Document:

EXHIBIT 10.1

 

SETTLEMENT AGREEMENT AND STIPULATION

 

THIS SETTLEMENT AGREEMENT
and Stipulation dated as of March 19, 2018 (“Agreement”) by and between plaintiff
Livingston Asset Management LLC (“LIVINGSTON”), and defendant Coates International, Ltd. (“COMPANY”).

 

BACKGROUND:

 

WHEREAS, there are
bona fide outstanding Claims against the Company in the principal amount of not less than $69,389.00; and

 

WHEREAS, these liabilities are
past due; and

 

WHEREAS. LIVINGSTON
acquired such liabilities on the terms and conditions set forth in Claim Purchase Agreement(s), subject however to compliance with
the provisions hereof; and

 

WHEREAS, LIVINGSTON
and the Company desire to resolve, settle, and compromise certain liabilities (hereinafter collectively referred to as the “Claims”).

 

NOW, THEREFORE, the parties hereto
agree as follows:

 

1.       Defined
Terms. As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings
to be equally applicable to both the singular and plural forms of the terms defined):

 

“AGREEMENT” shall have
the meaning specified in the preamble hereof.

 

“CLAIM AMOUNT- shall mean
$69,389.00

 

“COMMON STOCK”
shall mean the Company’s common stock. $0.0001 par value per share, and any shares of any other class of common stock whether now
or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon
liquidation of the Company).

 

    	 	1	 

     

    

 

“COURT” shall
mean the Circuit Court of Baltimore County, Maryland.

 

“DISCOUNT” shall
mean thirty (30%) percent.

 

“DTC” shall have the
meaning specified in Section 3b.

 

“DWAC” shall have the
meaning specified in Section 3b.

 

“FAST” shall have the
meaning specified in Section 3b.

 

“GROSS PROCEEDS” shall
mean proceeds from sales of Settlement Shares by LIVINGSTON.

 

“NET PROCEEDS” shall
mean Gross Proceeds less all brokerage, clearing and delivery related fees and charges associated with the generation of such Gross
Proceeds, including but not limited to, commission and execution fees, ticket and deposit fees, DTC and Non-DTC, transfer agent
and clearing agent fees.

 

“PRINCIPAL MARKET”
shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the Over the Counter Bulletin Board, OTCXD, the American Stock
Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

 

“REMITTANCE AMOUNT”
shall mean NET PROCEEDS multiplied by one minus the Discount ((1 — 0.30) or 0.70);

 

“SELLER”
shall mean any individual or entity listed on Schedule A, who originally owned the Claims.

 

“SETTLEMENT
SHARES” shall have the meaning specified in Section 3a.

 

    	 	2	 

     

    

 

“TRADING DAY”
shall mean any day during which the Principal Market shall be open for business.

 

“TRANSFER
AGENT” shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the
Common Stock upon the Company’s appointment of any such substitute or replacement transfer agent).

 

2.     Fairness
Hearing. Upon the execution hereof, Company and LIVINGSTON agree, pursuant to Section 3(a) (10) of the Securities Act of 1933
(the -Act”), and the applicable section of the General Statutes of Maryland, to promptly submit the terms and conditions of
this Agreement to the Court for a hearing on the fairness of such terms and conditions. and the issuance exempt from registration
of the Settlement Shares. This Agreement shall become binding upon the parties only upon entry of an order by the Court substantially
in the form annexed hereto as Exhibit A (the “Order”).

 

3.     Settlement
Shares. a. Following entry of an Order by the Court in accordance with Paragraph 2 herein and the delivery by LIVINGSTON and
Company of the Stipulation of Dismissal (as defined below), in settlement of the Claims, the Company shall issue and deliver to
LIVINGSTON shares of its Common Stock (the “Settlement Shares”) in one or more tranches as necessary, and subject to
adjustment and ownership limitations as set forth below, sufficient to generate proceeds such that the aggregate Remittance Amount
equals the Claim Amount.

 

b.       No
later than the fifth Trading Day following the date that the Court enters the Order, time being of the essence, Company shall:
(i) cause its legal counsel to issue an opinion to Company’s transfer agent, in form and substance reasonably acceptable to LIVINGSTON
and such transfer agent, that the shares of Common Stock to be issued as the initial issuance and any additional issuance are legally
issued, fully paid and non-assessable. are exempt from registration under the Securities Act, may be issued without restrictive
legend, and may be resold by LIVINGSTON without restriction pursuant to the Court Order; and (ii) issue the Settlement Shares,
in tranches as necessary, by physical delivery, or as Direct Registration Systems (DRS) shares to LIVINGSTON’s account with The
Depository Trust Company (DTC) or through the Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal Agent
Commission (DWAC) system, without any legends or restriction on transfer pursuant to the Court Order. The date upon which the initial
tranche, or additional tranche, of the Settlement Shares has been received into LIVINGSTON’s account and are available for sale
by LIVINGSTON shall be referred to as the “Issuance Date”.

 

c.       The
Company shall deliver to LIVINGSTON, through the initial tranche and any required additional tranches, that number of
Settlement Shares the proceeds of sales of which will generate an aggregate Remittance Amount equal to the Claim Amount.
Immediately prior to the Issuance Date, LIVINGSTON shall cause to be disbursed to Sellers the Remittance Amount associated
with any such tranche of Settlement Shares in accordance with the Claim Purchase Agreements. Prior to the Issuance Date,
LIVINGSTON shall deliver the Remittance Amount associated with any such tranche to the Escrow Agent, with instructions to
disburse those funds to the Sellers. Any Remittance Amount disbursed (and the associated sales of Settlement Shares) executed
to satisfy claims of Sellers who are deemed affiliates of the Company shall be made only after the proscribed holding period
has lapsed. To the extent that the Company issues Settlement Shares in excess of that necessary to satisfy the aggregate
Claim Amount, LIVINGSTON shall return any excess Settlement Shares to Company for reinstatement as authorized, but unissued
shares.. The parties reasonably estimate that the fair market value of the Settlement Shares to be received by LIVINGSTON is
equal to approximately $99,127.00. The parties acknowledge that the number of Settlement Shares to be issued pursuant to this
Agreement is indeterminable as of the date of its execution, and could well exceed the current existing number of shares
outstanding as of the date of its execution.

 

d.       Notwithstanding
anything to the contrary contained herein, the Settlement Shares beneficially owned by LIVINGSTON at any given time shall not exceed
the number of such shares that, when aggregated with all other shares of Company then beneficially owned by LIVINGSTON, or deemed
beneficially owned by LIVINGSTON, would result in LIVINGSTON owning more than 9.99% of all of such Common Stock as would be outstanding
on such date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. In compliance
therewith, the Company agrees to deliver the Initial Issuance and any additional issuances in one or more tranches.

 

    	 	3	 

     

    

 

4.       Necessary
Action. At all times after the execution of this Agreement and entry of the Order by the Court, each party hereto agrees to
take or cause to be taken all such necessary action including, without limitation, the execution and delivery of such further instruments
and documents, as may be reasonably requested by any party for such purposes or otherwise necessary to effect and complete the
transactions contemplated hereby.

 

5.       Releases.
Upon receipt of all of the Settlement Shares required to be delivered hereby, in consideration of the terms and conditions of this
Agreement, and except for the obligations, representations and covenants arising or made hereunder or a breach hereof, the parties
hereby release, acquit and forever discharge the other and each, every and all of their current and past officers, directors, shareholders,
affiliated corporations, subsidiaries, agents, employees, representatives, attorneys, predecessors, successors and assigns (the
“Released Parties”), of and from any and all claims, damages, cause of action, suits and costs, of whatever nature, character
or description, whether known or unknown, anticipated or unanticipated, which the parties may now have or may hereafter have or
claim to have against each other with respect to the Claims. Nothing contained herein shall be deemed to negate or affect LIVINGSTON’s
right and title to any securities heretofore or hereafter issued to it by Company or any subsidiary of Company.

 

6.     Representations.
Company hereby represents, warrants and covenants to LIVINGSTON as follows:

 

a.       There
are 12,000,000,000 shares of Common Stock of the Company authorized, of which 45,366,624 Shares of Common Stock are issued and
outstanding as of March 16, 2018;

 

b.       The
shares of Common Stock to be issued pursuant to the Order are duly authorized, and when issued will be duly and validly issued,
fully paid and non-assessable, free and clear of all liens, encumbrances and preemptive and similar rights to subscribe for or
purchase securities;

 

    	 	4	 

     

    

 

c.       Upon
Court approval of this Stipulation and entry of the Order, the shares will be exempt from registration under the Securities Act
and issuable without any restrictive legend;

 

d.      The
Company has, or will have, reserved from its duly authorized capital stock a number of shares of Common Stock at least equal to
the number of shares that could be issued pursuant to the terms of the Order;

 

e.      If
at any time it appears reasonably likely that there may be insufficient authorized shares to fully comply with the Order, Company
shall promptly increase its authorized shares to ensure its ability to timely comply with the Order;

 

f.       The
execution of this Agreement and performance of the Order by Company and LIVINGSTON will not (1) conflict with, violate or cause
a breach or default under any agreements between Company and any creditor (or any affiliate thereof) related to the account receivables
comprising the Claims, or (2) require any waiver, consent, or other action of the Company or any creditor, or their respective
affiliates, that has not already been obtained;

 

g.      Without
limitation, the Company hereby waives any provision in any agreement related to the account receivables comprising the Claims requiring
payments to be applied in a certain order, manner, or fashion, or providing for exclusive jurisdiction in any court other than
this Court;

 

h.      The
Company has all necessary power and authority to execute, deliver and perform all of its obligations under this Agreement;

 

i.       The
execution, delivery and performance of this Agreement by Company has been duly authorized by all requisite action on the part of
Company (including a majority of its independent directors), and this Agreement has been duly executed and delivered by Company;

 

j.       Company
did not enter into the transaction giving rise to the Claims in contemplation of any sale or distribution of Company’s common stock
or other securities;

 

    	 	5	 

     

    

 

k.      There
has been no modification, compromise, forbearance, or waiver entered into or given by the Company with respect to the Claims. There
is no action based on the Claims by the Company that is currently pending in any other court or other legal venue, and no judgments
based upon the Claims have been previously entered in any legal proceeding;

 

l.       There
are no taxes due, payable or withholdable as an incident of Seller’s provision of goods and services, and no taxes will be due,
payable or withholdable as a result of settlement of the Claims;

 

m.      To
the best of the Company’s knowledge, no Non-Affiliate Seller is, directly or indirectly, utilizing any of the proceeds received
from LIVINGSTON for selling the Claims to provide any consideration to or invest in any manner in the Company or any affiliate
of the Company;

 

n.       Company
has not received any notice (oral or written) from the SEC or Principal Market regarding a halt, limitation or suspension of trading
in the Common Stock; and

 

o.       No
Non-Affiliate Seller will, directly or indirectly, receive any consideration from or be compensated in any manner by, the Company,
or any affiliate of the Company, in exchange for or in consideration of selling the Claims.

 

p.       Company
acknowledges that LIVINGSTON or its affiliates may from time to time, hold outstanding securities of the Company, including securities
which may be convertible in shares of the Company’s common stock at a floating conversion rate tied to the current market price
for the stock. The number of shares of Common Stock issuable pursuant to this Agreement may increase substantially in certain circumstances,
including, but not necessarily limited to the circumstance wherein the trading price of the Common Stock declines during the Valuation
Period. The Company’s executive officers and directors have studied and fully understand the nature of the transaction contemplated
by this Agreement and recognize that they have a potential dilutive effect. The board of directors of the Company has concluded
in its good faith business judgment that such transaction is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the Settlement Shares is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the Company.

 

    	 	6	 

     

    

 

LIVINGSTON hereby represents, warrants
and covenants to Company as follows:

 

a.       It
acquired the Claims pursuant to the execution of Claim Purchase Agreements with Sellers, to whom payment is conditioned upon the
full performance by Company of the terms of this Agreement;

 

b.       It
is a limited liability company duly filed and in good standing under the laws of Florida; and

 

c.       The
execution, delivery and performance of this Stipulation by LIVINGSTON has been duly authorized by all requisite action on the part
of LIVINGSTON, and this Stipulation has been duly executed and delivered by LIVINGSTON.

 

7.     Continuing
Jurisdiction. In order to enable the Court to grant specific enforcement or other equitable relief in connection with this
Agreement, (a) the parties consent to the continuing jurisdiction of the Baltimore County Circuit Court for purposes of enforcing
this Agreement, and (b) each party to this Agreement expressly waives any contention that there is an adequate remedy at law or
any like doctrine that might otherwise preclude injunctive relief to enforce this Agreement.

 

8.     Conditions
Precedent/ Default. 

 

(a)       If
Company shall default in promptly delivering the Settlement Shares to LIVINGSTON in the form and mode of delivery as required by
Section 3 herein;

 

(b)       If
the Order shall not have been entered by the Court on or prior to May 31, 2018;

 

(c)       If
the Company shall fail to comply with the Covenants set forth in Paragraph 14 hereof;

 

    	 	7	 

     

    

 

b.       If
Bankruptcy, dissolution, receivership, reorganization, insolvency or liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company; or if the trading of the
Common Stock shall have been halted, limited, or suspended by the SEC or on the Principal Market; or trading in securities generally
on the Principal Market shall have been suspended or limited; or minimum prices shall have been established for securities traded
on the Principal Market; or there shall have been any material adverse change (i) in the Company’s finances or operations, or (ii)
in the financial markets such that, in the reasonable judgment of LIVINGSTON, makes it impracticable or inadvisable to trade the
Settlement Shares; and such suspension, limitation or other action is not cured within ten (10) trading days; then, at the sole
option of LIVINGSTON, LIVINGSTON may deem the Company to be in default of the Agreement and Order, and LIVINGSTON may treat this
Agreement as null and void.

 

9.    Information.
Company and LIVINGSTON each represent that prior to the execution of this Agreement, they have fully informed themselves of its
terms, contents, conditions and effects, and that no promise or representation of any kind has been made to them except as expressly
stated in this Agreement.

 

10.  Ownership
and Authority. Company and LIVINGSTON represent and warrant that they have not sold, assigned, transferred, conveyed or otherwise
disposed of any or all of any claim, demand, right, or cause of action, relating to any matter which is covered by this Agreement,
that each is the sole owner of such claim, demand, right or cause of action, and each has the power and authority and has been
duly authorized to enter into and perform this Agreement and that this Agreement is the binding obligation of each, enforceable
in accordance with its terms.

 

11.  No
Admission. This Agreement is contractual and it has been entered into in order to compromise disputed claims and to avoid the
uncertainty and expense of the litigation. This Agreement and each of its provisions in any orders of the Court relating to it
shall not be offered or received in evidence in any action, proceeding or otherwise used as an admission or concession as to the
merits of the Action or the liability of any nature on the part of any of the parties hereto except to enforce its terms.

 

    	 	8	 

     

    

 

12.  Binding
Nature. This Agreement shall be binding on all parties executing this Agreement and their respective successors, assigns and
heirs.

 

13.  Authority
to Bind. Each party to this Agreement represents and warrants that the execution, delivery and performance of this Agreement
and the consummation of the transactions provided in this Agreement have been duly authorized by all necessary action of the respective
entity and that the person executing this Agreement on its behalf has the full capacity to bind that entity. Each party further
represents and warrants that it has been represented by independent counsel of its choice in connection with the negotiation and
execution of this Agreement, and that counsel has reviewed this Agreement.

 

14. 
Covenants.

 

a.       For
so long as LIVINGSTON or any of its affiliates holds any Settlement Shares, neither Company nor any of its affiliates shall, without
the prior written consent of LIVINGSTON (which may not be unreasonably withheld), vote any shares of Common Stock owned or controlled
by it (unless voting in favor of a proposal approved by a majority of Company’s Board of Directors), or solicit any proxies or
seek to advise or influence any person with respect to any voting securities of Company; in favor of (1) causing a class of securities
of Defendant to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association, (2) causing a class of equity securities of Company to become eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, (3) taking any
action which would impede the purposes and objects of this Settlement Agreement.

 

b.      Upon the signing
of the Order by the Court, the Company shall file such OTCMarkets.com or SEC filings as may be required in respect of this
Settlement Agreement.

 

15.    Indemnification.
Company shall indemnify, defend and hold LIVINGSTON and its affiliates harmless with respect to all obligations of Company arising
from or incident or related to this Agreement, including, without limitation, any claim or action brought derivatively or directly
by the Seller or shareholders of Company.

 

    	 	9	 

     

    

 

16.   Legal
Effect. The parties to this Agreement represent that each of them has been advised as to the terms and legal effect of this
Agreement and the Order provided for herein, and that the settlement and compromise stated herein is final and conclusive forthwith,
subject to the conditions stated herein, and each attorney represents that his or her client has freely consented to and authorized
this Agreement after have been so advised.

 

17.   Waiver
of Defense. Each party hereto waives a statement of decision, and the right to appeal from the Order after its entry. Company
further waives any defense based on the rule against splitting causes of action. The prevailing party in any motion to enforce
the Order shall be awarded its reasonably attorney fees and expenses in connection with such motion. Except as expressly set forth
herein, each party shall bear its own attorneys’ fees, expenses and costs.

 

18.   Signatures.
This Agreement may be signed in counterparts and the Agreement, together with its counterpart signature pages, shall be deemed
valid and binding on each party when duly executed by all parties. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.

 

19.   Choice
of Law, Etc. Notwithstanding the place where this Agreement may be executed by either of the parties, or any other factor,
all terms and provisions hereof shall be governed by and construed in accordance with the laws of the State of Maryland, applicable
to agreements made and to be fully performed in that State and without regard to the principles of conflicts of laws thereof. Any
action brought to enforce, or otherwise arising out of this Agreement shall be brought only in the Circuit Court of Baltimore County,
Maryland.

 

20.   Exclusivity.
For a period of one hundred twenty (120) days from the date of the execution of this Agreement, (a) Company and its representatives
shall not directly or indirectly discuss, negotiate or consider any proposal, plan or offer from any other party relating to any
liabilities, or any financial transaction having an effect or result similar to the transactions contemplated hereby, and (b) LIVINGSTON
shall have the exclusive right to negotiate and execute definitive documentation embodying the terms set forth herein and other
mutually acceptable terms.

 

    	 	10	 

     

    

 

21.   Inconsistency.
In the event of any inconsistency between the terms of this Agreement and any other document executed in connection herewith, the
terms of this Agreement shall control to the extent necessary to resolve such inconsistency.

 

22.   NOTICES.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of

 

(a)       the
date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,

 

(b)       the
seventh business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

 

(c)       the
second business day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

 

in each case, addressed to each of the
other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10)
days’ advance written notice similarly given to each of the other parties hereto):

 

Company:

 

Coates International, Ltd.

Attn: Barry Kaye, Chief Financial Officer

Highway 34 & Ridgewood Road

Wall Township, NJ 07719

Tel: 732-449-7717

 

Plaintiff:

 

Livingston Asset Management LLC

2338 Immokalee Rd. Ste. 324

Naples, FL 34110

 

with a copy to:

 

Matheau J. W. Stout, Esq.

400 East Pratt Street

8th Floor

Baltimore. Maryland 21202

Tel (410) 429-7076

 

    	 	11	 

     

    

 

IN WITNESS WHEREOF, the parties have
duly executed this Settlement Agreement and Stipulation as of the date first indicated above.

 

	
         

        
	LIVINGSTON ASSET MANAGEMENT LLC
	 	 	 
	 	By:	/s/ Steven Hicks
	 	Name:	Stephen Hicks
	 	Title:	Manager
	 	 	 
	 	COATES INTERNATIONAL, LTD.
	 	 	 
	 	By:	 /s/ Barry C. Kaye
	 	Name:	Barry C. Kaye
	 	Title:	Chief Financial Officer

 

 

12PIONEER POWER SOLUTIONS, INC. 10-K

Exhibit
10.24

 

Execution Version

 

SECOND
AMENDING AGREEMENT

 

This
Second Amending Agreement is entered into as of March 28, 2018, by and among Pioneer Electrogroup
Canada Inc., a Canadian corporation (the “Borrower”), Pioneer
Power Solutions, Inc. (“PPSI”) and the direct and indirect Canadian Subsidiaries of the Borrower or
of PPSI from time to time party to the Credit Agreement, as Guarantors (the “Guarantors”), and Bank
of Montreal, a Canadian chartered bank (the “Bank”).

 

Preliminary
Statement

 

WHEREAS
the Bank made credit facilities available to the Borrower on the terms
and conditions set out in an Amended and Restated Credit Agreement dated as of April 29, 2016 entered into among the Borrower,
the Guarantors and the Bank, as amended by the First Amending Agreement dated as of March 15, 2017 (as amended, the “Existing
Credit Agreement”);

 

WHEREAS
the parties to the Existing Credit Agreement have agreed to amend the Credit Agreement in the manner set forth herein in order
to, among other things, extend the Revolving Credit Termination Date and the Term Loan B Maturity Date and amend certain other
provisions contained in the Existing Credit Agreement.

 

NOW
THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the parties covenant and agree with each other as follows:

 

Section
1

INTERPRETATION

 

		1.1	Capitalized
                                         terms defined in the Existing Credit Agreement have the same meanings in this Second
                                         Amending Agreement unless otherwise defined herein or the context expressly or by necessary
                                         implication requires otherwise. This Second Amending Agreement is referenced herein as
                                         the “Second Amending Agreement”. For greater certainty, this Second
                                         Amending Agreement amends the Existing Credit Agreement and the term “Agreement”,
                                         as defined in the Existing Credit Agreement, includes (unless the context expressly or
                                         by necessary implication requires otherwise) this Second Amending Agreement to the extent
                                         of such amendments.

 

		1.2	The
                                         insertion of headings in this Second Amending Agreement is for convenience of reference
                                         only and shall not affect the interpretation of this Second Amending Agreement.

 

 

     

    2 

    

 

Section
2

AMENDMENTS – Definitions

 

		2.1	Section
                                         1.1.8 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“1.1.8          “Applicable
Margin” means the following:

 

		(a)	For
                                         the Revolving Facility and Reimbursement Obligations

 

	Type
    of Advance	Rate
    and Applicable Margin
	CDN$
    Direct Advances at Prime Rate	Prime
    Rate + 0.50% per annum
	US$
    Direct Advances at US Base Rate	US
    Base Rate + 0.50% per annum
	US$
    Direct Advances at LIBOR	LIBOR
    + 2.00% per annum.
	Acceptance
    of CDN$ BA 	Acceptance
    fee of 2.00% per annum
	Performance
    Letters of Credit	1.00%
                                         per annum. 

        Minimum
        CDN$500 

	Financial
    Letters of Credit	2.00%
    per annum.
	Documentary
    Letters of Credit	Fees
    to be determined in accordance with the Bank’s fee schedule in effect from time to time

 

		(b)	For
                                         the Term Loan Facility A

 

	Type
    of Advance	Rate
    and Applicable Margin
	Prime
    Rate Loans:	Prime
    Rate + 1.25% per annum

 

     

    3 

    

 

		(c)	For
                                         the Term Loan Facility B

 

	Type
                                         of Advance

                                                                                
	Rate
    and Applicable Margin
	CDN$
    Direct Advances at Prime Rate	Prime
    Rate + 1.25% per annum
	US$
    Direct Advances at US Base Rate	US
    Base Rate + 1.25% per annum
	US$
    Direct Advances at LIBOR	LIBOR
    + 2.50% per annum.
	Acceptance
    of CDN$ BA 	Acceptance
    fee of 2.50% per annum

 

		(d)	For
                                         the MasterCard Facility: in accordance with the MasterCard Agreement and related agreements.”

 

		2.2	Section
                                         1.1.44 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“1.1.44          “EBITDA”
means, with reference to any period, Net Income for such period plus all amounts deducted in arriving at such Net Income
amount in respect of (a) Interest Expense for such period, (b) federal, state, and local income tax expenses for such period,
(c) depreciation of fixed assets and amortization (including, but not limited to, the amortization of any employee stock option
(or similar) compensation plan) of (and other charges with respect to) intangible assets for such period, and (d) extraordinary
fees or expenses not to exceed (i) US$2,000,000 for the applicable periods set forth in Section 8.20(b) ending on or prior to
December 31, 2018 and (ii) US$1,200,000 during any twelve month period thereafter, in each case including any fees and expenses
paid by any Loan Party during such period in connection with this Agreement and the consummation of any Permitted Acquisition
as defined and under the US Credit Agreement.”

 

		2.3	The
                                         words “one (1) month” in Section 1.1.68 of the Existing Credit Agreement
                                         are hereby deleted and replaced with the words “one (1) or two (2) months.”

 

		2.4	Section
                                         1.1.110 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“1.1.110       “Revolving
Credit Termination Date” means the date demand for payment of the Revolving Loans and cash collateralization of the
Letters of Credit is made by the Bank but if no such demand is sooner made, April 1, 2020, or such earlier date on which the Revolving
Credit Line is terminated in whole pursuant to pursuant to Sections 2.14, 9.2 or 9.3.”

 

     

    4 

    

 

		2.5	Section
                                         1.1.122 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“1.1.122      “Term
Loan B Maturity Date” means the earlier of (i) April 1, 2020 and (ii) the date on which the Term Loan B is terminated
in whole pursuant to Section 9.2 or 9.3.”

 

Section
3

amendments – COVENANTS

 

		3.1	Section
                                         2.2 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“2.2         Term
Loan Facility A.

 

Subject
to the terms and conditions hereof, the Bank agrees to make loans (the “Term Loan A”) in Canadian
Dollars to the Borrower in the initial amount of CDN$2,000,000 with an outstanding amount of CDN$47,128.80 as at March 14, 2018.
The Term Loan A has been advanced in one Borrowing on or about May 2, 2011. As provided in Section 2.8(a), the Borrower may elect
that the Term Loan A be outstanding as Prime Rate Loans. No amount repaid or prepaid on the Term Loan A may be borrowed again.”

 

		3.2	Section
                                         2.3 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“2.3         Term
Loan Facility B.

 

Subject
to the terms and conditions hereof, the Bank agrees to make loans (the “Term Loan B”) in Canadian
Dollars to the Borrower in the initial amount of CDN$10,000,000 or the U.S. Dollar Equivalent with an outstanding amount of US$424,000.00
as at March 14, 2018. The Term Loan B has been advanced in four Borrowings namely, in June 30, 2011 (CDN$6,500,000), June 30,
2011 (US$1,600,000), April 16, 2013 (US$1,400,000) and March 8, 2013 (CDN$166,837). As provided in Section 2.8(a), the Borrower
may elect that the Term Loan B be outstanding as Prime Rate Loans, US Base Rate Loans or LIBOR Loans. No amount repaid or prepaid
on the Term Loan B may be borrowed again.”

 

		3.3	Section
                                         2.4.2 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

		“2.4.2	each
                                         Bankers’ Acceptance shall be stated to mature on a Business Day no later than the
                                         Revolving Credit Termination Date, with term of thirty (30) or sixty (60) days, subject
                                         to market availability;”

 

     

    5 

    

 

		3.4	Section
                                         2.10 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“2.10        Maturity
of Loans.

 

		(a)	Revolving
                                         Loans. Each Revolving Loan, both for principal and interest not sooner paid, shall
                                         mature and be due and payable by the Borrower on demand. The Revolving Credit Facility
                                         shall be repaid in full on the Revolving Credit Termination Date.

 

		(b)	Scheduled
                                         Payments of Term Loan A. The Borrower shall make principal payments on the Term Loan
                                         A in installments on the last day of each January, April, July and October in each year,
                                         commencing with the calendar quarter ending July 31, 2011, with the amount of each such
                                         principal installment, as of the Effective Date to equal to the fixed amount 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 

        Fixed
        amount in CDN Dollars 

	04/30/18
    (Term Loan A Maturity Date)	$47,128.80

 

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

 

     

    6 

    

 

		(c)	Scheduled
                                         Payments of Term Loan B. The Borrower shall make principal payments on the Term Loan
                                         B in installments on the last day of each January, April, July and October in each year,
                                         commencing with the calendar quarter ending December 31, 2012, with the amount of each
                                         such principal installment, as of the Effective Date to equal to the fixed amount 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 

        Fixed
        amount in US Dollars 

	 	 
	04/30/18	$36,000
	07/31/18	$36,000
	10/31/18	$36,000
	01/31/19	$36,000
	04/30/19	$36,000
	07/31/19	$36,000
	10/31/19	$36,000
	01/31/20	$36,000
	04/01/20
    (Term Loan B Maturity Date)	Bullet
    payment of $136,000
	 	 

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

 

		3.5	Section
                                         3.1(a) of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

		(a)	“Administration
                                         Fee. On April 1, 2019, the Borrower shall pay to the Bank an administration fee equal
                                         to 0.10% of the Revolving Credit Line then in effect, whether or not in use.”

 

		3.6	Section
                                         8.5(i) of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

		“(i)	as
                                         soon as available, and in any event no later than 30 days prior to the end of each fiscal
                                         year of the Borrower (and for fiscal year 2018, on or before February 28, 2019), a copy
                                         of the consolidated and consolidating business plan for the Borrower and its Subsidiaries
                                         for following fiscal year, such business plan to show the projected consolidated and
                                         consolidating revenues, expenses and balance sheet of the Borrower on a quarter-by-quarter
                                         basis, such business plan to be in reasonable detail prepared by the Borrower and in
                                         form satisfactory to the Bank (which shall include a summary of all assumptions made
                                         in preparing such business plan);”

 

		3.7	Section
                                         8.5 of the Existing Credit Agreement is hereby amended by adding the following Section
                                         8.5(o) after Section 8.5(n):

 

		“(n)	as
                                         soon as available, and in any event no later than 25 days after the last day of each
                                         calendar month, a narrative update on the sale process of the enterprise of the Loan
                                         Parties (by way of a sale or sales of assets or capital stock) in reasonable detail;”

 

     

    7 

    

 

		3.8	Section
                                         8.20 of the Existing Credit Agreement is hereby deleted and replaced with the following:

 

“8.20       Financial
Covenants.

 

(a)       Current
Ratio. As of the last day of each fiscal quarter of PPSI, PPSI shall maintain a Current Ratio of not less than the corresponding
ratio set forth opposite such determination date below:

 

	Fiscal
    Quarter Ending on or about	Current
                                         Ratio shall 

        not
        be less than: 

	03/31/18	0.90
    to 1.0
	6/30/18	0.95
    to 1.0
	09/30/18	1.00
    to 1.0
	12/31/18
    and each fiscal quarter thereafter	1.05
    to 1.0
	 	 

(b)       EBITDA.
PPSI shall not permit its EBITDA, on a consolidated basis, (i) on or prior to December 31, 2018, for the period from and including
January 1, 2018 and ending as of the last day of the fiscal quarter of the Borrower set forth below and (ii) from and after January
1, 2019 for the four (4) consecutive fiscal quarters of PPSI then most recently completed, determined on the last day of each
fiscal quarter of PPSI, to be less than the applicable amount set forth opposite such determination date below in the “Minimum
EBITDA Covenant Level” column:

 

	Fiscal
    Quarter Ending on or about	PPSI
    Budgeted Minimum EBITDA	Minimum
    EBITDA Covenant Level [reflects 20% maximum variance to PPSI Budgeted Minimum EBITDA]
	 	 	 
	3/31/18	US$792,000	US$633,600
	 	 	 
	6/30/18	US$2,207,000	US$1,765,600
	 	 	 
	9/30/18	US$4,541,000	US$3,632,800
	 	 	 
	12/31/18	US$7,200,000	US$5,760,000
	 	 	 
	3/31/19
    and each fiscal quarter thereafter	US$7,200,000	US$5,760,000

 

     

    8 

    

 

(c)       Tangible
Net Worth. As of the last day of each fiscal quarter of PPSI, PPSI shall maintain, on a consolidated basis, a Tangible Net
Worth of not less than the corresponding amount set forth opposite such determination date below in the “Minimum Tangible
Net Worth” column:

 

	Period(s)
    Ending	PPSI
    Budgeted Tangible 

Net Worth:	Minimum
    Tangible Net 

Worth [reflects 15% 

maximum variance to PPSI budgeted tangible net worth]
	 	 	 
	3/31/18	US$1,056,000	US$897,600
	 	 	 
	6/30/18	US$2,316,800	US$1,969,280
	 	 	 
	9/30/18	US$3,860,800	US$3,281,680
	 	 	 
	12/31/18	US$5,272,000	US$4,481,200
	 	 	 
	3/31/19
    and at all times thereafter	US$5,272,000	US$4,481,200

”

 

		3.9	Exhibit
                                         A of the Existing Credit Agreement (Notice of Borrowing) is hereby deleted and
                                         replaced by the attached Schedule A.

 

		3.10	Exhibit
                                         B of the Existing Credit Agreement (Notice of Continuation/Conversion) is hereby
                                         deleted and replaced by the attached Schedule B.

 

Section
4

limited waivers

 

		4.1	PPSI
                                         has failed to comply, as of the last day of its fiscal year ended December 31, 2017,
                                         with the Current Ratio, EBITDA and Tangible Net Work requirements set forth in Section
                                         8.20 of the Existing Credit Agreement (the “Existing 2017 Default”).
                                         The Borrower has requested that the Bank permanently waive the Existing 2017 Default.
                                         Subject to the satisfaction of the conditions precedent set forth in Section 5 below,
                                         the Bank hereby permanently waives the Existing 2017 Default. This waiver is limited
                                         to the matters and time periods expressly stated herein. Except as specifically waived
                                         hereby, all of the terms and conditions of the Existing Credit Agreement, as amended
                                         by this Second Amending Agreement, shall stand and remain in full force and effect.

 

     

    9 

    

 

Section
5

CONDITIONS PRECEDENT

 

		5.1	The
                                         effectiveness of this Second Amending Agreement is subject to and conditional upon the
                                         satisfaction of the following conditions and the delivery by the Bank to the Borrower
                                         of a written notice that this Second Amending Agreement is then effective:

 

		(a)	the
                                         Bank shall have received sufficient copies, in form and substance satisfactory to the
                                         Bank, of the following:

 

		(i)	this
                                         Second Amending Agreement duly executed by all of the parties hereto;

 

		(ii)	copies
                                         of resolutions of the Borrower’s and each Guarantor’s board of directors
                                         (or similar governing body) authorizing the execution, delivery and performance of this
                                         Second Amending Agreement and the other Loan Documents to which it is a party and the
                                         consummation of the transactions contemplated hereby and thereby, certified by its Secretary
                                         or Assistant Secretary;

 

		(i)	confirmation
                                         that all conditions precedent for the amendment of the U.S. Credit Agreement have been
                                         met to the satisfaction of the Bank and its legal counsel; and

 

		(ii)	such
                                         other documents as the Bank may reasonably request;

 

		(b)	legal
                                         matters incident to the execution and delivery of this Second Amending Agreement and
                                         the other Loan Documents and to the transactions contemplated hereby shall be satisfactory
                                         to the Bank and its counsel;

 

		(c)	after
                                         giving effect to Section 4 of this Second Amending Agreement, no Default or Event of
                                         Default shall have occurred and be continuing; and

 

		(d)	all
                                         fees payable in accordance with this Second Amending Agreement shall have been paid to
                                         the Bank on or before the date of this Second Amending Agreement (including without limitation,
                                         an administration fee equal to 0.10% of the Revolving Credit Line then in effect, whether
                                         or not in use, and legal fees and expenses of the Bank).

 

		5.2	The
                                         conditions stated in Section 5.1 are inserted for the sole benefit of the Bank and the
                                         conditions stated therein may only be waived by the Bank, in whole or in part, with or
                                         without terms or conditions.

 

Section
6

GENERAL

 

		6.1	This
                                         Second Amending Agreement is executed under express reserve of the obligations contained
                                         in the Existing Credit Agreement and of all other rights subsisting in favour of the
                                         Bank under the Existing Credit Agreement insofar as they are not inconsistent with these
                                         presents and without novation of any kind or derogation from the rank or priority thereof.

 

		6.2	In
                                         all other respects, the parties recognize that the Existing Credit Agreement and the
                                         other Loan Documents remain unchanged and each of them confirms and reiterates, as of
                                         the date of this Second Amending Agreement, each and every of their respective representations
                                         and warranties, covenants, undertakings and obligations under the Existing Credit Agreement,
                                         as hereby amended, and the other Loan Documents.

 

     

    10 

    

 

		6.3	The
                                         Borrower and each Guarantor hereby recognizes that all security granted to the Bank pursuant
                                         to the Existing Credit Agreement, the Loan Documents or otherwise remains unchanged and
                                         confirms that such security (including, without limitation, the security described in
                                         Schedule 1.1.113 of the Existing Credit Agreement) remains available and in full force
                                         and effect to secure the indebtedness, liabilities and obligations of the Borrower and
                                         each Guarantor to the Bank pursuant to the Existing Credit Agreement, as hereby amended,
                                         and the other Loan Documents. For greater certainty, the Borrower and each Guarantor
                                         hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent
                                         or otherwise, under each of the Loan Documents to which it is a party (after giving effect
                                         hereto) and (ii) ratifies and reaffirms that such grant of hypothecs, security interests
                                         and Liens and confirms and agrees that such security interests and Liens hereafter secure
                                         all of the Obligations as amended hereby.

 

		6.4	The
                                         Borrower shall pay all legal fees and disbursements incurred by the Bank in connection,
                                         directly or indirectly, to the subject-matter of this Second Amending Agreement, including
                                         without limitation, the preparation, negotiation, execution and carrying out of this
                                         Second Amending Agreement and the documents contemplated thereby.

 

		6.5	This
                                         Second Amending Agreement may be executed and delivered in any number of counterparts,
                                         each of which when executed and delivered is an original but all of which taken together
                                         constitute one and the same instrument. This Second Amending Agreement may be executed
                                         and delivered by facsimile transmission or PDF and each of the parties hereto may rely
                                         on such facsimile signature or PDF as though that facsimile signature or PDF were an
                                         original hand-written signature.

 

		6.6	This
                                         Second Amending Agreement shall be governed by and construed in accordance with the laws
                                         of the Province of Québec and the laws of Canada applicable therein.

 

		6.7	The
                                         parties hereto have required that this Second Amending Agreement be drawn up in the English
                                         language. Les parties aux présentes ont exigé que la présente
                                         convention soit rédigée en langue anglaise.

 

[SIGNATURE
PAGE FOLLOWS]

 

     

    - S1 -

    

 

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

 

	 	PIONEER
    ELECTROGROUP CANADA INC., as Borrower
	 	 
	 	By:	
	 	 	Name: Nathan Mazurek
	 	 	Title: Chief Executive Officer
	 	I/we have authority to bind the
    corporation
	 	 	 
	 	PIONEER POWER SOLUTIONS, INC.,
    as Guarantor
	 	 	 
	 	By:	 
	 	 	Name: Nathan Mazurek
	 	 	Title: Chief Executive Officer
	 	I/we have authority to bind the
    corporation
	 	 	 
	 	 	 
	 	BANK OF MONTREAL
	 	 	 
	 	By:	 
	 	Name:
	 	Title:
	 	 	 
	 	By:	 
	 	Name:
	 	Title:
	 	I/we have authority to bind the
    bank

 

     

     

    

 

SCHEDULE
A

 

See
attached

 

     

     

    

 

EXHIBIT
A

 

NOTICE
OF BORROWING

 

	 	Date:	_______________,
    ____

 

		To:	Bank
                                         of Montreal, as lender under the Amended and Restated Credit Agreement dated as of April
                                         29, 2016 (as extended, renewed, amended or restated from time to time, the “Credit
                                         Agreement”), among Pioneer Electrogroup Canada Inc., as Borrower, the
                                         Guarantors party thereto, and Bank of Montreal

 

Ladies
and Gentlemen:

 

The
undersigned, Pioneer Electrogroup Canada Inc. (the “Borrower”), refers to the Amended and Restated
Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.8 of the Credit Agreement, of the Borrowing specified below:

 

		1.	The
                                         Business Day of the proposed Borrowing is ___________, ____.

 

		2.	The
                                         aggregate amount of the proposed Borrowing is $______________.

 

		3.	The
                                         Borrowing is being advanced under the Revolving Facility.

 

		4.	The
                                         Borrowing is to be comprised of $___________ of [LIBOR Loans or Acceptances].

 

		5.	[The
                                         duration of the Interest Period for the LIBOR Loans included in the Borrowing shall be
                                         1 or 2 months.]

 

		6.	[The
                                         Bankers’ Acceptances shall be for 30 or 60 days]

 

The
undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed
Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom:

 

		(a)	the
                                         representations and warranties contained in Article 6 of the Credit Agreement are true
                                         and correct in all material respects (where not already qualified by materiality, otherwise
                                         in all respects) as though made on and as of such date (except to the extent such representations
                                         and warranties relate to an earlier date, in which case they are true and correct in
                                         all material respects (where not already qualified by materiality, otherwise in all respects)
                                         as of such earlier date); and

 

     

     

    

 

		(b)	no
                                         Default has occurred and is continuing or would result from such proposed Borrowing.

 

	 	Pioneer
    ELECTROGROUP CANADA Inc.
	 	 	 
	 	By:	 
	 	 	Name
	 	 	Title

 

    -2- 

     

    

 

SCHEDULE
B

 

See
attached

 

     

     

    

 

EXHIBIT
B

 

NOTICE
OF CONTINUATION/CONVERSION

 

Date:
____________, ____

 

		To:	Bank
                                         of Montreal, as lender under the Amended and Restated Credit Agreement dated as of April
                                         29, 2016 (as extended, renewed, amended or restated from time to time, the “Credit
                                         Agreement”), among Pioneer Electrogroup Canada Inc., as Borrower, the
                                         Guarantors party thereto, and Bank of Montreal

 

Ladies
and Gentlemen:

 

The
undersigned, Pioneer Electrogroup Canada Inc. (the “Borrower”), refers to the Amended and Restated
Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.8 of the Credit Agreement, of the [conversion] [continuation] of the Loans specified herein, that:

 

1.       The
conversion/continuation Date is __________, ____.

 

		2.	The
                                         aggregate amount of the Revolving Loans to be [converted] [continued] is
                                         $______________.

 

		3.	The
                                         Loans are to be [converted into] [continued as] [Prime Rate] [U.S. Base Rate] [LIBOR]
                                         Loans or Bankers’ Acceptance.

 

		4.	[If
                                         applicable:] The duration of the Interest Period for the LIBOR Loans included in the
                                         [conversion] [continuation] shall be 1 or 2 months.

 

	 	Pioneer
    ELECTROGROUP CANADA Inc.
	 	 	 
	 	By:	 
	 	 	Name
	 	 	Title

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