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**Exhibit 10.9**

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**FORM OF WARRANT TO PURCHASE COMMON STOCK**

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**POLAR POWER, INC.**

 

Warrant Shares: ______

Initial Exercise Date: December 6, 2017

 

THIS WARRANT TO PURCHASECOMMON STOCK (the “Warrant”) certifies that, for value received, ___________ or its assigns (the “Holder”)is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time onor after December 6, 2017 (the “Initial Exercise Date”) and, in accordance with FINRA Rule 5110(f)(2)(G)(i),prior to at 5:00 p.m. (New York time) on the date that is five (5) years following the Effective Date (the “TerminationDate”) but not thereafter, to subscribe for and purchase from Polar Power, Inc., a Delaware corporation (the “Company”),up to _____ shares of common stock, par value $0.0001 per share (the “Common Stock”), of the Company (the “WarrantShares”), as subject to adjustment hereunder. The purchase price of one share of Common Stock under this Warrant shallbe equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions.In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 1:

 

“Affiliate”means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under commoncontrol with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“BusinessDay” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States orany day on which banking institutions in the State of New York are authorized or required by law or other governmental action toclose.

 

“Commission”means the United States Securities and Exchange Commission.

 

“ExchangeAct” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Person”means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liabilitycompany, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Rule144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpretedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purposeand effect as such Rule.

 

“SecuritiesAct” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“TradingDay” means a day on which the New York Stock Exchange is open for trading.

 

“TradingMarket” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading onthe date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or theNew York Stock Exchange (or any successors to any of the foregoing).

 

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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 then listedor quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest precedingdate) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a TradingDay from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market,the volume weighted average price of a share of Common Stock for such date (or the nearest preceding date) on the OTCQB or OTCQXas applicable, (c) if Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for Common Stockare then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeedingto its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all othercases, the fair market value of the Common Stock as determined by an independent appraiser selected in good faith by the Holderand reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

  

Section 2. Exercise.

 

a)                 Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or afterthe Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of theCompany as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books ofthe Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise Form annexed hereto. Within three(3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the sharesspecified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless thecashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstandinganything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until theHolder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, theHolder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Noticeof Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total numberof Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunderin an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showingthe number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice ofExercise Form within two (2) Business Days of receipt of such notice. **The Holder and any assignee, by acceptance of this Warrant,acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shareshereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated onthe face hereof.**

 

b)                 Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $8.75, subject to adjustmenthereunder (the “Exercise Price”).

 

c)                 Cashless Exercise. If at any time after the 6 month anniversary of the Initial Exercise Date, there is no effective registrationstatement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder,then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in whichthe Holder shall be entitled to receive the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by(A), where:

 

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IfWarrant Shares are issued in such a “cashless exercise,” the parties acknowledge and agree that in accordance withSection 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised,and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  TheCompany agrees not to take any position contrary to this Section 2(c). 

 

 Notwithstandinganything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuantto this Section 2(c).

 

d)                Mechanics of Exercise.

 

i.           Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmittedby its transfer agent to the Holder by crediting the account of the Holder’s or its designee’s balance account withThe Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company isthen a participant in such system and either (A) there is an effective registration statement permitting the issuance of theWarrant Shares to or resale of the Warrant Shares by Holder, or (B) the Warrant Shares are eligible for resale by the Holder withoutvolume or manner-of-sale limitations pursuant to Rule 144 and, in either case, the Warrant Shares have been sold by the Holderprior to the Warrant Share Delivery Date (as defined below), and otherwise by physical delivery of a certificate, registered inthe Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holderis entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three(3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share DeliveryDate”). If the Warrant Shares can be delivered via DWAC, the transfer agent shall have received from the Company anylegal opinions or other documentation required by it to deliver such Warrant Shares without legend (subject to receipt by the Companyof reasonable back up documentation from the Holder, including with respect to affiliate status) and, if applicable and requestedby the Company prior to the Warrant Share Delivery Date, the transfer agent shall have received from the Holder a confirmationof sale of the Warrant Shares (provided the requirement of the Holder to provide a confirmation as to the sale of Warrant Sharesshall not be applicable to the issuance of unlegended Warrant Shares upon a cashless exercise of this Warrant if the Warrant Sharesare then eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares shall be deemed to have been issued, and Holder orany other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes,as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted)and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares,having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exerciseby the second Trading Day following the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidateddamages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stockon the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth TradingDay after such liquidated damages begin to accrue) for each Trading Day after the second Trading Day following such Warrant ShareDelivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.

 

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ii.           Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the requestof a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holdera new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, whichnew Warrant shall in all other respects be identical with this Warrant.

 

iii.           Rescission Rights. If the Company fails to cause its transfer agent to deliver to the Holder the Warrant Shares pursuantto Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided,however, that the Holder shall be required to return any Warrant Shares or Common Stock subject to any such rescinded exercisenotice concurrently with the return to Holder of the aggregate Exercise Price paid to the Company for such Warrant Shares and therestoration of Holder’s right to acquire such Warrant Shares pursuant to this Warrant (including, issuance of a replacementwarrant certificate evidencing such restored right).

 

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iv.           Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights availableto the Holder, if the Company fails to cause its transfer agent to transmit to the Holder the Warrant Shares pursuant to an exerciseon or before the second Trading Day following the Warrant Share Delivery Date, and if after such date the Holder is required byits broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, sharesof Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receivingupon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, bywhich (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchasedexceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to theHolder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligationwas executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of WarrantShares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holderthe number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and deliveryobligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-Inwith respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligationof $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. TheHolder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, uponrequest of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any otherremedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/orinjunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrantas required pursuant to the terms hereof.

 

v.           No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exerciseof this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, theCompany shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fractionmultiplied by the Exercise Price or round up to the next whole share.

 

vi.           Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfertax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paidby the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed bythe Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the nameof the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executedby the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfertax incidental thereto. The Company shall pay all transfer agent fees required for same-day processing of any Notice of Exercise.

 

vii.           Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exerciseof this Warrant, pursuant to the terms hereof.

 

viii.           Signature. This Section 2 and the exercise form attached hereto set forth the totality of the procedures required of theHolder in order to exercise this Purchase Warrant.  Without limiting the preceding sentences, no ink-original exercise formshall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any exercise form be requiredin order to exercise this Purchase Warrant.  No additional legal opinion, other information or instructions shall be requiredof the Holder to exercise this Purchase Warrant.  The Company shall honor exercises of this Purchase Warrant and shall deliverShares underlying this Purchase Warrant in accordance with the terms, conditions and time periods set forth herein.

 

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e)                 Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not havethe right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect tosuch issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially ownin excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number ofshares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuableupon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares ofCommon Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially ownedby the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any othersecurities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversionor exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Exceptas set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordancewith Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holderthat the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Actand the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitationcontained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securitiesowned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretionof the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether thisWarrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portionof this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligationto verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated aboveshall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the numberof outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed withthe Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice bythe Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon thewritten or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder thenumber of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall bedetermined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holderor its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “BeneficialOwnership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after givingeffect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company,may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial OwnershipLimitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect tothe issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e)shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st dayafter such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a mannerotherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) whichmay be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplementsnecessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to asuccessor holder of this Warrant. 

 

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Section 3. CertainAdjustments.

 

a)                 Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend orotherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securitiespayable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Companyupon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues byreclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Priceshall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstandingimmediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjustedsuch that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividendor distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.For the purposes of clarification, the Exercise Price of this Warrant will not be adjusted in the event that the Company or anyfuture subsidiary of the Company sells or grants any option to purchase, or sell or grant any right to reprice, or otherwise disposeof or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common StockEquivalents, at an effective price per share less than the Exercise Price then in effect.

 

b)                 [RESERVED]

  

c)                 Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to therecord holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitledto acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquiredif the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard toany limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the dateon which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date asof which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holderexceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to suchextent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such PurchaseRight to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result inthe Holder exceeding the Beneficial Ownership Limitation).

 

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d)                Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend(other than cash dividends) or other distribution of its assets (or rights to acquire its assets) to holders of shares of CommonStock, by way of return of capital or otherwise (including, without limitation, any distribution of shares or other securities,property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similartransaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, theHolder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated thereinif the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard toany limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the dateof which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of sharesof Common Stock are to be determined for the participation in such Distribution (provided, however, to the extentthat the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of anyshares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyancefor the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the BeneficialOwnership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution,such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

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e)                 Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, inone 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 substantiallyall of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchangeoffer (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 theoutstanding 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 effectivelyconverted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or morerelated 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 or group of Persons whereby such otherPerson or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock heldby 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 this Warrant, the Holder shall have the right to receive, for each Warrant Share that would havebeen issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder(without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of thesuccessor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the“Alternate Consideration”) receivable by holders of Common Stock as a result of such Fundamental Transactionfor each share of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (withoutregard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determinationof the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of AlternateConsideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportionthe Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different componentsof the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be receivedin a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives uponany exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a FundamentalTransaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of theobligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written agreementsin form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to suchFundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security ofthe Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisablefor a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the sharesof Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of thisWarrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such sharesof capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transactionand the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purposeof protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and whichis reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the SuccessorEntity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisionsof this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every rightand power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if suchSuccessor Entity had been named as the Company herein.

  

f)                  Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding asof a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)                 Notice to Holder.

 

i.           Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Companyshall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustmentto the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

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ii.           Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchaseany shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be requiredin connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any saleor transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stockis converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution,liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed a notice to theHolder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to theapplicable record or effective date hereinafter specified, stating (x) the date on which a record is to be taken for the purposeof such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holdersof the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determinedor (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effectiveor close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange theirshares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger,sale, transfer or share exchange; provided that the failure to provide such notice or any defect therein shall not affect the validityof the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes,or contains, material, non-public information regarding the Company or any future subsidiaries of the Company, the Company shallsimultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitledto exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggeringsuch notice except as may otherwise be expressly set forth herein.

  

Section 4. Transferof Warrant.

 

a)                 Transferability. Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any Warrant Shares issued upon exercise ofthis Warrant shall be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative,put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which this Warrantis being issued, except the transfer of any security:

 

i.         by operation of law or by reason of reorganization of the Company;

 

ii.         to any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred remainsubject to the lock-up restriction in this Section 4(a) for the remainder of the time period;

 

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iii.         if the aggregate amount of securities of the Company held by the Holder or related person do not exceed 1% of the securities beingoffered;

 

iv.         that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating membermanages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of theequity in the fund; or

 

v.         the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction in this Section4(a) for the remainder of the time period.

* * 

Subject tothe foregoing restriction, any applicable securities laws and the conditions set forth in Section 4(d), this Warrant and all rightshereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of thisWarrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantiallyin the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxespayable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and delivera new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specifiedin such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned,and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a newholder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)                 New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid officeof the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signedby the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in suchdivision or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrantsto be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initialissuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuantthereto.

 

c)                 Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem andtreat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distributionto the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)                Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrantand, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with aview to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicablestate securities law, except pursuant to sales registered or exempted under the Securities Act.

 

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Section 5. Miscellaneous.

 

a)                 No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or otherrights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).

 

b)                 Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonablysatisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any certificate relating to the Warrant Shares,and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated,the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu ofsuch Warrant or stock certificate.

 

c)                 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the nextsucceeding Business Day.

 

d)                Authorized Shares.

 

The Company covenantsthat, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficientnumber of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are chargedwith the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchaserights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Sharesmay be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Marketupon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exerciseof the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and paymentfor such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free fromall taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transferoccurring contemporaneously with such issue).

  

Except andto the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amendingits certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue orsale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of thisWarrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actionsas may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limitingthe generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payabletherefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriatein order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrantand (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatorybody having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

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Before takingany action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in theExercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessaryfrom any public regulatory body or bodies having jurisdiction thereof.

 

e)                 Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shallbe determined in accordance with the provisions of the underwriting agreement, dated ___, 2016, by and between the Company, JosephGunnar & Co., LLC and Roth Capital Partners, LLC as representatives of the underwriters set forth therein (the “UnderwritingAgreement”).

 

f)                  Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)                 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holdershall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limitingany other provision of this Warrant or the Underwriting Agreement, if the Company willfully and knowingly fails to comply withany provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amountsas shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, includingthose of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcingany of its rights, powers or remedies hereunder.

 

h)                 Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Companyshall be delivered in accordance with the notice provisions of the Underwriting Agreement.

  

i)                   Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrantto purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liabilityof the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is assertedby the Company or by creditors of the Company.

 

j)                   Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not beadequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees towaive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

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k)                 Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced herebyshall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permittedassigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrantand shall be enforceable by the Holder or holder of Warrant Shares.

 

l)                   Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Companyand the Holder.

 

m)               Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provisionshall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions orthe remaining provisions of this Warrant.

 

n)                 Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, bedeemed a part of this Warrant.

 

 

********************

* *

*(Signature Page Follows)*

 

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IN WITNESS WHEREOF, theCompany has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

** **

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** **

**NOTICE OF EXERCISE**

 

TO:	POLARPOWER, INC.

_________________________

 

(1)   The undersignedhereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercisedin full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)   Paymentshall take the form of (check applicable box):

 

 ̈in lawful money of the United States; or

 

 ̈if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance withthe formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasablepursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)   Pleaseregister and issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered tothe following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)   AccreditedInvestor. If the Warrant is being exercised via cash exercise, the undersigned is an “accredited investor” as definedin Regulation D promulgated under the Securities Act of 1933, as amended

 

[SIGNATUREOF HOLDER]

 

Name of Investing Entity: _______________________________________________________________

*Signature of Authorized Signatory of Investing Entity*:_________________________________________

Name of Authorized Signatory: ___________________________________________________________

Title of Authorized Signatory: ____________________________________________________________

Date: ________________________________________________________________________________

 

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**ASSIGNMENT FORM**

 

(To assign the foregoing warrant, execute