Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 2, 2014

TITAN ENERGY WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

Nevada	26-0063012
(State of incorporation)	(I.R.S. Employer Identification No.)

6321 Bury Dr. Suite 8

Eden Prairie, MN 55346

(Address of principal executive offices)

(619) 988-5869

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry Into a Material Definitive Agreement.

Series A-1 Purchase Agreement

On December 2, 2014, Titan Energy Worldwide, Inc., a Nevada corporation (the “Company”) entered into that certain Series A-1 Convertible Preferred Stock Purchase Agreement (the “Series A-1 Purchase Agreement”) with PTES Acquisition Corp., a Delaware corporation (“PTES”) and wholly-owned subsidiary of Pioneer Power Solutions, Inc. (“Pioneer”), pursuant to which the Company issued and sold 100 shares of its newly designated Series A-1 Convertible Preferred Stock (the “Series A-1 Shares”), in exchange for aggregate consideration of $1,000,000 (the “Series A-1 Stock Sale”). The Series A-1 Shares are convertible into 1,250,000,000 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), subject to certain adjustments, and represent approximately 72.4% of the Company’s voting stock. As a condition to the Series A-1 Stock Sale, Jeffrey W. Flannery, the current sole member of the Company’s Board of Directors (the “Board”), agreed to resign from the Board, effective on or around December 13, 2014, and appointed Nathan J. Mazurek, the Chief Executive Officer of Pioneer, to serve as the new sole director of the Company, on or around December 13, 2014.

Concurrently with the Series A-1 Stock Sale, PTES also purchased 176 outstanding shares of the Company’s Series D Convertible Preferred Stock (the “Initial Series D Shares”) from two investors and entered into binding purchase agreements with certain other individual holders of the Company’s outstanding shares of Series D Convertible Preferred Stock, pursuant to which PTES agreed to purchase a total of 107.5 additional outstanding shares of the Company’s Series D Convertible Preferred Stock (the “Additional Series D Shares” and together with the Initial Series D Shares, the “Acquired Series D Shares”). The Acquired Series D Shares beneficially owned by PTES pursuant to the foregoing transactions (the “Series D Acquisition”) are convertible into a total of 387,709,734 shares of the Company’s Common Stock and collectively would represent approximately 22.4% of the Company’s voting stock.

As a result of the transactions contemplated by the Series A-1 Stock Sale and the Series D Acquisition (collectively, the “Acquisition”), PTES and Pioneer, as the sole stockholder of PTES, beneficially own a controlling interest in the Company. The Acquisition, the Series D Amendment (as defined in Item 5.03 of this report) and the Loan (as defined below) from PTES to the Company are collectively referred to herein as the “Transaction.”

Loan and Security Agreement

On December 2, 2014, the Company entered into that certain Loan and Security Agreement (the “Loan Agreement”) with PTES and certain subsidiaries of the Company as guarantors (collectively, the “Subsidiary Guarantors”), pursuant to which PTES made a term loan to the Company in the aggregate amount of $2,900,000 (the “Loan”) to be used to pay off the Company’s existing factoring line of indebtedness and certain trade payables and to provide funds for working capital and general corporate purposes in the ordinary course of business. Under the terms of the Loan Agreement, PTES, in its sole discretion, may also make additional term loans to the Company. The source of funds for the Loan was from a $5,000,000 term loan facility under Pioneer’s existing Credit Agreement (as defined below), as amended on December 2, 2014. The obligations of the Company and the Subsidiary Guarantors under the Loan Agreement are secured by a first priority security interest in all of the assets of the Company and the Subsidiary Guarantors, ranked senior to all existing and future classes of the Company’s debt and guaranteed by the Subsidiary Guarantors. Interest on the Loan accrues at a rate equal to 10% per annum, payable on a quarterly basis through the scheduled maturity date on December 2, 2019. The Loan Agreement provides for certain standard Events of Default (as defined in the Loan Agreement).

Joinder to Pioneer Credit Agreement and Security Agreement

In connection with the Acquisition and transactions contemplated by the Loan Agreement, on December 2, 2014, the Company and each of its subsidiaries entered to a Fifth Amendment to the Credit Agreement, dated June 28, 2013, among Pioneer, its wholly-owned subsidiaries and the Bank of Montreal, Chicago Branch., as lender (as amended from time to time, the “Credit Agreement”). Among other things, the Fifth Amendment to the Credit Agreement, added the Company and each of its subsidiaries as loan parties and provided Pioneer a new term loan facility in the amount of $5,000,000. Pursuant to the terms of the Credit Agreement, the principal amount of the term loan facility amortizes over five years and is payable in installments on the last day of each March, June, September, and December in each year, commencing with the calendar quarter ending March 31, 2015, and the remaining principal amount becomes due and payable at maturity. Borrowings under the term loan facility bear interest, at Pioneer’s option, at the lender’s prime rate plus 1.25% per annum on U.S. prime rate loans, or an adjusted LIBOR rate plus 2.50% per annum on Eurodollar loans. Upon the closing of the Transaction, the Company and the Company’s wholly-owned subsidiaries became guarantors of Pioneer’s obligations under the Credit Agreement and granted the lender a security interest in substantially all of their assets.

-2-

The foregoing summaries of the Series A-1 Purchase Agreement, the Loan Agreement and the Credit Agreement are not complete and are qualified in their entirety by reference to the full text of the agreements that are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction

Item 2.01

Completion of Acquisition or Disposition of Assets.

The information set forth in Item 1.01 of this report is incorporated herein by reference.

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this report is incorporated herein by reference.

Item 3.02

Unregistered Sales of Equity Securities.

The information regarding the issuance and sale of the Series A-1 Shares set forth in Item 1.01 of this report is incorporated herein by reference.

The Series A-1 Shares offered and issued to PTES in exchange for aggregate consideration of $1,000,000 pursuant to the Series A-1 Purchase Agreement were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or state securities laws, and were offered and/or sold in reliance on the exemption from registration under the Securities Act, provided by Section 4(2) and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. PTES is an accredited investor.

Item 3.03

Material Modification to the Rights of Security Holders.

The information set forth in Item 1.01 and Item 5.03 of this report is incorporated herein by reference.

Item 5.01

Changes in Control of Registrant.

The information set forth in Item 1.01 and Item 5.02 of this report is incorporated herein by reference.

-3-

Following the consummation of the Transaction, PTES has the ability to elect all of the members of the Board, and through such directors, controls the appointment of the Company’s officers. Pioneer is the sole shareholder of PTES and therefore deemed to beneficially own all securities owned by PTES. On December 2, 2014, immediately upon the closing of the Transaction, Mr. Flannery, the Company’s chairman, chief executive officer, chief operating officer and chief financial officer resigned from all offices and Nathan Mazurek, the chief executive officer of Pioneer, was appointed to serve as the new chief executive officer and president of the Company, and Andrew Minkow, the chief financial officer of Pioneer, was appointed to serve as the new chief financial officer, vice president, secretary and treasurer of the Company. In addition, in connection with the Series A-1 Purchase Agreement, Mr. Flannery, the Company’s sole director, agreed to resign from the Board, effective on or around December 13, 2014, and appointed Mr. Mazurek to serve as the new sole director of the Company, on or around December 13, 2014. The names and biographical information of the new director and executive officers are set forth in Item 5.02 of this Current Report on Form 8-K.

As a result of the closing of the Transaction, PTES acquired beneficial ownership of approximately 94.8% of the Company’s voting stock. The source of cash funds for PTES’s acquisition of a controlling interest in the Company was from Pioneer’s revolving and term loan facilities under the Credit Agreement, as amended on December 2, 2014 and summarized in Item 1.01 of this Current Report on Form 8-K.

Item 5.02

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

The information set forth in Item 1.01 and Item 5.01 of this report is incorporated herein by reference.

On December 2, 2014, immediately upon the closing of the Transaction, Mr. Flannery resigned as chairman, chief executive officer, chief operating offer, chief financial officer and all other offices held with the Company, effective immediately. In addition, pursuant to the terms of the Transaction, Mr. Flannery agreed to resign as the sole director of the Company, effective on or around December 13, 2014. On December 2, 2014, Mr. Flannery submitted, and the Company accepted, his resignation from the Board. Mr. Flannery is not resigning because of a disagreement with the Company or on any other matter relating to its operations, policies or practices.

On December 2, 2014, the Company appointed Mr. Mazurek to serve as the new president, chief executive officer and chairman of the Board, and Mr. Minkow to serve as the new chief financial officer, vice president, secretary and treasurer of the Company, effective as of the same date. In addition, in accordance with the terms of the Transactions, Mr. Mazurek was appointed to serve as the sole director of the Company, effective immediately upon the resignation of Mr. Flannery on or around December 13, 2014.

Upon the effectiveness of each of their respective appointments as an executive officer and/or the sole director of the Company, Mr. Mazurek and Mr. Minkow will not beneficially own any equity securities of the Company or any rights to acquire any such securities of the Company. The following sets forth certain biographical information concerning the experience and background of Messrs. Mazurek and Minkow.

Nathan J. Mazurek. Mr. Mazurek was appointed as the Company’s president and chief executive officer effective as of the closing of the Transaction. Mr. Mazurek has served as Pioneer’s chief executive officer, president and chairman of the board of directors since December 2, 2009. From December 2, 2009 through August 12, 2010, Mr. Mazurek also served as Pioneer’s chief financial officer, secretary and treasurer. Mr. Mazurek has over 25 years of experience in the electrical equipment and components industry. Mr. Mazurek has served as the chief executive officer, president, vice president, sales and marketing and chairman of the board of directors of Pioneer Transformers Ltd. since 1995. Mr. Mazurek has served as the president of American Circuit Breaker Corp., a former manufacturer and distributor of circuit breakers, since 1988 and as a director of Empire Resources, Inc., a distributor of semi-finished aluminum and steel products, since 1999. From 2002 through 2007, Mr. Mazurek served as president of Aerovox, Inc., a manufacturer of AC film capacitors. Mr. Mazurek received his BA from Yeshiva College in 1983 and his JD from Georgetown University Law Center in 1986. Mr. Mazurek is being appointed to serve on the Board because he will bring to the Board extensive experience with the electrical equipment and components industry.

-4-

Andrew Minkow. Mr. Minkow was appointed as the Company’s chief financial officer, vice president, secretary and treasurer effective as of the closing of the Transaction. Mr. Minkow has served as Pioneer’s chief financial officer, secretary and treasurer and a director since August 12, 2010. Mr. Minkow has over 20 years of industry experience in corporate finance, mergers and acquisitions, capital markets, financial reporting, forecasting and general operational and administrative management. Before joining Pioneer, Mr. Minkow was an independent financial consultant and provider of executive management, strategic planning and financial reporting services to several corporate clients, including to Pioneer. Before that, from 2001 to 2009, Mr. Minkow was a founding member of middle market investment banking firm Morgan Joseph & Co. Inc. between 1997 and 2001, he served in several investment banking and capital markets roles at the U.S. division of ING Barings Furman Selz. Mr. Minkow has a BA from Cornell University and an MBA from Columbia Business School.

Item 5.03

Amendments to Articles of Incorporation or Bylaws.

Amendment to the Bylaws

On December 2, 2014, the Board approved an amendment to the Amended and Restated Bylaws of the Company (the “Bylaws Amendment”), pursuant to which the Company added a provision to expressly opt out of the “Acquisition of Controlling Interest” statute under Sections 78.378 to 78.3793 of the Nevada Revised Statues, thereby rendering it inapplicable to the Company and any acquisition of a controlling interest by existing or future stockholders. The Bylaws Amendment is attached hereto as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Amendment to the Series D Certificate of Designation

On December 2, 2014, immediately prior to the effective time of the Transaction described in Item 1.01 of this report, the Company and holders of more than a majority of the Series D Convertible Preferred Stock, acting pursuant to Section 1955 of Chapter 78 of the Nevada Revised Statutes, approved resolutions adopted by the Board to amend the Certificate of Designation of the Rights and Preferences of the Series D Convertible Preferred Stock of the Company (the “Series D Amendment”) to (i) clarify that the Series D Convertible Preferred Stock is a subseries of the Preferred Series A Stock of the Company, (ii) reduce the liquidation preference amount to $6,200 per share from $10,000 and (iii) provide the Company with an option to redeem all of the outstanding shares of the Series D Convertible Preferred Stock. The Series D Amendment was filed with the Secretary of State of the State of Nevada and became effective on December 2, 2014, immediately prior to the Transaction described above. The Series D Amendment is attached hereto as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Series A-1 Certificate of Designation

In connection with the Acquisition described in Item 1.01 of this report, the Board approved a Certificate of Designation of the Rights and Preference of Series A-1 Convertible Preferred Stock (the “Series A-1 Certificate of Designation”) classifying and designating a new subseries of the Preferred Series A Stock as the Series A-1 Convertible Preferred Stock, consisting of 100 shares and having a stated value of $10,000 per share, subject to certain adjustments. The Series A-1 Certificate of Designation was filed with the Secretary of State of the State of Nevada and became effective on December 2, 2014. The Series A-1 Certificate of Designation is attached hereto as Exhibit 3.3 to this Current Report on Form 8-K and is incorporated herein by reference.

-5-

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description
3.1		First Amendment to the Amended and Restated Bylaws of Titan Energy Worldwide, Inc.
3.2		Certificate of Amendment to Certificate of Designation of the Rights and Preferences of the Series D Convertible Preferred Stock.
3.3		Certificate of Designation of the Rights and Preferences of the Series A-1 Convertible Preferred Stock.
10.1		Series A-1 Convertible Preferred Stock Purchase Agreement, dated as of December 2, 2014, by and between Titan Energy Worldwide, Inc. and PTES Acquisition Corp.
10.2		Loan and Security Agreement, dated as of December 2, 2014, by and between Titan Energy Worldwide, Inc. and PTES Acquisition Corp.
10.3		Fifth Amendment to the Credit Agreement, dated as of December 2, 2014, by and among the Bank of Montreal, Pioneer Power Solutions, Inc. and certain other subsidiary signatories thereto, as guarantors.

-6-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TITAN ENERGY WORLDWIDE, inc.

Date: December 4, 2014	By:	/s/ Andrew Minkow
	Name:	Andrew Minkow
	Title:	Chief Financial Officer

-7-

Exhibit 3.1

First Amendment to

Amended and Restated Bylaws of

Titan Energy Worldwide, inc.

This First Amendment (this “Amendment”) to the Amended and Restated Bylaws of Titan Energy Worldwide, Inc., a Nevada corporation (the “Corporation”), executed and effective this 2nd day of December, 2014, was duly adopted by the Board of Directors of the Corporation on December 2, 2014.

Article II, Section 2.13 is hereby added to the Amended and Restated Bylaws of the Corporation and shall read in its entirety as follows:

“Inapplicability of Nevada Revised Statutes Sections 78.378 to 78.3793, Inclusive. The provisions of Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive, shall not apply to the Corporation or to the acquisition of a controlling interest by existing or future stockholders.”

Except as modified and amended hereby, the Amended and Restated Bylaws of the Corporation remain in full force and effect with no further amendment or modification.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned hereby certifies, as of the date first set forth above, that this Amendment was duly approved by the Board of Directors of the Corporation on December 2, 2014, and that the Amended and Restated Bylaws of the Corporation, as amended by this Amendment, were expressly ratified, confirmed and adopted thereunder.

	Titan Energy Worldwide, Inc.

	/s/	Jeffrey W. Flannery
	Jeffrey W. Flannery, Chief Executive Officer

Exhibit 3.2

Exhibit 3.3

CERTIFICATE OF DESIGNATION
OF THE RIGHTS AND PREFERENCES
OF THE
SERIES A-1 CONVERTIBLE PREFERRED STOCK
OF
TITAN ENERGY WORLDWIDE, INC.

The undersigned, the Chief Executive Officer of Titan Energy Worldwide, Inc., a Nevada corporation (the “Company”), in accordance with the provisions of Chapter 78 of the Nevada Revised Statutes, does hereby certify that, pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Articles of Incorporation of the Company (as may be amended from time to time, the “Articles”), the following resolution creating a subseries of Preferred Series A Stock, designated as Series A-1 Convertible Preferred Stock, was duly adopted on December 2, 2014, as follows:

WHEREAS, Article 3 of the Articles authorizes a series of shares designated as Preferred Series A Stock and a series of shares designated as Preferred Series B Stock, and authorized the Board of Directors to designate subseries of the Preferred Series A Stock and the Preferred Series B Stock and fix the rights and preferences thereof; and

NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Company by the provisions of the Articles, there hereby is created a subseries of the Preferred Series A Stock out of the shares of the Company’s Preferred Series A Stock, to be named “Series A-1 Convertible Preferred Stock,” consisting of one hundred (100) shares, which subseries shall have the following designations, powers, preferences and relative and other special rights and the following qualifications, limitations and restrictions:

1. Designation and Rank. There shall be a subseries of the Preferred Series A Stock designated as the “Series A-1 Convertible Preferred Stock,” and the number of shares constituting such subseries shall be 100. Each share of Series A-1 Convertible Preferred Stock shall have a stated value of $10,000 (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction) (the “Stated Value”). The rights, preferences, powers, restrictions and limitations of the Series A-1 Convertible Preferred Stock shall be as set forth herein. With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), the shares of Series A-1 Convertible Preferred Stock shall rank superior to shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), and to all other classes and series of equity securities of the Company now or hereafter outstanding (collectively, with the Common Stock, the “Junior Stock”). The Series A-1 Convertible Preferred Stock shall be subordinate to and rank junior to all indebtedness of the Company now or hereafter outstanding.

2. Dividends. Holders of the Series A-1 Convertible Preferred Stock shall be entitled to cumulative dividends at the rate per share (as a percentage of the Stated Value per share) of six percent (6.0%) per annum. Dividends shall be calculated on the basis of a 365-day year, shall accrue daily commencing on the date of the initial issuance of the Series A-1 Convertible Preferred Stock (the “Issuance Date”), and shall be deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. Dividends shall be payable (a) annually, at the sole election of the holder of the Series A-1 Convertible Preferred Stock, in either cash or by accreting to and increasing the outstanding Stated Value of the shares with respect to which the dividends have accrued on January 1 of each calendar year, beginning on the first such date after the Issuance Date, and (b) on each Conversion Date (as hereinafter defined) (with respect only to the Series A-1 Convertible Preferred Stock being converted); except that if such dividend payment date is not a business day, then the dividend payment date will be the next succeeding business day.

3. Voting Rights.

(a) Class Voting Rights. So long as any shares of the Series A-1 Convertible Preferred Stock are outstanding, the Company may not amend, modify or waive (by merger, consolidation or otherwise) the provisions of the Articles, the Company’s bylaws or this Certificate of Designation in a way that would adversely affect the rights, preferences or privileges of the Series A-1 Convertible Preferred Stock without the prior vote or written consent of holders representing at least a majority of the then outstanding shares of Series A-1 Convertible Preferred Stock, voting together as a separate class.

(b) General Voting Rights. The holder of each share of Series A-1 Convertible Preferred Stock shall be entitled to the number of votes equal to the number of the shares of Common Stock into which such share of Series A-1 Convertible Preferred Stock could be converted for purposes of determining the shares entitled to vote at any regular, annual or special meeting of stockholders of the Company or any action by written consent of the stockholders, and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise expressly provided herein or as required by law, voting together with the Common Stock as a single class) and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of the Series A-1 Convertible Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).

(c) Other Special Voting Rights. Without the prior written consent of the holders of the then outstanding shares of Series A-1 Convertible Preferred Stock, and any other applicable stockholder approval required by law, the Company shall not take, and shall cause its Subsidiaries (as defined in Section 3(d) hereof) not to take or consummate, any of the actions or transactions described in this Section 3(c) (any such action or transaction without such prior written consent being null and void ab initio and of no force or effect) as follows:

(i) create, or authorize the creation of, any additional class or series of capital stock of the Company (or any security convertible into or exercisable for any class or series of capital stock of the Company) or issue or sell, or obligate itself to issue or sell, any securities of the Company or any Subsidiary (or any security convertible into or exercisable for any class or series of capital stock of the Company or any Subsidiary), including any class or series of capital stock of the Company that ranks superior to or in parity with the Series A-1 Convertible Preferred Stock in rights, preferences or privileges (including with respect to dividends, liquidation, redemption or voting);

(ii) increase or decrease the number of authorized shares of any series of Preferred Series Stock, $0.0001 par value per share (“Preferred Stock”), including the Preferred Series A Stock or Preferred Series B Stock or authorize the issuance of or issue any shares of Preferred Stock (including any shares of Preferred Series A Stock or Preferred Series B Stock);

(iii) amend, alter, modify or repeal the Articles, this Certificate of Designation or the by-laws of the Company, including the amendment of the Articles by the adoption or amendment of any Certificate of Designation or similar document, or amend the organizational documents of any Subsidiary;

(iv) issue, or cause any Subsidiary of the Company to issue, any indebtedness or debt security, other than trade accounts payable and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any indebtedness previously approved or required to be approved by the holders of the Series A-1 Convertible Preferred Stock, other than the incurrence of debt solely to fund the payment of dividends on the Series A-1 Convertible Preferred Stock that are accrued and unpaid;

(v) increase the authorized number of directors constituting the Board from one (1);

(vi) redeem, purchase or otherwise acquire or pay or declare any dividend or other distribution on (or pay into or set aside for a sinking fund for any such purpose) any capital stock of the Company;

(vii) declare bankruptcy, dissolve, liquidate or wind up the affairs of the Company or any Subsidiary of the Company;

(viii) effect, or enter into any agreement to effect, a Change of Control (as defined in Section 3(d) hereof).

(ix) modify or change the nature of the Company’s business such that a material portion of the Company’s business is devoted to any business other than the business of the sales and management of onsite power generation for industrial and commercial customers;

(x) acquire, or cause a Subsidiary of the Company to acquire, in any transaction or series of related transactions, the stock or any material assets of another Person (as defined in Section 3(d) hereof), or enter into any joint venture with any other Person, for aggregate consideration (including the direct or indirect assumption of liabilities); or

(xi) sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any assets of the Company or any Subsidiary;

(xii) use, or permit the use of, the proceeds from the sale of the Series A-1 Convertible Preferred Stock other than (A) for the satisfaction of the Company’s obligations under that certain Factoring and Security Agreement, dated June 15, 2011, between the Company and Harborcove Fund I, LP., as amended to date and (B) working capital and general corporate purposes in the ordinary course of business;

(xiii) enter into, or become subject to, any agreement or instrument or other obligation which by its terms restricts the Company’s ability to perform its obligations under this Certificate of Designation; or

(xiv) agree or commit to do any of the foregoing.

(d) Certain Definitions. For purposes of this Certificate of Designation:

(i) “Change of Control” means (a) any sale, lease or transfer or series of sales, leases or transfers of all or substantially all of the consolidated assets of the Company and its Subsidiaries; (b) any sale, transfer or issuance (or series of sales, transfers or issuances) of capital stock by the Company or the holders of Common Stock (or other voting stock of the Company) that results in the inability of the holders of Common Stock (or other voting stock of the Company) immediately prior to such sale, transfer or issuance to designate or elect a majority of the board of directors (or its equivalent) of the Company; or (c) any merger, consolidation, recapitalization or reorganization of the Company with or into another Person (whether or not the Company is the surviving corporation) that results in the inability of the holders of Common Stock (or other voting stock of the Company) immediately prior to such merger, consolidation, recapitalization or reorganization to designate or elect a majority of the board of directors (or its equivalent) of the resulting entity or its parent company.

(ii) “Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

(iii) “Subsidiary” means, with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.

4. Liquidation Preference.

(a) In the event of a Liquidation, the holders of shares of the Series A-1 Convertible Preferred Stock then outstanding shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders, an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series A-1 Convertible Preferred Stock (the “Liquidation Preference Amount”) before any payment shall be made or any assets distributed to the holders of any Junior Stock. If the assets of the Company are not sufficient to pay in full the Liquidation Preference Amount plus any accrued and unpaid dividends payable to the holders of outstanding shares of the Series A-1 Convertible Preferred Stock, then all of said assets will be distributed among the holders of the Series A-1 Convertible Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The liquidation payment with respect to each outstanding fractional share of the Series A-1 Convertible Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment with respect to each outstanding share of the Series A-1 Convertible Preferred Stock. All payments for which this Section 4(a) hereof provides shall be in cash, property (valued at its fair market value as determined in good faith by the Board of Directors of the Company) or a combination thereof; provided, however, that no cash shall be paid to holders of Junior Stock unless each holder of the outstanding shares of the Series A-1 Convertible Preferred Stock has been paid in cash the full Liquidation Preference Amount plus any accrued and unpaid dividends to which such holder is entitled as provided herein. After payment of the full Liquidation Preference Amount plus any accrued and unpaid dividends to which each holder is entitled, the holders of shares of Series A-1 Convertible Preferred Stock then outstanding shall be entitled to participate with the holders of shares of Junior Stock then outstanding, pro rata as a single class based on the number of outstanding shares of Junior Stock on an as-converted basis held by each holder as of immediately prior to the Liquidation, in the distribution of all the remaining assets and funds of the Company available for distribution to its stockholders.

(b) A consolidation or merger of the Company, other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation, and a sale, lease, transfer or other disposition of all or substantially all of the assets of, or an exclusive license to a third party of the key technology of, the Company shall be deemed to be a Liquidation within the meaning of this Section 4.

(c) Written notice of any Liquidation, stating a payment date and the place where the distributable amounts shall be payable, shall be given no less than thirty (30) days prior to the payment date stated therein, to the holders of record of the Series A-1 Convertible Preferred Stock.

5. Conversion. The holders of the Series A-1 Convertible Preferred Stock shall have the following conversion rights (the “Conversion Rights”):

(a) Right to Convert. At any time on or after the Issuance Date, any holder of shares of the Series A-1 Convertible Preferred Stock may, at such holder’s option, elect to convert all or any portion of the shares of Series A-1 Convertible Preferred Stock held by such holder, along with the aggregate accrued or accumulated and unpaid dividends thereon, into a number of fully paid and nonassessable shares of Common Stock equal to the quotient of (i) the aggregate Stated Value of the shares of Series A-1 Convertible Preferred Stock being converted, divided by (ii) the Conversion Price (as defined in Section 5(c) hereof) then in effect as of the date of the delivery by such holder of its notice of election to convert. In the event of a liquidation, dissolution or winding up of the Company, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A-1 Convertible Preferred Stock.

(b) Mechanics of Conversion. The conversion of the Series A-1 Convertible Preferred Stock shall be conducted in the following manner:

(i) Holder’s Delivery Requirements. To convert the Series A-1 Convertible Preferred Stock into full shares of Common Stock the holder thereof shall (A) transmit by facsimile or electronic mail (or otherwise deliver), an original or copy of a completed and executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”), to the Company (and the later of (1) the date specified in the Conversion Notice by the holder or (2) the date the Conversion Notice is actually received by the Company (unless received by the Company after 5:00 P.M New York time, in which event the next succeeding business day) shall be the “Conversion Date”), and (B) surrender to a common carrier for delivery to the Company, or personally deliver to the Company, as soon as practicable following such Conversion Date the original certificates representing the shares of Series A-1 Convertible Preferred Stock being converted (or, in the event such certificate(s) have been lost or destroyed, an affidavit of the holder of loss or destruction reasonably satisfactory to the Company as well as other support as reasonably requested by the Company) (the “Preferred Stock Certificates”) and, if not previously delivered, the originally executed Conversion Notice.

(ii) Company’s Response. Upon receipt by the Company of a facsimile as well as electronic mail or other copy of a Conversion Notice, the Company shall immediately send, via facsimile or electronic mail, a confirmation of receipt of such fully executed Conversion Notice to such holder. The Company or its designated transfer agent, as applicable, shall, as soon as practicable following the Conversion Date, issue and deliver to such holder of the Series A-1 Convertible Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled. If the number of shares of the Series A-1 Convertible Preferred Stock represented by the Series A-1 Convertible Preferred Stock Certificate(s) submitted for conversion is greater than the number of shares of the Series A-1 Convertible Preferred Stock being converted, then the Company shall, as soon as practicable and at the Company’s expense, issue and deliver to the holder a new Series A-1 Convertible Preferred Stock Certificate representing the number of shares of the Series A-1 Convertible Preferred Stock not converted.

(iii) Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of the Series A-1 Convertible Preferred Stock shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

(c) Conversion Price. The term “Conversion Price” shall mean $0.0008 per share of Common Stock, subject to adjustment under Section 5(d) hereof.

(d) Adjustments of Conversion Price.

(i) Adjustments for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock, the Conversion Price shall be proportionately decreased. If the Company shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the Conversion Price shall be proportionately increased. Any adjustments under this Section 5(d)(i) hereof shall be effective at the close of business on the date the stock split or combination becomes effective.

(ii) Adjustments for Certain Dividends and Distributions. If the Company shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Price shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction (A) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and (B) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividend or distribution; provided further, however, that no such adjustment shall be made if the holders of the Series A-1 Convertible Preferred Stock simultaneously receive (x) a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of the Series A-1 Convertible Preferred Stock had been converted into Common Stock on the date of such event or (y) a dividend or other distribution of shares of the Series A-1 Convertible Preferred Stock that are convertible, as of the date of such event, into such number of shares of Common Stock as is equal to the number of additional shares of Common Stock being issued with respect to each share of Common Stock in such dividend or distribution.

(iii) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 5(d)(i) and (ii) hereof, or by a reorganization, merger, consolidation, or sale of assets other than as provided for in Section 5(d)(iv) hereof), then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the holder of each share of Series A-1 Convertible Preferred Stock shall have the right thereafter to convert such share of the Series A-1 Convertible Preferred Stock into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such share of the Series A-1 Convertible Preferred Stock might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

(iv) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Issuance Date there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends provided for in Section 5(d)(i) and (ii) hereof, or a reclassification, exchange or substitution of shares provided for in Section 5(d)(iii) hereof), or a merger or consolidation of the Company with or into another entity where the Company is not the continuing or surviving entity, or the sale of all or substantially all of the Company’s properties or assets (an “Organic Change”), then, as a part of such Organic Change an appropriate revision to the Conversion Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Conversion Price or otherwise) so that the holder of each share of Series A-1 Convertible Preferred Stock shall have the right thereafter to convert such share of the Series A-1 Convertible Preferred Stock into the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from the Organic Change that holders of the number of shares of Common Stock into which such share of the Series A-1 Convertible Preferred Stock might have been converted immediately prior to such Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 5(d)(iv) hereof with respect to the rights of the holders of the Series A-1 Convertible Preferred Stock after the Organic Change to the end that the provisions of this Section 5(d)(iv) hereof (including any adjustment in the Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of the Series A-1 Convertible Preferred Stock) shall be applied after that event in as nearly an equivalent manner as may be practicable.

(e) No Impairment. The Company shall not, by amendment of its Articles or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A-1 Convertible Preferred Stock against impairment.

(f) Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion of the Series A-1 Convertible Preferred Stock pursuant to this Section 5, the Company shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the Series A-1 Convertible Preferred Stock a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon written request of the holder of the Series A-1 Convertible Preferred Stock, at any time, furnish or cause to be furnished to such holder a like certificate setting forth such adjustments and readjustments, the Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of a share of the Series A-1 Convertible Preferred Stock. Notwithstanding the foregoing, the Company shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount.

(g) Issue Taxes. The Company shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of the Series A-1 Convertible Preferred Stock pursuant hereto; provided, however, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

(h) Notice of Corporate Events. The Company will give written notice to each holder of the Series A-1 Convertible Preferred Stock at least thirty (30) days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock, (ii) with respect to any pro rata subscription offer to holders of Common Stock or (iii) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up. The Company will also give written notice to each holder of the Series A-1 Convertible Preferred Stock at least thirty (30) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place.

(i) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A-1 Convertible Preferred Stock. In lieu of any fractional shares to which a holder would otherwise be entitled, the Company shall round the number of shares to be issued upon conversion up to the nearest whole number of shares.

(j) Reservation of Common Stock. The Company shall, so long as any shares of the Series A-1 Convertible Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series A-1 Convertible Preferred Stock, such number of shares of Common Stock equal to at least one hundred percent (100%) of the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Series A-1 Convertible Preferred Stock then outstanding. The initial number of shares of Common Stock reserved for conversions of the Series A-1 Convertible and any increase in the number of shares so reserved shall be allocated pro rata among the holders of the Series A-1 Convertible Preferred Stock based on the number of shares of the Series A-1 Convertible Preferred Stock held by each holder of record at the time of issuance of the Series A-1 Convertible Preferred Stock or increase in the number of reserved shares, as the case may be. In the event a holder shall sell or otherwise transfer any of such holder’s shares of the Series A-1 Convertible Preferred Stock, each transferee shall be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and which remain allocated to any person or entity which does not hold any shares of the Series A-1 Convertible Preferred Stock shall be allocated to the remaining holders of the Series A-1 Convertible Preferred Stock, pro rata based on the number of shares of the Series A-1 Convertible Preferred Stock then held by such holder.

(k) Retirement of Series A-1 Convertible Preferred Stock. Conversion of the Series A-1 Convertible Preferred Stock shall be deemed to have been effected on the Conversion Date. From and after the Conversion Date, the shares of Series A-1 Convertible Preferred Stock converted as of such Conversion Date will no longer be deemed to be outstanding, dividends will cease to accrue on the Series A-1 Convertible Preferred Stock, and all rights of the holders of the Series A-1 Convertible Preferred Stock will terminate except for the right to receive the number of whole shares of Common Stock issuable upon conversion thereof at the Conversion Price then in effect and whole shares in lieu of any fractional shares of Common Stock. Any shares of Series A-1 Convertible Preferred Stock that have been converted will, after such conversion, be deemed cancelled and retired. Upon conversion of only a portion of the number of shares of the Series A-1 Convertible Preferred Stock represented by a certificate surrendered for conversion, the Company shall issue and deliver to such holder at the expense of the Company, a new certificate covering the number of shares of the Series A-1 Convertible Preferred Stock representing the unconverted portion of the certificate so surrendered as required by Section 5(b)(ii) hereof.

(l) Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of conversion of the Series A-1 Convertible Preferred Stock require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Company shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

6. Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction, or mutilation of any certificates representing shares of the Series A-1 Convertible Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking or bond, in the Company’s discretion, by the holder to the Company, and, in the case of mutilation, upon surrender and cancellation of the certificate(s), the Company shall execute and deliver new Series A-1 Convertible Preferred Stock certificates of like tenor and date.

7. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy.

8. Specific Shall Not Limit General; Construction. No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein. This Certificate of Designation shall be deemed to be jointly drafted by the Company and all initial holders of the Series A-1 Convertible Preferred Stock and shall not be construed against any person as the drafter hereof.

9. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of Series A-1 Convertible Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

10. Notices. Any notice to holders of Series A-1 Convertible Preferred Stock or the Company required pursuant to this Certificate of Designations shall be in writing and shall be deemed effectively given (a) upon delivery if delivered personally or by facsimile or electronic mail, (b) three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with verification of receipt, and (d) five (5) business days after having been sent by first class mail, postage prepaid. All notices to holders of Series A-1 Convertible Preferred Stock shall be addressed to each holder of record at the address of such holder appearing on the books of the Company.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and does affirm the foregoing as true as of the date first above written.

Titan Energy Worldwide, Inc.

By:	/s/ Jeffrey W. Flannery
	Name:	Jeffrey W. Flannery
	Title:	Chief Executive Officer

Signature Page to Series A-1 Convertible Preferred Stock Certificate of Designation

EXHIBIT I

TITAN ENERGY WORLDWIDE, INC.
CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the Series A-1 Convertible Preferred Stock of Titan Energy Worldwide, Inc. (the “Certificate of Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series A-1 Convertible Preferred Stock (the “Preferred Shares”), of Titan Energy Worldwide, Inc., a Nevada corporation (the “Company”), indicated below into shares of Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company, by tendering the stock certificate(s) representing the share(s) of Preferred Shares specified below as of the date specified below.

Date of Conversion

Number of Preferred Shares to be converted:

Please confirm the following information:

Conversion Price:

Number of shares of Common Stock to be issued:

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the holder on the Date of Conversion:

Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the Company in the following name and to the following address:

Issue to:



Facsimile Number:

Authorization:
				By:
				Title:
Dated

Exhibit 10.1

SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

This SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of December 2, 2014 by and among Titan Energy Worldwide, Inc., a Nevada corporation (the “Company”), and PTES Acquisition Corp., a Delaware corporation (the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and the exemption from securities registration afforded by Rule 506 of Regulation D (“Regulation D”) promulgated thereunder by the by the United States Securities and Exchange Commission (the “Commission”), the Company desires to issue and sell to the Purchaser, and the Purchaser, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

Article I.
Purchase and Sale of Preferred Stock

Section 1.01 Purchase and Sale of Preferred Shares. Upon the following terms and conditions, the Company shall issue and sell to the Purchaser, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchaser agrees to purchase from the Company, at a purchase price of $1,000,000 (the “Purchase Price”), 100 shares of the Company’s Series A-1 Convertible Preferred Stock (the “Preferred Shares”), convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). The designation, rights, preferences and other terms and provisions of the Series A-1 Convertible Preferred Stock are set forth in the Certificate of Designation of the Relative Rights and Preferences of the Series A-1 Convertible Preferred Stock attached hereto as Exhibit B (as amended from time to time, the “Certificate of Designation”).

Section 1.02 Conversion Shares. The holders of the Preferred Shares shall have the conversion rights as set forth in the Certificate of Designation. The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to at least one hundred percent (100%) of the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Preferred Shares then outstanding. Any shares of Common Stock issuable upon conversion of the Preferred Shares are herein referred to as the “Conversion Shares.”

Section 1.03 Closing. The closing of the purchase and sale of the Preferred Shares to be acquired by the Purchaser from the Company under this Agreement shall take place by electronic communication (the “Closing”) as soon as possible after all of the conditions set forth in Article IV hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith, but in no event later than November 30, 2014 (as such date may be extended pursuant to the provision to this sentence, the “Long Stop Date”); provided, however, that the Purchaser and the Company may mutually agree to extend the Long Stop Date by not more than 30 days. At any time after the Long Stop Date, this Agreement may be terminated by the Purchaser or the Company by delivering written notice of termination. Upon any such termination, no party hereto shall have any further obligation or liability to the other party hereto. On the date of Closing (the “Closing Date”), the Purchaser will deliver the Purchase Price by wire transfer to the Company, and the Company will deliver to the Purchaser a stock certificate representing the Preferred Shares.

Article II.
Representations and Warranties

Section 2.01 Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser, as of the date hereof and the Closing Date (except as set forth on the Schedule of Exceptions attached hereto as Exhibit A (the “Schedule”) with each numbered Schedule corresponding to the section number herein), as follows:

(a) Organization, Good Standing and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any subsidiaries except as set forth in Schedule 2.01(g). Each subsidiary of the Company is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate or other applicable organizational power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company and each such subsidiary is duly qualified as a corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect on the Company. For the purposes of this Agreement, “Material Adverse Effect” means any material adverse effect on the business, operations, properties, prospects, or financial condition of the Company and its subsidiaries and/or any condition, circumstance or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under the Transaction Documents (as defined below).

(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and perform this Agreement and the Certificate of Designation (the “Transaction Documents”), and to issue and sell the Preferred Shares in accordance with the terms hereof and thereof. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or shareholders is required. This Agreement has been duly executed and delivered by the Company. The Certificate of Designation will have been duly executed and delivered by the Company at the Closing. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

(c) Capitalization. The authorized capital stock of the Company, the number of shares of such capital stock issued and outstanding, and the number of shares of capital stock reserved for issuance upon the exercise or conversion of all outstanding warrants, stock options, and other securities issued by the Company, as the date hereof, are set forth on Schedule 2.01(c). All of the outstanding shares of the Common Stock and any other outstanding security of the Company have been duly and validly authorized and validly issued, fully paid and nonassessable and were issued in accordance with the registration or qualification provisions of the Securities Act, or pursuant to valid exemptions therefrom. Except as set forth on Schedule 2.01(c), no shares of Common Stock or any other security of the Company are entitled to preemptive rights, registration rights, rights of first refusal or similar rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever granted by the Company or existing pursuant to agreements to which the Company is a party and relating to, or securities or rights convertible into, any shares of capital stock of the Company. Furthermore, except as set forth in this Agreement and as set forth on Schedule 2.01(c), there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company. Except for customary transfer restrictions contained in agreements entered into by the Company in order to sell restricted securities or as provided on Schedule 2.01(c), the Company is not a party to or bound by any agreement or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. Except as set forth on Schedule 2.01(c), the Company is not a party to, and it has no knowledge of, any agreement or understanding restricting the voting or transfer of any shares of the capital stock of the Company. Except as disclosed on Schedule 2.01(c) or 2.01(h), (i) there are no outstanding debt securities, or other form of Indebtedness (as defined in Section 2.01(h)) of the Company or any of its subsidiaries, (ii) there are no outstanding securities of the Company or any of its subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings, agreements or arrangements by which the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any of its subsidiaries, (iii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements, or any similar plan or agreement and (iv) as of the date of this Agreement, except as disclosed on Schedule 2.01(c), to the Company’s and each of its subsidiaries’ knowledge, no Person (as defined below) or group of related Persons beneficially owns or has the right to acquire by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the Common Stock. Any Person with any right to purchase securities of the Company that would be triggered as a result of the transactions contemplated hereby has waived such rights or the time for the exercise of such rights has passed. Except as set forth on Schedule 2.01(c), there are no options, warrants or other outstanding securities of the Company (including, without limitation, any equity securities issued pursuant to any of the Company’s equity compensation plans), the vesting of which will be accelerated by the transactions contemplated hereby. The Company has furnished or made available to the Purchaser true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (the “Charter”), and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”). For purposes of this Agreement, “Person” shall mean an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

(d) Issuance of Shares. The Preferred Shares to be issued at the Closing have been duly authorized by all necessary corporate action and the Preferred Shares, when paid for or issued in accordance with the terms hereof, shall be validly issued and outstanding, fully paid and nonassessable and entitled to the rights and preferences set forth in the Certificate of Designation. When the Conversion Shares are issued in accordance with the terms of the Certificate of Designation, such shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders shall be entitled to all rights accorded to a holder of Common Stock.

(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the performance by the Company of its obligations under the Certificate of Designation, and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Charter or Bylaws or the organizational documents of any subsidiary of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any subsidiary of the Company is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property of the Company or any subsidiary of the Company under any agreement or any commitment to which the Company or any subsidiary of the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company and its subsidiaries is not being conducted in violation of any laws, ordinances or regulations of any governmental entity, except for possible violations which singularly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state, foreign or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, or issue and sell the Preferred Shares and the Conversion Shares in accordance with the terms hereof or the Certificate of Designation (other than any filings that may be required to be made by the Company with the Commission or state securities administrators subsequent to the Closing and the filing of the Certificate of Designation); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Purchaser herein.

(f) Commission Documents, Financial Statements. The Common Stock of the Company is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and except as disclosed on Schedule 2.01(f), the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to herein as the “Commission Documents”). The Company has delivered or made available to the Purchaser true and complete copies of the Commission Documents. Except as disclosed on Schedule 2.01(f), at the times of their respective filings, the Commission Documents, as amended, complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents and, as of their respective dates, none of the Commission Documents, as amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except as disclosed on Schedule 2.01(f), the financial statements of the Company included in the Commission Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

(g) Subsidiaries. Schedule 2.01(g) sets forth each subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of each person’s ownership. For the purposes of this Agreement, “subsidiary” shall mean with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person. All of the outstanding shares of capital stock of each subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable. There are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any subsidiary for the purchase or acquisition of any shares of capital stock of any subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock. Except as set forth on Schedule 2.01(i), there are no outstanding charges, pledges, escrow arrangements or other liens affecting the shares of any subsidiary. Neither the Company nor any subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence. There are no outstanding charges, pledges, escrow arrangements or other liens affecting the shares of any subsidiary. Neither the Company nor any subsidiary is party to, nor has any knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of any subsidiary. Except as set forth in the Commission Documents, neither the Company nor any subsidiary holds any equity, debt or other interests of any kind in any other Person.

(h) Indebtedness. Schedule 2.01(h) sets forth all outstanding secured and unsecured Indebtedness of the Company or any subsidiary, or for which the Company or any subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $25,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any subsidiary is in default with respect to any Indebtedness.

(i) Title to Assets. All material assets of the Company and its subsidiaries, including all mineral properties and real estate, are described generally in the Commission Documents. Each of the Company and the subsidiaries has good, recorded (if required by applicable law) and marketable title to all of its real and personal property, free and clear of any mortgages, pledges, charges, liens, security interests or other encumbrances, except as set forth on Schedule 2.01(i) or such that, individually or in the aggregate, do not cause a Material Adverse Effect. All leases of the Company and each of its subsidiaries are valid and subsisting and in full force and effect.

(j) Actions Pending. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding (each, an “Action”) pending or, to the knowledge of the Company, threatened against the Company or any subsidiary which questions the validity of this Agreement or the Certificate of Designation or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto. There is no Action pending or, to the knowledge of the Company, threatened, against or involving the Company, any subsidiary or any of their respective properties or assets, which individually or in the aggregate, would reasonably be expected, if adversely determined, to have a Material Adverse Effect. To the knowledge of the Company, there is no Action pending or threatened against any of the Company’s directors, officers or other in their capacities as such, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any subsidiary or, to the knowledge of the Company, any officers or directors of the Company or any subsidiary in their capacities as such, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(k) Compliance with Law. The business of the Company and its subsidiaries has been and is presently being conducted in all material respects in accordance with all applicable federal, state and local and foreign governmental laws, rules, regulations and ordinances, except where, individually or in the aggregate, the noncompliance therewith could not reasonably be expected to have a Material Adverse Effect. The Company and each of its subsidiaries has all franchises, permits, licenses, concessions, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(l) Taxes. The Company and each of its subsidiaries has accurately prepared and filed all federal, state, foreign and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements of the Company and its subsidiaries for all current taxes and other charges to which the Company or any subsidiary is subject and that are not currently due and payable. None of the federal income tax returns of the Company or any subsidiary have been audited by the Internal Revenue Service. The Company has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) of any nature whatsoever, whether pending or threatened against the Company or any subsidiary for any tax period, nor of any basis for any such assessment, adjustment or contingency.

(m) Certain Fees. Except as set forth on Schedule 2.01(m), no brokers, finders or financial advisory fees or commissions will be payable by the Company or any subsidiary or the Purchaser with respect to the transactions contemplated by this Agreement. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

(n) Intellectual Property. The Company and each of the subsidiaries owns or possesses all patents, trademarks, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations, and all rights with respect to the foregoing, which are necessary for the conduct of its business as now conducted without any conflict with the rights of others, except where failure to own such property or possess such rights would not have a Material Adverse Effect.

(o) Environmental Compliance. The Company and each of its subsidiaries has obtained all approvals, authorizations, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws and used in its business or in the business of any of its subsidiaries, unless the failure to obtain such approvals, authorizations, certificates, consents, licenses, concessions, orders and permits or other similar authorizations, individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. “Environmental Laws” shall mean all applicable laws relating to the protection of the environment, including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature. Except as set forth on Schedule 2.01(o), the Company has all necessary governmental approvals required under all Environmental Laws in connection with its business or in the business of any of its subsidiaries as now being conducted and as proposed to be conducted except for those approvals, if any, for which the failure to possess, individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect. To the knowledge of the Company, the Company and each of its subsidiaries is also in compliance in all material respects with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables required or imposed under all Environmental Laws. Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its subsidiaries that violate or may violate any Environmental Law after the Closing Date or that may give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance.

(p) Books and Records Internal Accounting Controls. The books and records of the Company and its subsidiaries accurately reflect in all material respects the information relating to the business of the Company and the subsidiaries, the location and collection of their assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company or any subsidiary. The Company and each of its subsidiaries maintains a system of internal accounting controls sufficient, in the judgment of the Company, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions is taken with respect to any differences.

(q) Material Agreements. Neither the Company nor any subsidiary is a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to a registration statement on Form S-1 or applicable form (collectively, “Material Agreements”) if the Company or any subsidiary were registering securities under the Securities Act, except such Material Agreements as are filed as an exhibit to one or more of the Commission Documents or as set forth on Schedule 2.01(q). The Company and each of its subsidiaries has in all material respects performed all the obligations required to be performed by them to date under the foregoing agreements, have received no notice of default and are not in default under any Material Agreement now in effect, the result of which could reasonably be expected to cause a Material Adverse Effect. No written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement of the Company or of any subsidiary limits the payment of dividends on the Preferred Shares, other preferred stock of the Company, if any, or the Common Stock.

(r) Transactions with Affiliates. Except for customary employment contracts or as set forth in the Commission Documents or on Schedule 2.01(r), there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company or any subsidiary on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the Company, or any of its subsidiaries, or, to the knowledge of the Company, any person owning any capital stock of the Company or any subsidiary or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee, consultant, director or stockholder which, in each case, is required to be disclosed in the Commission Documents or in the Company’s most recently filed definitive proxy statement on Schedule 14A, that is not so disclosed in the Commission Documents or in such proxy statement.

(s) Securities Act of 1933. Based in material part upon the representations herein of the Purchaser, the Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Preferred Shares hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Preferred Shares or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Preferred Shares under the registration provisions of the Securities Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Preferred Shares.

(t) Governmental Approvals. Except for the filing of any notice prior or subsequent to the Closing Date that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), including the filing of a Form D , the filing of the Certificate of Designation with the Secretary of State for the State of Nevada, no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Preferred Shares, or for the performance by the Company of its obligations under this Agreement.

(u) Employees. Neither the Company nor any subsidiary has any collective bargaining arrangements or agreements covering any of its employees. Except as set forth in Schedule 2.01(u), neither the Company nor any subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such subsidiary required to be disclosed in the Commission Documents that is not so disclosed. No officer, consultant or key employee of the Company or any subsidiary whose termination, either individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any subsidiary.

(v) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the Commission Documents, except as specifically disclosed in a subsequent Commission Document filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not previously been publicly disclosed.

(w) ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan (as defined below) by the Company or any of its subsidiaries which is or would be materially adverse to the Company and its subsidiaries. The execution and delivery of this Agreement and the issuance and sale of the Preferred Shares will not involve any transaction which is subject to the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), provided that, if the Purchaser, or any person or entity that owns a beneficial interest in the Purchaser, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.01(w), the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

(x) Dilutive Effect. The Company acknowledges that the issuance of the Conversion Shares upon conversion of the Preferred Shares in accordance with the Transaction Documents will result in dilution of the outstanding shares of Common Stock, which dilution will be substantial. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Conversion Shares upon conversion of the Preferred Shares in accordance with the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

(y) No Integrated Offering. Neither the Company, any subsidiary nor any of its or their affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Preferred Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Preferred Shares pursuant to Rule 506 under the Securities Act, or any applicable exchange-related shareholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Preferred Shares to be integrated with other offerings.

(z) Insurance. The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and its subsidiaries are engaged. To the best of Company’s knowledge, such insurance contracts and policies are valid and in full force and effect. Neither the Company nor any subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(aa) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Charter (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the Company’s issuance of the Preferred Shares and Conversion Shares and the Purchaser’ ownership of the Preferred Shares and Conversion Shares.

Section 2.02 Representations and Warranties of the Purchaser. The Purchaser hereby makes the following representations and warranties to the Company with respect solely to itself:

(a) Organization and Standing of the Purchaser. The Purchaser is a corporation duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

(b) Authorization and Power. The Purchaser has the requisite power and authority to enter into and perform on this Agreement and to purchase and acquire the Preferred Shares being sold or issued to it hereunder. The execution, delivery and performance of this Agreement by the Purchaser and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of the Purchaser or its board of directors, stockholders, or partners, as the case may be, is required. This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with the terms thereof.

(c) Purchase For Own Account. The Purchaser is acquiring the Preferred Shares solely for its own account and not with a view to or for sale in connection with distribution. The Purchaser does not have a present intention to sell the Preferred Shares, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Preferred Shares to or through any Person. The Purchaser acknowledges that it is able to bear the financial risks associated with an investment in the Preferred Shares and that it has been given full access to such records of the Company and its subsidiaries and to the officers of the Company and its subsidiaries and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company.

(d) Status of Purchaser. The Purchaser is an “accredited investor” as defined in Regulation D promulgated under the Securities Act. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and the Purchaser is not a broker-dealer.

(e) Opportunities for Additional Information. The Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of the Purchaser’s personal knowledge of the Company’s affairs, the Purchaser has asked such questions and received answers to the full satisfaction of the Purchaser, and the Purchaser desires to invest in the Company. Neither such inquiries nor any other due diligence investigations conducted by the Purchaser or its advisors, if any, or its representatives shall modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in Section 2.01 above.

(f) No General Solicitation. The Purchaser acknowledges that the Preferred Shares were not offered to the Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio or (ii) any seminar or meeting to which the Purchaser was invited by any of the foregoing means of communications.

(g) Rule 144. The Purchaser understands that the Preferred Shares (along with any Conversion Shares) must be held indefinitely unless such securities are registered under the Securities Act or an exemption from registration is available. The Purchaser acknowledges that it is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that the Purchaser has been advised that Rule 144 permits resales only under certain circumstances. The Purchaser understands that to the extent that Rule 144 is not available, the Purchaser will be unable to sell any Preferred Shares (along with any Conversion Shares) without either registration under the Securities Act or the existence of another exemption from such registration requirement.

(h) General. The Purchaser understands that the Preferred Shares are being offered and sold in reliance on a transactional exemption from the registration requirement of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Preferred Shares.

Article III.
Covenants

The Company covenants with the Purchaser as follows, which covenants are for the benefit of the Purchaser and its permitted assignees.

Section 3.01 Legend. Each certificate representing the Preferred Shares, and, if appropriate, any Conversion Shares, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

The Company agrees to reissue certificates representing any of the Conversion Shares without the legend set forth above if at such time, prior to making any transfer of any such securities, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request. Such proposed transfer and removal will not be effected until (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that the registration of the Conversion Shares under the Securities Act is not required in connection with such proposed transfer and the shares may subsequently be resold without any limitations or restrictions, (ii) the Company has received a registration statement under the Securities Act covering such proposed disposition has been filed by the Company with the Commission and has become effective under the Securities Act, (iii) the Company has received evidence reasonably satisfactory to the Company that such registration and qualification under the Securities Act and state securities laws are not required (in which event the Company shall provide its transfer agent with any required legal opinions) and the shares may subsequently be resold without any limitations or restrictions, or (iv) the holder provides the Company with reasonable assurances that such security can be sold pursuant to Rule 144 under the Securities Act.

Section 3.02 Securities Compliance. The Company shall notify the Commission and all applicable state authorities in accordance with their respective rules and regulations, of the transactions contemplated by any of this Agreement, including filing a Form D with respect to the Preferred Shares and the Conversion Shares as required under Regulation D and applicable “blue sky” laws, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Preferred Shares and the Conversion Shares to the Purchaser or subsequent holders.

Section 3.03 Compliance with Laws. The Company shall comply, and cause each subsidiary to comply, in all material respects with all applicable laws, rules, regulations and orders, except for such noncompliance with which could reasonably be expected to have a Material Adverse Effect.

Section 3.04 Keeping of Records and Books of Account. The Company shall keep and cause each subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

Section 3.05 Amendments. Without the prior written consent of the Purchaser, the Company shall not amend, alter, modify or repeal the Articles, the Certificate of Designation or the Bylaws, including the amendment of the Articles by the adoption or amendment of any Certificate of Designation or similar document, or amend the organizational documents of any subsidiary.

Section 3.06 Other Agreements. Without the prior written consent of the Purchaser, neither the Company nor any subsidiary shall enter into any agreement in which the terms of such agreement would restrict or impair the right or ability of the Company or any subsidiary to perform under the Transaction Documents.

Section 3.07 Use of Proceeds. The net proceeds from the sale of Preferred Shares shall be used than (A) for the satisfaction of the Company’s obligations under that certain Factoring and Security Agreement, dated June 15, 2011, between the Company and Harborcove Fund I, LP., as amended to date and (B) working capital and general corporate purposes in the ordinary course of business. None of the net proceeds from the sale of the Preferred Shares shall be used by the Company to redeem or repurchase any Common Stock or securities convertible, exercisable or exchangeable into Common Stock or to settle any outstanding litigation.

Section 3.08 Reservation of Shares. So long as any of the Preferred Shares remain outstanding, the Company shall take all actions necessary to at all times have authorized, and reserved for the purpose of issuance, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to the number of shares of Common Stock needed to provide for the issuance of the Conversion Shares.

Article IV.
CONDITIONS

Section 4.01 Conditions Precedent to the Obligation of the Company to Sell the Preferred Shares. The obligation hereunder of the Company to issue and sell the Preferred Shares to the Purchaser is subject to the satisfaction or waiver, at or before the Closing, of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

(a) Accuracy of Purchaser’s Representations and Warranties. The representations and warranties of the Purchaser shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date.

(b) Performance by the Purchaser. The Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Closing.

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(d) Delivery of Purchase Price. The Purchase Price for the Preferred Shares shall have been delivered to the Company.

Section 4.02 Conditions Precedent to the Obligation of the Purchaser to Purchase the Preferred Shares. The obligation hereunder of the Purchaser to acquire and pay for the Preferred Shares is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion.

(a) Accuracy of the Company’s Representations and Warranties. Each of the representations and warranties of the Company in this Agreement shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all respects as of such date.

(b) Performance by the Company. The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

(d) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

(e) Certificate of Designation of Rights and Preferences. The Certificate of Designation in the form of Exhibit B attached hereto shall have been filed with the Secretary of State of Nevada.

(f) Certificates. The Company shall have executed and delivered to the Purchaser the certificates (in the denominations as the Purchaser shall request) for the Preferred Shares being acquired by the Purchaser at the Closing (in the denominations as the Purchaser shall request).

(g) Amendment of Series D Preferred Stock. The Company shall have caused the Certificate of Designations for the Series D Preferred Stock to be amended in substantially the form attached hereto as Exhibit C.

(h) Resolutions. The Board of Directors of the Company shall have adopted resolutions, in a form reasonably acceptable to the Purchaser, approving the transactions completed by the Transaction Documents.

(i) Reservation of Shares. As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares, a number of shares of Common Stock equal to the aggregate number of Conversion Shares issuable upon conversion of the Preferred Shares.

(j) Officer’s Certificate. The Company shall have delivered to the Purchaser a certificate of an executive officer of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of the Closing Date and confirming the compliance by the Company with the conditions precedent set forth in this Section 4.02 as of the Closing Date.

(k) Material Adverse Effect. No Material Adverse Effect shall have occurred at or before the Closing Date.

Article V.
Miscellaneous

Section 5.01 Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

Section 5.02 Specific Enforcement, Consent to Jurisdiction.

(a) The Company and the Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of the Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of the Transaction Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

(b) Each of the Company and the Purchaser (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or the Certificate of Designation or the transactions contemplated hereby and thereby and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Purchaser consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 5.02 shall affect or limit any right to serve process in any other manner permitted by law.

Section 5.03 Entire Agreement; Amendment. This Agreement (including all exhibits and schedules hereto) and the Certificate of Designation contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the Certificate of Designation, neither the Company nor any of the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement may be waived or amended other than by a written instrument signed by the Company and the holders of all of the Preferred Shares then outstanding, and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such amendment or waiver is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares then outstanding.

Section 5.04 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy, e-mail or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

(a)	If to the Company:

	Titan Energy Worldwide, Inc.
	6321 Bury Dr. Suite 8
	Eden Prairie, MN 55346
	Fax No.: (952) 938-3290
	Email: jflannery@titanenergy.com

(b)	If to the Purchaser:

	c/o Pioneer Power Solutions, Inc.
	400 Kelby Street
	9th Floor, One Parker Plaza
	Fort Lee, NJ 07024
	Attention: Andrew Minkow, Chief Financial Officer
	Fax No.: (212) 867-1325
	Email: Andrew@pioneerpowersolutions.com

	with copies to:

	Haynes and Boonve, LLP
	30 Rockefeller Plaza, 26th Floor
	New York, New York 10112
	Attention: Rick A. Werner, Esq.
	Fax No.: (212) 884-8234
	Email: rick.werner@haynesboone.com

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

Section 5.05 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

Section 5.06 Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

Section 5.07 Successors and Assigns; Restrictions on Transfer. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser.

Section 5.08 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

Section 5.09 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

Section 5.10 Survival. The representations and warranties of the Company and the Purchaser shall survive the execution and delivery hereof and the Closing hereunder.

Section 5.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or scanned e-mail attachment, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or scanned signature were the original thereof.

Section 5.12 Severability. The provisions of the Transaction Documents are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of the Transaction Documents and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

Section 5.13 Further Assurances. From and after the date of this Agreement, upon the request of the Purchaser or the Company, each of the Company and the Purchaser shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement, the Preferred Shares, the Conversion Shares and the Certificate of Designation.

[SIGNATURE PAGE FOLLOWS]

[SIGNATURE PAGES TO
SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

	TITAN ENERGY WORLDWIDE, INC.

	By:	/s/ Jeffrey Flannery
		Name: Jeffrey Flannery
		Title: CFO

	PTES ACQUISITION CORP.

	By:	/s/ Andrew Minkow
		Name: Andrew Minkow
		Title: CFO

Signature Page to Series A-1 Convertible Preferred Stock Purchase Agreement

EXHIBIT A to the
SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
TITAN ENERGY WORLDWIDE, INC.

DISCLOSURE SCHEDULES

EXHIBIT B to the
SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
TITAN ENERGY WORLDWIDE, INC.

FORM OF CERTIFICATE OF DESIGNATION

CERTIFICATE OF DESIGNATION
OF THE RIGHTS AND PREFERENCES
OF THE
SERIES A-1 CONVERTIBLE PREFERRED STOCK
OF
TITAN ENERGY WORLDWIDE, INC.

3. Voting Rights.

(v) increase the authorized number of directors constituting the Board from one (1);

(vi) redeem, purchase or otherwise acquire or pay or declare any dividend or other distribution on (or pay into or set aside for a sinking fund for any such purpose) any capital stock of the Company;

(vii) declare bankruptcy, dissolve, liquidate or wind up the affairs of the Company or any Subsidiary of the Company;

(viii) effect, or enter into any agreement to effect, a Change of Control (as defined in Section 3(d) hereof).

(xi) sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any assets of the Company or any Subsidiary;

(xiv) agree or commit to do any of the foregoing.

(d) Certain Definitions. For purposes of this Certificate of Designation:

(ii) “Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

4. Liquidation Preference.

5. Conversion. The holders of the Series A-1 Convertible Preferred Stock shall have the following conversion rights (the “Conversion Rights”):

(b) Mechanics of Conversion. The conversion of the Series A-1 Convertible Preferred Stock shall be conducted in the following manner:

(c) Conversion Price. The term “Conversion Price” shall mean $0.0008 per share of Common Stock, subject to adjustment under Section 5(d) hereof.

(d) Adjustments of Conversion Price.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and does affirm the foregoing as true as of the date first above written.

	Titan Energy Worldwide, Inc.

	By:
		Name:
		Title:

Signature Page to Series A-1 Convertible Preferred Stock Certificate of Designation

EXHIBIT I

TITAN ENERGY WORLDWIDE, INC.
CONVERSION NOTICE

Date of Conversion

Number of Preferred Shares to be converted:

Please confirm the following information:

Conversion Price:

Number of shares of Common Stock to be issued:

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the holder on the Date of Conversion:

Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the Company in the following name and to the following address:

Issue to:



Facsimile Number:

Authorization:
		By:
		Title:

Dated

EXHIBIT C to the
SERIES A-1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
TITAN ENERGY WORLDWIDE, INC.

FORM OF AMENDMENT TO THE CERTIFICATE OF DESIGNATION OF SERIES D PREFERRED STOCK

TITAN ENERGY WORLDWIDE, INC.

Exhibit 10.2

LOAN AND SECURITY AGREEMENT

dated as of December 2, 2014

among

TITAN ENERGY WORLWIDE, INC.,

as Borrower,

CERTAIN SUBSIDIARIES OF TITAN ENERGY WORLDWIDE, INC.,

as Guarantors,

and

PTES ACQUISITION CORP.,
as Lender

TABLE OF CONTENTS

		Page

Article I. DEFINITIONS AND ACCOUNTING TERMS		1

Section 1.01	Certain Defined Terms	1
Section 1.02	Times of Day	6
Section 1.03	Principles of Construction	6

Article II. AMOUNTS AND TERMS OF THE ADVANCES		7

Section 2.01	The Loan	7
Section 2.02	Repayment of Loan.	7
Section 2.03	Interest.	7
Section 2.04	Reserved.	7
Section 2.05	Maximum Interest.	7
Section 2.06	Prepayments of Loan.	7
Section 2.07	Reserved	8
Section 2.08	Increased Costs.	8
Section 2.09	Taxes.	8
Section 2.10	Illegality	8
Section 2.11	Compensation for Losses	8
Section 2.12	Evidence of Debt.	9
Section 2.13	Payments and Computations.	9

Article III. CONDITIONS OF LENDING		9

Section 3.01	Conditions Precedent	9

Article IV. REPRESENTATIONS AND WARRANTIES		10

Section 4.01	Representations and Warranties	10

Article V. COVENANTS OF BORROWER		11

Section 5.01	Affirmative Covenants	11
Section 5.02	Negative Covenants	13

Article VI. SECURITY INTEREST AND CONTROL		14

Section 6.01	Granting of Security Interest	14
Section 6.02	Proceeds	14
Section 6.03	Authorization to File Financing Statements.	15

Article VII. EVENTS OF DEFAULT		15

Section 7.01	Events of Default	15
Section 7.02	Voting; Power of Attorney.	17
Section 7.03	Rights and Remedies; Blocker Sale.	17

Article VIII. CONTINUING GUARANTY		19

Section 8.01	Guaranty	19
Section 8.02	Rights of Lenders	19
Section 8.03	Certain Waivers	19
Section 8.04	Obligations Independent	19
Section 8.05	Subrogation	20
Section 8.06	Termination; Reinstatement	20
Section 8.07	Subordination	20
Section 8.08	Stay of Acceleration	20

Article IX. MISCELLANEOUS		20

Section 9.01	Amendments, Etc.	20
Section 9.02	Notices; Effectiveness; Electronic Communications.	20
Section 9.03	Reserved	21
Section 9.04	No Waiver.	21
Section 9.05	Costs and Expenses; Indemnification; Damage Waiver.	21
Section 9.06	Payments Set Aside	22
Section 9.07	Assignments and Participations.	22
Section 9.08	Governing Law; Submission to Jurisdiction.	23
Section 9.09	Severability	24
Section 9.10	Counterparts; Integration; Effectiveness; Electronic Execution.	24
Section 9.11	Confidentiality	24
Section 9.12	No Advisory or Fiduciary Relationship	24
Section 9.13	Right of Setoff.	25
Section 9.14	Judgment Currency	25
Section 9.15	USA PATRIOT Act Notice	25
Section 9.16	Entire Agreement	25

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT dated as of December 2, 2014, among TITAN ENERGY WORLDWIDE, INC., a Nevada corporation (“Borrower”), Guarantors (as defined below), and PTES ACQUISITION CORP., a Delaware corporation (“Lender”).

RECITALS

A. Borrower has requested Lender to make available to Borrower term loans in an aggregate principal amount of at least Two Million Nine Hundred Thousand Dollars ($2,900,000); and

B. Lender is willing to make these term loans on the terms and conditions set forth in this Agreement.

Article I.
DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

“Act” has the meaning specified in Section 9.15.

“Additional Term Loan” means any additional term loans made pursuant to Section 2.01 after the Closing Date.

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, “controls” or is “controlled by” or is “under common control with” the Person specified.

“Agreement” means this Loan and Security Agreement.

“Applicable Rate” means the rate equal to ten percent (10%) per annum.

“Bankruptcy Code” means the Federal Bankruptcy Code of 1978, Title 11 of the United States Code, as amended from time to time.

“Benefit Plan” means (a) an “employee benefit plan” within the meaning of Section 3(3) of ERISA, (b) a “Plan” within the meaning of Section 4975(e)(1) of the Code, or (c) an entity the underlying assets of which include assets of employee benefit plans or plans as a result of investments by such plans in the entity pursuant to Department of Labor Regulation Section 2510.3-101.

“Borrower” has the meaning specified in the preamble hereto.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in New York City, New York.

“Cash” means all cash in Dollars at any time and from time to time deposited in the Collateral Account to the extent that is not subject to any Liens other than Liens permitted in Section 5.02(b).

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule, regulation or treaty; (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued, and (ii) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Borrower or any Subsidiary, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower or any Subsidiary in which the holders of Borrower or Subsidiary’s outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Borrower or Subsidiary is the surviving entity.

“Closing Date” means the earliest date on which the conditions precedent set forth in Section 3.01 shall have been satisfied or waived in accordance with Section 9.01 of this Agreement.

“Code” means the U.S. Internal Revenue Code of 1986.

“Collateral” has the meaning specified in Section 6.01.

“Collateral Account” means that certain deposit account of Borrower established and maintained by Wells Fargo Bank, N.A., including any subaccount, substitute, successor or replacement account.

“Debt” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP, (a) all obligations of such Person for borrowed money; (b) all direct or contingent obligations of such Person arising under letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations of such Person under any Swap Contract; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due); (e) indebtedness secured by a Lien on property owned by such Person (including conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) capital leases and synthetic lease obligations; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any equity interest in such Person or any other Person; and (h) all Guarantees of such Person in respect of any of the foregoing.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, bankruptcy, moratorium, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions.

“Default” means any event or condition that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“Dollars” and “$” mean the lawful money of the United States.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Events of Default” has the meaning specified in Section 7.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Facility Documents” means, collectively, this Agreement and each other agreement or instrument executed or delivered in connection herewith or therewith.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, including any supra-national bodies such as the European Union or the European Central Bank.

“Grove” means Grove Power, Inc., a Florida corporation.

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Debt to obtain any such Lien).

“Guarantors” means, collectively, TESN, Stellar and Grove; and “Guarantor” means, any one of them.

“Guaranty” means, collectively, the Guaranty made by Guarantors under Article VIII in favor of the Lender.

“Indemnitee” has the meaning specified in Section 9.05(b).

“Information” has the meaning specified in Section 9.11.

“Interest Payment Date” means the first Business Day of each calendar quarter, commencing on the first such date to occur after the Closing Date, and the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of equity interests of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Judgment Currency” has the meaning specified in Section 9.14.

“Law” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“Loans” has the meaning specified in Section 2.01; and “Loan” means, any one of the Loans.

“Loan Parties” means, collectively, Borrower and each Guarantor; and “Loan Party” means any one of them.

“Margin Stock” means margin stock within the meaning of Regulation U.

“Material Adverse Effect” means (a) a material impairment of the ability of any Loan Party to perform any of its obligations under any of the Facility Documents, (b) a material adverse effect upon the legality, validity, binding effect or enforceability of any provision of any Facility Document, (c) a material adverse change in, or a material adverse effect upon, the business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of any Loan Party or (d) a material adverse change in, a material adverse effect upon, or a material impairment of, (i) the priority of Lender’s security interest in the Collateral or (ii) the rights, remedies and benefits available to, or conferred upon, Lender under any Facility Document or Lender’s ability to foreclose on the Collateral at the times and in the manner contemplated herein, in each case with respect to the foregoing clauses (a) to (d), as determined by Lender in its sole discretion.

“Maturity Date” means, the earlier of: (a) the Stated Maturity Date; and (b) the date on which the Loan is accelerated pursuant to Section 7.01.

“Maximum Lawful Rate” has the meaning specified in Section 2.05.

“Obligations” means the Loan to, and all debts, liabilities, obligations, covenants, indemnifications, and duties of, Borrower and each Loan Party arising at any time and from time to time, whether matured or unmatured, fixed or contingent, liquidated or unliquidated, under any Facility Document, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against Borrower or any Loan Party of any proceeding under any Debtor Relief Laws naming Borrower or any Loan Party as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“Organization Documents” means, as applicable, for any Person, such Person’s articles or certificate of incorporation, by-laws, memorandum and articles of association, partnership agreement, trust agreement, certificate of limited partnership, articles of organization, certificate of formation, shareholder agreement, voting trust agreement, operating agreement, subscription agreement, side letters, if any, limited liability company agreement and/or analogous documents.

“Permitted Liens” means Liens permitted under Section 5.02(b).

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Regulation T” means Regulation T issued by the FRB.

“Regulation U” means Regulation U issued by the FRB.

“Regulation X” means Regulation X issued by the FRB.

“Regulatory Event” means (a) any investigation made by any Governmental Authority for violation or breach of Law by any Loan Party, provided that such investigation is both (i) specific to such Loan Party, and (ii) for the material violation or breach of any Law relating to any anti-fraud provisions or any fiduciary duty provisions of any state or Federal securities laws in the United States by such Loan Party, or (b) the revocation, suspension or termination of any license, permit or approval held by any Loan Party that, in the reasonable judgment of Lender, is necessary for the conduct of any such Person’s business.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

“Responsible Officer” of a Person means its chief executive officer or its chief financial officer (whether or not the Person performing such duties is so designated) or any authorized designee thereof.

“Sanction(s)” means any international economic sanction administered or enforced by the United States government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Set-off Party” has the meaning specified in Section 9.13.

“Stated Maturity Date” means December 2, 2019.

“Stellar” means Stellar Energy Services, Inc., a Minnesota corporation.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Borrower.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, total return swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“TESN” means Titan Energy Systems Northeast, Inc., a Minnesota corporation.

“UCC” means Uniform Commercial Code in effect in the State of New York and any other applicable jurisdiction.

Section 1.02 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York time (daylight or standard, as applicable).

Section 1.03 Principles of Construction.

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Facility Document), (ii) except to the extent Lender’s consent is required as provided herein, any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Facility Document, shall be construed to refer to such Facility Document in its entirety and not to any particular provision thereof, (iv) all references in a Facility Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Facility Document in which such references appear, and (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.

(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c) Section headings herein and in the other Facility Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Facility Document.

(d) When used herein the terms Accessions, Account, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Deposit Account, Document, Electronic Chattel Paper, Equipment, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangible, Proceeds, Promissory Notes, Securities Account, Security Entitlement, Supporting Obligations and Uncertificated Securities have the meaning provided in Article 8 or Article 9, as applicable, of the UCC. Letter of Credit has the meaning provided in Section 5-102 of the UCC.

Article II.
AMOUNTS AND TERMS OF THE ADVANCES

Section 2.01 The Loan. Subject to the terms and conditions set forth herein, Lender agrees to make a single loan in Dollars to Borrower on the Closing Date in an amount not to exceed $2,900,000 (the “Closing Date Loan”). After the Closing Date, Lender may, in its sole and absolute discretion, make additional term loans to Borrower (each, an “Additional Term Loan” and, together with the Closing Date Loan, the “Loans”). Amounts borrowed hereunder and repaid or prepaid may not be reborrowed.

Section 2.02 Repayment of Loan. Borrower shall repay to Lender on the Maturity Date the principal amount of the Loans outstanding on such date.

Section 2.03 Interest.

(a) Ordinary Interest. Borrower shall pay interest on the unpaid principal amount of each Loan, from the date of such Loan until such principal amount shall be paid in full, at a rate per annum equal to the Applicable Rate, payable quarterly in arrears on each Interest Payment Date. Interest shall be computed on a year of 360 days and actual days elapsed in the period for which interest is payable. Interest (including the default interest set forth below) shall be due and payable before and after judgment or the commencement of any proceeding under any Debtor Relief Law.

(b) Default Interest. If any Event of Default shall have occurred, Borrower shall pay interest on the Loan at a rate per annum equal at all times to sixteen percent (16%), payable on demand (and in any event in arrears on the date such amount shall be paid in full).

Section 2.04 Reserved.

Section 2.05 Maximum Interest. In no event shall the interest charged with respect to the Loan or any other obligations of Borrower hereunder exceed the maximum amount permitted under the Laws of the State of New York or of any other applicable jurisdiction. In no event shall the total interest received by Lender exceed the amount which Lender could lawfully have received had the interest been calculated for the full term hereof at the highest rate of interest permitted under any applicable Law to be charged by Lender (the “Maximum Lawful Rate”). If Lender has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loan or to other amounts (other than interest) payable hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid to Borrower.

Section 2.06 Prepayments of Loan. Borrower may, upon two (2) Business Days’ notice to Lender, which shall be irrevocable, at any time prepay the outstanding principal amounts of the Loans, in whole or in part.

Section 2.07 Reserved.

Section 2.08 Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall have the effect to increase the cost of the Loan to Lender, or to reduce the amount of any sum received or receivable by Lender hereunder (whether of principal, interest or any other amount), or to reduce the rate of return on Lender’s capital or on the capital of Lender’s holding company, if any, as a consequence of this Agreement, then upon request of Lender, Borrower will pay, within 10 days of such request, to Lender such additional amount or amounts as will compensate Lender for such additional costs incurred or reduction suffered.

(b) Survival. All of Borrower’s obligations under this Section 2.08 shall survive termination of this Agreement and repayment of all other Obligations hereunder.

Section 2.09 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Facility Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of Lender) requires the deduction or withholding of any Tax from any such payment by Lender or any Loan Party, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including withholdings or deductions applicable to additional sums payable under this Section 2.09) Lender receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b) Survival. Borrower’s obligations under this Section 2.09 shall survive any assignment of rights by Lender and the repayment of all other Obligations.

Section 2.10 Illegality. Notwithstanding any other provision herein, if Lender shall notify Borrower that any Law makes it unlawful for Lender to perform its obligations to make or maintain the Loans hereunder, then the obligation of Lender to make or maintain the Loan shall be terminated immediately and the Loans, all interest thereon and all other amounts payable hereunder shall become immediately due and payable.

Section 2.11 Compensation for Losses. Upon demand of Lender from time to time, Borrower shall promptly compensate Lender for and hold Lender harmless from any loss, cost or expense incurred by it as a result of any failure by Borrower to prepay or borrow the Loan on the date or in the amount notified by Borrower (for a reason other than the failure of Lender to make the Loan in breach of its obligation hereunder), including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the Loans or from fees payable to terminate the deposits from which such funds were obtained. All of Borrower’s obligations under this Section 2.11 shall survive termination of this Agreement and repayment of all other Obligations hereunder. For purposes of calculating amounts payable by Borrower to Lender under this Section 2.11, Lender shall be deemed to have funded the Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not the Loan were in fact so funded.

Section 2.12 Evidence of Debt.

(a) The Lender is authorized to record on the grid attached hereto as Exhibit A each Loan made to the Borrower and each payment or prepayment thereof. The entries made by Lender shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of Lender to record such payments or prepayments, or any inaccuracy therein, shall not in any manner affect the obligation of Borrower to repay (with applicable interest) the Loans in accordance with their terms.

(b) No promissory note shall be required to evidence the Loans. Upon the request of Lender, Borrower shall execute and deliver to Lender a promissory note, which shall evidence the Loan in addition to such records.

Section 2.13 Payments and Computations.

(a) All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Borrower shall make each payment hereunder not later than 12:00 noon on the day when due in Dollars to Lender in immediately available funds. All payments received by Lender after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.

(b) Whenever any payment hereunder would be due on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or any fees, as the case may be.

(c) All payments (including prepayments and any other amounts received hereunder and payments and amounts received in connection with the exercise of Lender’s rights after an Event of Default) made by or on behalf of Borrower under any Facility Document shall be applied in the following order: (i) to any expenses and indemnities payable by Borrower to Lender; (ii) to any accrued and unpaid interest and fees due; (iii) to principal payments on the outstanding Loan; and (iv) to the extent of any excess, to the payment of all other Obligations.

Article III.
CONDITIONS OF LENDING

Section 3.01 Conditions Precedent. The obligation of Lender to make the Closing Date Loan is subject to satisfaction of the following conditions precedent:

(a) Lender shall have received each of the following documents, duly executed, each (unless otherwise specified below) dated the Closing Date and in form and substance satisfactory to Lender:

(i) duly executed counterparts of this Agreement;

(ii) certified copies of (A) the Organization Documents of each Loan Party, (B) the resolutions of each Loan Party authorizing the Facility Documents and (C) documents evidencing all other necessary company action, governmental approvals and third-party consents, if any, with respect to the Facility Documents;

(iii) an incumbency certificate of each Loan Party;

(iv) certificates evidencing the good standing of each Loan Party; and

(v) such other assurances, certificates, documents, consents, or opinions as Lender reasonably may require.

The acceptance of the Closing Date Loan shall be deemed to be a representation and warranty by Borrower that the conditions specified in Section 3.01 have been satisfied on and as of the Closing Date.

Article IV.
REPRESENTATIONS AND WARRANTIES

Section 4.01 Representations and Warranties. Each Loan Party represents and warrants to Lender that:

(a) Such Loan Party (i) is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, (ii) is duly qualified and in good standing in each other jurisdiction in which the conduct of its business requires it to so qualify or be licensed and where, in each case, failure so to qualify and be in good standing could have a Material Adverse Effect, and (iii) has all requisite company power and authority to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted.

(b) The execution, delivery and performance by each Loan Party of this Agreement and the other Facility Documents to which such Loan Party is a party (when delivered) and the consummation of the transactions contemplated under the Facility Documents are within its company powers, have been duly authorized by all necessary company action, and do not and will not (i) contravene such Loan Party’s Organization Documents, (ii) contravene any contractual restriction binding on it or require any consent under any agreement or instrument to which it is a party or by which any of its properties or assets is bound, (iii) result in or require the creation or imposition of any Liens upon any property or assets of such Loan Party other than Permitted Liens, or (iv) violate any Law (including, but not limited to, the Securities Act and the Exchange Act and the regulations thereunder) or writ, judgment, injunction, determination or award.

(c) Except for any filings to perfect Lender’s security interest in the Collateral, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption or waiver by, any Governmental Authority or any other third party (except as have been obtained or made and are in full force and effect), is required to authorize, or is required in connection with, (i) the execution, delivery and performance by any Loan Party of any Facility Document, (ii) the granting of the security interest in the Collateral to Lender or (iii) the legality, validity, binding effect or enforceability of any Facility Document.

(d) Each Loan Party is in compliance with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (ii) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(e) This Agreement and the other Facility Documents that any Loan Party is party to are and will be legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms in all respects. The security interest in the Collateral granted herein is a valid and binding security interest in the Collateral subject to no other liens or security interests other than Permitted Liens.

(f) No Default or Event of Default has occurred.

(g) Borrower is not, and after giving effect to the transactions contemplated under the Facility Documents will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940.

(h) No part of the proceeds of Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of Regulation T, Regulation U, or Regulation X, as applicable.

(i) Borrower owns all of the Collateral free and clear of Liens, other than Permitted Liens.

(j) The Loan is made with full recourse to Borrower and constitutes direct, general, unconditional and unsubordinated Debt of Borrower.

(k) All information provided or to be provided with respect to Borrower and its Affiliates by or on behalf of Borrower to Lender in connection with the negotiation, execution and delivery of this Agreement and the other Facility Documents or the transactions contemplated hereby and thereby including, but not limited to, any financial statements of Borrower provided to Lender was or will be, on or as of the applicable date of provision thereof, complete and correct in all material respects and did not (or will not) contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading in light of the time and circumstances under which such statements were made.

(l) Borrower has no Subsidiaries except for TESN, Stellar and Grove.

(m) Borrower is not a Benefit Plan.

(n) No Loan Party, nor, to the knowledge of such Loan Party, any director, officer, employee, agent, Affiliate or representative thereof, is an individual or entity currently the subject to any Sanctions, nor is any Loan Party located, organized or resident in a Designated Jurisdiction.

Article V.
COVENANTS OF BORROWER

Section 5.01 Affirmative Covenants. On and after the Closing Date and so long as any Obligations have not been indefeasibly paid in full:

(a) Existence. Each Loan Party shall preserve renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization.

(b) Reporting Requirements. Borrower will furnish to Lender or cause to be furnished to Lender:

(i) as soon as possible and in any event within two (2) Business Days after Borrower obtains actual knowledge of the occurrence of (A) any Event of Default or Default, or (B) any actual or threatened litigation or other event which, if adversely determined to Borrower, could reasonably be likely to result in a Material Adverse Effect, a statement of a Responsible Officer of Borrower setting forth the details thereof and the action which Borrower has taken and proposes to take with respect thereto; and

(ii) promptly after request therefor, such other business and financial information respecting the condition or operations, financial or otherwise, of Borrower as Lender may from time to time reasonably request.

(c) Use of Proceeds. Borrower will use the proceeds of the Closing Date Loan for (i) the full satisfaction of all obligations under that certain Factoring and Security Agreement, dated June 15, 2011, between Borrower and Harborcove Fund I, LP., as amended to date, (ii) the repayment of up to $2,500,000 of Company trade payables, and (iii) working capital and general corporate purposes in the ordinary course of business.

(d) Payment of Obligations. Each Loan Party shall pay and discharge as the same shall become due and payable, all its obligations and liabilities, including: (i) all taxes, assessments, claims and governmental charges or levies imposed upon it or upon its property; provided, however, that no Loan Party shall be required to pay or discharge any such tax, assessment, claim or charge that is being diligently contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained; (ii) all lawful claims which, if unpaid, would become a Lien on its property; and (iii) all Debt, as and when due and payable.

(e) Inspection Rights. Each Loan Party shall, at any reasonable time during normal business hours and upon reasonable prior notice, from time to time permit Lender (in each case, subject to Section 9.11) to (i) discuss the affairs, finances, assets and accounts of such Loan Party with any of such Loan Party’s officers, directors or other representatives and independent certified public accountants and (ii) examine and make copies of and abstracts from their records and books of account, all at the expense of Borrower; provided, however, that after the occurrence of an Event of Default, Lender may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice.

(f) Compliance with Laws. Each Loan Party shall comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the failure to comply therewith could not reasonably be expected to result in a Material Adverse Effect.

(g) Further Assurances. Each Loan Party agrees to execute and/or deliver any additional agreements, documents and instruments, and take such further actions as may be reasonably requested by Lender from time to time to carry out the intent of the Facility Documents.

Section 5.02 Negative Covenants. So long as any Obligations have not been indefeasibly paid in full:

(a) Additional Debt. No Loan Party shall, directly or indirectly, create, incur, assume or suffer to exist any Debt, other than Debt created under the Facility Documents.

(b) Liens. Each Loan Party shall defend the Collateral against all claims and demands of all persons at any time claiming any interest therein adverse to Lender. No Loan Party shall, directly or indirectly, create, incur, assume or suffer to exist any Lien upon any Collateral, whether now owned or hereafter acquired, except Liens created under the Facility Documents.

(c) Mergers, Etc. Without the prior consent of Lender, no Loan Party shall, directly or indirectly, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of, whether in one transaction or in a series of transactions, all or substantially all of the property and assets (whether now owned or hereafter acquired) of any Loan Party to any Person.

(d) Formation of Subsidiaries. No Loan Party shall, directly or indirectly, form, create, organize, incorporate or acquire any Subsidiaries.

(e) Investments. No Loan Party shall hold any Investments except Investments by Borrower and its Subsidiaries in their respective Subsidiaries outstanding on the date hereof.

(f) Dispositions. No Loan Party shall make any disposition or enter into any agreement to make any Disposition, except: (i) dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business; (ii) dispositions of inventory in the ordinary course of business; (iii) dispositions of equipment or real property to the extent that the proceeds of such disposition are reasonably promptly applied to the purchase price of such replacement property; and (iv) dispositions of property by any Subsidiary to Borrower or to a wholly-owned Subsidiary of Borrower.

(g) Transaction with Affiliates. No Loan Party shall enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate.

(h) Prepay Debt. No Loan Party shall prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any indebtedness of such Loan Party.

(i) Status as a Benefit Plan. No Loan Party shall, directly or indirectly, be or become a Benefit Plan.

(j) Change Name, Status, Tradename. No Loan Party shall, without prior written notice to Lender, change its name, change its corporate status, or use any trade name.

(k) Sanctions. The proceeds of the Loans shall not be used, directly or indirectly, and Borrower shall not lend, contribute or otherwise make available such proceeds to any Affiliate, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction that at the time of such funding, is the subject of any Sanctions; or in any other manner that will result in a violation by any individual or entity (including any individual or entity participating in the transaction, whether as a Lender or agent or otherwise) of any Sanctions.

Article VI.
SECURITY INTEREST AND CONTROL

Section 6.01 Granting of Security Interest. Each Loan Party hereby pledges, assigns and grants to Lender, on its behalf and for the benefit of Lender, a first priority security interest in and lien on, and a right of set-off against, the following property and assets, whether now or hereafter existing, owned or acquired by such Loan Party (collectively, the “Collateral”), to secure the payment and the performance of all the Obligations:

(a) Accounts;

(b) Chattel Paper;

(d) Deposit Accounts (including, without limitation, each Collateral Account);

(e) Documents;

(f) General Intangibles;

(g) Goods;

(h) Inventory;

(i) Equipment;

(j) Instruments;

(k) Investment Property;

(l) Letter-of-Credit Rights and Letters of Credit;

(m) Supporting Obligations;

(n) all books, records, writings, databases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section;

(o) all Accessions to and Proceeds of the foregoing and, to the extent not otherwise included, (i) all payments under insurance (whether or not Lender is the loss payee thereof) and (ii) all tort claims; and

(p) all other property and rights of every kind and description and interests therein.

Section 6.02 Proceeds. Except as permitted to be distributed to or withdrawn by Borrower pursuant to the terms herein, (a) any property received by Borrower, which shall comprise of such additions, substitutes and replacements for, or proceeds of, the Collateral, shall be held in trust for Lender and shall be delivered immediately to Lender, and (y) any cash proceeds of the Collateral shall be held in trust for Lender and shall be delivered immediately to Lender.

Section 6.03 Authorization to File Financing Statements. Each Loan Party hereby authorizes Lender to file financing statements or take any other action required to perfect Lender’s security interests in the Collateral, without notice to any Loan Party, with all appropriate jurisdictions to perfect or protect Lender’s interest or rights under the Facility Documents, including a notice that any disposition of the Collateral, except to the extent permitted by the terms of this Agreement, by Borrower, or any other Person, shall be deemed to violate the rights of Lender under the UCC.

Article VII.
EVENTS OF DEFAULT

Section 7.01 Events of Default. If any of the following events (“Events of Default”) shall occur:

(a) Any Loan Party shall fail to pay when due (i) any of the outstanding principal of Loan, or (ii) accrued interest on the Loan or other amounts or fees owing pursuant to any of the Facility Documents and with respect to clause (ii) only, such failure remains unremedied for three (3) days; or

(b) Any Loan Party shall fail to provide Lender with the reports required to be delivered under Section 5.01(b) on the date required for such delivery, and such failure shall not be cured within five (5) Business Days; or

(c) Any Loan Party shall fail to perform or observe any term, covenant, or agreement contained in Section 5.01(a), (c) or (e) or Section 5.02; or

(d) Any Loan Party shall fail to perform or observe any other term, covenant or agreement in this Agreement or any other Facility Document to which it is a party (not specified in clause (a), (b) or (c) above or any other clause of this Section 7.01) and such failure shall continue for 15 days; or

(e) any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party herein, in any other Facility Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

(f) (i) any Facility Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder, ceases to be in full force and effect; (ii) any Loan Party or any other Person contests in any manner the validity or enforceability of any Facility Document; or (iii) any Loan Party denies that it has any or further liability or obligation under any Facility Document; or

(g) (i) Any Loan Party (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Debt (other than Debt hereunder and Debt under Swap Contracts), or (B) fails to observe or perform any other agreement or condition relating to any such Debt or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Debt or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Debt to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Debt to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Loan Party, as applicable, is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which such Loan Party is an Affected Party (as so defined); or

(h) (i) Any Loan Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due; (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any Loan Party and is not released, vacated or fully bonded within 30 days after its issue or levy; (iii) any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; (iv) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of any Loan Party and the appointment continues undischarged or unstayed for thirty (30) calendar days; (v) any proceeding under any Debtor Relief Law relating to any Loan Party or to all or any material part of its property is instituted without the consent of such Loan Party and continues undismissed or unstayed for thirty (30) calendar days, or an order for relief is entered in any such proceeding; or (vi) any Loan Party shall take any action to authorize any of the actions set forth above in this Section 7.01(h); or

(i) there is entered against any Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) that have, or could reasonably be expected to have a Material Adverse Effect, and (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of ten (10) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or

(j) a Change of Control shall occur; or

(k) a Regulatory Event shall occur; or

(l) Lender ceases to have a first priority perfected Lien in the Collateral.

then, and in any such event, Lender may declare the Loan, all accrued interest thereon, all fees and all other accrued amounts payable under this Agreement and the other Facility Documents to be forthwith due and payable, whereupon the Loan, all such interest and fees and all such other amounts hereunder and under the Facility Documents shall become and be forthwith due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Borrower; provided, however, that upon the occurrence of any event in Section 7.01(h), the Loan, all accrued interest and all accrued other amounts payable, including fees, under this Agreement and under the other Facility Documents shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by Borrower.

Section 7.02 Voting; Power of Attorney.

(a) At all times prior to the occurrence of an Event of Default, Borrower shall have the right to exercise all voting rights pertaining to any equity interests held by Borrower; provided that Borrower will not vote such equity interests in any manner that is inconsistent with the terms of any Facility Document or would reasonably be expected to have a material adverse effect on the value thereof or Lender’s interest therein. After the occurrence of an Event of Default, if Lender elects to exercise such right and provides notice of its election to exercise such vote to Borrower, the right to vote any Collateral shall be vested exclusively in Lender. To this end, Borrower hereby irrevocably constitutes and appoints Lender the proxy and attorney-in-fact of Borrower, with full power of substitution, to vote, and to act with respect to, any and all Collateral standing in the name of Borrower or with respect to which Borrower is entitled to vote and act, subject to the understanding that such proxy may not be exercised until after an Event of Default occurs. The proxy herein granted is coupled with an interest, is irrevocable, and shall continue until the Obligations have been paid and performed in full.

(b) Borrower hereby irrevocably constitutes and appoints Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the name of Borrower or in its own name, to take after the occurrence an Event of Default that has not been waived, any and all action and to execute any and all documents and instruments which Lender at any time and from time to time deems necessary or desirable to accomplish the purposes hereof, including, without limitation, selling any of the Collateral on behalf of Borrower as agent or attorney in fact for Borrower and applying the proceeds received therefrom in accordance with this Agreement; however, nothing in this paragraph shall be construed to obligate Lender to take any action hereunder nor shall Lender be liable to Borrower for failure to take any action hereunder. This appointment shall be deemed a power coupled with an interest, is irrevocable, and shall continue until the Obligations have been paid and performed in full.

Section 7.03 Rights and Remedies; Blocker Sale.

(a) In the case of an Event of Default other than one referred to in Section 7.01(h), Lender may by notice to Borrower, declare the principal amount then outstanding of, and the accrued interest on, the Loans and all other obligations (including any amounts payable hereunder) to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Borrower; and (2) in the case of the occurrence of an Event of Default referred to in Section 7.01(h), the principal amount then outstanding of, and the accrued interest on, the Loans and all other obligations (including any amounts payable hereunder) shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Borrower.

(b) Lender may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:

(i) take possession of any Collateral not already in its possession without demand and without legal process;

(ii) require each Loan Party to, and each Loan Party hereby agrees that it will, at its expense and upon request of Lender forthwith, assemble all or part of the Collateral as directed by Lender and make it available to Lender at a place to be designated by Lender that is reasonably convenient to both parties;

(iii) enter onto the property where any Collateral is located and take possession thereof without demand and without legal process;

(iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of Lender’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Lender may deem commercially reasonable. Each Loan Party agrees that, to the extent notice of sale shall be required by law, at least ten days’ prior notice to such Loan Party of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(c) All cash proceeds received by Lender in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by Lender in its sole discretion.

(d) Lender may:

(i) transfer all or any part of the Collateral into the name of Lender or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder;

(ii) notify the parties obligated on any of the Collateral to make payment to Lender of any amount due or to become due thereunder;

(iii) withdraw, or cause or direct the withdrawal, of all funds with respect to the Collateral Account;

(iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto;

(v) endorse any checks, drafts, or other writings in any Loan Party’s name to allow collection of the Collateral;

(vi) take control of any proceeds of the Collateral; and

(vii) execute (in the name, place and stead of any Loan Party) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.

Article VIII.
CONTINUING GUARANTY

Section 8.01 Guaranty. Each Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all of the Obligations, whether for principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, and whether arising hereunder or under any other Facility Documents (including all renewals, extensions, amendments, refinancings, increases and other modifications thereof and all costs, attorneys’ fees and expenses incurred by Lender in connection with the collection or enforcement thereof). The Lender’s books and records showing the amount of the Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon Guarantors, and conclusive for the purpose of establishing the amount of the Obligations. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations or any instrument or agreement evidencing any Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Obligations which might otherwise constitute a defense to the obligations of Guarantors under this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing (other than the defense of payment in full).

Section 8.02 Rights of Lenders. Each Guarantor consents and agrees that Lender may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate, increase or otherwise change the time for payment or the terms of the Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Obligations; (c) apply such security and direct the order or manner of sale thereof as the Lender in its sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Obligations. Without limiting the generality of the foregoing, Guarantors consent to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of Guarantors under this Guaranty or which, but for this provision, might operate as a discharge of Guarantors.

Section 8.03 Certain Waivers. Guarantors waive (a) any defense arising by reason of any disability or other defense of Borrower or any other guarantor (other than the defense of payment in full), or the cessation from any cause whatsoever (including any act or omission of Lender) of the liability of Borrower; (b) any defense based on any claim that Guarantors’ obligations exceed or are more burdensome than those of Borrower; (c) the benefit of any statute of limitations affecting Guarantors’ liability hereunder; (d) any right to proceed against Borrower, proceed against or exhaust any security for the Obligations, or pursue any other remedy in the power of Lender whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by Lender; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties. Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Obligations.

Section 8.04 Obligations Independent. The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Obligations and the obligations of any other guarantor, and a separate action may be brought against each Guarantor to enforce this Guaranty whether or not Borrower or any other person or entity is joined as a party.

Section 8.05 Subrogation. No Guarantor shall exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments each of them makes under this Guaranty until all of the Obligations and any amounts payable under this Guaranty have been paid and performed in full and the Loans are terminated. If any amounts are paid to Guarantors in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of Lender and shall forthwith be paid to Lender to reduce the amount of the Obligations, whether matured or unmatured.

Section 8.06 Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all Obligations now or hereafter existing and shall remain in full force and effect until all Obligations and any other amounts payable hereunder are paid in full in cash and the Loans are terminated. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of Borrower or any Guarantor is made, or Lender exercises its right of setoff, in respect of the Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not Lender is in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Guarantor under this paragraph shall survive termination of this Agreement.

Section 8.07 Subordination. Each Guarantor hereby subordinates the payment of all obligations and indebtedness of Borrower or any other Guarantor owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of Borrower to any Guarantor as subrogee of Lender or resulting from any Guarantor’s performance under this Guaranty, to the payment in full in cash of all Obligations. If Lender so requests, any such obligation or indebtedness of Borrower to any Guarantor shall be enforced and performance received by such Guarantor as trustee for Lender and the proceeds thereof shall be paid over to Lender on account of the Obligations, but without reducing or affecting in any manner the liability of any Guarantor under this Guaranty.

Section 8.08 Stay of Acceleration. If acceleration of the time for payment of any of the Obligations is stayed, in connection with any case commenced by or against any Guarantors or Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by Guarantors immediately upon demand by Lender.

Article IX.
MISCELLANEOUS

Section 9.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Facility Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by Lender and Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 9.02 Notices; Effectiveness; Electronic Communications.

(a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to Borrower or any Loan Party, to it at 6321 Bury Drive, Suite 8, Eden Prairie, MN 55346, Attention: Jeffrey Flannery (Facsimile No. (952) 938-3290; Telephone No. (952) 960-2371; E-Mail: jflannery@titanenergy.com), with a copy to Kathy Scherer (kscherer@titanenergy.com).

(ii) if to Lender, to it at 400 Kelby Street, 9th Floor, Fort Lee, NJ 07024, Attention of Andrew Minkow (Facsimile No. (212) 867-1325; Telephone No. (212) 588-1070; E-Mail: Andrew@pioneerpowersolutions.com), with a copy to Rick Werner, Haynes and Boone, LLP, 30 Rockefeller Plaza, 26th Floor, New York, NY 10112 (Facsimile No. (212) 884-8233; Telephone No. (212) 867-0700); and.

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile or e-mail shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).

(b) Telephonic Communications. All telephonic notices to and other telephonic communications with Lender may be recorded by Lender, and each of the parties hereto hereby consents to such recording.

Section 9.03 Reserved.

Section 9.04 No Waiver.

(a) No failure on the part of Lender to exercise, and no delay in exercising, any right hereunder or under any other Facility Document shall operate as a waiver thereof nor shall the single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Law. No notice to or demand on any Loan Party in any case shall entitle such Loan Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lender to any other or further action in any circumstances without notice or demand.

Section 9.05 Costs and Expenses; Indemnification; Damage Waiver.

(a) Costs and Expenses. The Loan Parties shall, jointly and severally, pay (i) all reasonable out-of-pocket expenses incurred by Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Lender) in connection with the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of the Facility Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by Lender (including the fees, charges and disbursements of any counsel for Lender), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Facility Documents, including its rights under this Section, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loan.

(b) Indemnification by Borrower. The Loan Parties shall, jointly and severally, indemnify Lender and each Related Party of Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Loan Party or any Related Party of a Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Facility Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Loan or the use or proposed use of the proceeds therefrom, any Indemnitee acting in reliance on any instruction given by Borrower or any Indemnitee failing to follow the unlawful or unreasonable instructions of Borrower, or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Loan Party or any other Related Party of a Loan Party, and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Loan Party or any Related Party of a Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Facility Document, if such Loan Party or such Related Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no Loan Party shall assert, and each Loan Party hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Facility Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Loan or the use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems.

(d) Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(e) Survival. The agreements in this Section shall survive the termination of this Agreement and the repayment, satisfaction or discharge of all the other Obligations.

Section 9.06 Payments Set Aside. To the extent that any payment by or on behalf of a Loan Party is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

Section 9.07 Assignments and Participations.

(a) Assignments. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender. Lender may, with prior written consent of Borrower, assign to any person all or a portion of its rights and obligations under this Agreement; provided, however, that no such prior written consent of Borrower shall be required if (i) the assignment is to any Affiliate of Lender or (ii) an Event of Default shall have occurred.

(b) Participations. Lender may at any time, without the consent of, or notice to, Borrower, sell participations to any Person (other than a natural Person, Borrower or any of Borrower’s Affiliates) (each, a “Participant”) in all or a portion of Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loan). Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.08, 2.09, and 2.11 to the same extent as if it were Lender.

(c) Certain Pledges. Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its note, if any) to secure obligations of Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank.

Section 9.08 Governing Law; Submission to Jurisdiction.

(a) Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, without giving effect to its conflict of laws provisions.

(b) Submission to Jurisdiction. Each Loan Party irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the United States District Court of the Southern District of the State of New York, and all appropriate appellate courts or, if jurisdiction in such court is lacking, any New York State court of competent jurisdiction sitting in New York (and all appropriate appellate courts), in any action or proceeding arising out of or relating to this Agreement or any other Facility Document.

(c) Waiver of Venue. Each Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Facility Document in any court referred to in clause (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.08(d).

Section 9.09 Severability. In case any provision in this Agreement or any other Facility Document shall be held to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Agreement or such other Facility Document, as the case may be, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 9.10 Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Facility Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.11 Confidentiality. Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to Lender’s Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under any Facility Document or any action or proceeding relating to any Facility Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower or the Obligations, (g) with the consent of Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to Lender, or any of its Affiliates on a nonconfidential basis from a source other than Borrower.

For purposes of this Section, “Information” means all information received from a Loan Party hereof relating to such Loan Party or its business, other than any such information that is available to Lender on a nonconfidential basis prior to disclosure by such Loan Party, provided that, in the case of information received from Loan Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 9.11 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.12 No Advisory or Fiduciary Relationship. Each Loan Party acknowledges and agrees that: (a)(i) the arranging and other services regarding this Agreement provided by Lender are arm’s-length commercial transactions between such Loan Party and its Affiliates, on the one hand, and Lender and its Affiliates, on the other hand, (ii) each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) each Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Facility Documents; and (b) Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their Affiliates, and Lender has no obligations to disclose any of such interests to any Loan Party or any of its Affiliates. To the fullest extent permitted by law, each Loan Party hereby waives and releases any claims that it may have against Lender or its Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Section 9.13 Right of Setoff. Upon the occurrence of an Event of Default, Lender and its Affiliates (each, a “Set-off Party”) are hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Loan Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) and any other indebtedness at any time held or owing by a Set-off Party to or for the credit or the account of to such Loan Party against and on account of the obligations and liabilities of to such Loan Party to the Set-off Party under this Agreement or under any of the other Facility Documents, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement or any other Facility Document, irrespective of whether or not the relevant Set-off Party shall have made any demand hereunder and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured. The parties agree that each of the Collateral Account is a general and not special account. The rights of each Set-off Party under this Section 9.13 are in addition to other rights and remedies (including other rights of setoff) that Lender or its Affiliates may have. Lender agrees to notify to the applicable Loan Party promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 9.14 Judgment Currency. If a judgment, order or award is rendered by any court or tribunal for the payment of any amounts owing to Lender under any Facility Document, such judgment, order or award being expressed in a currency (the “Judgment Currency”) other than Dollars, each Loan Party agrees (a) that its obligations in respect of any such amounts owing shall be discharged only to the extent that on the Business Day following Lender’s receipt of any sum adjudged in the Judgment Currency, Lender may purchase Dollars with the Judgment Currency, and (b) to indemnify and hold harmless Lender against any deficiency in terms of Dollars in the amounts actually received by Lender following any such purchase (after deduction of any premiums and costs of exchange payable in connection with the purchase of, or conversion into, Dollars). The indemnity set forth in the preceding sentence shall survive the termination of this Agreement.

Section 9.15 USA PATRIOT Act Notice. Lender notifies to each Loan Party that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies to each Loan Party, which information includes the name and address of such Loan Party and other information that will allow Lender to identify such Loan Party in accordance with the Act. Each Loan Party agrees to promptly provide Lender with all of the information requested by such Person to the extent such Person deems such information reasonably necessary to identify such Loan Party in accordance with the Act.

Section 9.16 Entire Agreement. THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[END OF TEXT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers or representatives thereunto duly authorized, as of the date first above written.

	BORROWER:

	TITAN ENERGY WORLDWIDE, INC.,
	as Borrower

	By:	/s/ Jeffrey Flannery

	Name:	Jeffrey Flannery

	Title:	CEO

	GUARANTORS:

	TITAN ENERGY SYSTEMS NORTHEAST, INC.

	By:	/s/ Jeffrey Flannery

	Name:	Jeffrey Flannery

	Title:	CEO/ President

	STELLAR ENERGY SERVICES, INC.

	By:	/s/ Jeffrey Flannery

	Name:	Jeffrey Flannery

	Title:	President

	GROVE POWER, INC.

	By:	/s/ Jeffrey Flannery

	Name:	Jeffrey Flannery

	Title:	President

[Additional signature pages follow]

	PTES ACQUISITION CORP.,
	as Lender

	By	/s/ Andrew Minkow

	Name:	Andrew Minkow

	Title:	Chief Financial Officer

Exhibit A

Loans and Payments Schedule

Date of Loan

Amount of Loan

Amount of Principal
Paid

Unpaid
Principal
Amount of
Loan

Name of Person Making
the Notation

December 2, 2014

2,900,000.00

Exhibit 10.3

Fifth Amendment to Credit Agreement

This Fifth Amendment to Credit Agreement (herein, the “Amendment”) is entered into as of December 2, 2014, by and among Pioneer Power Solutions, Inc., a Delaware corporation (the “Borrower”), the direct and indirect Domestic Subsidiaries of the Borrower, as Guarantors, and Bank of Montreal, a Canadian chartered bank acting through its Chicago branch (the “Bank”).

Preliminary Statements

A. The Borrower, the Guarantors and the Bank entered into a certain Credit Agreement, dated as of June 28, 2013 (the Credit Agreement, as the same has been amended prior to the date hereof, being referred to herein as the “Credit Agreement”). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

B. The Borrower has requested that the Bank extend a term loan to fund, in part, the TEWI Acquisition Agreement, and the Bank is willing to do so under the terms and conditions set forth in this Amendment.

Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments.

Subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

1.1. The definition of “Borrowing Base” appearing in Section 1.1 shall be amended by replacing clause (c) thereof with the following:

1.2. The definition of “Term Loan Maturity Date” shall be amended and restated in its entirety to read as follows:

“Term Loan Maturity Date” means five (5) years from the Fifth Amendment Effective Date.

1.3. New definitions of “Fifth Amendment Effective Date”, “PTES”, “TEWI” and “TEWI Acquisition” shall be inserted in appropriate alphabetical sequence to read as follows:

“Fifth Amendment Effective Date” means December 2, 2014.

“PTES” means PTES Acquisition Corp., a Delaware corporation.

“TEWI” means Titan Energy Worldwide, Inc., a Nevada corporation.

“TEWI Acquisition” means the Acquisition by PCP (or a Subsidiary thereof) of TEWI and its Subsidiaries by (a) purchasing at least 51% of the Class D preferred stock thereof, and (b) acquiring from TEWI all of the new Series A-1 convertible preferred stock of TEWI for a cash purchase price not to exceed $1,000,000. For the avoidance of doubt, all references to Permitted Acquisition shall be deemed to include the TEWI Acquisition.

1.4. Section 2.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

Section 2.1. Term Loan Facility. Subject to the terms and conditions hereof, the Bank agrees to make loans (the “Term Loan”) in U.S. Dollars to the Borrower in the amount of $5,000,000. The Term Loan shall be advanced in one Borrowing on the Fifth Amendment Effective Date, at which time the Term Loan Commitment shall expire. As provided in Section 2.6(a), the Borrower may elect that the Term Loan be outstanding as U.S. Prime Rate Loans or Eurodollar Loans. No amount repaid or prepaid on the Term Loan may be borrowed again.

1.5. Section 2.7(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(a) Scheduled Payments of Term Loan. The Borrower shall make principal payments on the Term Loan in installments on the last day of each March, June, September, and December in each year, commencing with the calendar quarter ending March 31, 2015, with the amount of each such principal installment to equal the percentage of the original Borrowing of the Term Loan set forth in Column B below shown opposite of the relevant due date as set forth in Column A below:

Column A Payment Date	Column B Percentage
03/31/15	1.25%
06/30/15	1.25%
09/30/15	1.25%
12/31/15	1.25%
03/31/16	2.00%
06/30/16	2.00%
09/30/16	2.00%
12/31/16	2.00%
03/31/17	2.50%
06/30/17	2.50%
09/30/17	2.50%
12/31/17	2.50%
03/31/18	3.00%
06/30/18	3.00%
09/30/18	3.00%
12/31/18	3.00%
03/31/19	3.75%
06/30/19	3.75%
09/30/19	3.75%

, with a final payment of all principal and interest not sooner paid on the Term Loan due and payable on the Term Loan Maturity Date.

-2-

1.6. Section 6.6 of the Credit Agreement shall be amended and restated in its entirety to read as follows:

Section 6.6. No Material Adverse Change. Since March 31, 2013 (the Fifth Amendment Effective Date for TEWI and its Subsidiaries), there has been no change in the condition (financial or otherwise) or business prospects of any Loan Party or any Subsidiary of a Loan Party except those occurring in the ordinary course of business, which individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

1.7. Section 8.5 of the Credit Agreement shall be amended by amending and restating clauses (b), (c) and (e) to read as follows:

(b) as soon as available, and in any event no later than 45 days after the last day of the first three fiscal quarters of each fiscal year of the Borrower, a copy of the consolidated and consolidating balance sheet of (i) the Loan Parties and (ii) the Borrower and its Subsidiaries, each as of the last day of such fiscal quarter and the consolidated and consolidating statements of income, retained earnings, and cash flows of (i) the Loan Parties and (ii) the Borrower and its Subsidiaries, each for the fiscal quarter and for the fiscal year-to-date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by the Borrower in accordance with GAAP (subject to the absence of footnote disclosures and year-end audit adjustments) and certified to by a Financial Officer of the Borrower;

-3-

(c) as soon as available, and in any event no later than 120 days after the last day of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Loan Parties and their Non-Canadian Subsidiaries as of the last day of the fiscal year then ended and the consolidated statements of income, retained earnings, and cash flows of the Loan Parties and their Non-Canadian Subsidiaries for the fiscal year then ended, and accompanying notes thereto and a supplemental informational section that contains consolidating financial statements for the fiscal year then ended, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied in the case of the consolidated financial statements by a compilation report (or, if requested by the Bank by no later than September 15th each year, an unqualified opinion) of BDO USA, LLP or another firm of independent public accountants of recognized standing, selected by the Borrower and reasonably satisfactory to the Bank, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Loan Parties and Non-Canadian Subsidiaries of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended;

(e) as soon as available, and in any event no later than 120 days after the last day of each fiscal year of PECI, a copy of the consolidated balance sheet of PECI and its Subsidiaries as of the last day of the fiscal year then ended and the consolidated statements of income, retained earnings, and cash flows of PECI and its Subsidiaries for the fiscal year then ended, and accompanying notes thereto and a supplemental informational section that contains consolidating financial statements for the fiscal year then ended, each in reasonable detail showing in comparative form the figures for the previous fiscal year, accompanied in the case of the consolidated financial statements by a compilation report (or, if requested by the Bank by no later than September 15th each year, an unqualified opinion) of BDO USA, LLP or another firm of independent public accountants of recognized standing, selected by PECI and reasonably satisfactory to the Bank, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of PECI and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended;

-4-

1.8. Section 8.7 of the Credit Agreement shall be amended by (i) deleting the word “and” at the end of clause (o), and (ii) inserting new clauses (q) and (r) to read as follows:

(q) unsecured Indebtedness of TEWI in an aggregate amount of principal amount not to exceed $3,300,000 (plus accrued interest) or such greater amount as may be approved by the Bank; and

(r) Indebtedness in an amount of up to $2,900,000 of TEWI owing to PTES on the Fifth Amendment Effective Date.

1.9. Section 8.9 of the Credit Agreement shall be amended by (i) deleting the word “and” at the end of clause (i), (ii) redesignating clause (j) as clause (l) and (iii) inserting new clauses (j) and (k) to read as follows:

(j) a $2,900,000 loan on the Fifth Amendment Effective Date to TEWI by PTES, together with any further advances made to TEWI pursuant to Section 8.7(e), which loan may be converted, in whole or in part, into an equity investment;

(k) the Borrower’s creation of and investment in PTES to facilitate the TEWI Acquisition; and

1.10. Section 8.23(a) of the Credit Agreement shall be amended and restated in its entirety to read as follows:

(a) Total Leverage Ratio. As of the last day of each fiscal quarter of the Borrower ending during the relevant period set forth below, the Loan Parties and their Non-Canadian Subsidiaries shall not permit the Total Leverage Ratio to be greater than the corresponding ratio set forth opposite such period:

-5-

Period(s) Ending	Total Leverage Ratio shall not be greater than:
Fiscal quarters ending on or about 12/31/14—9/30/15	3.75 to 1.0
Fiscal quarters ending on or about 12/31/15 and at all times thereafter	3.00 to 1.0

1.11. Schedule 6.2 to the Credit Agreement shall be replaced with Schedule 6.2 attached hereto.

Section 2. Conditions Precedent.

The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:

2.1. The Borrower, the Guarantors and the Bank shall have executed and delivered this Amendment.

2.2. The Bank shall have received copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment to the extent the Bank or its counsel may reasonably request.

2.3. Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to the Bank and its counsel, and the Bank shall have received an opinion of counsel as to each new Guarantor.

2.4. The Bank shall have received a non-refundable closing fee of $12,500.

2.5. All of the conditions precedent set forth in Section 7.3 of the Credit Agreement shall be satisfied with respect to the TEWI Acquisition, as if (a) all references therein to “Permitted Acquisition” were instead to the “TEWI Acquisition” and (b) clause (e) thereof referred to the financial covenants set forth in Section 8.26 as of September 30, 2014.

2.6. The TEWI Acquisition shall meet all of the conditions of a Permitted Acquisition except that no Quality of Earnings Report is required.

2.7. The Bank shall have received a certificate from a Responsible Officer of the Borrower certifying that since September 30, 2014, no Material Adverse Effect has occurred and that there is no litigation, action or other legal proceeding pending or known to be threatened against the Borrower or any Guarantor which could reasonably be expected to have a Material Adverse Effect on the Borrower or any Guarantor.

-6-

2.8. The Bank shall be satisfied with the capital and organizational structure of the TEWI Acquisition, including that the total equity and debt investment does not exceed $6,800,000.

Section 3. Conditions Subsequent.

The Borrower hereby covenants and agrees that the following items may be delivered after the Fifth Amendment Effective Date, notwithstanding any requirements of Section 2 above.

3.1. Within 90 days of the Fifth Amendment Effective Date, the Borrower shall deliver satisfactory opinions with respect to all remaining new Guarantors (other than those formed in Delaware, which shall be required on the Fifth Amendment Effective Date).

Section 4. Representations.

In order to induce the Bank to execute and deliver this Amendment, the Borrower hereby represents to the Bank that as of the date hereof (a) the representations and warranties set forth in Section 6 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 6.5 shall be deemed to refer to the most recent financial statements of the Borrower delivered to the Bank) and (b) the Borrower is in compliance with the terms and conditions of the Credit Agreement and no Default or Event of Default has occurred and is continuing under the Credit Agreement or shall result after giving effect to this Amendment.

Section 5. Miscellaneous.

5.1. The Borrower and the Guarantors heretofore executed and delivered to the Bank the Security Agreement and certain other Collateral Documents. The Borrower and the Guarantors hereby acknowledge and agree that the Liens created and provided for by the Collateral Documents continue to secure, among other things, the Secured Obligations arising under the Credit Agreement as amended hereby; and the Collateral Documents and the rights and remedies of the Bank thereunder, the obligations of the Borrower and Guarantors thereunder, and the Liens created and provided for thereunder remain in full force and effect and shall not be affected, impaired or discharged hereby. Nothing herein contained shall in any manner affect or impair the priority of the liens and security interests created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect to this Amendment.

5.2. Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

-7-

5.3. The Borrower agrees to pay on demand all costs and expenses of or incurred by the Bank in connection with the negotiation, preparation, execution and delivery of this Amendment, including the reasonable fees and expenses of counsel for the Bank.

5.4. This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as delivery of a manually executed counterpart hereof. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Illinois.

[Signature Page to Follow]

-8-

This Fifth Amendment to Credit Agreement is entered into as of the date and year first above written.

	“Borrower”

	Pioneer Power Solutions, Inc.

	By	/s/ Andrew Minkow
		Name Andrew Minkow
		Title Chief Financial Officer

	“Guarantors”

	Jefferson Electric, Inc.

	By	/s/ Andrew Minkow
		Name Andrew Minkow
		Title Chief Financial Officer

	Pioneer Critical Power Inc.

	By	/s/ Andrew Minkow
		Name Andrew Minkow
		Title Chief Financial Officer

	Pioneer Custom Electrical Products Corp.

	By	/s/ Andrew Minkow
		Name Andrew Minkow
		Title Chief Financial Officer

Accepted and agreed to.

	Bank of Montreal, acting through its Chicago Branch

	By	/s/ Joseph W. Linder
		Name Joseph W. Linder
		Title Vice President

[Signature Page to Fifth Amendment to Credit Agreement]

Schedule 6.2

Subsidiaries

Name	Jurisdiction of Organization	Percentage Ownership	Owner

Pioneer Critical Power, Inc.	Delaware	100%	Borrower

Jefferson Electric, Inc.	Delaware	100%	Borrower

Nexus Custom Magnetics, LLC	Texas	100%	Jefferson Electric, Inc.

JE Mexican Holdings, Inc.	Delaware	100%	Borrower

Jefferson Electric Mexico Holdings, LLC	Wisconsin	100%	JE Mexican Holdings, Inc.

Nexus Magneticos de Mexico, S. de R.L. de C.V.	Mexico	100%	Nexus Custom Magnetics, LLC—99% Jefferson Electric Mexico Holdings, LLC—1%

Pioneer Electrogroup Canada, Inc.	Quebec	100%	Borrower

Pioneer Custom Electrical Products Corp.	Delaware	100%	Borrower

PTES Acquisition Corp.	Delaware	100%	PCP

Titan Energy Worldwide, Inc.	Nevada	>51%	PTES

Stellar Energy Services, Inc.	Minnesota	100%	TEWI

Titan Systems Northeast, Inc.	Minnesota	100%	TEWI

Grove Power, Inc.	Florida	100%	TEWI

Boards:

Quotes:

Boards

News

Market Data

Markets

Discover

Your Recent History