Exhibit 4.2


 


THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 1(a) OF THIS WARRANT.


 


XG TECHNOLOGY, INC.


 


Pre-Funded Series B Warrant
To Purchase Common Stock


 


Warrant No.: B-[   ]


 


Date of Issuance: August 19, 2015 (“Issuance
Date”)


 


xG Technology, Inc.,
a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [BUYER], the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), _________________1  (subject to adjustment
as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”,
and such number of Warrant Shares, the “Warrant Number”).  Except as otherwise defined herein, capitalized
terms in this Warrant shall have the meanings set forth in Section 18.  This Warrant is one of the four series of
Warrants to Purchase Common Stock and/or Convertible Securities issued or issuable by the Company (collectively, the “Registered
Warrants”) pursuant to (i) that certain Underwriting Agreement, dated as of August 13, 2015 (the “Subscription
Date”), by and among the Company and the underwriter(s) referred to therein, as amended from time to time (the “Underwriting
Agreement”) and (ii) the Company’s Registration Statement on Form S-1 (File number 333-203853) including the amendment
to such registration statement filed by the Company pursuant to Rule 462(b) with the Commission on August 14, 2015 (the “Registration
Statement”).


 


The Aggregate Exercise
Price (as defined below) of this Warrant, except for a nominal exercise price of $0.01 per Warrant Share, was pre-funded to the
Company on or prior to the initial Issuance Date and, consequently, no additional consideration (other than the nominal exercise
price of $0.01 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant.


 





 



1
Insert warrant coverage


 






     


     

    

 


1.          EXERCISE
OF WARRANT.


 


(a)          Mechanics
of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “Exercise
Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant.  Within
one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this
Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available
funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise
(as defined in Section 1(d)).  The Holder shall not be required to deliver an ink-original of this Warrant or an
Exercise Notice in order to effect an exercise hereunder, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Exercise Notice form be required.  Execution and delivery of an Exercise Notice with respect to less than all
of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares.  Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery
of the Warrant Shares in accordance with the terms hereof.  On or before the second (2nd) Trading Day following
the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment
of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder
and the Company’s transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction
to the Transfer Agent to process such Exercise Notice in accordance with the terms herein. On or before the third (3rd)
Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant
to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the
applicable Exercise Date), the Company shall (i) provided that the Transfer Agent is participating in The Depository Trust Company
(“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number
of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system, or (ii) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight
courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or its designee,
for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such exercise.  Upon delivery
of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the
Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be).  If
this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender
of this Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and
in no event later than three (3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its
designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised.  No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather
the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.  The Company shall
pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses
of the Transfer Agent) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.  Notwithstanding
the foregoing, except in the case where an exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s
failure to deliver Warrant Shares to the Holder on or prior to the later of (A) three (3) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the
settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date) and (B) one (1) Trading Day after the Company’s
receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “Share Delivery
Deadline”) shall not be deemed to be a breach of this Warrant.  From the Issuance Date through and including
the Expiration Date, the Company shall maintain a transfer agent that participates in the DTC’s Fast Automated Securities
Transfer Program.


 






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(b)          Exercise
Price.  For purposes of this Warrant, “Exercise Price” means $1.00, subject to adjustment as provided
herein.


 


(c)          Company’s
Failure to Timely Deliver Securities.  If the Company shall fail, for any reason or for no reason, on or prior to
the Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which the Holder
is entitled and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating in
the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as
the case may be) or (II) if the Registration Statement (or prospectus contained therein) covering the issuance of the Warrant Shares
that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not available for the issuance
of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the Warrant Shares
electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice
Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in
addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Share
Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common
Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, multiplied by (B)
any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on
the applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company,
may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Warrant that
has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise.  In
addition to the foregoing, if on or prior to the Share Delivery Deadline either (I) the Transfer Agent is not participating in
the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder (or its designee)
a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder
or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs,
and if on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable
upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then, in addition to
all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which
point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares)
shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing
such Warrant Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the
number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant
Shares multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the
date of the applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In
Payment Amount”).  Nothing shall limit the Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect
to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver
such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the terms hereof.


 






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(d)          Cashless
Exercise.  Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), the Holder
may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of Warrant Shares determined according to the following formula (a “Cashless Exercise”):


 


Net Number = (A x B) - (A x C)


     D


 


For purposes of the
foregoing formula:


 


A= the total number of shares with
respect to which this Warrant is then being exercised.


 






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B = the quotient of (x) the sum
of the VWAP of the Common Stock of each of the twenty (20) Trading Days ending at the close of business on the Principal Market
immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y) twenty (20).


 


C = the
Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.


 


D = as applicable:  (i)
the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice
if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading
Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading
Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if
such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant
to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.


 


For purposes
of Rule 144(d) promulgated under the 1933 Act, as in effect on the Subscription Date, the Company acknowledges and agrees that
the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Underwriting
Agreement.  In addition, if Warrant Shares are issued in Cashless Exercise, the Company acknowledges and agrees that
in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the registered characteristics of the Warrants
being exercised.  The Company agrees not to take any position contrary to this Section 1(d).


 


(e)          Disputes.  In
the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares
to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 13.


 






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(f)          Limitations
on Exercises.  The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not
have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise
shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together
with the other Attribution Parties collectively would beneficially own in excess of [4.99][9.99]% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall
include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but
shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock
or warrants, including other Registered Warrants) beneficially owned by the Holder or any other Attribution Party subject to a
limitation on conversion or exercise analogous to the limitation contained in this Section 1(f)(i).  For purposes of
this Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act.  For
purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant
without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written
notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”).  If the Company receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify
the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would
otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice
(the number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares.  For
any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally
and in writing or by electronic mail 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 and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported.  In the event that the issuance of shares of Common Stock to the Holder upon exercise of this
Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the
Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the
number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab
initio, and the Holder shall not have the power to vote or to transfer the Excess Shares.  As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price
paid by the Holder for the Excess Shares.  Upon delivery of a written notice to the Company, the Holder may from time
to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or
decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any
such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties
and not to any other holder of Registered Warrants that is not an Attribution Party of the Holder.  For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act.  No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the
extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly
give effect to such limitation.  The limitation contained in this paragraph may not be waived and shall apply to a successor
holder of this Warrant.


 






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(g)          Reservation
of Shares.  


 


(i)          Required
Reserve Amount.  So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance
under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as
shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Registered Warrants then
outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at
no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally
in connection with any exercise or redemption of Registered Warrants or such other event covered by Section 0 below.  The
Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro
rata among the holders of the Registered Warrants based on the number of shares of Common Stock issuable upon exercise of Registered
Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase in the number of reserved
shares, as the case may be (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise
transfer any of such holder’s Registered Warrants, each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Registered
Warrants shall be allocated to the remaining holders of Registered Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Registered Warrants then held by such holders (without regard to any limitations on exercise).  Notwithstanding
anything in this Warrant or any other Registered Warrants held by the Holder (any “Other Holder Warrants”) to
the contrary, the Holder may allocate its Authorized Share Allocation under this Warrant and its Authorized Share Allocation (as
defined in such Other Holder Warrants) under such Other Holder Warrants among this Warrant and/or such Other Holder Warrants in
any manner as elected by the Holder in writing to the Company.


 






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(ii)         Insufficient
Authorized Shares.  If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while any
of the Registered Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares
of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Registered Warrants then outstanding.  Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold
a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In
connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the stockholders that they approve such proposal.  In the event that the Company is prohibited from issuing
shares of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock
available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization
Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in
exchange for the cancellation of such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal
to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with
respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section
1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in connection therewith.


 


2.          ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set forth in this Section 2.


 


(a)          Stock
Dividends and Splits.  Without limiting any provision of Section 3 or Section 4, if the Company, at any
time on or after the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common
Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common
Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of
its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such subdivision or combination.  If any event
requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect such event.


 



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(b)          Number
of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a), the number
of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained
herein).


 


(c)          Stock
Combination Event Adjustment.  If at any time and from time to time on or after the Issuance Date there occurs
any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each,
a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) and
the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause 0 above),
then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event, the Exercise Price then in effect
on such sixteenth (16th) Trading Day (after giving effect to the adjustment in clause (b) above) shall be reduced (but in no event
increased) to the Event Market Price.  For the avoidance of doubt, if the adjustment in the immediately preceding sentence
would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.


 


(d)          Other
Events.  In the event that the Company (or any Subsidiary (as defined in the Underwriting Agreement)) shall take
any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder
from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 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), then the Company’s board of directors shall in good faith determine and implement an
appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the
Holder, provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number
of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such
adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors
and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate
adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by
the Company.


 


(e)          Calculations.  All
calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share,
as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common
Stock.


 






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(f)          Voluntary
Adjustment By Company.  The Company may at any time during the term of this Warrant, with the prior written consent
of the holders of a majority of the Registered Warrants then outstanding, reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the board of directors of the Company.


 


3.          RIGHTS
UPON DISTRIBUTION OF ASSETS.  In addition to any adjustments pursuant to Section 2 above, if the Company shall
declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the
Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation,
the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution
(provided, however, that to the extent that the Holder’s right to participate in any such Distribution would
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be
held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted
such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no such limitation).


 


4.          PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.


 


(a)          Purchase
Rights.  In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall
be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such
right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly
in abeyance) to the same extent as if there had been no such limitation).


 






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(b)          Fundamental
Transactions.  The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor
Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b)
pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental
Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable
for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (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 adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) if the Fundamental Transaction
occurs within six (6) months of August 19, 2015, the Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market.  Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental
Transaction, the provisions of this Warrant 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
with the same effect as if such Successor Entity had been named as the Company herein.  Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant
at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities,
cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to
be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares
of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would
have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted
in accordance with the provisions of this Warrant.  Notwithstanding the foregoing, and without limiting Section 1(f)
hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b)
to permit the Fundamental Transaction without the assumption of this Warrant.  In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive
upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the
Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant).  Provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the Holder.


 






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(c)          Black
Scholes Value.  Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the
Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction, (y)
the consummation of any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through
the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company
pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase
this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value.


 


(d)          Application.  The
provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events
and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage,
applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).


 


5.          NONCIRCUMVENTION.  The
Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or other
organizational documents or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issuance or sale of securities, or any other voluntary action,  avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take
all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing,
the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant.  Notwithstanding
anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted
to exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 1(f) hereof), the Company
shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals
as necessary to permit such exercise into shares of Common Stock.


 



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6.          WARRANT
HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this 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 be construed to confer upon the Holder, solely in its capacity
as the Holder of this 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 this Warrant.  In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.  Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.


 


7.          REISSUANCE
OF WARRANTS.


 


(a)          Transfer
of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.


 


(b)          Lost,
Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.


 


(c)          Exchangeable
for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants
for fractional shares of Common Stock shall be given.


 



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(d)          Issuance
of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as
the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.


 


8.          NOTICES.  Whenever
notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given at its last address
as it shall appear upon the warrant register of the Company.  The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Warrant (other than the issuance of shares of Common Stock upon exercise in accordance
with the terms hereof), including in reasonable detail a description of such action and the reason therefor.  Without
limiting the generality of the foregoing, the Company will give written notice to the Holder (i) promptly upon each adjustment
of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of
such adjustment(s), (ii) at least ten Trading Days prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales
of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares
of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being
provided to the Holder, and (iii) the existence of a proposed Fundamental Transaction at least ten (10) Trading Days prior to
the consummation of such Fundamental Transaction.  To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously
file such notice with the SEC pursuant to a Current Report on Form 8-K.  It is expressly understood and agreed that
the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged
by the Company.


 


9.          AMENDMENT
AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f))
may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Holder.  No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.


 


10.         SEVERABILITY.  If
any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The
parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 






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11.         GOVERNING
LAW.  This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  The
Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at its principal executive office and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Nothing contained herein shall be deemed or operate to preclude the Holder from bringing
suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations
to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court
ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.


 


12.         CONSTRUCTION;
HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not
form part of, or affect the interpretation of, this Warrant.


 


13.         DISPUTE
RESOLUTION.  


 


(a)          Submission
to Dispute Resolution.


 


(i)          In
the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, the Market Price, Black Scholes Consideration
Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may
be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder
(as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days
after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned
of the circumstances giving rise to such dispute.  If the Holder and the Company are unable to promptly resolve such
dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, such Market Price, such Black Scholes Consideration
Value, Black Scholes Value or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case
may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder
(as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option,
select an independent, reputable investment bank  to resolve such dispute.


 






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(ii)         The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required
Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver
all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither
the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).


 


(iii)        The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.


 


(b)          Miscellaneous.  The
Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate between the Company and
the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New York
Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) the terms of this Warrant shall serve
as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are
required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the terms of this Warrant, (iii) the Holder (and only
the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal
court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and
(iv) nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).


 






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14.         REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Warrant.  The Company covenants to the Holder
that there shall be no characterization concerning this instrument other than as expressly provided herein.  Amounts
set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts
to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof).  The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required.  The Company shall provide all information and documentation to the Holder
that is  requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions
of this Warrant (including, without limitation, compliance with Section 2 hereof).  The issuance of shares and
certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or
such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.


 


15.         PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Warrant is placed in
the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise
takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy,
reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim
under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in
connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’
fees and disbursements. 


 


16.         TRANSFER.  This
Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.


 


17.         WARRANT
AGENT.  The Company shall serve as warrant agent under this Warrant.  Upon 30 days’ notice to the
Holder, the Company may appoint a new warrant agent provided any corporation into which the Company or any new warrant agent may
be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder’s last address as shown on the books and records of the Company.


 






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18.         CERTAIN
DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:


 


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


 


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


 


(c)          “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


 


(d)          “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act.  For clarity,
the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.  


 


(e)          “Bid
Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply,
the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) as of such time of determination.  If the Bid Price cannot be calculated for a
security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time
of determination shall be the fair market value as mutually determined by the Company and the Holder.  If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13.  All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.


 






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(f)          “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model for a “call”
or “put” option, as elected by the Holder, as obtained from the “OV” function on Bloomberg utilizing (i)
an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period
beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to
Section 4(c) and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus
the value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal
to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of
the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the date
of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c)
if such request is prior to the date of the consummation of the applicable Fundamental Transaction, (iv) a zero cost of borrow
and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function
on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to
occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental
Transaction and (C) the date on which the Holder first became aware of the applicable Fundamental Transaction.


 


(g)          “Bloomberg”
means Bloomberg, L.P.


 


(h)          “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 to remain closed.


 


(i)          “Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC).  If the Closing Sale Price cannot be calculated for a security on a particular date on any
of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 13.  All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.


 






    	19 



     

    

 


(j)          “Common
Stock” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common
stock.


 


(k)          “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.


 


(l)          “Eligible
Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, or
the Principal Market.


 


(m)          “Event
Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum
of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading Day period
ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event
Date, divided by (y) five (5).


 


(n)          “Expiration
Date” means the date that is the fifth anniversary of the Issuance Date or, if such date falls on a day other than a
Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that
is not a Holiday.


 






    	20 



     

    

 


(o)          
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or
(z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of
the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.


 


(p)          “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.


 


(q)          “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.


 


(r)          “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.


 


(s)          “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.


 


(t)          “Principal
Market” means the Nasdaq Capital Market.


 






    	21 



     

    

 


(u)          
“SEC” means the United States Securities and Exchange Commission or the successor thereto.


 


(v)         “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.


 


(w)          “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.


 


(x)          “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day
in writing by the Holder or (y) with respect to all determinations other than price or trading volume determinations relating to
the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.


 


(y)          “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing
does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time,
as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours,
the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).  If the VWAP cannot be
calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.  All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or
other similar transaction during such period.


 


[signature page follows]


 




    	22 



     

    

 


IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.


 


	 	XG Technology, Inc. 
	 	 	 
	 	By: 	                
	 	 	Name:
	 	 	Title:


 




     


     

    

 


EXHIBIT A


 


EXERCISE
NOTICE


 


TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS

Pre-Funded SERIES B WARRANT TO PURCHASE COMMON STOCK


 


XG
TECHNOLOGY, INC.


 


The undersigned holder
hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of
xG Technology, Inc., a Delaware corporation (the “Company”), evidenced by Pre-Funded Series B Warrant to Purchase
Common Stock No. _______ (the “Warrant”).  Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.


 


1.          Form
of Exercise Price.  The Holder intends that payment of the Aggregate Exercise Price shall be made as:


 


		____________	a “Cash Exercise” with respect to _________________ Warrant Shares; and/or



 


		____________	a “Cashless Exercise” with respect to _______________ Warrant Shares.



 


In the event that the
Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date
set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.


 


2.          Payment
of Exercise Price.  In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant
Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the
Company in accordance with the terms of the Warrant.


 


3.          Delivery
of Warrant Shares.  The Company shall deliver to Holder, or its designee or agent as specified below, __________
Warrant Shares in accordance with the terms of the Warrant.  Delivery shall be made to Holder, or for its benefit, as
follows:


 


 ̈          Check
here if requesting delivery as a certificate to the following name and to the following address:


 


	Issue to:	 
	 	 
	 	 


 






     


     

    

 


 ̈Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:


 


	DTC Participant:	 
	 	 
	DTC Number:	 
	 	 
	Account Number:	 


 


	Date: _____________ __, ____	 
	 	 
	 	 
	Name of Registered Holder	 
	 	 
	By:  	 	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Tax ID:	 	 
	 	 	 	 
	 	Facsimile:	 	 
	 	 	 	 
	 	E-mail Address:	 	 


 




     


     

    

 


EXHIBIT B


 


ACKNOWLEDGMENT


 


The Company hereby
acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _________, 201_, from the Company and acknowledged and agreed to by _______________.


 


	 	XG Technology, Inc.
	 	 	 
	 	By: 	                          
	 	 	Name:
	 	 	Title: