f8kex10ii_pioneer.htm


     

    Exhibit
10.2

     

    WARRANT

     

    
      	
              PIONEER
      POWER SOLUTIONS, INC.

            
	 
	
              No.
      1

            	 
      	
              1,000,000
      Shares

            
	
              Date
      of Issuance: December 2, 2009

            	 
      	 
      


    

    


    WARRANT TO PURCHASE COMMON
STOCK

     

    VOID
AFTER 5:30 P.M., EASTERN

     

    TIME,
ON THE EXPIRATION DATE

     

    THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH
THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

     

    FOR VALUE
RECEIVED, PIONEER POWER SOLUTIONS, INC., a Delaware corporation (the “Company”), hereby
agrees to sell upon the terms and on the conditions hereinafter set forth, but
no later than 5:30 p.m., Eastern Time, on December 2, 2014 (the “Expiration Date”), to
[___________________], or its registered assigns (the “Holder”), under the
terms as hereinafter set forth, up to 1,000,000 fully paid and non-assessable
shares of Common Stock (as defined in Section 12) of the Company (the “Warrant Stock”), at a
purchase price of $2.00 per share (the “Warrant Price”),
pursuant to this warrant (this “Warrant”). The number
of shares of Warrant Stock to be so issued and the Warrant Price are subject to
adjustment in certain events as hereinafter set forth.

     

    1. Exercise of
Warrant.

     

    (a) The
Holder hereof may exercise this Warrant, in whole or in part, by the surrender
of this Warrant (with the Notice of Exercise attached hereto duly executed) at
the principal office of the Company, and by the payment to the Company of an
amount of consideration therefor equal to the Warrant Price in effect on the
date of such exercise multiplied by the number of shares of Warrant Stock with
respect to which this Warrant is then being exercised, payable at the Holder’s
election (i) by certified or official bank check or by wire transfer to an
account designated by the Company, (ii) by “cashless exercise” in accordance
with the provisions of subsection (b) of this Section 1, but only when a
registration statement under the Securities Act (as defined in Section 12)
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

     

    (b) Notwithstanding
any provisions herein to the contrary and commencing one (1) year following the
Original Issue Date (as defined in Section 12), if (i) the Per Share Market
Value (as defined in Section 12) of one share of Common Stock is greater than
the Warrant Price (at the date of calculation as set forth below) and (ii) the
Holder at the time of exercise is not able to sell the Warrant Stock pursuant to
an effective registration statement filed under the Securities Act providing for
the resale of the Warrant Stock, in lieu of exercising this Warrant by payment
of cash, the Holder may exercise this Warrant by a cashless exercise and shall
receive the number of shares of Common Stock equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
               

              X=

            	
              

            
	 
      	 
      	 
      
	
              Where

            	
              X=

            	
              the
      number of shares of Common Stock to be issued to the
    Holder.

            
	 
      	 
      	 
      
	 
      	
              Y=

            	
              the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised.

            
	 
      	 
      	 
      
	 
      	
              A=

            	
              the
      Warrant Price.

            
	 
      	 
      	 
      
	 
      	
              B=

            	
              the
      Per Share Market Value (as defined in Section 12) of one share of Common
      Stock on the Trading Day (as defined in Section 12) immediately preceding
      the date of such election.

            


    

    


    (c) This
Warrant may be exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of Warrant
Stock.  If exercised in part, the Company shall deliver to the Holder
a new Warrant, identical in form, in the name of the Holder, evidencing the
right to purchase the number of shares of Warrant Stock as to which this Warrant
has not been exercised, which new Warrant shall be signed by the Chairman, Chief
Executive Officer, President or any Vice President of the
Company.  The term Warrant as used herein shall include any subsequent
Warrant issued as provided herein.

     

    (d) No
fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Company shall round
the number of shares to be issued upon exercise up to the nearest whole number
of shares.

     

    (e) In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Stock so purchased, registered in the name of
the Holder, shall be delivered to the Holder within a reasonable time after such
rights shall have been so exercised. The person or entity in whose name any
certificate for the Warrant Stock is issued upon exercise of the rights
represented by this Warrant shall for all purposes be deemed to have become the
holder of record of such shares immediately prior to the close of business on
the date on which the Warrant was surrendered and payment of the Warrant Price
and any applicable taxes was made, irrespective of the date of delivery of 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 such shares at the opening of business on
the next succeeding date on which the stock transfer books are open. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any issuance and delivery of shares of Warrant Stock to any Person (as defined
in Section 12) other than the Holder or with respect to any income tax due by
the Holder with respect to any shares of Warrant Stock.

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    2. Disposition of Warrant Stock
and Warrant.

     

    (a) The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act on the ground that the issuance of this Warrant is exempt from
registration under Section 4(2) of the Securities Act as not involving any
public offering or (ii) under any applicable state securities law because the
issuance of this Warrant does not involve any public offering; and that the
Company’s reliance on the Section 4(2) exemption of the Securities Act and under
applicable state securities laws is predicated in part on the representations
hereby made to the Company by the Holder that it is acquiring this Warrant and
will acquire the Warrant Stock for investment for its own account, with no
present intention of dividing its participation with others or reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within its
control.

     

    The
Holder hereby agrees that it will not sell or transfer all or any part of this
Warrant and/or Warrant Stock, except pursuant to an effective registration
statement under the Securities Act, unless and until it shall first have given
notice to the Company describing such sale or transfer and furnished to the
Company either (i) an opinion of counsel reasonably satisfactory to the Company,
to the effect that the proposed sale or transfer may be made without
registration under the Securities Act and without registration or qualification
under any state law, or (ii) an interpretative letter from the Securities and
Exchange Commission to the effect that no enforcement action will be recommended
if the proposed sale or transfer is made without registration under the
Securities Act.

     

    (b) If, at
the time of issuance of any Warrant Stock, no registration statement is in
effect with respect to such shares under applicable provisions of the Securities
Act, the Company may at its election require that the Holder provide the Company
with written reconfirmation of the Holder’s investment intent and that any stock
certificate delivered to the Holder of a surrendered Warrant (in connection with
an exercise) shall bear a legend reading substantially as follows:

     

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

     

    In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    3. Reservation of
Shares.  The Company hereby agrees that at all times there
shall be reserved for issuance upon the exercise of this Warrant such number of
shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant. The Company further agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will be duly
authorized and will, upon issuance and against payment of the Warrant Price
therefor, be validly issued, fully paid and non assessable, free from all taxes,
liens, charges and preemptive rights with respect to the issuance thereof, other
than taxes, if any, in respect of any transfer occurring contemporaneously with
such issuance and other than transfer restrictions imposed by federal and state
securities laws.

     

    4. Exchange, Transfer or
Assignment of Warrant.  Subject to Section 2 hereof, this
Warrant may be transferred by the Holder, in whole or in part, without the
consent of the Company. If transferred pursuant to this paragraph, this Warrant
may be transferred on the books of the Company by the Holder hereof in person or
by duly authorized attorney, upon surrender of this Warrant at the principal
office of the Company, properly endorsed (by the Holder executing an assignment
in the form attached hereto) and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. This Warrant is
exchangeable at the principal office of the Company for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange. All Warrants issued on
transfers or exchanges shall be dated the Original Issue Date and shall be
identical with this Warrant except as to the number of shares of Warrant Stock
issuable pursuant thereto.

     

    5. Capital
Adjustments.  This Warrant is subject to the following further
provisions:

     

    (a) If any
recapitalization of the Company or reclassification of its Common Stock or any
merger or consolidation of the Company into or with a Person, or the sale or
transfer of all or substantially all of the Company’s assets or of any successor
corporation’s assets to any Person (any such Person being included within the
meaning of the term “successor corporation”) shall be effected, at any time
while this Warrant remains outstanding and unexpired, then, as a condition of
such recapitalization, reclassification, merger, consolidation, sale or
transfer, lawful and adequate provision shall be made whereby the Holder of this
Warrant thereafter shall have the right to receive upon the exercise hereof as
provided in Section 1 and in lieu of the shares of Common Stock immediately
theretofore issuable upon the exercise of this Warrant, such shares of capital
stock, securities or other property as may be issued or payable with respect to
or in exchange for a number of outstanding shares of Common Stock equal to the
number of shares of Common Stock immediately theretofore issuable upon the
exercise of this Warrant had such recapitalization, reclassification, merger,
consolidation, sale or transfer not taken place, and in each such case, the
terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.

     

    (b) If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Common Stock, the number of shares of Warrant Stock
purchasable upon exercise of this Warrant and the Warrant Price shall be
proportionately adjusted.

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

     

    (c) Whenever
the number of shares of Warrant Stock purchasable upon exercise of this Warrant
is adjusted, as herein provided, the Warrant Price payable upon the exercise of
this Warrant shall be adjusted to that price determined by multiplying the
Warrant Price immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately prior to such adjustment, and (ii) the
denominator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately thereafter.

     

    (d) The
number of shares of Common Stock outstanding at any given time for purposes of
the adjustments set forth in this Section 5 shall exclude any shares then
directly or indirectly held in the treasury of the Company.

     

    (e) The
Company shall not be required to make any adjustment pursuant to this Section 5
if the amount of such adjustment would be less than one percent (1%) of the
Warrant Price in effect immediately before the event that would otherwise have
given rise to such adjustment.  In such case, however, any adjustment
that would otherwise have been required to be made shall be made at the time of
and together with the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to not less than one
percent (1%) of the Warrant Price in effect immediately before the event giving
rise to such next subsequent adjustment.

     

    (f) Following
each computation or readjustment as provided in this Section 5, the new adjusted
Warrant Price and number of shares of Warrant Stock purchasable upon exercise of
this Warrant shall remain in effect until a further computation or readjustment
thereof is required.

     

    6. Notice to
Holders.

     

    (a) In
case:

     

    (i) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for the
purpose of entitling them to receive any dividend (other than a cash dividend
payable out of earned surplus of the Company) or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right;

     

    (ii) of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation with or merger of the Company into another
Person, or any conveyance of all or substantially all of the assets of the
Company to another Person; or

     

    (iii) of any
voluntary dissolution, liquidation or winding-up of the Company;

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    then, and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the time
receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up.  Such notice shall be mailed at least twenty (20) days
prior to the record date therein specified, or if no record date shall have been
specified therein, at least twenty (20) days prior to the date of such action;
provided, however, failure to
provide any such notice shall not affect the validity of such
transaction.

     

    (b) Whenever
any adjustment shall be made pursuant to Section 5 hereof, the Company shall
promptly make a certificate signed by its Chairman, Chief Executive Officer,
President, Vice President, Chief Financial Officer or Treasurer, setting forth
in reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Warrant
Price and number of shares of Warrant Stock purchasable upon exercise of this
Warrant after giving effect to such adjustment, and shall promptly cause copies
of such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant.

     

    7. Ownership Cap and Exercise
Restriction. Notwithstanding anything to the contrary set forth in this
Warrant, the Company shall not effect any exercise of this Warrant, and the
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 1 hereof or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates (as defined in
Section 12), and any other person or entity acting as a group together with the
Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below).  For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of
Common Stock issuable upon exercise of this 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 (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates.  Except as set forth in
the preceding sentence, for purposes of this Section 7, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act (as
defined in Section 12) and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 7 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates)
and of which portion of this Warrant is exercisable shall be in the sole
discretion of the 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

     

     

    Holder,
and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. 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 7, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of the Holder, the
Company shall confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.  In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Beneficial Ownership
Limitation provisions of this Section 7 may be waived by the Holder, at the
election of the Holder, upon not less than 61 days’ prior notice to the Company
to change the Beneficial Ownership Limitation to 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon exercise of this Warrant, and the provisions of
this Section 7 shall continue to apply. Upon such a change by the Holder of the
Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be further waived by the
Holder. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 7 to
correct this paragraph (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 of this Warrant.

     

    8. Registration Rights.
If, at any time while this Warrant remains outstanding, or the Holder holds any
shares of Warrant Stock, the Company shall determine to prepare and file with
the Securities and Exchange Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the
Company’s stock option or other employee benefit plans, then the Company shall
deliver to the Holder a written notice of such determination and, if within
fifteen days after the date of the delivery of such notice, the Holder shall so
request in writing, the Company shall include in such registration statement all
or any part of the Warrant Stock the Holder requests to be
registered.

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    9. Loss, Theft, Destruction or
Mutilation.  Upon receipt by the Company of evidence
satisfactory to it, in the exercise of its reasonable discretion, of the
ownership and the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company and, in the case of mutilation, upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof, without expense to
the Holder, a new Warrant of like tenor dated the date hereof.

     

    10. Warrant Holder Not a
Stockholder.  The Holder of this Warrant, as such, shall not be
entitled by reason of this Warrant to any rights whatsoever as a stockholder of
the Company.

     

    11. Notices.  Any
notice required or contemplated by this Warrant shall be deemed to have been
duly given if transmitted by registered or certified mail, return receipt
requested, postage prepaid, or nationally recognized overnight delivery service,
to the Company at c/o Provident Industries, Inc., c/o Clinton Group, 9 West
57th
Street, New York, New York 10019, Attention: Chief Executive Officer, or to the
Holder at the name and address set forth in the Warrant Register maintained by
the Company.

     

    12. Definitions. For the
purposes of this Warrant, the following terms have the following
meanings:

     

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

     

    “Common Stock” means
the common stock of the Company, par value $.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

     

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

     

    “Original Issue Date”
means December __, 2009.

     

    “Per Share Market
Value” means on any particular date (a) the closing sales price per share
of the Common Stock on such date on any registered national stock exchange on
which the Common Stock is then listed, or if there is no such closing sales
price on such date, then the closing sales price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common Stock is
not then listed on a registered national stock exchange, the closing sales price
for a share of Common Stock in the over-the-counter market, as reported by the
OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then reported
by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the “Pink Sheet” quotes for the five days preceding such
date of determination, or (d) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined in good faith by
the board of directors of the Company; provided, however, that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    “Person” shall mean
any natural person, corporation, division of a corporation, partnership, limited
liability company, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof

     

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

     

    “Trading Day” means
(a) a day on which the Common Stock is eligible to be traded on a registered
national stock exchange, or (b) if the Common Stock is not eligible to be traded
on any registered national stock exchange, a day on which the Common Stock is
authorized for quotation on the OTC Bulletin Board, or (c) if the Common Stock
is not eligible to be traded on a registered national stock exchange or
authorized for quotation on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) or
(c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

     

    13. Choice of Law. THIS
WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

     

    14. Jurisdiction and
Venue.  The Company and the Holder, by its acceptance hereof,
hereby agree that any dispute which may arise between them arising out of or in
connection with this Warrant shall be adjudicated before a court located in New
York, New York, and they hereby submit to the exclusive jurisdiction of the
federal and state courts of the State of New York located in New York City with
respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Warrant or any acts or omissions relating to the sale of the securities
hereunder, and consent to the service of process in any such action or legal
proceeding by means of registered or certified mail, return receipt requested,
postage prepaid, in care of the address set forth herein or such other address
as either party shall furnish in writing to the other.

     

    


     

     

    [Signature
Page Follows]

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     

    IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officer, as of
this 2nd day of December, 2009.

     

     

    PIONEER
POWER SOLUTIONS, INC.

     

     

    By:_______________________________

    Name:  Nathan
J. Mazurek

    Title:  Chief
Executive Officer

     
 

     

     

     

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

     

    NOTICE OF
EXERCISE

     

    WARRANT

     

    PIONEER
POWER SOLUTIONS., INC.

     

    The
undersigned ____________________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _______________ shares of Common Stock of
Pioneer Power Solutions, Inc. covered by the within Warrant.

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

    


    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: ______________________

     

    The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

     

    The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

     

    Cash
Exercise                                       o

     

    Cashless
Exercise                                o

     

    If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of
$______________ by certified or official bank check (or via wire transfer) to
the Company in accordance with the terms of the Warrant.

     

    If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is _______________.

     

    

     

    Where:

     

    The
number of shares of Common Stock to be issued to the Holder
_________________  (“X”).

     

    The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised _______________________ (“Y”).

     

    The
Warrant Price ___________________ (“A”).

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    The Per
Share Market Value of one share of Common Stock on the Trading Day immediately
preceding the date of such election ___________________ (“B”).

     

    ASSIGNMENT

     

    FOR VALUE
RECEIVED, ____________________hereby sells, assigns and transfers unto
______________________ the within Warrant and all rights evidenced thereby and
does irrevocably constitute and appoint __________________________, attorney, to
transfer the said Warrant on the books of the within named
corporation.

     

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

     
 

    PARTIAL
ASSIGNMENT

     

         FOR
VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
___________________ the right to purchase _______________________ shares of
Warrant Stock evidenced by the within Warrant together with all rights therein,
and does irrevocably constitute and appoint _____________________, attorney, to
transfer that part of the said Warrant on the books of the within named
corporation.

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

    


    FOR USE
BY THE COMPANY ONLY:

     

    This
Warrant No. _______canceled (or transferred or exchanged) this _____ day of
________________, _____________ shares of Common Stock issued therefor in the
name of _______________, Warrant No. ________ issued for ______________ shares
of Common Stock in the name of ________________________.