FORM OF PROMISSORY NOTE
 

$300,000.00 January 8, 2010

 
FOR VALUE RECEIVED TITAN ENERGY WORLDWIDE, INC. (the "Maker"), hereby promises
to pay to [________], an individual, or his successors and assigns (the
"Payee"), at [_____] or such other address as Payee shall provide in writing to
the Maker for such purpose, the principal sum of Three Hundred Thousand Dollars
(U.S. $300,000.00) (the "Principal Amount").
 

 
1. 
Payments and Maturity. Maker agrees to repay the Principal Amount and
simple Interest at the rate of 10% per annum by or before January 8, 2012 (the
"Maturity Date"). All accrued interest will be paid on the Maturity Date.

 

 
2. 
No Prepayment Penalty. The Note may be paid in whole or in part with
no prepayment penalty.

 

 
3. 
Warrants. The Company shall issue to the Payee five-year Warrants to purchase
an aggregate of Six Hundred Thousand (600,000) shares of the Company's
common stock, $0.0001 par value per share (the "Common Stock") with an exercise
price of $0.25 per share (the "Warrants").

 

 
4. 
Conversion Option.

 

 
(a) 
The Payee, at its sole option, shall have the right to convert the
PrincipalAmount and all accrued, but unpaid Interest on this Note into
commonshares of the Company (the "Conversion Shares") by submitting a written
notice (the "Optional Conversion Election Form"), in the form of Exhibit A
annexed hereto, electing to exercise its optional conversion rights (the
"Optional Conversion"). The date the Optional Conversion Election Form is
received by the Maker shall be deemed the Conversion Date.

 

 
(b) 
The number of common shares issued to the Payee upon conversion (the "Conversion
Shares") will be determined as follows: [Principal Amount + Unpaid Interest]
multiplied by 4 (four).

 
(c) 
Conversion Mechanics.

 

 
(i) 
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary
set forth herein, upon the exercise of Holders Optional Conversion Right, the
Holder shall be required to physically surrender this Note (or any affidavit of
lost Note) to the Company in order to receive the Conversion Shares and
Conversion Warrants due upon conversion of this Note by the Company.

 

 
(ii) 
Delivery of Shares Upon Conversion. Upon receipt by the Company of this Note(or
any affidavit of lost Note) and provided the Holder has converted this Note
inaccordance with the requirements of this Note, the Company shall issue and
deliver orcause to be issued and delivered to or upon the order of the Holder
the Certificate(s) for the Conversion Shares no later than two (2) business days
after such receipt (the "Deadline").

 
 
 

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(d) Concerning the Shares. Conversion Shares may not be sold or transferred
unless (i)such shares are sold pursuant to an effective registration statement
under the Act or (ii) the Company or its transfer agent shall have been
furnished with an opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or
transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule
144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule
144) of the Holder who agrees to sell or otherwise transfer the shares only in
accordance with this Note and who is an accredited investor. Except as otherwise
provided herein, until such time as the Conversion Shares have been registered
under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, each certificate for Conversion Shares that has not been so
included in an effective registration statement or that has not been sold
pursuant to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the following form,
as appropriate:
 
"THE SECURITIES REPRESENTED BY THISCERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED ORASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR
REGULATION S UNDER SAID ACT."
 
The legend set forth above shall be removed and the Company shall issue to the
Holder a new certificate therefore free of any transfer legend if (i) the
Company or its transfer agent shall have received an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Securities Act and the shares are so
sold or transferred, (ii) such Holder provides the Company or its transfer agent
with reasonable assurances that the Conversion Shares can be sold pursuant to
Rule 144 or Rule 144(k) or (iii) if the Conversion Shares are registered for
resale under an effective registration statement filed under the Act.
 
(e) Delivery of Conversion Warrants Upon Conversion. Upon receipt by the Company
of this Note (or any affidavit of lost Note) and provided the Holder has
converted this Note in accordance with the requirements of this Note, the
Company shall issue and deliver or cause to be issued and delivered to or upon
the order of the Holder the Conversion Warrants no later than two (2) business
days after such receipt (the "Deadline").
 
 
 

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(f) Status as Shareholder. Upon submission of this Note by the Holder and the
satisfaction of the Conversion Conditions by the Holder, (i) the shares covered
thereby shall be deemed Conversion Shares and (ii) the Holder's rights as a
Holder of this Note shall cease and terminate, excepting only the right to
receive certificates for the Conversion Shares and the Conversion Warrants and
to any remedies provided herein or otherwise available at law or in equity to
such Holder because of a failure by the Borrower to comply with the terms of
this Note. Notwithstanding the foregoing, if a Holder has not received
certificates for all Conversion Shares and the Conversion Warrants prior to the
third (3rd) business day after the expiration of the Deadline with respect to
any reason, then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder shall regain the
rights of a Holder of this Note and the Company shall, as soon as practicable,
return such unconverted Note to the Holder or, if the Note has not been
surrendered, adjust its records to reflect that such portion of this Note has
not been converted. In all cases, the Holder shall retain all of its rights and
remedies for the Company's failure to convert this Note.
 
5. Mandatory Prepayment Upon Triggering Events. Upon the occurrence of a
Triggering Event (as defined below), the Payee shall have the right, exercisable
at the sole option of the Payee, to require the Maker to prepay all or a portion
of the outstanding principal amount of this Note plus all accrued and unpaid
interest thereon, which shall be due and payable within thirty (30) Business
Days of the date on which the notice for the payment therefore is provided by
the Payee. If the Maker fails to pay such payment hereunder in full pursuant to
this Section on the date such amount is due in accordance with this Section, the
Maker will pay interest thereon at a rate of 12% per annum (or such lesser
amount permitted by applicable law), accruing daily from such date until such
amount, plus all such interest thereon, is paid in full.
 

 
(a) 
"Triggering Event" means any one or more of the following events (whateverthe
reason and whether it shall be voluntary or involuntary. or effected byoperation
of law or pursuant to any judgment, decree or order of any court. or any order,
rule or regulation of any administrative or governmental body):

 

 
(i) 
any default in the payment of the principal or interest or other payments  owing
inrespect of this Note, free of any claim of subordination, as and when the same
shallbecome due and payable;

 

 
(ii) 
the Maker or any of its subsidiaries shall commence or there shall be commenced
against the Maker or any such subsidiary a case under any applicable
bankruptcyor insolvency laws as now or hereafter in effect or any successor
thereto; or the Maker commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Maker or any subsidiary thereof or there is commenced
against the Maker or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 60 days; or the Maker
or any subsidiary. thereof is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Maker or any subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property which continues undercharged
or unstated for a period of 60 days; or the Maker or any subsidiary thereof
makes a general assignment for the benefit of creditors; or the Maker shall fail
to pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or the Maker or any subsidiary thereof shall
call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or the Maker or any subsidiary thereof
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate or other action is taken
by the Maker or any subsidiary thereof for the purpose of effecting any of the
foregoing;

 
 
 

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(iii) 
the Maker shall fail to observe or perform any other covenant, agreement or
warranty contained in, and such failure or breach shall not, if subject to the
possibility of a cure by the Maker, have been remedied within thirty (30) days
after the date on which notice of such failure or breach shall have been given.

 
6. 
No Waiver of Payee's Rights, etc. All payments of principal and interest shall
be made without setoff, deduction or counterclaim. No delay or failure on the
part of the Payee in exercising any of its options, powers, or rights, nor any
partial or single exercise of its options, powers or rights shall constitute a
waiver thereof or of any other option, power or right, and no waiver on the part
of the Payee of any of its options, powers or rights shall constitute a waiver
of any other option, power or right. The Maker hereby waives presentment of
payment, protest, and notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note. Acceptance by the
Payee of less than the full amount due and payable hereunder shall in no way
limit the right of the Payee to require full payment of all sums due and payable
hereunder in accordance with the terms hereof.

 
7. 
Modifications. No term or provision contained herein may be modified, amended
or waived except by written agreement or consent signed by the party to be bound
thereby.

 
8. 
Cumulative Rights and Remedies; Usury. The rights and remedies of the Payee
expressed herein are cumulative and not exclusive of any rights and remedies
otherwise available. If it shall be found that any interest outstanding
hereunder shall violate applicable laws governing usury, the applicable rate of
interest outstanding hereunder shall be reduced to the maximum permitted rate of
interest under such law.

 
9. 
Collection Expenses. If this obligation is placed in the hands of an attorney
for collection after default, and provided the Payee prevails on the merits in
respect to its claim of default, the Maker shall pay (and shall indemnify and
hold harmless the Payee from and against), all reasonable attorneys' fees and
expenses incurred by the Payee in pursuing collection of this Note.

 
10. 
Successors and Assigns. This Note shall be binding upon the Maker and its
successors and shall inure to the benefit of the Payee and its successors and
assigns. The term "Payee" as used herein, shall also include any endorsee,
assignee or other holder of this Note.

 
 
 

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11. 
Lost or Stolen Promissory Note. If this Note is lost, stolen, mutilated or
otherwise destroyed, the Maker shall execute and deliver to the Payee a new
promissory note containing the same terms, and in the same form, as this Note.
In such event, the Maker may require the Payee to deliver to the Maker an
affidavit of lost instrument and customary indemnity in respect thereof as a
condition to the delivery of any such new promissory note.

 
12. 
Due Authorization. This Note has been duly authorized, executed and delivered by
the Maker and is the legal obligation of the Maker, enforceable against the
Maker in accordance with its terms.

 
13. 
Governing Law. This Note shall be governed by and construed and enforced in
accordance with the internal laws of the State of Michigan without regard to the
principles of conflicts of law thereof. Each party hereby irrevocably submits to
the exclusivejurisdiction of the state and federal courts sitting in the State
of Michigan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.

 
14. 
Definitions. For the purposes hereof, the following terms shall have the
following meanings:

 
"Business Day" means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in the State of Minnesota
or State of Nevada are authorized or required by law or other government action
to close.
 
"Person" means a corporation, an association, a partnership, a limited liability
company, an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
 
 
 

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IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be duly
executed and delivered as of the date first set forth above.
 
 
FOR: TITAN ENERGY WORLDWIDE, INC.
 
\s\ Jeffrey W. Flannery
 Jeffrey W. Flannery
 
 
 

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Optional Conversion Election Form
 
 
2010
 
 
Titan Energy Worldwide, Inc.
10315 Grand River, Suite 302
Brighton, MI 48116
 
Re: Optional Conversion of Promissory Note
 
Gentlemen:
 
You are hereby notified that, pursuant to, and upon the terms and conditions of
that certain Promissory Note of Titan Energy Worldwide, Inc. (the "Company"), in
the principal amount of $300,000.00 (the "Note"), held by me, I hereby elect to
exercise my right of Optional Conversion (as such terms are defined in the
Note), effective as of the date of this writing.
 
Please provide me with all applicable instructions for the Optional Conversion
of the Note, and issue certificate(s) for the applicable shares issuable upon
the Optional Conversion, in the name of the person provided below.
 

          Very truly yours,                  
 
           Name:  

 

Please issue shares as follows:                            
 
       
Name
       
 
   
 
             Address                              
Social Security No. of Shareholder
                 

 
 
 

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