Exhibit 4.12


 


XG TECHNOLOGY, INC.


WARRANT AGENCY AGREEMENT


 


WARRANT AGENCY AGREEMENT
(this “Warrant Agreement”) made as of _______, 2016 (the “Issuance Date”), between xG Technology,
Inc., a Delaware corporation, with offices at 240 S. Pineapple Ave., Suite 701, Sarasota, Florida 34236 (“Company”),
and Continental Stock Transfer & Trust Co., with offices at 17 Battery Place, 8th Floor, New York, New York 10004 (“Warrant
Agent”).


 


WHEREAS, the
Company is engaged in a public offering (the “Offering”) of Common Stock and Warrants and, in connection with
the over-allotment option exercised by the Underwriters, has determined to issue and deliver up to _________ Warrants (the “Warrants”)
to the public investors, with each such Warrant evidencing the right of the holder thereof to purchase one share of common stock,
par value $0.00001 per share, of the Company’s Common Stock (the “Common Stock”) for $_____, subject to adjustment
as described herein; and


 


WHEREAS, the
Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a Registration Statement,
No. 333-214874 on Form S-1 (as the same may be amended from time to time, the “Registration Statement”) for
the registration, under the Securities Act of 1933, as amended (the “Securities Act”) of, among other securities,
the Warrants and the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), and such Registration
Statement was declared effective on _________, 2016; and


 


WHEREAS, the
Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with
the issuance, registration, transfer, exchange and exercise of the Warrants; and


 


WHEREAS, the
Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised,
and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants
(each, a “Holder”); and


 


WHEREAS, all
acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided herein, the valid and binding obligations of the Company, and to
authorize the execution and delivery of this Warrant Agreement.


 


NOW, THEREFORE,
in consideration of the mutual agreements herein contained, the parties hereto agree as follows:


 


1. Appointment of
Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this
Warrant Agreement.


 


2. Warrants.


 


2.1. Form of Warrant.
Each Warrant shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto,
the provisions of which are incorporated herein, and shall be signed by, or bear the facsimile signature of, the Chief Executive
Officer, President, Chief Financial Officer or Treasurer, Secretary or Assistant Secretary of the Company and shall bear a facsimile
of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased
to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same
effect as if he or she had not ceased to be such at the date of issuance. All of the Warrants shall initially be represented by
one or more book-entry certificates (each a “Book-Entry Warrant Certificate”).


 




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2.2. Effect of Countersignature.
Unless and until countersigned by the Warrant Agent pursuant to this Warrant Agreement, a Warrant shall be invalid and of no effect
and may not be exercised by a Holder.


 


2.3. Registration.


 


2.3.1. Warrant Register.
The Warrant Agent shall maintain books (“Warrant Register”), for the registration of the original issuance and
the registration of any transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and
register the Warrants in the names of the respective Holders in such denominations and otherwise in accordance with instructions
delivered to the Warrant Agent by the Company. To the extent the Warrants are DTC eligible as of the Issuance Date, all of the
Warrants shall be represented by one or more Book-Entry Warrant Certificates deposited with the Depository Trust Company (the “Depository”)
and registered in the name of Cede & Co., a nominee of the Depository. Ownership of beneficial interests in the Book-Entry
Warrant Certificates shall be shown on, and the transfer of such ownership shall be effected through, records maintained (i) by
the Depository or its nominee for each Book-Entry Warrant Certificate; (ii) by institutions that have accounts with the Depository
(such institution, with respect to a Warrant in its account, a “Participant”); or (iii) directly on the book-entry
records of the Warrant Agent with respect only to owners of beneficial interests that represent such direct registration.


 


If the Warrants are
not DTC Eligible as of the Issuance Date or the Depository subsequently ceases to make its book-entry settlement system available
for the Warrants, the Company may instruct the Warrant Agent to make other arrangements for book-entry settlement within ten (10)
Business Days after the Depository ceases to make its book-entry settlement available. In the event that the Company does not make
alternative arrangements for book-entry settlement within ten (10) Business Days or the Warrants are not eligible for, or it is
no longer necessary to have the Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to
the Depository to deliver to the Warrant Agent for cancellation each Book-Entry Warrant Certificate, and the Company shall instruct
the Warrant Agent to deliver to the Depository definitive Warrant Certificates in physical form evidencing such Warrants. Such
definitive Warrant Certificates shall be in substantially the form annexed hereto as Exhibit A.


 


As used herein, the
term “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the
City of New York are authorized or required by law or executive order to remain closed.


 


2.3.2. Beneficial
Owner; Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant
Agent may deem and treat the person in whose name such Warrant shall be registered upon the Warrant Register (“registered
holder”), as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation
of ownership or other writing on the Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose
of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. Any person in whose name ownership of a beneficial interest in the Warrants evidenced by a Book-Entry Warrant
Certificate is recorded in the records maintained by the Depository or its nominee shall be deemed the “beneficial owner”
thereof; provided, that all such beneficial interests shall be held through a Participant which shall be the registered
holder of such Warrants. As used herein, the term “Holder” refers only to a registered holder of the Warrants.


 




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2.4. Uncertificated
Warrants. Notwithstanding the foregoing and anything else herein to the contrary, the Warrants may be issued in uncertificated
form.


 


3. Terms and Exercise
of Warrants.


 


3.1. Exercise Price.
Each Warrant shall, when countersigned by the Warrant Agent, entitle the Holder, subject to the provisions of such Warrant and
of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $_____
per share, subject to the subsequent adjustments provided in Section 4 hereof. The term “Exercise Price” as
used in this Warrant Agreement refers to the price per share at which Common Stock may be purchased at the time a Warrant is exercised.


 


3.2. Duration of Warrants.
A Warrant may be exercised only during the period (“Exercise Period”) commencing on the Issuance Date and terminating
at 5:00 P.M., New York City time on _______, 2019 (“Expiration Date”). Each Warrant not exercised on or
before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Warrant Agreement
shall cease at the close of business on the Expiration Date.


 


3.3. Exercise of Warrants.


 


3.3.1. Exercise
and Payment. A Holder may exercise a Warrant by delivering, not later than 5:00 P.M., New York City time, on any Business
Day during the Exercise Period (the “Exercise Date”) to the Warrant Agent at its corporate trust department
(i) the Warrant Certificate evidencing the Warrants to be exercised, or, in the case of a Book-Entry Warrant Certificate, the Warrants
to be exercised (the “Book-Entry Warrants”) shown on the records of the Depository to an account of the Warrant
Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository from time to time, (ii) an
election to purchase the Warrant Shares underlying the Warrants to be exercised (an “Election to Purchase”),
properly completed and executed by the Holder on the reverse of the Warrant Certificate or, in the case of a Book-Entry Warrant
Certificate, properly delivered by the Participant in accordance with the Depository’s procedures, and (iii) the Exercise
Price for each Warrant to be exercised in lawful money of the United States of America by certified or official bank check or by
bank wire transfer in immediately available funds payable to the Warrant Agent.


 


If any of (A) the Warrant
Certificate or the Book-Entry Warrants, (B) the Election to Purchase, or (C) the Exercise Price therefor, is received by the Warrant
Agent after 5:00 P.M., New York City time, on the specified Exercise Date, the Warrants will be deemed to be received and
exercised on the Business Day next succeeding the Exercise Date. If the date specified as the Exercise Date is not a Business Day,
the Warrants will be deemed to be received and exercised on the next succeeding day that is a Business Day. If the Warrants are
received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered
to the Warrant Agent will be returned to the Holder. In no event will interest accrue on funds deposited with the Warrant Agent
in respect of an exercise or attempted exercise of Warrants. The validity of any exercise of Warrants will be determined by the
Company in its sole discretion and such determination will be final and binding upon the Holder and the Warrant Agent. Neither
the Company nor the Warrant Agent shall have any obligation to inform a Holder of the invalidity of any exercise of any Warrants.


 




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The Warrant Agent shall
promptly deposit all funds received by it in payment of the Exercise Price in the account of the Company maintained with the Warrant
Agent for such purpose and shall advise the Company via telephone at the end of each day on which funds for the exercise of the
Warrants are received of the amount so deposited to its account. The Warrant Agent shall promptly confirm such telephonic advice
to the Company in writing.


  


3.3.2. Issuance
of Certificates. The Warrant Agent shall, by 11:00 A.M. New York City time on the Business Day following the Exercise
Date of any Warrant, advise the Company or the transfer agent and registrar in respect of (a) the number of Warrant Shares issuable
upon such exercise in accordance with the terms and conditions of this Warrant Agreement, (b) the instructions of each Holder with
respect to delivery of the Warrant Shares issuable upon such exercise, and the delivery of definitive Warrant Certificates, as
appropriate, evidencing the balance, if any, of the Warrants remaining after such exercise, (c) in case of a Book-Entry Warrant
Certificate, the notation that shall be made to the records maintained by the Depository, its nominee for each Book-Entry Warrant
Certificate, or a Participant, as appropriate, evidencing the balance, if any, of the Warrants remaining after such exercise and
(d) such other information as the Company or such transfer agent and registrar shall reasonably require.


 


The Company shall,
by 5:00 P.M., New York City time, on the third Business Day next succeeding the Exercise Date of any Warrant and the clearance
of the funds in payment of the aggregate Exercise Price, execute, issue and deliver to the Warrant Agent, the Warrant Shares to
which such Holder is entitled, in fully registered form, registered in such name or names as may be directed by such Holder. Upon
receipt of such Warrant Shares, the Warrant Agent shall, by 5:00 P.M., New York City time, on the third Business Day next
succeeding such Exercise Date, transmit such Warrant Shares to, or upon the order of, such Holder.


 


In lieu of delivering
physical certificates representing the Warrant Shares issuable upon exercise of any Warrants, provided the Company’s transfer
agent is participating in the Depository’s Fast Automated Securities Transfer program, the Company shall use its commercially
reasonable efforts to cause its transfer agent to electronically transmit the Warrant Shares issuable upon exercise to the Depository
by crediting the account of the Depository or of the Participant, as the case may be, through its Deposit Withdrawal Agent Commission
system. The time periods for delivery described in the immediately preceding paragraph shall apply to the electronic transmittals
described herein.


 


3.3.3. Valid Issuance.
All Warrant Shares issued upon the proper exercise of a Warrant in conformity with this Warrant Agreement shall be validly issued,
fully paid and nonassessable.


 


3.3.4. No Fractional
Exercise. Warrants may be exercised only in whole numbers of Warrant Shares. No fractional Warrant Shares are to be issued
upon the exercise of a Warrant, but rather the number of Warrant Shares to be issued shall be rounded up or down, as applicable,
to the nearest whole number. If fewer than all of the Warrants evidenced by a Warrant Certificate are exercised, a new Warrant
Certificate for the number of unexercised Warrants remaining shall be executed by the Company and countersigned by the Warrant
Agent as provided in Section 2 of this Warrant Agreement, and delivered to the Holder at the address specified on the books of
the Warrant Agent or as otherwise specified by such Holder. If fewer than all of the Warrants evidenced by a Book-Entry Warrant
Certificate are exercised, a notation shall be made to the records maintained by the Depository, its nominee for each Book-Entry
Warrant Certificate, or a Participant, as appropriate, evidencing the balance of the Warrants remaining after such exercise.


 




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3.3.5. No Transfer
Taxes. The Company shall not be required to pay any stamp or other tax or governmental charge required to be paid in connection
with any transfer involved in the issue of the Warrant Shares upon the exercise of Warrants; and in the event that any such transfer
is involved, the Company shall not be required to issue or deliver any Warrant Shares until such tax or other charge shall have
been paid or it has been established to the Company’s satisfaction that no such tax or other charge is due.


  


3.3.6. Date of Issuance.
Each person in whose name any such certificate for Warrant Shares is issued shall for all purposes be deemed to have become the
holder of record of such shares on the date on which the applicable Warrant was surrendered and payment of the Exercise Price was
made, irrespective of the date of delivery of any such certificate, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of record of
such shares at the close of business on the next succeeding date on which the stock transfer books are open.


 


3.3.7. Cashless
Exercise Under Certain Circumstances.


 


(i) The Company shall
provide to the Holder prompt written notice of any time that the Company is unable to issue the Warrant Shares via DTC transfer
or otherwise (without restrictive legend), because (A) the Commission has issued a stop order with respect to the Registration
Statement, (B) the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily
or permanently, (C) the Company has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily
or permanently, or (D) otherwise (each a “Restrictive Legend Event”). To the extent that a Restrictive Legend
Event occurs after the Holder has exercised a Warrant in accordance with the terms of the Warrants but prior to the delivery of
the Warrant Shares, the Company shall, at the election of the Holder to be given within five (5) Business Days of receipt of notice
of the Restrictive Legend Event, either (A) rescind the previously submitted Election to Purchase and the Company shall return
all consideration paid by the Holder for such shares upon such rescission or (B) treat the attempted exercise as a cashless exercise
as described in the next paragraph and refund the cash portion of the Exercise Price to the Holder.


 


(ii) If a Restrictive
Legend Event has occurred and no exemption from the registration requirements is available, the Warrants shall only be exercisable
on a cashless basis. Notwithstanding anything herein to the contrary, the Company shall not be required to make any cash payments
or net cash settlement to the Holder in lieu of issuance of the Warrant Shares. Upon a “cashless exercise,”
the Holder shall be entitled to receive a certificate (or book entry) for the number of Warrant Shares equal to the quotient obtained
by dividing [(A-B) (X)] by (A), where:


 


(A) =the VWAP on
the Business Day immediately preceding the date on which the Holder elects to exercise the Warrant by means of a “cashless
exercise,” as set forth in the applicable Election to Purchase;


(B) =the Exercise
Price of the Warrant, as it may have been adjusted hereunder; and


(X) =the number
of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise
were by means of a cash exercise rather than a cashless exercise.


  


Upon receipt of an Election
to Purchase for a cashless exercise, the Warrant Agent will promptly deliver a copy of the Election to Purchase to the Company
to confirm the number of Warrant Shares issuable in connection with the cashless exercise. The Company shall calculate and transmit
to the Warrant Agent, and the Warrant Agent shall have no obligation under this section to calculate, the number of Warrant Shares
issuable in connection with the cashless exercise.


 




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“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on NYSE AMEX, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market or the New York Stock
Exchange (each, a “Trading Market”), the daily volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg
L.P. (based on a trading day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time) on any day that the
Trading Market on which the Common Stock is then listed is open for trading), (b) the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted
for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published
by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


3.3.8. Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the applicable Holders the number of Warrant Shares that are not disputed.


 


4. Adjustments.


 


4.1. Adjustment upon
Subdivision or Combination of Common Stock. If the Company at any time after the Issuance Date subdivides (by any stock split,
stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced
and the number of Warrant Shares will be proportionately increased. If the Company at any time after the Issuance Date combines
(by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 4.1 shall become
effective at the close of business on the date the subdivision or combination becomes effective. The Company shall promptly notify
Warrant Agent of any such adjustment and give specific instructions to Warrant Agent with respect to any adjustments to the Warrant
Register.


 


4.2. Adjustment for
Other Distributions. In the event the Company shall fix a record date for the making of a dividend or distribution to all holders
of Common Stock of any evidences of indebtedness or assets or subscription rights or warrants (excluding those referred to in Section
4.1 or other dividends paid out of retained earnings), then in each such case the Exercise Price shall be adjusted by multiplying
the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of
which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined
by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to each Holder
of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record
date mentioned above.


 




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4.3. Reclassification,
Consolidation, Purchase, Combination, Sale or Conveyance. If, at any time while the Warrants are outstanding, (i) the Company,
directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another
person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition
of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock
are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person whereby
such other person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to,
such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then,
upon any subsequent exercise of a Warrant, each Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the same amount and kind
of securities, cash or property, if any, of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which each Warrant is exercisable immediately prior to such
Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration that such Holder receives upon any exercise of each Warrant following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is
not the survivor (the “Successor Entity”) and for which stockholders received any equity securities of the Successor
Entity, to assume in writing all of the obligations of the Company under this Warrant Agreement in accordance with the provisions
of this Section 4.3 pursuant to written agreements and shall, upon the written request of such Holder, deliver to such Holder in
exchange for the applicable Warrants created by this Warrant Agreement a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to the Warrants which are exercisable for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity), if any, plus any Alternate Consideration, receivable as a result
of such Fundamental Transaction by a holder of the number of shares of Common Stock for which the Warrants are exercisable immediately
prior to such Fundamental Transaction, and with an exercise price which applies the Exercise Price hereunder to such shares of
capital stock, if any, plus any Alternate Consideration (but taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock
and such exercise price being for the purpose of protecting the economic value of such Warrant immediately prior to the consummation
of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction the Successor Entity shall succeed to,
and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant Agreement
and the Warrants referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right
and power of the Company and shall assume all of the obligations of the Company under this Warrant Agreement and the Warrants with
the same effect as if such Successor Entity had been named as the Company herein and therein.


 




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The Company shall instruct
the Warrant Agent to mail, by first class mail, postage prepaid, to each Holder, written notice of the execution of any such amendment,
supplement to this Warrant Agreement and/or the Warrants or other agreement. Any such amendment, supplement or other agreement
entered into by the Successor Entity shall provide for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 4. The Warrant Agent shall be under no responsibility to determine the correctness
of any provisions contained in such amendment, supplement or other agreement relating either to the kind or amount of securities
or other property receivable upon exercise of the Warrants or with respect to the method employed and provided therein for any
adjustments and shall be entitled to rely upon the provisions contained in any such amendment, supplement or other agreement. The
provisions of this Section 4.3 shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and
conveyances of the kind described above.


 


4.4. Other Events.
If any event occurs of the type contemplated by the provisions of Section 4.1, 4.2 or 4.3 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with
equity features to all holders of Common Stock for no consideration), then the Company’s Board of Directors will in good
faith make an adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of each Holder.


 


4.5. Notices of Changes
in Warrant. Upon every adjustment of the Exercise Price or the number of Warrant Shares, the Company shall give written notice
thereof to the Warrant Agent, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease,
if any, in the number of Warrant Shares purchasable upon the exercise of a Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1,
4.2 or 4.3, then, in any such event, the Company shall give written notice to each Holder, at the last address set forth for such
Holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such event.


 


4.6. No Fractional
Shares. Notwithstanding any provision contained in this Warrant Agreement to the contrary, the Company shall not issue fractional
shares upon exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, a Holder would be entitled,
upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round up
or down, as applicable, to the nearest whole number the number of Warrant Shares to be issued to such Holder.


 


4.7. Form of Warrant.
The form of Warrant annexed hereto as Exhibit A need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the same Exercise Price and the same number of shares as is stated
in the Warrants initially issued pursuant to this Warrant Agreement. However, the Company may at any time in its sole discretion
make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and
any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may
be in the form as so changed.


 




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5. Transfer and
Exchange of Warrants.


 


5.1. Registration
of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by
appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants
shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the
Warrant Agent to the Company from time to time upon request.


 


5.2. Procedure for
Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer
reasonably acceptable to Warrant Agent, duly executed by the Holder thereof, or by a duly authorized attorney, and thereupon the
Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Holder of the Warrants so surrendered,
representing an equal aggregate number of Warrants; provided, however, that except as otherwise provided herein or in any Book-Entry
Warrant Certificate, each Book-Entry Warrant Certificate may be transferred only in whole and only to the Depository, to another
nominee of the Depository, to a successor depository, or to a nominee of a successor depository; provided further, however, that
in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant
and issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel for the Company stating
that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend. Upon any such registration
of transfer, the Company shall execute, and the Warrant Agent shall countersign and deliver, in the name of the designated transferee
a new Warrant Certificate or Warrant Certificates of any authorized denomination evidencing in the aggregate a like number of unexercised
Warrants.


 


5.3. Fractional Warrants.
The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance of
a Warrant Certificate for a fraction of a Warrant.


 


5.4. Service Charges.
A service charge shall be made for any exchange or registration of transfer of Warrants, as negotiated between Company and Warrant
Agent.


 


5.5. Warrant Execution
and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of
this Warrant Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.


 




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6. Limitations on
Exercise. Neither the Warrant Agent nor the Company shall effect any exercise of any Warrant, and no Holder shall have the
right to exercise any portion of a Warrant, to the extent that after giving effect to the issuance of shares of Common Stock after
exercise as set forth on the applicable Election to Purchase, such Holder (together with such Holder’s Affiliates (as defined
in Rule 405 under the Securities Act), and any other persons acting as a group together with such Holder or any of such Holder’s
Affiliates), would beneficially own in excess of 4.99% of the Company’s Common Stock. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by a Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of the Warrant with respect to which such determination is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon exercise of the remaining, nonexercised portion of any Warrant beneficially
owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 6, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations promulgated thereunder, it being acknowledged by each Holder that neither the Warrant
Agent nor the Company is representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 6 applies, the determination of whether a Warrant is exercisable (in relation to other securities
owned by a Holder together with any Affiliates) and of which portion of a Warrant is exercisable shall be in the sole discretion
of a Holder, and the submission of an Election to Purchase shall be deemed to be such Holder’s determination of whether such
Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which portion
of a Warrant is exercisable, and neither the Warrant Agent nor the Company shall have any obligation to verify or confirm the accuracy
of such determination and neither of them shall have any liability for any error made by such Holder. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 6, in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common
Stock outstanding. The provisions of this Section 6 shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 6 to correct this subsection (or any portion hereof) which may be defective or inconsistent with
the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor Holder.


 


7. Other Provisions
Relating to Rights of Holders of Warrants.


 


7.1. No Rights as
Stockholder. Except as otherwise specifically provided herein, a Holder, solely in its capacity as an owner of a Warrant, shall
not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant Agreement be construed to confer upon a Holder, solely in its capacity as the owner of a Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice
of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which it is then entitled to receive upon the due exercise of a Warrant. For the avoidance of doubt, ownership of a Warrant does
not entitle the Holder or any beneficial owner thereof to any of the rights of a stockholder.


 


7.2. Lost, Stolen,
Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent
may on such terms as to indemnity (including obtaining an open penalty bond protecting the Warrant Agent) or otherwise as they
may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute
a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant
shall be at any time enforceable by anyone.


 


7.3. Reservation of
Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Warrant Agreement.


 




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8. Concerning the
Warrant Agent and Other Matters.


 


8.1. Concerning the
Warrant Agent. The Warrant Agent:


 


a) shall have no duties
or obligations other than those set forth herein and no duties or obligations shall be inferred or implied;


 


b) may rely on and
shall be held harmless by the Company in acting upon any certificate, statement, instrument, opinion, notice, letter, facsimile
transmission, telegram or other document, or any security delivered to it, and reasonably believed by it to be genuine and to have
been made or signed by the proper party or parties;


 


c) may rely on and
shall be held harmless by the Company in acting upon written or oral instructions or statements from the Company with respect to
any matter relating to its acting as Warrant Agent;


 


d) may consult with
counsel satisfactory to it (including counsel for the Company) and shall be held harmless by the Company in relying on the advice
or opinion of such counsel in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion of such counsel;


 


e) solely shall make
the final determination as to whether or not a Warrant received by Warrant Agent is duly, completely and correctly executed, and
Warrant Agent shall be held harmless by the Company in respect of any action taken, suffered or omitted by Warrant Agent hereunder
in good faith and in accordance with its determination;


 


f) shall not be obligated
to take any legal or other action hereunder which might, in its judgment, subject or expose it to any expense or liability unless
it shall have been furnished with an indemnity satisfactory to it; and


 


g) shall not be liable
or responsible for any failure of the Company to comply with any of the Company’s obligations relating to the Registration
Statement or this Warrant Agreement, including without limitation obligations under applicable regulation or law.


 


8.2. Payment of Taxes.
The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent
in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company shall not be obligated
to pay any transfer taxes in respect of the Warrants or such Warrant Shares. The Warrant Agent shall not register any transfer
or issue or deliver any Warrant Certificate(s) or Warrant Shares unless or until the persons requesting the registration or issuance
shall have paid to the Warrant Agent for the account of the Company the amount of such tax, if any, or shall have established to
the reasonable satisfaction of the Company that such tax, if any, has been paid.


 






     11


     


    

 


8.3. Resignation,
Consolidation, or Merger of Warrant Agent.


 


8.3.1. Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) calendar days’ notice in writing to the Company.
If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in
writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period
of thirty (30) calendar days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by
the Holder (who shall, with such notice, submit such Holder’s Warrants for inspection by the Company), then such Holder may
apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent,
the expenses of which shall be paid by the Company. Any successor Warrant Agent (but not including the initial Warrant Agent),
whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of
New York, in good standing and having its principal office in the Borough of Manhattan, City of New York and State of New York,
and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state
authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties,
and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any
further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and
deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and
rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor
Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.


 


8.3.2. Notice of
Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to
the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.


 


8.3.3. Merger or
Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated
or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor
Warrant Agent under this Warrant Agreement without any further act.


 


8.4. Fees and Expenses
of Warrant Agent.


 


8.4.1. Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration in an amount separately agreed to between Company and Warrant
Agent for its services as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the
Warrant Agent may reasonably incur in the execution of its duties hereunder. One half of the total Warrant Agent fees (not including
postage) must be paid upon execution of this Warrant Agreement. The remaining half must be paid within fifteen (15) Business Days
thereafter. An invoice for any out-of-pocket and/or per item fees incurred will be rendered to and payable by the Company within
fifteen (15) Business Days of the date of said invoice. It is understood and agreed that all services to be performed by Warrant
Agent shall cease if full payment for its services has not been received in accordance with the above schedule, and said services
will not commence thereafter until all payment due has been received by Warrant Agent.


 


8.4.2. Further Assurances.
The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying
out or performing of the provisions of this Warrant Agreement.


 


8.5. Liability of
Warrant Agent.


 


8.5.1. Reliance
on Company Statement. Whenever in the performance of its duties under this Warrant Agreement, the Warrant Agent shall deem
it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a statement signed by the President, Chief Executive Officer or Chief Financial Officer
of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered
in good faith by it pursuant to the provisions of this Warrant Agreement.


 




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8.5.2. Indemnity.
The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees
to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, claims, losses, damages,
costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Warrant Agreement
except as a result of the Warrant Agent’s gross negligence, willful misconduct, or bad faith.


 


8.5.3. Limitation
of Liability. The Warrant Agent’s aggregate liability, if any, during the term of this Warrant Agreement with respect
to, arising from, or arising in connection with this Warrant Agreement, or from all services provided or omitted to be provided
under this Warrant Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid
or payable hereunder by the Company to Warrant Agent as fees and charges (not including reimbursable expenses).


 


8.5.4. Disputes.
In the event any question or dispute arises with respect to the proper interpretation of this Warrant Agreement or the Warrant
Agent’s duties hereunder or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and
shall not be held liable or responsible for refusing to act until the question or dispute has been judicially settled (and the
Warrant Agent may, if it deems it advisable, but shall not be obligated to, file a suit in interpleader or for a declaratory judgment
for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all parties interested in the matter
which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory to the Warrant
Agent and executed by the Company and each other interested party. In addition, the Warrant Agent may require for such purpose,
but shall not be obligated to require, the execution of such written settlement by all of the Holders of the Warrants and all other
parties that may have an interest in the settlement.


 


8.5.5. Exclusions.
The Warrant Agent shall have no responsibility with respect to the validity of this Warrant Agreement or with respect to the validity
or execution of any Warrant (except its countersignature hereof and thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Warrant Agreement or in any Warrant; nor shall it be responsible to make
any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such
adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or reservation of any Warrant Shares to be issued pursuant
to this Warrant Agreement or any Warrant or as to whether any Warrant Shares will, when issued, be validly issued and fully paid
and nonassessable.


 


8.6. Acceptance of
Agency. The Warrant Agent hereby accepts the agency established by this Warrant Agreement and agrees to perform the same upon
the terms and conditions herein set forth and, among other things, shall account promptly to the Company with respect to Warrants
exercised and concurrently account for, and pay to the Company, all moneys received by the Warrant Agent for the purchase of Warrant
Shares through the exercise of Warrants.


 


9. Miscellaneous
Provisions.


 


9.1. Successors.
All the covenants and provisions of this Warrant Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns.


 




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9.2. Notices.
Any notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by a Holder to
or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or
private courier service within five (5) Business Days after deposit of such notice, postage prepaid, addressed (until another address
is filed in writing by the Company with the Warrant Agent), as follows:


 


xG Technology, Inc.

240 S. Pineapple Avenue, Suite 701


Sarasota, Florida 34236

Attn: Chief Executive Officer


 


Any notice, statement
or demand authorized by this Warrant Agreement to be given or made by the a Holder or by the Company to or on the Warrant Agent
shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier
service within five (5) Business Days after deposit of such notice, postage prepaid, addressed (until another address is filed
in writing by the Warrant Agent with the Company), as follows:


 


Continental Stock Transfer & Trust Co.


17 Battery Place, 8th Floor


New York, New York 10004

Attn: [________]


 


with a copy in each case to:


 


Robinson Brog Leinwand Greene Genovese & Gluck
P.C.


875 Third Avenue – 9th Floor


New York, New York 10022


Attn: David E. Danovitch, Esq.


  


and:


 


Aegis Capital Corp.

810 Seventh Avenue, 11th Fl

New York, NY 10019

Attn: Compliance Department


 


and:


 


Lowenstein Sandler LLP


1251 Avenue of Americas


New York, New York 10020

Attn: John D. Hogoboom, Esq.


 


9.3. Applicable Law.
The validity, interpretation, and performance of this Warrant Agreement and of the Warrants shall be governed in all respects by
the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of
the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Warrant Agreement shall be brought and enforced in the courts of the State of New York or
the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenience
forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.


 




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9.4. Persons Having
Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of
the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the
parties hereto and the Holders of the Warrants and, for purposes of Sections 3.3, 9.3 and 9.8, the Underwriter, any right, remedy,
or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof.
The Underwriters shall be deemed to be an express third-party beneficiary of this Warrant Agreement with respect to Sections 3.3,
9.3 and 9.8 hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Warrant Agreement shall
be for the sole and exclusive benefit of the parties hereto (and the Underwriters with respect to the Sections 3.3, 3.4, 9.3 and
9.8 hereof) and their successors and assigns and of the Holders.


 


9.5. Examination of
this Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office of the Warrant
Agent in the City of New York, State of New York, for inspection by any Holder. The Warrant Agent may require any such Holder to
submit his Warrant for inspection by it.


 


9.6. Counterparts.
This Warrant Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.


 


9.7. Effect of Headings.
The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect the interpretation
thereof.


 


9.8. Amendments.
This Warrant Agreement may be amended by the parties hereto without the consent of any Holder for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with
respect to matters or questions arising under this Warrant Agreement as the parties may deem necessary or desirable and that the
parties deem shall not adversely affect the interest of the Holders. All other modifications or amendments, including any amendment
to increase the Exercise Price or shorten the Exercise Period, shall require the written consent of the Underwriter and the Holders
of a majority of the then outstanding Warrants.


 


9.9. Severability.
This Warrant Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of this Warrant Agreement or of any other term or provision hereof. Furthermore, in lieu
of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Warrant
Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.


 


9.10. Force Majeure.
In the event either party is unable to perform its obligations under the terms of this Warrant Agreement because of acts of God,
strikes, failure of carrier or utilities, equipment or transmission failure or damage that is reasonably beyond its control, or
any other cause that is reasonably beyond its control, such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes. Performance under this Warrant Agreement shall resume when
the affected party or parties are able to perform substantially that party’s duties.


 




     15


     


    

  


9.11. Consequential
Damages. Notwithstanding anything in this Warrant Agreement to the contrary, neither party to this Warrant Agreement shall
be liable to the other party for any consequential, indirect, special or incidental damages under any provision of this Warrant
Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act
hereunder even if that party has been advised of or has foreseen the possibility of such damages.


 


[Signature Page Follows]


 




     16


     


    

  


IN WITNESS WHEREOF,
this Warrant Agreement has been duly executed by the parties hereto as of the day and year first above written.


 


	 	XG TECHNOLOGY, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST CO.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 




     17


     


    

  


Exhibit A


 


[FORM OF WARRANT CERTIFICATE]


 


EXERCISABLE ONLY IF COUNTERSIGNED BY THE
WARRANT

AGENT AS PROVIDED HEREIN.


 


Warrant Certificate Evidencing Warrants
to Purchase

Common Stock, par value of $0.00001 per share, as described herein.


 


XG TECHNOLOGY, INC.


 


	No. ___________	


 


VOID AFTER 5:00 P.M., NEW YORK CITY
TIME,

ON _______ __, 2019


 


This certifies that
________________________ or registered assigns is the registered holder (the “Holder”) of _____________________
warrants to purchase certain securities (each a “Warrant”). Each Warrant entitles the Holder, subject to the
provisions contained herein and in the Warrant Agreement (as defined below), to purchase from xG Technology, Inc., a Delaware corporation
(the “Company”), one share (collectively, the “Warrant Shares”) of Common Stock, par value
$0.00001 per share, of the Company (“Common Stock”), at the Exercise Price set forth below. The price per share
at which each Warrant Share may be purchased at the time each Warrant is exercised (the “Exercise Price”) is
$_____ initially, subject to adjustments as set forth in the Warrant Agreement (as defined below).


 


This Warrant Certificate
is issued under and in accordance with the Warrant Agreement, dated as of _______, 2016 (the “Warrant Agreement”),
between the Company and the Warrant Agent, and is subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate and the beneficial owners of the Warrants represented by this
Warrant Certificate consent by acceptance hereof. Copies of the Warrant Agreement are on file and can be inspected at the below-mentioned
office of the Warrant Agent and at the office of the Company at 240 S. Pineapple Ave., Suite 701, Sarasota, Florida 34236. Capitalized
terms used but not defined herein shall have the meaning ascribed to them in the Warrant Agreement.


 


Subject to the terms
of the Warrant Agreement, each Warrant evidenced hereby may be exercised in whole but not in part at any time, as specified herein,
on any Business Day (as defined below) occurring during the period (the “Exercise Period”) commencing on the
Issuance Date and terminating at 5:00 P.M., New York City time, on _______, 2019 (the “Expiration Date”).
Each Warrant remaining unexercised after 5:00 P.M., New York City time, on the Expiration Date shall become void, and all
rights of the Holder of this Warrant Certificate evidencing such Warrant shall cease.


 




    A-1


     


    

 


The Holder of the Warrants
represented by this Warrant Certificate may exercise any Warrant evidenced hereby by delivering, not later than 5:00 P.M.,
New York City time, on any Business Day during the Exercise Period (the “Exercise Date”) to Continental Stock
Transfer & Trust Co. (the “Warrant Agent”, which term includes any successor warrant agent under the Warrant
Agreement described below) at its corporate trust department at 17 Battery Place, 8th Floor, New York, New York 10004, (i) this
Warrant Certificate or, in the case of a Book-Entry Warrant Certificate (as defined in the Warrant Agreement), the Warrants to
be exercised (the “Book-Entry Warrants”) as shown on the records of The Depository Trust Company (the “Depository”)
to an account of the Warrant Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository,
(ii) an election to purchase (“Election to Purchase”), properly executed by the Holder hereof on the reverse
of this Warrant Certificate or properly executed by the institution in whose account the Warrant is recorded on the records of
the Depository (the “Participant”), and substantially in the form included on the reverse of this Warrant Certificate
and (iii) unless cashless exercise is permitted under the Warrant Agreement, the Exercise Price for each Warrant to be exercised
in lawful money of the United States of America by certified or official bank check or by bank wire transfer in immediately available
funds, in each case payable to the order of the Company.


 


As used herein, the
term “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the
City of New York are authorized or required by law or executive order to remain closed.


 


Warrants may be exercised
only in whole numbers of Warrants. No fractional Warrant Shares are to be issued upon the exercise of this Warrant, but rather
the number of Warrant Shares to be issued shall be rounded up or down, as applicable, to the nearest whole number. If fewer than
all of the Warrants evidenced by this Warrant Certificate are exercised, a new Warrant Certificate for the number of Warrants remaining
unexercised shall be executed by the Company and countersigned by the Warrant Agent as provided in Section 2 of the Warrant Agreement,
and delivered to the Holder of this Warrant Certificate at the address specified on the books of the Warrant Agent or as otherwise
specified by such Holder.


 


The Company shall provide
to the Holder prompt written notice of any time that the Company is unable to issue the Warrant Shares via DTC transfer or otherwise
(without restrictive legend), because (A) the Commission has issued a stop order with respect to the Registration Statement, (B)
the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently,
(C) the Company has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently,
or (D) otherwise (each a “Restrictive Legend Event”). To the extent that a Restrictive Legend Event occurs after
the Holder has exercised a Warrant in accordance with the terms of the Warrants but prior to the delivery of the Warrant Shares,
the Company shall, at the election of the Holder to be given within five (5) Business Days of receipt of notice of the Restrictive
Legend Event, either (A) rescind the previously submitted Election to Purchase and the Company shall return all consideration paid
by the Holder for such shares upon such rescission or (B) treat the attempted exercise as a cashless exercise as described in the
next paragraph and refund the cash portion of the exercise price to the Holder.


 


If a Restrictive Legend
Event has occurred and no exemption from the registration requirements is available, the Warrant shall only be exercisable on a
cashless basis. Notwithstanding anything herein to the contrary, the Company shall not be required to make any cash payments or
net cash settlement to the Holder in lieu of issuance of the Warrant Shares. Upon a “cashless exercise,” the Holder
shall be entitled to receive a certificate (or book entry) for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:


 


(A) =the VWAP on
the Business Day immediately preceding the date on which the Holder elects to exercise the Warrant by means of a “cashless
exercise,” as set forth in the applicable Election to Purchase;





(B) =the Exercise
Price of the Warrant, as it may have been adjusted hereunder; and





(X) =the number
of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise
were by means of a cash exercise rather than a cashless exercise.


 




    A-2


     


    

 


Upon receipt of an
Election to Purchase for a cashless exercise, the Warrant Agent will promptly deliver a copy of the Election to Purchase to the
Company to confirm the number of Warrant Shares issuable in connection with the cashless exercise. The Company shall calculate
and transmit to the Warrant Agent, and the Warrant Agent shall have no obligation under this section to calculate, the number of
Warrant Shares issuable in connection with the cashless exercise.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (each, a “Trading Market”), the daily volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg
L.P. (based on a trading day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time) on any day that the
Trading Market on which the Common Stock is then listed is open for trading), (b) the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted
for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published
by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


The Exercise Price
and the number of Warrant Shares purchasable upon the exercise of each Warrant shall be subject to adjustment as provided pursuant
to Section 4 of the Warrant Agreement.


 


Upon due presentment
for registration of transfer or exchange of this Warrant Certificate at the stock transfer division of the Warrant Agent, the Company
shall execute, and the Warrant Agent shall countersign and deliver, as provided in Section 5 of the Warrant Agreement, in the name
of the designated transferee one or more new Warrant Certificates of any authorized denomination evidencing in the aggregate a
like number of unexercised Warrants, subject to the limitations provided in the Warrant Agreement.


 


Neither this Warrant
Certificate nor the Warrants evidenced hereby entitles the Holder to any of the rights of a stockholder of the Company, including,
without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent
or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or
any other matter.


 


The Warrant Agreement
and this Warrant Certificate may be amended as provided in the Warrant Agreement including, under certain circumstances described
therein, without the consent of the Holder of this Warrant Certificate or the Warrants evidenced thereby.


 


THIS WARRANT CERTIFICATE
AND ALL RIGHTS HEREUNDER AND UNDER THE WARRANT AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS FORMED AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.


 




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This Warrant Certificate
shall not be entitled to any benefit under the Warrant Agreement or be valid or obligatory for any purpose, and no Warrant evidenced
hereby may be exercised, unless this Warrant Certificate has been countersigned by the manual signature of the Warrant Agent.


 


IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed.


 


	Dated as of ________ __, 2016	 	 


 


	 	XG TECHNOLOGIES, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 


	CONTINENTAL STOCK TRANSFER & TRUST CO., as Warrant Agent
	 	 	 
	By:	 	 
	Name:	 	 
	Title:	 	 



 



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[REVERSE]


 


Instructions for Exercise of Warrant


 


To exercise the Warrants
evidenced hereby, the Holder must, by 5:00 P.M., New York City time, on the specified Exercise Date, deliver to the Warrant
Agent at its stock transfer division, a certified or official bank check or a bank wire transfer in immediately available funds,
in each case payable to the Company, in an amount equal to the Exercise Price in full for the Warrants exercised. In addition,
the Holder must provide the information required below and deliver this Warrant Certificate to the Warrant Agent at the address
set forth below and the Book-Entry Warrants to the Warrant Agent in its account with the Depository designated for such purpose.
The Warrant Certificate and this Election to Purchase must be received by the Warrant Agent by 5:00 P.M., New York City time,
on the specified Exercise Date.


 


ELECTION TO PURCHASE

TO BE EXECUTED IF WARRANT HOLDER DESIRES

TO EXERCISE THE WARRANTS EVIDENCED HEREBY


 


The undersigned hereby
irrevocably elects to exercise, on __________, ____ (the “Exercise Date”), __________ Warrants, evidenced by
this Warrant Certificate, to purchase, __________ shares (the “Warrant Shares”) of Common Stock, par value of
$0.00001 per share (the “Common Stock”) of xG Technology, Inc., a Delaware corporation (the “Company”),
and represents that on or before the Exercise Date:


 


 ̈ such
Holder has tendered payment for such Warrant Shares by certified or official bank check payable to the order of the Company c/o
Continental Stock Transfer & Trust Co., 17 Battery Place, 8th Floor, New York, New York 10004, or by bank wire transfer in
immediately available funds payable to the Company at Account No. [ ], in each case in the amount of $_______ in accordance with
the terms hereof, or


 


 ̈ if
permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
3.3.7 of the Warrant Agreement, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant
to the cashless exercise procedure set forth in subsection 3.3.7.


 


The undersigned requests that said number
of Warrant Shares be in fully registered form, registered in such names and delivered, all as specified in accordance with the
instructions set forth below.


 


If said number of Warrant
Shares is less than all of the Warrant Shares purchasable hereunder, the undersigned requests that a new Warrant Certificate evidencing
the remaining balance of the Warrants evidenced hereby be issued and delivered to the Holder of the Warrant Certificate unless
otherwise specified in the instructions below.


 


Dated: ________ __, ____


 


	 	Name	 	 
	 	 	(Please Print)	 


 




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/   /   /   / - /   /   / - /   /   /   /   /


(Insert Social Security or Other Identifying Number
of Holder)


 


	 	Address	__________________________
	 	 	__________________________
	 	 	 
	 	Signature	__________________________


 


This Warrant may only be exercised by presentation
to the Warrant Agent at one of the following locations:


 


	 	By hand at:  	Continental Stock Transfer & Trust Co.
	 	 	17 Battery Place, 8th Floor
	 	 	New York, New York 10004
	 	 	 
	 	By mail at:	Continental Stock Transfer & Trust Co.
	 	 	17 Battery Place, 8th Floor
	 	 	New York, New York 10004


 


The method of delivery of this Warrant Certificate is at the
option and risk of the exercising Holder and the delivery of this Warrant Certificate will be deemed to be made only when actually
received by the Warrant Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended.
In all cases, sufficient time should be allowed to ensure timely delivery.


 


(Instructions as to form and delivery of Warrant Shares and/or
Warrant Certificates)


  


	Name in which Warrant Shares are to be
registered if other than in the name of the Holder of this Warrant Certificate:	 
	 	 
	Address to which Warrant Shares are to be mailed if other than to the address of the Holder of this Warrant Certificate as shown on the books of the Warrant Agent:	 


 


 


	 	(Street Address)
	 	 
	 	 
	 	(City and State) (Zip Code)


 


	Name in which Warrant Certificate evidencing unexercised Warrants, if any, is to be registered if other than in the name of the Holder of this Warrant Certificate: 	 
	 	 
	Address to which certificate representing unexercised Warrants, if any, is to be mailed if other than to the address of the Holder of this Warrant Certificate as shown on the books of the Warrant Agent: 	 


 




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	 	(Street Address)
	 	 
	 	 
	 	(City and State) (Zip Code)
	 	 
	 	Dated:
	 	 
	 	 
	 	Signature:
	 	 
	 	Signature must conform in all respects to the name of the Holder as specified on the face of this Warrant Certificate.  If Warrant Shares, or a Warrant Certificate evidencing unexercised Warrants, are to be issued in a name other than that of the Holder hereof or are to be delivered to an address other than the address of such Holder as shown on the books of the Warrant Agent, the above signature must be guaranteed by a an Eligible Guarantor Institution (as that term is defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended).


 


SIGNATURE GUARANTEE


 





	Name of Firm	 	 
	Address	 	 
	Area Code	 	 
	and Number	 	 


 





	Authorized Signature	 	 



 


	Name	 	 
	Title	 	 
	Dated:	_____________, 20__	 


 




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ASSIGNMENT


 


(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT
HOLDER

DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY)


 


FOR VALUE RECEIVED, ____________ HEREBY SELL(S), ASSIGN(S) AND
TRANSFER(S) UNTO


 


 


	(Please print name and address

including zip code of assignee)	 	(Please insert social security or

other identifying number of assignee)


 


the rights represented by the within Warrant Certificate and
does hereby irrevocably constitute and appoint ____________ Attorney to transfer said Warrant Certificate on the books of the Warrant
Agent with full power of substitution in the premises.


 


	 	Dated:
	 	 
	 	 
	 	Signature
	 	 
	 	(Signature must conform in all respects to the name of the Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by an Eligible Guarantor Institution (as that term is defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended).


 


	SIGNATURE GUARANTEE	 	 


 


	Name of Firm	 	 
	Address	 	 
	Area Code	 	 
	and Number	 	 


 


	Authorized Signature	 	 



 


	Name	 	 
	Title	 	 
	Dated:	_____________, 20__	


 




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