Document:

Credit Agreement

 

Dated as of June 28, 2013

 

among

 

Pioneer Power Solutions, Inc.,

 

The Guarantors from time to time
party hereto,

 

and

 

Bank of Montreal, Chicago Branch

  

	 

  

    	 

    	 

    

 

Table of Contents

 

	Section	Heading	 	Page
	 	 	 	 
	Section 1.	Definitions; Interpretation	 	1
	 	 	 	 
	Section 1.1.	Definitions	 	1
	Section 1.2.	Interpretation	 	27
	Section 1.3.	Change in Accounting Principles	 	27
	 	 	 	 
	Section 2.	The Facilities	 	28
	 	 	 	 
	Section 2.1.	Term Loan Facility	 	28
	Section 2.2.	Revolving Facility; Revolving Credit Line	 	28
	Section 2.3.	Letters of Credit	 	28
	Section 2.4.	Applicable Interest Rates	 	30
	Section 2.5.	Minimum Borrowing Amounts; Maximum Eurodollar Loans	 	31
	Section 2.6.	Manner of Borrowing Loans and Designating Applicable Interest Rates	 	31
	Section 2.7.	Maturity of Loans	 	32
	Section 2.8.	Prepayments	 	33
	Section 2.9.	Default Rate	 	35
	Section 2.10.	Evidence of Indebtedness	 	36
	Section 2.11.	Commitment Terminations	 	36
	 	 	 	 
	Section 3.	Fees	 	37
	 	 	 	 
	Section 3.1.	Fees	 	37
	 	 	 	 
	Section 4.	Taxes; Change in Circumstances, Increased Costs, and Funding Indemnity	 	37
	 	 	 	 
	Section 4.1.	Taxes	 	37
	Section 4.2.	Change of Law	 	39
	Section 4.3.	Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR	 	39
	Section 4.4.	Increased Costs	 	39
	Section 4.5.	Funding Indemnity	 	41
	Section 4.6.	Discretion of the Bank as to Manner of Funding	 	41
	Section 4.7.	Lending Offices; Mitigation Obligations	 	41
	 	 	 	 
	Section 5.	Place and Application of Payments	 	42
	 	 	 	 
	Section 5.1.	Place and Application of Payments	 	42
	Section 5.2.	Non-Business Days	 	42
	Section 5.3.	Payments Set Aside	 	42
	Section 5.4.	Account Debit	 	42

 

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	Section 6.	Representations and Warranties	 	43
	 	 	 	 
	Section 6.1.	Organization and Qualification	 	43
	Section 6.2.	Subsidiaries	 	43
	Section 6.3.	Authority and Validity of Obligations	 	43
	Section 6.4.	Use of Proceeds; Margin Stock	 	44
	Section 6.5.	Financial Reports	 	44
	Section 6.6.	No Material Adverse Change	 	44
	Section 6.7.	Full Disclosure	 	45
	Section 6.8.	Trademarks, Franchises, and Licenses	 	45
	Section 6.9.	Governmental Authority and Licensing	 	45
	Section 6.10.	Good Title	 	45
	Section 6.11.	Litigation and Other Controversies	 	45
	Section 6.12.	Taxes	 	45
	Section 6.13.	Approvals	 	46
	Section 6.14.	Affiliate Transactions	 	46
	Section 6.15.	Investment Company	 	46
	Section 6.16.	ERISA	 	46
	Section 6.17.	Compliance with Laws	 	46
	Section 6.18.	OFAC	 	47
	Section 6.19.	Labor Matters	 	47
	Section 6.20.	Other Agreements	 	47
	Section 6.21.	Solvency	 	48
	Section 6.22.	No Default	 	48
	Section 6.23.	No Broker Fees.	 	48
	 	 	 	 
	Section 7.	Conditions Precedent	 	48
	 	 	 	 
	Section 7.1.	All Credit Events	 	48
	Section 7.2.	Initial Credit Event	 	49
	Section 7.3.	Term Loan Advances	 	51
	 	 	 	 
	Section 8.	Covenants	 	53
	 	 	 	 
	Section 8.1.	Maintenance of Business	 	53
	Section 8.2.	Maintenance of Properties	 	53
	Section 8.3.	Taxes and Assessments	 	53
	Section 8.4.	Insurance	 	53
	Section 8.5.	Financial Reports	 	54
	Section 8.6.	Inspection; Field Audits	 	57
	Section 8.7.	Borrowings and Guaranties	 	57
	Section 8.8.	Liens	 	59
	Section 8.9.	Investments, Acquisitions, Loans and Advances	 	61
	Section 8.10.	Mergers, Consolidations and Sales	 	62
	Section 8.11.	Maintenance of Subsidiaries	 	62
	Section 8.12.	Dividends and Certain Other Restricted Payments	 	62
	Section 8.13.	ERISA	 	63

 

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	Section 8.14.	Compliance with Laws	 	63
	Section 8.15.	Compliance with OFAC Sanctions Programs	 	64
	Section 8.16.	Burdensome Contracts With Affiliates	 	64
	Section 8.17.	No Changes in Fiscal Year	 	65
	Section 8.18.	Formation of Subsidiaries	 	65
	Section 8.19.	Change in the Nature of Business	 	65
	Section 8.20.	Use of Proceeds	 	65
	Section 8.21.	No Restrictions	 	65
	Section 8.22.	Subordinated Debt	 	65
	Section 8.23.	Financial Covenants	 	65
	Section 8.24.	Foreign Subsidiary Holding Companies	 	66
	Section 8.25.	Post-Closing Covenant	 	67
	 	 	 	 
	Section 9.	Events of Default and Remedies	 	67
	 	 	 	 
	Section 9.1.	Events of Default	 	67
	Section 9.2.	Non-Bankruptcy Defaults	 	69
	Section 9.3.	Bankruptcy Defaults	 	70
	Section 9.4.	Collateral for Undrawn Letters of Credit	 	70
	Section 9.5.	Post-Default Collections	 	70
	 	 	 	 
	Section 10.	The Guarantees	 	71
	 	 	 	 
	Section 10.1.	The Guarantees	 	71
	Section 10.2.	Guarantee Unconditional	 	71
	Section 10.3.	Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances	 	72
	Section 10.4.	Subrogation	 	72
	Section 10.5.	Subordination	 	73
	Section 10.6.	Waivers	 	73
	Section 10.7.	Limit on Recovery	 	73
	Section 10.8.	Stay of Acceleration	 	73
	Section 10.9.	Benefit to Guarantors	 	73
	Section 10.10.	Keepwell	 	74
	 	 	 	 
	Section 11.	Collateral	 	74
	 	 	 	 
	Section 11.1.	Collateral	 	74
	Section 11.2.	Depository Banks	 	74
	Section 11.3.	Liens on Real Property	 	75
	Section 11.4.	Further Assurances	 	75
	 	 	 	 
	Section 12.	Miscellaneous	 	75
	 	 	 	 
	Section 12.1.	Notices	 	75
	Section 12.2.	Amendments, Etc	 	76
	Section 12.3	Costs and Expenses; Indemnification	 	77
	Section 12.4.	No Waiver, Cumulative Remedies	 	78

 

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	Section 12.5.	Right of Setoff	 	78
	Section 12.6.	Survival of Representations	 	78
	Section 12.7.	Survival of Indemnities	 	78
	Section 12.8.	Counterparts, Integration; Effectiveness.	 	78
	Section 12.9.	Headings	 	79
	Section 12.10.	Severability of Provisions	 	79
	Section 12.11.	Construction	 	79
	Section 12.12	Excess Interest	 	79
	Section 12.13.	No Advisory or Fiduciary Responsibility	 	80
	Section 12.14.	Binding Nature; Governing Law; Jurisdiction; Consent to Service of Process	 	80
	Section 12.15.	Waiver of Jury Trial	 	81
	Section 12.16.	USA Patriot Act	 	82
	 	 	 	 
	Signature Page	 	 	S-1

 

	Exhibit A	—	Notice of Borrowing
	Exhibit B	—	Notice of Continuation/Conversion
	Exhibit C-1	—	Term Note
	Exhibit C-2	—	Revolving Note
	Exhibit D	—	Borrowing Base Certificate
	Exhibit E	—	Compliance Certificate
	Exhibit F	—	Additional Guarantor Supplement
	Schedule 6.2	—	Subsidiaries
	Schedule 6.10	—	Litigation
	Schedule 6.19	—	Collective Bargaining Agreements

 

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Credit Agreement

 

This Credit Agreement
is entered into as of June 28, 2013, by and among Pioneer Power Solutions, Inc.,
a Delaware corporation (the “Borrower”), the direct and indirect Domestic Subsidiaries of the Borrower from
time to time party to this Agreement, as Guarantors, and Bank of Montreal, a
Canadian chartered bank acting through its Chicago branch (the “Bank”),
as the lender as provided herein.

 

Preliminary Statement

 

The Borrower has requested,
and the Bank has agreed to extend, certain credit facilities on the terms and conditions of this Agreement.

 

Now,
Therefore, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1.          Definitions;
Interpretation.

 

Section 1.1.          Definitions.
The following terms when used herein shall have the following meanings:

 

“Account Debtor”
means any Person obligated to make payment on any Receivable.

 

“Acquired
Business” means the entity or assets acquired by the Borrower or another Loan Party in an Acquisition, whether before
or after the date hereof.

 

“Acquisition”
means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person (other than a Person
that is a Subsidiary), or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary) provided that the Borrower or another Loan Party is
the surviving entity.

 

“Adjusted
EBITDA” means, with reference to any period, EBITDA for such period, plus (a) the earnings before interest,
taxes, depreciation and amortization (including, but not limited to, the amortization of any employee stock option (or similar)
compensation plan) of any Acquired Business acquired by the Borrower during such period (calculated as if such Acquisition and
the assumption or incurrence of Indebtedness occurred on the first day of such period) calculated in a manner satisfactory to the
Bank, minus (b) the positive EBITDA of any Persons or assets which are the subject of a Disposition consummated during
such period as if such Disposition occurred on the first day of such period.

 

    	 

    	 

    

 

“Adjusted
LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum determined in accordance with the following formula:

 

	Adjusted LIBOR	=	LIBOR
	 	 	1 - Eurodollar Reserve Percentage

 

“Affiliate”
means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person specified; provided that, in any event for purposes
of this definition, any Person that owns, directly or indirectly, 10% or more of the securities having the ordinary voting power
for the election of directors or governing body of a corporation or 10% or more of the partnership or other ownership interest
of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other
Person.

 

“Agreement”
means this Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time pursuant to the terms
hereof.

 

“Applicable
Margin” means (a) with respect to U.S. Prime Rate Loans under the Revolving Facility and Reimbursement Obligations,
1.00% per annum, (b) with respect to Eurodollar Loans under the Revolving Facility and Letter of Credit Fees, 2.25% per annum,
(c) with respect to U.S. Prime Rate Loans under the Term Loan Facility, 1.25% per annum, (d) with respect to Eurodollar
Loans under the Term Loan Facility, 2.50% per annum, and (e) with respect to the Standby Fees payable under Section 3.1(a),
0.625% per annum.

 

“Application”
is defined in Section 2.3(b).

 

“Assigned
Accounts” is defined in Section 11.2.

 

“Authorized
Representative” means those persons shown on the list of officers provided by the Borrower pursuant to Section 7.2
or on any update of any such list provided by the Borrower to the Bank, or any further or different officers of the Borrower so
named by any Authorized Representative of the Borrower in a written notice to the Bank.

 

“Bank”
means Bank of Montreal acting through its Chicago Branch, in its capacity as the lender hereunder, and any successor in such
capacity.

 

“Bank Products”
means each and any of the following bank products and services provided to any Loan Party by the Bank or any of its Affiliates:
(a) credit cards for commercial customers (including, without limitation, “commercial credit cards” and purchasing
cards), (b) stored value cards, and (c) depository, cash management, and treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network
services).

 

“Bank Product
Obligations” of the Loan Parties means any and all of their obligations, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions
therefor) in connection with Bank Products.

 

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“Borrower”
is defined in the introductory paragraph of this Agreement.

 

“Borrowing”
means the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different
type into such type by the Bank under a Facility on a single date and, in the case of Eurodollar Loans, for a single Interest Period.
A Borrowing is “advanced” on the day the Bank advances funds comprising such Borrowing to the Borrower, is “continued”
on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted”
when such Borrowing is changed from one type of Loans to the other, all as determined pursuant to Section 2.6.

 

“Borrowing
Base” means, as of any time it is to be determined, the sum of:

 

(a)          80%
of the then outstanding unpaid amount of Eligible Receivables; plus

 

(b)          the
lesser of (i) $5,000,000 and (ii) 50% of the value (computed at the lower of market or cost using the first-in/first-out
method of inventory valuation applied in accordance with GAAP) of Eligible Inventory; plus

 

(c)          as
long as the PECI Letter Loan Agreement remains in effect, the lower of: (a) the U.S. Dollar Equivalent of the excess of the
“Borrowing Base” (solely for purposes of this clause (c), as defined in the PECI Credit Agreement) over the
outstanding amounts under “Facility A” (as defined in the PECI Credit Agreement), and (b) $3,000,000
until December 31, 2013, and $2,000,000 from January 1, 2014 to March 31, 2014 and $0 at all times thereafter; less

 

(d)          Reserves
established by the Bank in its Permitted Discretion;

 

provided that (i) the Bank
shall have the right upon five (5) Business Days’ prior notice to the Borrower to reduce the advance rates against Eligible
Receivables and Eligible Inventory in its Permitted Discretion based on results from any field audit or appraisal of the Collateral
and (ii) the Borrowing Base shall be computed only as against and on so much of such Collateral as is included on the Borrowing
Base Certificates furnished from time to time by the Borrower pursuant to this Agreement and, if required by the Bank pursuant
to any of the terms hereof or any Collateral Document, as verified by such other evidence reasonably required to be furnished to
the Bank pursuant hereto or pursuant to any such Collateral Document.

 

“Borrowing
Base Certificate” means the certificate in the form of Exhibit D hereto, or in such other form acceptable to the
Bank, to be delivered to the Bank pursuant to Sections 7.2 and 8.5.

 

“Business
Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Chicago,
Illinois, Toronto, Canada or New York, New York and, if the applicable Business Day relates to the advance or continuation of,
or conversion into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar deposits in the interbank eurodollar
market in London, England.

 

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“Canadian
Credit Facilities” is defined in Section 7.2(r).

 

“Capital Expenditures”
means, with respect to any Person for any period, the aggregate amount of all expenditures (whether paid in cash or accrued as
a liability) by such Person during that period for the acquisition or leasing (pursuant to a Capital Lease) of fixed or capital
assets or additions to property, plant, or equipment (including replacements, capitalized repairs, and improvements) which should
be capitalized on the balance sheet of such Person in accordance with GAAP.

 

“Capital Lease”
means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee.

 

“Capitalized
Lease Obligation” means, for any Person, the amount of the liability shown on the balance sheet of such Person in respect
of a Capital Lease determined in accordance with GAAP.

 

“Cash Collateralize”
means, to pledge and deposit with or deliver to the Bank, as collateral for L/C Obligations, cash or deposit account balances subject
to a first priority perfected security interest in favor of the Bank or, if the Bank agrees in its sole discretion, other credit
support, in each case pursuant to documentation in form and substance satisfactory to the Bank.

 

“Cash Collateral”
shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

“Cash Equivalents”
means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year from
the date of acquisition thereof, (b) marketable direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year from the
date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P
or Moody’s, (c) commercial paper maturing within one (1) year from the date of creation thereof and, at the time
of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit,
time deposits, overnight bank deposits or bankers’ acceptances maturing within one (1) year from the date of acquisition
thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia having
at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) deposit accounts maintained
with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the
laws of the United States or any state thereof so long as the full amount maintained with any such other bank is fully insured
by the Federal Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank satisfying the requirements
of clause (d) of this definition or recognized securities dealer having combined capital and surplus of not less than $250,000,000,
having a term of not more than seven (7) days, with respect to securities satisfying the criteria in clauses (a) or (d) above,
provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered
through the Federal Reserve Book Entry System, and (g) investments in money market funds substantially all of whose assets
are invested in the types of assets described in clauses (a) through (f) above.

 

    	-4-

    	 

    

 

“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future amendments.

 

“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, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision
(or any successor or similar authority) or the United States or foreign 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 Nathan Mazurek ceases at any time and for any reason (including death or incapacity) to have voting
control of at least 51% of the Voting Stock of the Borrower.

 

“Closing Date”
means the date of this Agreement or such later Business Day upon which each condition described in Section 7.2 shall be satisfied
or waived in a manner acceptable to the Bank in its discretion.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

 

“Collateral”
means all properties, rights, interests, and privileges from time to time subject to the Liens granted to the Bank by the Collateral
Documents.

 

“Collateral
Account” is defined in Section 9.4.

 

“Collateral
Access Agreement” means any landlord waiver, warehouse, processor or other bailee letter or other agreement, in form
and substance reasonably satisfactory to the Bank, between the Bank and any third party (including any bailee, consignee, customs
broker, or other similar Person) in possession of any Collateral or any landlord of the Borrower or any Domestic Subsidiary for
any real property where any Collateral is located, as such landlord waiver, bailee letter or other agreement may be amended, restated,
or otherwise modified from time to time.

 

    	-5-

    	 

    

 

“Collateral
Documents” means the Security Agreement, and all other mortgages, deeds of trust, security agreements, pledge agreements,
assignments, financing statements, control agreements, and other documents as shall from time to time secure or relate to the Secured
Obligations or any part thereof.

 

“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor
statute.

 

“Connection
Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that
are franchise Taxes or branch profit Taxes.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of
a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Controlled
Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Loan Party, are treated as a single employer under Section 414 of the Code.

 

“Credit Event”
means the advancing of any Loan, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter
of Credit.

 

“Debtor Relief
Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor
relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

“Default”
means any event or condition which constitutes an Event of Default or
any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute
an Event of Default.  

 

“Designated
Disbursement Account” means the account of the Borrower maintained with the Bank or its Affiliate and designated in writing
to the Bank as the Borrower’s Designated Disbursement Account (or such other account as the Borrower and the Bank may otherwise
agree).

 

“Disposition”
means the sale, lease, conveyance or other disposition of Property, other than (a) the sale or lease of inventory in the ordinary
course of business, and (b) the sale, transfer, lease or other disposition of Property of a Loan Party to another Loan Party
in the ordinary course of its business.

 

    	-6-

    	 

    

 

“Distribution”
means the declaration or payment of any cash dividend on or in respect of any shares of any class of capital stock of the Borrower,
the purchase, redemption, defeasance, retirement or other acquisition for cash of any shares of any class of capital stock of the
Borrower, directly or indirectly through a subsidiary of the Loan Parties or otherwise (including the setting apart of assets for
a sinking or other analogous fund to be used for such purpose); the return of capital by the Loan Parties to its shareholders as
such in cash; or any other cash distribution on or in respect of any shares of any class of capital stock of the Loan Parties;
and the payment or distribution of any management fees.

 

“Domestic
Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.

 

“Drawing Period
End Date” is defined in Section 2.1.

 

“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 taxes 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 intangible assets for such period, and (d) extraordinary fees or expenses not to exceed
$500,000 during any twelve month period, including any fees and expenses paid by the Loan Parties during such period in connection
with this Agreement and the consummation of any Permitted Acquisition.

 

“Eligible
Inventory” means raw materials, work-in-process or finished goods inventory of each Loan Party that:

 

(a)          is
an asset of such Person to which it has good and marketable title, is freely assignable, and is subject to a perfected, first priority
Lien in favor of the Bank free and clear of any other Liens, except for Liens which are junior to the Bank’s Lien which arise
by operation of law for amounts not past due;

 

(b)          is
located in the United States of America at a Permitted Collateral Location as set forth in the Security Agreement and, in the case
of any location not owned by such Person, which is at all times subject either to a Collateral Access Agreement or, in the absence
of such Collateral Access Agreement and the Bank so agrees in its sole discretion, Reserves established to the satisfaction of
the Bank;

 

(c)          is
not bill-and-hold inventory or otherwise so identified to a contract to sell that it constitutes a Receivable;

 

(d)          is
not obsolete and is of good and merchantable quality conforming to all standards imposed by any governmental authority free from
any defects which will adversely affect the market value thereof;

 

(e)          is
not covered by a warehouse receipt or similar document;

 

(f)          does
not constitute spare or replacement parts (other than spare or replacement parts to be sold to customers in the ordinary course),
packaging and shipping material, manufacturing supplies, samples, prototypes, displays or display items, bill-and-hold goods, goods
that are returned or marked for return (except to the extent such goods may be resold in the ordinary course of business), repossessed
goods, defective or damaged goods, goods that have been discontinued or components thereof, goods held on consignment, or goods
which are not of a type held for sale in the ordinary course of business;

 

    	-7-

    	 

    

 

(g)          does
not contain or bear any intellectual property rights licensed to the such Loan Party unless the Bank is satisfied that it may sell
or otherwise dispose of such inventory without (i) infringing the rights of such licensor, (ii) violating any contract
with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant
to sale of such inventory under the current licensing agreement;

 

(h)          all
representations and warranties set forth in this Agreement and the Collateral Documents are true and correct in all material respects
with respect thereto;

 

(i)          is
not otherwise deemed to be ineligible in the Permitted Discretion of the Bank (it being acknowledged and agreed that with five
(5) Business Days prior written notice any inventory or categories thereof of any Loan Party may be deemed ineligible by the
Bank acting in its Permitted Discretion); and

 

(j)          does
not cause the amount of Eligible Inventory constituting work-in-process to exceed $2,000,000.

 

“Eligible
Line of Business” means any business engaged in as of the date of this Agreement by the Borrower or any other Loan Party
or any business reasonably related thereto, including the transmission, distribution, control or protection of electrical power.

 

“Eligible
Receivables” means any Receivable of a Loan Party that:

 

(a)          (i) arises
out of the sale of goods or the performance of services in the ordinary course of business that is not contingent upon the completion
of any further performance by such Loan Party or any other Person on its/their behalf, (ii) does not represent a pre-billed
Receivable or a progress billing or retainage amount, (iii) does not relate to the payment of interest, and (iv) is net
of any deposits made by or for the account of the relevant Account Debtor;

 

(b)          is
payable in U.S. Dollars and the Account Debtor on such Receivable is located within the United States of America or Canada or,
if such right has arisen out of the sale of such goods shipped to, or out of the rendition of services to, an Account Debtor located
in any other country, such right is secured by a valid and irrevocable transferable letter of credit issued by a lender reasonably
acceptable to the Bank for the full amount thereof or secured by an insurance policy in an amount and on such terms, and issued
by an insurer, satisfactory to the Bank in its discretion, in each case which has been assigned or transferred to the Bank in a
manner acceptable to the Bank;

 

    	-8-

    	 

    

 

(c)          is
the valid, binding and legally enforceable obligation of the Account Debtor obligated thereon and such Account Debtor (i) is
not a Subsidiary or an Affiliate of any Loan Party, (ii) is not a shareholder, director, officer, or employee of any Loan
Party or of any of its Subsidiaries, (iii) is not the United States of America or Canada, or any state, province, or political
subdivision thereof, or any department, agency or instrumentality of any of the foregoing, unless the Assignment of Claims Act
or any similar state, provincial, or local statute, as the case may be, is complied with to the satisfaction of the Bank, (iv) is
not a debtor under any proceeding under any Debtor Relief Law, (v) is not an assignor for the benefit of creditors, or (vi) has
not sold all or substantially all of its assets;

 

(d)          is
not evidenced by an instrument or chattel paper unless the same has been endorsed and delivered to the Bank;

 

(e)          is
an asset of such Person to which it has good and marketable title, is freely assignable, and is subject to a perfected, first priority
Lien in favor of the Bank free and clear of any other Liens, except for Liens which are junior to the Bank’s Lien which arise
by operation of law for amounts not past due;

 

(f)          is
not owing from an Account Debtor who is also a creditor or supplier of such Person, and is not subject to any offset, counterclaim,
or other known defenses with respect thereto;

 

(g)          no
surety bond was required or given in connection with said Receivable or the contract or purchase order out of which the same arose;

 

(h)          it
is evidenced by an invoice to the Account Debtor dated not more than five (5) Business Days subsequent to the shipment date
of the relevant inventory or completion of performance of the relevant services and is issued on ordinary trade terms requiring
payment within ninety (90) days of invoice date, and has not been invoiced more than once;

 

(i)          is
not unpaid more than 90 days after the date of the original invoice therefor (120 days with respect to Receivables owing from Siemens
and its Affiliates), and which has not been written off the books of the Loan Parties or otherwise designated as uncollectible;

 

(j)          is
not owed by an Account Debtor who is obligated on Receivables more than 25% of the aggregate unpaid balance of which have been
past due for longer than the relevant period specified in subsection (i) above unless the Bank has approved the continued
eligibility thereof;

 

(k)          would
not cause the total Receivables owing from any one Account Debtor and its Affiliate to exceed any credit limit established for
purposes of determining eligibility hereunder by the Bank in its Permitted Discretion for such Account Debtor and for which the
Bank has given the Borrower at least fifteen (15) Business Days prior notice of the establishment of any such credit limit;

 

    	-9-

    	 

    

 

(l)          is
not owed by an Account Debtor located in any jurisdiction which requires filing of a “Notice of Business Activities Report”
or other similar report in order to permit such Loan Party to seek judicial enforcement in such jurisdiction of payment of such
Receivable, unless such Loan Party has filed such report or qualified to do business in such jurisdiction;

 

(m)          complies
in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local, including
without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board;

 

(n)          all
representations and warranties set forth in this Agreement and the Collateral Documents are true and correct with respect thereto;

 

(o)          does
not arise from a sale on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment, or any other repurchase
or return basis; and

 

(p)          is
not otherwise deemed to be ineligible in the Permitted Discretion of the Bank (it being acknowledged and agreed that with five (5)
Business Days prior written notice any Receivable of any Loan Party may be deemed ineligible by the Bank acting in its Permitted
Discretion).

 

“Environmental
Claim” means any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent
decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant
to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material,
(c) from any abatement, removal, remedial, corrective or response action in connection with a Hazardous Material, Environmental
Law or order of a governmental authority or (d) from any actual or alleged damage, injury, threat or harm to health, safety,
natural resources or the environment.

 

“Environmental
Law” means any current or future Legal Requirement pertaining to (a) the protection of health, safety and the indoor
or outdoor environment, (b) the conservation, management or use of natural resources and wildlife, (c) the protection
or use of surface water or groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material or (e) pollution (including any Release to air, land, surface water or groundwater), and any amendment,
rule, regulation, order or directive issued thereunder.

 

    	-10-

    	 

    

 

“Environmental
Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Loan Party or any Subsidiary of a Loan Party directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials into the environment or (e) any contract, agreement or other legally enforceable consensual
arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.

 

“Eurodollar
Loan” means a Loan bearing interest at the rate specified in Section 2.4(b).

 

“Eurodollar
Reserve Percentage” means the maximum reserve percentage, expressed as a decimal, at which reserves (including, without
limitation, any emergency, marginal, special, and supplemental reserves) are imposed by the Board of Governors of the Federal Reserve
System (or any successor) on “eurocurrency liabilities”, as defined in such Board’s Regulation D
(or any successor thereto), subject to any amendments of such reserve requirement by such Board or its successor, taking into account
any transitional adjustments thereto. For purposes of this definition, the relevant Loans shall be deemed to be “eurocurrency
liabilities” as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under
Regulation D. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve percentage.

 

“Event of
Default” means any event or condition identified as such in Section 9.1.

 

“Event of
Loss” means, with respect to any Property, any of the following: (a) any loss, destruction or damage of such Property
or (b) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such Property, or
confiscation of such Property or the requisition of the use of such Property.

 

“Excluded
Property” means (a) any leased real property; (b) any equipment securing purchase money indebtedness or Capitalized
Lease Obligations if the granting of a Lien to any third party is prohibited by the agreement(s) setting forth the terms and conditions
applicable to such Indebtedness but only if such Indebtedness and the Liens securing the same are permitted by Sections 8.7(b)
and 8.8(d) of the Credit Agreement, provided that if and when the prohibition which prevents the granting of a Lien in any
such Property is removed, terminated or otherwise becomes unenforceable as a matter of law (including, without limitation, the
termination of any such security interest resulting from the satisfaction of the Indebtedness secured thereby), and notwithstanding
any previous release of Lien provided by the Bank requested in connection with respect to any such Indebtedness, the Excluded Property
will no longer include such Property and the Bank will be deemed to have, and at all times to have had, a security interest in
such property and the Collateral will be deemed to include, and at all times to have included, such Property without further action
or notice by any Person; (c) any permit or license issued to any Loan Party as the permit holder or licensee thereof or any
lease to which any Loan Party is lessee thereof, in each case only to the extent and for so long as the terms of such permit, license,
or lease effectively (after giving effect to Sections 9-406 through 9-409, inclusive, of the Uniform Commercial Code in the applicable
state (or any successor provision or provisions) or any other applicable law) prohibit the creation by such Loan Party of a security
interest in favor of the Bank in such permit, license, or lease in favor of the Bank or would result in an effective invalidation,
termination or breach of the terms of any such permit, license or lease (after giving effect to Sections 9-406 through 9-409, inclusive,
of the Uniform Commercial Code in the applicable state (or any successor provision or provisions) or any other applicable law),
in each case unless and until any required consents are obtained, provided that the Excluded Property will not include,
and the Collateral shall include and the security interest granted in the Collateral shall attach to, (x) all proceeds, substitutions
or replacements of any such excluded items referred to herein unless such proceeds, substitutions or replacements would constitute
excluded items hereunder, (y) all rights to payment due or to become due under any such excluded items referred to herein,
and (z) if and when the prohibition which prevents the granting of a security interest in favor of the Bank in any such Property
is removed, terminated, or otherwise becomes unenforceable as a matter of law, the Bank will be deemed to have, and at all times
to have had, a security interest in such property, and the Collateral will be deemed to include, and at all times to have included,
such Property without further action or notice by any Person; and (d) equity interests of any Foreign Subsidiary owned by
any Loan Party representing more than 65% of the total voting power of all outstanding voting equity interests of such Foreign
Subsidiary, with equity interests of such Foreign Subsidiary constituting “stock entitled to vote” within the meaning
of Treasury regulation section 1.956-2(c)(2) being treated as voting equity interests of such Foreign Subsidiary for purposes of
this clause (d).

 

    	-11-

    	 

    

 

“Excluded
Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion
of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or
any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity
Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure
for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with
respect to such related Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such
exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security
interest is or becomes illegal.

 

“Excluded
Taxes” means any of the following Taxes imposed on or with respect to the Bank or required to be withheld or deducted
from a payment to the Bank, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch
profits Taxes, in each case, (i) imposed as a result of the Bank being organized under the laws of, or having its principal
office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account
of the Bank with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) the
Bank acquires such interest in the Loan or Commitment or (ii) the Bank changes its lending
office, except in each case to the extent that, pursuant to Section 4.1 amounts with respect to such Taxes were payable to
the Bank immediately before it changed its lending office, and (c) any U.S. federal withholding
Taxes imposed under FATCA.

 

    	-12-

    	 

    

 

“Facility”
means any of the Revolving Facility or Term Loan Facility and “Facilities” means both.

 

“FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended
or successor version that is substantively comparable and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code

 

“Federal Funds
Rate” means the fluctuating interest rate per annum described in part (i) of clause (b) of the definition of U.S. Prime
Rate.

 

“Financial
Officer” of any Person means the chief financial officer, principal accounting officer, treasurer or controller of such
Person.

 

“Fixed Charge
Coverage Ratio” means, at any time the same is to be determined, the ratio of (a) Adjusted EBITDA for the four (4)
consecutive fiscal quarters of the Borrower then most recently completed less the sum of (i) Unfinanced Capital Expenditures
of the Loan Parties and their Non-Canadian Subsidiaries during such period, (ii) federal, state, and local income taxes (and
franchise taxes in lieu of income taxes) paid or required to be paid in cash by the Loan Parties and their Non-Canadian Subsidiaries
during such period, and (iii) Restricted Payments paid in cash during such period to (b) Fixed Charges for the same four (4)
consecutive fiscal quarters of the Borrower then ended. 

 

“Fixed Charges”
means, with reference to any period, the sum of (a) all scheduled payments of principal paid or required to be paid
during such period with respect to Indebtedness of the Loan Parties and their Non-Canadian Subsidiaries, and (b) Interest
Expense paid or required to be paid for such period.

 

“Foreign Subsidiary”
means each Subsidiary that (a) is organized under the laws of a jurisdiction other than the United States of America or any
state thereof or the District of Columbia, (b) conducts substantially all of its business outside of the United States of
America, and (c) has substantially all of its assets outside of the United States of America.

 

“Foreign Subsidiary
Holding Company” means each Domestic Subsidiary of the Borrower whose sole assets are equity interests in Foreign Subsidiaries
or other Foreign Subsidiary Holding Companies. As of the Closing Date, Nexus Custom Magnetics, LLC, a Texas limited liability company,
JE Mexican Holdings, Inc., a Delaware corporation, and Jefferson Electric Mexico Holdings, LLC, a Wisconsin limited liability company,
are the only Foreign Subsidiary Holding Companies.

 

    	-13-

    	 

    

 

“Funded Debt”
means for any Person (without duplication) (a) all indebtedness created, assumed or incurred in any manner by such Person
representing money borrowed (including by the issuance of debt securities), (b) all indebtedness for the deferred purchase
price of property or services (other than trade accounts payable arising in the ordinary course of business, (c) all indebtedness
secured by any Lien upon Property of such Person, whether or not such Person has assumed or become liable for the payment of such
indebtedness, (d) all Capitalized Lease Obligations of such Person, (e) all obligations of such Person on or with respect
to letters of credit, bankers’ acceptances and other extensions of credit whether or not representing obligations for borrowed
money, (f) 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 or any warrant, right or option to acquire such equity interest (other than
any obligation to make any payment on, or redemption of, any equity interests (x) with a stated maturity date that occurs
after the Term Loan Maturity Date and (y) that are not payable at the option of the holder), valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends,
(g) all net obligations (determined as of any time based on the termination value thereof) of such Person under any interest
rate, foreign currency, and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any other
similar interest rate, currency or commodity hedging arrangement; and (h) all Guarantees of such Person in respect of any
of the foregoing; provided, however, that Funded Debt shall exclude Subordinated Debt owed to Bemag Transformer Inc.

 

“GAAP”
means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession),
which are applicable to the circumstances as of the date of determination.

 

“Governmental
Authority” means the government of the United States of America or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government
(including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter
of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of business.

 

    	-14-

    	 

    

 

“Guaranty
Agreements” means and includes the Guarantee of the Loan Parties provided for in Section 10, and any other guaranty
agreement executed and delivered in order to guarantee the Secured Obligations or any part thereof in form and substance acceptable
to the Bank.

 

“Guarantors”
means (a) Jefferson Electric, Inc., (b) PCP and (c) any Domestic Subsidiary acquired pursuant to a Permitted Acquisition
by Borrower after the date hereof that becomes a party to this Agreement pursuant to Section 11. For the avoidance of doubt,
no Foreign Subsidiary shall be a Guarantor.

 

“Hazardous
Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant
or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum
(including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic”
or words of like import pursuant to an Environmental Law.

 

“Hazardous
Material Activity” means any activity, event or occurrence involving a Hazardous Material, including, without limitation,
the manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release,
abatement, removal, remediation, handling of or corrective or response action to any Hazardous Material.

 

“Hedging Agreement”
means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving,
or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination
of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of any Loan Party or its Subsidiaries shall be a Hedging
Agreement.

 

“Hedging Liability”
means the liability of any Loan Party to the Bank or any Affiliates of the Bank in respect of any Hedging Agreement of the
type permitted under Section 8.7(c) as such Loan Party may from time to time enter into with the Bank or its Affiliates, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor); provided, however, that, with respect to any Guarantor, the Hedging
Liability of any Loan Party Guaranteed by such Guarantor shall exclude all Excluded Swap Obligations.

 

“Hostile Acquisition”
means the acquisition of the capital stock or other equity interests of a Person through a tender offer or similar solicitation
of the owners of such capital stock or other equity interests which has not been approved (prior to such acquisition) by resolutions
of the Board of Directors of such Person or by similar action if such Person is not a corporation, or as to which such approval
has been withdrawn.

 

“Indebtedness”
means the indebtedness of any Loan Party and includes, without duplication (in each case, whether such obligation is with full
or limited recourse):

 

    	-15-

    	 

    

 

(a)          any
obligation of such Loan Party for borrowed money;

 

(b)          any
obligation of such Loan Party evidenced by a bond, debenture, note or similar instrument;

 

(c)          any
obligation of such Loan Party to pay the deferred purchase price of property or services, except a trade account payable that arises
in the ordinary course of business;

 

(d)          any
obligation of such Loan Party as lessee under any capital lease;

 

(e)          any
obligation of such Loan Party to reimburse any other person in respect of amounts drawn or drawable under any letter of credit
or other guarantee or under any bankers’ or trade acceptance issued or accepted by such other person, whether contingent
or non-contingent;

 

(f)          all
obligations of such Loan Party to purchase, redeem retire, decrease or otherwise make any payment in respect of any capital stock
of or other ownership or profit interest in such Loan Party or any other person, valued, in the case of redeemable preferred stock,
at the greater of its voluntary liquidation preference plus accrued and unpaid dividends;

 

(g)          any
obligation of such Loan Party to purchase securities or other property that arises out of or in connection with the sale of the
same or substantially similar securities or property;

 

(h)          any
Indebtedness of others secured by a Lien on any asset of such Loan Party;

 

(i)          any
Indebtedness of others guaranteed by such Loan Party; and

 

(j)          all
net obligations and liabilities of such Loan Party in respect of “Specified Transactions” (as such term is defined
in the 1992 Multicurrency-Cross Border Master Agreement published by the International Swaps and Derivatives Associates, Inc.).

 

“Indemnified
Taxes” means (a) all Taxes other than Excluded Taxes, imposed on or with respect to any payment made by or on account
of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

“Interest
Expense” means, with reference to any period, the sum of all interest charges (including imputed interest charges with
respect to Capitalized Lease Obligations and all amortization of debt discount and expense) of the Loan Parties and their Non-Canadian
Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

 

    	-16-

    	 

    

 

“Interest
Payment Date” means (a) with respect to any Eurodollar Loan, the last day of each Interest Period with respect to
such Eurodollar Loan and on the maturity date and, if the applicable Interest Period is longer than three (3) three months,
on each day occurring every three (3) months after the commencement of such Interest Period, and (b) with respect to
any U.S. Prime Rate Loan, the last day of every calendar month and on the maturity date.

 

“Interest
Period” means the period commencing on the date a Borrowing of Eurodollar Loans is advanced, continued, or created by
conversion and ending in the case of Eurodollar Loans, one (1), two (2), or three (3) months thereafter, provided,
however, that:

 

(i)          no
Interest Period shall extend beyond the final maturity date of the relevant Loans;

 

(ii)         no
Interest Period with respect to any portion of the Term Loan shall extend beyond a date on which the Borrower is required to make
a scheduled payment of principal on the Term Loan, unless the sum of (a) the aggregate principal amount of the Term Loan
that constitutes U.S. Prime Rate Loans plus (b) the aggregate principal amount of the Term Loan that constitutes
Eurodollar Loans with Interest Periods expiring on or before such date equals or exceeds the portion of the principal amount to
be paid on the Term Loan, on such payment date;

 

(iii)        whenever
the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall
be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest
Period for a Borrowing of Eurodollar Loans to occur in the following calendar month, the last day of such Interest Period shall
be the immediately preceding Business Day; and

 

(iv)        for
purposes of determining an Interest Period for a Borrowing of Eurodollar Loans, a month means a period starting on one day in a
calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there
is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins
on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month
in which such Interest Period is to end.

 

“IRS”
means the United States Internal Revenue Service.

 

“L/C Obligations”
means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations.

 

“L/C Sublimit”
means the U.S. Dollar Equivalent of $1,000,000, as reduced or otherwise amended pursuant to the terms hereof.

 

    	-17-

    	 

    

 

“Legal Requirement”
means any treaty, convention, statute, law, regulation, ordinance, license, permit, governmental approval, injunction, judgment,
order, consent decree or other requirement of any governmental authority, whether federal, state, or local.

 

“Lending Office”
is defined in Section 4.7.

 

“Letter of
Credit” is defined in Section 2.3(a).

 

“Letter of
Credit Fee” is defined in Section 3.1(b).

 

“LIBOR”
means, for an Interest Period for a Borrowing of Eurodollar Loans, (a) the LIBOR Index Rate for such Interest Period, if such
rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Bank at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest
Period by three (3) or more major banks in the interbank eurodollar market selected by the Bank for delivery on the first day of
and for a period equal to such Interest Period and in an amount equal or comparable to the principal amount of the Eurodollar Loan
scheduled to be made as part of such Borrowing.

 

“LIBOR Index
Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth
of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, which appears on the LIBOR01 Page
as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period.

 

“LIBOR01 Page”
means the display designated as “LIBOR01 Page” on the Reuters Service (or such other page as may replace the
LIBOR01 Page on that service or such other service as may be nominated by the British Bankers’ Association as the information
vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits).

 

“Lien”
means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including
the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement.

 

“Loan”
means any Revolving Loan or Term Loan, whether outstanding as a U.S. Prime Rate Loan or Eurodollar Loan or otherwise, each of which
is a “type” of Loan hereunder.

 

“Loan Documents”
means this Agreement, the Notes (if any), the Applications, the Collateral Documents, the Guaranty Agreements, and each
other instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith.

 

“Loan Party”
means the Borrower and each of the Guarantors.

 

    	-18-

    	 

    

 

“Material
Adverse Effect” means (a) a material adverse change in, or material adverse effect upon, the operations, business,
Property, financial condition or operating results of the Loan Parties taken as a whole, (b) a material impairment of the
ability of any Loan Party to perform its material obligations under any Loan Document or (c) a material adverse effect upon
(i) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document or the material rights
and remedies of the Bank thereunder or (ii) the perfection or priority of any Lien granted under any Collateral Document.

 

“Material
Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more
Hedging Agreements, of any one or more of the Loan Parties and its Subsidiaries in an aggregate principal amount exceeding $500,000.
For purposes of determining Material Indebtedness, the “obligations” of any Loan Party or any Subsidiary in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such
Loan Party or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

 

“Mortgages”
means, collectively, each Mortgage and Security Agreement with Assignment of Rents and each Deed of Trust and Security Agreement
with Assignment of Rents between the Borrower or another Loan Party and the Bank relating to such Person’s real property
acquired in connection with a Permitted Acquisition and any other mortgages or deeds of trust delivered to the Bank pursuant to
Section 11.4 as the same may be amended, modified, supplemented or restated from time to time.

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Net Cash
Proceeds” means, as applicable, (a) with respect to any Disposition by a Person, cash and cash equivalent proceeds
received by or for such Person’s account, net of (i) reasonable direct costs relating to such Disposition (including,
expenses, fees and commissions), (ii) sale, use or other transactional taxes paid or payable by such Person as a direct result
of such Disposition, (iii) income taxes to be paid in connection with such Disposition, and (iv) the principal amount
of any Indebtedness permitted hereby which is secured by a prior perfected Lien on the asset subject to such Disposition and is
required to be repaid in connection with such Disposition, (b) with respect to any Event of Loss of a Person, cash and cash
equivalent proceeds received by or for such Person’s account (whether as a result of payments made under any applicable insurance
policy therefor or in connection with condemnation proceedings or otherwise), net of reasonable direct costs incurred in connection
with the collection of such proceeds, awards or other payments, and (c) with respect to any offering of equity securities
of a Person or the issuance of any Indebtedness by a Person, cash and cash equivalent proceeds received by or for such Person’s
account, net of reasonable legal, underwriting, and other fees and expenses incurred as a direct result thereof.

 

    	-19-

    	 

    

 

“Net Income”
means, with reference to any period, the net income (or net loss) of the Loan Parties and their Non-Canadian Subsidiaries for such
period computed on a consolidated basis in accordance with GAAP; provided that there shall be excluded from Net Income (a) the
net income (or net loss) of any Person accrued prior to the date it becomes a Subsidiary of, or has merged into or consolidated
with, any Loan Party or another Non-Canadian Subsidiary, (b) the net income (or net loss) of any Person (other than a Subsidiary)
in which any Loan Party or any of its Non-Canadian Subsidiaries has an equity interest, except to the extent of the amount of dividends
or other distributions actually paid to a Loan Party or any of its Non-Canadian Subsidiaries during such period, (c) the undistributed
earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or requirement of
law applicable to such Subsidiary, and (d) extraordinary or non-recurring gains.

 

“Net Worth”
means, for any Person and at any time the same is to be determined, total shareholder’s equity (including capital stock,
additional paid-in capital, and retained earnings after deducting treasury stock) which would appear on the balance sheet of such
Person in accordance with GAAP.

 

“Non-Canadian
Subsidiaries” means and includes all Subsidiaries of the Borrower which are not organized under the laws of Canada or
a province or territory thereof.

 

“Note”
and “Notes” each is defined in Section 2.10.

 

“Obligations”
means all obligations of the Borrower to pay principal and interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment obligations of the Borrower or any other Loan Party
arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due,
direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

 

“OFAC”
means the United States Department of Treasury Office of Foreign Assets Control.

 

“OFAC Event”
means the event specified in Section 8.15.

 

“OFAC
Sanctions Programs” means all laws, regulations, and Executive Orders administered by OFAC, including without limitation,
the Bank Secrecy Act, anti-money laundering laws (including, without limitation, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act)),
and all economic and trade sanction programs administered by OFAC, any and all similar United States
federal laws, regulations or Executive Orders, and any similar laws, regulations or orders adopted by any State within the United
States. 

 

“OFAC SDN
List” means the list of the Specially Designated Nationals and Blocked Persons maintained by OFAC.

 

“Other Connection
Taxes” means, with respect to the Bank, Taxes imposed as a result of a present or former connection between the Bank
and the jurisdiction imposing such Tax (other than connections arising from the Bank having executed, delivered, become a party
to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

    	-20-

    	 

    

 

“Other Taxes”
means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment
made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed
with respect to an assignment.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA.

 

“PCP”
means Pioneer Critical Power Inc., a Delaware corporation.

 

“PECI”
means Pioneer Electrogroup Canada Inc., a Quebec corporation.

 

“PECI Letter
Loan Agreement” means that certain Amended and Restated Letter Loan Agreement dated as of June 28, 2013 among PECI
and its Subsidiaries, as borrowers, and the Bank, as the same may be amended, modified or restated from time to time.

 

“Permitted
Acquisition” means any Acquisition with respect to which all of the following conditions shall have been satisfied:

 

(a)          the
Acquired Business is in an Eligible Line of Business and has its primary operations within the United States of America;

 

(b)          the
Acquisition shall not be a Hostile Acquisition;

 

(c)          the
financial statements of the Acquired Business shall have been compiled or audited by a nationally recognized accounting firm or
such financial statements shall have undergone review of a scope satisfactory to the Bank and in case of any Acquisition where
the Total Consideration exceeds $2,000,000, the Bank shall have received a Quality of Earnings Report satisfactory to it;

 

(d)          the
Total Consideration for the Acquired Business shall not exceed $10,000,000;

 

(e)          the
Borrower shall have notified the Bank not less than thirty (30) days prior (or such shorter time period as permitted by the
Bank) to any such Acquisition and furnished to the Bank at such time reasonable details as to such Acquisition (including sources
and uses of funds therefor), and three (3)-year historical financial information, if available, and three (3)-year pro
forma financial forecasts of the Acquired Business on a stand alone basis as well as of the Borrower on a consolidated basis after
giving effect to the Acquisition and covenant compliance calculations reasonably satisfactory to the Bank demonstrating satisfaction
of the condition described in clause (g) below;

 

    	-21-

    	 

    

 

(f)          if
a new Domestic Subsidiary is formed or acquired as a result of or in connection with the Acquisition, the Borrower shall have complied
with the requirements of Section 11 in connection therewith; and

 

(g)          after
giving effect to the Acquisition and any Credit Event in connection therewith, no Default shall exist, including with respect to
the financial covenants contained in Section 8.23 on a pro forma basis (looking back four completed fiscal quarters as if
the Acquisition occurred on the first day of such period and after giving effect to the payment of the purchase price for the Acquired
Business).

 

“Permitted
Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.

 

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

 

“Plan”
means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code that either (a) is maintained by a member of the Controlled Group for employees of a member of the Controlled
Group or (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one
employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions.

 

“Premises”
means the real property owned or leased by any Loan Party or any Domestic Subsidiary of a Loan Party.

 

“Property”
means, as to any Person, all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries under GAAP.

 

“Qualified
ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000
at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation
or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations
promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by
entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“RCRA”
means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

 

“Receivables”
means all rights to the payment of a monetary obligation, now or hereafter owing, whether evidenced by accounts, instruments, chattel
paper, or general intangibles.

 

    	-22-

    	 

    

 

“Reimbursement
Obligation” is defined in Section 2.3(c).

 

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

 

“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migration, dumping,
or disposing into the indoor or outdoor environment, including, without limitation, the abandonment or discarding of barrels, drums,
containers, tanks or other receptacles containing or previously containing any Hazardous Material.

 

“Reserves”
means any and all reserves which the Bank deems necessary, in its Permitted Discretion, to maintain (including, without limitation,
an availability reserve, reserves for accrued and unpaid interest on the Secured Obligations, volatility reserves, reserves for
rent at locations leased by any Loan Party and for consignee's, warehousemen’s and bailee’s charges, reserves for dilution
of Receivables, reserves for Inventory shrinkage, reserves for customs charges and shipping charges related to any Inventory in
transit, reserves for Hedging Liability and Bank Product Obligations, reserves for contingent liabilities of any Loan Party, reserves
for uninsured losses of any Loan Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or
potential liabilities with respect to any litigation and reserves for taxes, fees, assessments, and other governmental charges)
with respect to the Collateral or any part thereof or any Loan Party; provided that in no event shall Reserves at one time
exceed $500,000.

 

“Responsible
Officer” of any person means any executive officer or Financial Officer of such Person and any other officer, general
partner or managing member or similar official thereof with responsibility for the administration of the obligations of such person
in respect of this Agreement whose signature and incumbency shall have been certified to the Bank on or after the Closing Date
pursuant to an incumbency certificate of the type contemplated by Section 7.2.

 

“Revolving
Facility” means the credit facility for making Revolving Loans and issuing Letters of Credit described in Sections 2.2
and 2.3.

 

“Revolving
Credit Exposure” means, at any time, the aggregate principal amount at such time of the Bank’s outstanding Revolving
Loans and L/C Obligations at such time.

 

“Revolving
Credit Line” means the maximum amount of Revolving Loans and Letters of Credit at any one time outstanding under the
Revolving Facility, not to exceed the amount set forth in Section 2.2, as the same may be reduced or modified at any time
or from time to time pursuant to the terms hereof.

 

“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, or such earlier date on which the Revolving Credit Line is terminated in whole pursuant to Section 2.11,
9.2 or 9.3.

 

    	-23-

    	 

    

 

“Revolving
Loan” is defined in Section 2.2 and, as so defined, includes a U.S. Prime Rate Loan or a Eurodollar Loan, each of
which is a “type” of Revolving Loan hereunder.

 

“Revolving
Note” is defined in Section 2.10.

 

“S&P”
means Standard & Poor’s Ratings Services Group, a Standard & Poor’s Financial Services LLC business.

 

“Secured Obligations”
means the Obligations, Hedging Liability, and Bank Product Obligations, in each case whether now existing or hereafter arising,
due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired (including all interest,
costs, fees, and charges after the entry of an order for relief against any Loan Party in a case under the United States Bankruptcy
Code or any similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim against such Loan
Party in any such proceeding); provided, however, that, with respect to any Guarantor, Secured Obligations Guaranteed by
such Guarantor shall exclude all Excluded Swap Obligations.

 

“Security
Agreement” means that certain Security Agreement dated the date of this Agreement among the Loan Parties and the Bank,
as the same may be amended, modified, supplemented or restated from time to time.

 

“Subordinated
Debt” means Indebtedness which is subordinated in right of payment to the prior payment of the Secured Obligations pursuant
to subordination provisions approved in writing by the Bank and is otherwise pursuant to documentation that is, which is in an
amount that is, and which contains interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies
and other material terms that are in form and substance, in each case reasonably satisfactory to the Bank.

 

“Subsidiary”
means, as to any particular parent corporation or organization, any other corporation or organization more than 50% of the outstanding
Voting Stock of which is at the time directly or indirectly owned by such parent corporation or organization or by any one or more
other entities which are themselves subsidiaries of such parent corporation or organization. Unless otherwise expressly noted herein,
the term “Subsidiary” means a Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries.

 

“Swap Obligation”
means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes
a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

“Sweep to
Loan Arrangement” means a cash management arrangement established by the Borrower with the Bank, pursuant to which the
Bank is authorized (a) to make advances of Revolving Loans hereunder, the proceeds of which are deposited by the Bank into
a designated account of the Borrower maintained at the Bank, and (b) to accept as prepayments of the Revolving Loans hereunder
proceeds of excess targeted balances held in such designated account at the Bank, which cash management arrangement is subject
to such agreement(s) and on such terms acceptable to the Bank.

 

    	-24-

    	 

    

 

“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.

 

“Term Loan
Facility” means the credit facility for the Term Loan described in Section 2.1.

 

“Term Loan”
is defined in Section 2.1 and, as so defined, includes a U.S. Prime Rate Loan or a Eurodollar Loan, each of which is a
“type” of Term Loan hereunder.

 

“Term Loan
Commitment” means the obligation of the Bank to make the Term Loan in the principal amount not to exceed the amount set
forth in Section 2.1.

 

“Term Loan
Maturity Date” means June 21, 2018.

 

“Term Note”
is defined in Section 2.10.

 

“Total Consideration”
means, with respect to an Acquisition, the sum (but without duplication) of (a) cash paid or payable in connection with any
Acquisition, whether paid at or prior to or after the closing thereof, (b) indebtedness payable to the seller in connection
with such Acquisition, including all “earn-out” and other future payment obligations subject to the occurrence of any
contingency (provided that, in the case of any future payment subject to a contingency, such shall be considered part of the Total
Consideration to the extent of the reserve, if any, required under GAAP to be established in respect thereof by any Loan Party
or any Subsidiary of a Loan Party), (c) the fair market value of any equity securities, including any warrants or options
therefor, delivered in connection with any Acquisition, (d) the present value of covenants not to compete entered into in
connection with such Acquisition or other future payments which are required to be made over a period of time and are not contingent
upon any Loan Party or its Subsidiary meeting financial performance objectives (exclusive of salaries paid in the ordinary course
of business) (discounted at the U.S. Base Rate), but only to the extent not included in clause (a), (b) or (c) above, and
(e) the amount of indebtedness assumed in connection with such Acquisition.

 

“Total Capitalization”
means, at any time the same is to be determined, the sum of (a) Net Worth of the Loan Parties and their Non-Canadian Subsidiaries
at such time and (b) Funded Debt of the Loan Parties and their Non-Canadian Subsidiaries at such time.

 

“Total Leverage
Ratio” means, as of the last day of any fiscal quarter of the Borrower, the ratio of Funded Debt of the Loan Parties
and their Non-Canadian Subsidiaries as of the last day of such fiscal quarter to Adjusted EBITDA of the Loan Parties and their
Non-Canadian Subsidiaries for the period of four fiscal quarters then ended.

 

“Unfinanced
Capital Expenditures” means, with respect to any period, the aggregate amount of Capital Expenditures made by the Loan
Parties and their Non-Canadian Subsidiaries during such period to the extent permitted by this Agreement and not financed with
proceeds of Indebtedness; provided that any Capital Expenditures financed under the Revolving Facility shall be considered
Unfinanced Capital Expenditures.

 

    	-25-

    	 

    

 

“Unfunded
Vested Liabilities” means, for any Plan at any time, the amount (if any) by which the present value of all vested
nonforfeitable accrued benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential
liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA.

 

“U.S. Dollar
Equivalent” means (a) the amount of any Obligation or Letter of Credit denominated in U.S. Dollars, and (b) in
relation to any Obligation or Letter of Credit denominated in another currency, the amount of U.S. Dollars which would be realized
by converting such currency into U.S. Dollars at the exchange rate quoted to the Bank at the time of such calculation.

 

“U.S. Dollars”
and “$” each means the lawful currency of the United States of America.

 

“U.S. Person”
means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

 

“U.S. Prime
Rate” means, for any day, the rate per annum equal to the greater of: (a) the rate of interest announced or otherwise
established by the Bank from time to time as the base rate it will use to determine rates of interest for U.S. Dollar loans
to borrowers located in the United States as in effect on such day, with any change in the U.S. Prime Rate resulting from
a change in said prime commercial rate to be effective as of the date of the relevant change in said base rate (it being acknowledged
and agreed that such rate may not be the Bank’s best or lowest rate), and (b) the sum of (i) the rate determined
by the Bank to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to the
Bank at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is
not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers selected by the Bank for sale
to the Bank at face value of Federal funds in the secondary market in an amount equal or comparable to the principal amount for
which such rate is being determined, plus (ii) 1/2 of 1%.

 

“U.S. Prime
Rate Loan” means a Loan bearing interest at a rate specified in Section 2.4(a).

 

“Voting Stock”
of any Person means capital stock or other equity interests of any class or classes (however designated) having ordinary power
for the election of directors or other similar governing body of such Person, other than stock or other equity interests having
such power only by reason of the happening of a contingency.

 

“Welfare Plan”
means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Withholding
Agent” means any Loan Party and the Bank.

 

    	-26-

    	 

    

 

Section 1.2.          Interpretation.
The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.”
The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein 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), (b) any reference
herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,”
“hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference
to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented
from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and
contract rights. All references to time of day herein are references to Chicago, Illinois, time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation
or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with
GAAP except where such principles are inconsistent with the specific provisions of this Agreement. The Borrower covenants and agrees
with the Bank that whether or not the Borrower may at any time adopt Accounting Standards Codification 825 or account for assets
and liabilities acquired in an acquisition on a fair value basis pursuant to Accounting Standards Codification 805, all determinations
of compliance with the terms and conditions of this Agreement shall be made on the basis that the Borrower has not adopted Accounting
Standards Codification 825 or Accounting Standards Codification 805.

 

Section 1.3.          Change
in Accounting Principles. If, after the date of this Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 and such change shall result in a change in the method
of calculation of any financial covenant, standard or term found in this Agreement, either the Borrower or the Bank may by notice
to the Bank or the Borrower, respectively, require that the Bank and the Borrower negotiate in good faith to amend such covenants,
standards, and terms so as equitably to reflect such change in accounting principles, with the desired result being that the criteria
for evaluating the financial condition of the Borrower and its Subsidiaries shall be the same as if such change had not been made.
No delay by the Borrower or the Bank in requiring such negotiation shall limit their right to so require such a negotiation at
any time after such a change in accounting principles. Until any such covenant, standard, or term is amended in accordance with
this Section, financial covenants shall be computed and determined in accordance with GAAP in effect prior to such change in accounting
principles. Without limiting the generality of the foregoing, the Borrower shall neither be deemed to be in compliance with any
financial covenant hereunder nor out of compliance with any financial covenant hereunder if such state of compliance or noncompliance,
as the case may be, would not exist but for the occurrence of a change in accounting principles after the date hereof.

 

    	-27-

    	 

    

 

Section 2.          The
Facilities.

 

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 $6,000,000. The Term Loan may be advanced in multiple Borrowings beginning
on the Closing Date and ending on the date 6 months thereafter (the “Drawing Period End 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.

 

Section 2.2.          Revolving
Facility; Revolving Credit Line. Subject to the terms and conditions hereof, the Borrower may request and the Bank shall consider
in its discretion making a loan or loans (individually a “Revolving Loan” and collectively, the “Revolving
Loans”) in U.S. Dollars to the Borrower from time to time on a revolving basis up to $10,000,000, subject to any reductions
thereof pursuant to the terms hereof, before the Revolving Credit Termination Date; provided that, subject to the satisfaction
of the conditions precedent set forth in Sections 7.1 and 7.2 hereof, the Bank has agreed to make an advance on the Closing Date
of not less than $4,908,856.42. The sum of the aggregate principal amount of Revolving Loans and L/C Obligations at any time outstanding
shall not exceed the lesser of (i) the Revolving Credit Line in effect at such time and (ii) the Borrowing Base as determined
based on the most recent Borrowing Base Certificate. As provided in Section 2.6(a), the Borrower may elect that each Borrowing
of Revolving Loans be either U.S. Prime Rate Loans or Eurodollar Loans. Revolving Loans may be repaid and the principal amount
thereof reborrowed before the Revolving Credit Termination Date, subject to the terms and conditions hereof. The
Borrower acknowledges that the Revolving Loans and the Revolving Note are payable upon demand and that nothing contained herein
or in the Revolving Note shall in any manner affect or impair the right of the Bank to demand payment of the Revolving Loans and
Revolving Note, or refuse to extend Revolving Loans, at any time it deems fit, even though no Default has occurred or is continuing
and even though the Borrower is in compliance with the terms of this Agreement and the Revolving Note.

 

Section 2.3.          Letters
of Credit. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Facility, the
Bank shall issue standby and commercial letters of credit (each a “Letter of Credit”) for the account of the
Borrower or for the account of the Borrower and one or more of its Subsidiaries in an aggregate undrawn face amount
up to the L/C Sublimit. Letters of Credit shall constitute usage of the Revolving Credit Line in an amount equal to the L/C Obligations
then outstanding.

 

    	-28-

    	 

    

 

(b)          Applications.
At any time before the Revolving Credit Termination Date, the Bank shall, at the request of the Borrower, issue one or more Letters
of Credit in U.S. Dollars and other currencies approved by the Bank, in a form satisfactory to the Bank, with expiration
dates no later than the earlier of 12 months from the date of issuance (or which are cancelable not later than 12 months from the
date of issuance and each renewal) or thirty (30) days prior to the Revolving Credit Termination Date, in an aggregate
face amount as set forth above, upon the receipt of an application duly executed by the Borrower and, if such Letter of Credit
is for the account of one of its Subsidiaries, such Subsidiary for the relevant Letter of Credit in the form then customarily
prescribed by the Bank for the Letter of Credit requested (each an “Application”). The Borrower agrees that
if on the Revolving Credit Termination Date any Letters of Credit remain outstanding, the Borrower shall then deliver to the Bank,
without notice or demand, Cash Collateral in an amount equal to 105% of the aggregate amount of each Letter of Credit then outstanding
(which shall be held by the Bank pursuant to the terms of Section 9.4). Notwithstanding anything contained in any Application
to the contrary: (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 3.1,
(ii) except as otherwise provided herein or in Section 2.8, unless an Event of Default exists, the Bank will not call
for the funding by the Borrower of any amount under a Letter of Credit before being presented with a drawing thereunder, and (iii) if
the Bank is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, except
as otherwise provided for in Section 2.6(b), the Borrower’s obligation to reimburse the Bank for the amount of such
drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate
per annum equal to the sum of the Applicable Margin plus the U.S. Prime Rate from time to time in effect (computed on the basis
of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed). The Bank agrees to issue amendments
to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of the Borrower subject
to the conditions of Section 7 and the other terms of this Section.

 

(c)          The
Reimbursement Obligations. Subject to Section 2.3(b), the obligation of the Borrower to reimburse the Bank for all drawings
under a Letter of Credit (a “Reimbursement Obligation”) shall be governed by the Application related to such
Letter of Credit, except that reimbursement shall be made by no later than 12:00 Noon (Chicago time) on the date when each drawing
is to be paid if the Borrower has been informed of such drawing by the Bank on or before 11:00 a.m. (Chicago time) on the
date when such drawing is to be paid or, if notice of such drawing is given to the Borrower after 11:00 a.m. (Chicago time)
on the date when such drawing is to be paid, by no later than 12:00 Noon (Chicago time) on the following Business Day, in immediately
available funds at the Bank’s principal office in Chicago, Illinois, or such other office as the Bank may designate in writing
to the Borrower (who shall thereafter cause to be distributed to the Bank such amount(s) in like funds).

 

    	-29-

    	 

    

 

(d)          Obligations
Absolute. The Borrower’s obligation to reimburse L/C Obligations shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement and the relevant Application under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any
term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent
or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Bank under
a Letter of Credit against presentation of a draft or other document that does not strictly comply with the terms of such Letter
of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. The Bank shall not have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any
of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required
to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the
control of the Bank; provided that the foregoing shall not be construed to excuse the Bank from liability to the Borrower
to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower
and each other Loan Party to the extent permitted by applicable law) suffered by the Borrower or any Loan Party that are caused
by the Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit
comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct
on the part of the Bank (as determined by a court of competent jurisdiction by final and nonappealable judgment), the Bank shall
be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Bank may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept
and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(e)          Manner
of Requesting a Letter of Credit. The Borrower shall provide at least five (5) Business Days’ advance written notice
to the Bank of each request for the issuance of a Letter of Credit, such notice in each case to be accompanied by an Application
for such Letter of Credit properly completed and executed by the Borrower and, in the case of an extension or amendment or an increase
in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Bank, in each case, together with
the fees called for by this Agreement.

 

Section 2.4.          Applicable
Interest Rates. (a) U.S. Prime Rate Loans. Each U.S. Prime Rate Loan made or maintained by the Bank shall bear
interest (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual days elapsed on the unpaid
principal amount thereof from the date such Loan is advanced, or created by conversion from a Eurodollar Loan, until maturity (whether
by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the U.S. Prime Rate from time
to time in effect, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

(b)          Eurodollar
Loans. Each Eurodollar Loan made or maintained by the Bank shall bear interest during each Interest Period it is outstanding
(computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date
such Loan is advanced or continued, or created by conversion from a U.S. Prime Rate Loan, until maturity (whether by acceleration
or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such Interest
Period, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

    	-30-

    	 

    

 

(c)          Rate
Determinations.  The Bank shall determine each interest rate applicable to the Loans and the Reimbursement Obligations hereunder
in a manner consistent with the terms of this Agreement, and its determination thereof shall be conclusive and binding except in
the case of manifest error.

 

Section 2.5.          Minimum
Borrowing Amounts; Maximum Eurodollar Loans. Each Borrowing of U.S. Prime Rate Loans advanced under a Facility shall be in
an amount not less than $100,000. Each Borrowing of Eurodollar Loans advanced, continued or converted under a Facility shall be
in an amount equal to $500,000 or such greater amount which is an integral multiple of $100,000. Without the Bank’s consent,
there shall not be more than five (5) Borrowings of Eurodollar Loans outstanding hereunder at any one time.

 

Section 2.6.          Manner
of Borrowing Loans and Designating Applicable Interest Rates. (a) Notice to the Bank. The Borrower shall give notice
to the Bank by no later than 10:00 a.m. (Chicago time): (i) at least three (3) Business Days before the date on
which the Borrower requests the Bank to advance a Borrowing of Eurodollar Loans and (ii) on the date the Borrower requests
the Bank to advance a Borrowing of U.S. Prime Rate Loans. The Loans included in each Borrowing shall bear interest initially at
the type of rate specified in such notice of a new Borrowing. Thereafter, subject to the terms and conditions hereof, the Borrower
may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to the minimum
amount requirement for each outstanding Borrowing set forth in Section 2.5, a portion thereof, as follows: (i) if such
Borrowing is of Eurodollar Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or
all of such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into U.S. Prime Rate Loans or (ii) if such
Borrowing is of U.S. Prime Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period or Interest Periods specified by the Borrower. The Borrower shall give all such notices requesting
the advance, continuation or conversion of a Borrowing to the Bank by telephone, telecopy, or other telecommunication device acceptable
to the Bank (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing in a manner
acceptable to the Bank), substantially in the form attached hereto as Exhibit A (Notice of Borrowing) or Exhibit B (Notice
of Continuation/Conversion), as applicable, or in such other form acceptable to the Bank. Notice of the continuation of a Borrowing
of Eurodollar Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of U.S. Prime Rate Loans
into Eurodollar Loans must be given by no later than 10:00 a.m. (Chicago time) at least three (3) Business Days before
the date of the requested continuation or conversion. All such notices concerning the advance, continuation or conversion of a
Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business
Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Loans to comprise such new, continued
or converted Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the Interest Period applicable thereto. Upon
notice to the Borrower by the Bank (or, in the case of an Event of Default under Section 9.1(j) or 9.1(k) with respect to
the Borrower, without notice), no Borrowing of Eurodollar Loans shall be advanced, continued, or created by conversion if any Event
of Default then exists. The Borrower agrees that the Bank may rely on any such telephonic, telecopy or other telecommunication
notice given by any person the Bank in good faith believes is an Authorized Representative without the necessity of independent
investigation, and in the event any such notice by telephone conflicts with any written confirmation such telephonic notice shall
govern if the Bank has acted in reliance thereon.

 

    	-31-

    	 

    

 

(b)          Borrower’s
Failure to Notify. If the Borrower fails to give notice pursuant to Section 2.6(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before the last day of its then current Interest Period
within the period required by Section 2.6(a) and such Borrowing is not prepaid in accordance with Section 2.8(a), such
Borrowing shall automatically be converted into a Borrowing of U.S. Prime Rate Loans. In the event the Borrower fails to give notice
pursuant to Section 2.6(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the
Bank by 12:00 noon (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement
Obligation through funds not borrowed under this Agreement, the Borrower shall be deemed to have requested a Borrowing of U.S.
Prime Rate Loans under the Revolving Facility on such day in the amount of the Reimbursement Obligation then due, which Borrowing
shall be applied to pay the Reimbursement Obligation then due.

 

(c)          Disbursement
of Loans. The Bank shall make the proceeds of each new Borrowing available to the Borrower at the Bank’s principal office
in Chicago, Illinois (or at such other location as the Bank shall designate), by depositing or wire transferring such proceeds
to the credit of the Borrower’s Designated Disbursement Account or as the Borrower and the Bank may otherwise agree.

 

(d)          Sweep
to Loan Arrangement. So long as a Sweep to Loan Arrangement is in effect, and subject to the terms and conditions thereof,
Revolving Loans may be advanced and prepaid hereunder notwithstanding any notice, minimum amount, or funding and payment location
requirements hereunder for any advance of Revolving Loans or for any prepayment of any Revolving Loans. The making of any such
Revolving Loans shall otherwise be subject to the other terms and conditions of this Agreement. All Revolving Loans advanced or
prepaid pursuant to such Sweep to Loan Arrangement shall be Base Rate Loans. The Bank shall have the right in its
sole discretion to suspend or terminate the making and/or prepayment of Revolving Loans pursuant to such Sweep to Loan Arrangement
with notice to the Borrower (which may be provided on a same-day basis), whether or not any Default exists. The Bank shall not
be liable to the Borrower or any other Person for any losses directly or indirectly resulting from events beyond the Bank’s
reasonable control, including without limitation any interruption of communications or data processing services or legal restriction
or for any special, indirect, consequential or punitive damages in connection with any Sweep to Loan Arrangement.

 

Section 2.7.          Maturity
of Loans. (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,
2014, with the amount of each such principal installment to equal the percentage of the outstanding principal balance of the Term
Loan on the Drawing Period End Date set forth in Column B below shown opposite of the relevant due date as set forth in Column A
below:

 

    	-32-

    	 

    

 

	Column A 
Payment
    Date	 	Column B 
Percentage	 
	03/31/14	 	 	3.00	%
	06/30/14	 	 	3.00	%
	09/30/14	 	 	3.00	%
	12/31/14	 	 	3.00	%
	03/31/15	 	 	3.50	%
	06/30/15	 	 	3.50	%
	09/30/15	 	 	3.50	%
	12/31/15	 	 	3.50	%
	03/31/16	 	 	4.00	%
	06/30/16	 	 	4.00	%
	09/30/16	 	 	4.00	%
	12/31/16	 	 	4.00	%
	03/31/17	 	 	4.50	%
	06/30/17	 	 	4.50	%
	09/30/17	 	 	4.50	%
	12/31/17	 	 	4.50	%
	03/31/18	 	 	4.50	%

 

, 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.

 

(b)          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.

 

Section 2.8.          Prepayments.
(a) Optional. The Borrower may prepay in whole or in part (but, if in part, then: (i) if such Borrowing is
of U.S. Prime Rate Loans, in an amount not less than $100,000, (ii) if such Borrowing is of Eurodollar Loans, in an amount
not less than $100,000, and (iii) in each case, in an amount such that the minimum amount required for a Borrowing pursuant
to Section 2.5 remains outstanding) upon not less than three (3) Business Days prior notice by the Borrower to the Bank in
the case of any prepayment of a Borrowing of Eurodollar Loans and notice delivered by the Borrower to the Bank no later than 10:00 a.m.
(Chicago time) on the date of prepayment in the case of a Borrowing of U.S. Prime Rate Loans (or, in any case, such shorter period
of time then agreed to by the Bank), such prepayment to be made by the payment of the principal amount to be prepaid and, in the
case of the Term Loan or any Eurodollar Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the
Bank under Section 4.5.

 

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(b)          Mandatory.
(i) The Borrower shall, on each date the Revolving Credit Line is reduced pursuant to Section 2.11 or at any time when
the unpaid principal balance of Revolving Loans and L/C Obligations outstanding exceeds the Revolving Credit Line, prepay the Revolving
Loans, and, if necessary, prefund the L/C Obligations by the amount, if any, necessary to reduce the sum of the aggregate principal
amount of Revolving Loans and L/C Obligations then outstanding to the amount to which the Revolving Credit Line has been so reduced.

 

(ii)         If
at any time the sum of the unpaid principal balance of the Revolving Loans and the L/C Obligations then outstanding shall
be in excess of the Borrowing Base as determined on the basis of the most recent Borrowing Base Certificate, the Borrower shall
within 2 Business Days’ pay over the amount of the excess to the Bank as and for a mandatory prepayment on such Obligations,
with each such prepayment first to be applied to the Revolving Loans until paid in full with any remaining balance to be held by
the Bank in the Collateral Account as security for the Obligations owing with respect to the Letters of Credit.

 

(iii)        If
the Borrower or any Domestic Subsidiary shall at any time or from time to time make or agree to make a Disposition or shall suffer
an Event of Loss with respect to any Property, then the Borrower shall promptly notify the Bank of such proposed Disposition or
Event of Loss (including the amount of the estimated Net Cash Proceeds to be received by the Borrower or such Domestic Subsidiary
in respect thereof) and, within 2 Business Days of receipt by the Borrower or such Domestic Subsidiary of the Net Cash Proceeds
of such Disposition or Event of Loss, the Borrower shall prepay the Obligations in an aggregate amount equal to 100% of the amount
of all such Net Cash Proceeds; provided that (x) so long as no Event of Default then exists, this subsection shall
not require any such prepayment with respect to Net Cash Proceeds received on account of an Event of Loss so long as (A) such
Net Cash Proceeds are applied to replace or restore the relevant Property in accordance with the relevant Collateral Documents
or (B) the Net Cash Proceeds received from such Event of Loss are less than $25,000, (y) this subsection shall not require
any such prepayment with respect to Net Cash Proceeds received on account of Dispositions during any fiscal year of the Borrower
not exceeding $100,000 in the aggregate so long as no Default then exists, and (z) in the case of any Disposition not covered
by clause (y) above, so long as no Default then exists, if the Borrower states in its notice of such event that the Borrower
or the relevant Domestic Subsidiary intends to reinvest, within 180 days of the applicable Disposition, the Net Cash Proceeds
thereof in assets similar to the assets which were subject to such Disposition, then the Borrower shall not be required to make
a mandatory prepayment under this subsection in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds are actually
reinvested in such similar assets with such 180-day period. Promptly after the end of such 180-day period, the Borrower shall notify
the Bank whether the Borrower or such Domestic Subsidiary has reinvested such Net Cash Proceeds in such similar assets, and, to
the extent such Net Cash Proceeds have not been so reinvested, the Borrower shall promptly prepay the Obligations in the amount
of such Net Cash Proceeds not so reinvested. The amount of each such prepayment shall be applied first to the outstanding Term
Loan until paid in full and then to the Revolving Facility, provided that proceeds from an Event of Loss relating to Eligible
Inventory and Eligible Receivables then included in the Borrowing Base shall first be applied to the Revolving Facility, but without
a reduction of the Revolving Credit Line. If the Bank so requests, all proceeds of such Disposition or Event of Loss shall be deposited
with the Bank (or its agent) and held by it in the Collateral Account. So long as no Event of Default exists, the Bank shall disburse
amounts representing such proceeds from the Collateral Account to or at the Borrower’s direction for application to or reimbursement
for the costs of replacing, rebuilding or restoring such Property.

 

    	-34-

    	 

    

 

(iv)        If
after the Closing Date the Borrower or any Domestic Subsidiary shall issue any Indebtedness, other than Indebtedness permitted
by Section 8.7, the Borrower shall promptly notify the Bank of the estimated Net Cash Proceeds of such issuance to be received
by or for the account of the Borrower or such Domestic Subsidiary in respect thereof. Within 2 Business Days of receipt by the
Borrower or such Domestic Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay the Obligations in an aggregate
amount equal to 100% of the amount of such Net Cash Proceeds. The amount of each such prepayment shall be applied first to the
outstanding Term Loan until paid in full and then to the Revolving Facility, but without a reduction of the Revolving Credit Line.
The Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Bank for any breach of
Section 8.7 or any other terms of the Loan Documents.

 

(v)         Unless
the Borrower otherwise directs, prepayments of Loans under this Section 2.8(b) shall be applied first to Borrowings of U.S.
Prime Rate Loans until payment in full thereof with any balance applied to Borrowings of Eurodollar Loans in the order in which
their Interest Periods expire. Each prepayment of Loans under this Section 2.8(b) shall be made by the payment of the principal
amount to be prepaid and, in the case of the Term Loan or any Eurodollar Loans, accrued interest thereon to the date of prepayment
together with any amounts due the Bank under Section 4.5. Each prefunding of L/C Obligations shall be made in accordance with
Section 9.4.

 

(c)          Any
amount of Revolving Loans paid or prepaid before the Revolving Credit Termination Date may, subject to the terms and conditions
of this Agreement, be borrowed, repaid and borrowed again. No amount of the Term Loan paid or prepaid may be reborrowed, and, in
the case of any partial prepayment, such prepayment shall be applied to the remaining payments on the relevant Loans in the inverse
order of maturity.

 

Section 2.9.          Default
Rate. Notwithstanding anything to the contrary contained herein, while any Event of Default exists or after acceleration, the
Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal
amount of all Loans and Reimbursement Obligations, letter of credit fees and other amounts at a rate per annum equal to:

 

(a)          for
any U.S. Prime Rate Loan, the sum of 2.0% plus the Applicable Margin plus the U.S. Prime Rate from time to time in
effect;

 

(b)          for
any Eurodollar Loan, the sum of 2.0% plus the rate of interest in effect thereon at the time of such Event of Default until
the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of 2.0% plus the
Applicable Margin for U.S. Prime Rate Loans plus the U.S. Prime Rate from time to time in effect;

 

    	-35-

    	 

    

 

(c)          for
any Reimbursement Obligation, the sum of 2.0% plus the amounts due under Section 2.3 with respect to such Reimbursement
Obligation;

 

(d)          for
any Letter of Credit, the sum of 2.0% plus the Letter of Credit Fee due under Section 3.1(b) with respect to such Letter
of Credit; and

 

(e)          for
any other amount owing hereunder not covered by clauses (a) through (d) above, the sum of 2% plus the Applicable Margin
plus the U.S. Prime Rate from time to time in effect;

 

provided, however, that in the absence
of acceleration pursuant to Section 9.2 or 9.3, any adjustments pursuant to this Section shall be made at the election of
the Bank, with written notice to the Borrower (which election may be retroactively effective to the date of such Event of Default).
While any Event of Default exists or after acceleration, interest shall be paid on demand of the Bank.

 

Section 2.10.         Evidence
of Indebtedness. (a) The Bank shall maintain in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from each Loan made by the Bank from time to time, including the amounts of principal and
interest payable and paid to the Bank from time to time hereunder.

 

(b)          The
Bank shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder, the type thereof and
the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and
payable from the Borrower to the Bank hereunder and (iii) the amount of any sum received by the Bank hereunder from the Borrower.

 

(c)          The
entries maintained in the accounts maintained pursuant to subsections (a) and (b) above shall be prima facie evidence
of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Bank to maintain
such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance
with their terms.

 

(d)          The
Borrower shall prepare, execute and deliver to the Bank a promissory note or notes payable to the Bank or its registered assigns
in the forms of Exhibit C-1 (in the case of the Term Loan and referred to herein as a “Term Note”) and
C-2 (in the case of the Revolving Loans and referred to herein as a “Revolving Note”) (the Term Note and Revolving
Note being hereinafter referred to collectively as the “Notes” and individually as a “Note”).

 

Section 2.11.         Commitment
Terminations. (a) Optional Revolving Credit Terminations. The Borrower shall have the right at any time and from
time to time, upon five (5) Business Days prior written notice to the Bank (or such shorter period of time agreed to by the
Bank), to terminate the Revolving Credit Line without premium or penalty and in whole or in part, any partial termination to be in
an amount not less than $1,000,000, provided that the Revolving Credit Line may not be reduced to an amount less than the sum of
the aggregate principal amount of Revolving Loans and L/C Obligations then outstanding. Any termination of the Revolving Credit
Line below the L/C Sublimit then in effect shall reduce the L/C Sublimit by a like amount.

 

    	-36-

    	 

    

 

(b)          Any
termination of the Revolving Credit Line pursuant to this Section may not be reinstated.

 

Section 3.          Fees.

 

Section 3.1.          Fees.
(a) Standby Fee. During the period from the Closing Date to the Drawing Period End Date, the Borrower shall pay to
the Bank a standby fee at the rate per annum equal to the Applicable Margin (computed on the basis of a year of 365 or 366 days,
as applicable, and the actual number of days elapsed) times the daily amount by which the Term Loan Commitment exceeds the principal
amount of Term Loans then outstanding. Such standby fee shall be payable monthly in arrears on the last day of each month in each
year (commencing on the first such date occurring after the Closing Date) and on the Drawing Period End Date. For the avoidance
of doubt, no further standby fee shall be due with respect to any time after the Drawing Period End Date.

 

(b)          Administration
Fee. On each anniversary of the Closing Date until the Revolving Loans are terminated, 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.

 

(c)          Letter
of Credit Fees. Quarterly in arrears, on the last day of each March, June, September, and December, commencing on the first
such date occurring after the Closing Date, the Borrower shall pay to the Bank a letter of credit fee (the “Letter of
Credit Fee”) at a rate per annum equal to the Applicable Margin (computed on the basis of a year of 360 days and
the actual number of days elapsed) in effect during each day of such quarter applied to the daily average face amount of Letters
of Credit outstanding during such quarter. In addition, the Borrower shall pay to the Bank the Bank’s standard issuance,
drawing, negotiation, amendment, assignment, and other administrative fees for each Letter of Credit as established by the Bank
from time to time.

 

(d)          Closing
Fee. The Borrower shall pay to the Bank on the date hereof a non-refundable closing fee in the amount of $40,000.

 

(e)          Late
Fees.  In addition to any other amounts due hereunder, if any payment due hereunder is not received by the Bank on or before
1:00 p.m. (Chicago time) of the tenth (10th) day after such payment is due, the Borrower shall pay to the Bank on demand a
late fee equal to the greater of (i) five percent (5%) of the amount due and (ii) $15.00.

 

		Section 4.	Taxes;
                                                                                                                  Change in Circumstances,
                                                                                                                  Increased Costs,
                                                                                                                  and Funding
                                                                                                                  Indemnity.

 

Section 4.1.          Taxes.
(a) Certain Defined Terms. For purposes of this Section, the term “applicable law” includes FATCA.

 

    	-37-

    	 

    

 

(b)          Payments
Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan 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 an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment
by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall
timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if
such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after
such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under
this Section) the Bank receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

(c)          Payment
of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance
with applicable law, or at the option of the Bank timely reimburse it for the payment of, any Other Taxes.

 

(d)          Indemnification
by the Loan Parties. The Loan Parties shall jointly and severally indemnify the Bank, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section) payable or paid by the Bank or required to be withheld or deducted from a payment to the Bank and any
reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by the Bank shall be conclusive absent manifest error.

 

(e)          Evidence
of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this
Section, such Loan Party shall deliver to the Bank the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory
to the Bank.

 

(f)          Treatment
of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund
of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant
to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments
made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect
to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the
amount paid over pursuant to this subsection (f) (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding
anything to the contrary in this subsection (f), in no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this subsection (f) the payment of which would place the indemnified party in a less favorable
net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been
paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

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(g)          Survival.
Each party’s obligations under this Section shall survive any assignment of rights by the Bank, the termination of the
Facilities and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

Section 4.2.          Change
of Law. Notwithstanding any other provisions of this Agreement or any other Loan Document, if at any time any Change in Law
makes it unlawful for the Bank to make or continue to maintain any Eurodollar Loans or to perform its obligations as contemplated
hereby, the Bank shall promptly give notice thereof to the Borrower and the Bank’s obligations to make or maintain Eurodollar
Loans under this Agreement shall be suspended until it is no longer unlawful for the Bank to make or maintain Eurodollar Loans.
The Borrower shall prepay on demand the outstanding principal amount of any such affected Eurodollar Loans, together with all interest
accrued thereon and all other amounts then due and payable to the Bank under this Agreement; provided, however, subject
to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from the Bank by means of U.S. Prime Rate Loans.

 

Section 4.3.          Unavailability
of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:

 

(a)          the
Bank determines that deposits in U.S. Dollars (in the applicable amounts) are not being offered to it in the interbank eurodollar
market for such Interest Period, or that by reason of circumstances affecting the interbank eurodollar market adequate and reasonable
means do not exist for ascertaining the applicable LIBOR, or

 

(b)          the
Bank determines that (i) LIBOR as determined by the Bank will not adequately and fairly reflect the cost to the Bank of funding
Eurodollar Loans for such Interest Period or (ii) that the making or funding of Eurodollar Loans become impracticable,

 

then the Bank shall forthwith give notice
thereof to the Borrower, whereupon until the Bank notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Bank to make Eurodollar Loans shall be suspended.

 

Section 4.4.          Increased
Costs. (a) Increased Costs Generally. If any Change in Law shall:

 

(i)          impose,
modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in by, the Bank (except any reserve requirement reflected
in the Adjusted LIBOR);

 

    	-39-

    	 

    

 

(ii)         subject
the Bank to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition
of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)        impose
on the Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or
Loans made by the Bank or any Letter of Credit issued by the Bank;

 

and the result of any of the foregoing
shall be to increase the cost to the Bank of making, converting to, continuing or maintaining any Loan or of maintaining its obligation
to make any such Loan, or to increase the cost to the Bank of issuing or maintaining any Letter of Credit (or of maintaining its
obligation to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by the Bank hereunder (whether
of principal, interest or any other amount) then, upon request of the Bank, the Borrower will pay to the Bank such additional amount
or amounts as will compensate the Bank for such additional costs incurred or reduction suffered.

 

(b)          Capital
Requirements. If the Bank determines that any Change in Law affecting the Bank or any lending office of the Bank or the Bank’s
holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return
on the Bank’s capital or on the capital of the Bank’s holding company, if any, as a consequence of this Agreement,
the Facilities of the Bank or the Loans made by, or the Letters of Credit issued by the Bank, to a level below that which the Bank
or the Bank’s holding company could have achieved but for such Change in Law (taking into consideration the Bank’s
policies and the policies of the Bank’s holding company with respect to capital adequacy), then from time to time the Borrower
will pay to the Bank such additional amount or amounts as will compensate the Bank or the Bank’s holding company for any
such reduction suffered.

 

(c)          Certificates
for Reimbursement. A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or its holding
company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall
be conclusive absent manifest error. The Borrower shall pay the Bank the amount shown as due on any such certificate within ten (10)
days after receipt thereof.

 

(d)          Delay
in Requests. Failure or delay on the part of the Bank to demand compensation pursuant to this Section shall not constitute
a waiver of the Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate
the Bank pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date
that the Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of the Bank’s
intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

    	-40-

    	 

    

 

Section 4.5.          Funding
Indemnity. If the Bank shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or re-employment of deposits or other funds acquired by the Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to the Bank) as a result of:

 

(a)          any
payment, prepayment or conversion of a Eurodollar Loan on a date other than the last day of its Interest Period,

 

(b)          any
failure (because of a failure to meet the conditions of Section 7 or otherwise) by the Borrower to borrow or continue a Eurodollar
Loan, or to convert a U.S. Prime Rate Loan into a Eurodollar Loan on the date specified in a notice given pursuant to Section 2.6(a)
or 2.2(b),

 

(c)          any
failure by the Borrower to make any payment of principal on any Eurodollar Loan when due (whether by acceleration or otherwise),
or

 

(d)          any
acceleration of the maturity of a Eurodollar Loan as a result of the occurrence of any Event of Default hereunder,

 

then, upon the demand of the Bank, the
Borrower shall pay to the Bank such amount as will reimburse the Bank for such loss, cost or expense. If the Bank makes such a
claim for compensation, it shall provide to the Borrower a certificate setting forth the amount of such loss, cost or expense in
reasonable detail and the amounts shown on such certificate shall be conclusive absent
manifest error.

 

Section 4.6.          Discretion
of the Bank as to Manner of Funding. Notwithstanding any other provision of this Agreement, the Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder with respect to Eurodollar Loans shall be made as if the Bank had actually
funded and maintained each Eurodollar Loan through the purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Loan’s Interest Period, and bearing an interest rate equal to LIBOR for such Interest Period.

 

Section 4.7.          Lending
Offices; Mitigation Obligations. The Bank may, at its option, elect to make its Loans hereunder at the branch, office or affiliate
specified on the appropriate signature page hereof (each a “Lending Office”) for each type of Loan available
hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written
notice to the Borrower.  If the Bank requests compensation under Section 4.4, or requires the Borrower to pay any Indemnified
Taxes or additional amounts to the Bank or any Governmental Authority for the account of the Bank pursuant to Section 4.1,
then the Bank shall (consistent with its internal policy and legal and regulatory restrictions) designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of the Bank, such designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 4.1 or 4.4, as the case may be, in the future, and (ii) would not subject the Bank to any unreimbursed
cost or expense and would not otherwise be disadvantageous to the Bank.

 

    	-41-

    	 

    

 

Section 5.          Place
and Application of Payments.

 

Section 5.1.          Place
and Application of Payments. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and
all other Obligations payable by the Borrower under this Agreement and the other Loan Documents, shall be made by the Borrower
to the Bank by no later than 12:00 Noon (Chicago time) on the due date thereof at the office of the Bank or its Affiliate,
BMO Harris Bank N.A., in Chicago, Illinois (or such other location as the Bank may designate to the Borrower). Any payments received
after such time shall be deemed to have been received by the Bank on the next Business Day. All such payments shall be made in
U.S. Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim.

 

Section 5.2.          Non-Business
Days. Subject to the definition of Interest Period, if any payment hereunder becomes due and payable on a day which is not
a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day which is not a Business Day, interest on such
principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall
be due and payable on the next scheduled date for the payment of interest.

 

Section 5.3.          Payments
Set Aside. To the extent that any payment by or on behalf of the Borrower or any other Loan Party is made to the Bank or the
Bank exercises its right of setoff, 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 the Bank
in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding 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 5.4.          Account
Debit. The Borrower hereby irrevocably authorizes the Bank to charge any of the Borrower’s deposit accounts maintained
with the Bank or any of its Affiliates for the amounts from time to time necessary to pay any then due Obligations; provided
that the Bank acknowledges and agrees that the Bank shall not be under an obligation to do so and the Bank shall not incur
any liability to the Borrower or any other Person for the Bank’s failure to do so.

 

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Section 6.          Representations
and Warranties.

 

The Borrower, for itself
and each other Loan Party represents and warrants to the Bank as follows:

 

Section 6.1.          Organization
and Qualification. Each Loan Party is duly organized, validly existing, and in good standing as a corporation, limited liability
company, or partnership, as applicable, under the laws of the jurisdiction in which it is organized, has full and adequate power
to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction
in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing
or qualifying, except where the failure to do so would not have a Material Adverse Effect.

 

Section 6.2.          Subsidiaries.
Each Subsidiary that is not a Loan Party is duly organized, validly existing, and in good standing under the laws of the jurisdiction
in which it is organized, has full and adequate power to own its Property and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature
of the Property owned or leased by it requires such licensing or qualifying, except where the failure to do so would not have a
Material Adverse Effect. Schedule 6.2 hereto identifies each Subsidiary (including Subsidiaries that are Loan Parties), the
jurisdiction of its organization, the percentage of issued and outstanding shares of each class of its capital stock or other equity
interests owned by any Loan Party and its Subsidiaries and, if such percentage is not 100% (excluding directors’ qualifying
shares as required by law), a description of each class of its authorized capital stock and other equity interests and the number
of shares of each class issued and outstanding. All of the outstanding shares of capital stock and other equity interests of each
Subsidiary are validly issued and outstanding and fully paid and nonassessable and all such shares and other equity interests indicated
on Schedule 6.2 as owned by the relevant Loan Party or another Subsidiary are owned, beneficially and of record, by such Loan
Party or such Subsidiary free and clear of all Liens other than the Liens granted in favor of the Bank pursuant to the Collateral
Documents or otherwise permitted by this Agreement. There are no outstanding commitments or other obligations of any Subsidiary
to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other
equity interests of any Subsidiary.

 

Section 6.3.          Authority
and Validity of Obligations. Each Loan Party has full right and authority to enter into this Agreement and the other Loan Documents
executed by it, to make the borrowings herein provided for (in the case of the Borrower), to guarantee the Secured Obligations
(in the case of each Guarantor), to grant to the Bank the Liens described in the Collateral Documents executed by such Loan Party,
and to perform all of its obligations hereunder and under the other Loan Documents executed by it. The Loan Documents delivered
by the Loan Parties have been duly authorized, executed, and delivered by such Persons and constitute valid and binding obligations
of such Loan Parties enforceable against each of them in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles
of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this
Agreement and the other Loan Documents do not, nor does the performance or observance by any Loan Party or any Subsidiary of any
of the matters and things herein or therein provided for, (a) contravene or constitute a default under any material provision
of law or any judgment, injunction, order or decree binding upon any Loan Party or any Subsidiary of a Loan Party or any provision
of the organizational documents (e.g., charter, certificate or articles of incorporation and by-laws, certificate or articles
of association and operating agreement, partnership agreement, or other similar organizational documents) of any Loan Party or
any Subsidiary of a Loan Party, (b) contravene or constitute a default under any material covenant, indenture or agreement
of or affecting any Loan Party or any Subsidiary of a Loan Party or any of their respective Property, in each case where such contravention
or default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (c) result
in the creation or imposition of any Lien on any Property of any Loan Party or any Subsidiary of a Loan Party other than the Liens
granted in favor of the Bank pursuant to the Collateral Documents.

 

    	-43-

    	 

    

 

Section 6.4.          Use
of Proceeds; Margin Stock. The Borrower shall use the proceeds of the Term Loan to finance Permitted Acquisitions and to pay
fees and expenses incurred in connection therewith; and the Borrower shall use the proceeds of the Revolving Facility to refinance
existing Indebtedness outstanding on the Closing Date, repay working capital loans made by PECI, and for its general working capital
purposes and for such other legal and proper purposes as are consistent with all applicable laws. No Loan Party nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Loan
or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock. Margin stock (as hereinabove defined) constitutes less
than 25% of the assets of the Loan Parties and their Subsidiaries which are subject to any limitation on sale, pledge or other
restriction hereunder.

 

Section 6.5.          Financial
Reports. The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2012, and the related
consolidated statements of income, retained earnings and cash flows of such Persons for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of Richter LLP, independent public accountants,
and the unaudited interim consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 2013, and the related
consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the 3 months
then ended, heretofore furnished to the Bank, fairly present the consolidated financial condition of the Borrower and its Subsidiaries
as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with
GAAP applied on a consistent basis. No Loan Party nor any of its Subsidiaries has contingent liabilities which are material to
it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished
pursuant to Section 8.5.

 

Section 6.6.          No
Material Adverse Change. Since March 31, 2013, 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.

 

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Section 6.7.          Full
Disclosure. The statements and information furnished to the Bank in connection with the negotiation of this Agreement and the
other Loan Documents and the commitment by the Bank to provide all or part of the financing contemplated hereby do not (taken as
a whole) contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained
herein or therein not materially misleading, the Bank acknowledging that as to any projections furnished to the Bank, the Loan
Parties only represent that the same were prepared on the basis of information and estimates the Loan Parties believed to be reasonable.

 

Section 6.8.          Trademarks,
Franchises, and Licenses. Except as would be expected to have a Material Adverse Effect, the Loan Parties and their Subsidiaries
own, possess, or have the right to use all necessary patents, licenses, franchises, trademarks, trade names, trade styles, copyrights,
trade secrets, know how, and confidential commercial and proprietary information to conduct their businesses as now conducted,
without known conflict with any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary
right of any other Person.

 

Section 6.9.          Governmental
Authority and Licensing. The Loan Parties and their Subsidiaries have received all licenses, permits, and approvals of all
federal, state, and local governmental authorities, if any, necessary to conduct their businesses, in each case where the failure
to obtain or maintain the same would reasonably be expected to have a Material Adverse Effect. No investigation or proceeding which,
if adversely determined, would reasonably be expected to result in revocation or denial of any material license, permit or approval
is pending or, to the knowledge of the any Loan Party, threatened.

 

Section 6.10.         Good
Title. The Loan Parties and their Subsidiaries have good and defensible title (or valid leasehold interests) to their assets
as reflected on the most recent consolidated balance sheet of the Loan Parties and their Subsidiaries furnished to the Bank (except
for sales of assets in the ordinary course of business), subject to no Liens other than such thereof as are permitted by Section 8.8.

 

Section 6.11.         Litigation
and Other Controversies. Except as set forth on Schedule 6.10, there is no litigation or governmental or arbitration proceeding
or labor controversy pending, nor to the knowledge of any Loan Party threatened, against any Loan Party or any Subsidiary of a
Loan Party or any of their respective Property which if adversely determined, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

Section 6.12.         Taxes.
All federal and material state, local, and foreign Tax returns required to be filed by any Loan Party or any Subsidiary of a Loan
Party in any jurisdiction have, in fact, been filed, and all Taxes upon any Loan Party or any Subsidiary of a Loan Party or upon
any of their respective Property, income or franchises, which are shown to be due and payable in such returns, have been paid,
except such Taxes, if any, as are being contested in good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and as to which adequate reserves established in accordance with GAAP have been provided. No Loan Party knows
of any proposed additional Tax assessment against it or its Subsidiaries for which adequate provisions in accordance with GAAP
have not been made on their accounts. Adequate provisions in accordance with GAAP for Taxes on the books of each Loan Party and
each of its Subsidiaries have been made for all open years, and for its current fiscal period.

 

    	-45-

    	 

    

 

Section 6.13.         Approvals.
No authorization, consent, license or exemption from, or filing or registration with, any court or governmental department, agency
or instrumentality, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or
performance by any Loan Party or any Subsidiary of a Loan Party of any Loan Document, except for (i) such approvals which
have been obtained prior to the date of this Agreement and remain in full force and effect, (ii) filings which are necessary
to perfect the security interests under the Collateral Documents, and (iii) where failure to obtain, effect or make any such
approval, authorization, consent, exemption, or other action, notice or filing would not reasonably be expected to have a Material
Adverse Effect.

 

Section 6.14.         Affiliate
Transactions. No Loan Party nor any of its Subsidiaries is a party to any contracts or agreements with any of its Affiliates
on terms and conditions which are less favorable to such Loan Party or such Subsidiary than would be usual and customary in similar
contracts or agreements between Persons not affiliated with each other.

 

Section 6.15.         Investment
Company. No Loan Party nor any of its Subsidiaries is an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 6.16.         ERISA.
Each Loan Party and each other member of its Controlled Group has fulfilled its obligations under the minimum funding standards
of and is in compliance in all material respects with ERISA and the Code to the extent applicable to it and has not incurred any
liability to the PBGC or a Plan under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA. No Loan Party nor any of its Subsidiaries has any contingent liabilities with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described in article 6 of Title I of ERISA.

 

Section 6.17.         Compliance
with Laws. (a) No Loan Party nor any Subsidiary of a Loan Party is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it, where such violation would reasonably be expected to have a Material Adverse Effect.

 

    	-46-

    	 

    

 

(b)          Without
limiting the representations and warranties set forth in Section 6.17(a) above, except for such matters, individually or in
the aggregate, which would not reasonably be expected to result in a Material Adverse Effect, the Loan Parties represent and warrant
that: (i) the Loan Parties and their Subsidiaries, and each of the Premises, comply in all material respects with all applicable
Environmental Laws; (ii) the Loan Parties and their Subsidiaries have obtained all material governmental approvals required
for their operations and each of the Premises by any applicable Environmental Law; (iii) the Loan Parties and their Subsidiaries
have not, and no Loan Party has knowledge of any other Person who has, caused any Release, threatened Release or disposal of any
Hazardous Material at, on, about, or off any of the Premises in any material quantity and, to the knowledge of each Loan Party,
none of the Premises are adversely affected by any Release, threatened Release or disposal of a Hazardous Material originating
or emanating from any other property; (iv) none of the Premises contain and have contained any: (1) underground storage
tank, (2) material amounts of asbestos containing building material, (3) landfills or dumps, (4) hazardous waste
management facility as defined pursuant to RCRA or any comparable state law, or (5) site on or nominated for the National
Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable
state law; (v) the Loan Parties and their Subsidiaries have not used a material quantity of any Hazardous Material and have
conducted no Hazardous Material Activity at any of the Premises; (vi) the Loan Parties and their Subsidiaries have no material
liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state
law; (vii) the Loan Parties and their Subsidiaries are not subject to, have no notice or knowledge of and are not required
to give any notice of any Environmental Claim involving any Loan Party or any Subsidiary of a Loan Party or any of the Premises,
and there are no conditions or occurrences at any of the Premises which could reasonably be anticipated to form the basis for an
Environmental Claim against any Loan Party or any Subsidiary of a Loan Party or such Premises; (viii) none of the Premises
are subject to any, and no Loan Party has knowledge of any imminent restriction on the ownership, occupancy, use or transferability
of the Premises in connection with any (1) Environmental Law or (2) Release, threatened Release or disposal of a Hazardous
Material; and (ix) there are no conditions or circumstances at any of the Premises which pose an unreasonable risk to the
environment or the health or safety of Persons.

 

Section 6.18.         OFAC.
(a) Each Loan Party is in compliance in all material respects with the requirements of all OFAC Sanctions Programs applicable
to it, (b) each Subsidiary of each Loan Party is in compliance in all material respects with the requirements of all OFAC
Sanctions Programs applicable to such Subsidiary, (c) each Loan Party has provided to the Bank all information requested by
them regarding such Loan Party and its Affiliates and Subsidiaries necessary for the Bank to comply with all applicable OFAC Sanctions
Programs, and (d) to the best of each Loan Party’s knowledge, no Loan Party nor any of its Affiliates or Subsidiaries is,
as of the date hereof, named on the current OFAC SDN List.

 

Section 6.19.         Labor
Matters. There are no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary of a Loan Party pending or, to
the knowledge of any Loan Party, threatened. Except as set forth on Schedule 6.19, there are no collective bargaining agreements
in effect between any Loan Party or any Subsidiary of a Loan Party and any labor union; and no Loan Party nor any of its Subsidiaries
is under any obligation to assume any collective bargaining agreement to or conduct any negotiations with any labor union with
respect to any future agreements. Each Loan Party and its Subsidiaries have remitted on a timely basis all amounts required to
have been withheld and remitted (including withholdings from employee wages and salaries relating to income tax, employment insurance,
and pension plan contributions), goods and services tax and all other amounts which if not paid when due could result in the creation
of a Lien against any of its Property, except for Liens permitted by Section 8.8.

 

Section 6.20.         Other
Agreements. No Loan Party nor any of its Subsidiaries is in default under the terms of any covenant, indenture or agreement
of or affecting such Person or any of its Property, which default if uncured would reasonably be expected to have a Material Adverse
Effect.

 

    	-47-

    	 

    

 

Section 6.21.         Solvency.
The Loan Parties and their Subsidiaries are solvent, able to pay their debts as they become due, and have sufficient capital to
carry on their business and all businesses in which they are about to engage.

 

Section 6.22.         No
Default. No Default has occurred and is continuing.

 

Section 6.23.         No
Broker Fees. No broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions
contemplated thereby; and the Loan Parties hereby agree to indemnify the Bank against, and agree that they will hold the Bank harmless
from, any claim, demand, or liability for any such broker’s or finder’s fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable attorneys’ fees) arising in connection with any such claim,
demand, or liability.

 

Section 7.          Conditions
Precedent.

 

Section 7.1.          All
Credit Events. At the time of each Credit Event hereunder:

 

(a)          each
of the representations and warranties set forth herein and in the other Loan Documents shall be true and correct in all material
respects as of said time (where not already qualified by materiality, otherwise in all respects), except to the extent the same
expressly relate to an earlier date, in which case they shall be true and correct in all material respects (where not already qualified
by materiality, otherwise in all respects) as of such earlier date;

 

(b)          no
Default shall have occurred and be continuing or would occur as a result of such Credit Event;

 

(c)          after
giving effect to such extension of credit the aggregate principal amount of all Revolving Loans and L/C Obligations outstanding
under this Agreement shall not exceed the lesser of (i) the Revolving Credit Line and (ii) the Borrowing Base as then
determined and computed;

 

(d)          in
the case of a Borrowing the Bank shall have received the notice required by Section 2.6, in the case of the issuance of any
Letter of Credit the Bank shall have received a duly completed Application for such Letter of Credit together with any fees called
for by Section 3.1, and, in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor
in a form acceptable to the Bank together with fees called for by Section 3.1; and

 

(e)          such
Credit Event shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation
applicable to the Bank (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System)
as then in effect.

 

    	-48-

    	 

    

 

Each request for a
Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a
Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date on such Credit Event as to the
facts specified in subsections (a) through (d), both inclusive, of this Section; provided, however, that the Bank may
continue to make advances under the Revolving Facility in its sole discretion, notwithstanding the failure of the Borrower to satisfy
one or more of the conditions set forth above and any such advances so made shall not be deemed a waiver of any Default or other
condition set forth above that may then exist.

 

Section 7.2.          Initial
Credit Event. Before or concurrently with the initial Credit Event:

 

(a)          the
Bank shall have received this Agreement duly executed by the Borrower and each Guarantor, and the Bank;

 

(b)          the
Bank shall have received duly executed Notes of the Borrower dated the date hereof and otherwise in compliance with the provisions
of Section 2.10;

 

(c)          the
Bank shall have received the Security Agreement duly executed by the Loan Parties, together with (i) original stock certificates
or other similar instruments or securities representing all of the issued and outstanding shares of capital stock or other equity
interests in each Domestic Subsidiary and PECI (limited in the case of any first tier Foreign Subsidiary to 65% of the Voting Stock
and 100% of any other equity interests as provided in Section 11.1) as of the Closing Date, (ii) stock powers executed
in blank and undated for the Collateral consisting of the stock or other equity interest in each Subsidiary, (iii) UCC financing
statements to be filed against each Loan Party, as debtor, in favor of the Bank, as secured party, (iv) patent, trademark,
and copyright collateral agreements to the extent requested by the Bank, and (v) deposit account, securities account, and
commodity account control agreements to the extent requested by the Bank;

 

(d)          the
Bank shall have received evidence of insurance required to be maintained under the Loan Documents, naming the Bank as mortgagee/lender’s
loss payee and as an additional insured, as applicable;

 

(e)          the
Bank shall have received copies of each Loan Party’s articles of incorporation and bylaws (or comparable organizational documents)
and any amendments thereto, certified in each instance by its Secretary or Assistant Secretary (or comparable Responsible Officer);

 

(f)          the
Bank shall have received copies of resolutions of each Loan Party’s Board of Directors (or similar governing body) authorizing
the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such
documents on each Loan Party’s behalf, all certified in each instance by its Secretary or Assistant Secretary (or comparable
Responsible Officer);

 

(g)          the
Bank shall have received copies of the certificates of good standing for each Loan Party (dated no earlier than 30 days prior
to the date hereof) from the office of the secretary of the state of its incorporation or organization and of each state in which
it is qualified to do business as a foreign corporation or organization;

 

    	-49-

    	 

    

 

(h)          the
Bank shall have received a list of the Borrower’s Authorized Representatives;

 

(i)          the
Bank shall have received a certificate as to the Borrower’s Designated Disbursement Account;

 

(j)          the
Bank shall have received the initial fees called for by Section 3.1;

 

(k)          the
capital and organizational structure of the Loan Parties and their Subsidiaries shall be satisfactory to the Bank;

 

(l)          the
Bank shall have received (i) a Borrowing Base Certificate prepared
by the Borrower and certified to by a Financial Officer of the Borrower as of the Closing
Date after giving effect to the initial Credit Event and payment of all costs and expenses in connection therewith; (ii) certificate
from a Responsible Officer of the Borrower certifying as to the solvency of the Loan Parties
and their Subsidiaries as of the Closing Date after giving effect to the initial Credit Event and the transactions contemplated
hereby and payment of all costs and expenses in connection therewith; and (iii) a certificate from
a Responsible Officer of the Borrower certifying that since March 31, 2013, 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;

 

(m)          the
Bank shall have received financing statement, tax, and judgment lien search results against each Loan Party and its Property evidencing
the absence of Liens thereon except as permitted by Section 8.8;

 

(n)          the
Bank shall have received pay-off and lien release letters from secured creditors of the Loan Parties (other than secured parties
intended to remain outstanding after the Closing Date with Indebtedness and Liens permitted by Sections 8.7 and 8.8) setting
forth, among other things, the total amount of indebtedness outstanding and owing to them (or outstanding letters of credit issued
for the account of any Loan Party or its Subsidiaries) and containing an undertaking to cause to be delivered to the Bank UCC termination
statements and any other lien release instruments necessary to release their Liens on the assets of any Loan Party or any Subsidiary
of a Loan Party, which pay-off and lien release letters shall be in form and substance acceptable to the Bank;

 

(o)          the
Bank shall have received the favorable written opinion of counsel to each Loan Party, in form and substance satisfactory to the
Bank;

 

    	-50-

    	 

    

 

(p)          the
Bank shall have received, sufficiently in advance of the Closing Date, all documentation and other information requested by the
Bank required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules
and regulations, including without limitation, the United States Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) including, without limitation, the information described in Section 12.16; and the Bank shall
have received a fully executed Internal Revenue Service Form W-9 (or its equivalent) for the Borrower and each other Loan Party;

 

(q)          the
Bank shall have received a subordination agreement by Bemag Transformer Inc. for the debt owed by Jefferson Electric, Inc. in form
and substance satisfactory to the Bank;

 

(r)          confirmation
that all conditions precedent for the facilities granted by the Bank to the PECI and its Subsidiaries (the “Canadian Credit
Facilities”) have been met to the satisfaction of the Bank and its legal counsel;

 

(s)          Orbian
Financial Services II, LLC (“Orbian”) shall have either (i) executed a lien subordination agreement
in form and substance satisfactory to the Bank, (ii) terminated its UCC financing statement filed against Jefferson Electric,
Inc., or (iii) amended the same to cover only receivables which have previously been purchased by Orbian, and the Borrower
shall have delivered copies of all current documents with Orbian;

 

(t)          the
Bank shall have received such other agreements, instruments, documents, certificates, and opinions as the Bank may reasonably request.

 

Section 7.3.          Term
Loan Advances. Before or concurrently with the initial advance of the Term Loan:

 

(a)          the
Bank shall have received certified copies of the acquisition documents for the Permitted Acquisition which are satisfactory to
the Administrative Agent in form and substance;

 

(b)          the
Permitted Acquisition shall have been consummated in accordance with the acquisition documents for such Permitted Acquisition,
without giving effect to any amendment, modification or waiver by the acquirer thereof or thereunder that is in any manner materially
adverse to the Bank in its capacity as such that has not been approved in writing by the Bank;

 

(c)          the
Bank shall have received an Additional Guarantor Supplement, and a supplement to the Security Agreement, together with (i) original
stock certificates or other similar instruments or securities representing all of the issued and outstanding shares of capital
stock or other equity interests in the acquired entity, (ii) stock powers executed in blank and undated for the Collateral
consisting of the stock or other equity interest in the acquired entity, and (iii) Collateral Access Agreements to the extent
requested by the Bank;

 

    	-51-

    	 

    

 

(d)          to
the extent any Real Property is to be acquired by Borrower or any Loan Party (and in addition to the requirement set forth in Section 11.4):

 

(i)          the
Bank shall have received a mortgagee’s title insurance policy (or a prepaid binding commitment therefor) in form and substance
acceptable to the Bank from a title insurance company acceptable to the Bank in an amount acceptable to the Bank insuring the Lien
of the Mortgage to be a valid first priority Lien subject to no defects or objections which are unacceptable to the Bank, together
with such endorsements as the Bank may require;

 

(ii)         the
Bank shall have received a survey in form and substance acceptable to the Bank prepared by a licensed surveyor on each parcel of
real property subject to the Lien of the Mortgage, which survey shall also state whether or not any portion of the real property
is in a federally designated flood hazard area;

 

(iii)        the
Bank shall have received a report as to whether or not any portion of the real property is in a federally designated flood hazard
area and, if any improvements thereon are in a federally designated flood hazard area, evidence of the maintenance of flood insurance
as may be required by applicable law;

 

(iv)        the
Bank shall have received a report of an independent firm of environmental engineers acceptable to the Bank concerning the environmental
hazards and matters with respect to the parcels of real property subject to the Lien of the Mortgage, together with a reliance
letter thereon acceptable to the Bank; and

 

(v)         the
Bank shall have received an appraisal report prepared for the Bank by a state certified appraiser selected by the Bank, which appraisal
report describes the fair market value of the property subject to the Lien of the Mortgage and otherwise meets the requirements
of applicable law for appraisals prepared for federally insured depository institutions.

 

(e)          the
Bank shall have received a compliance certificate in the form attached hereto as Exhibit E showing
compliance with the financial covenants set forth in Section 8.23 hereof as of June 30, 2013 calculated on a pro forma
basis as if the Permitted Acquisition had occurred (and all Indebtedness incurred in connection therewith had been incurred) on
June 30, 2013; and

 

(f)          the
Bank shall have received such other agreements, instruments, documents, certificates, and opinions as the Bank may reasonably request.

 

    	-52-

    	 

    

 

Section 8.          Covenants.

 

Each Loan Party agrees
that, so long as any credit is available to or in use by the Borrower hereunder, except to the extent compliance in any case or
cases is waived in writing by the Bank:

 

Section 8.1.          Maintenance
of Business. Each Loan Party shall, and shall cause each of its Subsidiaries to, preserve and maintain its existence, except
as otherwise provided in Section 8.10(c); provided, however, that nothing in this Section shall prevent the Borrower
from dissolving any of its Subsidiaries if such action is, in the reasonable business judgment of the Borrower, desirable in the
conduct of its business and is not disadvantageous in any material respect to the Bank. Each Loan Party shall, and shall cause
each of its Subsidiaries to, preserve and keep in force and effect all licenses, permits, franchises, approvals, patents, trademarks,
trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business where the failure
to do so would reasonably be expected to have a Material Adverse Effect.

 

Section 8.2.          Maintenance
of Properties. Each Loan Party shall, and shall cause each of its Subsidiaries to maintain its material property, plant, and
equipment in good repair, working order and condition (ordinary wear and tear and casualty events excepted), and shall from time
to time make all needful and proper repairs, renewals, replacements, additions, and betterments thereto so that at all times the
efficiency thereof shall be fully preserved and maintained, except to the extent that, in the reasonable business judgment of such
Person, any such Property is no longer necessary for the proper conduct of the business of such Person.

 

Section 8.3.          Taxes
and Assessments. Each Loan Party shall duly pay and discharge, and shall cause each of its Subsidiaries to duly pay and discharge,
all federal and material state, local, and foreign Taxes, rates, assessments, fees, and governmental charges upon or against it
or its Property, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest
and adequate reserves are provided therefor.

 

Section 8.4.          Insurance.
Each Loan Party shall maintain and shall cause their Subsidiaries to maintain, with financially sound and reputable insurers, such
insurance as is customary for Persons engaged in the same or similar business, and the Loan Parties shall maintain flood insurance
with respect to any improvements on real Property consisting of building or parking facilities in an area designated by a governmental
body as having special flood hazards. The Loan Parties shall in any event maintain insurance on the Collateral to the extent required
by the Collateral Documents. All such policies of insurance shall contain satisfactory mortgagee/lender's loss payable endorsements,
naming the Bank (or its security trustee) as mortgagee or a loss payee, assignee or additional insured, as appropriate, as its
interest may appear, and showing only such other loss payees, assignees and additional insureds as are satisfactory to the Bank.
Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than thirty (30) days’
(ten (10) days’ in the case of nonpayment of insurance premiums) prior written notice to the Bank in the event
of cancellation of the policy for any reason whatsoever and a clause specifying that the interest of the Bank shall not be impaired
or invalidated by any act or neglect of any Loan Party or any Subsidiary of a Loan Party, or the owner of the premises or Property
or by the occupation of the premises for purposes more hazardous than are permitted by said policy. The Borrower shall deliver
to the Bank (a) on the Closing Date and at such other times as the Bank shall reasonably request, certificates evidencing
the maintenance of insurance required hereunder, (b) prior to the termination of any such policies, certificates evidencing
the renewal thereof, and (c) promptly following request by the Bank, copies of all insurance policies of the Loan Parties
and their Subsidiaries. The Borrower also agrees to deliver to the Bank, promptly as rendered, true copies of all reports made
in any reporting forms to insurance companies.

 

    	-53-

    	 

    

 

Section 8.5.          Financial
Reports. The Loan Parties shall, and shall cause each of their Subsidiaries to, maintain proper books of records and accounts
reasonably necessary to prepare financial statements required to be delivered pursuant to this Section 8.5 in accordance with GAAP
and shall furnish to the Bank:

 

(a)          as
soon as available, and in any event no later than 20 days after the last day of each calendar month, a Borrowing Base Certificate
showing the computation of the Borrowing Base in reasonable detail as of the close of business on the last day of such month, together
with an accounts receivable and accounts payable aging, and an inventory stock status report prepared by the Borrower and certified
to by a Financial Officer of the Borrower;

 

(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 the Loan Parties as of the last day of such
fiscal quarter and the consolidated and consolidating statements of income, retained earnings, and cash flows of the Loan Parties
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;

 

(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 an unqualified opinion of Richter 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 and that an examination of such
accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and,
accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered
necessary in the circumstances;

 

    	-54-

    	 

    

 

(d)          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 and consolidating balance sheet of the Borrower and its Subsidiaries as of the last day of the fiscal year
then ended and the consolidated and consolidating statements of income, retained earnings, and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, and accompanying notes thereto, 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 an unqualified opinion
of Richter 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 Borrower 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 and that an examination of
such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards
and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered
necessary in the circumstances;

 

(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 an unqualified opinion of Richter 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 and that an examination of such accounts in connection with such financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;

 

(f)          promptly
after receipt thereof, any additional written reports, management letters or other detailed information contained in writing concerning
significant aspects of any Loan Party’s or any of its Subsidiary’s operations and financial affairs given to it by
its independent public accountants;

 

    	-55-

    	 

    

 

(g)          promptly
after the sending or filing thereof, copies of each Form 10-K, Form 10-Q, Form 8-K, Form S-1 and Form S-3 reports filed by any
Loan Party or any Subsidiary of a Loan Party with any securities exchange or the Securities and Exchange Commission or any successor
agency;

 

(h)          promptly
after receipt thereof, a copy of each audit made by any regulatory agency of the books and records of any Loan Party or any Subsidiary
of a Loan Party or of notice of any material noncompliance with any applicable law, regulation or guideline relating to any Loan
Party or any Subsidiary of a Loan Party or their respective business;

 

(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, a copy of
the consolidated and consolidating business plan for the Loan Parties and their Subsidiaries for following fiscal year, such business
plan to show the projected consolidated and consolidating revenues, expenses and balance sheet of the Loan Parties 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);

 

(j)          notice
of any Change of Control;

 

(k)          promptly
after knowledge thereof shall have come to the attention of any Responsible Officer of any Loan Party, written notice of (i) any
threatened or pending litigation or governmental or arbitration proceeding or labor controversy against any Loan Party or any Subsidiary
of a Loan Party or any of their Property which, if adversely determined, would reasonably be expected to have a Material Adverse
Effect, (ii) the occurrence of any Material Adverse Effect, or (iii) the occurrence of any Default;

 

(l)          with
each of the financial statements delivered pursuant to subsections (b) and (c) above, a written certificate in the form attached
hereto as Exhibit E signed by a Financial Officer of the Borrower to the effect that to the best of such officer’s knowledge
and belief no Event of Default has occurred during the period covered by such statements or any Default exists or, if any such
Event of Default has occurred during such period or Default exists, setting forth a description of such Default and specifying
the action, if any, taken by the relevant Loan Party or its Subsidiary to remedy the same. Such certificate shall also set forth
the calculations supporting such statements in respect of Section 8.23 (Financial Covenants); and

 

(m)          promptly,
from time to time, such other information regarding the operations, business affairs and financial condition of any Loan Party
or any Subsidiary of a Loan Party, or compliance with the terms of any Loan Document, as the Bank may reasonably request.

 

    	-56-

    	 

    

 

Section 8.6.          Inspection;
Field Audits. Each Loan Party shall, and shall cause each of its Subsidiaries to, permit the Bank and each of their duly authorized
representatives and agents to visit and inspect any of its Property, corporate books, and financial records, to examine and make
copies of its books of accounts and other financial records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers, employees and independent public accountants (and by this provision the Loan Parties hereby
authorize such accountants to discuss with the Bank the finances and affairs of the Loan Parties and their Subsidiaries) at such
reasonable times and intervals as the Bank may designate and, so long as no Default exists, with reasonable prior notice to the
Borrower; provided, however, that in the absence of any Default, the Borrower shall not be required to pay the Bank for
more than one (1) such inspection per calendar year. The Borrower shall pay to the Bank charges for field audits of the Collateral,
inspections and visits to Property, inspections of corporate books and financial records, examinations and copies of books of accounts
and financial record and other activities permitted in this Section performed by the Bank or its agents or third party firms, in
such amounts as the Bank may from time to time request (the Bank acknowledging and agreeing that any internal charges for such
audits and inspections shall be computed in the same manner as it at the time customarily uses for the assessment of charges for
similar collateral audits, but in no event exceeding $25,000 per audit); provided, however, that in the absence of any Default,
the Borrower shall not be required to pay the Bank for more than one (1) such audit per calendar year and the Bank does not have
the present intention of conducting field audits.

 

Section 8.7.          Borrowings
and Guaranties.  No Loan Party shall, nor shall it permit any of its Domestic Subsidiaries to, issue, incur, assume, create
or have outstanding any Indebtedness, or incur liabilities under any Hedging Agreement, or be or become liable as endorser, guarantor,
surety or otherwise for any Indebtedness or undertaking of any Person, or otherwise agree to provide funds for payment of the obligations
of another, or supply funds thereto or invest therein or otherwise assure a creditor of another against loss, or apply for or become
liable to the issuer of a letter of credit which supports an obligation of another, or subordinate any claim or demand it may have
to the claim or demand of any Person; provided, however, that the foregoing shall not restrict nor operate to prevent:

 

(a)          the
Secured Obligations (and any guarantees of such obligations) of the Loan Parties owing to the Bank (and its Affiliates);

 

(b)          purchase
money indebtedness and Capitalized Lease Obligations of the Loan Parties in an amount not to exceed $500,000 in the aggregate at
any one time outstanding;

 

(c)          obligations
of the Loan Parties arising out of interest rate, foreign currency, and commodity Hedging Agreements entered into with financial
institutions in connection with bona fide hedging activities in the ordinary course of business and not for speculative purposes;

 

(d)          endorsement
of items for deposit or collection of commercial paper received in the ordinary course of business;

 

    	-57-

    	 

    

 

(e)          intercompany
advances from time to time owing between the Loan Parties or owing from a Loan Party to PECI and its Subsidiaries, in each case,
in the ordinary course of business;

 

(f)          Subordinated
Debt in an amount not to exceed $1,750,000 in the aggregate on the Closing Date, as reduced by permitted payments thereon;

 

(g)          Indebtedness
owed to any Person providing workers’ compensation, health, disability or other employee benefits (including contractual
and statutory benefits) or property, casualty, liability or credit insurance, pursuant to reimbursement or indemnification obligations
to such Person, in each case incurred in the ordinary course of business;

 

(h)          Indebtedness
in respect of bids, trade contracts (other than for debt for borrowed money), leases (other than Capitalized Lease Obligations),
statutory obligations, surety, stay, customs and appeal bonds, performance, performance and completion and return of money bonds,
government contracts and similar obligations, in each case, provided in the ordinary course of business;

 

(i)          Indebtedness
in respect of netting services, overdraft protection and similar arrangements, in each case, in connection with cash management
and deposit accounts;

 

(j)          Indebtedness
representing deferred compensation to directors, officers, employees of any Loan Party incurred in the ordinary course of business;

 

(k)          Indebtedness
consisting of the financing of insurance premiums in the ordinary course of business;

 

(l)          Indebtedness
arising from agreements of a Loan Party providing for indemnification, adjustment of purchase or acquisition price or similar obligations,
in each case, incurred or assumed in connection with a Permitted Acquisition;

 

(m)          guaranty
from the Borrower of Indebtedness of PECI, Pioneer Transformers Ltd. and Bemag Transformer Inc. owing to the Bank or its Affiliates;
and guaranties from Loan Parties of Indebtedness of Subsidiaries which are not Loan Parties in an amount not to exceed $2,750,000;

 

(n)          any
guarantee by a Loan Party of Indebtedness of any other Loan Party, so long as the incurrence of such Indebtedness is otherwise
permitted under the terms of this Agreement; and

 

(o)          unsecured
Indebtedness of the Loan Parties and their Subsidiaries not otherwise permitted by this Section in an amount not to exceed $200,000
in the aggregate at any one time outstanding.

 

    	-58-

    	 

    

 

Section 8.8.          Liens.
No Loan Party shall, nor shall it permit any of its Domestic Subsidiaries to, create, incur or permit to exist any Lien of any
kind on any Property owned by any such Person; provided, however, that the foregoing shall not apply to nor operate to prevent:

 

(a)          Liens
arising by statute in connection with worker’s compensation, unemployment insurance, old age benefits, social security obligations,
Taxes, assessments, statutory obligations or other similar charges (other than Liens arising under ERISA), good faith cash deposits
in connection with tenders, contracts or leases to which any Loan Party or any Subsidiary of a Loan Party is a party or other cash
deposits required to be made in the ordinary course of business, provided in each case that the obligation is not for borrowed
money and that the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate proceedings
which prevent enforcement of the matter under contest and adequate reserves have been established therefor;

 

(b)          mechanics’,
workmen’s, materialmen’s, landlords’, carriers’ or other similar Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being contested in good faith by appropriate proceedings which
prevent enforcement of the matter under contest;

 

(c)          judgment
liens and judicial attachment liens not constituting an Event of Default under Section 9.1(g) and the pledge of assets for
the purpose of securing an appeal, stay or discharge in the course of any legal proceeding, provided that the aggregate amount
of such judgment liens and attachments and liabilities of the Loan Parties secured by a pledge of assets permitted under this subsection,
including interest and penalties thereon, if any, shall not be in excess of $200,000 at any one time outstanding;

 

(d)          Liens
on equipment of any Loan Party created solely for the purpose of securing indebtedness permitted by Section 8.7(b), representing
or incurred to finance the purchase price of such Property, provided that no such Lien shall extend to or cover other Property
of such Loan Party other than the respective Property so acquired, and the principal amount of indebtedness secured by any such
Lien shall at no time exceed the purchase price of such Property, as reduced by repayments of principal thereon;

 

(e)          any
interest or title of a lessor under any operating lease, including the filing of Uniform Commercial Code financing statements solely
as a precautionary measure in connection with operating leases entered into by any Loan Party in the ordinary course of its business;

 

(f)          easements,
rights-of-way, restrictions, and other similar encumbrances against real property incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and which do not materially detract from the value of the Property subject thereto
or materially interfere with the ordinary conduct of the business of any Loan Party or any Subsidiary of a Loan Party;

 

    	-59-

    	 

    

 

(g)          bankers’
Liens, rights of setoff and other similar Liens (including under Section 4-210 of the Uniform Commercial Code) in one or more
deposit accounts maintained by any Loan Party or any Subsidiary of a Loan Party, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect
to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided
that, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly
or indirectly) the repayment of any Indebtedness;

 

(h)          Liens
granted in favor of the Bank pursuant to the Collateral Documents;

 

(i)          Liens
arising out of conditional sale, title retention, consignment or similar arrangements (including Liens arising under Section 2-502
of the Uniform Commercial Code) for the sale of goods entered into by any Loan Party or any Subsidiary of a Loan Party in the ordinary
course of business;

 

(j)          non-exclusive
licenses of intellectual property granted in the ordinary course of business and not interfering in any material respect with the
ordinary conduct of business of any Loan Party or any Subsidiary of a Loan Party;

 

(k)          Liens
on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto permitted by Section 8.7(k);

 

(l)          Liens
in favor of a Loan Party;

 

(m)          Liens
securing refinancing Indebtedness to the extent such Liens do not extend to or cover any property of a party not previously subjected
to Liens relating to the Indebtedness being refinanced;

 

(n)          Liens
in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the
importation of goods;

 

(o)          Liens
(i) on cash advances in favor of the seller of any Property to be acquired in a Permitted Acquisition to be applied against
the purchase price for such Property, or (ii) consisting of an agreement to dispose of any Property in a disposition permitted
under Section 8.10, in each case, solely to the extent such Acquisition or disposition, as the case may be, would have been permitted
on the date of the creation of such Lien; and

 

(p)          Liens
on cash collateral to secure Subordinated Debt in existence on the Closing Date in an amount not to exceed $165,280.50 so long
as such cash collateral is required to be maintained by the lender to the holder of the Subordinated Debt.

 

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Section 8.9.          Investments,
Acquisitions, Loans and Advances. No Loan Party shall, nor shall it permit any of its Domestic Subsidiaries to, directly or
indirectly, make, retain or have outstanding any investments (whether through purchase of stock or obligations or otherwise) in,
or loans or advances to (other than for travel advances and other similar cash advances made to employees in the ordinary course
of business), any other Person, or acquire all or any substantial part of the assets or business of any other Person or division
thereof; provided, however, that the foregoing shall not apply to nor operate to prevent:

 

(a)          Cash
Equivalents;

 

(b)          the
Loan Parties’ existing investments in their respective Subsidiaries outstanding on the Closing Date;

 

(c)          intercompany
advances (and the repayment of intercompany advances) made from time to time between the Loan Parties in the ordinary course of
business;

 

(d)          investments
by any Loan Party and its Subsidiaries in connection with interest rate, foreign currency, and commodity Hedging Agreements entered
into with financial institutions in connection with bona fide hedging activities in the ordinary course of business and not for
speculative purposes;

 

(e)          promissory
notes and other non-cash consideration received in connection with dispositions permitted by Section 8.10;

 

(f)          investments
(including debt obligations and equity interests) received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary
course of business and upon the foreclosure with respect to any secured investment or other transfer of title with respect to any
secured investment;

 

(g)          Permitted
Acquisitions;

 

(h)          guaranties
permitted by Section 8.7(m);

 

(i)          any
Acquisition for which the Total Consideration in the aggregate is less than $1,000,000 in any calendar year; and

 

(j)          other
investments, loans, and advances in addition to those otherwise permitted by this Section in an amount not to exceed $5,000,000
in the aggregate at any one time outstanding.

 

In determining the amount of investments,
acquisitions, loans, and advances permitted under this Section, investments and acquisitions shall always be taken at the original
cost thereof (regardless of any subsequent appreciation or depreciation therein), and loans and advances shall be taken at the
principal amount thereof then remaining unpaid.

 

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Section 8.10.         Mergers,
Consolidations and Sales. No Loan Party shall, nor shall it permit any of its Subsidiaries to, be a party to any merger or
consolidation or amalgamation, or sell, transfer, lease or otherwise dispose of all or any part of its Property, including any
disposition of Property as part of a sale and leaseback transaction, or in any event sell or discount (with or without recourse)
any of its notes or accounts receivable; provided, however, that this Section shall not apply to nor operate to prevent:

 

(a)          the
sale or lease of inventory in the ordinary course of business;

 

(b)          the
sale, transfer, lease or other disposition of Property of any Loan Party to one another in the ordinary course of its business;

 

(c)          the
merger of any Loan Party with and into the Borrower or any other Loan Party, provided that, in the case of any merger involving
the Borrower, the Borrower is the corporation surviving the merger;

 

(d)          the
sale of delinquent notes or accounts receivable in the ordinary course of business for purposes of collection only (and not for
the purpose of any bulk sale or securitization transaction);

 

(e)          the
sale, transfer or other disposition of any tangible personal property that, in the reasonable business judgment of the relevant
Loan Party or its Subsidiary, has become obsolete or worn out, and which is disposed of in the ordinary course of business;

 

(f)          normal
cash discounts on normal trade terms in the ordinary course of business; and

 

(g)          the
Disposition of Property of any Loan Party or any Subsidiary of a Loan Party (including any Disposition of Property as part of a
sale and leaseback transaction) aggregating for all Loan Parties and their Subsidiaries not more than $200,000 during any fiscal
year of the Borrower; provided, however, that this clause (g) shall not permit any Loan Party to factor any of its Receivables
with any party. For the avoidance of doubt, the Loan Parties acknowledge that this Section 8.10 prohibits any factoring of
Receivables with Orbian or any other party.

 

Section 8.11.         Maintenance
of Subsidiaries. No Loan Party shall assign, sell or transfer, nor shall it permit any of its Subsidiaries to issue, assign,
sell or transfer, any shares of capital stock or other equity interests of a Subsidiary; provided, however, that the foregoing
shall not operate to prevent (a) the issuance, sale, and transfer to any person of any shares of capital stock of a Subsidiary
solely for the purpose of qualifying, and to the extent legally necessary to qualify, such person as a director of such Subsidiary,
(b) any transaction permitted by Section 8.10(c) above, and (c) Liens on the capital stock or other equity interests
of Subsidiaries granted to the Bank pursuant to the Collateral Documents or the Canadian Credit Facilities.

 

Section 8.12.         Dividends
and Certain Other Restricted Payments. No Loan Party shall, nor shall it permit any of its Subsidiaries to, make any Distributions;
provided, however, that the foregoing shall not operate to prevent:

 

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(i)          the
making of dividends or distributions by any Subsidiary to any Borrower;

 

(ii)         so
long as no Default exists or would exist after giving effect thereto, the making of any payment on preferred equity issued to a
seller in connection with a Permitted Acquisition; and

 

(iii)        so
long as no Default exists or would exist after giving effect thereto, Distributions made by Borrower in any calendar year in an
aggregate amount less than or equal to 25% of Borrower’s Net Income in the immediately preceding calendar year.

 

Section 8.13.         ERISA.
Each Loan Party shall, and shall cause each of its Subsidiaries to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to result in the imposition of a
Lien against any of its Property. Each Loan Party shall, and shall cause each of its Subsidiaries to, promptly notify the Bank
of: (a) the occurrence of any reportable event (as defined in ERISA) with respect to a Plan, (b) receipt of any notice
from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (c) its intention to
terminate or withdraw from any Plan, and (d) the occurrence of any event with respect to any Plan which would result in the
incurrence by any Loan Party or any Subsidiary of a Loan Party of any material liability, fine or penalty, or any material increase
in the contingent liability of any Loan Party or any Subsidiary of a Loan Party with respect to any post-retirement Welfare Plan
benefit.

 

Section 8.14.         Compliance
with Laws. (a) Each Loan Party shall, and shall cause each of its Subsidiaries to, comply in all material respects with
the requirements of all federal, state, and local laws, rules, regulations, ordinances and orders applicable to or pertaining to
its Property or business operations, where any such non-compliance, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or result in a Lien upon any of its Property.

 

(b)          Without
limiting the agreements set forth in Section 8.14(a) above, each Loan Party shall, and shall cause each of its Subsidiaries
to, at all times, do the following to the extent the failure to do so, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect: (i) comply in all material respects with, and maintain each of the Premises in compliance
in all material respects with, all applicable Environmental Laws; (ii) require that each tenant and subtenant, if any, of
any of the Premises or any part thereof comply in all material respects with all applicable Environmental Laws; (iii) obtain
and maintain in full force and effect all material governmental approvals required by any applicable Environmental Law for operations
at each of the Premises; (iv) cure any material violation by it or at any of the Premises of applicable Environmental Laws;
(v) not allow the presence or operation at any of the Premises of any (1) landfill or dump or (2) hazardous waste
management facility or solid waste disposal facility as defined pursuant to RCRA or any comparable state law; (vi) not manufacture,
use, generate, transport, treat, store, release, dispose or handle any Hazardous Material at any of the Premises except in the
ordinary course of its business and in de minimis amounts; (vii) within ten (10) Business Days notify the Bank in writing
of and provide any reasonably requested documents upon learning of any of the following in connection with any Loan Party or any
Subsidiary of a Loan Party or any of the Premises: (1) any material liability for response or corrective action, natural resource
damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (2) any material Environmental Claim; (3) any
material violation of an Environmental Law or material Release, threatened Release or disposal of a Hazardous Material; (4) any
restriction on the ownership, occupancy, use or transferability arising pursuant to any (x) Release, threatened Release or
disposal of a Hazardous Material or (y) Environmental Law; or (5) any environmental, natural resource, health or safety
condition, which could reasonably be expected to have a Material Adverse Effect; (viii) conduct at its expense any investigation,
study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean
up or abate any material Release, threatened Release or disposal of a Hazardous Material as required by any applicable Environmental
Law, (ix) abide by and observe any restrictions on the use of the Premises imposed by any governmental authority as set forth
in a deed or other instrument affecting any Loan Party’s or any of its Subsidiary’s interest therein; (x) promptly
provide or otherwise make available to the Bank any reasonably requested environmental record concerning the Premises which any
Loan Party or any Subsidiary of a Loan Party possesses or can reasonably obtain; and (xi) perform, satisfy, and implement
any operation or maintenance actions required by any governmental authority or Environmental Law, or included in any no further
action letter or covenant not to sue issued by any governmental authority under any Environmental Law.

 

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Section 8.15.         Compliance
with OFAC Sanctions Programs.  (a) Each Loan Party shall at all times comply with the requirements of all OFAC Sanctions
Programs applicable to such Loan Party and shall cause each of its Subsidiaries to comply with the requirements of all OFAC Sanctions
Programs applicable to such Subsidiary.

 

(b)          Each
Loan Party shall provide the Bank any information regarding the Loan Parties, their Affiliates, and their Subsidiaries necessary
for the Bank to comply with all applicable OFAC Sanctions Programs; subject however, in the case of Affiliates, to such Loan Party’s
ability to provide information applicable to them.

 

(c)          If
any Loan Party obtains actual knowledge or receives any written notice that any Loan Party, any Affiliate or any Subsidiary of
any Loan Party is named on the then current OFAC SDN List (such occurrence, an “OFAC Event”), such Loan Party
shall promptly (i) give written notice to the Bank of such OFAC Event, and (ii) comply in all material respects with all applicable
laws with respect to such OFAC Event (regardless of whether the party included on the OFAC SDN List is located within the jurisdiction
of the United States of America), including the OFAC Sanctions Programs, and each Loan Party hereby authorizes and consents to
the Bank taking any and all steps the Bank deems necessary, in their sole but reasonable discretion, to avoid violation of all
applicable laws with respect to any such OFAC Event, including the requirements of the OFAC Sanctions Programs (including the freezing
and/or blocking of assets and reporting such action to OFAC).

 

Section 8.16.         Burdensome
Contracts With Affiliates.  No Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into any contract, agreement
or business arrangement with any of its Affiliates on terms and conditions which are less favorable to such Loan Party or such
Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated
with each other; provided that the foregoing restriction shall not apply to transactions between or among the Loan Parties.

 

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Section 8.17.         No
Changes in Fiscal Year. The fiscal year of the Borrower and its Subsidiaries ends on December 31 of each year; and the
Borrower shall not, nor shall it permit any Subsidiary to, change its fiscal year from its present basis.

 

Section 8.18.         Formation
of Subsidiaries. Promptly upon the formation or acquisition of any Subsidiary, the Loan Parties shall provide the Bank notice
thereof (at which time Schedule 6.2 shall be deemed amended to include reference to such Subsidiary. The Loan Parties shall,
and shall cause their Subsidiaries to, timely comply with the requirements of Sections 10 and 11 with respect to any Subsidiary
that is required to become a Guarantor hereunder. Except for Foreign Subsidiaries existing on the Closing Date and identified on
Schedule 6.2, no Loan Party, nor shall it permit any of its Subsidiaries to, form or acquire any Foreign Subsidiary.

 

Section 8.19.         Change
in the Nature of Business. No Loan Party shall, nor shall it permit any of its Subsidiaries to, engage in any business or activity
if as a result the general nature of the business of such Loan Party or any of its Subsidiaries would be changed in any material
respect from the general nature of the business engaged in by it as of the Closing Date.

 

Section 8.20.         Use
of Proceeds. The Borrower shall use the credit extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4.

 

Section 8.21.         No
Restrictions. Except as provided herein and in the Canadian Credit Facilities, no Loan Party shall, nor shall it permit any
of its Subsidiaries to, directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Loan Party or any Subsidiary of a Loan Party to: (a) pay dividends
or make any other distribution on any Subsidiary’s capital stock or other equity interests owned by such Loan Party or any
other Subsidiary, (b) pay any indebtedness owed to any Loan Party or any other Subsidiary, (c) make loans or advances
to any Loan Party or any Subsidiary, (d) transfer any of its Property to any Loan Party or any other Subsidiary, or (e) guarantee
the Secured Obligations and/or grant Liens on its assets to the Bank as required by the Loan Documents.

 

Section 8.22.         Subordinated
Debt. No Loan Party shall, nor shall it permit any of its Domestic Subsidiaries to, (a) amend or modify any of the terms
or conditions relating to Subordinated Debt, (b) make any voluntary prepayment of Subordinated Debt or effect any voluntary
redemption thereof, or (c) make any payment on account of Subordinated Debt which is prohibited under the terms of any instrument
or agreement subordinating the same to the Obligations. Notwithstanding the foregoing, the Loan Parties may agree to a decrease
in the interest rate applicable thereto or to a deferral of repayment of any of the principal of or interest on the Subordinated
Debt beyond the current due dates therefor.

 

Section 8.23.         Financial
Covenants. (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:

 

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	Period(s) Ending	 	
        Total
Leverage Ratio shall not 

be greater than:

	 	 	 
	Fiscal quarters ending on or about 6/30/13 – 12/31/13	 	5.25 to 1.0
	 	 	 
	Fiscal quarter ending on or about 3/31/14	 	5.00 to 1.0
	 	 	 
	Fiscal quarter ending on or about 6/30/14	 	4.50 to 1.0
	 	 	 
	Fiscal quarter ending on or about 9/30/14	 	4.00 to 1.0
	 	 	 
	Fiscal quarters ending on or about 12/31/14 and at all times thereafter	 	3.75 to 1.0

 

(b)          Funded
Debt to Total Capitalization Ratio. The Loan Parties and their Non-Canadian Subsidiaries shall at all times maintain a ratio
of (a) Funded Debt to (b) Total Capitalization of not more than 0.50 to 1.0.

 

(c)          Fixed
Charge Coverage 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 maintain a Fixed Charge Coverage Ratio of not less than:

 

	Period(s) Ending	 	Ratio shall not be less than:
	 	 	 
	Fiscal quarters ending on or about 6/30/13 – 12/31/13	 	1.25 to 1.0
	 	 	 
	Fiscal quarters ending on or about 3/31/14 and at all times thereafter	 	1.35 to 1.0

 

(d)          Special
Provision Regarding 6/30/13. With respect to the calculation of each of the foregoing covenants in this Section 8.23 for
the fiscal quarter ending June 30, 2013, the Borrower shall calculate such covenants as if the anticipated Permitted Acquisition
(and any associated Indebtedness) had closed on June 30, 2013, so long as such Permitted Acquisition has closed at the time
of delivery of the compliance certificate required for the June 30, 2013 fiscal quarter.

 

Section 8.24.         Foreign
Subsidiary Holding Companies. Notwithstanding anything contained in the Agreement to the contrary, the Foreign Subsidiary
Holding Companies shall not engage in any business or other activity, own any material assets or property, incur any Indebtedness
or material liabilities or grant Liens on any part of its Property, other than (i) ownership of the capital stock of a Foreign
Subsidiary or another Foreign Subsidiary Holding Company, (ii) maintenance of its corporate existence, and (iii) activities
relating to legal, Tax, and accounting matters with respect to any of the foregoing activities.

 

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Section 8.25.         Post-Closing
Covenant. Within 30 days of the Closing Date, the Loan Parties agree to deliver Collateral Access Agreements to the extent
required by the Security Agreement.

 

Section 9.          Events
of Default and Remedies.

 

Section 9.1.          Events
of Default. Any one or more of the following shall constitute an “Event of Default” hereunder:

 

(a)          default
in the payment when due of all or any part of the principal of any Loan (whether at the stated maturity thereof or at any other
time provided for in this Agreement) or of any Reimbursement Obligation, or default for a period of three (3) Business Days
in the payment when due of any interest, fee or other Obligation payable hereunder or under any other Loan Document;

 

(b)          default
in the observance or performance of any covenant set forth in Sections 8.1, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.22 or
8.23 of this Agreement or of any provision in any Loan Document dealing with the use, disposition or remittance of the proceeds
of Collateral or requiring the maintenance of insurance thereon; provided not more than twice per fiscal year the Borrower may
remedy a default with respect to Section 8.5 within five (5) Business Days;

 

(c)          default
in the observance or performance of any other provision hereof or of any other Loan Document which is not remedied within ten (10) Business
Days after written notice thereof is given to the Borrower by the Bank;

 

(d)          any
representation or warranty made in Section 6 hereof or any material representation or warranty made in any other Loan Document
or in any certificate furnished to the Bank pursuant hereto or thereto or in connection with any transaction contemplated hereby
or thereby shall have been incorrect in any material respect as of the date of the issuance or making or deemed making thereof;

 

(e)          (i) any
event occurs or condition exists (other than those described in subsections (a) through (d) above) which is specified as an
event of default under any of the other Loan Documents, or (ii) any of the Loan Documents shall for any reason not be or shall
cease to be in full force and effect or is declared to be null and void, or (iii) any of the Collateral Documents shall for
any reason fail to create a valid and perfected first priority Lien in favor of the Bank in any Collateral purported to be covered
thereby except as expressly permitted by the terms hereof, or (iv) any Loan Party takes any action for the purpose of terminating,
repudiating or rescinding any Loan Document executed by it or any of its obligations thereunder, or (v) any Loan Party or
any Domestic Subsidiary of a Loan Party makes any payment on account of any Subordinated Debt which is prohibited under the terms
of any instrument subordinating such Subordinated Debt to any Secured Obligations, or any subordination provision in any document
or instrument (including, without limitation, any intercreditor or subordination agreement) relating to any Subordinated Debt shall
cease to be in full force and effect, or any Person (including the holder of any Subordinated Debt) shall contest in any manner
the validity, binding nature or enforceability of any such provision;

 

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(f)          default
shall occur under the Canadian Credit Facilities; or default shall occur under any Material Indebtedness issued, assumed or guaranteed
by any Loan Party or any Subsidiary of a Loan Party, or under any indenture, agreement or other instrument under which the same
may be issued, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any
such Material Indebtedness (whether or not such maturity is in fact accelerated), or any such Material Indebtedness shall not be
paid when due (whether by demand, lapse of time, acceleration or otherwise);

 

(g)          (i) any
judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, shall be entered
or filed against any Loan Party or any Subsidiary of a Loan Party, or against any of their respective Property, in an aggregate
amount for all such Persons in excess of $500,000 (except to the extent fully covered by insurance pursuant to which the insurer
has accepted liability therefor in writing), and which remains undischarged, unvacated, unbonded or unstayed for a period of 30 days,
or any action shall be legally taken by a judgment creditor to attach or levy upon any Property of any Loan Party or any Subsidiary
of a Loan Party to enforce any such judgment, or (ii) any Loan Party or any Subsidiary of a Loan Party shall fail within thirty (30)
days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately
contested in good faith by proper proceedings diligently pursued;

 

(h)          any
Loan Party or any Subsidiary of a Loan Party, or any member of its Controlled Group, shall fail to pay when due an amount or amounts
aggregating for all such Persons in excess of $500,000 which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess
of $500,000 (collectively, a “Material Plan”) shall be filed under Title IV of ERISA by any Loan Party
or any Subsidiary of a Loan Party, or any other member of its Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed
to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against any Loan Party
or any Subsidiary of a Loan Party, or any member of its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and
such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated;

 

(i)          any
Change of Control shall occur;

 

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(j)          any
Loan Party or any Subsidiary of a Loan Party shall (i) have entered involuntarily against it an order for relief under the
United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as
they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to or acquiesce
in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States
Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors
or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take
any corporate or similar action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail
to contest in good faith any appointment or proceeding described in Section 9.1(k); or

 

(k)          a
custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for any Loan Party or any Subsidiary
of a Loan Party, or any substantial part of any of its Property, or a proceeding described in Section 9.1(j)(v) shall be instituted
against any Loan Party or any Subsidiary of a Loan Party, and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 days; or

 

(l)          the
occurrence of any fact, event or circumstance, which, in the good faith determination of the Bank, would have a Material Adverse
Effect.

 

Section 9.2.          Non-Bankruptcy
Defaults. When any Event of Default (other than those described in subsection (j) or (k) of Section 9.1 with respect
to the Borrower) has occurred and is continuing, the Bank may, by written notice to the Borrower: (a) terminate the remaining
Facilities and all other obligations of the Bank hereunder on the date stated in such notice (which may be the date thereof); (b)
declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding
Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts
payable under the Loan Documents without further demand, presentment, protest or notice of any kind; and (c) demand that the Borrower
immediately deliver to the Bank Cash Collateral in an amount equal to 105% of the aggregate amount of each Letter of Credit then
outstanding, and the Borrower agrees to immediately make such payment and acknowledges and agrees that the Bank would not have
an adequate remedy at law for failure by the Borrower to honor any such demand and that the Bank shall have the right to require
the Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under
any Letter of Credit. In addition, the Bank may exercise all rights and remedies available to it under the Loan Documents or applicable
law or equity when any such Event of Default has occurred and is continuing.

 

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Section 9.3.          Bankruptcy
Defaults. When any Event of Default described in subsections (j) or (k) of Section 9.1 with respect to the Borrower
has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts
payable under the Loan Documents without presentment, demand, protest or notice of any kind, the obligation of the Bank to extend
further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower shall immediately deliver to the
Bank Cash Collateral in an amount equal to 105% of the aggregate amount of each Letter of Credit then outstanding, the Borrower
acknowledging and agreeing that the Bank would not have an adequate remedy at law for failure by the Borrower to honor any such
demand and that the Bank shall have the right to require the Borrower to specifically perform such undertaking whether or not any
draws or other demands for payment have been made under any of the Letters of Credit. In addition, the Bank may exercise all rights
and remedies available to it under the Loan Documents or applicable law or equity when any such Event of Default has occurred and
is continuing.

 

Section 9.4.          Collateral
for Undrawn Letters of Credit. (a) If the prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under any of Sections 2.3(b), 2.8(b), 9.2 or 9.3 above, the Borrower shall forthwith pay the
amount required to be so prepaid, to be held by the Bank as provided in subsection (b) below.

 

(b)          All
amounts prepaid pursuant to subsection (a) above shall be held by the Bank in one or more separate collateral accounts (each
such account, and the credit balances, properties, and any investments from time to time held therein, and any substitutions for
such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on
any of the foregoing being collectively called the “Collateral Account”) as security for, and for application
by the Bank (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by
the Bank, and to the payment of the unpaid balance of all other Secured Obligations. The Collateral Account shall be held in the
name of and subject to the exclusive dominion and control of the Bank. If and when requested by the Borrower, the Bank shall invest
funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided
that the Bank is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments
out of the Collateral Account for application to amounts due and owing from the Borrower to the Bank. If the Borrower shall have
made payment of all obligations referred to in subsection (a) above required under Section 2.8(b), at the request of
the Borrower the Bank shall release to the Borrower amounts held in the Collateral Account so long as at the time of the release
and after giving effect thereto no Default exists. After all Letters of Credit have expired or been cancelled and the expiration
or termination of all Facilities, at the request of the Borrower, the Bank shall release any remaining amounts held in the Collateral
Account following payment in full in cash of all Secured Obligations.

 

Section 9.5.          Post-Default
Collections. Anything contained herein or in the other Loan Documents to the contrary notwithstanding (including, without limitation,
Section 2.8(b)), all payments and collections received in respect of the Obligations and all proceeds of the Collateral and
payments made under or in respect of the Guaranty Agreements received, in each instance, by the Bank after acceleration or the
final maturity of the Obligations or termination of the Facilities as a result of an Event of Default shall be remitted to the
Bank and applied in the Bank’s discretion.

 

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Section 10.         The
Guarantees.

 

Section 10.1.          The
Guarantees. To induce the Bank to provide the credits described herein and in consideration of benefits expected to accrue
to the Borrower by reason of the Facilities and for other good and valuable consideration, receipt of which is hereby acknowledged,
each Domestic Subsidiary party hereto (including any Domestic Subsidiary executing an Additional Guarantor Supplement in the form
attached hereto as Exhibit F or such other form acceptable to the Bank) and the Borrower (as to the Secured Obligations of
another Loan Party) hereby unconditionally and irrevocably guarantees jointly and severally to the Bank and its Affiliates, the
due and punctual payment of all present and future Secured Obligations, including, but not limited to, the due and punctual payment
of principal of and interest on the Loans, the Reimbursement Obligations, and the due and punctual payment of all other Obligations
now or hereafter owed by the Borrower under the Loan Documents and the due and punctual payment of all Hedging Liability and Bank
Product Obligations, in each case as and when the same shall become due and payable, whether at stated maturity, by acceleration,
or otherwise, according to the terms hereof and thereof (including all interest, costs, fees, and charges after the entry of an
order for relief against the Borrower or such other obligor in a case under the United States Bankruptcy Code or any similar proceeding,
whether or not such interest, costs, fees and charges would be an allowed claim against the Borrower or any such obligor in any
such proceeding); provided, however, that, with respect to any Guarantor, its Guarantee of Hedging Liability of any Loan
Party shall exclude all Excluded Swap Obligations. In case of failure by the Borrower or other obligor punctually to pay any Secured
Obligations guaranteed hereby, each Guarantor hereby unconditionally agrees to make such payment or to cause such payment to be
made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, and
as if such payment were made by the Borrower or such obligor.

 

Section 10.2.          Guarantee
Unconditional. The obligations of each Guarantor under this Section 10 shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged, or otherwise affected by:

 

(a)          any
extension, renewal, settlement, compromise, waiver, or release in respect of any obligation of any Loan Party or other obligor
or of any other guarantor under this Agreement or any other Loan Document or by operation of law or otherwise;

 

(b)          any
modification or amendment of or supplement to this Agreement or any other Loan Document or any agreement relating to Hedging Liability
or Bank Product Obligations;

 

(c)          any
change in the corporate existence, structure, or ownership of, or any insolvency, bankruptcy, reorganization, or other similar
proceeding affecting, any Loan Party or other obligor, any other guarantor, or any of their respective assets, or any resulting
release or discharge of any obligation of any Loan Party or other obligor or of any other guarantor contained in any Loan Document;

 

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(d)          the
existence of any claim, set-off, or other rights which any Loan Party or other obligor or any other guarantor may have at any time
against the Bank or any other Person, whether or not arising in connection herewith;

 

(e)          any
failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies
against any Loan Party or other obligor, any other guarantor, or any other Person or Property;

 

(f)          any
application of any sums by whomsoever paid or howsoever realized to any obligation of any Loan Party or other obligor, regardless
of what obligations of any Loan Party or other obligor remain unpaid;

 

(g)          any
invalidity or unenforceability relating to or against any Loan Party or other obligor or any other guarantor for any reason of
this Agreement or of any other Loan Document or any agreement relating to Hedging Liability or Bank Product Obligations or any
provision of applicable law or regulation purporting to prohibit the payment by any Loan Party or other obligor or any other guarantor
of the principal of or interest on any Loan or any Reimbursement Obligation or any other amount payable under the Loan Documents
or any agreement relating to Hedging Liability or Bank Product Obligations; or

 

(h)          any
other act or omission to act or delay of any kind by the Bank or any other Person or any other circumstance whatsoever that might,
but for the provisions of this subsection, constitute a legal or equitable discharge of the obligations of any Guarantor under
this Section 10.

 

Section 10.3.          Discharge
Only upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor’s obligations under this Section 10
shall remain in full force and effect until the Facilities are terminated, all Letters of Credit have expired, and the principal
of and interest on the Loans and all other amounts payable by the Borrower and the other Loan Parties under this Agreement and
all other Loan Documents and, if then outstanding and unpaid, all Hedging Liability and Bank Product Obligations shall have been
paid in full. If at any time any payment of the principal of or interest on any Loan or any Reimbursement Obligation or any other
amount payable by any Loan Party or other obligor or any guarantor under the Loan Documents or any agreement relating to Hedging
Liability or Bank Product Obligations is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or
reorganization of such Loan Party or other obligor or of any guarantor, or otherwise, each Guarantor’s obligations under
this Section 10 with respect to such payment shall be reinstated at such time as though such payment had become due but had
not been made at such time.

 

Section 10.4.          Subrogation.
Each Guarantor agrees it will not exercise any rights which it may acquire by way of subrogation by any payment made hereunder,
or otherwise, until all the Secured Obligations shall have been paid in full subsequent to the termination of all the Facilities
and expiration of all Letters of Credit. If any amount shall be paid to a Guarantor on account of such subrogation rights at any
time prior to the later of (x) the payment in full of the Secured Obligations and all other amounts payable by the Loan Parties
hereunder and the other Loan Documents and (y) the termination of the Facilities and expiration of all Letters of Credit,
such amount shall be held in trust for the benefit of the Bank (and its Affiliates) and shall forthwith be paid to the Bank (and
its Affiliates) or be credited and applied upon the Secured Obligations, whether matured or unmatured, in accordance with the terms
of this Agreement.

 

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Section 10.5.          Subordination.
Each Guarantor (each referred to herein as a “Subordinated Creditor”) hereby subordinates the payment of all
indebtedness, obligations, and liabilities of the Borrower or other Loan Party owing to such Subordinated Creditor, whether now
existing or hereafter arising, to the indefeasible payment in full in cash of all Secured Obligations. During the existence of
any Event of Default, subject to Section 10.4, any such indebtedness, obligation, or liability of the Borrower or other Loan
Party owing to such Subordinated Creditor shall be enforced and performance received by such Subordinated Creditor as trustee for
the benefit of the holders of the Secured Obligations and the proceeds thereof shall be paid over to the Bank for application to
the Secured Obligations (whether or not then due), but without reducing or affecting in any manner the liability of such
Guarantor under this Section 10.

 

Section 10.6.          Waivers.
Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, and any notice not provided for herein, as well
as any requirement that at any time any action be taken by the Bank or any other Person against the Borrower or any other Loan
Party or other obligor, another guarantor, or any other Person.

 

Section 10.7.          Limit
on Recovery. Notwithstanding any other provision hereof, the right of recovery against each Guarantor under this Section 10
shall not exceed $1.00 less than the lowest amount which would render such Guarantor’s obligations under this Section 10
void or voidable under applicable law, including, without limitation, fraudulent conveyance law.

 

Section 10.8.          Stay
of Acceleration. If acceleration of the time for payment of any amount payable by the Borrower or other Loan Party or other
obligor under this Agreement or any other Loan Document, or under any agreement relating to Hedging Liability or Bank Product Obligations,
is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or such other Loan Party or obligor, all such amounts
otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents, or under any agreement relating
to Hedging Liability or Bank Product Obligations, shall nonetheless be payable by the Guarantors hereunder forthwith on demand
by the Bank.

 

Section 10.9.          Benefit
to Guarantors. The Loan Parties are engaged in related businesses and integrated to such an extent that the financial strength
and flexibility of the Borrower and the other Loan Parties has a direct impact on the success of each other Loan Party. Each Guarantor
will derive substantial direct and indirect benefit from the extensions of credit hereunder, and each Guarantor acknowledges that
this guarantee is necessary or convenient to the conduct, promotion and attainment of its business.

 

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Section 10.10.         Keepwell.
Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such
funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Guaranty
in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for
the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section, or otherwise
under this Guaranty, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater
amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until discharged
in accordance with Section 10.3. Each Qualified ECP Guarantor intends that this Section constitute, and this Section shall
be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all
purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Section 11.         Collateral.

 

Section 11.1.          Collateral.
The Secured Obligations shall be secured by valid, perfected, and enforceable Liens on all right, title, and interest of each Loan
Party in all of its real property, personal property, and fixtures, whether now owned or hereafter acquired or arising, and all
proceeds thereof; provided, however, that: (i) the Collateral shall not include Excluded Property, (ii) until
an Event of Default has occurred and is continuing and thereafter until otherwise required by the Bank, Liens on vehicles or other
goods which are subject to a certificate of title law need not be perfected provided that the total value of such property at any
one time not so perfected shall not exceed $100,000 in the aggregate, and (iii) the Collateral need not include (or be perfected
if a Lien is granted) those assets of any Loan Party as to which the Bank in its sole discretion determines that the cost of obtaining
a security interest in or perfection thereof are excessive in relation to the value of the security to be afforded thereby. Each
Loan Party acknowledges and agrees that the Liens on the Collateral shall be granted to the Bank and shall be valid and perfected
first priority Liens (to the extent perfection by filing, registration, recordation, possession or control is required herein or
in any other Loan Document) subject to the proviso appearing at the end of the preceding sentence and to Liens permitted by Section 8.8,
in each case pursuant to one or more Collateral Documents from such Persons, each in form and substance satisfactory to the Bank.

 

Section 11.2.          Depository
Banks. Within thirty (30) days of the Closing Date, each Loan Party shall maintain at the Bank (or one of its Affiliates) as
its primary depository bank, including for its principal operating, administrative, cash management, lockbox arrangements, collection
activity, and other deposit accounts for the conduct of its business. All deposit accounts shall be maintained with the Bank or
such other bank(s) reasonably acceptable to the Bank subject to deposit account control agreements in favor of the Bank on terms
reasonably satisfactory to the Bank (all such deposit accounts maintained with the Bank or with such other bank(s) subject to a
deposit account control agreement being hereinafter collectively referred to as the “Assigned Accounts”). Each
Loan Party shall make such arrangements as may be reasonably requested by the Bank to assure that all proceeds of the Collateral
are deposited (in the same form as received) in one or more Assigned Accounts. Any proceeds of Collateral received by any Loan
Party shall be promptly deposited into an Assigned Account and, until so deposited, shall held by it in trust for the Bank. Each
Loan Party acknowledges and agrees that the Bank has (and is hereby granted to the extent it does not already have) a Lien on each
Assigned Account and all funds contained therein to secure the Secured Obligations. The Bank agrees with the Loan Parties that
if and so long as no Default has occurred or is continuing, amounts on deposit in the Assigned Accounts will (subject to the rules
and regulations as from time to time in effect applicable to such demand deposit accounts) be made available to the relevant Loan
Party for use in the conduct of its business. Upon the occurrence of a Default, the Bank may apply the funds on deposit in any
and all such Assigned Accounts to the Secured Obligations (whether or not then due).  

 

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Section 11.3.          Liens
on Real Property. In the event that any Loan Party owns or hereafter acquires any real property (other than Excluded Property),
such Loan Party shall execute and deliver to the Bank a mortgage or deed of trust acceptable in form and substance to the Bank
for the purpose of granting to the Bank (or a security trustee therefor) a Lien on such real property to secure the Secured Obligations,
shall pay all taxes, costs, and expenses incurred by the Bank in recording such mortgage or deed of trust, and shall supply to
the Bank at the Borrower’s cost and expense a survey, environmental report, hazard insurance policy, appraisal report, and
a mortgagee’s policy of title insurance from a title insurer acceptable to the Bank insuring the validity of such mortgage
or deed of trust and its status as a first Lien (subject to Liens permitted by this Agreement) on the real property encumbered
thereby and such other instrument, documents, certificates, and opinions reasonably required by the Bank in connection therewith.

 

Section 11.4.          Further
Assurances. Each Loan Party agrees that it shall, from time to time at the request of the Bank, execute and deliver such documents
and do such acts and things as the Bank may reasonably request in order to provide for or perfect or protect such Liens on the
Collateral. In the event any Loan Party forms or acquires any other Domestic Subsidiary after the date hereof, except as otherwise
provided in the definition of Guarantor, the Loan Parties shall promptly upon such formation or acquisition cause such newly formed
or acquired Domestic Subsidiary to execute a Guaranty Agreement and such Collateral Documents as the Bank may then require, and
the Loan Parties shall also deliver to the Bank, or cause such Domestic Subsidiary to deliver to the Bank, at the Borrower’s
cost and expense, such other instruments, documents, certificates, and opinions reasonably required by the Bank in connection therewith.

 

Section 12.         Miscellaneous.

 

Section 12.1.          Notices.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone
(and except as provided in subsection (b) below), 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 facsimile as follows:

 

(i)          if
to the Borrower or any other Loan Party, 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

 

(ii)         if
to the Bank, to Bank of Montreal at 234 Simcoe Street, 3rd Floor, Toronto, Ontario M5T 1T4, Attention of Maria Tan (Facsimile No.
416-598-6269 Telephone No. 416-498-6756), with respect to Borrowings; and at Director, Corporate Finance Division, 105 St-Jacques
St, 3rd Floor, Montreal, Quebec H2Y 1L6 (Facsimile No. 514-877-7704; Telephone No. 514-877-6102) with respect to all other matters.

 

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Notices sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile
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). Notices delivered through electronic
communications, to the extent provided in subsection (b) below, shall be effective as provided in said subsection (b).

 

(b)          Electronic
Communications.  The Bank or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder
by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited
to particular notices or communications. Unless the Bank otherwise prescribes, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such
as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii)
notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended
recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is
available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email
or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next business day for the recipient.

 

(c)          Change
of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder
by notice to the other parties hereto.

 

Section 12.2.          Amendments,
Etc.  No amendment, modification, termination or waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed
by the Bank; provided that any amendment or modification to the terms of this Agreement or any Loan Document shall also
be signed by the Loan Parties against whom such changes or modifications are to be enforced. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

 

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Section 12.3.          Costs
and Expenses; Indemnification. (a) The Borrower agrees to pay on demand the costs and expenses of the Bank in connection
with the negotiation, preparation, execution and delivery of this Agreement, the other Loan Documents and the other instruments
and documents to be delivered hereunder or thereunder, and in connection with the recording or filing of any of the foregoing,
and in connection with the transactions contemplated hereby or thereby, and in connection with any consents hereunder or waivers
or amendments hereto or thereto, including the reasonable fees and expenses of counsel for the Bank with respect to all of the
foregoing (whether or not the transactions contemplated hereby are consummated). The Borrower further agrees to pay to the Bank
or any other holder of the Obligations all costs and expenses (including court costs and reasonable attorneys’ fees), if
any, incurred or paid by the Bank or any other holder of the Obligations in connection with any Default or in connection with the
enforcement of this Agreement or any of the other Loan Documents or any other instrument or document delivered hereunder or thereunder
(including, without limitation, all such costs and expenses incurred in connection with any proceeding under the United States
Bankruptcy Code involving the Borrower or any guarantor). The Borrower further agrees to indemnify the Bank, and any security trustee,
and their respective directors, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities
and expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the indemnified
Person is a party thereto) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the direct or indirect application or proposed application of the proceeds of any extension of credit made
available hereunder, other than those which arise from the fraud, gross negligence or willful misconduct of the party claiming
indemnification. The Borrower, upon demand by the Bank at any time, shall reimburse the Bank for any legal or other expenses incurred
in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence
or willful misconduct of the party to be indemnified. The obligations of the Borrower under this Section shall survive the termination
of this Agreement.

 

(b)          The
Borrower unconditionally agrees to forever indemnify, defend and hold harmless, and covenants not to sue for any claim for contribution
against, the Bank for any damages, costs, loss or expense, including without limitation, response, remedial or removal costs, arising
out of any of the following: (i) any presence, release, threatened release or disposal of any hazardous or toxic substance
or petroleum by the Borrower or any Subsidiary or otherwise occurring on or with respect to their Property, (ii) the operation
or violation of any environmental law, whether federal, state, or local, and any regulations promulgated thereunder, by the Borrower
or any Subsidiary or otherwise occurring on or with respect to their Property, (iii) any claim for personal injury or property
damage in connection with the Borrower or any Subsidiary or otherwise occurring on or with respect to their Property, and (iv) the
inaccuracy or breach of any environmental representation, warranty or covenant by the Borrower or any Subsidiary made herein or
in any mortgage, deed of trust, security agreement or any other instrument or document evidencing or securing any indebtedness,
obligations, or liabilities of the Borrower or any Subsidiary owing to the Bank or setting forth terms and conditions applicable
thereto or otherwise relating thereto, except for damages arising from the Bank’s fraud, willful misconduct or gross negligence.
This indemnification shall survive the payment and satisfaction of all Obligations owing to the Bank and the termination of this
Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction
in full of any single claim under this indemnification. This indemnification shall be binding upon the successors and assigns of
the Borrower and shall inure to the benefit of Bank and its directors, officers, employees, agents, and collateral trustees, and
their successors and assigns.

 

(c)          All
amounts due under this Section shall be payable 10 days after demand therefor.

 

(d)          Each
party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations
hereunder.

 

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Section 12.4.          No
Waiver, Cumulative Remedies. No delay or failure on the part of the Bank or on the part of the holder or holders of any of
the Obligations in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence
in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right. The rights and remedies hereunder of the Bank and of the holder or holders of any of
the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have.

 

Section 12.5.          Right
of Setoff. In addition to any rights now or hereafter granted under the Loan Documents or applicable law and not by way of
limitation of any such rights, if an Event of Default shall have occurred and be continuing, the Bank and each of its Affiliates
is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other
obligations (in whatever currency) at any time owing, by the Bank or any such Affiliate, to or for the credit or the account of
the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to the Bank or its Affiliates, irrespective of whether or not the Bank
or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of the Bank different from
the branch, office or Affiliate holding such deposit or obligated on such indebtedness. The rights of the Bank and its Affiliates
under this Section are in addition to other rights and remedies (including other rights of setoff) that the Bank or its Affiliates
may have. The Bank agrees to notify the Borrower 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 12.6.          Survival
of Representations. All representations and warranties made herein or in any other Loan Document or in certificates given pursuant
hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder.

 

Section 12.7.          Survival
of Indemnities. All indemnities and other provisions relative to reimbursement to the Bank of amounts sufficient to protect
the yield of the Bank with respect to the Loans and Letters of Credit, including, but not limited to, Sections 4.1, 4.4, 4.5,
and 12.3, shall survive the termination of this Agreement and the other Loan Documents and the payment of the Obligations.

 

Section 12.8.          Counterparts;
Integration; Effectiveness. 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 Loan Documents, and any separate letter agreements with respect to fees payable to the Bank, 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. Except as provided in Section 7.2, this Agreement shall become effective
when it shall have been executed by the Bank and when the Bank shall have received counterparts hereof that, when taken together,
bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement
by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

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Section 12.9.          Headings.
Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

 

Section 12.10.         Severability
of Provisions. Any provision of any Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction. All rights, remedies and powers provided in this Agreement and the
other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions
of law, and all the provisions of this Agreement and other Loan Documents are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement
or the other Loan Documents invalid or unenforceable.

 

Section 12.11.         Construction.
The parties acknowledge and agree that the Loan Documents shall not be construed more favorably in favor of any party hereto based
upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of
the Loan Documents. The provisions of this Agreement relating to Subsidiaries shall only apply during such times as the Borrower
has one or more Subsidiaries. Nothing contained herein shall be deemed or construed to permit
any act or omission which is prohibited by the terms of any Collateral Document, the covenants and agreements contained herein
being in addition to and not in substitution for the covenants and agreements contained in the Collateral Documents.

 

Section 12.12.         Excess
Interest. Notwithstanding any provision to the contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount of interest in excess of the maximum amount of interest permitted by
applicable law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the Loans
or other obligations outstanding under this Agreement or any other Loan Document (“Excess Interest”). If any
Excess Interest is provided for, or is adjudicated to be provided for, herein or in any other Loan Document, then in such event
(a) the provisions of this Section shall govern and control, (b) neither the Borrower nor any guarantor or endorser shall
be obligated to pay any Excess Interest, (c) any Excess Interest that the Bank may have received hereunder shall, at the option
of the Bank, be (i) applied as a credit against the then outstanding principal amount of Obligations hereunder and accrued
and unpaid interest thereon (not to exceed the maximum amount permitted by applicable law), (ii) refunded to the Borrower,
or (iii) any combination of the foregoing, (d) the interest rate payable hereunder or under any other Loan Document shall
be automatically subject to reduction to the maximum lawful contract rate allowed under applicable usury laws (the “Maximum
Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified
to reflect such reduction in the relevant interest rate, and (e) neither the Borrower nor any guarantor or endorser shall
have any action against the Bank for any damages whatsoever arising out of the payment or collection of any Excess Interest. Notwithstanding
the foregoing, if for any period of time interest on any of Borrower’s Obligations is calculated at the Maximum Rate rather
than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate
of interest payable on the Borrower’s Obligations shall remain at the Maximum Rate until the Bank has received the amount
of interest which the Bank would have received during such period on the Borrower’s Obligations had the rate of interest
not been limited to the Maximum Rate during such period.

 

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Section 12.13.         No
Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in
connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Loan Party acknowledges
and agrees, and acknowledges its Affiliates’ understanding, that: (a) (i) no
fiduciary, advisory or agency relationship between any Loan Party and its Subsidiaries and the Bank is intended to be or has been
created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether the Bank has
advised or is advising any Loan Party or any of its Subsidiaries on other matters, (ii) the arranging and other services regarding
this Agreement provided by the Bank are arm’s-length commercial transactions between such Loan Parties and their
Affiliates, on the one hand, and the Bank, on the other hand, (iii) each Loan Party has consulted its own legal, accounting,
regulatory and tax advisors to the extent that it has deemed appropriate and (iv) 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 Loan Documents;
and (b) (i) the Bank is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Loan Party or any of its
Affiliates, or any other Person; (ii) the Bank has no obligation to any Loan Party or any of its
Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the
other Loan Documents; and (iii) the Bank and its respective Affiliates may be engaged, for their own accounts or the accounts
of customers, in a broad range of transactions that involve interests that differ from those of any Loan Party and its
Affiliates, and the Bank has no obligation to disclose any of such interests to any Loan Party
or its Affiliates. To the fullest extent permitted by law, each Loan Party hereby waives
and releases any claims that it may have against the Bank with respect to any breach or alleged breach of agency or fiduciary duty
in connection with any aspect of any transaction contemplated hereby.

 

Section 12.14.         Binding
Nature; Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Bank and the benefit of its successors and assigns, including
any subsequent holder of the Obligations. The Borrower may not assign its rights hereunder without the written consent of the Bank.
This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements,
whether written or oral, with respect thereto are superseded hereby.

 

    	-80-

    	 

    

 

(b)          This
agreement, the Notes and the other Loan Documents (except as otherwise specified therein), and the rights and duties of the parties
hereto, shall be construed and determined in accordance with the laws of the State of Illinois without regard to conflicts of
law principles that would require application of the laws of another jurisdiction.

 

(c)          Each
party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago,
and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each party hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such Illinois State court or, to the extent permitted by applicable
Legal Requirements, in such federal court. Each party hereto hereby agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable
Legal Requirements. Nothing in this Agreement or any other Loan Document or otherwise shall affect any right that the Bank may
otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or
any Guarantor or its respective properties in the courts of any jurisdiction.

 

(d)          Each
Loan Party hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirements, any
objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement or any other Loan Document in any court referred to in Section 12.14(c). Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable Legal Requirements, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

 

(e)          Each
party to this Agreement irrevocably consents to service of process in any action or proceeding arising out of or relating to any
Loan Document, in the manner provided for notices (other than telecopy or e-mail) in Section 12.1. Nothing in this Agreement
or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted
by applicable Legal Requirements.

 

Section 12.15.         Waiver
of Jury Trial. Each party hereto hereby irrevocably waives, to the fullest extent permitted
by applicable Legal Requirements, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising
out of or relating to any Loan Document or the transactions contemplated thereby (whether based on contract, tort or any other
theory). Each party hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party 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 by, among other things, the mutual waivers
and certifications in this Section.

 

    	-81-

    	 

    

 

Section 12.16.         USA
Patriot Act. The Bank hereby notifies the Borrower 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 the Borrower, which information includes the name and address of the Borrower and other information that will allow
the Bank to identify the Borrower in accordance with the Act.

 

[Signature
Pages to Follow]

 

    	-82-

    	 

    

 

This Credit Agreement
is entered into between us for the uses and purposes hereinabove set forth as of the date 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

 

[Signature Page to Credit Agreement]

 

    	 

    	 

    

 

	 	“Bank”
	 	 
	 	Bank of Montreal, acting through its Chicago Branch
	 	 
	 	By :  	/s/ Larry Allan Swiniarski
	 	Name: Larry Alan Swiniarski
	 	Title:   Director

 

[Signature Page to Credit
Agreement]

 

    	 

    	 

    

 

Exhibit A

 

Notice of Borrowing

 

Date: _______________, ____

 

		To:	Bank of Montreal, as lender under the Credit Agreement dated as of June 28, 2013 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”), among Pioneer Power Solutions, Inc.,
as Borrower, the Guarantors party thereto, and Bank of Montreal

 

Ladies and Gentlemen:

 

The undersigned, Pioneer
Power Solutions, Inc. (the “Borrower”), refers to the Credit Agreement,
the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.6
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] [Term Loan] Facility.

 

4.          The
Borrowing is to be comprised of $___________ of [U.S. Prime Rate] [Eurodollar] Loans.

 

[5.         The
duration of the Interest Period for the Eurodollar Loans included in the Borrowing shall be ____________ months.]

 

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 Section 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 Power Solutions, Inc.
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	-2-

    	 

    

 

Exhibit B

 

Notice of Continuation/Conversion

 

Date: ____________, ____

 

		To:	Bank of Montreal, as lender under the Credit Agreement dated as of June 28, 2013 (as extended,
renewed, amended or restated from time to time, the “Credit Agreement”), among Pioneer Power Solutions, Inc.,
as Borrower, the Guarantors party thereto, and Bank of Montreal

 

Ladies and Gentlemen:

 

The undersigned, Pioneer
Power Solutions, Inc. (the “Borrower”), refers to the Credit Agreement,
the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.6
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] [Term] Loans to be [converted] [continued] is $______________.

 

3.          The
Loans are to be [converted into] [continued as] [Eurodollar] [U.S. Prime Rate] Loans.

 

4.          [If
applicable:] The duration of the Interest Period for the [Revolving] [Term] Loans included in the [conversion] [continuation]
shall be _________ months.

 

	 	Pioneer Power Solutions, Inc.
	 	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	 

    	 

    

 

Exhibit C-1

 

Term Note

 

	U.S. $6,000,000	June 28, 2013

 

For
Value Received, the undersigned, Pioneer
Power Solutions, Inc., a Delaware corporation (the “Borrower”), hereby promises to pay to Bank
of Montreal (the “Lender”) or its registered assigns at the principal office of the Lender in Chicago, Illinois
(or such other location as the Lender may designate to the Borrower), in immediately available funds, the principal sum of Six
Million Dollars ($6,000,000) or, if less, the aggregate unpaid principal amount of the Term Loan made or maintained by the Lender
to the Borrower pursuant to the Credit Agreement, in installments in the amounts called for by the Credit Agreement, together with
interest on the principal amount of such Term Loan from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.

 

This Note is the Term
Note referred to in the Credit Agreement dated as of June 28, 2013, among the Borrower, the Guarantors party thereto, and
the Lender (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note
and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit
Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with
the internal laws of the State of Illinois.

 

Voluntary prepayments
may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

The Borrower hereby
waives demand, presentment, protest or notice of any kind hereunder.

 

	 	Pioneer Power Solutions, Inc.
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	 

    	 

    

 

Exhibit C-2

 

Revolving Note

 

	U.S. $10,000,000	June 28, 2013

 

For
Value Received, on
demand, the undersigned, Pioneer Power Solutions, Inc., a Delaware corporation
(the “Borrower”), hereby promises to pay to Bank of Montreal (the “Lender”) or its registered
assigns at the principal office of the Lender in Chicago Illinois (or such other location as the Lender may designate to the Borrower),
in immediately available funds, the principal sum of Ten Million Dollars ($10,000,000) or, if less, the aggregate unpaid principal
amount of all Revolving Loans made by the Lender to the Borrower pursuant to the Credit Agreement, together with interest on the
principal amount of each Revolving Loan from time to time outstanding hereunder at the rates, and payable in the manner and on
the dates, specified in the Credit Agreement.

 

This Note is the Revolving
Note referred to in the Credit Agreement dated as of June 28, 2013, among the Borrower, the Guarantors party thereto, and
the Lender (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note
and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit
Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with
the internal laws of the State of Illinois.

 

Voluntary prepayments
may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

The Borrower hereby
waives demand, presentment, protest or notice of any kind hereunder.

 

	 	Pioneer Power Solutions, Inc.
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	 

    	 

    

 

Exhibit D

 

Pioneer Power Solutions,
Inc. 

 

Borrowing Base Certificate

 

		To:	Bank of Montreal, as lender under the Credit Agreement described below

 

Pursuant to the terms
of the Credit Agreement dated as of June 28, 2013, among us (as extended, renewed, amended or restated from time to time,
the “Credit Agreement”), we submit this Borrowing Base Certificate to you and certify that the information set
forth below and on any attachments to this Certificate is true, correct and complete as of the date of this Certificate.

 

A.           Receivables
in Borrowing Base

 

	 	1.	Gross Receivables	 	 	 
	 	 	Less	 	 	 
	 	 	(a)	Ineligible sales	 	 	 
	 	 	(b)	Owed by an account debtor who is an Affiliate	 	 	 
	 	 	(c)	Owed by an account debtor who is in an insolvency or reorganization proceeding	 	 	 
	 	 	(d)	Credits/allowances	 	 	 
	 	 	(e)	Unpaid more than 90 days from invoice date	 	 	 
	 	 	(f)	Otherwise ineligible	 	 	 
	 	2.	Total Deductions (sum of lines A1a - A1f)	 	 	 
	 	3.	Eligible Receivables (line A1 minus line A2)	 	 	 
	 	4.	Eligible Receivables in Borrowing Base (line A3 x .80)	 	 	 

 

B.           Inventory
in Borrowing Base

 

	 	1.	Gross inventory of Finished Goods, Work-in-Process and Raw Materials	 	 	 
	 	2.	Less	 	 	 

 

    	 

    	 

    

 

	 	 	(a)	Finished Goods, Work-in-Process and Raw Materials not located at approved locations	 	 	 
	 	 	(b)	Obsolete, slow moving, or not merchantable	 	 	 
	 	 	(c)	Work-in-process in excess of $2,000,000	 	 	 
	 	 	(d)	Otherwise ineligible	 	 	 
	 	2.	Total Deductions (sum of lines B2a - B2d above)	 	 	 
	 	3.	Eligible Inventory (line B1 minus line B2)	 	 	 
	 	4.	Eligible Inventory in Borrowing Base determination (line B3 x .50)	 	 	 

 

C.           Inventory
in Borrowing Base

 

	 	1.	Inventory Cap	$5,000,000
	 	2.	Eligible Inventory included in Borrowing Base determination (Line B4)	 
	 	3.	Eligible Inventory in Borrowing Base (Lesser of C1 and C2)	 

 

	D.	Excess Canadian Collateral	 

 

E.           Total
Borrowing Base

 

	 	1.	Line A4	 	 	 
	 	2.	Line C3	 	 	 
	 	3.	Line D	 	 	 
	 	4.	Reserves established by the Bank	 	 	 
	 	5.	Sum of Lines E1, E2 and E3 less Line E4 (Borrowing Base)	 	 	 

 

F.           Revolving
Facility Advances

 

	1.	Revolving Loans	 	 	 
	2.	Letters of Credit	 	 	 
	3.	Total Outstandings (Sum of lines F1 and F2)	 	 	 

  

    	-2-

    	 

    

 

G.           Available
Borrowing Base Collateral

 

	(line E5 minus line F3)	 	 

 

Dated as of this ______
day of __________________.

 

	 	Pioneer Power Solutions, Inc.
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	-3-

    	 

    

 

Exhibit E

 

Pioneer Power Solutions,
Inc. 

 

Compliance Certificate

 

		To:	Bank of Montreal, as lender under the Credit Agreement described below

 

This Compliance Certificate
is furnished to the Bank pursuant to that certain Credit Agreement dated as of June 28, 2013, among us (as extended, renewed,
amended or restated from time to time, the “Credit Agreement”). Unless otherwise defined herein, the terms used
in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.

 

The
Undersigned hereby certifies that:

 

1.          I
am the duly elected __________________________ of Pioneer Power Solutions, Inc.;

 

2.          I
have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review
of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial
statements;

 

3.          The
examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the
occurrence of any event which constitutes a Default during or at the end of the accounting period covered by the attached financial
statements or as of the date of this Compliance Certificate, except as set forth below;

 

4.          The
financial statements required by Section 8.5 of the Credit Agreement and being furnished to you concurrently with this Compliance
Certificate are true, correct and complete as of the date and for the periods covered thereby; and

 

5.          The
Schedule I hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants
of the Credit Agreement, all of which data and computations are, to the best of my knowledge, true, complete and correct and have
been made in accordance with the relevant Sections of the Credit Agreement.

 

Described below are
the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which
it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition
or event:

 

    	 

    	 

    

 

	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

The foregoing certifications,
together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ______ day of __________________ 20___.

 

	 	Pioneer Power Solutions, Inc.
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	-2-

    	 

    

 

Schedule I

to Compliance Certificate

 

Pioneer Power Solutions,
Inc.

 

Compliance Calculations

for Credit Agreement dated
as of June 28, 2013

 

Calculations
as of _____________, _______

  

 

 

	A.        Total Leverage Ratio (Section 8.23(a))	 
	1.          Funded Debt (per definition)	$____________
	2.          Net Income for past 4 quarters	$____________
	3.          Interest Expense for past 4 quarters	$____________
	4.          Federal, state and local income taxes for past 4 quarters	$____________
	5.          Depreciation and amortization for past 4 quarters	$____________
	6.          Extraordinary fees or expenses for past 4 quarters	$____________
	7.          Sum of Lines A2-A6 (EBITDA)	$____________
	8.          Adjustments per definition of Adjusted EBITDA	$____________
	9.          Sum of Lines A7 and A8 (Adjusted EBITDA)	$____________
	10.         Ratio of Line A1 to Line A9	____:1.0
	11.         Line A10 Ratio shall not exceed	____:1.0
	12.         The Borrower is in compliance?  (circle yes or no)	yes/no
	 	 
	B.         Funded Debt to Capitalization Ratio (Section 8.23(b))	 
	1.          Funded Debt	$____________
	2.          Net Worth	$____________
	3.          Sum of Lines B1 and B2 (Total Capitalization)	$____________
	4.          Ratio of Line B1 to Line B3	____:1.0
	5.          Line B4 Ratio shall not exceed	0.50:1.0
	6.          The Borrower is in compliance?  (circle yes or no)	yes/no

 

    	 

    	 

    

 

	C.         Fixed Charge Coverage Ratio (Section 8.23(c))	 
	1.          Adjusted EBITDA for past 4 quarters (Line A9)	$____________
	2.          Unfinanced Capital Expenditures for past 4 quarters	$____________
	3.          Cash taxes for past 4 quarters	$____________
	4.          Restricted Payments paid in cash for past 4 quarters	$____________
	5.          Line C1 minus the sum of Lines C2-C4	$____________
	6.          Scheduled principal payments for past 4 quarters	$____________
	7.          Interest Expense for past 4 quarters	$____________
	8.          Sum of Lines C6 and C7 (Fixed Charges)	$____________
	9.          Ratio of Line C5 to Line C8	____:1.0
	10.         Line C9 Ratio shall not be less than	____:1.0
	11.         The Borrower is in compliance?  (circle yes or no)	yes/no

 

    	-2-

    	 

    

 

Exhibit F

 

Additional Guarantor Supplement

 

______________, ___

 

Bank of Montreal (the “Bank”),
as lender under the Credit Agreement dated as of June 28, 2013, among Pioneer Power Solutions, Inc., as Borrower, the
Guarantors referred to therein, and the Bank (as extended, renewed, amended or restated from time to time, the “Credit
Agreement”)

 

Ladies and Gentlemen:

 

Reference is made to
the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes
hereof the meaning provided therein. The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of incorporation
or organization] hereby elects to be a “Guarantor” for all purposes of the Credit Agreement, effective from
the date hereof. The undersigned confirms that the representations and warranties set forth in Section 6 of the Credit Agreement
are true and correct in all material respects (where not already qualified by materiality, otherwise in all respects) as
to the undersigned as of the date hereof (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 the undersigned shall comply with each of the covenants set forth in Section 8 of the Credit
Agreement applicable to it.

 

Without limiting the
generality of the foregoing, the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound
in all respects by the terms of, the Credit Agreement, including without limitation Section 10 thereof, to the same extent
and with the same force and effect as if the undersigned were a signatory party thereto.

 

The undersigned acknowledges
that this Agreement shall be effective upon its execution and delivery by the undersigned to the Bank, and it shall not be necessary
for the Bank or any of its Affiliates entitled to the benefits hereof, to execute this Agreement or any other acceptance hereof.
This Agreement shall be construed in accordance with and governed by the internal laws of the State of Illinois.

 

	 	Very truly yours,
	 	 
	 	[Name of Subsidiary Guarantor]
	 	 
	 	By	 

	 	Name	 
	 	Title	 

 

    	 

    	 

    

 

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 Transformers Ltd.	 	Quebec	 	100%	 	Pioneer Electrogroup Canada, Inc.
	 	 	 	 	 	 	 
	Pioneer Wind Energy Systems, Inc.	 	Quebec	 	100%	 	Pioneer Electrogroup Canada, Inc.
	 	 	 	 	 	 	 
	Bemag Transformer Inc.	 	Quebec	 	100%	 	Pioneer Electrogroup Canada, Inc.

 

    	 

    	 

    

 

Schedule 6.10

 

Litigation

 

Nexus Manufacturing LLC vs. Jefferson
Electric, Inc., et al. United States District Court for the Southern District of Texas Case No. M-08-352. Case M-08-352 was stayed
by the District Court. The former owners of Nexus Manufacturing LLC re-filed this claim in July 2012 and it was assigned Case No.
M-12-232.

 

    	 

    	 

    

 

Schedule 6.19

 

Collective Bargaining Agreements

 

Collective Bargaining Agreement,
effective January 31, 2011, among Nexus Magneticos de Mexico S de R.L. de C.V. and Sindicato Industrial Autonomo De Operarios
En General De Maquiladoras De Reynosa C.T.M. (Union of Independent Industrial Operators in Reynosa (Mexico) Maquiladoras, C.T.M.).Security Agreement

 

This Security Agreement
(the “Agreement”) is dated as of June 28, 2013, by and among Pioneer Power Solutions, Inc., a Delaware corporation
(the “Borrower”), the other parties executing this Agreement under the heading “Debtors” (the
Borrower and such other parties, along with any parties who execute and deliver to the Secured Party referred to herein an agreement
attached hereto as Schedule H, being hereinafter referred to collectively as the “Debtors” and individually
as a “Debtor”), each with its mailing address as set forth in Section 12(b) hereof, and Bank of Montreal,
a Canadian chartered bank acting through its Chicago branch (the “Secured Party”), with its mailing address
as set forth in Section 12(b) hereof. The term “Debtor” and “Debtors” as used herein shall mean and
include the Debtors collectively and also each individually, with all grants, representations, warranties and covenants of and
by the Debtors, or any of them, herein contained to constitute joint and several grants, representations, warranties and covenants
of and by the Debtors; provided, however, that unless the context in which the same is used shall otherwise require, any
grant, representation, warranty or covenant contained herein related to the Collateral shall be made by each Debtor only with respect
to the Collateral owned by it or represented by such Debtor as owned by it.

 

Preliminary Statement

 

A.           The
Borrower, Jefferson Electric, Inc., Pioneer Critical Power Inc. and the Secured Party have entered into a Credit Agreement dated
as of June 28, 2013 (the Credit Agreement, as the same may be amended or modified from time to time, including amendments and restatements
thereof in its entirety, being referred to herein as the “Credit Agreement”) pursuant to which the Secured Party
may from time to time extend credit or otherwise make financial accommodations available to or for the account of the Borrower.

 

B.           The
Debtors (other than the Borrower) are subsidiaries or affiliates of the Borrower.

 

C.           Each
Debtor provides each of the other Debtors with substantial financial, management, administrative, and technical support.

 

D.           The
interdependent nature of the businesses of the Debtors is such that the viability of each Debtor is dependent upon the continued
success of the other Debtors and, upon the continuation of such Debtor’s business relationships with the other Debtors, and
the continuation thereof necessitates the Borrower’s access to credit and other financial accommodations from the Secured
Party.

 

E.           As
a condition to extending credit or otherwise making financial accommodations available to or for the account of the Borrower (whether
under the Credit Agreement or otherwise), the Secured Party requires, among other things, that each Debtor grant the Secured Party
a security interest in such Debtor’s personal property described herein subject to the terms and conditions hereof.

    	 

    	 

    

 

Now,
Therefore, in consideration of the benefits accruing to the Debtors, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.          Grant
of Security Interest. Each Debtor hereby grants to the Secured Party (for the benefit of itself and as representative for the
benefit of its affiliates) a lien on and security interest in, and acknowledges and agrees that the Secured Party has and shall
continue to have a continuing lien on and security interest in, all right, title, and interest of each Debtor, whether now owned
or existing or hereafter created, acquired or arising, in and to all of the following:

 

(a)          Accounts
(including Healthcare Insurance Receivables, if any);

 

(b)          Chattel
Paper;

 

(c)          Instruments
(including Promissory Notes);

 

(d)          Documents;

 

(e)          General
Intangibles (including Payment Intangibles and Software, patents, trademarks, tradestyles, copyrights, and all other intellectual
property rights, including all applications, registration, and licenses therefor, and all goodwill of the business connected therewith
or represented thereby);

 

(f)          Letter-of-Credit
Rights;

 

(g)          Supporting
Obligations;

 

(h)          Deposit
Accounts;

 

(i)          Investment
Property (including certificated and uncertificated Securities, Securities Accounts, Security Entitlements, Commodity Accounts,
and Commodity Contracts);

 

(j)          Inventory;

 

(k)          Equipment
(including all software, whether or not the same constitutes embedded software, used in the operation thereof);

 

(l)          Fixtures;

 

(m)          Commercial
Tort Claims (as described on Schedule F hereto or on one or more supplements to this Agreement);

 

(n)          Rights
to merchandise and other Goods (including rights to returned or repossessed Goods and rights of stoppage in transit) which is represented
by, arises from, or relates to any of the foregoing;

 

    	-2-

    	 

    

 

(o)          Monies,
personal property, and interests in personal property of such Debtor of any kind or description now held by the Secured Party or
at any time hereafter transferred or delivered to, or coming into the possession, custody, or control of, the Secured Party, or
any agent or affiliate of the Secured Party, whether expressly as collateral security or for any other purpose (whether for safekeeping,
custody, collection or otherwise), and all dividends and distributions on or other rights in connection with any such property;

 

(p)          Supporting
evidence and documents relating to any of the above-described property, including, without limitation, computer programs, disks,
tapes and related electronic data processing media, and all rights of such Debtor to retrieve the same from third parties, written
applications, credit information, account cards, payment records, correspondence, delivery and installation certificates, invoice
copies, delivery receipts, notes, and other evidences of indebtedness, insurance certificates and the like, together with all books
of account, ledgers, and cabinets in which the same are reflected or maintained;

 

(q)          Accessions
and additions to, and substitutions and replacements of, any and all of the foregoing; and

 

(r)          Proceeds
and products of the foregoing, and all insurance of the foregoing and proceeds thereof;

 

all of the foregoing being herein sometimes
referred to as the “Collateral”. All terms which are used in this Agreement which are defined in the Uniform
Commercial Code of the State of Illinois as in effect from time to time (“UCC”) shall have the same meanings
herein as such terms are defined in the UCC, unless this Agreement shall otherwise specifically provide. For purposes of this Agreement,
the term “Receivables” means all rights to the payment of a monetary obligation, whether or not earned by performance,
and whether evidenced by an Account, Chattel Paper, Instrument, General Intangible, or otherwise.

 

Section 2.          Obligations
Hereby Secured. The lien and security interest herein granted and provided for is made and given to secure, and shall secure,
the payment and performance of (a) all Obligations, Hedging Liability and Bank Product Obligations (as such terms are defined
in the Credit Agreement), and (b) any and all expenses and charges, legal or otherwise, suffered or incurred by the Secured Party
or its affiliates in collecting or enforcing any of such Obligations, Hedging Liability and Bank Product Obligations or in realizing
on or protecting or preserving any security therefor, including, without limitation, the lien and security interest granted hereby
(all of the foregoing being hereinafter referred to as the “Secured Obligations”). Notwithstanding anything
in this Agreement to the contrary, (a) the right of recovery against any Debtor (other than the Borrower to which this limitation
shall not apply) under this Agreement shall not exceed $1.00 less than the lowest amount that would render such Debtor’s
obligations under this Agreement void or voidable under applicable law, including fraudulent conveyance law and (b) the Secured
Obligations with respect to any Debtor shall not include any Excluded Swap Obligations (as such term is defined in the Credit Agreement).

 

    	-3-

    	 

    

  

Section 3.          Covenants,
Agreements, Representations and Warranties. The Debtors hereby covenant and agree with, and represents and warrants to, the
Secured Party that:

 

(a)          No
Debtor shall change its jurisdiction of organization without the Secured Party’s prior written consent. Each Debtor is the
sole and lawful owner of its Collateral, and has full right, power, and authority to enter into this Agreement and to perform each
and all of the matters and things herein provided for. Each Debtor’s organizational registration number (if any) is
set forth under its name under Column 1 on Schedule A.

 

(b)          Each
Debtor’s chief executive office is at the location listed under Column 2 on Schedule A attached hereto opposite
such Debtor’s name; and such Debtor has no other executive offices or places of business other than those listed under Column 3
on Schedule A attached hereto opposite such Debtor’s name. The tangible Collateral owned or leased by each Debtor
is and shall remain in such Debtor’s possession or control at the locations listed under Columns 2 and 3 on Schedule A
attached hereto opposite such Debtor’s name (collectively for each Debtor, as such locations may be amended or supplemented
from time to time with written notice to the Secured Party as provided below, the “Permitted Collateral Locations”),
except for (i) tangible Collateral which in the ordinary course of such Debtor’s business is in transit (x) between
Permitted Collateral Locations or (y) to a customer, and (ii) tangible Collateral aggregating less than $200,000 in fair market
value outstanding at any one time. If for any reason any tangible Collateral is at any time kept or located at a location other
than a Permitted Collateral Location, the Secured Party shall nevertheless have and retain a lien on and security interest therein.
The Debtors own and shall at all times own all Permitted Collateral Locations, except to the extent otherwise disclosed under Columns 2
and 3 on Schedule A. No Debtor shall move its chief executive office or maintain a place of business at a location other than
those specified under Columns 2 or 3 on Schedule A, in each case without first providing the Secured Party 30 days’
prior written notice of such Debtor’s intent to do so (at which time Schedule A will be deemed amended or supplemented
with such additional or modified locations); provided that each Debtor shall at all times maintain its chief executive office
and, unless otherwise specifically agreed to in writing by the Secured Party, Permitted Collateral Locations in the United States
of America and, with respect to any new chief executive office or place of business or location of Collateral, such Debtor shall
have taken all action reasonably requested by the Secured Party to maintain the lien and security interest of the Secured
Party in the Collateral at all times fully perfected and in full force and effect.

 

(c)          Each
Debtor’s legal name and jurisdiction of organization is correctly set forth under Column 1 on Schedule A of this
Agreement. No Debtor has transacted business at any time during the immediately preceding five-year period, and does not currently
transact business, under any other legal names or trade names other than the prior legal names and trade names (if any) set forth
on Schedule B attached hereto. No Debtor shall change its legal name or transact business under any other trade name without
first giving 30 days’ prior written notice of its intent to do so to the Secured Party.

 

    	-4-

    	 

    

 

(d)          The
Collateral and every part thereof is and shall be free and clear of all security interests, liens (including, without limitation,
mechanics’, laborers’ and statutory liens), attachments, levies, and encumbrances of every kind, nature and description,
whether voluntary or involuntary, except for the lien and security interest of the Secured Party therein and as otherwise permitted
by Section 8.8 of the Credit Agreement. Each Debtor shall warrant and defend the Collateral against any claims and demands
of all persons at any time claiming the same or any interest in the Collateral adverse to the Secured Party.

 

(e)          Reserved.

 

(f)          No
Debtor shall waste or destroy the Collateral or any part thereof or be negligent in the care or use of any Collateral. Each Debtor
shall perform in all material respects its obligations under any contract or other agreement constituting part of
the Collateral, it being understood and agreed that the Secured Party has no responsibility to perform such obligations.

 

(g)          Reserved.

 

(h)          In
case of any material loss, damage to or destruction of the Collateral or any part thereof, the relevant Debtor shall promptly give
written notice thereof to the Secured Party generally describing the nature and extent of such damage or destruction. In case of
any loss, damage to or destruction of the Collateral or any part thereof, the relevant Debtor, whether or not the insurance proceeds,
if any, received on account of such damage or destruction shall be sufficient for that purpose, at such Debtor’s cost and
expense, shall promptly repair or replace the Collateral so lost, damaged, or destroyed, except to the extent such Collateral,
prior to its loss, damage, or destruction, had become uneconomical, obsolete, or worn out and is not necessary for or of importance
to the proper conduct of such Debtor’s business in the ordinary course. Each Debtor hereby authorizes the Secured Party,
at the Secured Party’s option, to adjust, compromise, and settle any losses under any insurance afforded at any time during
the existence of any Event of Default, and each Debtor does hereby irrevocably constitute the Secured Party, and each of its nominees,
officers, agents, attorneys, and any other person whom the Secured Party may designate, as such Debtor’s attorneys-in-fact,
with full power and authority to effect such adjustment, compromise, and/or settlement and to endorse any drafts drawn by an insurer
of the Collateral or any part thereof and to do everything necessary to carry out such purposes and to receive and receipt for
any unearned premiums due under policies of such insurance. Unless the Secured Party elects to adjust, compromise, or settle losses
as aforesaid, any adjustment, compromise, and/or settlement of any losses under any insurance shall be made by the relevant Debtor
subject to final approval of the Secured Party (regardless of whether or not an Event of Default shall have occurred and is continuing)
in the case of losses exceeding $200,000. All insurance proceeds shall be subject to the lien and security interest of the Secured
Party hereunder.

 

    	-5-

    	 

    

 

Unless
the Debtors provide the Secured Party with evidence of the insurance coverage required by this Agreement, the Secured Party may
purchase insurance at the Debtors’ expense to protect the Secured party’s interests in the Collateral. This insurance
may, but need not, protect the debtors’ interests in the Collateral. The coverage purchased by the Secured Party may not
pay any claims that any Debtor makes or any claim that is made against any Debtor in connection with the Collateral. The relevant
Debtor may later cancel any such insurance purchased by the Secured Party, but only after providing the Secured Party with evidence
that such Debtor has obtained insurance as required by this Agreement. If the Secured Party purchases insurance for the Collateral,
the Debtors will be responsible for the costs of that insurance, including interest and any other charges that the Secured Party
may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Secured Obligations secured hereby. The costs of the insurance may be
more than the cost of insurance the Debtors may be able to obtain on its own. 

 

(i)          Reserved.

 

(j)          If
any Collateral is in the possession or control of any of any Debtor’s agents or processors and the Secured Party so requests,
such Debtor agrees to notify such agents or processors in writing of the Secured Party’s security interest therein and instruct
them to hold all such Collateral for the Secured Party’s account and subject to the Secured Party’s instructions. Each
Debtor shall, upon the request of the Secured Party, authorize and instruct all bailees and other parties, if any, at any time
processing, labeling, packaging, holding, storing, shipping, or transferring all or any part of the Collateral to permit the Secured
Party and its representatives to examine and inspect any of the Collateral then in such party’s possession and to verify
from such party’s own books and records any information concerning the Collateral or any part thereof which the Secured Party
or its representatives may seek to verify. As to any premises not owned by a Debtor wherein any of the Collateral is located, the
relevant Debtor shall, at the Secured Party’s request, cause each party having any right, title or interest in, or lien on,
any of such premises to enter into an agreement (any such agreement to contain a legal description of such premises) whereby such
party disclaims any right, title and interest in, and lien on, the Collateral and allows the removal of such Collateral by the
Secured Party and is otherwise in form and substance reasonably acceptable to the Secured Party; provided, however, that
no such agreement need be obtained with respect to any one location wherein the value of the Collateral as to which such agreement
has not been obtained aggregates less than $200,000 at any one time.

 

(k)          Each
Debtor agrees from time to time to deliver to the Secured Party such evidence of the existence, identity, and location of its Collateral
and of its availability as collateral security pursuant hereto (including, without limitation, schedules describing all Receivables
created or acquired by such Debtor, copies of customer invoices or the equivalent, and original shipping or delivery receipts for
all merchandise and other goods sold or leased or services rendered, together with such Debtor’s warranty of the genuineness
thereof, and reports stating the book value of Inventory and Equipment by major category and location), in each case as the Secured
Party may reasonably request. The Secured Party shall have the right to verify all or any part of the Collateral in any
manner, and through any medium, which the Secured Party considers appropriate (including, without limitation, the verification
of Collateral by use of a fictitious name), and each Debtor agrees to furnish all assistance and information, and perform any acts,
which the Secured Party may reasonably require in connection therewith.

 

(l)          Each
Debtor shall comply in all material respects with the terms and conditions of all leases, easements, right-of-way agreements, and
other similar agreements binding upon such Debtor or affecting the Collateral or any part thereof.

 

    	-6-

    	 

    

 

(m)          Schedule C
attached hereto contains a true, complete, and current listing of all patents, trademarks, tradestyles, copyrights, and other intellectual
property rights (including all registrations and applications therefor) owned by the Debtors as of the date hereof that are registered
with any governmental authority. The Debtors shall promptly notify the Secured Party in writing of any additional intellectual
property rights acquired or arising after the date hereof, and shall submit to the Secured Party a supplement to Schedule C
to reflect such additional rights (provided any Debtor’s failure to do so shall not impair the Secured Party’s security
interest therein). Each Debtor owns or possesses rights to use all franchises, licenses, patents, trademarks, trade names, tradestyles,
copyrights, and rights with respect to the foregoing which are required to conduct its business. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and the Debtors are not
liable to any person for infringement under applicable law with respect to any such rights as a result of its business operations.

 

(n)          Schedule F
attached hereto contains a true, complete and current listing of all Commercial Tort Claims held by the Debtors as of the date
hereof, each described by reference to the specific incident giving rise to the claim. Each Debtor agrees to execute and deliver
to the Secured Party a supplement to this Agreement in the form attached hereto as Schedule G, or in such other form acceptable
to the Secured Party, promptly upon becoming aware of any other Commercial Tort Claim held or maintained by such Debtor arising
after the date hereof (provided such Debtor’s failure to do so shall not impair the Secured Party’s security interest
therein).

 

(o)          Each
Debtor agrees to execute and deliver to the Secured Party such further agreements, assignments, instruments, and documents and
to do all such other things as the Secured Party may reasonably deem necessary or appropriate to assure the Secured Party its lien
and security interest hereunder, including, without limitation, (i) such financing statements, and amendments thereof or supplements
thereto, and such other instruments and documents as the Secured Party may from time to time reasonably require in order to comply
with the UCC and any other applicable law, (ii) such agreements with respect to patents, trademarks, copyrights, and similar
intellectual property rights as the Secured Party may from time to time reasonably require to comply with the filing requirements
of the United States Patent and Trademark Office and the United States Copyright Office, and (iii) such control agreements
with respect to all Deposit Accounts, Investment Property, Letter-of-Credit Rights, and electronic Chattel Paper, and to cause
the relevant depository institutions, financial intermediaries, and issuers to execute and deliver such control agreements, as
the Secured Party may from time to time reasonably require. Each Debtor hereby agrees that a carbon, photographic, or other reproduction
of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Secured Party without
notice thereof to such Debtor wherever the Secured Party in its sole discretion desires to file the same. Each Debtor hereby authorizes
the Secured Party to file any and all financing statements covering the Collateral or any part thereof as the Secured Party may
require, including financing statements describing the Collateral as “all assets” or “all personal property”
or words of like meaning. The Secured Party may order lien searches from time to time against each Debtor and the Collateral, and
the Debtor shall promptly reimburse the Secured Party for all reasonable costs and expenses incurred in connection with such lien
searches. In the event for any reason the law of any jurisdiction other than Illinois becomes or is applicable to the Collateral
or any part thereof, or to any of the Secured Obligations, each Debtor agrees to execute and deliver all such instruments and documents
and to do all such other things as the Secured Party in its sole discretion deems necessary or appropriate to preserve,
protect, and enforce the lien and security interest of the Secured Party under the law of such other jurisdiction. Each Debtor
agrees to mark its books and records to reflect the lien and security interest of the Secured Party in the Collateral.

 

    	-7-

    	 

    

 

 (p)          On
failure of any Debtor to perform any of the material covenants and agreements herein contained, the Secured Party may, at its
option, perform the same and in so doing may expend such sums as the Secured Party may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, liens, and encumbrances,
expenditures made in defending against any adverse claims, and all other expenditures which the Secured Party may be compelled
to make by operation of law or which the Secured Party may make by agreement or otherwise for the protection of the security hereof.
All such sums and amounts so expended shall be repayable by the relevant Debtor immediately without notice or demand, shall constitute
additional Secured Obligations secured hereunder and shall bear interest from the date said amounts are expended at the rate per
annum determined in accordance with Section 2.9(e) of the Credit Agreement (such rate per annum as so determined being hereinafter
referred to as the “Default Rate”). No such performance of any covenant or agreement by the Secured Party on
behalf of any Debtor, and no such advancement or expenditure therefor, shall relieve the Debtor of any default under the terms
of this Agreement or in any way obligate the Secured Party to take any further or future action with respect thereto. The Secured
Party, in making any payment hereby authorized, may do so according to any bill, statement, or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement, or estimate or
into the validity of any tax assessment, sale, forfeiture, tax lien, or title or claim. The Secured Party, in performing any act
hereunder, shall be the sole judge of whether any Debtor is required to perform same under the terms of this Agreement. The Secured
Party is hereby authorized to charge any account of the relevant Debtor maintained with the Secured Party for the amount of such
sums and amounts so expended.

 

Section 4.          Special
Provisions Re: Receivables. (a) As of the time any Receivable owned by a Debtor becomes subject to the security interest
provided for hereby, and at all times thereafter, such Debtor shall be deemed to have warranted as to each and all of such Receivables
that all warranties of such Debtor set forth in this Agreement are true and correct with respect to each such Receivable; that
each Receivable and all papers and documents relating thereto are genuine and in all respects what they purport to be; that no
surety bond was required or given in connection with such Receivable or the contracts or purchase orders out of which the same
arose; that the amount of the Receivable represented as owing is the correct amount actually and unconditionally owing, except
for normal cash discounts on normal trade terms in the ordinary course of business; and that the amount of such Receivable represented
as owing is not disputed and is not subject to any set-offs, credits, deductions, or countercharges other than those arising in
the ordinary course of such Debtor’s business which are disclosed to the Secured Party in writing promptly upon such Debtor
becoming aware thereof. Without limiting the foregoing, if any Receivable arises out of a contract with the United States of America,
or any state or political subdivision thereof, or any department, agency, or instrumentality of any of the foregoing, each Debtor
agrees to notify the Secured Party and, at the Secured Party’s request, execute whatever instruments and documents are required
by the Secured Party in order that such Receivable shall be assigned to the Secured Party and that proper notice of such assignment
shall be given under the federal Assignment of Claims Act (or any successor statute) or any similar state or local statute, as
the case may be.

 

    	-8-

    	 

    

  

(b)          Unless
and until an Event of Default exists, any merchandise or other goods which are returned by a customer or account debtor or otherwise
recovered may be resold by a Debtor in the ordinary course of its business as presently conducted in accordance with Section 6(b)
hereof; and, during the existence of any Event of Default, such merchandise and other goods shall be set aside at the request of
the Secured Party and held by the relevant Debtor as trustee for the Secured Party and shall remain part of the Secured Party’s
Collateral. Unless and until an Event of Default exists, the Debtors may settle and adjust disputes and claims with its customers
and account debtors, handle returns and recoveries, and grant discounts, credits, and allowances in the ordinary course of its
business as presently conducted for amounts and on terms which the relevant Debtor in good faith considers advisable; and, during
the existence of any Event of Default, at the Secured Party’s request, the Debtors shall notify the Secured Party promptly
of all returns and recoveries and, on the Secured Party’s request, deliver any such merchandise or other goods to the Secured
Party. During the existence of any Event of Default, at the Secured Party’s request, the Debtor shall also notify the Secured
Party promptly of all disputes and claims and settle or adjust them at no expense to the Secured Party, but no discount, credit,
or allowance other than on normal trade terms in the ordinary course of business as presently conducted shall be granted to any
customer or account debtor and no returns of merchandise or other goods shall be accepted by any Debtor without the Secured Party’s
consent. The Secured Party may, at all times during the existence of any Event of Default, settle or adjust disputes and claims
directly with customers or account debtors for amounts and upon terms which the Secured Party considers reasonably advisable.

 

(c)          Reserved.

 

Section 5.          Collection
of Receivables. (a) Except as otherwise provided in this Agreement, the Debtors shall make collection of all Receivables
and may use the same to carry on its business in accordance with sound business practice and otherwise subject to the terms hereof.

 

(b)          Upon
the occurrence and during the continuance of any Event of Default, whether or not the Secured Party has exercised any or all of
its rights under other provisions of this Section 5, in the event the Secured Party requests any applicable Debtor to do so:

 

(i)          all
Instruments and Chattel Paper at any time constituting part of the Receivables or any other Collateral (including any postdated
checks) shall, upon receipt by such Debtor, be immediately endorsed to and deposited with the Secured Party; and/or

 

(ii)         such
Debtor shall instruct all customers and account debtors to remit all payments in respect of Receivables or any other Collateral
to a lockbox or lockboxes under the sole custody and control of the Secured Party and which are maintained at post office(s) in
Chicago, Illinois selected by the Secured Party.

 

    	-9-

    	 

    

  

(c)          Upon
the occurrence and during the continuance of any Event of Default, whether or not the Secured Party has exercised any or
all of its rights under other provisions of this Section 5, the Secured Party or its designee may notify the Debtors’
customers and account debtors at any time that Receivables or any other Collateral have been assigned to the Secured Party or of
the Secured Party’s security interest therein, and either in its own name, or the relevant Debtor’s name, or both,
demand, collect (including, without limitation, through a lockbox analogous to that described in Section 5(b)(ii) hereof),
receive, receipt for, sue for, compound, and give acquittance for any or all amounts due or to become due on Receivables or any
other Collateral, and in the Secured Party’s discretion file any claim or take any other action or proceeding which the Secured
Party may deem reasonably necessary or appropriate to protect or realize upon the security interest of the Secured Party
in the Receivables or any other Collateral.

 

(d)          Any
proceeds of Receivables or other Collateral transmitted to or otherwise received by the Secured Party pursuant to any of the provisions
of Sections 5(b) or 5(c) hereof may be handled and administered by the Secured Party in and through a remittance account at
the Secured Party, and the Debtors acknowledge that the maintenance of such remittance account by the Secured Party is solely for
the Secured Party’s convenience and that the Debtors do not have any right, title, or interest in such remittance account.
The Secured Party may, after the occurrence and during the continuation of any Event of Default, apply all or any part of any proceeds
of Receivables or other Collateral received by it from any source to the payment of the Secured Obligations (whether or not then
due and payable), such applications to be made in such amounts, in such manner and order and at such intervals as the Secured Party
may from time to time in its discretion determine, but not less often than once each week. The Secured Party need not apply or
give credit for any item included in proceeds of Receivables or other Collateral until the Secured Party has received final payment
therefor at its office in cash or final solvent credits current in Chicago, Illinois, acceptable to the Secured Party as such.
However, if the Secured Party does give credit for any item prior to receiving final payment therefor and the Secured Party fails
to receive such final payment or an item is charged back to the Secured Party for any reason, the Secured Party may at its election
in either instance charge the amount of such item back against the remittance account or any account of the relevant Debtor maintained
with the Secured Party, together with interest thereon at the Default Rate. Concurrently with each transmission of any proceeds
of Receivables or other Collateral to the remittance account, each Debtor shall furnish the Secured Party with a report in such
form as the Secured Party shall reasonably require identifying the particular Receivable or other Collateral from which the same
arises or relates. Unless and until an Event of Default exists, the Secured Party will release proceeds of Collateral which the
Secured Party has not applied to the Secured Obligations as provided above from the remittance account from time to time promptly
after receipt thereof. The Secured Party shall have no liability or responsibility to any Debtor for accepting any check, draft
or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive
legend or endorsement whatsoever or be responsible for determining the correctness of any remittance.

 

Section 6.          Special
Provisions Re: Inventory and Equipment. (a) Reserved.

 

(b)          Reserved.

 

    	-10-

    	 

    

  

(c)          Reserved.

 

(d)          Each
Debtor warrants and agrees that no Inventory owned by it is or will be consigned to any other person without the Secured Party’s
prior written consent.

 

(e)          Upon
the Secured Party’s request, each Debtor shall at its own cost and expense cause the lien of the Secured Party in and to
any portion of the Collateral subject to a certificate of title law to be duly noted on such certificate of title or to be otherwise
filed in such manner as is prescribed by law in order to perfect such lien and shall cause all such certificates of title and evidences
of lien to be deposited with the Secured Party.

 

(f)          Except
for Equipment from time to time located on the real estate described on Schedule D attached hereto and as otherwise disclosed
to the Secured Party in writing, none of the Equipment is or will be attached to real estate in such a manner that the same may
become a fixture.

 

(g)          If
any of the Inventory is at any time evidenced by a document of title, such document shall be promptly delivered by the relevant
Debtor to the Secured Party except to the extent the Secured Party specifically requests such Debtor not to do so with respect
to any such document.

 

Section 7.          Special
Provisions Re: Investment Property and Deposits. (a) Unless and until an Event of Default has occurred and is continuing
and thereafter until notified to the contrary by the Secured Party pursuant to Section 9(d) hereof:

 

(i)          the
Debtors shall be entitled to exercise all voting and/or consensual powers pertaining to the Investment Property or any part thereof,
for all purposes not inconsistent with the terms of this Agreement or any other document evidencing or otherwise relating to any
Secured Obligations; and

 

(ii)         the
Debtors shall be entitled to receive and retain all cash dividends paid upon or in respect of the Investment Property.

 

(b)          All
Investment Property (including all securities, certificated or uncertificated, securities accounts, and commodity accounts) of
the Debtors on the date hereof is listed and identified on Schedule E attached hereto and made a part hereof. Each Debtor
shall promptly notify the Secured Party of any other Investment Property acquired or maintained by such Debtor after the date hereof,
and shall submit to the Secured Party a supplement to Schedule E to reflect such additional rights (provided such Debtor’s
failure to do so shall not impair the Secured Party’s security interest therein). Certificates for all certificated
securities now or at any time constituting Investment Property shall be promptly delivered by the Debtors to the Secured Party
duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or an appropriate undated stock
power or powers, in every case sufficient to transfer title thereto, including, without limitation, all stock received in respect
of a stock dividend or resulting from a split-up, revision, or reclassification
of the Investment Property or any part thereof or received in addition to, in substitution of, or in exchange for the Investment
Property or any part thereof as a result of a merger, consolidation, or otherwise. With respect to any uncertificated securities
or any Investment Property held by a securities intermediary, commodity intermediary, or other financial intermediary of any kind,
at the Secured Party’s request, the Debtors shall execute and deliver, and shall cause any such issuer or intermediary to
execute and deliver, an agreement among the relevant Debtor, the Secured Party, and such issuer or intermediary in form and substance
reasonably satisfactory to the Secured Party which provides, among other things, for the intermediary’s agreement
that it shall comply with entitlement orders, and apply any value distributed on account of any such Investment Property, as directed
by the Secured Party without further consent by any Debtor. The Secured Party may at any time, after the occurrence and during
the continuance of an Event of Default, cause to be transferred into its name or the name of its nominee or nominees all or any
part of the Investment Property hereunder.

 

    	-11-

    	 

    

 

(c)          Reserved.

 

(d)          The
Debtors represent that on the date of this Agreement, none of the Investment Property consists of margin stock (as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System) except to the extent the Debtors have delivered
to the Secured Party a duly executed and completed Form U-1 with respect to such stock. If at any time the Investment Property
or any part thereof consists of margin stock, the Debtors shall promptly so notify the Secured Party and deliver to the Secured
Party a duly executed and completed Form U-1 and such other instruments and documents reasonably requested by the Secured
Party in form and substance reasonably satisfactory to the Secured Party.

 

(e)          Notwithstanding
anything to the contrary contained herein, in the event any Investment Property is subject to the terms of a separate security
agreement in favor of the Secured Party, the terms of such separate security agreement shall govern and control unless otherwise
agreed to in writing by the Secured Party.

 

(f)          All
Deposit Accounts of the Debtors on the date hereof are listed and identified (by account number and depository institution) on
Schedule E attached hereto and made a part hereof. Each Debtor shall promptly notify the Secured Party of any other Deposit
Account opened or maintained by such Debtor after the date hereof, and shall submit to the Secured Party a supplement to Schedule E
to reflect such additional accounts (provided such Debtor’s failure to do so shall not impair the Secured Party’s security
interest therein). With respect to any Deposit Account maintained by a depository institution other than the Secured Party, and
as a condition to the establishment and maintenance of any such Deposit Account except as otherwise agreed to in writing by the
Secured Party, such Debtor, the depository institution, and the Secured Party shall execute and deliver an account control agreement
in form and substance reasonably satisfactory to the Secured Party which provides, among other things, for the depository institution’s
agreement that it will comply with instructions originated by the Secured Party directing the disposition of the funds in the Deposit
Account without further consent by such Debtor.

 

    	-12-

    	 

    

  

Section 8.          Power
of Attorney. In addition to any other powers of attorney contained herein, each Debtor hereby appoints the Secured Party, its
nominee, and any other person whom the Secured Party may designate, as such Debtor’s attorney-in-fact, with full power and
authority upon the occurrence and during the continuation of any Event of Default to sign such Debtor’s name on verifications
of Receivables and other Collateral; to send requests for verification of Collateral to such Debtor’s customers, account
debtors, and other obligors; to endorse such Debtor’s name on any checks, notes, acceptances, money orders, drafts, and any
other forms of payment or security that may come into the Secured Party’s possession or on any assignments, stock powers,
or other instruments of transfer relating to the Collateral or any part thereof; to sign such Debtor’s name on any invoice
or bill of lading relating to any Collateral, on claims to enforce collection of any Collateral, on notices to and drafts against
customers and account debtors and other obligors, on schedules and assignments of Collateral, on notices of assignment and on public
records; to notify the post office authorities to change the address for delivery of such Debtor’s mail to an address designated
by the Secured Party; to receive, open and dispose of all mail addressed to such Debtor; and to do all things necessary to carry
out this Agreement. Each Debtor hereby ratifies and approves all acts of any such attorney and agrees that neither the Secured
Party nor any such attorney will be liable for any acts or omissions or for any error of judgment or mistake of fact or law other
than such person’s gross negligence or willful misconduct. The Secured Party may file one or more financing statements disclosing
its security interest in any or all of the Collateral without the relevant Debtor’s signature appearing thereon. Each Debtor
also hereby grants the Secured Party a power of attorney to execute any such financing statements, or amendments and supplements
to financing statements, on behalf of such Debtor without notice thereof to such Debtor. The foregoing powers of attorney, being
coupled with an interest, are irrevocable until the Secured Obligations have been fully paid and satisfied and all agreements of
the Secured Party to extend credit to or for the account of the Borrower have expired or otherwise have been terminated.

 

Section 9.          Defaults
and Remedies. (a)  The occurrence of any event or the existence of any condition specified as an “Event of Default”
under the Credit Agreement shall constitute an “Event of Default” hereunder.

 

(b)          Upon
the occurrence and during the continuation of any Event of Default, the Secured Party shall have, in addition to all rights provided
herein or by law, the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction
where the rights or remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further the
Secured Party may, without demand and without advertisement, notice, hearing, or process of law, all of which the Debtors hereby
waive, at any time or times, sell and deliver all or any part of the Collateral (and any other property of the Debtors attached
thereto or found therein) held by or for it at public or private sale, for cash, upon credit, or otherwise, at such prices and
upon such terms as the Secured Party deems advisable, in its sole discretion. In addition to all other sums due the Secured Party
hereunder, the Debtors shall pay the Secured Party all costs and expenses incurred by the Secured Party, including attorneys’
fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or the Secured Obligations or in the prosecution
or defense of any action or proceeding by or against the Secured Party or any Debtor concerning any matter arising out of or connected
with this Agreement or the Collateral or the Secured Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the United States Bankruptcy Code (or any successor statute). Any requirement of
reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to each Debtor in accordance
with Section 12(b) hereof at least 10 days before the time of sale or other event giving rise to the requirement of
such notice; provided however, no notification need be given to any Debtor if such Debtor has signed, after an Event of
Default has occurred, a statement renouncing any right to notification of sale or other intended disposition. The Secured Party
shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. The Secured
Party may be the purchaser at any such sale. Each Debtor hereby waives all of its rights of redemption from any such sale. The
Secured Party may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the
time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale was postponed
or the Secured Party may further postpone such sale by announcement made at such time and place. The Secured Party has no obligation
to prepare the Collateral for sale. The Secured Party may sell or otherwise dispose of the Collateral without giving any warranties
as to the Collateral or any part thereof, including disclaimers of any warranties of title or the like, and each Debtor acknowledges
and agrees that the absence of such warranties shall not render the disposition commercially unreasonable.

 

    	-13-

    	 

    

 

(c)          Without
in any way limiting the foregoing, upon the occurrence and during the continuation of any Event of Default, the Secured Party shall
have the right, in addition to all other rights provided herein or by law, to take physical possession of any and all of the Collateral
and anything found therein, the right for that purpose to enter without legal process any premises where the Collateral may be
found (provided such entry be done lawfully), and the right to maintain such possession on the relevant Debtor’s premises
(each Debtor hereby agreeing to lease such premises without cost or expense to the Secured Party or its designee if the Secured
Party so requests) or to remove the Collateral or any part thereof to such other places as the Secured Party may desire. Upon the
occurrence and during the continuation of any Event of Default, the Secured Party shall have the right to exercise any and all
rights with respect to all Deposit Accounts of each Debtor including, without limitation, the right to direct the disposition of
the funds in each Deposit Account and to collect, withdraw, and receive all amounts due or to become due or payable under each
such Deposit Account. Upon the occurrence and during the continuation of any Event of Default, each Debtor shall, upon the Secured
Party’s demand, promptly assemble the Collateral and make it available to the Secured Party at a place designated by the
Secured Party. If the Secured Party exercises its right to take possession of the Collateral, the relevant Debtor shall also at
its expense perform any and all other steps requested by the Secured Party to preserve and protect the security interest hereby
granted in the Collateral, such as placing and maintaining signs indicating the security interest of the Secured Party, appointing
overseers for the Collateral, and maintaining Collateral records.

 

    	-14-

    	 

    

 

(d)          Without
in any way limiting the foregoing, upon the occurrence and during the continuation of any Event of Default, all rights of each
Debtor to exercise the voting and/or consensual powers which it is entitled to exercise pursuant to Section 7(a)(i) hereof
and/or to receive and retain the distributions which it is entitled to receive and retain pursuant to Section 7(a)(ii) hereof,
shall, at the option of the Secured Party, cease and thereupon become vested in the Secured Party, which, in addition to all other
rights provided herein or by law, shall then be entitled solely and exclusively to exercise all voting and other consensual powers
pertaining to the Investment Property (including, without limitation, the right to deliver notice of control with respect to any
Investment Property held in a securities account or commodity account and deliver all entitlement orders with respect thereto)
and/or to receive and retain the distributions which any Debtor would otherwise have been authorized to retain pursuant to Section 7(a)(ii)
hereof and shall then be entitled solely and exclusively to exercise any and all rights of conversion, exchange, or subscription
or any other rights, privileges, or options pertaining to any Investment Property as if the Secured Party were the
absolute owner thereof. Without limiting the foregoing, the Secured Party shall have the right to exchange, at its discretion,
any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization, or other readjustment
of the respective issuer thereof or upon the exercise by or on behalf of any such issuer or the Secured Party of any right, privilege,
or option pertaining to any Investment Property and, in connection therewith, to deposit and deliver any and all of the Investment
Property with any committee, depositary, transfer agent, registrar, or other designated agency upon such terms and conditions as
the Secured Party may determine. In the event the Secured Party in good faith believes any of the Collateral constitutes restricted
securities within the meaning of any applicable securities laws, any disposition thereof in compliance with such laws shall not
render the disposition commercially unreasonable.

 

(e)          Without
in any way limiting the foregoing, each Debtor hereby grants to the Secured Party a royalty-free irrevocable license and right
to use all of such Debtor’s patents, patent applications, patent licenses, trademarks, trademark registrations, trademark
licenses, trade names, trade styles, copyrights, copyright applications, copyright licenses, and similar intangibles in connection
with any foreclosure or other realization by the Secured Party on all or any part of the Collateral upon the occurrence and during
the continuance of an Event of Default. The license and right granted the Secured Party hereby shall be without any royalty or
fee or charge whatsoever.

 

(f)          The
powers conferred upon the Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose on
it any duty to exercise such powers. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation
of the Collateral in its possession or control if such Collateral is accorded treatment substantially equivalent to that which
the Secured Party accords its own property, consisting of similar type assets, it being understood, however, that the Secured Party
shall have no responsibility for ascertaining or taking any action with respect to calls, conversions, exchanges, maturities, tenders,
or other matters relating to any such Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters.
This Agreement constitutes an assignment of rights only and not an assignment of any duties or obligations of the Debtors, or any
of them, in any way related to the Collateral, and the Secured Party shall have no duty or obligation to discharge any such duty
or obligation. The Secured Party shall have no responsibility for taking any necessary steps to preserve rights against any parties
with respect to any Collateral or initiating any action to protect the Collateral against the possibility of a decline in market
value. Neither the Secured Party nor any party acting as attorney for the Secured Party shall be liable for any acts or omissions
or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct.

 

    	-15-

    	 

    

 

(g)          Failure
by the Secured Party to exercise any right, remedy, or option under this Agreement or any other agreement between the Debtors,
or any of them, and the Secured Party or provided by law, or delay by the Secured Party in exercising the same, shall not operate
as a waiver; and no waiver by the Secured Party shall be effective unless it is in writing and then only to the extent specifically
stated. The rights and remedies of the Secured Party under this Agreement shall be cumulative and not exclusive of any other right
or remedy which the Secured Party may have. For purposes of this Agreement, an Event of Default shall be construed as continuing
after its occurrence until waived in writing by the Secured Party.

 

Section 10.         Application
of Proceeds. The proceeds and avails of the Collateral at any time received by the Secured Party after the occurrence and during
the continuation of any Event of Default shall, when received by the Secured Party in cash or its equivalent, be applied by the
Secured Party as follows:

 

(i)          first,
to the payment and satisfaction of all sums paid and costs and expenses incurred by the Secured Party hereunder or otherwise in
connection herewith, including such monies paid or incurred in connection with protecting, preserving or realizing upon the Collateral
or enforcing any of the terms hereof, including attorneys’ fees and court costs, together with any interest thereon (but
without preference or priority of principal over interest or of interest over principal), to the extent the Secured Party is not
reimbursed therefor by the Debtors; and

 

(ii)         second,
to the payment and satisfaction of the remaining Secured Obligations, whether or not then due (in whatever order the Secured Party
elects), both for interest and principal.

 

The Debtors shall remain liable to the
Secured Party for any deficiency. Any surplus remaining after the full payment and satisfaction of the foregoing shall be returned
to the Debtors or to whomsoever the Secured Party reasonably determines is lawfully entitled thereto.

 

Section 11.         Continuing
Agreement. This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect until
all of the Secured Obligations, both for principal and interest, have been fully paid and satisfied and all agreements of the Secured
Party to extend credit to or for the account of the Borrower have expired or otherwise have been terminated. Upon such termination
of this Agreement, the Secured Party shall, upon the request and at the expense of the Debtors, forthwith release its security
interest hereunder.

 

Section 12.         Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the rights, privileges, remedies, and options given
to the Secured Party hereunder shall inure to the benefit of its successors and assigns, and all the terms, conditions, covenants,
agreements, representations, and warranties of and in this Agreement shall bind the Debtors and their legal representatives, successors
and assigns, provided that no Debtor may assign its rights or delegate its duties hereunder without the Secured Party’s prior
written consent.

 

(b)          All
notices and other communications provided for herein shall be effectuated (a) in the case of notices to Secured Party, in
the manner provided for in the Credit Agreement, and (b) in the case of notices to any Debtor, in the manner provided for
in the Credit Agreement. Each Debtor appoints the Borrower such Debtor’s agent, and the Borrower shall act as agent for each
other Debtor, for receipt of notices and other communications pursuant to the Loan Documents.

 

    	-16-

    	 

    

 

(c)          In
the event and to the extent that any provision hereof shall be deemed to be invalid or unenforceable by reason of the operation
of any law or by reason of the interpretation placed thereon by any court, this Agreement shall to such extent be construed as
not containing such provision, but only as to such locations where such law or interpretation is operative, and the invalidity
or unenforceability of such provision shall not affect the validity of any remaining provisions hereof, and any and all other provisions
hereof which are otherwise lawful and valid shall remain in full force and effect. Without limiting the generality of the foregoing,
in the event that this Agreement shall be deemed to be invalid or otherwise unenforceable with respect to any Debtor, such invalidity
or unenforceability shall not affect the validity of this Agreement with respect to the other Debtors.

 

(d)          The
lien and security interest herein created and provided for stand as direct and primary security for the Secured Obligations. No
application of any sums received by the Secured Party in respect of the Collateral or any disposition thereof to the reduction
of the Secured Obligations or any part thereof shall in any manner entitle any Debtor to any right, title or interest in or to
the Secured Obligations or any collateral or security therefor, whether by subrogation or otherwise, unless and until all Secured
Obligations have been fully paid and satisfied and all agreements of the Secured Party to extend credit to or for the account of
each Debtor have expired or otherwise have been terminated. Each Debtor acknowledges that the lien and security interest hereby
created and provided are absolute and unconditional and shall not in any manner be affected or impaired by any acts of omissions
whatsoever of the Secured Party or any other holder of any Secured Obligations, and without limiting the generality of the foregoing,
the lien and security interest hereof shall not be impaired by any acceptance by the Secured Party or any other holder of any Secured
Obligations of any other security for or guarantors upon any of the Secured Obligations or by any failure, neglect or omission
on the part of the Secured Party or any other holder of any Secured Obligations to realize upon or protect any of the Secured Obligations
or any collateral or security therefor. The lien and security interest hereof shall not in any manner be impaired or affected by
(and the Secured Party, without notice to anyone, is hereby authorized to make from time to time) any sale, pledge, surrender,
compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or
disposition of any of the Secured Obligations or of any collateral or security therefor, or of any guaranty thereof, or of any
instrument or agreement setting forth the terms and conditions pertaining to any of the foregoing. The Secured Party may at its
discretion at any time grant credit to any Debtor without notice to the other Debtors in such amounts and on such terms as the
Secured Party may elect (all of such to constitute additional Secured Obligations hereby secured) without in any manner impairing
the lien and security interest created and provided for herein. In order to realize hereon and to exercise the rights granted the
Secured Party hereunder and under applicable law, there shall be no obligation on the part of the Secured Party or any other holder
of any Secured Obligations at any time to first resort for payment to any one or more Debtors or to any guaranty of the Secured
Obligations or any portion thereof or to resort to any other collateral, security, property, liens or any other rights or remedies
whatsoever, and the Secured Party shall have the right to enforce this Agreement against any Debtor or any of its Collateral irrespective
of whether or not other proceedings or steps seeking resort to or realization upon or from any of the foregoing are pending.

 

    	-17-

    	 

    

 

(e)          In
the event the Secured Party shall at any time in its discretion permit a substitution of Debtors hereunder or a party shall wish
to become a Debtor hereunder, such substituted or additional Debtor shall, upon executing an agreement in the form attached hereto
as Schedule H, become a party hereto and be bound by all the terms and conditions hereof to the same extent as though such
Debtor had originally executed this Agreement and, in the case of a substitution, in lieu of the Debtor being replaced. Any such
agreement shall contain information as to such Debtor necessary to update Schedule A, B, C, D, E, and F hereto with respect
to it. No such substitution shall be effective absent the written consent of the Secured Party nor shall it in any manner affect
the obligations of the other Debtors hereunder.

 

(f)          This
Agreement shall be deemed to have been made in the State of Illinois and shall be governed by, and construed in accordance with,
the laws of the State of Illinois. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.

 

(g)          This
Agreement may be executed in any number of counterparts and by different parties hereto on separate counterpart signature pages,
each constituting an original, but all together one and the same instrument. Each Debtor acknowledges that this Agreement is and
shall be effective upon its execution and delivery by such Debtor to the Secured Party, and it shall not be necessary for the Secured
Party to execute this Agreement or any other acceptance hereof or otherwise to signify or express its acceptance hereof.

 

(h)          Each
Debtor hereby submits to the non-exclusive jurisdiction of the United States District Court for the Northern District of Illinois
and of any Illinois state court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each Debtor irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and
any claim that any such proceeding brought in such a court has been brought in an inconvenient form. The
Debtors and the Secured Party each hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby.

 

[Signature
Page to Follow]

 

    	-18-

    	 

    

 

In
Witness Whereof, the Debtors have caused this Security Agreement to be duly executed and delivered as of the date and year
first above written.

  

	 	Pioneer Power Solutions, Inc.
	 	 
	 	By:	/s/ Andrew Minkow
	 	 	Name:  	Andrew Minkow
	 	 	Title:  	Chief Financial Officer

 

	 	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

 

[Signature Page to Security Agreement]

 

    	 

    	 

    

  

Accepted and agreed
to in Chicago, Illinois as of the date and year first above written.

 

	 	Bank
of Montreal, acting through its Chicago Branch
	 	 
	 	By:	  /s/ Larry Allan Swiniarski
	 	 	Name:	Larry Alan Swiniarski
	 	 	Title:	Director

 

[Signature Page to Security Agreement]

 

    	 

    	 

    

 

Schedule A

 

Locations

 

	Column 1	Column 2	Column 3
	 	 	 
	Name of Debtor  (and

State of Organization

and Organizational

Registration Number)	Chief Executive Office

(and name of record

owner of such Location)	Additional Places of

Business and Collateral

Locations (and name of

record owner of such

Locations)
	 	 	 
	Pioneer Power Solutions, Inc.

(Delaware; 4757949)	400 Kelby Street, 9th Floor

Fort Lee, NJ  07024	400 Kelby Street, 9th Floor, Fort Lee, New Jersey 07024
	 	 	 
	Jefferson Electric, Inc. 

 (Delaware; 4818480)	9650 S. Franklin Drive

Franklin, WI  53132-8847	1011 West 46th Avenue, Denver, Colorado 80211
	 	 	 
			3145 N.W. 38th Street, Miami, Florida 33142
	 	 	 
	 	 	790-B Great Southwest Parkway, Atlanta, Georgia 30336
	 	 	 
	 	 	159 Plantation Road, Harahan, Louisiana 70123
	 	 	 
	 	 	7500 Intervale Avenue, Detroit, Michigan 48238
	 	 	 
	 	 	63-15 Traffic Avenue, Ridgewood, New York 11385
	 	 	 
	 	 	3501 Croton Avenue, Cleveland, Ohio 44115
	 	 	 
	 	 	8180 Bourbon Street, Oklahoma City, Oklahoma 73128
	 	 	 
	 	 	1231 Ford Road, Bensalem, Pennsylvania 19020
	 	 	 
	 	 	4650 South Pinemont, Suite 125, Houston, Texas 77041
	 	 	 
	 	 	10501 South Jackson Road, Suite Number 100, Pharr, Texas 78577
	 	 	 
	 	 	7828 South 200th Street, Kent, Washington 98032
	 	 	 
	 	 	9650 South Franklin Drive, Franklin, Wisconsin 53132-8847
	 	 	 
	 	 	3601 Jurupa Street, Ontario, California 91761
	 	 	 
	 	 	2071 Ringwood Avenue, San Jose, California 95131

 

    	 

    	 

    

 

	 	 	351 West Touhy Avenue, Suite 190, Des Plaines, Illinois 60018
	 	 	 
	Pioneer Critical Power Inc.

(Delaware; 4906256)	9210 Wyoming Avenue North

Suite 250

Minneapolis, MN  55445	9210 Wyoming Avenue North, Suite 250, Minneapolis, Minnesota 55445

 

    	 

    	 

    

 

Schedule B

 

Other Names

 

		A.	Prior
                                                                              Legal Names

 

Power Systems Solutions, Inc.

 

Pioneer Sales USA Inc.

 

Pioneer Wind Energy Services,
Inc.

 

JEI Acquisition Corp.

 

Sierra Concepts, Inc.

 

		B.	Trade
                                                                              Names

 

None.

 

    	 

    	 

    

 

Schedule C

 

Intellectual Property Rights

 

A.           Trademarks

 

	Debtor	Marks	Reg. No.	Reg. Date
	 	 	 	 
	Jefferson Electric, Inc.	Jefferson Electric	4124485	April 10, 2012
	Jefferson Electric, Inc.	Jefferson	4124484	April 10, 2012
	Jefferson Electric, Inc.	Solartran Tanning Bed Transformers	3095087	May 23, 2006
	 	 	 	 
	Jefferson Electric, Inc.	Jefferson Electric	2179377	August 4, 1998
	Pioneer Power Solutions, Inc.	Pioneer	4076679	December 27, 2011
	Pioneer Power Solutions, Inc.	P T	4022410	September 6, 2011
	Pioneer Power Solutions, Inc.	P T Transformateurs LTEE Pioneer Transformers LTD	3988192	July 5, 2011

 

B.           Patents

 

None.

 

C.           Copyrights

 

None.

 

    	 

    	 

    

 

Schedule D

 

Real Estate legal descriptions

 

None.

 

    	 

    	 

    

 

Schedule E

 

Investment Property and
Deposits

 

A.           Investment
Property

 

	Debtor	 	Name of Subsidiary

    Issuer	 	Type of

    Organization
 (e.g., corporation,
 partnership,
 limited liability
 company)	 	Jurisdiction of

    Organization	 	No. (and

    type) of
 Issued
 Shares/units	 	 	Certificate 

    No. (if any)	 	Percentage

    of Issuer’s
 Equity
 Interests	 
	Pioneer Power Solutions, Inc.	 	Jefferson Electric, Inc.	 	Corporation	 	Delaware	 	 	2,295 common shares	 	 	No. 2	 	 	100	%
	Pioneer Power Solutions, Inc.	 	Pioneer Critical Power Inc.	 	Corporation	 	Delaware	 	 	100 common shares	 	 	No. 002	 	 	100	%
	Pioneer Power Solutions, Inc.	 	JE Mexican Holdings, Inc.	 	Corporation	 	Delaware	 	 	1,000	 	 	No. 2	 	 	100	%
	Jefferson Electric, Inc.	 	Nexus Custom Magnetics, LLC	 	LLC	 	Texas	 	 	5,000 units	 	 	No. 3	 	 	100	%
	Pioneer Power Solutions, Inc.	 	Pioneer Electrogroup Canada Inc.	 	Corporation	 	Quebec, Canada	 	 	____	 	 	____	 	 	100	%1

 

 

 

1
Pioneer Power Solutions, Inc. pledges 65% of the Voting Stock (as defined in the Credit Agreement) of Pioneer Electrogroup
Canada Inc. to the Secured Party.

 

    	 

    	 

    

 

B.           Deposits

 

	Debtor	 	Type of Account and

Account Number (e.g.,

deposit account,

securities account or

commodity account)	 	Account

Number	 	Account

Title	 	Name and Address of 

Institution
	Pioneer Power Solutions, Inc.	 	Checking	 		 	Pioneer Operating	 	Bank of America

P.O. Box 25118

Tampa, FL 33622-5118
	Pioneer Power Solutions, Inc.	 	Checking	 		 	Pioneer

Payroll	 	Bank of America

P.O. Box 25118

Tampa, FL 33622-5118
	Pioneer Critical Power Inc.	 	Checking	 		 	PCPI Operating	 	Bank of America

P.O. Box 25118

Tampa, FL 33622-5118
	Pioneer Critical Power Inc.	 	Checking	 		 	PCPI

Payroll	 	Bank of America

P.O. Box 25118

Tampa, FL 33622-5118
	Jefferson Electric, Inc.	 	Checking	 		 	Operating Account	 	Johnson Bank

P.O. Box 547

Racine, WI 53401-0547
	Jefferson Electric, Inc.	 	Checking	 		 	Incoming International Wire Account	 	Johnson Bank

P.O. Box 547

Racine, WI 53401-0547

  

    	 

    	 

    

 

Schedule F

 

Commercial Tort Claims

 

None.

    	 

    	 

    

 

Schedule G

 

Supplement to Security Agreement

 

This
Supplement to Security Agreement (the "Supplement") is dated
as of this _____ day of _____________, 20__, from _________________________, a(n) _____________ corporation/limited liability
company/partnership (the “Debtor”), to Bank of Montreal, a Canadian chartered bank acting through its Chicago
branch (the “Secured Party”).

 

Preliminary Statements

 

A.           The
Debtor and certain affiliates of the Debtor and the Secured Party are parties to that certain Security Agreement dated as of June
28, 2013 (such Security Agreement, as the same may from time to time be amended, modified or restated, being hereinafter referred
to as the “Security Agreement”). All capitalized terms used herein without definition shall have the same meanings
herein as such terms are defined in the Security Agreement.

 

B.           Pursuant
to the Security Agreement, the Debtor granted to the Secured Party, among other things, a continuing security interest in all Commercial
Tort Claims.

 

C.           The
Debtor has acquired a Commercial Tort Claim, and executes and delivers this Supplement to confirm and assure the Secured Party's
security interest therein.

 

Now,
Therefore, in consideration of the benefits accruing to the Debtor, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.          In
order to secure payment of the Secured Obligations, whether now existing or hereafter arising, the Debtor does hereby grant to
the Secured Party a continuing lien on and security interest in the Commercial Tort Claim described below:

	 
	 
	 
	

 

2.          Schedule F
(Commercial Tort Claims) to the Security Agreement is hereby amended to include reference to the Commercial Tort Claim referred
to in Section 1 above. The Commercial Tort Claim described herein is in addition to, and not in substitution or replacement
for, the Commercial Tort Claims heretofore described in and subject to the Security Agreement, and nothing contained herein shall
in any manner impair the priority of the liens and security interests heretofore granted by the Debtor in favor of the Secured
Party under the Security Agreement.

 

    	 

    	 

    

 

3.          The
Debtor agrees to execute and deliver such further instruments and documents and do such further acts and things as the Secured
Party may deem necessary or proper to carry out more effectively the purposes of this Supplement.

 

4.          No
reference to this Supplement need be made in the Security Agreement or in any other document or instrument making reference to
the Security Agreement, any reference to the Security Agreement in any of such items to be deemed a reference to the Security Agreement
as supplemented hereby. The Debtor acknowledges that this Supplement shall be effective upon its execution and delivery by the
Debtor to the Secured Party, and it shall not be necessary for the Secured Party to execute this Supplement or any other acceptance
hereof or otherwise to signify or express its acceptance hereof.

 

5.          This
Agreement shall be governed by and construed in accordance with the laws of the State of Illinois (without regard to principles
of conflicts of law).

 

	 	[Insert Name of Debtor]

	 	 	 	 
	 	By	 	 
	 	 	Name	 
	 	 	Title	 

 

    	 

    	 

    

 

Schedule H

 

Assumption and Supplemental
Security Agreement

 

This
Agreement dated as of this _____ day of ______________, 20___ from [new debtor], a __________ corporation/limited
liability company/partnership (the “New Debtor”), to Bank of Montreal, a Canadian chartered bank acting
through its Chicago branch (the “Secured Party”).

 

Witnesseth that:

 

Whereas,
Pioneer Power Solutions, Inc. (the “Borrower”) and certain other parties have executed and delivered to the
Secured Party that certain Security Agreement dated as of June 28, 2013 (such Security Agreement, as the same may from time to
time be modified or amended, including supplements thereto which add additional parties as Debtors thereunder, being hereinafter
referred to as the “Security Agreement”), pursuant to which such parties (the “Existing Debtors”)
have granted to the Secured Party a lien on and security interest in each such Existing Debtor’s Collateral (as such term
is defined in the Security Agreement) to secure the Secured Obligations (as such term is defined in the Security Agreement); and

 

Whereas,
the Borrower provides the New Debtor with substantial financial, managerial, administrative, technical and other support
and the New Debtor will directly and substantially benefit from credit and other financial accommodations extended and to be extended
by the Secured Party to the Borrower;

 

Now,
therefore, for value received, and in consideration of advances made or to be made, or credit accommodations given or to
be given, to the Borrower by the Secured Party from time to time, the New Debtor hereby agrees as follows:

 

1.          The
New Debtor acknowledges and agrees that it shall become a “Debtor” party to the Security Agreement effective upon the
date the New Debtor’s execution of this Agreement and the delivery of this Agreement to the Secured Party, and that upon
such execution and delivery, all references in the Security Agreement to the terms “Debtor” or “Debtors”
shall be deemed to include the New Debtor. Without limiting the generality of the foregoing, the New Debtor hereby repeats and
reaffirms all grants (including the grant of a lien and security interest), covenants, agreements, representations and warranties
contained in the Security Agreement as amended hereby, each and all of which are and shall remain applicable to the Collateral
from time to time owned by the New Debtor or in which the New Debtor from time to time has any rights. Without limiting the foregoing,
in order to secure payment of the Secured Obligations, whether now existing or hereafter arising, the New Debtor does hereby grant
to the Secured Party, and hereby agrees that the Secured Party has and shall continue to have a continuing lien on and security
interest in, among other things, all of the New Debtor’s Collateral (as such term is defined in the Security Agreement),
including, without limitation, all of the New Debtor’s Accounts, Chattel Paper, Instruments, Documents, General Intangibles,
Letter-of-Credit Rights, Supporting Obligations, Deposit Accounts, Investment Property, Inventory, Equipment, Fixtures, Commercial
Tort Claims, and all Proceeds thereof and all of the other Collateral described in the granting clauses of the Security Agreement,
each and all of such granting clauses being incorporated herein by reference with the same force and effect as if set forth in
their entirety except that all references in such clauses to the Existing Debtors or any of them shall be deemed to include references
to the New Debtor. Nothing contained herein shall in any manner impair the priority of the liens and security interests heretofore
granted in favor of the Secured Party under the Security Agreement.

 

    	 

    	 

    

 

2.          Schedules A
(Locations), Schedule B (Other Names), Schedule C (Intellectual Property Rights), Schedule D (Real Estate), Schedule E
(Investment Property and Deposits), and Schedule F (Commercial Tort Claims) to the Security Agreement shall be supplemented
by the information stated below with respect to the New Debtor:

 

Supplement to Schedule A

	Name of Debtor (and

 State of Organization 

and Organizational 

Registration Number)	 	Chief Executive Office (and

 name of record owner of 

such location)	 	Additional Places of 

Business and Collateral

 Locations (and name of 

record owner of such 

locations)
	 	 	 	 	 
	 	 	 	 	 

 

Supplement to Schedule B

 

	Name of Debtor	 	Prior Legal Names and Trade Names of 

Such Debtor
	 	 	 

 

Supplement to Schedule C

 

Intellectual Property Rights

	 
	 

 

    	 

    	 

    

 

Supplement to Schedule D

	Real Estate Legal Descriptions
	 
	 

 

Supplement to Schedule E

	Investment Property and Deposits

	 
	 

 

Supplement to Schedule F

	Commercial Tort claims

	 
	 

 

3.          The
New Debtor hereby acknowledges and agrees that the Secured Obligations are secured by all of the Collateral according to, and otherwise
on and subject to, the terms and conditions of the Security Agreement to the same extent and with the same force and effect as
if the New Debtor had originally been one of the Existing Debtors under the Security Agreement and had originally executed the
same as such an Existing Debtor.

 

4.          All
capitalized terms used in this Agreement without definition shall have the same meaning herein as such terms have in the Security
Agreement, except that any reference to the term “Debtor” or “Debtors” and any provision of the Security
Agreement providing meaning to such term shall be deemed a reference to the Existing Debtors and the New Debtor. Except as specifically
modified hereby, all of the terms and conditions of the Security Agreement shall stand and remain unchanged and in full force and
effect.

 

5.          The
New Debtor agrees to execute and deliver such further instruments and documents and do such further acts and things as the Secured
Party may reasonably deem necessary or proper to carry out more effectively the purposes of this Agreement.

 

6.          No
reference to this Agreement need be made in the Security Agreement or in any other document or instrument making reference to the
Security Agreement, any reference to the Security Agreement in any of such to be deemed a reference to the Security Agreement as
modified hereby.

 

    	 

    	 

    

 

7.          This
Agreement shall be governed by and construed in accordance with the laws of the State of Illinois (without regard to principles
of conflicts of law).

 

	 	[Insert
Name of New Debtor]
	 	 
	 	By	 	 
	 	 	Name	 
	 	 	Title	 

 

Accepted and agreed
to as of the date first above written.

 

	 	Bank
of Montreal, acting through its Chicago Branch

 
	 	 	 	 
	 	By	 	 
	 	 	Name	 
	 	 	Title

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