8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

___________________________________________________________________

Date of Report (Date of earliest event reported):  December 2, 2009

Pioneer Power Solutions, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	333-155375	26-3387077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

9 West 57th Street, 26th Floor New York, New York	10019
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:      (212) 867-0700    

(Former name or former address, if changed since last report)

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

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

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

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

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

CURRENT REPORT ON FORM 8-K

PIONEER POWER SOLUTIONS, INC.

TABLE OF CONTENTS

		Page
Item 2.01	Completion of Acquisition or Disposition of Assets	1
	Share Exchange	1
	Description of Our Company	3
	Description of Business	4
	Legal Proceedings	9
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Risk Factors	20
	Security Ownership of Certain Beneficial Owners and Management	29
	Executive Officers and Directors	30
	Executive Compensation	31
	Certain Relationships and Related Transactions	35
Item 3.02	Unregistered Sales of Equity Securities	35
	Description of Capital Stock	36
Item 4.01	Changes in Registrant’s Certifying Accountant.	40
Item 5.01	Changes in Control of Registrant.	41
Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.	41
Item 5.03	Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.	41
Item 5.06	Change in Shell Company Status.	42
Item 9.01	Financial Statements and Exhibits.	42

Item  2.01       Completion of Acquisition or Disposition of Assets

On November 30, 2009 Sierra Concepts, Inc. (“Sierra”), a Nevada corporation, was merged with and into Pioneer Power Solutions, Inc., a Delaware corporation (“Pioneer Power”), for the purpose of changing its state of incorporation to Delaware from Nevada and changing its name, in each case pursuant to a Certificate of Ownership and Merger and Articles of Merger, each dated November 30, 2009 and approved by stockholders on November 30, 2009.

Share Exchange

The Share Exchange.  On December 2, 2009, Pioneer Power entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among Pioneer Power, Pioneer Transformers Ltd., a company incorporated under the Canada Business Corporations Act (“Pioneer Transformers”), and Provident Pioneer Partners, L.P., a Delaware limited partnership and the holder of all of the outstanding capital stock of Pioneer Transformers  (the “PT Shareholder”). Pursuant to the Exchange Agreement, on December 2, 2009, the PT Shareholder transferred all of the issued and outstanding capital stock of Pioneer Transformers to Pioneer Power in exchange for (i) 22,800,000newly issued shares of common stock of Pioneer Power, resulting in Pioneer Transformers becoming a wholly owned subsidiary of Pioneer Power, and (ii) a five-year warrant to purchase up to 1,000,000 shares of common stock of Pioneer Power at an exercise price of $3.25 per share (the “$3.25 Warrant”).

Pursuant to the terms and conditions of the Exchange Agreement:

●   At the closing of the share exchange contemplated by the Exchange Agreement (the “Share Exchange”), the PT Shareholder transferred 750,000 common shares of Pioneer Transformers (which represented all of Pioneer Transformers’ issued and outstanding capital stock immediately prior to the closing of the Share Exchange) to Pioneer Power in exchange for (i) 22,800,000 shares of Pioneer Power’s common stock and (ii) the $3.25 Warrant.

●   In connection with the closing of the Share Exchange, Pioneer Power sold 5,000,000 shares of its common stock at a purchase price of $1.00 per share in a private placement to accredited investors, resulting in aggregate gross proceeds of $5,000,000 (the “Private Placement”). Pioneer Power intends to use the proceeds from the Private Placement for the repayment of indebtedness, expansion of Pioneer Transformers’ plant in Quebec, Canada, potential acquisitions and general corporate purposes.  Pioneer Power has agreed to use its best efforts to file a registration statement in order to register the resale of these shares within 60 days following the closing date of the Private Placement and to cause such registration statement to be declared effective within 180 days following the closing date of the Private Placement. Pioneer Power has further agreed to pay the investors in the Private Placement liquidated damages in the event that Pioneer Power fails to meet either of these deadlines, subject to certain exemptions.

●   Upon the closing of the Share Exchange, David Davis resigned as the sole officer and director of Pioneer Power, and simultaneously with the Share Exchange a new board of directors and new officers were appointed for Pioneer Power. Pioneer Power’s new board of directors consists of Nathan J. Mazurek, previously a director of Pioneer Transformers, Yossi Cohn, David Tesler, David J. Landes and Jonathan Tulkoff. In addition, immediately following the Share Exchange, Pioneer Power appointed Nathan J. Mazurek as its chief executive officer, president, chairman of the board, chief financial officer, secretary and treasurer.

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●   Immediately following the closing of the Share Exchange and the Private Placement, under the terms of an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Conveyance Agreement”), Pioneer Power transferred all of its pre-Share Exchange assets and liabilities to its wholly owned subsidiary, Sierra Concepts Holdings, Inc., a Delaware corporation (“SplitCo”). Thereafter, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), Pioneer Power transferred all of the outstanding capital stock of SplitCo to David Davis in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 7,200,000 shares of Pioneer Power’s common stock (the “Split-Off”), leaving 1,200,000 shares of common stock outstanding held by persons who were stockholders of Pioneer Power prior to the Share Exchange.

The foregoing description of the Share Exchange and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the (i) Exchange Agreement, which is filed as Exhibit 2.1 hereto, (ii) the Conveyance Agreement, which is filed as Exhibit 10.11 hereto, and (iii) the Stock Purchase Agreement, which is filed as Exhibit 10.12 hereto, each of which is incorporated herein by reference.

The foregoing description of the Private Placement and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the form of Securities Purchase Agreement filed as Exhibit 10.1 hereto, which is incorporated herein by reference.

Neither Pioneer Transformers nor Pioneer Power had any options or warrants to purchase shares of its capital stock outstanding immediately prior to the closing of the Share Exchange. Pioneer Power has adopted, and its stockholders have approved, an equity incentive plan and reserved 1,600,000 shares of its common stock for issuance as incentive awards to officers, directors, employees, consultants and other qualified persons. In addition, at the close of the Share Exchange, Pioneer Power sold a five-year warrant to purchase up to an aggregate of 1,000,000 shares of common stock of Pioneer Power at an exercise price of $2.00 per share for aggregate gross proceeds of $10,000 (the “$2.00 Warrant”).

Following (i) the closing of the Share Exchange, (ii) the closing of the Private Placement for $5,000,000 and (iii) the cancellation of 7,200,000 shares in the Split-Off, there were 29,000,000 shares of common stock issued and outstanding.  Approximately79% of such issued and outstanding shares were held by the PT Shareholder and approximately 17% were held by the investors in the Private Placement. The foregoing percentages exclude the $2.00 Warrant, the $3.25 Warrant and 1,600,000 shares of common stock reserved for issuance under Pioneer Power’s equity incentive plan.

The shares of Pioneer Power’s common stock issued to the PT Shareholder in connection with the Share Exchange, the shares of common stock issued to the investors in the Private Placement, the $3.25 Warrant and the $2.00 Warrant were not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements.  Certificates representing these shares contain a legend stating the restrictions applicable to such shares.

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Changes to the Business.  Pioneer Power intends to carry on Pioneer Transformers’ business as its sole line of business.  Pioneer Power has relocated its executive offices to 9 West 57th Street, 26th Floor, New York, New York 10019 and its telephone number is (212) 867-0700.

Changes to the Board of Directors and Executive Officers.  Upon the closing of the Share Exchange, the size of Pioneer Power’s board of directors was increased from one director tofivedirectors,  David Davis resigned as the sole officer and director of Pioneer Power and Nathan J. Mazurek, Yossi Cohn, David Tesler, David J. Landes and Jonathan Tulkoff were appointed to Pioneer Power’s board of directors.  Following the Share Exchange, Nathan J. Mazurek was appointed as Pioneer Power’s chief executive officer, president, chairman of the board, chief financial officer, treasurer and secretary.

All directors hold office for one-year terms until the election and qualification of their successors.  Officers are elected by the board of directors and serve at the discretion of the board.

Accounting Treatment.  The Share Exchange is being accounted for as a recapitalization.  Pioneer Transformers is the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that are reflected in the financial statements herein are those of Pioneer Transformers and will be recorded at the historical cost basis of Pioneer Transformers.

Tax Treatment.  The Share Exchange is intended to constitute a tax-deferred exchange of property governed by Section 351 of the United States Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization or restructuring provisions as may be available under the Code. Any gain required to be recognized will be subject to regular individual or corporate federal income taxes, as the case may be.

Description of Our Company

Sierra was incorporated on September 16, 2008 in the State of Nevada for the purpose of providing individuals with financial counseling services through the Internet. On November 30, 2009, Sierra merged with and into Pioneer Power solely for the purpose of reincorporating in the State of Delaware and changing its name to “Pioneer Power Solutions, Inc.”  Immediately following the Share Exchange, the assets and liabilities of Pioneer Power that existed prior to the Share Exchange were disposed of pursuant to the Split-Off. In addition, following the Share Exchange, Pioneer Power succeeded to the business of Pioneer Transformers as its sole line of business.

Pioneer Transformers was incorporated in 1995 under the Canadian Business Corporations Act as a result of the acquisition of the business from a subsidiary of Schneider Electric S.A.  Pioneer Transformers has one wholly-owned subsidiary, Barnard Granby Realty, Inc (“Granby Realty”).

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Description of Business

As used in this Current Report on Form 8-K, all references to the “Company,” “we,” “our” and “us” for periods prior to the closing of the Share Exchange refer to Pioneer Transformers, and for periods subsequent to the closing of the Share Exchange refer to Pioneer Power and its direct and indirect subsidiaries (including Pioneer Transformers and Granby Realty).

Overview

We are a leading North American designer, manufacturer and marketer of liquid-filled electric power, distribution and specialty transformers. We have been in the transformer business for over 50 years and distinguish ourselves by manufacturing a wide range of customized, engineered-to-order equipment for our customers. We serve Canadian and U.S. clients in a variety of industries with particular emphasis on the electric utility, industrial and commercial construction markets.

An electric transformer is used to reduce or increase the voltage of electricity traveling through a wire. This is accomplished by transferring electric energy from one coil or winding to another coil through electromagnetic induction. Electric power plants use generator transformers to "step-up," or increase, voltage that is transferred through power lines in order to transmit the electricity more efficiently and over long distances. When the high voltage electricity reaches a community, a "step-down" transformer reduces its voltage. A distribution transformer makes a final step-down in voltage by diminishing the force of the electricity to a level usable in homes and businesses. Some electrical devices, such as doorbells and small appliances, use additional step-down transformers to decrease voltage even further.

Transformers are integral to any electrical transmission and distribution (“T&D”) system. Electric utilities use transformers for the construction and maintenance of their power networks, industrial firms use transformers to supply factories with electricity and to distribute power to production machinery and the construction industry uses transformers to connect new homes and buildings to the electricity grid.

The Industry

Demand for our electrical power and distribution transformers results primarily from spending by electric utilities for replacements, expansions and efficiency improvements. Demand is also sensitive to overall economic conditions, particularly with respect to the level of industrial production and investment in commercial and residential construction. Other market factors include voltage conversion, voltage unit upgrades, electrical equipment failures, higher energy costs and stricter environmental regulations.

According to The Freedonia Group, a market research firm, U.S. demand for electrical T&D equipment, which includes switchgear, transformers, pole/line hardware and meters, was $20.8 billion in 2008. Of this amount, approximately 38%, or $7.9 billion, was comprised of demand for transformers. Together with Canadian demand for transformers, we believe that the North American market currently exceeds $8.5 billion annually. The value of transformer shipments in the U.S. has grown 10.6% per annum since 2003 due to capital spending increases by utilities and due to recent price increases of key material inputs such as steel and copper. Assuming more stable prices, The Freedonia Group expects transformer demand to increase 2.3% annually through 2013, accelerating to 3.4% per annum thereafter through 2018.

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This prediction of accelerating growth is consistent with the need to upgrade the U.S. power grid and is supported by regulatory initiatives intended to improve system stability and promote growth in electric power generation by independent producers and in renewable energy sources such as wind power. For example, according to The Brattle Group, a consulting firm, 70% of all power transformers are currently over 25 years old. Including other major equipment components of the U.S. power grid also operating at, close to or past their planned service lives, The Brattle Group estimates $1.5 trillion of capital investment will be required in the U.S. electrical infrastructure by 2030 in order to meet growing demand and targets for efficiency, emissions and renewable sources. A majority of these expenditures, or approximately $900 billion, is expected by The Battle Group to be for T&D equipment, with the remainder being spent on increasing generation capacity.

The transformer market is very fragmented due to the range of sizes, voltages and technological standards required by different categories of end-users. This diversity of manufacturers also reflects the fact that many orders are custom-engineered and tend to be very time-sensitive since other critical work is frequently being coordinated around the customer’s transformer installation. As a result of these and other factors, the vast majority of North American demand for transformers is satisfied from producers in the U.S. and Canada. According to the U.S. Census Bureau, there are over 250 transformer manufacturers in the U.S. and at least 50 that manufacture larger power and distribution transformers such as those produced by us.

Products

We design, develop, manufacture and sell a wide range of liquid-filled electrical power and distribution transformers. Power transformers are designed for utility and industrial customers to be installed in substations or commercial electric power centers for apartment complexes, shopping centers, factories and other high load users of electrical power. Distribution transformers are used to step-down high voltage electrical transmissions to usable levels (typically to 120 or 240 volts) for use in homes, offices and factories. Distribution transformers may be mounted on utility poles, or increasingly, they are placed at ground level on a concrete pad or in underground vaults.

Our transformer products are manufactured in electrical power ranges from 25 kVA (kilovolt amperes) to 10 MVA (megavolt amperes) and at up to 44 kV (kilovolts) in voltage. In recent years, we have focused primarily on the small power market, generally considered to include transformers between 1 MVA and 10 MVA, as well as on specialty transformers such as network and other highly-engineered models. We sell our products to electrical utilities, independent power providers, electrical co-ops, industrial companies, commercial users and to electric equipment wholesalers. Our primary product categories are as follows:

Transformer Type	Range of Sizes	Applications
Small Power	300 kVA to 10 MVA	Power conversion for the utility and industrial/commercial market, typically found in substations
Network	300 kVA to 3.75 MVA	Subway and vault-type transformers designed to withstand harsh environments and typically used by utilities and municipal power authorities to ensure reliability of service
Pad-Mount	75 kVA to 10 MVA	Distribution transformers commonly used in underground power or distribution systems

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Unitized Pad-Mount	Up to 5 MVA	Combines pad-mounts with other equipment in a product that can be substituted for conventional unit substations at apartment complexes, shopping centers, hospitals and similar commercial facilities
Mini-Pad	25 kVA to 167 kVA	Single phase, low profile pad-mounted distribution transformers for residential and underground distribution
Platform-Mount	250 kVA to 2.5 MVA	Single phase units from 250 kVA to 1,000 kVA, also supplied for substation installation up to 2,500 kVA

The transformers we manufacture are typically shell-type, composed of steel cores surrounding wound coils and mounted inside tanks made of hot rolled steel that are filled under vacuum with oil or another liquid with similar cooling and/or dielectric properties such as silicone or FR3. We manufacture the cores from non-aging, grain-oriented silicon steel strip. Stresses which develop in cutting and forming the core are relieved by batch annealing in our nitrogen atmosphere ovens. We wind the coils on thermally upgraded heavy board forms to provide high mechanical strength and basic insulation to ground. Layer insulation consists of adhesive coated thermally upgraded paper of several different thicknesses. Our core/coil/frame mounting system is designed to assure a relatively stress free assembly resulting in consistently low core loss (i.e., high efficiency) and low sound level.  Many of our products adhere to standards developed by Underwriters Laboratories Inc., the American National Standards Institute and the Canadian Standards Association.

Business Strategy

The foundation of our strategy is to build upon the core strengths that we believe have led to our growth and increasing profitability in recent years -- our engineering and manufacturing capabilities, our product quality and our highly flexible, individualized and responsive standards for customer service. The combination of these strengths enables us to consistently deliver high volumes of custom-engineered transformers. Our strategy is to continually seek ways to broaden our capabilities to serve our customers more completely and directly, an approach we believe will maximize our market penetration, increase our revenues more profitably and we hope will create barriers to entry for our competitors.

We intend to expand rapidly over the next several years by adhering to this strategy in the execution of our internal growth and acquisition plans.

Internal Growth

We intend to build our revenue and profit margins at rates exceeding industry norms primarily by continuing our sales and product mix migration towards more highly-engineered, value-added products. We intend to accomplish this goal by emphasizing the sale of more power, network and subsurface transformers to new and existing utility customers, particularly in the U.S. To increase our manufacturing capacity for these products, which are among the largest we produce, in September 2009 we commenced a significant plant expansion. This expansion will alleviate production scheduling conflicts and increase utilization of our existing floor space, while establishing the potential to produce still larger, more high-powered transformers in the future.

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Acquisitions

We will pursue opportunities to acquire businesses that increase our market share in transformers or expand our geographic reach. We will also consider acquiring manufacturers of other highly engineered and customized ancillary or complementary products that will further our penetration of markets and customers served. We favor candidates that have competencies and business characteristics similar to our own, and those that we expect will benefit from some of the major trends affecting our industry.

China Expansion

Our management team places a high priority on entering the Chinese market for T&D equipment, either by way of a plant or company acquisition. According to The Freedonia Group, the 2008 market for T&D equipment in China was ¥179.1 billion ($25.8 billion), of which ¥53.2 billion ($7.7 billion) was for transformers, a market segment that is expected to grow 10.5% annually through 2013. Based on reports by the China National Transformer Association and on our management’s own knowledge and experience with respect to doing doing business in China, we believe the Chinese market is far more fragmented than the North American market and that there are many potential candidates for a business combination that would benefit from our experience and access to the U.S. public capital markets.

Customers

We sell our products principally to Canadian customers, who presently account for more than 80% of our sales. Our customers include a majority of Canada’s electrical utilities, several U.S. utilities and municipal power systems, large industrial companies, engineering and construction firms and a number of electrical distributors. During the past five years approximately 70% of our sales have been to utilities, with the remainder being sold primarily to industrial companies and electrical distributors.

Approximately 26% and 40% of our sales in 2008 and during the first nine months of 2009, respectively, were made to Hydro-Quebec Utility Company, a government-owned utility in the Province of Quebec, Canada ("Hydro-Quebec"). The majority of our sales to Hydro-Quebec are made pursuant to a long-term contract which expires in 2010. Hydro-Quebec has been a customer of Pioneer and its predecessors for approximately 40 years, over which time we have been party to consecutive long-term contracts for an uninterrupted period spanning several decades. We believe the status of our business relationship with Hydro-Quebec to be good. For the first nine months of 2009, no other customer accounted for 10% or more of our sales. Aside from Hydro-Quebec, we do not believe that the loss of any specific customer would have a material adverse effect on our business.

Competition

We experience competition from a large number of transformer manufacturers. The number and size of our competitors varies considerably by product line, with many of our competitors tending to be small, highly specialized or focused on a certain geographic market area or customer. However, several of our competitors have substantially greater financial and technical resources than us, including some of the world's largest electrical products companies such as ABB Ltd., Cooper Industries plc, General Electric Company, Groupe Schneider and Siemens AG.

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We believe that we compete primarily on the basis of product quality, product innovation, service and price. We have established a niche in the manufacture and design of small power and distribution electrical transformers and, in particular, custom transformers requiring specialized and complex applications. As a result of our long-time presence in the industry, we possess a number of special transformer designs that we have engineered and developed specifically for our customers. We believe these designs give us a competitive advantage and that they are a major contributor to our high frequency of repeat customer orders; repeat customers typically account for over 75% of our sales from year to year.

Raw Materials and Suppliers

The principal raw materials purchased by us are core steel, copper wire, aluminum strip and insulating materials including transformer oil.We also purchase certain electrical components from a variety of suppliers including bushings, switches, fuses and protectors. These raw materials and components are available from and supplied by numerous sources at competitive prices, although there are more limited sources of supply for electrical core steel and transformer oil. Unanticipated increases in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability. We anticipate no significant difficulty fulfilling our raw material purchase requirements and have not experienced any such difficulty in the past several years.  Our largest suppliers include Cogent Power, Inc., Itochu Corporation and Rea Magnet Wire Company.

Marketing, Sales and Distribution

A substantial portion of the transformers manufactured by us are sold to customers by our direct sales force of full-time sales personnel operating either from our two offices in Canada or our office in the U.S.  Our products are also sold through our network of independent sales agents throughout North America.  Our direct sales force markets to end users and to third parties, such as engineering firms, that prescribe the specifications and parameters that control the applications of our products.  

Facilities

We have one manufacturing facility located in Granby, Quebec, Canada, which was built in 1962 and consists of approximately 38,000 square feet.  The facility sits on approximately 25 acres in the town of Granby which is located approximately 40 miles east of Montreal. We own both the facility and the land through Granby Realty. We believe the facility has been well maintained and is in proper condition necessary to operate at current levels.  Our primary lender has a senior secured mortgage on the facility and the land in order to secure up to $9.3 million of indebtedness that we have the right to draw down upon under our existing line of credit.

We lease office space for our engineering and marketing office in Mississauga near Toronto, Ontario, Canada.  Our monthly rent is $3,065and the lease expires in 2011.  We also pay $6,500 per month for use of office space for our executive management and sales office in New York City.  

Sales Backlog

Backlog reflects the amount of revenue we expect to realize upon the shipment of customer orders for products that are not yet complete or for which work has not yet begun.  Our sales backlog as of September 30, 2009 was approximately $21.0 million, as compared to $22.8 million at September 30, 2008. We anticipate that approximately half of our current backlog will be delivered during the remainder of 2009. Orders included in our sales backlog are represented by customer purchase orders and contracts that we believe to be firm.

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Employees

At September 30, 2009, we had 61 employees consisting of 22 salaried staff and 39 hourly workers.  We had no part-time employees.  Our hourly employees, all located at our plant in Granby, are covered by a collective bargaining agreement with the United Steel Workers of America Local 5653 that expires in May 2010. We consider our relationship with our employees to be good.

Environmental

We are subject to numerous environmental laws and regulations concerning, among other areas, air emissions, discharges into waterways and the generation, handling, storing, transportation, treatment and disposal of waste materials. These laws and regulations are constantly changing and it is impossible to predict with accuracy the effect they may have on us in the future. Like many other industrial enterprises, our manufacturing operations entail the risk of noncompliance, which may result in fines, penalties and remediation costs, and there can be no assurance that such costs will be insignificant. To our knowledge, we are in substantial compliance with all federal, state, provincial and local environmental protection provisions, and believe that the future cost of fines, penalties and remediation protection provisions, if any, should not have a material adverse effect on our capital expenditures, earnings or competitive position. However, legal and regulatory requirements in these areas have been increasing and there can be no assurance that significant costs and liabilities will not be incurred in the future due to regulatory noncompliance.  

Legal Proceedings

There are currently no pending legal proceedings and, as far as we are aware, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject.

Forward-Looking Statements

Statements in this Current Report on Form 8-K and other written reports made from time to time by us that are not historical facts constitute so-called “forward-looking statements,” all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. Forward-looking statements are likely to address our growth strategy, financial results and product and development programs, among other things. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. Such risks and uncertainties include but are not limited to those outlined in the section entitled “Risk Factors” and other risks detailed from time to time in our filings with the SEC or otherwise. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate.  It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis.  We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report.  Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.  We do not assume any obligation to update any forward-looking statement.  As a result, investors should not place undue reliance on these forward-looking statements.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the other sections of this Report, including “Risk Factors,” “Description of Business” and the Financial Statements attached hereto pursuant to Item 9.01 and the related exhibits.  The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Report.  See “Forward-Looking Statements.” Our actual results may differ materially.

Recent Events

On December 2, 2009, we completed a share exchange, pursuant to which we acquired all of the capital stock of Pioneer Transformers and Pioneer Transformers became our wholly owned subsidiary.  In connection with this share exchange, we discontinued our former business and succeeded to the business of Pioneer Transformers as our sole line of business.  The share exchange is being accounted for as a recapitalization.  Pioneer Transformers is the acquirer for accounting purposes and Pioneer Power is the acquired company.  Accordingly, Pioneer Transformers’ historical financial statements for periods prior to the acquisition have become those of the registrant (Pioneer Power) retroactively restated for, and giving effect to, the number of shares received in the share exchange.  The accumulated earnings of Pioneer Transformers were also carried forward after the acquisition. Operations reported for periods prior to the share exchange are those of Pioneer Transformers.

Overview

We manufacture, design, develop, sell and distribute liquid-filled power, distribution and specialty electric transformers for the utility, industrial and commercial markets.

In connection with the closing of the Share Exchange, we elected to report our financial results in U.S. dollars. Accordingly, all comparative financial information contained in this discussion has been recast from  Canadian dollars to U.S. dollars. We also elected to report our financial results in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) to improve the comparability of our financial information with our peer companies.

Although we have elected to report our results in accordance with U.S. GAAP and in U.S. dollars, our primary operating subsidiary, Pioneer Transformers, is a Canadian entity and our functional currency is the Canadian dollar. Our financial position, results of operations, cash flows and equity are initially consolidated in Canadian dollars. Our assets and liabilities are then translated from Canadian dollars to U.S. dollars by applying the foreign currency exchange rate in effect at the balance sheet date, while the results of our operations and cash flows are translated to U.S. dollars by applying the average foreign currency exchange rate in effect during the reporting period. The resulting translation adjustments are included in other comprehensive income or loss.

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Critical Accounting Policies

Use of Estimates.  The preparation of financial statements in accordance U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances. Significant estimates in these financial statements include pension expense, inventory provisions, useful lives and impairment of long-lived assets. Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial statements and actual results could differ from the estimates and assumptions.

Revenue Recognition.  Revenue is recognized when:

● persuasive evidence of an arrangement exists;  

● delivery occurs;  

● the sales price is fixed or determinable; and  

● collectibility is reasonably assured.

Revenue is recognized on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer upon delivery, provided that we maintain neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold.

Changes in Accounting Principles.  No significant changes in accounting principles were adopted during fiscal 2007 and 2008, or during the first nine months ended September 30, 2009, except for the following:

Fair Value Measurements.  SFAS 157, Fair Value Measurements, (“SFAS 157”) is effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for non-financial assets and liabilities in fiscal years beginning after November 15, 2008. We adopted SFAS 157 for financial assets and liabilities in fiscal 2008 with no material impact to our financial statements. We are currently evaluating the potential impact of the application of SFAS 157 on our nonfinancial assets and liabilities.

SFAS 157 applies to all assets and liabilities that are being measured and reported on a fair value basis. SFAS 157 requires new disclosure requirements that establish a framework for measuring fair value in U.S. GAAP, and expands disclosure requirements pertaining to fair value measurements. SFAS 157 enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

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Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities that are subject to SFAS 157. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. There were no assets or liabilities measured at fair value as at December 31, 2008.

Fair Value of Financial Instruments.  Fair value represents our best estimate based on a range of methodologies and assumptions. Advances to companies controlled by shareholders and the advances from ultimate shareholders are presumed to have a fair value measured by the cash proceeds exchanged at issuance in accordance with APB-21, “Interest on Receivables and Payables”.

Unrecognized Tax Benefits.  On January 1, 2007, we adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”) which is an interpretation of SFAS 109, Accounting for Income Taxes (“SFAS 109”). FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS 109. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Prior to January 1, 2007 and the implementation of FIN 48, we recorded tax contingencies when the exposure item became probable and reasonably estimable, in accordance with SFAS 5, Accounting for Contingencies. The adoption of FIN 48 has not had a material effect on our financial position or results of operations for the years ended December 31, 2008 and 2007.

We do not expect our unrecognized tax benefits to change significantly over the next twelve months.

Classification of Interest and Penalties.  Additionally, FIN 48 requires that we accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws.  Our policy to include interest and penalties related to unrecognized tax benefits within the provision for income taxes did not change as a result of adopting FIN 48.  

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Results of Operations

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Revenue.  For the nine months ended September 30, 2009, revenue decreased 14.4% to $30.4 million from $35.5 million during the same period in 2008. The decline in revenue was primarily attributable to the translation effect of a strengthening in the U.S. dollar against the Canadian dollar. This effect was more pronounced due to a decrease in our U.S. dollar denominated revenue during 2009 as compared to the same period in 2008, reflecting an increase in demand fulfilled for products in the Canadian utility market. The remainder of our revenue decline for the period was attributable to the net effect of decreases in transformer unit volume and average selling prices, offset by an increase in the average price per electrical unit of transformation capacity sold.

Gross Margin.  For the nine months ended September 30, 2009, our gross margin percentage increased to 27.4% of revenues, compared to 20.5% during the same period in 2008.  The increase in our gross margin resulted primarily from increases in the sales of larger units to the utility market, more efficient manufacturing and lower material costs as a result of weakening in the U.S. dollar against the Canadian dollar. These positive contributors to our gross margin were partially offset by the translation effect of a strengthening in the U.S. dollar against the Canadian dollar. While most of our operating revenues are denominated in Canadian dollars, a portion of our expenses, including the majority of our costs of goods sold, are denominated and disbursed in U.S. dollars.

 The electrical transformer industry is highly competitive and requires that we expend significant resources.  Our profitability is dependent on a number of factors including a favorable product mix, factory configuration, manufacturing capacity and utilization and prices for various raw material commodities. Accordingly, there can be no assurance that such or other factors will not have a material effect on our gross margin in future periods.

Selling, General and Administrative Expense.  For the nine months ended September 30, 2009, selling, general and administrative (“SG&A”) expense decreased 19.1% to approximately $2.7 million from $3.4 million during the same period in 2008. These cost savings resulted primarily from a large reduction in sales commission expense, driven by the decision to service certain customer accounts in-house rather than through external sales agents. SG&A expense as a percentage of revenue decreased to 8.9% for the nine months ended September 30, 2009, compared to 9.5% for the same period in 2008.

Foreign Exchange (Gain) Loss.  Most of our operating revenues are denominated in Canadian dollars and a material percentage of our expenses are denominated and disbursed in U.S. dollars. Historically we have not engaged in currency hedging activities. Accordingly, fluctuations in the relative value of the U.S. dollar versus the Canadian dollar between the time we initiate and then settle transactions with our customers and suppliers can have an impact on our operating results. For the nine months ended September 30, 2009, the impact of these fluctuations resulted in a loss of approximately $281,000 to operating profit, compared to a gain of $37,000 during the same period of 2008.

Write-down of Advances to Companies Controlled by Shareholders.  During the third quarter of 2008, we wrote down the entire amount of advances we made to certain members of the PT Shareholder, which advances were made to these members as reimbursement for certain advances made by them to a switchgear manufacturing company formerly controlled by the PT Shareholder. This write-down resulted in an operating loss of $0.7 million being recognized for the nine months ended September 30, 2008, as compared to no loss being recognized for the same period in 2009.

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Interest and Factoring Fees.  For the nine months ended September 30, 2009, interest and factoring fees decreased 31.2% to approximately $282,000 from $410,000 during the same period in 2008. The decrease in interest and factoring fees was primarily the result of lower average borrowings and interest rates during the nine months ended September 30, 2009, as compared to the same period in 2008.

Provision for Income Taxes.  Our provision for income taxes reflects an effective tax rate on earnings before income taxes of 30.7% compared to 35.7% for the same period in 2008. The decrease in our effective tax rate between 2008 and 2009 is primarily attributable to the non-deductible write-down of advances described earlier in this section that was recognized in the third quarter of 2008.

Net Earnings.  For the nine months ended September 30, 2009, we generated net earnings of $3.4 million, a significant increase over our net earnings of $1.7 million for the same period in 2008. During 2009, our net earnings have benefited from several factors including a favorable product mix that has generated higher gross margins, a weakening in the U.S. dollar as compared to the Canadian dollar and reductions in our SG&A and debt service costs.

Backlog.  Our order backlog at September 30, 2009 was $21.0 million, compared to $19.8 million at December 31, 2008 and $22.7 million at September 30, 2008. New orders placed during the nine months ended September 30, 2009 were $29.4 million, a decrease of 7.0% (or an increase of 6.8% on a constant currency basis) compared to new orders of $31.6 million that were placed during the nine months ended September 30, 2008.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Revenue.  Total revenue decreased 4.6% to $43.9 million in 2008 from $46.0 million in 2007. The decline in revenue during 2008 was primarily attributable to the net effect of a decrease in transformer unit volume sold, offset by an increase in the average price per unit sold. Our product sales mix during 2008 reflected our continuing strategy to emphasize the sale of more highly-engineered transformers which generally command higher selling prices and gross margins, but require longer manufacturing times and thereby reduce overall unit volume.

Gross Margin.  Our gross margin percentage for 2008 increased to 20.5% of revenues compared with 17.8% in 2007. The increase was primarily related to the change in product mix associated with the sale of larger units into the utility market. The electrical transformer industry is highly competitive and requires that we expend significant resources.  Our profitability is dependent on a number of factors including a favorable product mix, factory configuration, manufacturing capacity and utilization and prices for various raw material commodities. Accordingly, there can be no assurance that such or other factors will not have a material effect on our gross margin in future periods.

Selling, General and Administrative Expense.  SG&A expenses increased 5.9% to $4.2 million in 2008, compared to $4.0 million in 2007. This net increase was the result of many individual changes in our costs which included, among the larger changes, increased engineering staff costs (associated with manufacturing larger and more complex units) and lower external sales commission expense. SG&A expenses as a percentage of revenue increased to 9.6% in 2008 from 8.6% in 2007.

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Foreign Exchange (Gain) Loss.  Most of our operating revenues are denominated in Canadian dollars and a material percentage of our expenses are denominated and disbursed in U.S. dollars. We have historically not engaged in currency hedging activities. Accordingly, fluctuations in the relative value of the U.S. dollar versus the Canadian dollar between the time we initiate and then settle transactions with our customers and suppliers can have an impact on our operating results. During 2008, the impact of these fluctuations resulted in a gain of $0.1 million to operating profit, compared to a gain of approximately $0.9 million in 2007.

Write-down of Advances to Companies Controlled by Shareholders.  During the third quarter of 2008, we wrote down the entire amount of advances we made to certain members of the PT Shareholder, which advances were made to these members as reimbursement for certain advances made by them to a switchgear manufacturing company formerly controlled by the PT Shareholder. This write-down resulted in an operating loss of $0.7 million being recognized in 2008, as compared to no operating loss being recognized in 2007.

Interest and Factoring Fees.  Interest and factoring fees were approximately $512,000 for 2008, down 21.7% from approximately $654,000 in 2007. The decrease was primarily a result of lower average borrowings and interest rates during 2008.

Provision for Income Taxes.  Our provision for income taxes reflects an effective tax rate on earnings before income taxes of 38.8% in 2008 compared to 74.6% in 2007. Our effective tax rate in 2008 was primarily impacted by the non-deductible write-down of advances described earlier in this section that was recognized during the third quarter. The higher 2007 effective tax rate primarily reflects tax provisions for prior years’ assessments.

Net Earnings.  We generated net earnings of $2.1 million in 2008, compared to $1.1 million in 2007. During 2008 we generated higher gross profits despite lower overall revenue, while leveraging our existing infrastructure to sell increasing volumes of larger and more highly-engineered products.

Backlog.  The order backlog at December 31, 2008 was $19.7 million, down 31.3% (or 15.6% on a constant currency basis) compared to $28.8 million at December 31, 2007. New orders placed during the year were $40.1 million, a decrease of 21.1% (or 21.6% on a constant currency basis) compared to orders during 2007 of $50.9 million.

Liquidity and Capital Resources

General.  At September 30, 2009, we had cash and cash equivalents of approximately $201,000. We have historically met our cash needs through a combination of cash flows from operating activities and bank borrowings. Our cash requirements are generally for operating activities, debt repayment and capital improvements. We believe that working capital, funds available under our credit agreement, and funds generated from operations should be sufficient to finance our cash requirements for anticipated operational activities, capital improvements, repayment of debt and possible future acquisitions through the next 12 months.

Our operating activities generated cash flow of approximately $0.8 million for the nine month period ended September 30, 2009, and used cash of $1.3 million during the same period in the prior year. The principal elements of cash flow from operations for the nine months ended September 30, 2009 included net income of $3.4 million and depreciation of $0.2 million, offset by increased investment in operating working capital elements of $2.8 million.

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Cash used in our financing activities was $0.9 million for the nine months ended September 30, 2009, compared to cash generated of approximately $1.5 million during the comparable period of 2008. The principal reason for the decrease in cash from financing activities during 2009 was that we repaid approximately $0.4 million of our bank indebtedness during the nine months ended September 30, 2009, whereas we had borrowed an additional $1.9 million under our credit facility during the nine months ended September 30, 2008.

Cash used in investing activities during the nine months ended September 30, 2009 was approximately $94,000 for additions to property and equipment, compared to $487,000 during the same period in 2008, which consisted of approximately $144,000 in additions to property and equipment and $342,000 in dividend payments to the PT Shareholder.

As of September 30, 2009, current assets exceeded current liabilities by 1.6 times. Current assets increased $3.8 million during the nine months ended September 30, 2009 while current liabilities increased by $0.2 million during the same period. As a result, our working capital increased by $3.6 million to $5.3 million during the nine months ended September 30, 2009.

Credit Facilities.  As of September 30, 2009, we had a credit facility with our primary lender consisting of a revolving loan of up to approximately $5.8 million bearing interest at the lender’s prime rate plus 1.5% per annum. Our agreement with this lender provides that we continually sell all of our accounts receivable to the lender. To the extent that we draw funds prior to the collection of the accounts receivable (the bank indebtedness), the funds bear interest at the lender’s prime rate plus 1.5% per annum. We are contingently liable for credit risk, merchandise disputes and other claims on accounts receivable sold to the lender and, accordingly, accounts receivable are therefore still presented on our balance sheet. As of September 30, 2009 and December 31, 2008, the amount of the revolving credit line outstanding was approximately $4.2 million and $4.1 million, respectively.

Subsequent to the end of our third quarter ended September 30, 2009, we entered into a financing arrangement with a new primary lender that replaced the credit facility described immediately above. The new credit facility consists of an $8.8 million demand revolving credit facility and a $1.6 million term loan facility. The demand revolving credit facility is subject to margin criteria, and along with the term loan facility bears interest at the lender’s prime lending rate plus 0.75% or the U.S. base rate plus 0.75%. The credit facility is secured by a first-ranking lien in the amount of $9.3 million on all of our assets, a collateral mortgage of $9.3 million on our land and buildings as well as charges against our inventory.

Also subsequent to the end of our third quarter ended September 30, 2009 and in conjunction with the Share Exchange and Private Placement, we drew $2.0 million against our new credit facility to fund a cash dividend to the PT Shareholder. A portion of the proceeds from the Private Placement were then used to repay all amounts outstanding under our credit facility and, as a result, we had no bank indebtedness outstanding as of the closing of the Share Exchange.

Equipment Loans.  As of September 30, 2009, we had equipment loans with an aggregate principal amount outstanding of approximately $160,000, compared to approximately $260,000 outstanding as of December 31, 2008. These equipment loans bear interest at rates varying from 5.93% to 9.93% and are repayable in monthly installments of approximately $15,000 including interest, with a final payment due in December 2010.

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Loans from Shareholder. Certain limited partners of the PT Shareholder previouslyadvanced us an aggregate $150,000 at the rate of 12% per annum  with no specific terms of repayment. These advances are not expected to be repaid prior to October 1, 2010.

Factors That May Affect Future Operations

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the transformer industry and the markets for our products. Our operating results could also be impacted by a weakening of the Canadian dollar, changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum.  We attempt to minimize these increases through the inclusion of escalation clauses with respect to commodities in our customer contracts. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. We predominately sell to customers in the utility market. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets.

Off Balance Sheet Transactions and Related Matters

We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 141 (Revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations. Under SFAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R will change the accounting treatment for certain specific acquisition related items including:

●    expensing acquisition related costs as incurred;  

●    valuing non-controlling interests at fair value at the acquisition date; and  

●    expensing restructuring costs associated with an acquired business.  

SFAS 141R also includes a substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS 141R will have an impact on our accounting for future business combinations once adopted but the effect is dependent upon the acquisitions that are made in the future.

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In December 2007, FASB issued SFAS 160, Non-controlling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling or minority interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the Consolidated Financial Statements and separate from the parent company’s equity. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the Consolidated Statement of Operations, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. We expect SFAS 160 will have an impact on our accounting for future business combinations once adopted but the effect is dependent upon the acquisitions that are made in the future.

In March 2008, FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). This standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the impact that this statement will have on our disclosures related to derivative instruments and hedging activities.

In May 2008, FASB issued SFAS 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 shall be effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The adoption of SFAS 162 will not have a material effect on our financial position or results of operations.

In May 2008, FASB issued FSP APB-14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“APB-14-1”). APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. Additionally, APB-14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. APB-14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is not permitted. The adoption of APB-14-1 is not expected to have a material effect on our financial position or results of operations.

In April 2008, FASB issued SFAS 142-3, Determination of the Useful Life of Intangible Assets (“SFAS 142-3”). SFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, Goodwill and Other Intangible Assets. SFAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of  SFAS 142-3 is not expected to have a material effect on our financial position or results of operations.

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In June 2008, FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“EITF 03-6-1”). EITF 03-6-1 states that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. The adoption of EITF 03-6-1 is not expected to have a material effect on our financial position or results of operations.

In June 2008, FASB issued EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock (“EITF 07-5”). EITF 07-5 addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity's own stock. EITF 07-5 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of EITF 07-5 is not expected to have a material effect on our financial position or results of operations.

In June 2008, FASB issued EITF 08-3, Accounting by Lessees for Non-refundable Maintenance Deposits (“EITF 08-3”). EITF 08-3 prescribes the accounting for all non-refundable maintenance deposits. This EITF is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of EITF 08-3 is not expected to have a material effect on our financial position or results of operations.

In November 2008, FASB issued EITF 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6”). This EITF considers whether all of the provisions of SFAS 141R and SFAS 160 should be applied when accounting for an equity method investment. This EITF is effective on a prospective basis in fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years. The adoption of EITF 08-6 is not expected to have a material effect on our financial position or results of operations.

In November 2008, FASB issued EITF 08-8, Accounting for an Instrument (or an Embedded Feature) with a Settlement Amount That Is Based on the Stock of an Entity's Consolidated Subsidiary (“EITF 08-8”). EITF 08-8 addresses the determination of whether a financial instrument for which the payoff to the counterparty is based, in whole or in part, on the stock of an entity's consolidated subsidiary is indexed to the reporting entity's own stock and therefore should not be precluded from qualifying for the first part of the scope exception in paragraph 11(a) of SFAS 133 or being within the scope of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. EITF 08-8 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The adoption of EITF 08-8 is not expected to have a material effect on our financial position or results of operations.

In December 2008, FASB issued SFAS 132(R)-1, Employers' Disclosures about Postretirement Benefit Plan Assets (“SFAS 132(R)-1”). SFAS 132(R)-1 provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. SFAS 132(R)-1 also includes a technical amendment to SFAS 132R, Employer Disclosures about Pensions and Other Postretirement Benefits, that requires a nonpublic entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented. SFAS 132(R)-1 is effective for fiscal years ending after December 15, 2008.  The adoption of SFAS 132(R)-1 is not expected to have a material effect on our financial position or results of operations.

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Risk Factors

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals.  If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected.  In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

Risks Relating to Our Business

 Our industry is highly competitive.

            The electrical transformer industry is highly competitive.  Principal competitors in  our markets include Howard Industries, Inc., Carte International, Inc., Partner Technologies, Inc., ABB Transformers, Cooper Industries plc and General Electric Company.  A number of these competitors are significantly larger and have substantially greater resources than we do and are able to achieve greater economies of scale and lower cost structures than us and may, therefore, be able to provide their products to customers at lower prices than we are able to. Moreover, we cannot be certain that our competitors will not develop the expertise, experience and resources to offer products that are superior in both price and quality to our products. Similarly, we cannot be certain that we will be able to maintain or enhance our competitive position within our industry, maintain our customer base at current levels or increase our customer base.

Because we currently derive a significant portion of our revenues from one customer, any decrease in orders from this customer could have an adverse effect on our business, financial condition and operating results.

We depend on Hydro-Quebec for a large portion of our business, and any change in the level of orders from Hydro-Quebec, has, in the past, had a significant impact on our results of operations. In particular, Hydro-Quebec represented a substantial portion of our sales, approximately 26.3% and 33.2% of net sales in the fiscal years ended December 31, 2008 and 2007, respectively.  If Hydro-Quebec were to significantly cancel, delay or reduce the amount of business it does with us, there could be a material adverse effect on our business, financial condition and operating results. Our long term supply agreement for the sale of our products to Hydro-Quebec expires in 2010 and we therefore cannot assure you that Hydro-Quebec will continue to purchase transformers from us in quantities consistent with the past or at all.  In addition, if Hydro-Quebec were to become insolvent or otherwise unable to pay or were to delay payment for services, our business, financial condition and operating results could also be materially adversely affected.

Fluctuations in the price and supply of raw materials used to manufacture our products may reduce our profits.

Our raw material costs represented approximately 70% and 74% of our revenues for the fiscal years ended December 31, 2008 and 2007, respectively. The principal raw materials purchased by us are core steel, copper wire, aluminum strip and insulating materials including transformer oil. We also purchase certain electrical components from a variety of suppliers including bushings, switches, fuses and protectors. These raw materials and components are available from and supplied by numerous sources at competitive prices, although there are more limited sources of supply for electrical core steel and transformer oil. Unanticipated increases in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability. While we do not anticipate significant difficulty fulfilling our raw material purchase requirements and have not experienced any such difficulty in the past three years, we cannot provide any assurances that we will not experience such difficulties in the future.

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We may not be able to fully realize the revenue value reported in our backlog.

We have a backlog of work to be completed on contracts. Orders included in our backlog are represented by customer purchase orders and contracts that we believe to be firm. Backlog develops as a result of new business taken, which represents the revenue value of new customer orders received by us during a given period. Backlog consists of customer orders which either (1) have not yet been started or (2) are in progress and are not yet completed. In the latter case, the revenue value reported in backlog is the remaining value associated with work that has not yet been completed. From time to time, customer orders are canceled that appeared to have a high certainty of going forward at the time they were recorded as new business taken. In the event of a customer order cancellation, we may be reimbursed for certain costs but typically have no contractual right to the total revenue reflected in our backlog. In addition to our being unable to recover certain direct costs, canceled customer orders may also result in additional unrecoverable costs due to the resulting underutilization of our assets.

We are subject to pricing pressure from our larger customers.

We face significant pricing pressures in all of our business segments from our larger customers, including Hydro-Quebec. Because of their purchasing size, our larger customers can influence market participants to compete on price terms. Such customers also use their buying power to negotiate lower prices. If we are not able to offset pricing reductions resulting from these pressures by improved operating efficiencies and reduced expenditures, those price reductions may have an adverse impact on our financial results.

Deterioration in the credit quality of several major customers could have a material adverse effect on our operating results and financial condition.

A significant asset included in our working capital is accounts receivable from customers. If customers responsible for a significant amount of accounts receivable become insolvent or otherwise unable to pay for products and services, or become unwilling or unable to make payments in a timely manner, our operating results and financial condition could be adversely affected. A significant deterioration in the economy could have an adverse effect on the servicing of these accounts receivable, which could result in longer payment cycles, increased collection costs and defaults in excess of management’s expectations. Deterioration in the credit quality of Hydro-Quebec, or of any other major customers, could have a material adverse effect on our operating results and financial condition.

We may face additional impairment charges if economic environments in which our business operates and key economic and business assumptions substantially change.

Assessment of the potential impairment of property, plant and equipment, goodwill and other identifiable intangible assets is an integral part of our normal ongoing review of operations. Testing for potential impairment of long-lived assets is dependent on numerous assumptions and reflects our best estimates at a particular point in time, which may vary from testing date to testing date. The economic environments in which our business operates and key economic and business assumptions with respect to projected product selling prices and materials costs, market growth and inflation rates, can significantly affect the outcome of impairment tests. Estimates based on these assumptions may differ significantly from actual results. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on both the existence and magnitude of impairments, as well as the time at which such impairments are recognized. Future changes in the economic environment and the economic outlook for the assets being evaluated could also result in additional impairment charges. Any significant asset impairments would adversely impact our financial results.

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Our operating results may vary significantly from quarter to quarter.

Our quarterly results may be materially and adversely affected by:

●   the timing and volume of work under new agreements;

●   general economic conditions;

●   the spending patterns of customers;

●   customer orders received;

●   losses experienced in our operations not otherwise covered by insurance;

●   a change in the demand or production of our products caused by severe weather conditions;

●   a change in the mix of our customers, contracts and business;

●   increases in design and manufacturing costs; and

●   the ability of customers to pay their invoices owed to us and disagreements with customers related to product performance on delivery.

Accordingly, our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter or for an entire year.

We rely on third parties whose operations are outside our control.

We rely on arrangements with third-party shippers and carriers such as independent shipping companies for timely delivery of our products to our customers. As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond our control, including labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs. If the services of any of these third parties become unsatisfactory, we may experience delays in meeting our customers’ product demands and we may not be able to find a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver products to our customers in a timely and accurate manner may damage our reputation and could cause us to lose customers.

We also utilize third party distributors and manufacturer’s representatives to sell, install and service certain of our products. While we are selective in whom we choose to represent us, it is difficult for us to ensure that our distributors and manufacturer’s representatives consistently act in accordance with the standards we set for them. To the extent any of our end-customers have negative experiences with any of our distributors or manufacturer’s representatives, it could reflect poorly on us and damage our reputation, thereby negatively impacting our financial results.

We plan to engage in acquisitions and joint ventures, and may encounter unexpected difficulties identifying, pricing or integrating those businesses.

We seek to grow, in part, through strategic acquisitions that are intended to complement or expand our business, and expect to continue to do so in the future. The success of this strategy will depend on our ability to identify, price, finance and complete these transactions or arrangements. Success will also depend on our ability to integrate the businesses acquired in these transactions. We may encounter unexpected difficulties in completing and integrating acquisitions with our existing operations, and in managing strategic investments.  Furthermore, we may not realize the degree, or timing, of benefits we anticipated when we first entered into a transaction. Any of the foregoing could adversely affect our business and results of operations.

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We may be unsuccessful at generating internal growth.

Our ability to generate internal growth will be affected by, among other factors, our ability to attract new customers, increase the number or size of orders received by existing customers, hire and retain employees and increase volume utilizing our existing facilities.  In addition, our customers may reduce the number or size of their orders. Many of the factors affecting our ability to generate internal growth may be beyond our control, and we cannot be certain that our strategies will be successful or that we will be able to generate cash flow sufficient to fund our operations and to support internal growth. If we are unsuccessful, we may not be able to achieve internal growth, expand our operations or grow our business.

The departure of key personnel could disrupt our business.

We depend on the continued efforts of Nathan J. Mazurek, our sole executive officer, and other senior management. We cannot be certain that any individual will continue in such capacity for any particular period of time. The loss of key personnel, or the inability to hire and retain qualified employees, could negatively impact our ability to manage our business.

Our business requires skilled labor, and we may be unable to attract and retain qualified employees.

Our ability to maintain our productivity and profitability will be limited by our ability to employ, train and retain skilled personnel necessary to meet our requirements. We may experience shortages of qualified personnel. We cannot be certain that we will be able to maintain an adequate skilled labor force necessary to operate efficiently and to support our growth strategy or that our labor expenses will not increase as a result of a shortage in the supply of skilled personnel. Labor shortages or increased labor costs could impair our ability to maintain our business or grow our revenues, and may adversely impact our profitability.

Our business operations are dependent upon our ability to engage in successful collective bargaining with our unionized workforce.

Currently, approximately 68% of our workforce is unionized, and we engage in collective bargaining negotiations with the union that represents them. If we are unable to reach agreement with any of our unionized work groups in future negotiations regarding the terms of their collective bargaining agreements, or if additional segments of our workforce become unionized, we may be subject to work interruptions or stoppages. Strikes or labor disputes with our employees may adversely affect our ability to conduct our business.

We carry insurance against many potential liabilities, and our risk management program may leave us exposed to unidentified or unanticipated risks.

            Although we maintain insurance policies with respect to our related exposures, these policies contain deductibles and limits of coverage. We estimate our liabilities for known claims and unpaid claims and expenses based on information available as well as projections for claims incurred but not reported. However, insurance liabilities are difficult to estimate due to various factors. If any of our insurance policies or programs are not effective in mitigating our risks, we may incur losses that are not covered by our insurance policies or that exceed our accruals or that exceed our coverage limits and could adversely impact our consolidated results of operations, cash flows and financial position.

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Unforeseen adverse regulatory, environmental, monetary and other governmental policies could have a material adverse effect on our profitability.

We are subject to international, federal, provincial and local laws and regulations governing environmental matters, including emissions to air, discharge to waters and the generation and handling of waste. We are also subject to laws relating to occupational health and safety. The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is no assurance that we will not incur material environmental or occupational health and safety liabilities in the future. Moreover, expectations of remediation expenses could be affected by, and potentially significant expenditures could be required to comply with, environmental regulations and health and safety laws that may be adopted or imposed in the future. Future remediation technology advances could adversely impact expectations of remediation expenses.

Future litigation could impact our financial results and condition.

Our business, results of operations and financial condition could be affected by significant future litigation or claims adverse to us. Types of potential litigation cases include: product liability, contract, employment-related, labor relations, personal injury or property damage, intellectual property, stockholder claims and claims arising from any injury or damage to persons, property or the environment from hazardous substances used, generated or disposed of in the conduct of our business.

Market disruptions caused by the worldwide financial crisis could affect our ability to meet our liquidity needs at reasonable cost and our ability to meet long-term commitments, which could adversely affect our financial condition and results of operations.

We rely on our credit facility with our primary lender, amongst other avenues, to satisfy our liquidity needs. Further disruptions in the credit markets or further deterioration of the banking industry’s financial condition, may discourage or prevent our primary lender and other lenders from meeting their existing lending commitments, extending the terms of such commitments or agreeing to new commitments.Market disruptions may also limit our ability to issue debt securities in the capital markets.  We can provide no assurances that our primary lender or any other lenders we may have will meet their existing commitments or that we will be able to access the credit markets in the future on terms acceptable to us or at all.

Longer term disruptions in the capital and credit markets as a result of uncertainty, reduced financing alternatives or failures of significant financial institutions could adversely affect our access to the liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the market stabilizes or until alternative financing can be arranged. Such measures could include deferring capital expenditures and reducing other discretionary expenditures.

Continued market disruptions could cause a broad economic downturn which may lead to increased incidence of customers’ failure to pay for services delivered, which could adversely affect our financial condition, results of operations and cash flow.

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Continued capital market disruptions could result in increased costs related to variable rate debt. As a result, continuation of market disruptions could increase our interest expense and adversely impact our results of operations.

Disruption in the capital markets and its actual or perceived effects on particular businesses and the greater economy also adversely affects the value of the investments held within our pension plans. Significant declines in the value of the investments held within our pension plans may require us to increase contributions to those plans in order to meet future funding requirements if the actual asset returns do not recover these declines in value in the foreseeable future. These trends may also adversely impact our results of operations, net cash flows and financial positions, including our shareholders’ equity.

Restrictive loan covenants may impact our ability to operate our business and to pursue our business strategies, and our failure to comply with these covenants could result in an acceleration of our indebtedness.

Our credit facility with our primary lender contains certain covenants that restrict our ability to, among other things:   

●   effect an amalgamation, merger or consolidation with any legal entity;  

●   cause our subsidiaries to wind up, liquidate or dissolve their affairs;  

●   change the nature of our core business;  

●   alter our capital structure in a manner that would be materially adverse to our primary lender, undergo a change of control and make investments or advancements to affiliated or related companies without our primary lender’s prior written consent.

The majority of the liquidity derived from our credit facility is based on availability determined by a borrowing base. Specifically, the availability of credit is dependent upon our eligible receivables, inventory and certain liens. We may not be able to maintain adequate levels of eligible assets to support our required liquidity.

In addition, our credit facility requires us to meet certain financial ratios. Our ability to meet these financial provisions may be affected by events beyond our control.  If, as or when required, we are unable to repay, refinance or restructure our indebtedness under, or amend the covenants contained in, our credit facility, our primary lender could institute foreclosure proceedings against the assets securing borrowings under those facilities for up to $9.3 million, which would harm our business, financial condition and results of operations.

Our revenue may be adversely affected by fluctuations in currency exchange rates.

Most of our expenditures and revenue will be spent or derived in Canada. However, we report our financial condition and results of operations in U.S. dollars. As a result, fluctuations between the U.S. dollar and the Canadian dollar will impact the amount of our revenues. For example, if the Canadian dollar appreciates relative to the U.S. dollar, the fluctuation will result in a positive impact on the revenues that we report. However, if the Canadian dollar depreciates relative to the U.S. dollar, there will be a negative impact on the revenues we report due to such fluctuation. It is possible that the impact of currency fluctuations will result in a decrease in reported sales even though we have experienced an increase in sales when reported in the Canadian dollar. Conversely, the impact of currency fluctuations may result in an increase in reported sales despite declining sales when reported in the Canadian dollar. The exchange rate from the  U.S. dollar to the Canadian  dollar has fluctuated substantially and may continue to do so in the future.Though we may choose to hedge our exposure to foreign currency exchange rate changes in the future, there is no guarantee such hedging, if undertaken, will be successful.

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Risks Relating to Our Organization and Our Common Stock

As of the Share Exchange, we became a consolidated subsidiary of a company that is subject to the reporting requirements of federal securities laws, which can be expensive and may divert resources from other projects, thus impairing our ability to grow.

As a result of the Share Exchange, we became a consolidated subsidiary of a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).  The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Share Exchange) and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we remained privately held and did not consummate the Share Exchange.

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud.  Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act.  We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.  Effective internal control is necessary for us to provide reliable financial reports and prevent fraud.  If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.  In addition, if we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current and may adversely affect any market for, and the liquidity of, our common stock.

Public company compliance may make it more difficult for us to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies.  As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly.  As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.  As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

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Because we became public by means of a reverse acquisition, we may not be able to attract the attention of major brokerage firms.

There may be risks associated with us becoming public through a “reverse acquisition.”  Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock.  No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our post-Share Exchange company.

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

●   changes in our industry;  

●   competitive pricing pressures;  

●   our ability to obtain working capital financing;  

●   additions or departures of key personnel;  

●   limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;  

●   sales of our common stock;  

●   our ability to execute our business plan;  

●   operating results that fall below expectations;  

●   loss of any strategic relationship;  

●   regulatory developments;  

●   economic and other external factors; and  

●   period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.  These market fluctuations may also materially and adversely affect the market price of our common stock.

We may not pay dividends in the future.  Any return on investment may be limited to the value of our common stock.

We do not anticipate paying cash dividends in the foreseeable future.  The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.  If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

To date there has not been a liquid trading market for our common stock.  We cannot predict how liquid the market for our common stock might become.  As soon as is practicable, we anticipate applying for listing of our common stock on either the NYSE Amex Equities, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange.  We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange.  Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remains quoted on the OTC Bulletin Board or is suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

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Furthermore, for companies whose securities are quoted on the OTC Bulletin Board, it is more difficult (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies and (iii) to obtain needed capital.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, including shares issued in the Private Placement upon the effectiveness of a registration statement with respect to such shares, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall.  The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.  In addition, the shares of our common stock sold in the Private Placement will be freely tradable upon the earlier of: (i) effectiveness of a registration statement covering such shares and (ii) the date on which such shares may be sold without registration pursuant to Rule 144 (or other applicable exemption) under the Securities Act.

We may apply the proceeds of the Private Placement to uses that ultimately do not improve our operating results or increase the price of our common stock.

We intend to use the net proceeds from the Private Placement for costs and expenses incurred in connection with the repayment of indebtness, the expansion of our plant in Quebec, Canada, potential acquisitions and general corporate purposes.  However, we do not have more specific plans for the net proceeds from the Private Placement.  Moreover, our management has broad discretion in how we actually use these proceeds.  These proceeds could be applied in ways that do not ultimately improve our operating results or otherwise increase the value of our common stock.

Nathan J. Mazurek, our president and chairman of our board of directors, beneficially owns a substantial portion of our outstanding common stock, which enables him to influence many significant corporate actions and in certain circumstances may prevent a change in control that would otherwise be beneficial to our stockholders.

Nathan J. Mazurek beneficially owns approximately 79.3% of our outstanding shares of common stock. As such, he has a substantial impact on matters requiring the vote of the stockholders, including the election of our directors and most of our corporate actions. This control could delay, defer, or prevent others from initiating a potential merger, takeover or other change in our control, even if these actions would benefit our stockholders and us. This control could adversely affect the voting and other rights of our other stockholders and could depress the market price of our common stock.

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Our certificate of incorporation allows for our board to create new series of preferred stock without further approval by holders of our common stock, which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further approval by holders of our common stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of December 3, 2009 regarding the beneficial ownership of our common stock, taking into account the consummation of the Share Exchange and the closing of the Private Placement, by (i) each person or entity who, to our knowledge, beneficially owns more than 5% of our common stock; (ii) each executive officer and named officer; (iii) each director; and (iv) all of our officers and directors as a group.  Unless otherwise indicated in the footnotes to the following table, each of the stockholders named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned. Except as otherwise indicated, the address of each of the stockholders listed below is: c/o Pioneer Power Solutions, Inc., 9 West 57th Street, 26th Floor, New York, New York 10019.

Name of Beneficial Owner	Number of Shares Beneficially Owned (1)	Percentage Beneficially Owned (2)
5% Owners
Provident Pioneer Partners, L.P.	23,800,000(3)(4)	79.3%
Officers and Directors
Nathan J. Mazurek	23,800,000(4)	79.3%
Raymond Haddad	--	--
James Wilkins	--	--
Yossi Cohn	--	--
David J. Landes	--	--
David Tesler	--	--

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Name of Beneficial Owner	Number of Shares Beneficially Owned (1)	Percentage Beneficially Owned (2)
Jonathan Tulkoff	--	--
All officers and directors as a group (7 persons)	23,800,000(3)(4)	79.3%

________________

(1) Unless otherwise indicated, includes shares owned by a spouse, minor children, and relatives sharing the same home, as well as entities owned or controlled by the named beneficial owner.

(2)   Based on 29,000,000 shares of our common stock outstanding immediately following the Share Exchange and Private Placement.

(3)   Nathan J. Mazurek is the majority shareholder and a control person of Provident Canada Corp., the general partner of Provident Pioneer Partners, L.P., and, as such, has sole voting and investment power over the 22,800,000 shares of common stock and currently exercisable warrant to purchase up to 1,000,000 shares of common stock at an exercise price of $3.25 per share held by Provident Pioneer Partners, L.P.

(4)   Includes (i) 22,800,000 shares of common stock held by Provident Pioneer Partners, L.P. and (ii) a currently exercisable warrant to purchase up to 1,000,000 shares of common stock at an exercise price of $3.25 per share held by Provident Pioneer Partners, L.P.

Executive Officers and Directors

The following persons became our executive officers and directors on December 2, 2009, upon effectiveness of the Share Exchange, and hold the positions set forth opposite their respective names.

Name	Age	Position
Nathan J. Mazurek	47	Chief Executive Officer, President, Chairman, Chief Financial Officer, Secretary and Treasurer
Yossi Cohn	31	Director
David J. Landes	53	Director
David Tesler	36	Director
Jonathan Tulkoff	45	Director

Our directors hold office until the earlier of their death, resignation or removal by stockholders or until their successors have been qualified.  Our officers are elected annually by, and serve at the pleasure of, our board of directors.

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Biographies

Directors and Officers

Nathan J. Mazurek has served as our chief executive officer, president, chairman, chief financial officer, treasurer and secretary since the consummation of the Share Exchange on December 2, 2009.  Mr. Mazurek has over 20 years experience in the electrical equipment and components industry.  He has served as the chief executive officer, vice president, sales and marketing and chairman of the board of directors of Pioneer Transformers since 1995.  Mr. Mazurek has served as president of American Circuit Breaker Corp., a manufacturer and distributor of circuit breakers, since 2008 and as president of Aerovox, Inc., a manufacturer of AC film capacitors from 2002 through 2007.  Mr. Mazurek has served as a director of Empire Resources, Inc., a distributor of semi-finished aluminum products, since 1999.  Mr. Mazurek received his BA from Yeshiva College in 1983 and his JD from Georgetown University Law Center in 1986.

Yossi Cohn has served as our director since the consummation of the Share Exchange on December 2, 2009.  Mr. Cohn founded YY Capital Partners, LLC, an investment firm, in 2007 and has served as its co-managing partner since its inception.  He has served as a member of L3G Partners, LLC since June, 2009.  He served as a director of investor relations at IDT Corporation, a NYSE listed telecommunications company, from September 2005 through May 2007.  Prior to joining IDT, Mr. Cohn was a director of research at SAGEN Asset Management, an asset manager of funds of hedge funds, from January 2005 through May 2005.  Mr. Cohn started his career as an analyst in the funds-of-funds investment group of Millburn Ridgefield Corporation, where he worked from March 2004 through January 2005.  

David J. Landes has served as our director since the consummation of the Share Exchange on December 2, 2009.  Mr. Landes has served as President of Provident Sunnyside, LLC, and as President of CYMA Investments LLC, for over the past five years and as President of 516 Churchill Associates, LLC since 2005.  Mr. Landes received his BA from Columbia University and his JD from the University of Chicago.

David Tesler has served as our director since the consummation of the Share Exchange on December 2, 2009.  Mr. Tesler has served as chief executive officer of LeaseProbe, LLC, a provider of lease abstracting services, since 2004 and as chief executive officer of RealDiligence, LLC, a financial due diligence company, since 2007. Prior to founding LeaseProbe, LLC, Mr. Tesler practiced law at Skadden Arps Slate Meager & Flom LLP and at Jenkens & Gilchrist, Parker Chapin LLP.  Mr. Tesler received his BA from Yeshiva College, a Master’s degree in Medieval History from Bernard Revel Graduate School and a JD from Benjamin A. Cardozo School of Law.  

Jonathan Tulkoff has served as our director since the consummation of the Share Exchange on December 2, 2009.  Mr. Tulkoff has served as president of Uniwire International, Ltd. a steel trading and marketing company, since 1995.

There are no family relationships among any of our directors and executive officers.

Executive Compensation

Summary Compensation Table

The table below sets forth, for our last two fiscal years, the compensation earned by (i) Nathan J. Mazurek, our chief executive officer, president, chairman, chief financial officer, treasurer and secretary, (ii) Raymond Haddad, the vice president, operations, of Pioneer Transformers and (iii) James Wilkins, the vice president, finance, of Pioneer Transformers.

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Name and Principal Position	Year	Salary ($)(1)	Bonus ($)(1)	All Other Compensation  ($)(1)	Total ($)(1)
Nathan J. Mazurek Chief Executive Officer, President and Chairman	2008	--	--	$274,511 (2)	$274,511
	2007	--	--	$142,236 (3)	$142,236
Raymond Haddad Vice President, Operations	2008	$228,345	$38,422	$15,799 (4)	$282,566
	2007	$206,394	$931	$18,696 (4)	$226,021
James Wilkins Vice President, Finance	2008	$100,194	$10,308	$16,835 (5)	$127,337
	2007	$88,920	$931	$16,723 (5)	$106,574

(1)   Compensation amounts received in non-U.S. currency have been converted into U.S. dollars using the average exchange rate for the applicable year.

(2)   Represents fees earned for consulting services of $150,511 and reimbursement of expenses for an administrative assistant, office space and travel and entertainment of $124,000.

(3)   Represents fees earned for consulting services of $69,236 and reimbursement of expenses for an administrative assistant, office space and travel and entertainment of $73,000.

(4)   Represents car benefits.

(5)   Represents vacation pay and car benefits.

Agreements with Executive Officers

Nathan J. Mazurek

 We have entered into an employment agreement with Mr. Mazurek to serve as our chief executive officer and chief financial officer for a term of three years. Pursuant to this employment agreement, Mr. Mazurek is entitled to receive an annual base salary of $250,000, which shall be increased to $275,000 and $300,000 on the first anniversary and second anniversary, respectively, of the Share Exchange.  Mr. Mazurek is entitled to receive an annual cash bonus at the discretion of our board of directors, or a committee thereof, of up to 50% of his annual base salary.  The bonus shall be prorated for any fiscal year that is less than 12 months due to a change in the fiscal year.  In the event that Mr. Mazurek is terminated without cause, Mr. Mazurek shall be entitled to receive his base salary for the balance of the term of this agreement (assuming Mr. Mazurek’s employment had not been terminated).  This agreement prohibits Mr. Mazurek from competing with us for a period of four years following the date of termination; provided however, that he is prohibited from competing with us for a period of two years in the event he is terminated without cause or due to disability or he voluntarily resigns following a breach by us of this agreement.

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Outstanding Equity Awards at Fiscal Year-End

There were nooutstanding equity awards held by our officers as of December 31, 2008.

2009 Equity Incentive Plan

On December 2, 2009, our board of directors and stockholders adopted the 2009 Stock Incentive Plan (the “2009 Plan”), pursuant to which 1,600,000 shares of our common stock are reserved for issuance as awards to employees, directors, consultants and other service providers. The purpose of the 2009 Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2009 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, restricted stock, stock appreciation rights, performance unit awards and stock bonus awards. The 2009 Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors. No awards have been granted to date under the 2009 Plan.

Retirement Savings Plan

 We provide  retirement benefits to each of our salaried employees whom we permit to participate in our Retirement Savings Plan (the “Retirement Plan”), which is registered as a retirement savings plan, or RSP, under the Income Tax Act (Canada).  An employee must have been employed by us for a period of at least one continuous year to be eligible to participate.  An employee may contribute up to 2.5% of his or her salary into an individual retirement account and we contribute 3.6% of the employee’s salary into his or her account.  The employees invest the monies in their respective accounts in one or more investment funds managed by The Standard Life Assurance Company and its subsidiary, the Standard Life Assurance Company of Canada.  The monies in the retirement accounts are to be used to purchase annuities or registered retirement income funds no later than the end of the year of retirement.   Employees may select annuities that will continue for their lives only, for the lives of their spouses in the event they die before the spouse, or for a specific period of time.

There is no mandatory age of retirement and employees are entitled to receive their pension benefits upon retirement, without reference to the number of years of employment.  If an employee dies before receiving pension benefits, a refund of the value in his funds will be paid to the employee’s beneficiary or estate.

Mr. Haddad received pension benefits of approximately $9,410 and approximately $8,761, respectively, in the fiscal years ended December 31, 2008 and 2007, respectively.  Mr. Wilkins received pension benefits of approximately $4,038 and approximately $3,778, respectively, in the fiscal years ended December 31, 2008 and 2007.   

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Pension Plan for Hourly Employees

Each of our hourly employees at our manufacturing facility located in Granby, Quebec, Canada, participates in our Pension Plan for Hourly Employees (the “Pension Plan”).  They are typically eligible to receive retirement benefits at age 65 as set forth below:

Retirement on or After	Amount of Pension per Month of Credited Service
June 1, 2004	$24
June 1, 2007	$25
June 1, 2008	$26
June 1, 2009	$27

The maximum age of retirement is 69 and employees who are employed past age 65 receive the actuarial equivalent of the pension accrued to age 65.  The pension is normally payable for the lifetime of the employee.  For employees who have a spouse at retirement, the pension will continue from the date of death for the spouse’s lifetime, at the rate of 60% of the employee’s pension.

Assets held by the Pension Plan are invested in accordance with the provisions of our approved investment policy.  The Pension Plan’s strategic asset allocation was structured to reduce volatility through diversification and enhance return to approximate the amounts and timing of the expected benefit payments.

Director Compensation

In addition to any compensation received for services performed as an executive officer, we intend to pay each director $1,000 per meeting for each board meeting attended and reimbursement for expenses incurred in connection with their service as directors.  We also grant annually to each director options to purchase 2,000 shares of our common stock at an exercise price per share equal to the fair market value price per share of our common stock on the grant date.  The options shall vest on the one year anniversary of the grant date.  During the fiscal years ended December 31, 2008 and 2007, our directors did not receive any compensation from us for their services in such capacity.

Directors’ and Officers’ Liability Insurance

We currently have directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions.  Such insurance also insures us against losses which we may incur in indemnifying our officers and directors.  In addition, we have entered into indemnification agreements with key officers and directors and such persons shall also have indemnification rights under applicable laws, and our certificate of incorporation and bylaws.

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Code of Ethics

We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.

Board Committees

We expect our board of directors, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt charters relative to each such committee.  We intend to appoint such persons to committees of the board of directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we elect to seek a listing on a national securities exchange.

Certain Relationships and Related Transactions

Nathan J. Mazurek, our chief executive officer, president, chairman, chief financial officer, secretary and treasurer, is the control person of Provident Canada Corp., the general partner of the PT Shareholder.  In 2008 and 2009, Pioneer Transformers paid the PT Shareholder cash dividends of $450,000 and $2,342,000, respectively.  In connection with the 2009 dividends, immediately prior to the Share Exchange and Private Placement, Pioneer Transformers paid the PT Shareholder a cash dividend of $2,000,000 with funds obtained through its revolving credit facility.  Immediately after the closing of the Share Exchange, we repaid the obligations incurred under the revolving credit facility using the proceeds from the Private Placement and, as a result, had no bank indebtedness outstanding following the closing of the Share Exchange.

Pioneer Transformers paid Mr. Mazurek approximately $206,351 from January 1, 2009 through September 30, 2009 as compensation for consulting services and reimbursement of expenses.  Pioneer Transformers paid Mr. Mazurek approximately $274,511 for consulting services and reimbursement of expenses in the fiscal year ended December 31, 2008.

Between 1996 and 2005, each of Mr. Mazurek and Stephen Landes, the brother of David J. Landes, made cash advances to a switchgear company that was a wholly owned subsidiary of the PT Shareholder in the aggregate principal amount of approximately $800,000. These advances were made without any terms of repayment or interest rate. Between 2006 and 2008, the PT Shareholder caused Pioneer Transformers to advance an aggregate of $700,335 to Mr. Mazurek and Stephen Landes as reimbursement for these advances to the switchgear company. In 2008, Pioneer Transformers forgave these advances in full.

Item  3.02        Unregistered Sales of Equity Securities

Sales by Sierra

Sierra completed an offering of 6,000,000 shares of its common stock at a price of $0.001 per share on September 25, 2008 to David Davis, its president, chief executive officer, chief financial officer and secretary-treasurer. The total amount received from that offering was $6,000.  These shares were issued pursuant to Section 4(2) of the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.  

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Sales by Pioneer Power

On December 2, 2009, we sold an aggregate of 5,000,000 shares of common stock to 18 investors in connection with the Private Placement for aggregate gross proceeds of $5,000,000. The Private Placement was made solely to “accredited investors,” as that term is defined in Regulation D under the Securities Act.  The securities sold in the Private Placement were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

On December 2, 2009, pursuant to the Share Exchange, we issued 22,800,000 shares of common stock and a warrant to purchase up to 1,000,000 shares of common stock at an exercise price of $3.25 per share to the PT Shareholder in exchange for all of the issued and outstanding capital stock of Pioneer Transformers. The PT Shareholder was an “accredited investor,” as that term is defined in Regulation D under the Securities Act at the time of the Share Exchange. The 22,800,000 shares of common stock and the $3.25 Warrant were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

On December 2, 2009, we sold a five-year warrant to purchase up to an aggregate of 1,000,000 shares of common stock of Pioneer Power at an exercise price of $2.00 per share for aggregate gross proceeds of $10,000 to one of our consultants.  Such consultant was an “accredited investor,” as that term is defined in Regulation D under the Securities Act.  This warrant was not registered under the Securities Act, or the securities laws of any state, and was offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act, and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.

Information set forth in Item 2.01 of this Current Report on Form 8-K with respect to the issuance of unregistered equity securities in connection with the Share Exchange and Private Placement is incorporated by reference into this Item 3.02.

Description of Capital Stock

Authorized Capital Stock

We have authorized 80,000,000 shares of capital stock, par value $0.001 per share, of which 75,000,000are shares of common stock and 5,000,000are shares of “blank check” preferred stock.

Capital Stock Issued and Outstanding

After giving effect to the Share Exchange, and the issuance of 5,000,000 shares of common stock in the Private Placement and the Split-Off, we have issued and outstanding securities on a fully diluted basis as follows:

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●     29,000,000 shares of common stock;

●     no shares of preferred stock;

●     a five-year warrant to purchase up to an aggregate of 1,000,000 shares of our common stock at an exercise price of $3.25 per share; and

●     a five-year warrant to purchase up to an aggregate of 1,000,000 shares of our common stock at an exercise price of $2.00 per share.

Common Stock

The holders of our common stock are entitled to one vote per share. Our Certificate of Incorporation does not provide for cumulative voting. The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth.  Upon liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors and issued in the future.

Preferred Stock

Our board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series.  Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

Warrants

$2.00 Warrant

Immediately following the Share Exchange, we sold a warrant to purchase up to an aggregate of 1,000,000 shares of common stock for a price of $0.01 per warrant. Such warrant provides for the purchase of shares of common stock for five years at an exercise price of $2.00 per share. We are prohibited from effecting the exercise of the warrant to the extent that as a result of such exercise the holder of the exercised warrant beneficially owns more than 4.99% (or, if such limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of our common stock upon the exercise of the warrant. The warrant contains provisions that protect its holder against dilution by adjustment of the purchase price in certain events such as stock dividends, stock splits and other similar events. If at any time after the one year anniversary of the issuance date of such warrant there is no effective registration statement registering, or no current prospectus available for, the resale of the shares of common stock underlying the warrant, then the holder of such warrant has the right to exercise the warrant by means of a cashless exercise.

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$3.25 Warrant

Pursuant to the Share Exchange, we issued a warrant to purchase up to 1,000,000 shares of common stock to the PT Shareholder. Such warrant provides for the purchase of shares of common stock for five years at an exercise price of $3.25 per share. This warrant contains provisions that protect its holder against dilution by adjustment of the purchase price in certain events such as stock dividends, stock splits and other similar events. If at any time after the one year anniversary of the issuance date of such warrant there is no effective registration statement registering, or no current prospectus available for, the resale of the shares of common stock underlying such warrant, then the holder shall have the right to exercise this warrant by means of a cashless exercise.

This summary description of the warrants is qualified in its entirety by reference to the Form of $2.00Warrant attached hereto as Exhibit 10.2 and the Form of $3.25Warrant attached hereto as Exhibit 10.3.

Options

We have adopted a stock incentive plan that provides for the granting of options to purchase common stock, stock appreciation rights, performance unit awards, restrictive stock awards, and stock bonus awards to designated employees, consultants, officers and directors.  1,600,000 shares of common stock have been reserved for awards under this plan, but no awards have been granted to date.

Dividend Policy

Pioneer Transformers paid the PT Shareholder $2,342,000 in cash dividends in 2009, a $450,000 cash dividend in 2008 and no cash dividend in 2007.  We do not anticipate or contemplate paying cash dividends on our common stock in the foreseeable future.  We currently intend to use all available funds to develop our business.  We can give no assurances that we will ever have excess funds available to pay dividends.

Registration Rights

We have agreed to use our best efforts to file a registration statement with the SEC within 60 days following the close of the Private Placement covering the resale of the shares of common stock issued in the Private Placement, and to cause such registration statement to be declared effective by the SEC on or before the 180th day following the closing of the Private Placement. If we fail to file a registration statement registering the resale of such shares within the prescribed 60 day period or fail to have such registration statement declared effective within the prescribed 180 day period, then on each such event of default, and on every monthly anniversary thereof, we shall pay to the investors, in cash, a penalty equal to 1% of the dollar amount invested by each investor; provided, however, that we shall not be liable for liquidated damages as to any shares of common stock that (A) are not permitted by the SEC to be included in a registration statement because of the SEC’s application of Rule 415 or (B) can be sold publicly under Rule 144.

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We have granted piggy-back registration rights to the 1,000,000 shares of common stock underlying the $2.00 Warrant and the 1,000,000 shares of common stock underlying the $3.25 Warrant.

Lock-up Agreements

All of the shares of common stock issued to the PT Shareholder in connection with the Share Exchange are subject to a lock-up agreement.  The lock-up agreement provides that the PT Shareholder may not, subject to certain exemptions, sell or transfer any of the shares it received in the Share Exchange for a period of 18 months following the Share Exchange.

 This summary description of the lock-up agreement is qualified in its entirety by reference to the Form of Lock-Up Agreement attached hereto as Exhibit 10.4.

Indemnification of Directors and Officers

The Delaware General Corporation Law (“DGCL”) provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as us, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.  In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.

Our Certificate of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in the manner permitted by the provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by contract.

We also have director and officer indemnification agreements with each of our executive officers and directors that provide, among other things, for the indemnification to the fullest extent permitted or required by Delaware law, provided that such indemnitee shall not be entitled to indemnification in connection with any “claim” (as such term is defined in the agreement) initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation of such claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Exchange Act.

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Any repeal or modification of these provisions approved by our stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer of ours existing as of the time of such repeal or modification.

We are also permitted to apply for insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the DGCL would permit indemnification.

Anti-Takeover Effect of Delaware Law, Certain By-Law Provisions

 Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or tender offers or delaying or preventing a change of control of our company. These provisions are as follows:

●   they provide that special meetings of stockholders may be called only by our chairman, our president or by a resolution adopted by a majority of our board of directors;

●   they do not include a provision for cumulative voting in the election of directors. Under cumulative voting, a minority stockholder holding a sufficient number of shares may be able to ensure the election of one or more directors. The absence of cumulative voting may have the effect of limiting the ability of minority stockholders to effect changes in our board of directors; and

●   they allow us to issue, without stockholder approval, up to 5,000,000 shares of preferred stock that could adversely affect the rights and powers of the holders of our common stock.

We are subject to the provisions of Section 203 of the DGCL, an anti-takeover law.  In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.  For purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of the voting stock.

Trading Information

Our common stock is currently approved for quotation on the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority, Inc. under the symbol SRRC and there is no active trading market for our stock.  We have notified the OTC Bulletin Board of our name change and will obtain a new symbol.  As soon as practicable, and assuming we satisfy all necessary initial listing requirements, we intend to apply to have our common stock listed for trading on the NYSE Amex Equities or The Nasdaq Stock Market, although we cannot be certain that any of these applications will be approved.

Transfer Agent

The transfer agent for our common stock is Empire Stock Transfer Inc. We will serve as warrant agent for the $3.25Warrant and the $2.00Warrant.

Item  4.01        Changes in Registrant’s Certifying Accountant.

On December 2, 2009, in connection with the Share Exchange, we dismissed Maddox Ungar Silberstein, PLLC (“Maddox”) as our independent registered public accounting firm.  Maddox had previously been engaged as the principal accountant to audit Pioneer Power’s financial statements (when known as Sierra Concepts, Inc.).  The reason for the dismissal of Maddox is that, following the consummation of the Share Exchange on December 2, 2009, our primary business became the business conducted by Pioneer Transformers.  The independent registered public accountant of Pioneer Transformers is the firm of RSM Richter LLP (“RSM”).  We believe that it is in our best interest to have RSM continue to work with our business, and we therefore retained RSM as our new principal independent registered accounting firm, effective as of December 2, 2009. RSM is located at 2, Place Alexis Nihon, Montreal, Quebec H3Z 3C2, Canada.  The decision to change accountants was approved by our board of directors on December 2, 2009.

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The report of Maddox on Pioneer Power’s financial statements for the period from September 16, 2008 (inception) through September 30, 2009 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report was qualified as to Pioneer Power’s ability to continue as a going concern.

From Pioneer Power’s inception through December 2, 2009, there were no disagreements with Maddox on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Maddox, would have caused it to make reference to the matter in connection with its reports.

From Pioneer Power’s inception through December 2, 2009,  we did not consult RSMregarding either: (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K.

We have made the contents of this Current Report on Form 8-K available to Maddox and requested that Maddox furnish us a letter addressed to the SEC as to whether Maddox agrees or disagrees with, or wishes to clarify our expression of, our views, or containing any additional information.  A copy of Maddox’s letter to the SEC is included as Exhibit 16.1 to this Current Report on Form 8-K.

Item  5.01        Changes in Control of Registrant.

Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item  5.02        Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Our sole officer and director immediately prior to the Share Exchange resigned from all positions with us as of December 2, 2009, effective upon the closing of the Share Exchange.  Pursuant to the terms of the Exchange Agreement, our new directors and officers are as set forth therein.  Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item  5.03         Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On November 30, 2009, Pioneer Power’s board of directors approved the merger of Sierra with and into Pioneer Power, for the purpose of changing our state of incorporation to Delaware from Nevada and changing our name from “Sierra Concepts, Inc.” to “Pioneer Power Solutions, Inc.”  On November 30, 2009, stockholders representing the requisite number of votes necessary to approve the merger and name change took action via written consent, approving such actions.  On November 30, 2009, Sierra was merged with and into Pioneer Power by filing a Certificate of Ownership and Merger with the Secretary of State of the State of Delaware and filing Articles of Merger with the Secretary of State of the State of Nevada.  As a result of the merger, the certificate of incorporation and bylaws of Pioneer Power replaced Sierra's articles of incorporation and bylaws.

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 On December 2, 2009, Pioneer Power’s board of directors approved a change in fiscal year to a fiscal year ending on December 31 from a fiscal year ending on September 30. Our 2009 fiscal year will end on December 31, 2009.

Item  5.06        Change in Shell Company Status.

Following the consummation of the Share Exchange described in Item 2.01 of this Current Report on Form 8-K, we believe that we are not a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

Item  9.01        Financial Statements and Exhibits.

(a)           Financial Statements of Businesses Acquired.  In accordance with Item 9.01(a), Pioneer Transformers’ audited financial statements for the fiscal years ended December 31, 2008 and 2007 are filed in this Current Report on Form 8-K as Exhibit 99.1 and Pioneer Transformers’ unaudited financial statements for the nine months ended September 30, 2009 are filed in this Current Report on Form 8-K as Exhibit 99.2.

(b)           Pro Forma Financial Information.  In accordance with Item 9.01(b), our pro forma financial statements are filed in this Current Report on Form 8-K as Exhibit 99.3.

(c)           Exhibits.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

Exhibit No.	Description
2.1	Share Exchange Agreement, dated December 2, 2009, by and among Pioneer Power Solutions, Inc., Pioneer Transformers Ltd. and Provident Pioneer Partners, L.P., the holder of all of the outstanding capital stock of Pioneer Transformers Ltd.
3.1	Certificate of Incorporation (Incorporated herein by reference from Exhibit 3.1 to our Form 8-K filed with the SEC on December 2, 2009)
3.2	Bylaws (Incorporated herein by reference from Exhibit 3.2 to our Form 8-K filed with the SEC on December 2, 2009)
10.1	Form of Securities Purchase Agreement
10.2	Form of $2.00 Warrant

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Exhibit No.	Description
10.3	Form of $3.25 Warrant
10.4	Form of Lock-up Agreement
10.5	Resignation Letter from David Davis, dated December 2, 2009
10.6	Form of Director and Officer Indemnification Agreement
10.7	Employment Agreement, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and Nathan J. Mazurek
10.8	Pioneer Power Solutions, Inc. 2009 Equity Incentive Plan
10.9	Form of 2009 Incentive Stock Option Agreement
10.10	Form of 2009 Non-Qualified Stock Option Agreement
10.11	Agreement of Conveyance, Transfer and Assignment of Assets and Assumptions of Obligations, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and Sierra Concepts Holdings, Inc.
10.12	Stock Purchase Agreement, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and David Davis
10.13	Agreement for Authorized Sales Representatives, dated March 1, 1995 by and between Pioneer Transformers Ltd. and CHAZ Sales Corp.
10.14	Agreement for Authorized Sales Representatives, dated April 1, 1996, by and between Pioneer Transformers Ltd. and Virelli & Associates, Inc.
10.15	Agreement for Authorized Sales Representatives, dated September 19, 2003, by and between Pioneer Transformers Ltd. and AESCO Associates Ltd.
10.16	Collective Labour Agreement, dated June 1, 2005, by and between Pioneer Transformers Ltd. and The Steelworkers Union on behalf of Local 9414
10.17	Agreement for Authorized Sales Representatives, dated May 11, 2006, by and between Pioneer Transformers Ltd. and Techno-Contact, Inc.
10.18	Lease Amending Agreement, dated August 1, 2006, by and between Pioneer Transformers Ltd. and 2600 Skymark Investments Inc.
10.19*	Agreement dated September 1, 2006, by and among Pioneer Transformers Ltd., Newfoundland Power, Inc., Maritime Electric Company, Limited, Fortisalberta Inc. and Fortisbc Inc.
10.20	License and Services Agreement, dated May 4, 2007, by and between Pioneer Transformers Ltd. and Oracle Corporation Canada Inc.
10.21	ValuePlan Lease, dated September 27, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited

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Exhibit No.	Description
10.22	ValuePlan Lease, dated November 22, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.23	ValuePlan Lease, dated December 11, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.24	ValuePlan Lease, dated December 19, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.25*	Agreement dated August 5, 2009, by and between Pioneer Transformers Ltd. and Toronto Hydro-Electric System Limited
10.26*	Agreement dated April 1, 2006, by and between Pioneer Transformers Ltd. and Hydro-Quebec Utility Company
10.27	Commitment Letter, dated July 9, 2009, by and between Pioneer Transformers Ltd. and the Bank of Montreal
16.1	Letter from Maddox Ungar Silberstein, PLLC, dated December 4, 2009
99.1	Pioneer Transformers Ltd. financial statements for the fiscal years ended December 31, 2008 and 2007
99.2	Pioneer Transformers Ltd. unaudited financial statements for the nine months ended September 30, 2009
99.3	Pro forma unaudited consolidated financial statements as of September 30, 2009
*	Confidential treatment has been requested for these exhibits and confidential portions have been filed with the SEC

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SIGNATURES

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

Date:  December 7, 2009

PIONEER POWER SOLUTIONS, INC.
By:	/s/ Nathan J. Mazurek
	Nathan J. Mazurek
	Chief Executive Officer

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INDEX TO EXHIBITS

Exhibit No.	Description
2.1	Share Exchange Agreement, dated December 2, 2009, by and among Pioneer Power Solutions, Inc., Pioneer Transformers Ltd. and Provident Pioneer Partners, L.P., the holder of all of the outstanding capital stock of Pioneer Transformers Ltd.
3.1	Certificate of Incorporation (Incorporated herein by reference from Exhibit 3.1 to our Form 8-K filed with the SEC on December 2, 2009)
3.2	Bylaws (Incorporated herein by reference from Exhibit 3.2 to our Form 8-K filed with the SEC on December 2, 2009)
10.1	Form of Securities Purchase Agreement
10.2	Form of $2.00 Warrant
10.3	Form of $3.25 Warrant
10.4	Form of Lock-up Agreement
10.5	Resignation Letter from David Davis, dated December 2, 2009
10.6	Form of Director and Officer Indemnification Agreement
10.7	Employment Agreement, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and Nathan J. Mazurek
10.8	Pioneer Power Solutions, Inc. 2009 Equity Incentive Plan
10.9	Form of 2009 Incentive Stock Option Agreement
10.10	Form of 2009 Non-Qualified Stock Option Agreement
10.11	Agreement of Conveyance, Transfer and Assignment of Assets and Assumptions of Obligations, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and Sierra Concepts Holdings, Inc.
10.12	Stock Purchase Agreement, dated December 2, 2009, by and between Pioneer Power Solutions, Inc. and David Davis
10.13	Agreement for Authorized Sales Representatives, dated March 1, 1995 by and between Pioneer Transformers Ltd. and CHAZ Sales Corp.
10.14	Agreement for Authorized Sales Representatives, dated April 1, 1996, by and between Pioneer Transformers Ltd. and Virelli & Associates, Inc.

Exhibit No.	Description
10.15	Agreement for Authorized Sales Representatives, dated September 19, 2003, by and between Pioneer Transformers Ltd. and AESCO Associates Ltd.
10.16	Collective Labour Agreement, dated June 1, 2005, by and between Pioneer Transformers Ltd. and The Steelworkers Union on behalf of Local 9414
10.17	Agreement for Authorized Sales Representatives, dated May 11, 2006, by and between Pioneer Transformers Ltd. and Techno-Contact, Inc.
10.18	Lease Amending Agreement, dated August 1, 2006, by and between Pioneer Transformers Ltd. and 2600 Skymark Investments Inc.
10.19*	Agreement dated September 1, 2006, by and among Pioneer Transformers Ltd., Newfoundland Power, Inc., Maritime Electric Company, Limited, Fortisalberta Inc. and Fortisbc Inc.
10.20	License and Services Agreement, dated May 4, 2007, by and between Pioneer Transformers Ltd. and Oracle Corporation Canada Inc.
10.21	ValuePlan Lease, dated September 27, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.22	ValuePlan Lease, dated November 22, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.23	ValuePlan Lease, dated December 11, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.24	ValuePlan Lease, dated December 19, 2007, by and between Pioneer Transformers Ltd. and IBM Canada Limited
10.25*	Agreement dated August 5, 2009, by and between Pioneer Transformers Ltd. and Toronto Hydro-Electric System Limited
10.26*	Agreement dated April 1, 2006, by and between Pioneer Transformers Ltd. and Hydro-Quebec Utility Company
10.27	Commitment Letter, dated July 9, 2009, by and between Pioneer Transformers Ltd. and the Bank of Montreal
16.1	Letter from Maddox Ungar Silberstein, PLLC, dated December 4, 2009
99.1	Pioneer Transformers Ltd. financial statements for the fiscal years ended December 31, 2008 and 2007
99.2	Pioneer Transformers Ltd. unaudited financial statements for the nine months ended September 30, 2009
99.3	Pro forma unaudited consolidated financial statements as of September 30, 2009
*	Confidential treatment has been requested for these exhibits and confidential portions have been filed with the SEC

EX-2.1

Exhibit 2.1

SHARE EXCHANGE AGREEMENT

This Share Exchange Agreement (this “Agreement”), dated as of December 2, 2009, is by and among Pioneer Power Solutions, Inc., a Delaware corporation (the “Parent”), Pioneer Transformers Ltd., a company incorporated under the Canada Business Corporations Act (the “Company”), and Provident Pioneer Partners, L.P., a Delaware limited partnership, and the sole stockholder of the Company (the “Shareholder”).  Each of the parties to this Agreement is individually referred to herein as a “Party” and collectively as the “Parties.”

BACKGROUND

The Company has 750,000 common shares (the “Company Shares”) issued and outstanding, all of which are held by the Shareholder.  The Shareholder has agreed to transfer the Company Shares to the Parent in exchange for an aggregate of 22,800,000 newly issued shares of common stock, par value $0.001 per share, of the Parent (the “Parent Stock”), and a five-year warrant to purchase up to 1,000,000 shares of Parent Stock at an exercise price of $3.25 per share in the form attached hereto as Exhibit A (the “Warrant”).

The exchange of the Company Shares for 22,800,000 shares of Parent Stock (the “Parent Shares”) and the Warrant is intended to constitute a  tax-deferred exchange of property governed by Section 351 of the United States Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization or restructuring provisions as may be available under the Code.

The Board of Directors of each of the Parent and the Company has determined that it is desirable to effect this plan of reorganization and share exchange.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

Exchange of Shares

SECTION 1.01.Exchange by the Shareholder. At the Closing (as defined in Section 1.02), the Shareholder shall sell, transfer, convey, assign and deliver to the Parent all of the Company Shares free and clear of all Liens in exchange for the Parent Shares and the Warrant.

SECTION 1.02.Closing.  The closing (the “Closing”) of the transactions contemplated by this Agreement (the “Transactions”) shall take place at the offices of Haynes and Boone, LLP at 1221 Avenue of the Americas, 26th Floor, New York, New York 10020, commencing upon the satisfaction or waiver of all conditions and obligations of the Parties to consummate the Transactions contemplated hereby (other than conditions and obligations with respect to the actions that the respective Parties will take at Closing) or such other date and time as the Parties may mutually determine (the “Closing Date”).

ARTICLE II

Representations and Warranties of the Shareholder

The Shareholder hereby represents and warrants to the Parent, as follows:

SECTION 2.01.Good Title.  The Shareholder is the record and beneficial owner, and has good title to the Company Shares, with the right and authority to sell and deliver the Company Shares to the Parent as provided herein. Upon delivery of any certificate or certificates duly endorsed for transfer to the Parent, representing the same as herein contemplated and/or upon registering of the Parent as the new owner of the Company Shares in the share register of the Company, the Parent will receive good title to the Company Shares, free and clear of all liens, hypothecs security interests, pledges, equities and claims of any kind, voting trusts, trust agreements, shareholder agreements, prete nom agreements and other encumbrances (collectively, “Liens”).

SECTION 2.02.Power and Authority.  All acts required to be taken by the Shareholder to enter into this Agreement and to carry out the Transactions have been properly taken.  This Agreement constitutes a legal, valid and binding obligation of the Shareholder, enforceable against the Shareholder in accordance with the terms hereof.

SECTION 2.03.No Conflicts.  The execution and delivery of this Agreement by the Shareholder and the performance by the Shareholder of its obligations hereunder in accordance with the terms hereof: (i) will not require the consent of any third party or any federal, state, provincial, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (“Governmental Entity”) under any statutes, laws, ordinances, rules, regulations, orders, writs, injunctions, judgments, or decrees (collectively, “Laws”); (ii) will not violate any Laws applicable to the Shareholder; and (iii) will not violate or breach any contractual obligation to which the Shareholder is a party.

SECTION 2.04.No Finder’s Fee.  The Shareholder has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with the Transactions that the Company or the Parent will be responsible for.

SECTION 2.05.Purchase Entirely for Own Account.  The Parent Shares proposed to be acquired by the Shareholder hereunder will be acquired for investment for its own account, and not with a view to the resale or distribution of any part thereof, and the Shareholder has no present intention of selling or otherwise distributing the Parent Shares, except in compliance with applicable securities laws.

SECTION 2.06.Available Information.  The Shareholder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Parent.

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SECTION 2.07.Non-Registration. The Shareholder understands that the Parent Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and, if issued in accordance with the provisions of this Agreement, will be issued by reason of a specific exemption from the registration provisions of the Securities Act that depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Shareholder’s representations as expressed herein.  The non-registration shall have no prejudice with respect to any rights, interests, benefits and entitlements attached to the Parent Shares in accordance with the Parent charter documents or the laws of its jurisdiction of incorporation.

SECTION 2.08.Restricted Securities. The Shareholder understands that the Parent Shares are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Shareholder pursuant hereto, the Parent Shares would be acquired in a transaction not involving a public offering.  The Shareholder further acknowledges that if the Parent Shares are issued to the Shareholder in accordance with the provisions of this Agreement, the Parent Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom.  The Shareholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

SECTION 2.09.Legends.  It is understood that the Parent Shares will bear the following legend or another legend that is similar to the following:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

and any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended.

SECTION 2.10.Accredited Investor.  The Shareholder is an “accredited investor” within the meaning of Rule 501 under the Securities Act.

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ARTICLE III

Representations and Warranties of the Company

The Company has previously provided to the Parent a Disclosure Schedule and draft Current Report on Form 8-K for filing with the Securities and Exchange Commission (the “SEC”), including financial statements and notes thereto (the “Company Disclosure Letter”). The Company represents and warrants to the Parent that, except as set forth in the Company Disclosure Letter, regardless of whether or not the Company Disclosure Letter is referenced below with respect to any particular representation or warranty:

SECTION 3.01.Organization, Standing and Power.  Each of the Company and its subsidiaries (the “Company Subsidiaries”) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and in which it has a place of business and has the corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on the Company, a material adverse effect on the ability of the Company to perform its obligations under this Agreement or on the ability of the Company to consummate the Transactions (a “Company Material Adverse Effect”).  The Company is duly qualified to do business in each jurisdiction where the nature of its business or its ownership or leasing of its properties make such qualification necessary except where the failure to so qualify would not reasonably be expected to have a Company Material Adverse Effect.  The Company has delivered to the Parent true and complete copies of the certificate of incorporation and bylaws of the Company and such other constituent instruments of the Company as may exist, each as amended to the date of this Agreement (as so amended, the “Company Constituent Instruments”), and the comparable charter, organizational documents and other constituent instruments of each Company Subsidiary, in each case as amended through the date of this Agreement.

SECTION 3.02.Company Subsidiaries; Equity Interests.

(a)The Company Disclosure Letter lists each Company Subsidiary and its jurisdiction of organization.  Except as specified in the Company Disclosure Letter, all the outstanding shares of capital stock or equity investments of each Company Subsidiary have been validly issued and are fully paid and nonassessable and are as of the date of this Agreement owned by the Company, by another Company Subsidiary or by the Company and another Company Subsidiary, free and clear of all Liens.

(b)Except for its interests in the Company Subsidiaries, the Company does not as of the date of this Agreement own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

SECTION 3.03.Capital Structure.  The Company has 750,000 ordinary shares issued and outstanding.  Except as set forth above, no shares of capital stock or other voting securities of the Company are issued, reserved for issuance or outstanding.  Except as specified in the Company Disclosure Letter, the Company is the sole record and beneficial owner of all of the issued and outstanding capital stock of each Company Subsidiary. All outstanding shares of the capital stock of the Company and each Company Subsidiary are duly authorized, validly

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issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the applicable corporate laws of Canada, the Company Constituent Instruments or any Contract (as defined in Section 3.05) to which the Company is a party or otherwise bound.  Except as set forth in this Section 3.03 and in the Company Disclosure Letter, there are not any bonds, debentures, notes or other indebtedness of the Company or any Company Subsidiary having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Company Shares or the common stock of any Company Subsidiary may vote (“Voting Company Debt”). Except as set forth above, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound (a) obligating the Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or any Company Subsidiary or any Voting Company Debt, (b) obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of the Company or of any Company Subsidiary.

SECTION 3.04.Authority; Execution and Delivery; Enforceability.  The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions.  The execution and delivery by the Company of this Agreement and the consummation by the Company of the Transactions have been duly authorized and approved by the Board of Directors of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the Transactions.  When executed and delivered, this Agreement will be enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and similar laws of general applicability as to which the Company is subject.

SECTION 3.05.No Conflicts; Consents.

(a)Except as set forth in the Company Disclosure Letter, the execution and delivery by the Company of this Agreement does not, and the consummation of the Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under any provision of (a) the Company Constituent Instruments or the comparable charter or organizational documents of any Company Subsidiary, (b) any material contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument (a “Contract”) to which the Company or any Company Subsidiary is a party or by which any of their respective properties or assets is bound or (c) subject to the filings and other matters referred to in Section 3.05(b), any material judgment, order or decree (“Judgment”) or material Law applicable to the Company or any Company Subsidiary or their respective properties or assets, other than, in the case of clauses (b) and (c) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.

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(b)Except as set forth in the Company Disclosure Letter and except for required filings with the Province of Quebec, the SEC and applicable “Blue Sky” or state securities commissions, no material consent, approval, license, permit, order or authorization (“Consent”) of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to the Company or any Company Subsidiary in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions.

SECTION 3.06.Taxes.

(a)The Company and each Company Subsidiary have timely filed, or have caused to be timely filed on their behalf, all Tax Returns required to be filed by them, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.  All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. No tax audit is in process or threatened and the Company has not received a notice of assessment from any tax authority indicating a tax assessment or recalculation of any taxes in any tax return previously filed.

(b)The Company Financial Statements (as defined in Section 3.15) reflect an adequate reserve for all Taxes payable by the Company and the Company Subsidiaries (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements.  No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Company or any Company Subsidiary, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

(c)For purposes of this Agreement:

“Taxes” includes all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, provincial, foreign, federal or other Governmental Entity, or in connection with any agreement with respect to Taxes, including all interest, penalties and additions imposed with respect to such amounts.

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“Tax Return” means all federal, state, provincial, local, provincial and foreign Tax returns, declarations, statements, reports, schedules, forms and information returns and any amended Tax return relating to Taxes.

SECTION 3.07.Benefit Plans.  Except as set forth in the Company Disclosure Letter, the Company does not have or maintain any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, share ownership, share purchase, share option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of the Company or any Company Subsidiary (collectively, “Company Benefit Plans”).  Except as set forth in the Company Disclosure Letter, as of the date of this Agreement there are not any severance or termination agreements or arrangements between the Company or any Company Subsidiary and any current or former employee, officer or director of the Company or any Company Subsidiary, nor does the Company or any Company Subsidiary have any general severance plan or policy.

SECTION 3.08.Litigation.  There is no action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any Company Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, provincial, county, local or foreign), stock market, stock exchange or trading facility (“Action”) that (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Company Shares or (ii) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Company Material Adverse Effect.  Neither the Company nor any Company Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim or violation of or liability under federal, state or provincial securities laws or a claim of breach of fiduciary duty.

SECTION 3.09.Compliance with Applicable Laws.  The Company and the Company Subsidiaries are in compliance with all applicable Laws, including those relating to occupational health, labor and safety and the environment, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.  Except as set forth in the Company Disclosure Letter, the Company has not received any written communication during the past two years from a Governmental Entity that alleges that the Company is not in compliance in any material respect with any applicable Law.  This Section 3.09 does not relate to matters with respect to Taxes, which are the subject of Section 3.06.

SECTION 3.10.Brokers; Schedule of Fees and Expenses.  Except for those brokers as to which the Company and Parent shall be solely responsible, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

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SECTION 3.11.Contracts.  Except as disclosed in the Company Disclosure Letter, there are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of the Company and the Company Subsidiaries taken as a whole.  Neither the Company nor any Company Subsidiary is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.

SECTION 3.12.Title to Properties. Except as set forth in the Company Disclosure Letter, the Company and the Company Subsidiaries do not own any real or immoveable property.  Each of the Company and the Company Subsidiaries has sufficient title to, or valid leasehold interests in, all of its properties and assets used in the conduct of its businesses.  All such assets and properties, other than assets and properties in which the Company or any of the Company Subsidiaries has leasehold interests, are free and clear of all Liens other than those set forth in the Company Disclosure Letter and except for Liens that, in the aggregate, do not and will not materially interfere with the ability of the Company and the Company Subsidiaries to conduct business as currently conducted.

SECTION 3.13.Intellectual Property. The Company and the Company Subsidiaries own, or are validly licensed or otherwise have the right to use, all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights and other proprietary intellectual property rights and computer programs (collectively, “Intellectual Property Rights”) that are material to the conduct of the business of the Company and the Company Subsidiaries taken as a whole.  The Company Disclosure Letter sets forth a description of all Intellectual Property Rights that are material to the conduct of the business of the Company and the Company Subsidiaries taken as a whole.  There are no claims pending or, to the knowledge of the Company, threatened that the Company or any of the Company Subsidiaries is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.  To the knowledge of the Company, no person is infringing the rights of the Company or any of the Company Subsidiaries with respect to any Intellectual Property Right.

SECTION 3.14.Labor Matters.  Except as set forth in the Company Disclosure Letter, there are no collective bargaining or other labor union agreements to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company.

SECTION 3.15.Financial Statements.  The Company has delivered to the Parent its audited consolidated financial statements for the fiscal years ended December 31, 2007 and 2008 (collectively, the “Company Financial Statements”).  The Company Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated.  The Company Financial Statements fairly present in all material respects the financial condition and operating results of the Company, as of the dates, and for the periods, indicated therein.  The Company does not have any material

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liabilities or obligations, contingent or otherwise, other than (a) liabilities incurred in the ordinary course of business subsequent to December 31, 2008, and (b) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in the Company Financial Statements, which, in both cases, individually and in the aggregate would not be reasonably expected to result in a Company Material Adverse Effect.

SECTION 3.16.Insurance.  The Company and the Company Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Company Subsidiaries are engaged and in the geographic areas where they engage in such businesses. The Company has no reason to believe that it will not be able to renew its and the Company Subsidiaries’ existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and the Company Subsidiaries’ respective lines of business.

SECTION 3.17.Transactions With Affiliates and Employees.  Except as set forth in the Company Disclosure Letter and Company Financial Statements, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Company Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real, immoveable, personal or moveable property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

SECTION 3.18.Internal Accounting Controls.  The Company and the Company Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has established disclosure controls and procedures for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its subsidiaries, is made known to the officers by others within those entities.  The Company’s officers have evaluated the effectiveness of the Company’s controls and procedures.  Since December 31, 2008, there have been no significant changes in the Company’s internal controls or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls.

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SECTION 3.19.Solvency.  Based on the financial condition of the Company as of the Closing Date (and assuming that the Closing shall have occurred), (a) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (b) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (c) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company is not insolvent or bankrupt and it has not filed for protection under the Bankruptcy and Insolvency Act of Canada or the Companies’ Creditors Arrangement Act of Canada. Moreover, there has been no petition in bankruptcy filed by the Company or against the Company.

SECTION 3.20.Application of Takeover Protections.  The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of its jurisdiction of formation that is or could become applicable to the Shareholder as a result of the Shareholder and the Company fulfilling their obligations or exercising their rights under this Agreement, including, without limitation, the issuance of and the Shareholder’s ownership of the Parent Shares.

SECTION 3.21.No Additional Agreements.  The Company does not have any agreement or understanding with the Shareholder with respect to the transactions contemplated by this Agreement other than as specified in this Agreement.

SECTION 3.22.Investment Company.  The Company is not, and is not an affiliate (as defined in the Canadian Business Corporations Act) of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

SECTION 3.23.Absence of Certain Changes or Events.  Except as disclosed in the Company Financial Statements or in the Company Disclosure Letter, from December 31, 2008 to the date of this Agreement, the Company has conducted its business only in the ordinary course, and during such period there has not been:

(a)any change in the assets, liabilities, financial condition or operating results of the Company or any Company Subsidiary, except changes in the ordinary course of business that have not caused, in the aggregate, a Company Material Adverse Effect;

(b)any damage, destruction or loss, whether or not covered by insurance, that would have a Company Material Adverse Effect;

(c)any waiver or compromise by the Company or any Company Subsidiary of a valuable right or of a material debt owed to it;

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(d)any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company or any Company Subsidiary, except in the ordinary course of business and the satisfaction or discharge of which would not have a Company Material Adverse Effect;

(e)any material change to a material Contract by which the Company or any Company Subsidiary or any of its respective assets is bound or subject;

(f)any mortgage, pledge, transfer of a security interest in, or lien, created by the Company or any Company Subsidiary, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s or any Company Subsidiary’s ownership or use of such property or assets;

(g)any loans or guarantees made by the Company or any Company Subsidiary to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(h)any alteration of the Company’s method of accounting or the identity of its auditors;

(i)any declaration or payment of dividend or distribution of cash or other property to the Shareholder or any purchase, redemption or agreements to purchase, redeem or retract any Company Shares;

(j)any issuance of equity securities to any officer, director or affiliate (as defined in the Canadian Business Corporations Act), except pursuant to existing Company Shares option plans; or

(k)any arrangement or commitment by the Company or any Company Subsidiary to do any of the things described in this Section 3.23.

SECTION 3.24.Foreign Corrupt Practices.  Neither the Company nor any Company Subsidiary, nor, to the Company’s knowledge, any director, officer, agent, employee or other person acting on behalf of the Company or any Company Subsidiary has, in the course of its actions for, or on behalf of, the Company (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

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ARTICLE IV

Representations and Warranties of the Parent

The Parent represents and warrants as follows to the Shareholder and the Company, that, except as set forth in the reports, schedules, forms, statements and other documents filed by the Parent with the SEC and publicly available prior to the date of this Agreement, or in the letter, dated as of the date of this Agreement, from the Parent to the Company and the Shareholder (the “Parent Disclosure Letter”):

SECTION 4.01.Organization, Standing and Power.  The Parent is duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on the Parent, a material adverse effect on the ability of the Parent to perform its obligations under this Agreement or on the ability of the Parent to consummate the Transactions (a “Parent Material Adverse Effect”).  The Parent is duly qualified to do business in each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary and where the failure to so qualify would reasonably be expected to have a Parent Material Adverse Effect.  The Parent has delivered to the Company true and complete copies of the certificate of incorporation of the Parent, as amended to the date of this Agreement (as so amended, the “Parent Charter”), and the Bylaws of the Parent, as amended to the date of this Agreement (as so amended, the “Parent Bylaws”).

SECTION 4.02.Subsidiaries; Equity Interests.  Except as set forth in the Parent Disclosure Letter, the Parent does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

SECTION 4.03.Capital Structure.  The authorized capital stock of the Parent consists of 75,000,000 shares of Parent Stock, par value $0.001 per share, and5,000,000 shares of preferred stock, par value $0.001 per share, of which (a) 8,400,000 shares of Parent Stock are issued and outstanding (before giving effect to the issuances to be made at Closing) (b) no shares of preferred stock are outstanding, and (c) no shares of Parent Stock or preferred stock are held by the Parent in its treasury.  No other shares of capital stock or other voting securities of the Parent are issued, reserved for issuance or outstanding.  All outstanding shares of the capital stock of the Parent are, and all such shares that may be issued prior to the date hereof will be when issued, duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the General Corporation Law of the State of Delaware, the Parent Charter, the Parent Bylaws or any Contract to which the Parent is a party or otherwise bound.  There are not any bonds, debentures, notes or other indebtedness of the Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of the Parent Stock may vote (“Voting Parent Debt”).  Except as set forth above, as of the date of this Agreement, there are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Parent is a party or by which it is bound (a) obligating the Parent to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of

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capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Parent or any Voting Parent Debt, (b) obligating the Parent to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of the Parent.  As of the date of this Agreement, there are no outstanding contractual obligations of the Parent to repurchase, redeem or otherwise acquire any shares of capital stock of the Parent. The Parent is not a party to any agreement granting any securityholder of the Parent the right to cause the Parent to register shares of the capital stock or other securities of the Parent held by such securityholder under the Securities Act.  The stockholder list provided to the Company is a current stockholder list generated by the Parent’s stock transfer agent, and such list accurately reflects all of the issued and outstanding shares of the Parent Stock as at the Closing.

SECTION 4.04.Authority; Execution and Delivery; Enforceability.  The execution and delivery by the Parent of this Agreement and the consummation by the Parent of the Transactions have been duly authorized and approved by the Board of Directors of the Parent and no other corporate proceedings on the part of the Parent are necessary to authorize this Agreement and the Transactions. This Agreement constitutes a legal, valid and binding obligation of the Parent, enforceable against the Parent in accordance with the terms hereof.

SECTION 4.05.No Conflicts; Consents.

(a)Except as set forth in the Parent Disclosure Letter, the execution and delivery by the Parent of this Agreement, does not, and the consummation of the Transactions and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of the Parent under, any provision of (a) the Parent Charter or Parent Bylaws, (b) any material Contract to which the Parent is a party or by which any of its properties or assets is bound or (c) subject to the filings and other matters referred to in Section 4.05(b), any material Judgment or material Law applicable to the Parent or its properties or assets, other than, in the case of clauses (b) and (c) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.

(b)No Consent of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to the Parent in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than the (i) filing with the SEC of reports under Sections 13 and 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) filings under state “blue sky” laws, as each may be required in connection with this Agreement and the Transactions.

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SECTION 4.06.SEC Documents; Undisclosed Liabilities.

(a)The Parent has filed all reports, schedules, forms, statements and other documents required to be filed by the Parent with the SEC since November 26, 2008, pursuant to Sections 13 and 15 of the Exchange Act, as applicable (the “Parent SEC Documents”).

(b)As of its respective filing date, each Parent SEC Document complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Document, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Except to the extent that information contained in any Parent SEC Document has been revised or superseded by a later filed Parent SEC Document, none of the Parent SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The consolidated financial statements of the Parent included in the Parent SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Parent as of the dates thereof and the results of operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).

(c)Except as set forth in the filed Parent SEC Documents, the Parent has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a balance sheet of the Parent or in the notes thereto.  The Parent Disclosure Letter sets forth all financial and contractual obligations and liabilities (including any obligations to issue capital stock or other securities of the parent) due after the date hereof.  As of the date hereof, all liabilities of the Parent have been paid off and shall in no event remain liabilities of the Parent, the Company or the Shareholder following the Closing.

SECTION 4.07.Information Supplied.  None of the information supplied or to be supplied by the Parent for inclusion or incorporation by reference in any SEC filing of report by the Company contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

SECTION 4.08.Absence of Certain Changes or Events.  Except as disclosed in the filed Parent SEC Documents or in the Parent Disclosure Letter, from the date of the most recent audited financial statements included in the filed Parent SEC Documents to the date of this Agreement, the Parent has conducted its business only in the ordinary course, and during such period there has not been:

(a)any change in the assets, liabilities, financial condition or operating results of the Parent from that reflected in the Parent SEC Documents, except changes in the ordinary course of business that have not caused, in the aggregate, a Parent Material Adverse Effect;

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(b)any damage, destruction or loss, whether or not covered by insurance, that would have a Parent Material Adverse Effect;

(c)any waiver or compromise by the Parent of a valuable right or of a material debt owed to it;

(d)any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Parent, except in the ordinary course of business and the satisfaction or discharge of which would not have a Parent Material Adverse Effect;

(e)any material change to a material Contract by which the Parent or any of its assets is bound or subject;

(f)any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

(g)any resignation or termination of employment of any officer of the Parent;

(h)any mortgage, pledge, transfer of a security interest in, or lien, created by the Parent, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Parent’s ownership or use of such property or assets;

(i)any loans or guarantees made by the Parent to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(j)any declaration, setting aside or payment or other distribution in respect of any of the Parent’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Parent;

(k)any alteration of the Parent’s method of accounting or the identity of its auditors;

(l)any issuance of equity securities to any officer, director or affiliate (as defined in the Securities Act), except pursuant to existing Parent stock option plans; or

(m)any arrangement or commitment by the Parent to do any of the things described in this Section 4.08.

SECTION 4.09.Taxes.

(a)Except as set forth in the Parent Disclosure Letter, the Parent has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file, any delinquency in filing or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.  All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.

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(b)The most recent financial statements contained in the filed Parent SEC Documents reflect an adequate reserve for all Taxes payable by the Parent (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements.  No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Parent, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.

(c)There are no Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of the Parent.  The Parent is not bound by any agreement with respect to Taxes.

SECTION 4.10.Absence of Changes in Benefit Plans.  From the date of the most recent audited financial statements included in the filed Parent SEC Documents to the date of this Agreement, there has not been any adoption or amendment in any material respect by the Parent of any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of the Parent (collectively, “Parent Benefit Plans”).  As of the date of this Agreement there are not any employment, consulting, indemnification, severance or termination agreements or arrangements between the Parent and any current or former employee, officer or director of the Parent, nor does the Parent have any general severance plan or policy.

SECTION 4.11.ERISA Compliance; Excess Parachute Payments.  The Parent does not, and since its inception never has, maintained, or contributed to any “employee pension benefit plans” (as defined in Section 3(2) of ERISA), “employee welfare benefit plans” (as defined in Section 3(1) of ERISA) or any other Parent Benefit Plan for the benefit of any current or former employees, consultants, officers or directors of the Parent.

SECTION 4.12.Litigation.  Except as disclosed in the Parent SEC Documents or in the Parent Disclosure Letter, there is no Action that (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Parent Shares or (ii) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Parent Material Adverse Effect. Neither the Parent nor any subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim or violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

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SECTION 4.13.Compliance with Applicable Laws.  Except as disclosed in the Parent SEC Documents or in the Parent Disclosure Letter, the Parent is in compliance with all applicable Laws, including those relating to occupational health and safety, the environment, export controls, trade sanctions and embargoes, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.  Except as set forth in the Parent SEC Documents or in the Parent Disclosure Letter, the Parent has not received any written communication during the past two years from a Governmental Entity that alleges that the Parent is not in compliance in any material respect with any applicable Law.  The Parent is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, that are applicable to it, except where such noncompliance could not have or reasonably be expected to result in a Parent Material Adverse Effect.  This Section 4.13 does not relate to matters with respect to Taxes, which are the subject of Section 4.09.

SECTION 4.14.Contracts.  Except as disclosed in the Parent SEC Documents, there are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of the Parent taken as a whole.  The Parent is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Parent Material Adverse Effect.

SECTION 4.15.Title to Properties.  The Parent has good title to, or valid leasehold interests in, all of its properties and assets used in the conduct of its businesses.  All such assets and properties, other than assets and properties in which the Parent has leasehold interests, are free and clear of all Liens other than those set forth in the Parent Disclosure Letter and except for Liens that, in the aggregate, do not and will not materially interfere with the ability of the Parent to conduct business as currently conducted.  The Parent has complied in all material respects with the terms of all material leases to which it is a party and under which it is in occupancy, and all such leases are in full force and effect.  The Parent enjoys peaceful and undisturbed possession under all such material leases.

SECTION 4.16.Intellectual Property.  The Parent owns, or is validly licensed or otherwise has the right to use, all Intellectual Property Rights that are material to the conduct of the business of the Parent taken as a whole.  The Parent Disclosure Letter sets forth a description of all Intellectual Property Rights that are material to the conduct of the business of the Parent taken as a whole.  Except as set forth in the Parent Disclosure Letter no claims are pending or, to the knowledge of the Parent, threatened that the Parent is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.  To the knowledge of the Parent, no person is infringing the rights of the Parent with respect to any Intellectual Property Right.

SECTION 4.17.Labor Matters.  There are no collective bargaining or other labor union agreements to which the Parent is a party or by which it is bound.  No material labor dispute exists or, to the knowledge of the Parent, is imminent with respect to any of the employees of the Parent.

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SECTION 4.18.Market Makers.  The Parent has at least two (2) market makers for the Parent Stock and such market makers have obtained all permits and made all filings necessary in order for such market makers to continue as market makers of the Parent.

SECTION 4.19.Transactions With Affiliates and Employees.  Except as set forth in the filed Parent SEC Documents and Parent Disclosure Letter, none of the officers or directors of the Parent and, to the knowledge of the Parent, none of the employees of the Parent is presently a party to any transaction with the Parent or any subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Parent, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

SECTION 4.20.Internal Accounting Controls.  The Parent maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Parent has established disclosure controls and procedures for the Parent and designed such disclosure controls and procedures to ensure that material information relating to the Parent is made known to the officers by others within those entities.  The Parent’s officers have evaluated the effectiveness of the Parent’s controls and procedures.  Since September 30, 2009, there have been no significant changes in the Parent’s internal controls or, to the Parent’s knowledge, in other factors that could significantly affect the Parent’s internal controls.

SECTION 4.21.Solvency.  Based on the financial condition of the Parent as of the Closing Date (and assuming that the Closing shall have occurred), (a) the Parent’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Parent’s existing debts and other liabilities (including known contingent liabilities) as they mature, (b) the Parent’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Parent, and projected capital requirements and capital availability thereof, and (c) the current cash flow of the Parent, together with the proceeds the Parent would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  The Parent does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

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SECTION 4.22.Application of Takeover Protections.  The Parent has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Parent’s charter documents or the laws of its state of incorporation that is or could become applicable to the Shareholder as a result of the Shareholder and the Parent fulfilling their obligations or exercising their rights under this Agreement, including, without limitation, the issuance of the Parent Shares and the Shareholder’s ownership of the Parent Shares.

SECTION 4.23.No Additional Agreements.  The Parent does not have any agreement or understanding with the Shareholder with respect to the transactions contemplated by this Agreement other than as specified in this Agreement.

SECTION 4.24.Investment Company.  The Parent is not, and is not an affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

SECTION 4.25.Certain Registration Matters.  Except as specified in the Parent Disclosure Letter and Parent SEC Documents, the Parent has not granted or agreed to grant to any person any rights (including “piggy-back” registration rights) to have any securities of the Parent registered with the SEC or any other governmental authority that have not been satisfied.

SECTION 4.26.Listing and Maintenance Requirements.  The Parent is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of the Parent Stock on the trading market on which the Parent Stock as currently listed or quoted.  The issuance and sale of the Parent Shares under this Agreement do not contravene the rules and regulations of the trading market on which the Parent Stock is currently listed or quoted, and no approval of the stockholders of the Parent is required for the Parent to issue and deliver to the Shareholder the Parent Shares contemplated by this Agreement.

SECTION 4.27.No Undisclosed Events, Liabilities, Developments or Circumstances.  No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Parent, its subsidiaries or their respective businesses, properties, prospects, operations or financial condition, that would be required to be disclosed by the Parent under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Parent of its Parent Stock and which has not been publicly announced.

SECTION 4.28.Foreign Corrupt Practices.  Neither the Parent, nor to the Parent’s knowledge, any director, officer, agent, employee or other person acting on behalf of the Parent has, in the course of its actions for, or on behalf of, the Parent (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

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ARTICLE V

Deliveries

SECTION 5.01.Deliveries of the Shareholder.

(a)Concurrently herewith the Shareholder is delivering to the Parent this Agreement executed by the Shareholder.

(b)At or prior to the Closing, the Shareholder shall deliver to the Parent:

(i)   certificates representing its Company Shares; and

(ii)   a duly executed share transfer power for transfer by the Shareholder of the Company Shares to the Parent.

SECTION 5.02.Deliveries of the Parent.

(a)Concurrently herewith, the Parent is delivering to the Shareholder and to the Company, a copy of this Agreement executed by the Parent.

(b)At or prior to the Closing, the Parent shall deliver to the Company:

(i)   a certificate from the Parent, signed by its Secretary or Assistant Secretary certifying that the attached copies of the Parent Charter, Parent Bylaws and resolutions of the Board of Directors of the Parent and of the stockholders of the Parent approving this Agreement and the transactions contemplated hereunder, are all true, complete and correct and remain in full force and effect;

(ii)   a letter of resignation of David Davis from all offices he holds with the Parent and as a director of the Parent;

(iii)   evidence of the election of Nathan J. Mazurek, Yossi Cohn, David Tesler, David J. Landes and Jonathan Tulkoff as directors of the Parent effective upon the Closing;

(iv)   evidence of the election of Nathan J. Mazurek as the Chief Executive Officer, President, Chairman of the Board, Chief Financial Officer, Secretary and Treasurer of the Parent effective upon the Closing;

(v)   such pay-off letters and releases relating to liabilities as the Company shall require in order to result in the Company having no liabilities at Closing and such pay-off letters and releases shall be in form and substance satisfactory to the Company;

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(vi)   if requested, the results of UCC, judgment lien and tax lien searches with respect to the Parent, the results of which indicate no liens on the assets of the Parent; and

(vii)   a duly executed release by the current director and officers of the Parent in favor of the Parent, the Company and the Shareholders.

(c)At or prior to the Closing, the Parent shall deliver to the Company and the Shareholder an opinion from Parent’s legal counsel in form and substance reasonably satisfactory to the Shareholder.

(d)Promptly following the Closing, the Parent shall deliver:

(i)   to the Shareholder, certificates representing the Parent Shares; and

(ii)   to the Company, a consent letter of the accounting firm of the Parent confirming such firm’s respective consent to the use by the Parent of reports prepared by such firm regarding the financial statements of the Parent in all future registration statements filed with the SEC.

SECTION 5.03.Deliveries of the Company.

(a)Concurrently herewith, the Company is delivering to the Parent this Agreement executed by the Company.

(b)At or prior to the Closing, the Company shall deliver to the Parent a certificate from the Company, signed by its authorized officer certifying that the attached copies of the Company Constituent Instruments and resolutions of the Board of Directors of the Company approving the Agreement and the Transactions are all true, complete and correct and remain in full force and effect.

ARTICLE VI

Conditions to Closing

SECTION 6.01.Shareholder and Company Conditions Precedent.  The obligations of the Shareholder and the Company to enter into and complete the Closing is subject, at the option of the Shareholder and the Company, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Shareholder and the Company in writing.

(a)Representations and Covenants. The representations and warranties of the Parent contained in this Agreement shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.  The Parent shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by the Parent on or prior to the Closing Date.  The Parent shall have delivered to the Shareholder and the Company, a certificate, dated the Closing Date, to the foregoing effect.

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(b)Litigation.  No action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body to restrain, modify or prevent the carrying out of the Transactions or to seek damages or a discovery order in connection with such Transactions, or which has or may have, in the reasonable opinion of the Company or the Shareholder, a materially adverse effect on the assets, properties, business, operations or condition (financial or otherwise) of the Parent or the Company.

(c)No Material Adverse Change.  There shall not have been any occurrence, event, incident, action, failure to act, or transaction since September 30, 2009 which has had or is reasonably likely to cause a Parent Material Adverse Effect.

(d)SEC Reports.  The Parent shall have filed all reports and other documents required to be filed by Parent under the U.S. federal securities laws through the Closing Date.

(e)OTCBB Quotation.  The Parent shall have maintained its status as a company whose common stock is quoted on the Over-the-Counter Bulletin Board and no reason shall exist as to why such status shall not continue immediately following the Closing.

(f)Deliveries.  The deliveries specified in Section 5.02 shall have been made by the Parent.

(g)No Suspensions of Trading in Parent Stock; Listing.  Trading in the Parent Stock shall not have been suspended by the SEC or any trading market (except for any suspensions of trading of not more than one trading day solely to permit dissemination of material information regarding the Parent) at any time since the date of execution of this Agreement, and the Parent Stock shall have been at all times since such date listed for trading on a trading market.

(h)Satisfactory Completion of Due Diligence.  The Company and the Shareholder shall have completed their legal, accounting and business due diligence of the Parent and the results thereof shall be satisfactory to the Company and the Shareholder in their sole and absolute discretion.

(i)Delivery of Legal Opinion from Parent’s Counsel.  The Company and the Shareholders shall have received an opinion from the Parent’s legal counsel in form and substance reasonably satisfactory to the Shareholder.

SECTION 6.02.Parent Conditions Precedent.  The obligations of the Parent to enter into and complete the Closing are subject, at the option of the Parent, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Parent in writing.

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(a)Representations and Covenants.  The representations and warranties of the Shareholder and the Company contained in this Agreement shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.  The Shareholder and the Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by the Shareholder and the Company on or prior to the Closing Date.  The Company shall have delivered to the Parent, if requested, a certificate, dated the Closing Date, to the foregoing effect.

(b)Litigation.  No action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body to restrain, modify or prevent the carrying out of the Transactions or to seek damages or a discovery order in connection with such Transactions, or which has or may have, in the reasonable opinion of the Parent, a materially adverse effect on the assets, properties, business, operations or condition (financial or otherwise) of the Parent.

(c)No Material Adverse Change.  There shall not have been any occurrence, event, incident, action, failure to act, or transaction since December 31, 2008 which has had or is reasonably likely to cause a Company Material Adverse Effect.

(d)Deliveries.  The deliveries specified in Section 5.01 and Section 5.03 shall have been made by the Shareholder and the Company, respectively.

(e)Audited Financial Statements and Form 10 Disclosure.  The Company shall have provided the Parent and the Shareholder with reasonable assurances that the Parent will be able to comply with its obligation to file a current report on Form 8-K no later than four (4) business days following the Closing containing the requisite audited consolidated financial statements of the Company and the requisite Form 10 disclosure regarding the Company.

(f)Satisfactory Completion of Due Diligence.  The Parent shall have completed its legal, accounting and business due diligence of the Company and the Shareholder and the results thereof shall be satisfactory to the Parent in its sole and absolute discretion.

ARTICLE VII

Covenants

SECTION 7.01.Blue Sky Laws. The Parent shall take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified) required to be taken under any applicable state securities laws in connection with the issuance of the Parent Shares in connection with this Agreement.

SECTION 7.02.Public Announcements.  Prior to the Closing, the Parent and the Company will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press releases or other public statements with respect to the Agreement and the Transactions and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchanges.

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SECTION 7.03.Fees and Expenses.  All fees and expenses incurred in connection with this Agreement shall be paid by the Party incurring such fees or expenses, whether or not this Agreement is consummated.

SECTION 7.04.Continued Efforts.  Each Party shall use commercially reasonable efforts to (a) take all action reasonably necessary to consummate the Transactions, and (b) take such steps and do such acts as may be necessary to keep all of its representations and warranties true and correct as of the Closing Date with the same effect as if the same had been made, and this Agreement had been dated, as of the Closing Date.

SECTION 7.05.Exclusivity.  Each of the Parent and the Company shall not (and shall not cause or permit any of their affiliates to) engage in any discussions or negotiations with any person or take any action that would be inconsistent with the Transactions and that has the effect of avoiding the Closing contemplated hereby.  Each of the Parent and the Company shall notify each other immediately if any person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing.

SECTION 7.06.Filing of Form 8-K and Press Release.  The Parent shall file, no later than four (4) business days after the Closing Date, a current report on Form 8-K and attach as exhibits all relevant agreements disclosing the terms of this Agreement and other requisite disclosure regarding the Transactions and including the requisite audited consolidated financial statements of the Company and the requisite Form 10 disclosure regarding the Company.

SECTION 7.07.Access.  Each Party shall permit representatives of any other Party to have full access to all premises, properties, personnel, books, records (including Tax records), contracts, and documents of or pertaining to such Party.

SECTION 7.08.Preservation of Business.  From the date of this Agreement until the Closing Date, the Company and the Parent shall operate only in the ordinary and usual course of business consistent with their respective past practices (provided, however, that Parent shall not issue any securities without the prior written consent of the Company), and shall use reasonable commercial efforts to (a) preserve intact their respective business organizations, (b) preserve the good will and advantageous relationships with customers, suppliers, independent contractors, employees and other persons material to the operation of their respective businesses, and (c) not permit any action or omission that would cause any of their respective  representations or warranties contained herein to become inaccurate or any of their respective covenants to be breached in any material respect.

ARTICLE VIII

Miscellaneous

SECTION 8.01.Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given upon receipt by the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

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If to the Parent, to:

Pioneer Power Solutions, Inc.

6074 Citation Court

Reno, Nevada 89523

Attention:  David Davis

With a copy to:

Cane Clark LLP

3273 E. Warm Springs Road

Las Vegas, Nevada 89120

Attention:  Kyleen E. Cane

Facsimile:  (702) 944-7100

If to the Company, to:

Pioneer Transformers Ltd.

9 West 57th Street

New York, New York 10019

Attention: Nathan J. Mazurek

Facsimile.: (212) 867-1325

with a copy to:

Haynes and Boone, LLP

1221 Avenue of the Americas

New York, New York 10020

Attention:  Rick A. Werner, Esq.

Facsimile (212) 884-8234

If to the Shareholder, to:

Provident Pioneer Partners, L.P.

9 West 57th Street

New York, New York 10019

Attention: Nathan J. Mazurek

Facsimile: (212) 867-1325

SECTION 8.02.Amendments; Waivers; No Additional Consideration.  No provision of this Agreement may be waived or amended except in a written instrument signed by the Company, Parent and the Shareholder.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right.

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SECTION 8.03.Replacement of Securities.  If any certificate or instrument evidencing any Parent Shares is mutilated, lost, stolen or destroyed, the Parent shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefore, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Parent of such loss, theft or destruction and customary and reasonable indemnity, if requested.  The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Parent Shares.  If a replacement certificate or instrument evidencing any Parent Shares is requested due to a mutilation thereof, the Parent may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

SECTION 8.04.Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Shareholder, the Parent and the Company will be entitled to specific performance under this Agreement.  The Parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

SECTION 8.05.Interpretation.  When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

SECTION 8.06.Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that Transactions contemplated hereby are fulfilled to the extent possible.

SECTION 8.07.Counterparts; Facsimile Execution.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

SECTION 8.08.Entire Agreement; Third Party Beneficiaries. This Agreement, taken together with the Company Disclosure Letter and the Parent Disclosure Letter, (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the Transactions and (b) are not intended to confer upon any person other than the Parties any rights or remedies.

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SECTION 8.09.Governing Law.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to principles of conflicts of laws.  Any action or proceeding brought for the purpose of enforcement of any term or provision of this Agreement shall be brought only in the federal or state courts sitting in New York, New York, and the parties hereby waive any and all rights to trial by jury.

SECTION 8.10.Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the Parties without the prior written consent of the other Parties.  Any purported assignment without such consent shall be void.  Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Share Exchange Agreement as of the date first above written.

The Parent:                                    PIONEER POWER SOLUTIONS, INC.

By: /s/ David Davis

Name: David Davis

Title: President

The Company:                               PIONEER TRANSFORMERS LTD.

By: /s/ Nathan J. Mazurek

Name: Nathan J. Mazurek

Title:Chief Executive Officer

The Shareholder:                          PROVIDENT PIONEER PARTNERS, L.P.

By: Provident Canada Corp.

Its General Partner

By: /s/ Nathan J. Mazurek

Name: Nathan J. Mazurek

Title: General Partner

[Signature Page to Share Exchange Agreement]

EX-10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of December 2, 2009, by and among Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), and each investor  identified on the signature pages hereto (individually, an “Investor” and collectively, the “Investors”).

BACKGROUND

A.         The Company and each Investor are executing and delivering this Agreement in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act.

B.         Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate number of shares of the common stock, par value $0.001 per share, of the Company (the “Common Stock”), set forth on such Investor’s signature page to this Agreement (which aggregate amount for all Investors together shall collectively be referred to herein as the “Shares”).

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

ARTICLE I  

DEFINITIONS

1.1Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.

“Agreement” has the meaning set forth in the Preamble.

“Best Efforts” means the efforts that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as practical; provided, however, that an obligation to use Best Efforts under this Agreement does not require the Company to dispose of or make any change to its business, expend any material funds or incur any other material burden.

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“Business Day” means any day other than Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in The State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

“Closing Date” means the date and time of the Closing and shall be on such date and time as is mutually agreed to by the Company and each Investor.

“Closing Price” means, for any date, the closing price per share of the Common Stock for such date (or, if not a Trading Day, the nearest preceding date that is a Trading Day) on the primary Eligible Market or exchange or quotation system on which the Common Stock is then listed or quoted.

“Company” has the meaning set forth in the Preamble.

“Company Counsel” means Haynes and Boone, LLP, counsel to the Company.

“Common Stock” has the meaning set forth in the Preamble.

 “Contingent Obligation” has the meaning set forth in Section 3.1(aa).

“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.

“Covering Shares” has the meaning set forth in Section 4.1(b).

“Disclosure Materials” means the Super 8-K, together with this Agreement and the Schedules to this Agreement.

“Effective Date” means the date that the Registration Statement is first declared effective by the SEC.

“Effectiveness Period” has the meaning set forth in Section 6.1(b).

 “Eligible Market” means any of the New York Stock Exchange, the NYSE Amex Equities, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board.

“Environmental Laws” has the meaning set forth in Section 3.1(dd).

“Escrow Account” has the meaning set forth in Section 2.2.

“Escrow Agent” has the meaning set forth in Section 2.2.

“Event” has the meaning set forth in Section 6.1(d).

“Event Payments” has the meaning set forth in Section 6.1(d).

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

“Excluded Events” has the meaning set forth in Section 6.1(d)(iii).

“Filing Date” means the date that is sixty (60) days after the Closing Date or, if such date is not a Business Day, the next date that is a Business Day.

“FINRA” has the meaning set forth in Section 3.2(c).

“GAAP” has the meaning set forth in Section 3.1(g).

“Hazardous Materials” has the meaning set forth in Section 3.1(dd).

“Indebtedness” has the meaning set forth in Section 3.1(aa).

“Indemnified Party” has the meaning set forth in Section 6.4(c).

“Indemnifying Party” has the meaning set forth in Section 6.4(c).

“Insolvent” has the meaning set forth in Section 3.1(h).

“Intellectual Property Rights” has the meaning set forth in Section 3.1(t).

“Investor” has the meaning set forth in the Preamble.

“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction.

“Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.

“Material Adverse Effect” means (i) a material adverse effect on the results of operations, assets, business, prospects or financial condition of the Company and the Subsidiaries taken as a whole on a consolidated basis or (ii) material and adverse impairment of the Company's ability to perform its obligations under this Agreement, provided, that none of the following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect:  (i) a change in the market price or trading volume of the Common Stock or (ii) changes in general economic conditions or changes affecting the industry in which the Company operates generally (as opposed to Company-specific changes) so long as such changes do not have a disproportionate effect on the Company and its Subsidiaries taken as a whole.

“Material Permits” has the meaning set forth in Section 3.1(v).

“Options” means any outstanding rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

“Person” has the meaning set forth in Section 3.1(aa).

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“Pioneer” means Pioneer Transformers Ltd., a Canadian corporation.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing.

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means the Shares issued or issuable pursuant to this Agreement, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

“Registration Statement” means each registration statement required to be filed under Article VI, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Regulation D” has the meaning set forth in the Preamble.

“Required Effectiveness Date” means one hundred and eighty (180) days after the Closing Date.

“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“SEC” has the meaning set forth in the Preamble.

“Super 8-K” has the meaning set forth in Section 3.1(g).

“Securities Act” has the meaning set forth in the Preamble.

“Share Exchange” means the closing of the acquisition of 100% of the issued and outstanding capital stock of Pioneer, by the Company, pursuant to the Share Exchange Agreement.

“Share Exchange Agreement” means that certain Share Exchange Agreement, of even date herewith, by and among the Company, Pioneer and the shareholders of Pioneer.

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“Shares” has the meaning set forth in the Preamble.

“Short Sales” has the meaning set forth in Section 3.2(i).

“Subsidiary” means any direct or indirect subsidiary of the Company.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex Equities, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“Transaction” has the meaning set forth in Section 3.2(i).

“Transfer Agent” means the Company’s transfer agent at the time.

“Transfer Agent Instructions” means, with respect to the Company, the Irrevocable Transfer Agent Instructions, in the form of Exhibit D, executed by the Company and delivered to and acknowledged in writing by the Transfer Agent.

“Variable Rate Transaction” means a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

ARTICLE II 

PURCHASE AND SALE

2.1Closing.  Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company, such number of Shares for the price set forth on such Investor’s signature page to this Agreement.  The date and time of the Closing and shall be 11:00 a.m., New York City Time, on the Closing Date.  The Closing shall take place at the offices of the Company’s Counsel.

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2.2Escrow.  Pending the Closing, all funds paid hereunder shall be deposited by the Investors in a separate account maintained by Signature Bank (the “Escrow Agent”) for the benefit of Investors (the “Escrow Account”).

2.3Closing Deliveries.

(a)At the Closing, the Company shall deliver or cause to be delivered to each Investor the following:

(i)a copy of the Company’s irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing such number of Shares set forth on such Investor’s signature page to this Agreement, registered in the name of such Investor;

(ii)duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent;

(iii)a legal opinion of Company Counsel, in the form of Exhibit B, executed by such counsel and delivered to the Investors;

(iv) a lock up agreement, in the form of Exhibit F attached hereto, duly executed by all shareholders of Pioneer as of immediately prior to the Share Exchange;

(v)  a certificate of the Secretary of the Company, dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the issuance of the Shares, (b) certifying the current versions of the certificate of incorporation, as amended and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing this Agreement and all related documents on behalf of the Company; and

(vi) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.1(a) and (b).

(b)At the Closing, each Investor shall deliver or cause to be delivered to the Company:

(i)this Agreement duly executed by such Investor;

(ii)Exhibits A-1, A-2 and A-3, as appropriate, duly completed and executed by such Investor; and

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(iii)the purchase price set forth on such Investor’s signature page to this Agreement in United States dollars and in immediately available funds, by wire transfer pursuant to the release of the funds held in the Escrow Account to an account designated in writing by the Company prior to the Closing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investors as follows (which representations and warranties shall be deemed to apply, where appropriate, to each Subsidiary of the Company):

(a)Subsidiaries.  The Company owns or controls, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien, and all issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights; and the Company owns or controls, directly or indirectly, only the following corporations, partnerships, limited liability partnerships, limited liability companies, associations or other entities: (i) Pioneer and (ii) Bernard Granby Realty Inc., a Canadian corporation (each, a “Subsidiary”).

(b)Organization and Qualification. The Company and each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  The Company and each Subsidiary is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(c)Authorization; Enforcement. The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders.  This Agreement has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

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(d)No Conflicts.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not, and will not, (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound, or affected, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any Subsidiary is subject (including, assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or any Subsidiary are bound or affected, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect.

(e)The Shares.   The Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investors).

(f)Capitalization.  The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth in Schedule 3.1(f) hereto. To the Company’s knowledge, all outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all material respects with all applicable securities laws.  Except as disclosed in Schedule 3.1(f) hereto, to the Company’s knowledge, the Company does not have outstanding any other Options, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any Person any right to subscribe for or acquire, any shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth on Schedule 3.1(f) hereto, and except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, to the Company’s knowledge, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issuance and sale of the Shares will not obligate the Company to issue

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shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities.  To the Company’s knowledge, except as disclosed in the Super 8-K and any Schedules 13D or 13G filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in Schedule 3.1(f) hereto, no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock.

(g)Super 8-K; Financial Statements.  Attached hereto as Schedule 3.1(g) is a copy of a substantially final Current Report on Form 8-K (the “Super 8-K”) that the Company will file with the SEC in connection with the Share Exchange on or prior to the 4th Trading Day immediately following the date thereof (which Current Report contains, among other information, risk factors concerning the Company and financial statements required to be filed therewith).  The Super 8-K, upon its filing with the SEC, will comply, in all material respects with the requirements of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder and other federal, state and local laws applicable to the Super 8-K, and the Super 8-K does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Super 8-K comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or identified in the Super 8-K, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC.

(h)Material Changes; Undisclosed Events, Liabilities or Developments; Solvency.   Since the date of the latest audited financial statements included within the Super 8-K, except as disclosed in the Super 8-K or in Schedule 3.1(h) hereto, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that would result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the SEC, (iii) the Company has not altered its method of accounting or changed its auditors, except as disclosed in the Super 8-K, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made

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any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans.  The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.  The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below).  For purposes of this Section 3.1(h), “Insolvent” means (i) the present fair saleable value of the Company's assets is less than the amount required to pay the Company's total Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. The representations and warranties in this Section 3.1(h) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(i)Absence of Litigation.  Except as disclosed in the Super 8-K, there is no action, suit, claim, or Proceeding, or, to the Company's knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary that could, individually or in the aggregate, to have a Material Adverse Effect. The representations and warranties in this Section 3.1(i) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(j)Compliance.  Except as would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i)  neither the Company nor any Subsidiary is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) neither the Company nor any Subsidiary is in violation of any order of any court, arbitrator or governmental body, or (iii)  neither the Company nor any Subsidiary is or has been in violation of any statute, rule or regulation of any governmental authority. The representations and warranties in this Section 3.1(j) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(k)Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and each Subsidiary, in each case free and clear of all Liens, except for Liens that do not, individually or in the aggregate, have or result in a Material Adverse Effect. Any real property and facilities held under lease by the Company or any Subsidiary is held by it under valid, subsisting and enforceable leases of which the Company and each Subsidiary is in material compliance. The representations and warranties in this Section 3.1(k) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

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(l)No General Solicitation; Placement Agent's Fees.  Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commission (other than for persons engaged by any Investor or its investment advisor) relating to or arising out of the issuance of the Shares pursuant to this Agreement. The Company shall pay, and hold each Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the issuance of the Shares pursuant to this Agreement. Notwithstanding the foregoing, the Company has not engaged any placement agent or other agent in connection with the sale of the Shares.

(m)  Private Placement; Investment Company; U.S. Real Property Holding Corporation.  Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Shares as contemplated hereby or (ii) cause the offering of the Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. Assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Investors as contemplated hereby. The sale and issuance of the Shares hereunder does not contravene the rules and regulations of any Trading Market on which the Common Stock is listed or quoted. The Company is not required to be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company is not required to be registered as a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980.

(n)Form S-1 Eligibility.  The Company is eligible to register the Shares for resale by the Investors using Form S-1 promulgated under the Securities Act.

(o)Listing and Maintenance Requirements.  The Company has not, in the twelve months preceding the date hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.  The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

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(p)Registration Rights.  Except as described in Schedule 3.1(p), the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the SEC or any other governmental authority that have not expired or been satisfied or waived.

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

(r)Disclosure.  The Company confirms that neither it nor any officers, directors or Affiliates, has provided any of the Investors or their agents or counsel with any information that constitutes or might constitute material, nonpublic information (other than the existence and terms of the issuance of Shares, as contemplated by this Agreement, and the information set forth in the Super 8-K). The Company understands and confirms that each of the Investors will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided by the Company to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement furnished by or on behalf of the Company, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge, except for the transactions contemplated by this Agreement and the Super 8-K, no event or circumstance has occurred or information exists with respect to the Company or any Subsidiary or their businesses, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no Investor makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in this Agreement.

(s)Acknowledgment Regarding Investors' Purchase of Securities.  Based upon the assumption that the transactions contemplated by this Agreement are consummated in all material respects in conformity with this Agreement, the Company acknowledges and agrees that each of the Investors is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Investor is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Investor or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Investors’ purchase of the Shares. The Company further represents to each Investor that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its advisors and representatives.

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(t)Patents and Trademarks.  The Company and each Subsidiary owns, or possesses adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted. None of the Company’s or any Subsidiary’s Intellectual Property Rights have expired or terminated, or are expected to expire or terminate within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or any Subsidiary of Intellectual Property Rights of others.  There is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or any Subsidiary regarding its Intellectual Property Rights. The representations and warranties in this Section 3.1(t) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(u)Insurance.  The Company and each Subsidiary is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses and locations in which the Company and each Subsidiary is engaged.

(v)Regulatory Permits.  The Company and each Subsidiary possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as presently conducted and described in the Super 8-K (“Material Permits”), except where the failure to possess such permits does not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit. The representations and warranties in this Section 3.1(v) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(w)Transactions With Affiliates and Employees.  Except as disclosed in the Super 8-K, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company that would be required to be reported on Form 10-K by Item 13 thereof pursuant to Regulation S-K Item 404 (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the Company's knowledge, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner. The representations and warranties in this Section 3.1(w) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of Company’s knowledge.

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(x)Internal Accounting Controls.  The Company and each Subsidiary maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The representations and warranties in this Section 3.1(x) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(y)Sarbanes-Oxley Act. The Company is in compliance in all material respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by the SEC thereunder, except where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect. The representations and warranties in this Section 3.1(y) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(z)Foreign Corrupt Practices.  Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political parties or campaigns from corporate funds; (iii) violated or is in violation in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. The representations and warranties in this Section 3.1(z) as they relate to the Company prior to the consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(aa)Indebtedness.  Except as disclosed in the Super 8-K, neither the Company nor any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of any term of or is in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, and (iii) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect.  The representatives and Warranties in this Section 3.1(aa) as they relate to the Company prior to the Share Exchange are qualified to the extent of the Company’s knowledge.  For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of

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property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.

(bb)Employee Relations.  Except as disclosed in Schedule 3.1(bb), neither the Company nor any Subsidiary is a party to any collective bargaining agreement or employs any member of a union. The Company believes that its relations with its employees are as disclosed in the Super 8-K.  No executive officer of the Company or any Subsidiary has notified the Company or any Subsidiary that such officer intends to leave the Company or a Subsidiary, as applicable, or otherwise terminate such officer's employment with the Company or a Subsidiary, as applicable. To the knowledge of the Company or any Subsidiary, no executive officer of the Company or any Subsidiary is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters. The representations and warranties in this Section 3.1(bb) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(cc)Labor Matters.   The Company and each Subsidiary is in compliance in all material respects with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The representations and warranties in this Section 3.1(cc) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

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(dd)Environmental Laws.  The Company and each Subsidiary (i) is in compliance in all material respects with any and all Environmental Laws (as hereinafter defined), (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) is in compliance in all material respects with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.  The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. The representations and warranties in this Section 3.1(dd) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

(ee)Subsidiary Rights.  The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

(ff)Tax Status.  The Company and each Subsidiary (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The representations and warranties in this Section 3.1(ff) as they relate to the Company prior to consummation of the Share Exchange are qualified to the extent of the Company’s knowledge.

3.2Representations and Warranties of the Investors.  Each Investor hereby, as to itself only and for no other Investor, represents and warrants to the Company as follows:

(a)Organization; Authority.  If the Investor is an entity, such Investor is a corporation, partnership, limited liability company or partnership, association, joint stock company, trust, unincorporated organization or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, partnership or other power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations

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hereunder. The purchase by such Investor of the Shares hereunder has been, to the extent such Investor is an entity, duly authorized by all necessary corporate, partnership or other action on the part of such Investor. This Agreement has been duly executed and delivered by such Investor and constitutes the valid and binding obligation of such Investor, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)No Public Sale or Distribution.  Such Investor is acquiring the Shares in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and such Investor does not have a present arrangement to effect any distribution of the Shares to or through any person or entity; provided, however, that by making the representations herein, such Investor does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

(c)Investor Status.  At the time such Investor was offered the Shares, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or an entity engaged in the business of being a broker dealer.  Except as otherwise disclosed in writing to the Company on Exhibit A-2 (attached hereto) on or prior to the date of this Agreement, such Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity engaged in the business of being a broker dealer.

(d)General Solicitation.  Such Investor is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media, broadcast over television or radio, disseminated over the Internet or presented at any seminar or any other general solicitation or general advertisement.

(e)Experience of Such Investor.  Such Investor, either alone or together with its representatives has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment.  Such Investor understands that it must bear the economic risk of this investment in the Shares indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment.

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(f)Access to Information.  Such Investor acknowledges that it has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and each Subsidiary and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

(g)No Governmental Review.  Such Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

(h)No Conflicts.  The execution, delivery and performance by such Investor of this Agreement and the consummation by such Investor of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of such Investor to consummate the transactions contemplated hereby.

(i)Prohibited Transactions; Confidentiality.  No Investor, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with any Investor, has engaged in any purchases or sales in the securities, including derivatives, of the Company (including, without limitation, any Short Sales (a “Transaction”) involving any of the Company’s securities) since the time that such Investor was first contacted by the Company or any other Person regarding an investment in the Company. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with such Investor will engage, directly or indirectly, in any Transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.  “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.

(j)Restricted Securities. The Investors understand that the Shares are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.

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(k)Legends.   It is understood that, except as provided in Section 4.1(b) of this Agreement, certificates evidencing such Shares may bear the legend set forth in Section 4.1(b).

(l)No Legal, Tax or Investment Advice.  Such Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Shares constitutes legal, tax or investment advice.  Such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in con­nection with its purchase of the Shares.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1Transfer Restrictions.

(a)The Investors covenant that the Shares will only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or to the Company, or at such time that the Shares may be sold without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act.  Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with its Transfer Agent, without any such legal opinion, except to the extent that the transfer agent requests such legal opinion, any transfer of Shares by an Investor to an Affiliate of such Investor, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not request any removal of any existing legends on any certificate evidencing the Shares.

(b)The Investors agree to the imprinting, until no longer required by this Section 4.1(b), of the following legend on any certificate evidencing any of the Shares:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

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Certificates evidencing the Shares shall not be required to contain such legend or any other legend (i) while a registration statement (including the Registration Statement) covering the resale of the Shares is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144 if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the Shares can be sold under Rule 144, (iii) if the Shares are eligible for sale without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, or (iv) if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the SEC).  The Company shall cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the Transfer Agent on the Effective Date.  Following the Effective Date and provided the registration statement referred to in clause (i) above is then in effect, or at such earlier time as a legend is no longer required for certain Shares, the Company will no later than three Trading Days following the delivery by an Investor to the Company or the Transfer Agent (if delivery is made to the Transfer Agent a copy shall be contemporaneously delivered to the Company) of (i) a legended certificate representing such Shares (and, in the case of a requested transfer, endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect transfer), and (ii) an opinion of counsel to the extent required by Section 4.1(a), deliver or cause to be delivered to such Investor a certificate representing such Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section.

If within three Trading Days after receipt by the Company or its Transfer Agent of a legended certificate and the other documents as specified in Clauses (i) and (ii) of the paragraph immediately above, the Company shall fail to cause to be issued and delivered to such Investor a certificate representing such Shares that is free from all restrictive and other legends, and if on or after such Trading Day the Investor purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares of Common Stock that the Investor anticipated receiving from the Company without any restrictive legend (the “Covering Shares”), then the Company shall, within three Trading Days after the Investor’s request, pay cash to the Investor in an amount equal to the excess (if any) of the Investor’s total purchase price (including brokerage commissions, if any) for the Covering Shares, over the product of (A) the number of Covering Shares, times (B) the closing bid price on the date of delivery of such certificate and the other documents as specified in Clauses (i) and (ii) of the paragraph immediately above.

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(c)The Company will not object to and shall permit (except as prohibited by law) an Investor to pledge or grant a security interest in some or all of the Shares in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement, and if required under the terms of such arrangement, the Company will not object to and shall permit (except as prohibited by law) such Investor to transfer pledged or secured Shares to the pledgees or secured parties.  Except as required by law, such a pledge or transfer would not be subject to approval of the Company, no legal opinion of the pledgee, secured party or pledgor shall be required in connection therewith (but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Investor transferee of the pledge), and no notice shall be required of such pledge.  Each Investor acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Shares or for any agreement, understanding or arrangement between any Investor and its pledgee or secured party.  At the appropriate Investor's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. Provided that the Company is in compliance with the terms of this Section 4.1(c), the Company’s indemnification obligations pursuant to Section 6.4 shall not extend to any Proceeding or Losses arising out of or related to this Section 4.1(c).

4.2Furnishing of Information.  Until the date that any Investor owning Shares may sell all of them without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144 (or any successor provision), the Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  The Company further covenants that it will take such further action as any holder of Shares may reasonably request to satisfy the provisions of this Section 4.2.

4.3Integration.  The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Investors or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market.

4.4Securities Laws Disclosure; Publicity.  The Company shall, at or before 5:30 p.m., New York time, on the fourth Trading Day following execution of this Agreement and the Share Exchange Agreement, file the Super 8-K with the SEC, including as exhibits to the Super 8-K this Agreement, in the form required by the Exchange Act.  Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions contemplated hereby and provide copies thereof to the Investors promptly after filing.  Except as herein provided, neither the Company nor any Subsidiary shall publicly disclose the name of any Investor, or include the name of any Investor in any press release without the prior written consent of such Investor (which consent shall not be unreasonably withheld or delayed), unless otherwise required by law, regulatory authority or Trading Market.  Neither the Company nor any Subsidiary shall, nor shall any of their respective officers, directors, employees and agents, provide any Investor with any material nonpublic information regarding the Company or any Subsidiary from and after the issuance of the above referenced press release without the express written consent of such Investor.

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4.5Use of Proceeds.  The Company intends to use the net proceeds from the sale of the Shares for the repayment of indebtedness, working capital, expansion of the Company’s plant in Quebec, Canada, potential acquisitions and general corporate purposes. The Company also may use a portion of the net proceeds, currently intended for general corporate purposes, to acquire or invest in technologies, products or services that complement its business, although the Company has no present plans or commitments and is not currently engaged in any material negotiations with respect to these types of transactions.  Pending these uses, the Company intends to invest the net proceeds from this offering in short-term, interest-bearing, investment-grade securities, or as otherwise pursuant to the Company's customary investment policies.

4.6Variable Rate Transactions. From the date hereof until eighteen (18) months following the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect the offer or sale to, or exchange with (or other type of distribution to) any third party, of Common Stock or any debt or equity securities convertible, exercisable or exchangeable into Common Stock involving a Variable Rate Transaction.

ARTICLE V

CONDITIONS

5.1Conditions Precedent to the Obligations of the Investors.  The obligation of each Investor to acquire Shares at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions:

(a)Representations and Warranties.  The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and

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

(c)No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the SEC or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market.

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(d)Absence of Litigation. No action, suit or proceeding by or before any court or any governmental body or authority, against the Company or any Subsidiary or pertaining to the transactions contemplated by this Agreement or their consummation, shall have been instituted on or before the Closing Date, which action, suit or proceeding would, if determined adversely, have a Material Adverse Effect.

(e)Closing of the Share Exchange.  The Share Exchange shall have occurred and the Company shall have (i) delivered to the Investors evidence thereof and (ii) provided evidence that the Company is prepared to file the Super 8-K with the SEC on or before the 4th Trading Day following the consummation of the Share Exchange.

(f)Closing Deliveries.  The Company shall have delivered the items set forth in Section 2.3(a) of this Agreement.

(g) Minimum Escrow Deposit.  The Investors shall have deposited at least $5,000,000 into the Escrow Account and shall have delivered executed signature pages to this Agreement to the Company committing to purchase at least an aggregate of $5,000,000 of Shares.

5.2Conditions Precedent to the Obligations of the Company.  The obligation of the Company to sell the Shares at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a)Representations and Warranties.  The representations and warranties of the Investors contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; and

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

(c)Disclosure Materials Reconfirmation.  Each Investor shall have signed an acknowledgement of receipt of the Disclosure Materials, in the form attached hereto as Exhibit E, and shall have reconfirmed such Investor’s desire to acquire the Shares hereunder.

(d)Closing Deliverables.  Each Investor shall have delivered the items set forth in Section 2.3(b) of this Agreement.

ARTICLE VI 

REGISTRATION RIGHTS

6.1Registration Statement.

(a)As promptly as possible, and in any event on or prior to the Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415.  The Registration Statement shall be on Form S-1 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-1, in which case such registration shall be on another appropriate form in accordance with the Securities Act and the Exchange Act) and shall contain (except if otherwise directed by the Investors or requested by the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit C.

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(b)The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but in any event prior to the Required Effectiveness Date, and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of the date that all Shares covered by such Registration Statement have been sold or can be sold publicly under Rule 144 (the “Effectiveness Period”); provided that, upon notification by the SEC that a Registration Statement will not be reviewed or is no longer subject to further review and comments, the Company shall request acceleration of such Registration Statement within five (5) Trading Days after receipt of such notice and request that it become effective on 4:00 p.m. New York City time on the Effective Date and file a prospectus supplement for any Registration Statement, whether or not required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the Effective Date (unless the Company is required to update its financial statements prior to requesting acceleration of the Registration Statement, which will require the Company to file an amendment to such Registration Statement).

(c)The Company shall notify the Investors in writing promptly (and in any event within two Trading Days) after receiving notification from the SEC that the Registration Statement has been declared effective.

(d)Should an Event (as defined below) occur, then upon the occurrence of such Event, and on every monthly anniversary thereof until the applicable Event is cured, the Company shall pay to each Investor an amount in cash, as liquidated damages and not as a penalty, equal to one percent (1.0%) of (i) the number of Shares held by such Investor as of the date of such Event, multiplied by (ii) the purchase price paid by such Investor for such Shares then held; provided, however, that the Company shall not be liable for liquidated damages under this Agreement as to any Shares that (A) are not permitted by the SEC to be included in a Registration Statement because of its application of Rule 415 or (B) can be sold publicly under Rule 144.  The payments to which an Investor shall be entitled pursuant to this Section 6.1(d) are referred to herein as “Event Payments.”  Any Event Payments payable pursuant to the terms hereof shall apply on a pro rated basis for any portion of a month prior to the cure of an Event.  All pro rated calculations made pursuant to this paragraph shall be based upon the actual number of days in such pro rated month.

For such purposes, each of the following shall constitute an “Event”:

(i)the Registration Statement is not filed on or prior to the Filing Date;

(ii)the Registration Statement is not declared effective on or prior to the Required Effectiveness Date;

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(iii)except as provided for in Section 6.1(e) (the “Excluded Events”), after the Effective Date and during the Effectiveness Period, an Investor is not permitted to sell Registrable Securities under the Registration Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason (other than the fault of such Investor) for ten (10) or more Trading Days (whether or not consecutive); provided, however, that if an Investor is not permitted to sell Registrable Securities under the Registration Statement because the financial statements included in such Registration statement become ineligible for inclusion therein, the Company may suspend sales of Registrable Securities under such Registration Statement for up to fifteen (15) Trading Days prior to it being deemed an Event so long as the Company is not in breach of any other provision of this Agreement;

(iv)except as a result of the Excluded Events, the Common Stock is not listed or quoted, or is suspended from trading, on an Eligible Market for a period of three Trading Days (which need not be consecutive Trading Days) during the Effectiveness Period; or

(v)during the Effectiveness Period, except as a result of the Excluded Events, the Company fails to have any Shares listed or quoted on an Eligible Market.

(e)Notwithstanding anything in this Agreement to the contrary, the Company may, by written notice to the Investors, suspend sales under a Registration Statement after the Effective Date thereof and/or require that the Investors immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a material merger, acquisition or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintaina Registration Statement at such time or (B) it is in the best interests of the Company to suspend sales under such registration at such time.  Upon receipt of such notice, each Investor shall immediately discontinue any sales of Registrable Securities pursuant to such registration until such Investor is advised in writing by the Company that the current Prospectus or amended Prospectus, as applicable, may be used.  In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company.  The Company’s rights under this Section 6(e) may be exercised for a period of no more than 30 Trading Days in any twelve-month period, without such suspension being considered as part of an Event Payment determination.  Immediately after the end of any suspension period under this Section 6(e), the Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and the ability of the Investors to publicly resell their Registrable Securities pursuant to such effective Registration Statement.

(f)The Company shall not, from the date hereof until 90 days following the Effective Date of the Registration Statement, prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than any registration statement or post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered on Form S-8.

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6.2       Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall:

(a)Not less than three Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto, furnish via email to those Investors who have supplied the Company with email addresses copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the review of such Investors.  The Company shall reflect in each such document when so filed with the SEC such comments regarding the Investors and the plan of distribution as the Investors may reasonably and promptly propose no later than two Trading Days after the Investors have been so furnished with copies of such documents as aforesaid.

(b) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to the Registration Statement or any amendment thereto; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Investors thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

(c)Notify the Investors as promptly as reasonably possible, and if requested by the Investors confirm such notice in writing no later than two Trading Days thereafter, of any of the following events:  (i) the SEC notifies the Company whether there will be a “review” of any Registration Statement; (ii) the SEC comments in writing on any Registration Statement; (iii) any Registration Statement or any post-effective amendment is declared effective; (iv) the SEC or any other federal or state governmental authority requests any amendment or supplement to any Registration Statement or Prospectus or requests additional information related thereto; (v) the SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (vi) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; (vii) the financial statements included in any Registration Statement become ineligible for inclusion therein or (viii) any Registration Statement or Prospectus or other document contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

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(d)Use its commercially reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible.

(e)If requested by an Investor, provide such Investor without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

(f)Promptly deliver to each Investor, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Investors in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.

(g)(i) In the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Shares to be approved for listing on each Trading Market as soon as possible thereafter; (iii) provide to each Investor evidence of such listing; and (iv) except as a result of the Excluded Events, during the Effectiveness Period, maintain the listing of such Shares on each such Trading Market or another Eligible Market.

(h)Prior to any public offering of Registrable Securities, use its Best Efforts to register or qualify or cooperate with the selling Investors in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

(i)Cooperate with the Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and under law, of all restrictive legends, and to enable such certificates to be in such denominations and registered in such names as any such Investors may reasonably request.

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(j)Upon the occurrence of any event described in Section 6.2(c)(vii) or (viii), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, the financial statements included in such Registration Statement are current and neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(k)Cooperate with any reasonable due diligence investigation undertaken by the Investors in connection with the sale of Registrable Securities, including, without limitation, by making available documents and information; provided that the Company will not deliver or make available to any Investor material, nonpublic information unless such Investor requests in advance in writing to receive material, nonpublic information and agrees to keep such information confidential.

(l)Comply with all rules and regulations of the SEC applicable to the registration of the Registrable Securities.

(m)It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of any particular Investor or to make any Event Payments set forth in Section 6.1(d) to such Investor that such Investor furnish to the Company the information specified in Exhibits A-1, A-2 and A-3 hereto and such other information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the Registrable Securities held by it (if different from the Plan of Distribution set forth on Exhibit C hereto) as shall be reasonably required to effect the registration of such Registrable Securities and shall complete and execute such documents in connection with such registration as the Company may reasonably request.

(n)The Company shall comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to make available a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

6.3Registration Expenses.  The Company shall pay all fees and expenses incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.

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6.4Indemnification

(a)Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors, partners, members, agents and employees of each of them, each Person who controls any such Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby, (ii) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby, (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section 6.4(c) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) the execution, delivery, performance or enforcement of this Agreement or any other certificate, instrument or document contemplated hereby, (y) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Shares, or (z) the status of an Indemnified Party as the holder of Shares (unless, and only to the extent that, such action, suit or claim is based, including in part, upon a breach of such Investor’s representations, warranties or covenants under this Agreement or any conduct by such Investor that constitutes fraud, gross negligence or willful misconduct) or (iv) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such Investor furnished in writing to the Company by such Investor  for use therein, or to the extent that such information relates to such Investor or such Investor's proposed method of distribution of Registrable Securities and was reviewed and expressly approved by such Investor in writing expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company to the Investor, and the Investor seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.    

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(b)Indemnification by Investors.  Each Investor shall, severally and not jointly, indemnify and hold harmless the Company and its directors, officers, agents and employees to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statements or omissions are based solely upon information regarding such Investor furnished to the Company by such Investor in writing expressly for use therein, or to the extent that such information relates to such Investor or such Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Investor expressly for use in the Registration Statement (it being understood that the information provided by the Investor to the Company in Exhibits A-1, A-2 and A-3 and the Plan of Distribution set forth on Exhibit C, as the same may be modified by such Investor and other information provided by the Investor to the Company in or pursuant to this Agreement constitutes information reviewed and expressly approved by such Investor in writing expressly for use in the Registration Statement), such Prospectus or such form of prospectus or in any amendment or supplement thereto. In no event shall the liability of any selling Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c)Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the

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expense of the Indemnifying Party).  It shall be understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d)Contribution.  If a claim for indemnification under Section 6.4(a) or  (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 6.4(d), no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor from the sale of the Registrable Securities subject to the Proceeding exceed the amount of any damages that such Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

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The indemnity and contribution agreements contained in this Section  are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6.5Dispositions.  Each Investor agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell its Registrable Securities in accordance with the Plan of Distribution set forth in the Prospectus.  Each Investor further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(v), (vi), (vii), or (viii), such Investor will discontinue disposition of such Registrable Securities under the Registration Statement until such Investor is advised in writing by the Company that the use of the Prospectus, or amended Prospectus, as applicable, may be resumed.  The Company may provide appropriate stop orders to enforce the provisions of this paragraph. Each Investor, severally and not jointly with the other Investors, agrees that the removal of the restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Investor will comply with the provisions of this subsection. Both the Company and the Transfer Agent, and their respective directors, officers, employees and agents, may rely on this subsection.

6.6No Piggyback on Registrations.  Except as set forth on Schedule 6.6 hereto, neither the Company nor any of its security holders (other than the Investors in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities.

6.7Piggy-Back Registrations.  If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Investor not then eligible to sell all of their Registrable Securities under Rule 144 in a three-month period, written notice of such determination and if, within ten days after receipt of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered.  Notwithstanding the foregoing, in the event that, in connection with any underwritten public offering, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Investor has requested inclusion hereunder as the underwriter shall permit; provided, however, that (i) the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not contractually entitled to inclusion of such

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securities in such Registration Statement or are not contractually entitled to pro rata inclusion with the Registrable Securities and (ii) after giving effect to the immediately preceding proviso, any such exclusion of Registrable Securities shall be made pro rata among the Investors seeking to include Registrable Securities and the holders of other securities having the contractual right to inclusion of their securities in such Registration Statement by reason of demand registration rights, in proportion to the number of Registrable Securities or other securities, as applicable, sought to be included by each such Investor or other holder.  If an offering in connection with which an Investor is entitled to registration under this Section 6.7 is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering and shall enter into an underwriting agreement in a form and substance reasonably satisfactory to the Company and the underwriter or underwriters. Upon the effectiveness the registration statement for which piggy-back registration has been provided in this Section 6.7, any Event Payments payable by an Investor whose Registrable Securities are included in such registration statement shall terminate and no longer be payable.

ARTICLE VII

MISCELLANEOUS

7.1Termination.  This Agreement may be terminated by the Company or any Investor, by written notice to the other parties, if the Closing has not been consummated by the third Trading Day following the date of this Agreement; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties).

7.2Fees and Expenses.  Except as expressly set forth in this Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Shares.

7.3Entire Agreement.  This Agreement, together with the Exhibits and Schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such document, exhibits and schedules.  At or after the Closing, and without further consideration, the Company will execute and deliver to the Investors such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under this Agreement.

7.4Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section  prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.

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7.5Amendments; Waivers.  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each of the Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Investors under Article VI may be given by Investors holding at least a majority of the Registrable Securities to which such waiver or consent relates.

7.6Construction.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

7.7Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors.  Any Investor may assign its rights under this Agreement to any Person to whom such Investor assigns or transfers any Shares, provided (i) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of (x) the name and address of such transferee or assignee and (y) the Registrable Securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions hereof that apply to the “Investors” and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

7.8No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder.

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7.9Governing Law; Venue; Waiver of Jury Trial.  THE CORPORATE LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THIS AGREEMENT), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

7.10Survival.  The representations and warranties, agreements and covenants contained herein shall survive the Closing.

7.11Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.

7.12Severability.  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

7.13Replacement of Shares.  If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith.  The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares.

7.14Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors and the Company will be entitled to seek specific performance under this Agreement.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.

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7.15Payment Set Aside.  To the extent that the Company makes a payment or payments to any Investor hereunder or any Investor enforces or exercises its rights hereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration 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 enforcement or setoff had not occurred.

7.16Adjustments in Share Numbers and Prices.  In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement to a number of shares or a price per share shall be amended to appropriately account for such event.

7.17Independent Nature of Investors' Obligations and Rights.  The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement.  The decision of each Investor to purchase Shares pursuant to this Agreement has been made by such Investor independently of any other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or employees shall have any liability to any other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions.  Nothing contained herein, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.  Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no other Investor will be acting as agent of such Investor in connection with monitoring its investment hereunder. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose.

SIGNATURE PAGES TO FOLLOW

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

PIONEER POWER SOLUTIONS, INC.

By:            

Name: Nathan J. Mazurek

Title:   Chief Executive Officer

Address for Notice:

c/o Provident Industries, Inc.

c/o Clinton Group

9 West 57th Street, 26th Floor

New York, New York 10019

Tel: (212) 867-0700                                                    

Fax: (212) 867-1325                                                    

Attn:  Nathan J. Mazurek, CEO

With a copy to:

Haynes and Boone, LLP

1221 Avenue of the Americas, 26th Floor

New York, New York 10020

Tel: (212) 659-4974

Fax: (212) 884-8234

Attn:  Rick A. Werner, Esq.

COMPANY SIGNATURE PAGE

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Investor Signature Page

By its execution and delivery of this signature page, the undersigned Investor hereby joins in and agrees to be bound by the terms and conditions of the Securities Purchase Agreement (the “Purchase Agreement”) by and among Pioneer Power Solutions, Inc. and the Investors (as defined therein), as to the number of Shares set forth below, and authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof.

Name of Investor:

By: 

Name:  

Title:  

Address:    

Telephone No.: _________________________

Facsimile No.:          

Email Address: __________________________

Number of Shares:

Aggregate Purchase Price: $ 

Delivery Instructions (if different than above):

c/o: _________________________________________________________

Address: ________________________________________________________

                ________________________________________________________

Telephone No.: _______________________________________________________

Facsimile No. : _______________________________________________________

Other Special Instructions: ___________________________________________

EX-10.2

Exhibit 10.2

WARRANT

PIONEER POWER SOLUTIONS, INC.
No. 1	1,000,000 Shares
Date of Issuance: December 2, 2009

WARRANT TO PURCHASE COMMON STOCK

VOID AFTER 5:30 P.M., EASTERN

TIME, ON THE EXPIRATION DATE

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

FOR VALUE RECEIVED, PIONEER POWER SOLUTIONS, INC., a Delaware corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on December 2, 2014 (the “Expiration Date”), to [___________________], or its registered assigns (the “Holder”), under the terms as hereinafter set forth, up to 1,000,000 fully paid and non-assessable shares of Common Stock (as defined in Section 12) of the Company (the “Warrant Stock”), at a purchase price of $2.00 per share (the “Warrant Price”), pursuant to this warrant (this “Warrant”). The number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth.

1.Exercise of Warrant.

(a)The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the Notice of Exercise attached hereto duly executed) at the principal office of the Company, and by the payment to the Company of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at the Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Company, (ii) by “cashless exercise” in accordance with the provisions of subsection (b) of this Section 1, but only when a registration statement under the Securities Act (as defined in Section 12) providing for the resale of the Warrant Stock is not then in effect, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant.

(b)Notwithstanding any provisions herein to the contrary and commencing one (1) year following the Original Issue Date (as defined in Section 12), if (i) the Per Share Market Value (as defined in Section 12) of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) the Holder at the time of exercise is not able to sell the Warrant Stock pursuant to an effective registration statement filed under the Securities Act providing for the resale of the Warrant Stock, in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

	X=
Where	X=	the number of shares of Common Stock to be issued to the Holder.
	Y=	the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.
	A=	the Warrant Price.
	B=	the Per Share Market Value (as defined in Section 12) of one share of Common Stock on the Trading Day (as defined in Section 12) immediately preceding the date of such election.

(c)This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional shares of Warrant Stock.  If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer, President or any Vice President of the Company.  The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

(d)No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Company shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

(e)In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Stock so purchased, registered in the name of the Holder, shall be delivered to the Holder within a reasonable time after such rights shall have been so exercised. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented by this Warrant shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the stock transfer books are open. The Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any issuance and delivery of shares of Warrant Stock to any Person (as defined in Section 12) other than the Holder or with respect to any income tax due by the Holder with respect to any shares of Warrant Stock.

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2.Disposition of Warrant Stock and Warrant.

(a)The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are, as of the date hereof, not registered: (i) under the Securities Act on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Securities Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and that the Company’s reliance on the Section 4(2) exemption of the Securities Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder that it is acquiring this Warrant and will acquire the Warrant Stock for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control.

The Holder hereby agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Stock, except pursuant to an effective registration statement under the Securities Act, unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company either (i) an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed sale or transfer may be made without registration under the Securities Act and without registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Securities Act.

(b)If, at the time of issuance of any Warrant Stock, no registration statement is in effect with respect to such shares under applicable provisions of the Securities Act, the Company may at its election require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant (in connection with an exercise) shall bear a legend reading substantially as follows:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

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3.Reservation of Shares.  The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant. The Company further agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized and will, upon issuance and against payment of the Warrant Price therefor, be validly issued, fully paid and non assessable, free from all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities laws.

4.Exchange, Transfer or Assignment of Warrant.  Subject to Section 2 hereof, this Warrant may be transferred by the Holder, in whole or in part, without the consent of the Company. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Company by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Company, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable at the principal office of the Company for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

5.Capital Adjustments.  This Warrant is subject to the following further provisions:

(a)If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a Person, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any Person (any such Person being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 1 and in lieu of the shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

(b)If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of shares of Warrant Stock purchasable upon exercise of this Warrant and the Warrant Price shall be proportionately adjusted.

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(c)Whenever the number of shares of Warrant Stock purchasable upon exercise of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted to that price determined by multiplying the Warrant Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately thereafter.

(d)The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

(e)The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise have given rise to such adjustment.  In such case, however, any adjustment that would otherwise have been required to be made shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise to such next subsequent adjustment.

(f)Following each computation or readjustment as provided in this Section 5, the new adjusted Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further computation or readjustment thereof is required.

6.Notice to Holders.

(a)In case:

(i)the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

(ii)of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another Person, or any conveyance of all or substantially all of the assets of the Company to another Person; or

(iii)of any voluntary dissolution, liquidation or winding-up of the Company;

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then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.  Such notice shall be mailed at least twenty (20) days prior to the record date therein specified, or if no record date shall have been specified therein, at least twenty (20) days prior to the date of such action; provided, however, failure to provide any such notice shall not affect the validity of such transaction.

(b)Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make a certificate signed by its Chairman, Chief Executive Officer, President, Vice President, Chief Financial Officer or Treasurer, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant after giving effect to such adjustment, and shall promptly cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

7.Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 hereof or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates (as defined in Section 12), and any other person or entity acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 7, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act (as defined in Section 12) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 7 applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the

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Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 7, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership Limitation provisions of this Section 7 may be waived by the Holder, at the election of the Holder, upon not less than 61 days’ prior notice to the Company to change the Beneficial Ownership Limitation to 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant, and the provisions of this Section 7 shall continue to apply. Upon such a change by the Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation may not be further waived by the Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 7 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

8.Registration Rights. If, at any time while this Warrant remains outstanding, or the Holder holds any shares of Warrant Stock, the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to the Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, the Holder shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Stock the Holder requests to be registered.

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9.Loss, Theft, Destruction or Mutilation.  Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof, without expense to the Holder, a new Warrant of like tenor dated the date hereof.

10.Warrant Holder Not a Stockholder.  The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.

11.Notices.  Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, postage prepaid, or nationally recognized overnight delivery service, to the Company at c/o Provident Industries, Inc., c/o Clinton Group, 9 West 57th Street, New York, New York 10019, Attention: Chief Executive Officer, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.

12.Definitions. For the purposes of this Warrant, the following terms have the following meanings:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Common Stock” means the common stock of the Company, par value $.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

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

“Original Issue Date” means December __, 2009.

“Per Share Market Value” means on any particular date (a) the closing sales price per share of the Common Stock on such date on any registered national stock exchange on which the Common Stock is then listed, or if there is no such closing sales price on such date, then the closing sales price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not then listed on a registered national stock exchange, the closing sales price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the board of directors of the Company; provided, however, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.

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“Person” shall mean any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof

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

“Trading Day” means (a) a day on which the Common Stock is eligible to be traded on a registered national stock exchange, or (b) if the Common Stock is not eligible to be traded on any registered national stock exchange, a day on which the Common Stock is authorized for quotation on the OTC Bulletin Board, or (c) if the Common Stock is not eligible to be traded on a registered national stock exchange or authorized for quotation on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) or (c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

13.Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

14.Jurisdiction and Venue.  The Company and the Holder, by its acceptance hereof, hereby agree that any dispute which may arise between them arising out of or in connection with this Warrant shall be adjudicated before a court located in New York, New York, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of New York located in New York City with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Warrant or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officer, as of this 2nd day of December, 2009.

PIONEER POWER SOLUTIONS, INC.

By:_______________________________

Name:  Nathan J. Mazurek

Title:  Chief Executive Officer

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NOTICE OF EXERCISE

WARRANT

PIONEER POWER SOLUTIONS., INC.

The undersigned ____________________, pursuant to the provisions of the within Warrant, hereby elects to purchase _______________ shares of Common Stock of Pioneer Power Solutions, Inc. covered by the within Warrant.

Dated:	Signature
	Address

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: ______________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise                                       o

Cashless Exercise                                o

If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $______________ by certified or official bank check (or via wire transfer) to the Company in accordance with the terms of the Warrant.

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is _______________.

Where:

The number of shares of Common Stock to be issued to the Holder _________________  (“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised _______________________ (“Y”).

The Warrant Price ___________________ (“A”).

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The Per Share Market Value of one share of Common Stock on the Trading Day immediately preceding the date of such election ___________________ (“B”).

ASSIGNMENT

FOR VALUE RECEIVED, ____________________hereby sells, assigns and transfers unto ______________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint __________________________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto ___________________ the right to purchase _______________________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint _____________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

FOR USE BY THE COMPANY ONLY:

This Warrant No. _______canceled (or transferred or exchanged) this _____ day of ________________, _____________ shares of Common Stock issued therefor in the name of _______________, Warrant No. ________ issued for ______________ shares of Common Stock in the name of ________________________.

EX-10.3

Exhibit 10.3

WARRANT

PIONEER POWER SOLUTIONS, INC.
No. 1	1,000,000 Shares
Date of Issuance: December 2, 2009

WARRANT TO PURCHASE COMMON STOCK

VOID AFTER 5:30 P.M., EASTERN

TIME, ON THE EXPIRATION DATE

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

FOR VALUE RECEIVED, PIONEER POWER SOLUTIONS, INC., a Delaware corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on December 2, 2014 (the “Expiration Date”), to PROVIDENT PIONEER PARTNERS, L.P., or its registered assigns (the “Holder”), under the terms as hereinafter set forth, up to 1,000,000 fully paid and non-assessable shares of Common Stock (as defined in Section 11) of the Company (the “Warrant Stock”), at a purchase price of $3.25 per share (the “Warrant Price”), pursuant to this warrant (this “Warrant”). The number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth.

1.Exercise of Warrant.

(a)The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the Notice of Exercise attached hereto duly executed) at the principal office of the Company, and by the payment to the Company of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at the Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Company, (ii) by “cashless exercise” in accordance with the provisions of subsection (b) of this Section 1, but only when a registration statement under the Securities Act (as defined in Section 11) providing for the resale of the Warrant Stock is not then in effect, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant.

(b)Notwithstanding any provisions herein to the contrary and commencing one (1) year following the Original Issue Date (as defined in Section 11), if (i) the Per Share Market Value (as defined in Section 11) of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) the Holder at the time of exercise is not able to sell the Warrant Stock pursuant to an effective registration statement filed under the Securities Act providing for the resale of the Warrant Stock, in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

	X=
Where	X=	the number of shares of Common Stock to be issued to the Holder.
	Y=	the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.
	A=	the Warrant Price.
	B=	the Per Share Market Value (as defined in Section 11) of one share of Common Stock on the Trading Day (as defined in Section 11) immediately preceding the date of such election.

(c)This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional shares of Warrant Stock.  If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer, President or any Vice President of the Company.  The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

(d)No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Company shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

(e)In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Stock so purchased, registered in the name of the Holder, shall be delivered to the Holder within a reasonable time after such rights shall have been so exercised. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented by this Warrant shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the stock transfer books are open. The Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any issuance and delivery of shares of Warrant Stock to any Person (as defined in Section 11) other than the Holder or with respect to any income tax due by the Holder with respect to any shares of Warrant Stock.

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2.Disposition of Warrant Stock and Warrant.

(a)The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are, as of the date hereof, not registered: (i) under the Securities Act on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Securities Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and that the Company’s reliance on the Section 4(2) exemption of the Securities Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder that it is acquiring this Warrant and will acquire the Warrant Stock for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control.

The Holder hereby agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Stock, except pursuant to an effective registration statement under the Securities Act, unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company either (i) an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed sale or transfer may be made without registration under the Securities Act and without registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Securities Act.

(b)If, at the time of issuance of any Warrant Stock, no registration statement is in effect with respect to such shares under applicable provisions of the Securities Act, the Company may at its election require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant (in connection with an exercise) shall bear a legend reading substantially as follows:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

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3.Reservation of Shares.  The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant. The Company further agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized and will, upon issuance and against payment of the Warrant Price therefor, be validly issued, fully paid and non assessable, free from all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities laws.

4.Exchange, Transfer or Assignment of Warrant.  Subject to Section 2 hereof, this Warrant may be transferred by the Holder, in whole or in part, without the consent of the Company. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Company by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Company, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable at the principal office of the Company for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

5.Capital Adjustments.  This Warrant is subject to the following further provisions:

(a)If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a Person, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any Person (any such Person being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 1 and in lieu of the shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

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(b)If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of shares of Warrant Stock purchasable upon exercise of this Warrant and the Warrant Price shall be proportionately adjusted.

(c)Whenever the number of shares of Warrant Stock purchasable upon exercise of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted to that price determined by multiplying the Warrant Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately thereafter.

(d)The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

(e)The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise have given rise to such adjustment.  In such case, however, any adjustment that would otherwise have been required to be made shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise to such next subsequent adjustment.

(f)Following each computation or readjustment as provided in this Section 5, the new adjusted Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further computation or readjustment thereof is required.

6.Notice to Holders.

(a)In case:

(i)the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

(ii)of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another Person, or any conveyance of all or substantially all of the assets of the Company to another Person; or

(iii)of any voluntary dissolution, liquidation or winding-up of the Company;

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then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.  Such notice shall be mailed at least twenty (20) days prior to the record date therein specified, or if no record date shall have been specified therein, at least twenty (20) days prior to the date of such action; provided, however, failure to provide any such notice shall not affect the validity of such transaction.

(b)Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make a certificate signed by its Chairman, Chief Executive Officer, President, Vice President, Chief Financial Officer or Treasurer, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant after giving effect to such adjustment, and shall promptly cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

7.Registration Rights. If, at any time while this Warrant remains outstanding, or the Holder holds any shares of Warrant Stock, the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to the Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, the Holder shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Stock the Holder requests to be registered.

8.Loss, Theft, Destruction or Mutilation.  Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof, without expense to the Holder, a new Warrant of like tenor dated the date hereof.

9.Warrant Holder Not a Stockholder.  The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.

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10.Notices.  Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, postage prepaid, or nationally recognized overnight delivery service, to the Company at c/o Provident Industries, Inc., c/o Clinton Group, 9 West 57th Street, New York, New York 10019, Attention: Chief Executive Officer, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.

11.Definitions. For the purposes of this Warrant, the following terms have the following meanings:

“Common Stock” means the common stock of the Company, par value $.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Original Issue Date” means December __, 2009.

“Per Share Market Value” means on any particular date (a) the closing sales price per share of the Common Stock on such date on any registered national stock exchange on which the Common Stock is then listed, or if there is no such closing sales price on such date, then the closing sales price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not then listed on a registered national stock exchange, the closing sales price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the board of directors of the Company; provided, however, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.

“Person” shall mean any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof

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

“Trading Day” means (a) a day on which the Common Stock is eligible to be traded on a registered national stock exchange, or (b) if the Common Stock is not eligible to be traded on any registered national stock exchange, a day on which the Common Stock is authorized for quotation on the OTC Bulletin Board, or (c) if the Common Stock is not eligible to be traded on a registered national stock exchange or authorized for quotation on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) or (c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

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12.Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

13.Jurisdiction and Venue.  The Company and the Holder, by its acceptance hereof, hereby agree that any dispute which may arise between them arising out of or in connection with this Warrant shall be adjudicated before a court located in New York, New York, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of New York located in New York City with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Warrant or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officer, as of this 2nd day of December, 2009.

PIONEER POWER SOLUTIONS, INC.

By:_______________________________

Name:  Nathan J. Mazurek

Title:  Chief Executive Officer

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NOTICE OF EXERCISE

WARRANT

PIONEER POWER SOLUTIONS., INC.

The undersigned ____________________, pursuant to the provisions of the within Warrant, hereby elects to purchase _______________ shares of Common Stock of Pioneer Power Solutions, Inc. covered by the within Warrant.

Dated:	Signature
	Address

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: ______________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise                                    o

Cashless Exercise                             o

If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $______________ by certified or official bank check (or via wire transfer) to the Company in accordance with the terms of the Warrant.

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is _______________.

Where:

The number of shares of Common Stock to be issued to the Holder _________________  (“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised _______________________ (“Y”).

The Warrant Price ___________________ (“A”).

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The Per Share Market Value of one share of Common Stock on the Trading Day immediately preceding the date of such election ___________________ (“B”).

ASSIGNMENT

FOR VALUE RECEIVED, ____________________hereby sells, assigns and transfers unto ______________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint __________________________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto ___________________ the right to purchase _______________________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint _____________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

FOR USE BY THE COMPANY ONLY:

This Warrant No. _______canceled (or transferred or exchanged) this _____ day of ________________, _____________ shares of Common Stock issued therefor in the name of _______________, Warrant No. ________ issued for ______________ shares of Common Stock in the name of ________________________.

EX-10.4

Exhibit 10.4

LOCK-UP AGREEMENT

December 2, 2009

Ladies and Gentlemen:

The undersigned is the owner of certain shares of common stock, $.001 par value per share, of Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), that were received pursuant to that certain Share Exchange Agreement, of even date herewith, between the Company, the undersigned and Pioneer Transformers Ltd., a Canadian corporation (the “Exchange Shares”). The undersigned understands that in connection with the Share Exchange Agreement, the Company has entered into a securities purchase agreement, of even date herewith (the “Purchase Agreement”), pursuant to which the Company will issue and sell to the investors set forth therein (the “Investors”) the Shares (as defined in the Purchase Agreement) in exchange for proceeds of at least $5,000,000 (the “Funding Transaction”). The undersigned understands that the Company and the Investors will proceed with the Funding Transaction in reliance on this Letter Agreement.

1.           In recognition of the benefit that the Funding Transaction will confer upon the undersigned, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees, for the benefit of the Company and the Investors, that during the period beginning on the closing of the Funding Transaction and ending eighteen (18) months after such date (the “Lockup Period”), the undersigned will not, without the prior written consent of the Investors, (i) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell (or announce any offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option or contract to purchase, purchase of any option or contract of sale, grant of any option, right or warrant to purchase or other sale or disposition), or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future), any of the Exchange Shares or any securities into or for which the Exchange Shares may be converted, exercised or exchanged, whether as a result of the Funding Transaction, by operation of law or otherwise, or (ii) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any of the Exchange Shares, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of any of the Exchange Shares; and

2.           Notwithstanding the foregoing, the undersigned (and any transferee of the undersigned) may transfer any of the Exchange Shares (i) as a bona fide gift or gifts, provided that prior to such transfer the donee or donees thereof agree in writing to be bound by the restrictions set forth herein, (ii) to any trust, partnership, corporation or other entity formed for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that prior to such transfer a duly authorized officer, representative or trustee of such transferee agrees in writing to be bound by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (iii) if such transfer occurs by

operation of law, such as rules of descent and distribution, statutes governing the effects of a merger or a qualified domestic order, provided that prior to such transfer the transferee executes an agreement stating that the transferee is receiving and holding any of the Exchange Shares subject to the provisions of this agreement or (iv) in connection with privately negotiated transactions, provided that any such transferee agrees, in writing, to be bound by the restrictions set forth herein. For purposes hereof, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. In order to enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of legends and/or stop transfer orders with the transfer agent with respect to any Exchange Shares.

3.           This agreement shall be governed by and construed in accordance with the laws of the State of New York.

4.           This agreement will become a binding agreement among the undersigned as of the date hereof. This agreement (and the agreements reflected herein) may be terminated or modified only by the mutual agreement of the Company, the Investors holding a majority of the Shares, and the undersigned, and if not sooner terminated, will terminate upon the expiration date of the Lockup Period.

Very truly yours,

_____________________________

Print Name:

Address: ______________________________________

Number of Exchange Shares owned: ________________

Certificate Numbers: _____________________________

EX-10.5

Exihibit 10.5

RESIGNATION

I, David Davis, hereby resign from all officer and director positions that I hold with Pioneer Power Solutions, Inc. and any of its direct or indirect subsidiaries, except for Sierra Concepts Holdings, Inc., effective immediately.

/s/ David Davis

David Davis

Dated: December 2, 2009

EX-10.6

Exhibit 10.6

PIONEER POWER SOLUTIONS, INC.

DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

This Director and Officer Indemnification Agreement, dated as of December 2, 2009 (this “Agreement”), is made by and between Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), and ___________ (the “Indemnitee”).

RECITALS:

A.           Section 141 of the Delaware General Corporation Law provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors.

B.           By virtue of the managerial prerogatives vested in the directors and officers of a Delaware corporation, directors and officers act as fiduciaries of the corporation and its stockholders.

C.           Thus, it is critically important to the Company and its stockholders that the Company be able to attract and retain the most capable persons reasonably available to serve as directors and officers of the Company.

D.           In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Delaware law authorizes (and in some instances requires) corporations to indemnify their directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers.

E.           The Delaware courts have recognized that indemnification by a corporation serves the dual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure in the knowledge that, if vindicated, the corporation will bear the expense of litigation, and (2) encouraging capable women and men to serve as corporate directors and officers, secure in the knowledge that the corporation will absorb the costs of defending their honesty and integrity.

F.           The number of lawsuits challenging the judgment and actions of directors and officers of Delaware corporations, the costs of defending those lawsuits and the threat to personal assets have all materially increased over the past several years, chilling the willingness of capable women and men to undertake the responsibilities imposed on corporate directors and officers.

G.           Recent federal legislation and rules adopted by the Securities and Exchange Commission and the national securities exchanges have exposed such directors and officers to new and substantially broadened civil liabilities.

H.           Under Delaware law, a director’s or officer’s right to be reimbursed for the costs of defense of criminal actions, whether such claims are asserted under state or federal law, does not depend upon the merits of the claims asserted against the director or officer and is separate and distinct from any right to indemnification the director may be able to establish.

I.           Indemnitee is, or will be, a director and/or officer of the Company and his or her willingness to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her in accordance with the principles reflected above, to the fullest extent permitted by the laws of the State of Delaware, and upon the other undertakings set forth in this Agreement.

J.           Therefore, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s continued service as a director and/or officer of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “Constituent Documents”), any change in the composition of the Company’s Board of Directors (the “Board”) or any change-in-control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification and advancement of Expenses to Indemnitee on the terms, and subject to the conditions, set forth in this Agreement.

K.           In light of the considerations referred to in the preceding recitals, it is the Company’s intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder.

AGREEMENT:

NOW, THEREFORE, the parties hereby agree as follows:

1.Certain Definitions.  In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

“Change in Control” shall have occurred at such time, if any, as Incumbent Directors cease for any reason to constitute a majority of Directors.  For purposes of this Section 1(a), “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the Company and any individual becoming a Director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least a majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Securities Exchange Act of 1934, as amended) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

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“Claim” means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other Person, including, without limitation, any federal, state or other governmental entity, that Indemnitee reasonably determines might lead to the institution of any such claim, demand, action, suit or proceeding.  For the avoidance of doubt, the Company intends indemnity to be provided hereunder in respect of acts or failure to act prior to, on or after the date hereof.

“Controlled Affiliate” means any corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, that is directly or indirectly controlled by the Company.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity or enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided that direct or indirect beneficial ownership of capital stock or other interests in an entity or enterprise entitling the holder to cast 15% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such entity or enterprise shall be deemed to constitute control for purposes of this definition.

“Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.

“Expenses” means attorneys’ and experts’ fees and expenses and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any Claim.

“Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee or agent of the Company or as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise referred to in clause (i) of this sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee or agent of the Company or as a current or former director, officer, employee, member, manager, trustee or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status.  In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as a director, officer, employee, member, manager, trustee or agent of another entity or enterprise if Indemnitee is or was serving as a director, officer, employee, member, manager, agent, trustee or other fiduciary of such entity or enterprise and (i) such entity or enterprise is or at the time of such service was a Controlled Affiliate, (ii) such entity or enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate (by action of the Board, any committee thereof or the Company’s Chief Executive Officer (“CEO”) (other than as the CEO him or herself)) caused or authorized Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

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“Indemnifiable Losses” means any and all Losses relating to, arising out of or resulting from any Indemnifiable Claim; provided, however, that Indemnifiable Losses shall not include Losses incurred by Indemnitee in respect of any Indemnifiable Claim (or any matter or issue therein) as to which Indemnitee shall have been adjudged liable to the Company, unless and only to the extent that the Delaware Court of Chancery or the court in which such Indemnifiable Claim was brought shall have determined upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court shall deem proper.

“Independent Counsel” means a nationally recognized law firm, or a member of a nationally recognized law firm, that is experienced in matters of Delaware corporate law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company (or any subsidiary) or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements) or (ii) any other named (or, as to a threatened matter, reasonably likely to be named) party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

“Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other) and amounts paid or payable in settlement, including, without limitation, all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.

“Person” means any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

“Standard of Conduct” means the standard for conduct by Indemnitee that is a condition precedent to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to, arising out of or resulting from an Indemnifiable Claim.  The Standard of Conduct is (i) good faith and a reasonable belief by Indemnitee that his action was in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, that Indemnitee had no reasonable cause to believe that his conduct was unlawful, or (ii) any other applicable standard of conduct that may hereafter be substituted under Section 145(a) or (b) of the Delaware General Corporation Law or any successor to such provision(s).

2.Indemnification Obligation.  Subject only to Section 7 and to the proviso in this Section, the Company shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted or required by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Section 5, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with (i) any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation of such Claim, or (ii) the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.  The Company acknowledges that the foregoing obligation may be broader than that now provided by applicable law and the Company’s Constituent Documents and intends that it be interpreted consistently with this Section and the recitals to this Agreement.

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3.Advancement of Expenses. Indemnitee shall have the right to advancement by the Company prior to the final disposition of any Indemnifiable Claim of any and all actual and reasonable Expenses relating to, arising out of or resulting from any Indemnifiable Claim paid or incurred by Indemnitee.  Without limiting the generality or effect of any other provision hereof, Indemnitee’s right to such advancement is not subject to the satisfaction of any Standard of Conduct.  Without limiting the generality or effect of the foregoing, within five business days after any request by Indemnitee that is accompanied by supporting documentation for specific reasonable Expenses to be reimbursed or advanced, the Company shall, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest, any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to, arising out of or resulting from such Indemnifiable Claim.  In connection with any such payment, advancement or reimbursement, at the request of the Company, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in respect of Expenses relating to, arising out of or resulting from any Indemnifiable Claim in respect of which it shall have been determined, following the final disposition of such Indemnifiable Claim and in accordance with Section 7, that Indemnitee is not entitled to indemnification hereunder.

4.Indemnification for Additional Expenses. Without limiting the generality or effect of the foregoing, the Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific Expenses to be reimbursed or advanced, any and all actual and reasonable Expenses paid or incurred by Indemnitee in connection with any Claim made, instituted or conducted by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company; provided, however, if it is ultimately determined that the Indemnitee is not entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, then the Indemnitee shall be obligated to repay any such Expenses to the Company; provided further, that, regardless in each case of whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, Indemnitee shall return, without interest, any such advance of Expenses (or portion thereof) which remains unspent at the final disposition of the Claim to which the advance related.

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5.Partial Indemnity.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Loss but not for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

6.Procedure for Notification.  To obtain indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written request therefore, including a brief description (based upon information then available to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss.  If, at the time of the receipt of such request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all Indemnifiable Claims and Indemnifiable Losses in accordance with the terms of such policies.  The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, substantially concurrently with the delivery thereof by the Company.  The failure by Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and to the extent that such failure results in forfeiture by the Company of substantial defenses, rights or insurance coverage.

7. Determination of Right to Indemnification.

To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion thereof or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to, arising out of or resulting from such Indemnifiable Claim in accordance with Section 2 and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required.

To the extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination of whether Indemnitee has satisfied the applicable Standard of Conduct (a “Standard of Conduct Determination”) shall be made as follows:  (i) if a Change in Control shall not have occurred, or if a Change in Control shall have occurred but Indemnitee shall have requested that the Standard of Conduct Determination be made pursuant to this clause (i), (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if such Disinterested Directors so direct, by a majority vote of a committee of Disinterested Directors designated by a majority vote of all Disinterested Directors, or (C) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so direct, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee shall not have requested that the Standard of Conduct Determination be made pursuant to clause (i) above, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.

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If (i) Indemnitee shall be entitled to indemnification hereunder against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition precedent to indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been determined or deemed pursuant to Section 7(b) to have satisfied the applicable Standard of Conduct, then the Company shall pay to Indemnitee, within five business days after the later of (x) the Notification Date in respect of the Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are related, out of which such Indemnifiable Losses arose or from which such Indemnifiable Losses resulted, and (y) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall have been satisfied, an amount equal to the amount of such Indemnifiable Losses.  Nothing herein is intended to mean or imply that the Company is intending to use Section 145(f) of the Delaware General Corporation Law to dispense with a requirement that Indemnitee meet the applicable Standard of Conduct where it is otherwise required by such statute.

If a Standard of Conduct Determination is required to be, but has not been, made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board or a committee of the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected.  If a Standard of Conduct Determination is required to be, or to have been, made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either case, Indemnitee or the Company, as applicable, may, within five business days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “Independent Counsel” in Section 1(h), and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person so selected shall act as Independent Counsel.  If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences and clause (i) of this sentence shall apply to such subsequent selection and notice.  If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections.  If no Independent Counsel that is permitted under the foregoing provisions of this Section 7(d) to make the Standard of Conduct Determination shall have been selected within 30 calendar days after the Company gives its initial notice pursuant to the first sentence of this Section 7(d) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(d), as the case may be, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person or firm selected by the Court or by such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel.  In all events, the Company shall pay all of the actual and reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b).

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8.Cooperation.  Indemnitee shall cooperate with reasonable requests of the Company in connection with any Indemnifiable Claim and any individual or firm making such Standard of Conduct Determination, including providing to such Person documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to defend the Indemnifiable Claim or make any Standard of Conduct Determination without incurring any unreimbursed cost in connection therewith.  The Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific costs and expenses to be reimbursed or advanced, any and all costs and expenses (including attorneys’ and experts’ fees and expenses) actually and reasonably incurred by Indemnitee in so cooperating with the Person defending the Indemnifiable Claim or making such Standard of Conduct Determination.

9.Presumption of Entitlement.  Notwithstanding any other provision hereof, in making any Standard of Conduct Determination, the Person making such determination shall presume that Indemnitee has satisfied the applicable Standard of Conduct.

10.No Other Presumption.  For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable Standard of Conduct or that indemnification hereunder is otherwise not permitted.

11.Non-Exclusivity.  The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the Company’s jurisdiction of incorporation, any other contract or otherwise (collectively, “Other Indemnity Provisions”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will without further action be deemed to have such greater right hereunder, and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder.  The Company may not, without the consent of Indemnitee, adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under this Agreement.

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12. Liability Insurance and Funding.  For the duration of Indemnitee’s service as a director and/or officer of the Company and for a reasonable period of time thereafter, which such period shall be determined by the Company in its sole discretion, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company, and, if applicable, that is substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance.  Upon reasonable request, the Company shall provide Indemnitee or his or her counsel with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.  In all policies of directors’ and officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy.  Notwithstanding the foregoing, (i) the Company may, but shall not be required to, create a trust fund, grant a security interest or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement and (ii) in renewing or seeking to renew any insurance hereunder, the Company will not be required to expend more than 2.0 times the premium amount of the immediately preceding policy period (equitably adjusted if necessary to reflect differences in policy periods).

13.Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other Persons (other than Indemnitee’s successors), including any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f).  Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company).

14.No Duplication of Payments.  The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee has otherwise already actually received payment (net of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (including from any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.

15. Defense of Claims.  Subject to the provisions of applicable policies of directors’ and officers’ liability insurance, if any, the Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume or lead the defense thereof with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee determines, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee shall conclude that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, or (d) Indemnitee has interests in the claim or underlying subject matter that are different from or in addition to those of other Persons against whom the Claim has been made or might reasonably be expected to be

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made, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim for all indemnitees in Indemnitee’s circumstances) at the Company’s expense.  The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent.  The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any threatened or pending Indemnifiable Claim which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such Indemnifiable Claim.  Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.

16.Mutual Acknowledgment.Both the Company and the Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  Indemnitee understands and acknowledges that the Company may be required in the future to undertake to the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee and, in that event, the Indemnitee’s rights and the Company’s obligations hereunder shall be subject to that determination.

17.Successors and Binding Agreement.

This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any Person acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or delegatable by the Company.

This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives, executors, administrators, heirs, distributees, legatees and other successors.

This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 17(a) and 17(b).  Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 17(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred.

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18.Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder must be in writing and shall be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or one business day after having been sent for next-day delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the Secretary of the Company) and to Indemnitee at the applicable address shown on the signature page hereto, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

19.Governing Law.The validity, interpretation, construction and performance of this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State.  The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the Chancery Court of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement, waive all procedural objections to suit in that jurisdiction, including, without limitation, objections as to venue or inconvenience, agree that service in any such action may be made by notice given in accordance with Section 18 and also agree that any action instituted under this Agreement shall be brought only in the Chancery Court of the State of Delaware.

20. Validity.  If any provision of this Agreement or the application of any provision hereof to any Person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other Person or circumstance shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal.  In the event that any court or other adjudicative body shall decline to reform any provision of this Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the immediately preceding sentence, the parties thereto shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal.

21.Miscellaneous.  No provision of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement.

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22.Certain Interpretive Matters.  Unless the context of this Agreement otherwise requires, (1) “it” or “its” or words of any gender include each other gender, (2) words using the singular or plural number also include the plural or singular number, respectively, (3) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (4) the terms “Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex or Exhibit of or to this Agreement, (5) the terms “include,” “includes” and “including” will be deemed to be followed by the words “without limitation” (whether or not so expressed), and (6) the word “or” is disjunctive but not exclusive.  Whenever this Agreement refers to a number of days, such number will refer to calendar days unless business days are specified and whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time or by a particular date that ends or occurs on a non-business day, then such period or date will be extended until the immediately following business day.  As used herein, “business day” means any day other than Saturday, Sunday or a United States federal holiday.

23.Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter of this Agreement.  Any prior agreements or understandings between the parties hereto with respect to indemnification are hereby terminated and of no further force or effect.  This Agreement is not the exclusive means of securing indemnification rights of Indemnitee and is in addition to any rights Indemnitee may have under any Constituent Documents.

24. Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together shall constitute one and the same agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly authorized representative to execute this Agreement as of the date first above written.

PIONEER POWER SOLUTIONS, INC.

By:______________________________________

Name: Nathan J. Mazurek

Title:   Chief Executive Officer

INDEMNITEE:

__________________________________________

Name:  _____________________

Signature Page to Director and Officer Indemnification Agreement

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EX-10.7

Exhibit 10.7

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 2nd day of December, 2009 by and between Pioneer Power Solutions, Inc. (the “Company”), a Delaware corporation, c/o Provident Industries, c/o Clinton Group, 9 West 57th Street, 26th Floor, New York, New York 10019 and Nathan Mazurek, c/o Provident Industries, c/o Clinton Group, 9 West 57th Street, 26th Floor, New York, New York 10019 (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company; and

WHEREAS, the Company and the Executive desire to set forth the terms and conditions of such employment.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the “Employment Term”) commencing on the date of the consummation of the share exchange by and among the Company, Pioneer Transformers Ltd. and Provident Pioneer Partners, L.P., a Delaware limited partnership (the “Share Exchange”), and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on the third anniversary of the Share Exchange (the “Original Employment Term”), provided that the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for successive additional two (2) year periods (the “Additional Terms”), unless, at least one hundred eighty (180) days prior to the end of the Original Employment Term or the then Additional Term, the Company or the Executive has notified the other in writing that the Employment Term shall terminate at the end of the then current term.

2.Position and Responsibilities. During the Employment Term, the Executive shall serve as the Chief Executive Officer and Chief Financial Officer of the Company and the Executive shall report exclusively to the Board of Directors of the Company (the “Board”). During the Employment Term, the Company shall recommend the Executive for election as a director. The Executive shall have all of the duties, authorities, powers and responsibilities commensurate with all of the duties, authorities, powers and responsibilities of a chief executive officer. The Executive shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder, provided that the foregoing shall not prevent the Executive from participating in charitable, community or industry affairs, from managing his and his family’s personal investments and from serving on the boards of directors of not-for-profit companies to the extent such activities do not interfere with the performance of his duties hereunder.

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3.Compensation and Benefits. The Company shall pay and provide the Executive the following:

3.1.Base Salary. The Company shall pay the Executive a base salary (the “Base Salary”) at an annual rate of not less than Two Hundred Fifty Thousand Dollars ($250,000) per year in accordance with the Company’s normal payroll practices for senior executives. Base Salary shall be increased to Two Hundred Seventy-Five Thousand Dollars ($275,000) and to Three Hundred Thousand Dollars ($300,000) on the first and second anniversaries, respectively, of the date hereof.  Once increased, Base Salary shall not be reduced and shall thereafter, as increased, shall be the Base Salary hereunder.

3.2.Annual Bonus. In addition to the Base Salary set forth in 3.1 above, the Executive shall be entitled to such bonus compensation as the Board may determine from time to time in its sole discretion, but not to exceed 50% of the Executive’s Base Salary (which percentage may be increased in the discretion of the Board).

3.3.Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with his position in all employee benefit, fringe benefit, welfare, retirement, savings and incentive plans and programs generally provided by the Company to its senior executives from time to time.

3.4.Vacation. The Executive shall be entitled to paid vacation in accordance with the standard written policies of the Company with regard to vacations of senior executives, but in no event less than six (6) weeks per calendar year (with proration for partial years).

4.Expenses. Upon submission of appropriate documentation, the Company shall pay, or reimburse, the Executive for all ordinary and necessary business expenses (including, but not limited to, travel and entertainment expenses) which the Executive incurs in connection with the performance of his duties hereunder.

5.Termination of Employment and the Employment Term. The Executive’s employment with the Company and the Employment Term shall terminate upon the occurrence of the first of the following events:

5.1.Death. Automatically on the date of the Executive’s death.

5.2.Disability. Upon thirty (30) days’ written notice by the Company to the Executive of a termination due to Disability, provided such notice is delivered during the period of Disability. “Disability” shall mean the inability of the Executive, due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of his material duties hereunder for a period of more than one hundred eighty (180) days in any twelve (12) month period.

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5.3.For Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause, provided such notice is given within ninety (90) days after the discovery by the Board of the Cause event and has been approved by at least two-thirds of the directors then in office (other than the Executive) at a meeting at which the Executive and his counsel had the right to appear and address after receiving at least five (5) business days written notice of the meeting and reasonable detail of the facts and circumstances claimed to provide a basis for such termination. “Cause” shall mean: (i) an act or acts of willful and material misrepresentation, fraud or willful dishonesty (other than good faith expense account disputes) by the Executive which is intended to result in his substantial personal enrichment at the expense of the Company; (ii) any willful misconduct by the Executive with regard to the Company that has a material adverse impact on the Company; (iii) any material, willful and knowing violation by the Executive of any fiduciary duties owed by him to the Company which has a material adverse impact on the Company; (iv) the Executive’s conviction of, or pleading nolo contendere or guilty to, a felony (other than (x) a traffic infraction or (y) vicarious liability solely as a result of his position provided that the Executive did not have actual knowledge of the actions or inactions creating the violation of the law or the Executive relied in good faith on the advice of counsel with regard to the legality of such action or inaction); or (v) any other material breach by the Executive of this Agreement that is not cured by the Executive within twenty (20) days after receipt by the Executive of a written notice from the Company of such breach specifying the details thereof. No action or inaction should be deemed willful if not demonstrably willful and if taken or not taken by the Executive in good faith as not being adverse to the best interests of the Company. Reference in this Section 5.3 to the Company shall also include direct and indirect subsidiaries of the Company.

5.4.Without Cause.  Upon sixty (60) days’ written notice by the Company to the Executive of a termination Without Cause. “Without Cause” shall mean any reason other than death of the Executive, Disability or Cause.  In the event the Company terminates the Executive’s employment pursuant to this Section 5.4, the Company shall continue to pay the Executive the Base Salary for the remainder of the Original Employment Term or the Additional Term, as the case may be, as if this Agreement had not been previously terminated pursuant to this Section 5.4.

6. Non-Competition/Non-Solicitation.

6.1.Non-Competition. The Executive agrees that during the Specified Period (as defined below), the Executive shall not, directly or indirectly, be engaged as a principal in any other business, activity or conduct which competes with the business of the Company (or be an employee, consultant, director, principal, shareholder or adviser of, or otherwise be affiliated with, any such business, activity or conduct), provided that competition shall not include: (i) holding five percent (5%) or less of an interest in the equity or debt of any publicly traded company, (ii) engaging in any activity with the prior written approval of the Board, or (iii) being involved only in a noncompeting portion of a business which is in competition with the business of the Company (but only if such non-competing portion of the business is conducted as a separate business unit, and the Executive has no direct or indirect involvement with the operations of the competing business unit (with the burden of so demonstrating being on the Executive) and the foregoing shall not affect the Executive’s obligations of confidentiality). For purposes of this Section 6, “Company” shall mean the Company and its subsidiaries and affiliates. The “Specified Period” means the Executive’s period of employment and the four (4) year period thereafter, provided that in the event the Executive is terminated without Cause or due to his Disability or the Executive voluntarily terminates his employment following a breach by the Company of this Agreement, the Specified Period will terminate two (2) years after the termination of his employment.

\

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6.2.Non-Solicitation. The Executive agrees that during the Specified Period the Executive shall not, directly or indirectly, (i) solicit any customer, client, supplier, or middleman of the Company or induce any customer, client, supplier, or middleman of the Company to terminate, or otherwise to cease, reduce, or diminish in any way its relationship with the Company or (ii) solicit or induce, or attempt to solicit or induce, any non-clerical employee(s), sales representative(s), agent(s), or consultant(s) of the Company to terminate such person’s employment, representation or other association with the Company for the purpose of affiliating with any entity with which the Executive is associated.

6.3.Confidentiality. The Executive specifically acknowledges that any trade secrets or confidential business and technical information of the Company or its vendors, suppliers or customers, whether reduced to writing, maintained on any form of electronic media, or maintained in mind or memory and whether compiled by the Executive or the Company (collectively, “Confidential Information”), derives independent economic value from not being readily known to or ascertainable by proper means by others; that reasonable efforts have been made by the Company to maintain the secrecy of such information; that such information is the sole property of the Company or its vendors, suppliers, or customers and that any retention, use or disclosure of such information by the Executive during the Employment Term (except in the course of performing duties and obligations of employment with the Company) or any time after termination thereof, shall constitute misappropriation of the trade secrets of the Company or its vendors, suppliers, or customers, provided that Confidential Information shall not include: (i) information that is at the time of disclosure public knowledge or generally known within the industry; (ii) information deemed in good faith by the Executive, while employed by the Company, desirable to disclose in the course of performing the Executive’s duties; (iii) information the disclosure of which the Executive in good faith deems necessary in defense of the Executive’s rights provided such disclosure by the Executive is limited to only disclose as necessary for such purpose; or (iv) information disclosed by the Executive to comply with a court, or other lawful compulsory, order compelling him to do so, provided the Executive gives the Company prompt notice of the receipt of such order and the disclosure by the Executive is limited to only disclosure necessary for such purpose.

6.4.Return of Property. Upon the termination of the Executive’s employment or at any other time upon written request by the Company, the Executive shall promptly deliver to the Company all records, files, memoranda, designs, data, reports, drawings, plans, computer programs, software and other documents (and all copies or reproductions of such materials in his possession or control) belonging to the Company. Notwithstanding the foregoing, the Executive may retain his rolodex, Microsoft Outlook Contacts file or similar electronic file and similar phone directories (collectively, the “Rolodex”), to the extent the Rolodex does not contain information other than name, address, telephone number, e-mail address and similar information.

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6.5.Scope of Restrictions/Remedies. If, at the time of enforcement of this Section 6, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. In the event of a material breach or threatened material breach of this Section 6, the Company, in addition to its other remedies at law or in equity, shall be entitled to injunctive or other equitable relief in order to enforce or prevent any violations of the provisions of this Section 6. The Company agrees that it will not assert to enjoin or otherwise limit the Executive’s activities based on an argument of inevitable disclosure of confidential information. Upon written request of the Executive, the Company shall within thirty (30) days notify the Executive in writing whether or not in good faith it believes that any proposed activities would be in competition and, if it so determines that such activity is not in competition or does not reply within thirty (30) days, the Company shall be deemed to waive any right to treat such activities as competition under Section 6.1 hereof unless the facts are otherwise than as presented by the Executive or there is a change thereafter in such activities.

7.Indemnification/Liability Insurance. The Company shall concurrently with the execution and delivery of this Agreement enter into an Indemnification Agreement with the Executive (in substantially the same form attached as Appendix A hereto). The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the Employment Term in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

8.Assignment. This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any Successor of the Company, and any such Successor shall be deemed substituted for all purposes of the “Company” under the terms of this Agreement. “Successor” shall mean any person, firm, corporation or business entity which at any time, whether by merger, share exchange, purchase, or otherwise, acquires all or substantially all of the assets of the Company. Notwithstanding such assignment, the Company shall remain, with such successor, jointly and severally liable for all its obligations hereunder. Except as herein provided, this Agreement may not otherwise be assigned by the Company. This Agreement is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees, and legatees. If the Executive should die after a termination while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid to the Executive’s devisee, legatee, or other designee or, in the absence of such designee, to the Executive’s estate.

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9.Legal Remedies.

9.1.Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or one (1) day after sending by express mail or other “overnight mail service,” or three (3) days after sending by certified or registered mail, postage prepaid, return receipt requested. Notice shall be sent as follows: if to the Executive, to the address as listed in the Company’s records, and if to the Company, to the address set forth on the first page of this Agreement, attention of Chief Financial Officer. Either party may change the notice address by notice given as aforesaid.

9.2.Arbitration. All disputes and controversies arising under or in connection with this Agreement, other than the seeking of injunctive or other equitable relief pursuant to Section 6 hereof, shall be settled exclusively by arbitration in New York City, New York, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of commercial disputes of the American Arbitration Association (“AAA”) then in effect. The determination of the arbitrators shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of the AAA and the arbitrator shall be borne as determined by the arbitrator.

10.Miscellaneous.

10.1.Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

10.2.Modification. This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

10.3.Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

10.4.Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

10.5.Tax Withholding. The Company may withhold from any benefits payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

10.6.Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of New York, without regard to any otherwise applicable principles of conflicts of laws.

[Signature page follows immediately]

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IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement, as of the day and year first above written.

PIONEER POWER SOLUTIONS, INC.

By:       /s/ Nathan J. Mazurek

Name: Nathan J. Mazurek

Title: Chief Executive Officer

EXECUTIVE

/s/ Nathan J. Mazure

Nathan J. Mazurek

[Signature page to Employment Agreement]

APPENDIX A

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is entered into as of this 2nd day of December, 2009, by and between Pioneer Power Solutions, Inc., a Delaware corporation (the "Company"), and Nathan J. Mazurek ("Indemnitee").

RECITALS

A.           The Company is aware that because of the increased exposure to litigation costs, talented and experienced persons are increasingly reluctant to serve or continue serving as directors and officers of corporations unless they are protected by comprehensive liability insurance and indemnification.

B.           The statutes and judicial decisions regarding the duties of directors and officers are often difficult to apply, ambiguous, or conflicting, and therefore fail to provide such directors and officers with adequate guidance regarding the proper course of action.

C.           The Board of Directors of the Company (the "Board") has concluded that, to retain and attract talented and experienced individuals to serve as officers and directors of the Company and its subsidiaries and to encourage such individuals to take the business risks necessary for the success of the Company and its subsidiaries, the Company should contractually indemnify its officers and directors, and the officers and directors of its subsidiaries, in connection with claims against such officers and directors in connection with their services to the Company and its subsidiaries, and has further concluded that the failure to provide such contractual indemnification could be detrimental to the Company, its subsidiaries and stockholders.

NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

1. Definitions.

(a)           Agent. "Agent" with respect to the Company means any person who is or was a director, officer, employee or other agent of the Company or a Subsidiary of the Company; or is or was serving at the request of, for the convenience of, or to represent the interests of, the Company or a Subsidiary of the Company as a director, officer, employee or agent of another entity or enterprise; or was a director, officer, employee or agent of a predecessor corporation of the Company or a Subsidiary of the Company, or was a director, officer, employee or agent of another entity or enterprise at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

(b)           Expenses. "Expenses" means all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys' fees, costs of investigation and related disbursements) incurred by the Indemnitee in connection with the investigation, settlement, defense or appeal of a claim or Proceeding covered hereby or establishing or enforcing a right to indemnification under this Agreement.

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(c)           Proceeding. "Proceeding" means any threatened, pending, or completed claim, suit or action, whether civil, criminal, administrative, investigative or otherwise.

(d)           Subsidiary. "Subsidiary" means any corporation or other entity of which more than 10% of the outstanding voting securities or interests is owned directly or indirectly by the Company, and one or more other Subsidiaries, taken as a whole.

2.           Maintenance of Liability Insurance.

(a)           The Company hereby covenants and agrees with Indemnitee that, subject to Section 2(b), the Company shall obtain and maintain in full force and effect directors' and officers' liability insurance ("D&O Insurance") in reasonable amounts as the Board of Directors shall determine from established and reputable insurers, but no less than the amounts in effect upon initial procurement of the D&O Insurance. In all policies of D&O Insurance, Indemnitee shall be named as an insured.

(b)           Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that the premium costs for such insurance are (i) disproportionate to the amount of coverage provided after giving effect to exclusions, and (ii) substantially more burdensome to the Company than the premiums charged to the Company for its initial D&O Insurance.

3.           Mandatory Indemnification. The Company shall defend, indemnify and hold harmless Indemnitee:

(a)           Third Party Actions. If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was or is claimed to be an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, against any and all Expenses and liabilities of any type whatsoever (including, but not limited to, legal fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) incurred by such person in connection with the investigation, defense, settlement or appeal of such Proceeding, so long as Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or Proceeding, had no reasonable cause to believe such person's conduct was unlawful.

(b)           Actions by or in the Right of the Company. If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company by reason of the fact that he is or was an Agent of the Company, or by reason of anything done or not done by him in any such capacity, against any and all Expenses and liabilities or any type whatsoever (including, but not limited to, legal fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) incurred by such person in connection with the investigation, defense, settlement or appeal of such Proceeding, so long as the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification under this subsection shall be made, and Indemnitee shall repay all amounts previously advanced by the Company, in respect of any claim, issue or matter for which such person is judged in a final, non-appealable decision to be liable to the Company by a court of competent jurisdiction, unless and only to the extent that the court in which such Proceeding was brought shall determine that Indemnitee is fairly and reasonably entitle to indemnity.

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(c)           Actions Where Indemnitee Is Deceased. If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that he is or was an Agent of the Company, or by reason of anything done or not done by him in any such capacity, and prior to, during the pendency of, or after completion of, such Proceeding, the Indemnitee shall die, then the Company shall defend, indemnify and hold harmless the estate, heirs and legatees of the Indemnitee against any and all Expenses and liabilities incurred by or for such persons or entities in connection with the investigation, defense, settlement or appeal of such Proceeding on the same basis as provided for the Indemnitee in Sections 3(a) and 3(b) above.

The Expenses and liabilities covered hereby shall be net of any payments by D&O Insurance carriers or others.

4.           Partial Indemnification. If Indemnitee is found under Section 3, 7 or 10 hereof not to be entitled to indemnification for all of the Expenses and liabilities relating to a Proceeding, the Company shall indemnify the Indemnitee for any portion of such Expenses not specifically precluded by the operation of such Section 3, 7 or 10.

5.           Mandatory Advancement of Expenses. Until a determination to the contrary under Section 7 hereof is made, and unless the provisions of Section 10 apply, the Company shall advance all Expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any Proceeding to which Indemnitee is a party or is threatened to be made a party covered by the indemnification in Section 3 hereof. If required by law, as a condition to such advances, Indemnitee shall, at the request of the Company, undertake in a reasonable manner to repay such amounts advanced if it shall ultimately be determined by a final order of a court that Indemnitee is not entitled to be indemnified by the Company by the terms hereof or under applicable law. Subject to Section 6 hereof, the advances to be made hereunder shall be paid by the Company to Indemnitee within 20 days following delivery of a written request by Indemnitee to the Company, which request shall be accompanied by vouchers, invoices and similar evidence documenting the amounts requested.

6.           Indemnification Procedures.

(a)           Promptly after receipt by Indemnitee of notice to him of the commencement or threat of any Proceeding or claim covered hereby, Indemnitee shall notify the Company of the commencement or threat thereof, provided that any failure to so notify shall not relieve the Company of any of its obligations hereunder, except to the extent that such failure or delay increases the liability of the Company hereunder.

(b)           If, at the time of the receipt of a notice pursuant to Section 6(a) above, the Company has D&O Insurance in effect, the Company shall give prompt notice of the Proceeding or claim to its insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay all amounts payable as a result of such Proceeding or claim in accordance with the terms of such policies, and Indemnitee shall not take any action (by waiver, settlement or otherwise) which would adversely affect the ability of the Company to obtain payment from its insurers.

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(c)           If the Company shall be obligated to pay the Expenses of Indemnitee, the Company may (and shall if requested by Indemnitee in writing) assume the defense of the Proceeding to which the Expenses relate, in which event the Company shall deliver a notice of assumption to Indemnitee. Any counsel employed by the Company in connection with the defense of such Proceeding shall be subject to approval by Indemnitee, such approval not to be unreasonably withheld or delayed. The Company will not be liable to Indemnitee under this Agreement for any fees or expenses of counsel incurred by Indemnitee after delivery of such notice of assumption with respect to such Proceeding; provided; however, that if Indemnitee shall have provided the Company with an opinion of counsel stating that there is a strong argument that a conflict of interest exists between the Company and Indemnitee in the conduct of any such defense, the fees and Expenses of Indemnitee's counsel shall be at the expense of the Company. Notwithstanding the fact that the Company assumes the defense of a Proceeding pursuant to the preceding sentence, Indemnitee shall have the right to employ his or her own counsel in any such Proceeding at Indemnitee's expense.

7.           Determination of Right to Indemnification.

(a)           To the extent Indemnitee has been successful on the merits or otherwise in defense of any Proceeding, claim, issue or matter covered hereby, Indemnitee need not repay any of the Expenses advanced in connection with the investigation, defense or appeal of such Proceeding.

(b)           If Section 7(a) is inapplicable, the Company shall remain obligated to indemnify Indemnitee, and Indemnitee need not repay Expenses previously advanced, unless the Company, by motion before a court of competent jurisdiction, obtains an order for preliminary or permanent relief suspending or denying the obligation to advance or indemnify for Expenses.

(c)           Notwithstanding any other provision in this Agreement to the contrary, the Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee in connection with any Proceeding under Section 7(b) and against all Expenses incurred by Indemnitee in connection with any other Proceeding between the Company and Indemnitee involving the interpretation or enforcement of the rights of Indemnitee under this Agreement unless a court of competent jurisdiction finds that the material claims and/or defenses of Indemnitee in any such Proceeding were frivolous or made in bad faith.

8.           Certificate of Incorporation and Bylaws. The Company agrees that the Company's Certificate of Incorporation and Bylaws in effect on the date hereof shall not be amended to reduce, limit, hinder or delay (i) the rights of Indemnitee granted hereby, or (ii) the ability of the Company to indemnify Indemnitee as required hereby.

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9.           Witness Expenses. The Company agrees to compensate Indemnitee for the reasonable value of his time spent, and to reimburse Indemnitee for all Expenses (including attorneys' fees and travel costs) incurred by him, in connection with being a witness, or if Indemnitee is threatened to be made a witness, with respect to any Proceeding, by reason of his serving or having served as an Agent of the Company.

10.           Exceptions. Notwithstanding any other provision hereunder to the contrary, the Company shall not be obligated pursuant to the terms of this Agreement:

(a)           Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense (other than Proceedings brought to establish or enforce a right to indemnification under this Agreement or the provisions of the Company's Certificate of Incorporation or Bylaws unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such Proceeding were not made in good faith or were frivolous).

(b)           Unauthorized Settlements. To indemnify Indemnitee under this Agreement for any amounts paid in settlement of a Proceeding covered hereby without the prior written consent of the Company to such settlement.

11.           Non-exclusivity. This Agreement is not the exclusive arrangement between the Company and Indemnitee regarding the subject matter hereof and shall not diminish or affect any other rights which Indemnitee may have under any provision of law, the Company's Certificate of Incorporation or By-laws, under other agreements, or otherwise.

12.           Continuation After Term. Indemnitee's rights hereunder shall continue after the Indemnitee has ceased acting as a director or Agent of the Company and the benefits hereof shall inure to the benefit of the heirs, executors and administrators of Indemnitee.

13.           Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, provisions of the Agreement shall not in any way be affected or impaired thereby, and to the fullest extent possible, the provisions of this Agreement shall be construed or altered by the court so as to remain enforceable and to provide Indemnitee with as many of the benefits contemplated hereby as are permitted under law.

14.           Counterparts, Modification and Waiver. This Agreement may be signed in counterparts. This Agreement constitutes a separate agreement between the Company and Indemnitee and may be supplemented or amended as to Indemnitee only by a written instrument signed by the Company and Indemnitee, with such amendment binding only the Company and Indemnitee. All waivers must be in a written document signed by the party to be charged. No waiver of any of the provisions of this Agreement shall be implied by the conduct of the parties. A waiver of any right hereunder shall not constitute a waiver of any other right hereunder.

15.           Notices. All notices, demands, consents, requests, approvals and other communications required or permitted hereunder shall be in writing and shall be deemed to have been properly given if hand delivered (effective upon receipt or when refused), or if sent by a courier freight prepaid (effective upon receipt or when refused), in the case of the Company, at the addresses listed below, and in the case of Indemnitee, at Indemnitee's address of record at the office of the Company, or to such other addresses as the parties may notify each other in writing.

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To Company:	Pioneer Power Solutions, Inc.
	c/o Provident Industries, Inc. c/o Clinton Group 9 West 57th Street, 26th Floor
	New York, NY 10019 Attention: Chief Financial Officer
To Indemnitee:	At the Indemnitee's residence address and facsimile number on the records of the Company from time to time.

16.           Evidence of Coverage. Upon request by Indemnitee, the Company shall provide evidence of the liability insurance coverage required by this Agreement. The Company shall promptly notify Indemnitee of any change in the Company's D&O Insurance coverage.

18.           Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

[Signature page follows immediately]

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IN WITNESS WHEREOF, the parties hereto have entered into this Indemnification Agreement effective as of the date first above written.

PIONEER POWER SOLUTIONS, INC.

By:       /s/ Nathan J. Mazurek

Name: Nathan J. Mazurek

Title: Chief Executive Officer

EXECUTIVE

/s/ Nathan J. Mazure

Nathan J. Mazurek

[Signature page to Indemnification Agreement]

EX-10.8

Exhibit 10.8

PIONEER POWER SOLUTIONS, INC.

2009 EQUITY INCENTIVE PLAN

1.             Purpose of the Plan.

This 2009 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries.

It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan shall be nonqualified stock options (the “Nonqualified Options”).  Incentive Options and Nonqualified Options are hereinafter referred to collectively as “Options.”

The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act.  Further, the Plan is intended to satisfy the performance-based compensation exception to the limitation on the Company’s tax deductions imposed by Section 162(m) of the Code with respect to those Options for which qualification for such exception is intended.  In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.

2.             Administration of the Plan.

The Board of Directors of the Company (the “Board”) shall appoint and maintain as administrator of the Plan a Committee (the “Committee”) consisting of two or more directors who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3) and (iii) “Outside Directors” (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board.  The Committee, subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate recipients of Options and restricted stock (“Restricted Stock”) and to determine the terms and conditions of the respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan.  The Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options.  To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option.

Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options and Restricted Stock granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options or Restricted Stock granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any Options or Restricted Stock.  The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority of the Committee at a meeting duly held for such purpose.  Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties.

In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the Board otherwise determines to administer the Plan, then the Plan shall be administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board, and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by the Committee.

3.           Designation of Optionees and Grantees.

The persons eligible for participation in the Plan as recipients of Options (the “Optionees”) or Restricted Stock (the “Grantees” and together with Optionees, the “Participants”) shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each Option or award of Restricted Stock granted to Participants, the Committee may consider any factors it deems relevant, including, without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional Option or Options, or Restricted Stock if the Committee shall so determine.

4.           Stock Reserved for the Plan.

Subject to adjustment as provided in Section 8 hereof, a total of 1,600,000 shares of the Company’s common stock, par value $0.001 per share (the “Stock”), shall be subject to the Plan.  The maximum number of shares of Stock that may be subject to Options granted under the Plan to any individual in any calendar year shall not exceed 1,600,000 shares, and the method of counting such shares shall conform to any requirements applicable to performance based compensation under Section 162(m) of the Code, if qualification as performance based compensation under Section 162(m) is intended. The shares of Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Stock shall be and is hereby reserved for such purpose.  Any of such shares of Stock that may remain unissued and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan.  Should any Option or award of Restricted Stock expire or be canceled prior to its exercise or vesting in full or should the number of shares of Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be reduced for any reason, the shares of Stock theretofore subject to such Option or Restricted Stock may be subject to future Options or Restricted Stock under the Plan, except where such reissuance is inconsistent with the provisions of Section 162(m) of the Code where qualification as performance-based compensation under Section 162(m) of the Code is intended.

5.           Terms and Conditions of Options.

Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a)           Option Price.  The purchase price of each share of Stock purchasable under an Incentive Option shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Stock shall be at least 110% of the Fair Market Value per share of Stock on the date of grant.  The purchase price of each share of Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Stock on the date the Option is granted.  The exercise price for each Option shall be subject to adjustment as provided in Section 8 below.  “Fair Market Value” means the closing price on the final trading day immediately prior to the grant date of the Stock on the principal securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market or OTC Bulletin Board (if the shares of Stock are regularly quoted on the NASDAQ Stock Market or OTC Bulletin Board, as the case may be), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over the counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent with the provisions of the Code.  Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Stock are listed.

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(b)           Option Term.  The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted.

(c)           Exercisability.  Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant; provided, however, that in the absence of any Option vesting periods designated by the Committee at the time of grant, Options shall vest and become exercisable as to one-third of the total number of shares subject to the Option on each of the first, second and third anniversaries of the date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3).

Upon the occurrence of a “Change in Control” (as hereinafter defined), the Committee may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion.  In its sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Company Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee shall determine in its sole discretion.

For purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change in Control shall be deemed to have occurred if:

(i)           a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;

(ii)           the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;

(iii)           the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or

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(iv)           a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.

Notwithstanding the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement.

For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act.  In addition, for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.

(d)           Method of Exercise.  Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Committee.  As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Stock owned by the Optionee (based on the Fair Market Value of the Stock which is not the subject of any pledge or security interest, (ii) in the form of shares of Stock withheld by the Company from the shares of Stock otherwise to be received with such withheld shares of Stock having a Fair Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Stock received upon exercise of an Incentive Option.  An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes.

(e)           Non-transferability of Options.  Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution.  The Committee, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order.  Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.

(f)           Termination by Death.  Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter.

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(g)           Termination by Reason of Disability.  Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Disability (as defined below), then any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.  “Disability” shall mean an Optionee’s total and permanent disability; provided, that if Disability is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Disability shall have the meaning ascribed to it in such employment agreement

(h)           Termination by Reason of Retirement.  Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.

For purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55.

(i)           Other Terminations.  Unless otherwise determined by the Committee upon grant, if any Optionee’s employment with or service to the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or Early Retirement or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such Option’s term, which ever period is shorter.  The transfer of an Optionee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan.

(i)           In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary for “cause” any unexercised portion of any Option shall immediately terminate in its entirety.  For purposes hereof, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, “Cause” shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided, however, that it is specifically understood that “Cause” shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the case may be, or upon the advice of counsel to the Company.  Notwithstanding the foregoing, if Cause is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Cause shall have the meaning ascribed to it in such employment agreement.

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(ii)           In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause” or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee.  Such Option may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its terms; which ever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before the Options terminate and are no longer exercisable, the terms and provisions of Section 5(f) shall control.  For purposes of this Section 5(i), and unless otherwise defined in an employment agreement between the Company and the relevant Optionee, Good Reason shall exist upon the occurrence of the following:

(A) the assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment;

(B) a Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and

(C) the failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to such failure.

Notwithstanding the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement.

(j)           Limit on Value of Incentive Option.  The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000.

6.           Terms and Conditions of Restricted Stock.

Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a)           Grantee rights.  A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Committee.  After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in Section 6(d) below.

(b)           Issuance of Certificates.  The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award.

(c)           Delivery of Certificates.  Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Committee at the time of grant.

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(d)           Forfeitability, Non-transferability of Restricted Stock.  Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied.  Shares of Restricted Stock are not transferable until the date on which the Committee has specified such restrictions have lapsed.  Unless otherwise provided by the Committee at or after grant, distributions in the form of dividends or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock.

(e)           Change of Control.  Upon the occurrence of a Change in Control as defined in Section 5(c), the Committee may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Committee, in its sole discretion.

(f)           Termination of Employment.  Unless otherwise determined by the Committee at or after grant, in the event the Grantee ceases to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power.  The Committee may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.

7.            Term of Plan.

No Option or award of Restricted Stock shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan, but Options and awards of Restricted Stock theretofore granted may extend beyond that date.

8.            Capital Change of the Company.

In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately before the occurrence of such event.  The Committee shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code.  Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan.

The adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of the Code (in the case of an Incentive Option) and Section 409A of the Code.

9.            Purchase for Investment/Conditions.

Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Options or Restricted Stock under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.  The Committee may impose any additional or further restrictions on awards of Options or Restricted Stock as shall be determined by the Committee at the time of award.

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10.           Taxes.

(a)           The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options or Restricted Stock granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.

(b)           If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section 83(b).

(c)           If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days hereof.

11.           Effective Date of Plan.

The Plan shall be effective on December 2,  2009; provided, however, that if, and only if, certain options are intended to qualify as Incentive Stock Options, the Plan must subsequently be approved by majority vote of the Company’s stockholders no later than December 2, 2009, and further, that in the event certain Option grants hereunder are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code, the requirements as to stockholder approval set forth in Section 162(m) of the Code are satisfied.

12.           Amendment and Termination.

The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant under any Option or Restricted Stock theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would:

(a)           materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;

(b)           materially increase the benefits accruing to the Participants under the Plan;

(c)           materially modify the requirements as to eligibility for participation in the Plan;

(d)           decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof; or

(e)           extend the term of any Option beyond that provided for in Section 5(b).

(f)           except as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price of outstanding Options or effect repricing through cancellations and re-grants of new Options.

Subject to the forgoing, the Committee may amend the terms of any Option theretofore granted, prospectively or retrospectively, but no such amendment shall impair the rights of any Optionee without the Optionee’s consent.

It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Committee shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly.  The Plan and any grant of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules.

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13.           Government Regulations.

The Plan, and the grant and exercise of Options or Restricted Stock hereunder, and the obligation of the Company to sell and deliver shares under such Options and Restricted Stock shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.

14.           General Provisions.

(a)           Certificates.  All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Stock is then listed or traded and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.

(b)           Employment Matters.  Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time.

(c)           Limitation of Liability.  No member of the Committee, or any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.

(d)           Registration of Stock.  Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States.  The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option, although the Company may in its sole discretion register such Stock at such time as the Company shall determine.  If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop transfer instructions with respect to such Stock to the Company’s transfer agent.

15.           Non-Uniform Determinations.

The Committee’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards under the Plan, whether or not such Participants are similarly situated.

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16.           Governing Law.

The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

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EX-10.9

Exhibit 10.9

PIONEER POWER SOLUTIONS, INC.

2009 EQUITY INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

This INCENTIVE STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the __ day of ___________, 2___ (the “Grant Date”), is between Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), and _______ (the “Optionee”), a key employee of the Company or of a Subsidiary of the Company (a “Related Corporation”), pursuant to the Pioneer Power Solutions, Inc. 2009 Equity Incentive Plan (the “Plan”).

WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company, par value $0.001 (“Common Shares”), in accordance with the provisions of the Plan, a copy of which is attached hereto;

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

1.           Grant of Option.  The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of [________]  (______) Common Shares.  The Option is in all respects limited and conditioned as hereinafter provided, and is subject in all respects to the terms and conditions of the Plan now in effect and as it may be amended from time to time (but only to the extent that such amendments apply to outstanding options).  Such terms and conditions are incorporated herein by reference, made a part hereof, and shall control in the event of any conflict with any other terms of this Option Agreement.  The Option granted hereunder is intended to be an incentive stock option (“ISO”) meeting the requirements of the Plan and section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and not a nonqualified stock option (“NQSO”).

2.           Exercise Price.  The exercise price of the Common Shares covered by this Option shall be $_________ per share.  It is the determination of the committee administering the Plan (the “Committee”) that on the Grant Date the exercise price was not less than the greater of (i) 100% (110% for an Optionee who owns more than 10% of the total combined voting power of all shares of stock of the Company or of a Related Corporation – a “More-Than-10% Owner”) of the “Fair Market Value” (as defined in the Plan) of a Common Share, or (ii) the par value of a Common Share.

3.           Term.  Unless earlier terminated pursuant to any provision of the Plan or of this Option Agreement, this Option shall expire on _________ __, 2____ (the “Expiration Date”), which date is not more than 10 years (five years in the case of a More-Than-10% Owner) from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

4.           Exercise of Option.  The Option shall vest according to the following schedule, provided that Optionee remains continuously employed as a key employee of the Company or a Related Corporation from the date hereof through the applicable vesting date:

Date Installment Becomes Exercisable	Number of Shares
	______ Shares
	an additional ______ Shares
	an additional ______ Shares
	an additional ______ Shares

The Committee may accelerate any vesting date of the Option, in its discretion, if it deems such acceleration to be desirable.  Once the Option becomes exercisable, it will remain exercisable until it is exercised or until it terminates.

5.           Method of Exercising Option.  Subject to the terms and conditions of this Option Agreement and the Plan, the Option may be exercised by written notice to the Company at its principal office.  The form of such notice is attached hereto and shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; and shall be accompanied by payment of the full exercise price of such shares.  Only full shares will be issued.

The exercise price shall be paid to the Company:

(a)           in cash, or by certified check, bank draft, or postal or express money order;

(b)           through the delivery of Common Shares previously acquired by the Optionee;

(c)           by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount necessary to pay the exercise price of the Option;

(d)           in Common Shares newly acquired by the Optionee upon exercise of the Option (which shall constitute a disqualifying disposition with respect to this ISO); or

(e)           in any combination of (a), (b), (c) or (d) above.

In the event the exercise price is paid, in whole or in part, with Common Shares, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Shares surrendered on the date of exercise.

Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the Common Shares with respect to which the Option is so exercised. The Optionee shall obtain the rights of a shareholder upon receipt of a certificate(s) representing such Common Shares.

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Such certificate(s) shall be registered in the name of the person so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship), and shall be delivered as provided above to, or upon the written order of, the person exercising the Option.  In the event the Option is exercised by any person after the death or disability (as determined in accordance with Section 22(e)(3) of the Code) of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person to exercise the Option.  All Common Shares that are purchased upon exercise of the Option as provided herein shall be fully paid and non-assessable.

Upon exercise of the Option, Optionee shall be responsible for all employment and income taxes then or thereafter due (whether Federal, State or local), and if the Optionee does not remit to the Company sufficient cash (or, with the consent of the Committee, Common Shares) to satisfy all applicable withholding requirements, the Company shall be entitled to satisfy any withholding requirements for any such tax by disposing of Common Shares at exercise, withholding cash from Optionee’s salary or other compensation or such other means as the Committee considers appropriate to the fullest extent permitted by applicable law.  Nothing in the preceding sentence shall impair or limit the Company’s rights with respect to satisfying withholding obligations under Section 10 of the Plan.

6.           Non-Transferability of Option.  This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution.  During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

7.           Termination of Employment.  If the Optionee’s employment with the Company and all Related Corporations is terminated for any reason (other than death or disability) prior to the Expiration Date, then this Option may be exercised by Optionee, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of employment, at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after such termination of employment.  Any part of the Option that was not exercisable immediately before the termination of Optionee’s employment shall terminate at that time.

8.           Disability.  If the Optionee becomes disabled (as determined in accordance with section 22(e)(3) of the Code) during his or her employment and, prior to the Expiration Date, the Optionee’s employment is terminated as a consequence of such disability, then this Option may be exercised by the Optionee or by the Optionee’s legal representative, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of employment at any time prior to the earlier of (i) the Expiration Date or (ii) one year after such termination of employment.  Any part of the Option that was not exercisable immediately before the Optionee’s termination of employment shall terminate at that time.

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9.           Death.  If the Optionee dies during his or her employment and prior to the Expiration Date, or if the Optionee’s employment is terminated for any reason (as described in Paragraphs 7 and 8) and the Optionee dies following his or her termination of employment but prior to the earliest of (i) the Expiration Date, or (ii) the expiration of the period determined under Paragraph 7 or 8 (as applicable to the Optionee), then this Option may be exercised by the Optionee’s estate, personal representative or beneficiary who acquired the right to exercise this Option by bequest or inheritance or by reason of the Optionee’s death, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of his or her death, at any time prior to the earlier of (i) the Expiration Date or (ii) one year after the date of the Optionee’s death.  Any part of the Option that was not exercisable immediately before the Optionee’s death shall terminate at that time.

 10.           Disqualifying Disposition of Option Shares.  The Optionee agrees to give written notice to the Company, at its principal office, if a “disposition” of the Common Shares acquired through exercise of the Option granted hereunder occurs at any time within two years after the Grant Date or within one year after the transfer to the Optionee of such shares.  Optionee acknowledges that if such disposition occurs, the Optionee generally will recognize ordinary income as of the date the Option was exercised in an amount equal to the lesser of (i) the Fair Market Value of the Common Shares on the date of exercise minus the exercise price, or (ii) the amount realized on disposition of such shares minus the exercise price.  If requested by the Company at the time of and in the case of any such disposition, Optionee shall pay to the Company an amount sufficient to satisfy the Company’s federal, state and local withholding tax obligations with respect to such disposition.  The provisions of this Section 10 shall apply, whether or not the Optionee is in the employ of the Company at the time of the relevant disposition.  For purposes of this Paragraph, the term “disposition” shall have the meaning assigned to such term by section 424(c) of the Code.

11.           Securities Matters.  (a)  If, at any time, counsel to the Company shall determine that the listing, registration or qualification of the Common Shares subject to the Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of Common Shares hereunder, such Option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors.  The Company shall be under no obligation to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.  The Committee shall inform the Optionee in writing of any decision to defer or prohibit the exercise of an Option.  During the period that the effectiveness of the exercise of an Option has been deferred or prohibited, the Optionee may, by written notice, withdraw the Optionee’s decision to exercise and obtain a refund of any amount paid with respect thereto.

-4-

(b)           The Company may require: (i) the Optionee (or any other person exercising the Option in the case of the Optionee’s death or Disability) as a condition of exercising the Option, to give written assurances, in substance and form satisfactory to the Company, to the effect that such person is acquiring the Common Shares subject to the Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to make such other representations or covenants; and (ii) that any certificates for Common Shares delivered in connection with the exercise of the Option bear such legends, in each case as the Company deems necessary or appropriate, in order to comply with federal and applicable state securities laws, to comply with covenants or representations made by the Company in connection with any public offering of its Common Shares or otherwise.  The Optionee specifically understands and agrees that the Common Shares, if and when issued upon exercise of the Option, may be “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933 and, accordingly, the Optionee may be required to hold the shares indefinitely unless they are registered under such Securities Act of 1933, as amended, or an exemption from such registration is available.

(c)           The Optionee shall have no rights as a shareholder with respect to any Common Shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to the Optionee for such Common Shares.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

12.           Governing Law.  This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible.  Otherwise, the laws of the State of Delaware (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, the Plan and Options granted thereunder.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Incentive Stock Option Agreement to be duly executed by its duly authorized officer, and the Optionee has hereunto set his or her hand and seal, all as of the ______ day of ____________, 2____.

PIONEER POWER SOLUTIONS, INC.

By:_______________________________

Name:

Title:

________________________________

Optionee

PIONEER POWER SOLUTIONS, INC.

2009 EQUITY INCENTIVE PLAN

Notice of Exercise of Incentive Stock Option

I hereby exercise the incentive stock option granted to me pursuant to the Incentive Stock Option Agreement dated as of  ____________ __, 20__, by Pioneer Power Solutions, Inc. (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $0.001 per Share, covered by said option:

Number of Shares to be purchased:                                                                  _______

Purchase price per Share:                                                                                  $_______

Total purchase price:                                                                                         $_______

A. Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $________ in full/partial [circle one] payment for such Shares;

and/or

B. Enclosed is/are Share(s) with a total fair market value of $ on the date hereof in full/partial [circle one] payment for such Shares;

and/or

C. I have provided notice to [insert name of broker], a broker, who will render full/partial [circle one] payment for such Shares.  [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full/partial (as elected above) exercise price.]

and/or

D. I elect to satisfy the payment for Shares purchased hereunder by having the Company withhold newly acquired Shares pursuant to the exercise of the Option.  I understand that this will result in a “disqualifying disposition,” as described in Section 10 of my Incentive Stock Option Agreement.

Please have the certificate or certificates representing the purchased Shares registered in the following name or names*:                          ; and sent to .

DATED: ___, 2___                                                                                                                                                                        ___________ ___________

Optionee’s Signature

* Certificates may be registered in the name of the Optionee alone or in the joint names (with right of survivorship) of the Optionee and his or her spouse.

EX-10.10

Exhibit 10.10

PIONEER POWER SOLUTIONS, INC.

2009 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the ____ day of ___ 2___ (the “Grant Date”), is between Pioneer Power Solutions, Inc., a Delaware corporation (the “Company”), and _____________ (the “Optionee”), a director, officer or employees of, or consultant or advisor to, the Company or a Subsidiary of the Company (a “Related Corporation”), pursuant to the Pioneer Power Solutions, Inc. 2009 Equity Incentive Plan (the “Plan”).

WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company, par value $0.001 (“Common Shares”) in accordance with the provisions of the Plan, a copy of which is attached hereto;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

1.           Grant of Option.  The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of ___________________ (______) Common Shares.  The Option is in all respects limited and conditioned as hereinafter provided, and is subject in all respects to the terms and conditions of the Plan now in effect and as it may be amended from time to time (but only to the extent that such amendments apply to outstanding options).  Such terms and conditions are incorporated herein by reference, made a part hereof, and shall control in the event of any conflict with any other terms of this Option Agreement.  The Option granted hereunder is intended to be a nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2.           Exercise Price.  The exercise price of the Common Shares covered by this Option shall be $_________ per share.  It is the determination of the committee administering the Plan (the “Committee”) that on the Grant Date the exercise price was not less than the greater of (i) 100% of the “Fair Market Value” (as defined in the Plan) of a Common Share, or (ii) the par value of a Common Share.

                      3.           Term.  Unless earlier terminated pursuant to any provision of the Plan or of this Option Agreement, this Option shall expire on ___________ ___, 2____ (the “Expiration Date”), which date is not more than 10 years from the Grant Date.  This Option shall not be exercisable on or after the Expiration Date.

4.           Exercise of Option.  The Option shall vest according to the following schedule, provided that Optionee remains continuously engaged as a director, officer or employee of, or consultant or advisor to, the Company or a Related Corporation from the date hereof through the applicable vesting date:

Date Installment Becomes Exercisable	Number of Shares
	______ Shares
	an additional ______ Shares
	an additional ______ Shares
	an additional ______ Shares

The Committee may accelerate any vesting date of the Option, in its discretion, if it deems such acceleration to be desirable.  Once the Option becomes exercisable, it will remain exercisable until it is exercised or until it terminates.

5.           Method of Exercising Option.  Subject to the terms and conditions of this Option Agreement and the Plan, the Option may be exercised by written notice to the Company at its principal office.  The form of such notice is attached hereto and shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; and shall be accompanied by payment of the full exercise price of such shares. Only full shares will be issued.

The exercise price shall be paid to the Company:

(a)           in cash, or by certified check, bank draft, or postal or express money order;

(b)           through the delivery of Common Shares previously acquired by the Optionee;

(c)           by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount necessary to pay the exercise price of the Option;

(d)           in Common Shares newly acquired by the Optionee upon exercise of the Option; or

(e)           in any combination of (a), (b), (c) or (d) above.

In the event the exercise price is paid, in whole or in part, with Common Shares, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Shares surrendered on the date of exercise.

Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the Common Shares with respect to which the Option is so exercised. The Optionee shall obtain the rights of a shareholder upon receipt of a certificate(s) representing such Common Shares.

Such certificate(s) shall be registered in the name of the person so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship), and shall be delivered as provided above to, or upon the written order of, the person exercising the Option.  In the event the Option is exercised by any person after the death or disability (as determined in accordance with Section 22(e)(3) of the Code) of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person to exercise the Option.  All Common Shares that are purchased upon exercise of the Option as provided herein shall be fully paid and non-assessable.

Upon exercise of the Option, Optionee shall be responsible for all employment and income taxes then or thereafter due (whether Federal, State or local), and if the Optionee does not remit to the Company sufficient cash (or, with the consent of the Committee, Common Shares) to satisfy all applicable withholding requirements, the Company shall be entitled to satisfy any withholding requirements for any such tax by disposing of Common Shares at exercise, withholding cash from Optionee’s salary or other compensation or such other means as the Committee considers appropriate to the fullest extent permitted by applicable law.  Nothing in the preceding sentence shall impair or limit the Company’s rights with respect to satisfying withholding obligations under Section 10 of the Plan.

6.           Non-Transferability of Option.  This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution.  During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

7.           Termination of Services.  If the Optionee’s services with the Company and all Related Corporations are terminated for any reason (other than death or disability) prior to the Expiration Date, then this Option may be exercised by Optionee, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of services, at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after such termination of services.  Any part of the Option that was not exercisable immediately before the termination of Optionee’s services shall terminate at that time.

8.           Disability.  If the Optionee becomes disabled (as determined in accordance with section 22(e)(3) of the Code) during the period of his or her service and, prior to the Expiration Date, the Optionee’s services are terminated as a consequence of such disability, then this Option may be exercised by the Optionee or by the Optionee’s legal representative, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of services, at any time prior to the earlier of (i) the Expiration Date or (ii) one year after such termination of services.  Any part of the Option that was not exercisable immediately before the Optionee’s termination of services shall terminate at that time.

9.           Death.  If the Optionee dies during the period of his or her services and prior to the Expiration Date, or if the Optionee’s services are terminated for any reason (as described in Paragraphs 7 and 8) and the Optionee dies following his or her termination of services but prior to the earliest of (i) the Expiration Date, or (ii) the expiration of the period determined under Paragraph 7 or 8 (as applicable to the Optionee), then this Option may be exercised by the Optionee’s estate, personal representative or beneficiary who acquired the right to exercise this Option by bequest or inheritance or by reason of the Optionee’s death, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of his or her death, at any time prior to the earlier of (i) the Expiration Date or (ii) one year after the date of the Optionee’s death.  Any part of the Option that was not exercisable immediately before the Optionee’s death shall terminate at that time.

10.           Securities Matters.  (a)  If, at any time, counsel to the Company shall determine that the listing, registration or qualification of the Common Shares subject to the Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of Common Shares hereunder, such Option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors.  The Company shall be under no obligation to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.  The Committee shall inform the Optionee in writing of any decision to defer or prohibit the exercise of an Option.  During the period that the effectiveness of the exercise of an Option has been deferred or prohibited, the Optionee may, by written notice, withdraw the Optionee’s decision to exercise and obtain a refund of any amount paid with respect thereto.

(b)           The Company may require: (i) the Optionee (or any other person exercising the Option in the case of the Optionee’s death or Disability) as a condition of exercising the Option, to give written assurances, in substance and form satisfactory to the Company, to the effect that such person is acquiring the Common Shares subject to the Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to make such other representations or covenants; and (ii) that any certificates for Common Shares delivered in connection with the exercise of the Option bear such legends, in each case as the Company deems necessary or appropriate, in order to comply with federal and applicable state securities laws, to comply with covenants or representations made by the Company in connection with any public offering of its Common Shares or otherwise.  The Optionee specifically understands and agrees that the Common Shares, if and when issued upon exercise of the Option, may be “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933 and, accordingly, the Optionee may be required to hold the shares indefinitely unless they are registered under such Securities Act of 1933, as amended, or an exemption from such registration is available.

(c)           The Optionee shall have no rights as a shareholder with respect to any Common Shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to the Optionee for such Common Shares.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

11.           Governing Law.  This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible.  Otherwise, the laws of the State of Delaware (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, the Plan and Options granted thereunder.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock Option Agreement to be duly executed by its duly authorized officer, and the Optionee has hereunto set his or her hand and seal, all as of the ____ day of ___, 2___.

PIONEER POWER SOLUTIONS, INC.

By:_______________________________

Name:

Title:

_______________________________

Optionee

PIONEER POWER SOLUTIONS, INC.

2009 EQUITY INCENTIVE PLAN

Notice of Exercise of Nonqualified Stock Option

I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified Stock Option Agreement dated as of ___________ __, 2___, by Pioneer Power Solutions, Inc. (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $0.001 per Share, covered by said option:

Number of Shares to be purchased:                                                                     _______

Purchase price per Share:                                                                                     $_______

Total purchase price:                                                                                             $_______

A. Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $__________ in full/partial [circle one] payment for such Shares;

  and/or

B. Enclosed is/are Share(s) with a total fair market value of $ on the date hereof in full/partial [circle one] payment for such Shares;

and/or

C. I have provided notice to [insert name of broker], a broker, who will render full/partial [circle one] payment for such Shares.  [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full exercise price.]

and/or

D. I elect to satisfy the payment for Shares purchased hereunder by having the Company withhold newly acquired Shares pursuant to the exercise of the Option.

Please have the certificate or certificates representing the purchased Shares registered in the following name or names*: ; and sent to .

DATED:   , 2___                                                                                               _______________________________

                                       Optionee’s Signature

EX-10.11

Exhibit 10.11

AGREEMENT OF CONVEYANCE, TRANSFER AND ASSIGNMENT OF ASSETS AND ASSUMPTION OF OBLIGATIONS

This Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (“Transfer and Assumption Agreement”) is made as of December 2, 2009, by Pioneer Power Solutions, Inc., a Delaware corporation (“Assignor”), and Sierra Concepts Holdings, Inc., a Delaware corporation and a wholly owned subsidiary of Assignor (“Assignee”).

WHEREAS, Assignor intends to commence operations as a provider of web-based budgeting services for consumers (the “Business”); and

WHEREAS, Assignor desires to convey, transfer and assign to Assignee, and Assignee desires to acquire from Assignor, all of the assets of Assignor relating to the operation of the Business, and in connection therewith, Assignee has agreed to assume all of the liabilities of Assignor relating to the Business, on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1.      Assignment.

1.1.           Assignment of Assets.  For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by Assignor, Assignor does hereby assign, grant, bargain, sell, convey, transfer and deliver to Assignee, and its successors and assigns, all of Assignor’s right, title and interest in, to and under the assets, properties and business, of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, held or used in the conduct of the Business (the “Assets”), including, but not limited to, the assets listed on Exhibit A hereto, and identified in part by reference to Assignor’s most recent balance sheet as of September 30, 2009, filed with the Securities and Exchange Commission as part of Assignor’s predecessor’s quarterly report on Form 10-K on November 17, 2009 (the “Balance Sheet”).  Notwithstanding anything to the contrary contained herein, the term Assets shall not include either the assets of or the business conducted by Pioneer Transformers Ltd., a company organized under the Business Corporations Act of Canada.

1.2           Further Assurances.  Assignor shall from time to time after the date hereof at the request of Assignee and without further consideration execute and deliver to Assignee such additional instruments of transfer and assignment, including without limitation any bills of sale, assignments of leases, deeds, and other recordable instruments of assignment, transfer and conveyance, in addition to this Transfer and Assumption Agreement, as Assignee shall reasonably request to evidence more fully the assignment by Assignor to Assignee of the Assets.

Section 2.      Assumption.

2.1           Assumed Liabilities.  As of the date hereof, Assignee hereby assumes and agrees to pay, perform and discharge, fully and completely, all liabilities, commitments, contracts, agreements, obligations or other claims against Assignor, whether known or unknown, asserted or unasserted, accrued or unaccrued, absolute or contingent, liquidated or unliquidated, due or to become due, and whether contractual, statutory, or otherwise associated with the Business whenever arising (the “Liabilities”), including, but not limited to, the Liabilities listed on Exhibit B, and identified in part by reference to the Balance Sheet.

2.2           Further Assurances.  Assignee shall from time to time after the date hereof at the request of Assignor and without further consideration execute and deliver to Assignor such additional instruments of assumption in addition to this Transfer and Assumption Agreement as Assignor shall reasonably request to evidence more fully the assumption by Assignee of the Liabilities.

Section 3.     Headings.  The descriptive headings contained in this Transfer and Assumption Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Transfer and Assumption Agreement.

Section 4.      Governing Law.  This Transfer and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within that state, except that any conveyances of leaseholds and real property made herein shall be governed by the laws of the respective jurisdictions in which such property is located.

[The remainder of this page is blank intentionally.]

IN WITNESS WHEREOF, this Transfer and Assumption Agreement has been duly executed and delivered by the parties hereto as of the date first above written.

PIONEER POWER SOLUTIONS, INC.

By: /s/ Nathan J. Mazurek

Nathan J. Mazurek

Chief Executive Officer

SIERRA CONCEPTS HOLDINGS, INC.

By: Pioneer Power Solutions, Inc.,

Its sole stockholder

By: /s/ David Davis

David Davis

President

Exhibit A

(a)All of the equipment, computers, servers, hardware, appliances, implements, and all other tangible personal property that are owned by Assignor and have been used in the conduct of the Business;

(b)all inventory associated with the Business;

(c)all real property and real property leases to which Assignor is a party, and which affect the Business or the Assets;

(d)all contracts to which Assignor is a party, or which affect the Business or the Assets, including leases of personal property;

(e)all rights, claims and causes of action against third parties resulting from or relating to the operation of the Business or the Assets, including without limitation, any rights, claims and causes of action arising under warranties from vendors and other third parties;

(f)all governmental licenses, permits, authorizations, consents or approvals affecting or relating to the Business or the Assets;

(g)all accounts receivable, notes receivable, prepaid expenses and insurance and indemnity claims to the extent related to any of the Assets or the Business;

(h)all goodwill associated with the Assets and the Business;

(i)all business records, regardless of the medium of storage, relating to the Assets and/or the Business, including without limitation, all schematics, drawings, customer data, subscriber lists, statistics, promotional graphics, original art work, mats, plates, negatives, accounting and financial information concerning the Assets or Business;

(j)Assignor’s right to use the name “Sierra Concepts” and all other names used in conducting the Business, and all derivations thereof, in connection with Assignee’s future conduct of the Business;

(k)all internet domain names and URLs of the Business, software, inventions, art works, patents, patent applications, processes, shop rights, formulas, brand names, trade secrets, know-how, service marks, trade names, trademarks, trademark applications, copyrights, source and object codes, customer lists, drawings, ideas, algorithms, processes, computer software programs or applications (in code and object code form), tangible or intangible proprietary information and any other intellectual property and similar items and related rights owned by or licensed to Assignor used in the Business, together with any goodwill associated therewith and all rights of action on account of past, present and future unauthorized use or infringement thereof; and

(l)all other privileges, rights, interests, properties and assets of whatever nature and wherever located that are owned, used or intended for use in connection with, or that are necessary to the continued conduct of, the Business as presently conducted or planned to be conducted.

Exhibit B

(a)All liabilities in respect of indebtedness of Assignor related to the Business;

(b)product liability and warranty claims relating to any product or service of Assignor associated with the Business;

(c)taxes, duties, levies, assessments and other such charges, including any penalties, interests and fines with respect thereto, payable by Assignor to any federal, provincial, municipal or other government, domestic or foreign, incurred in the conduct of the Business;

(d)liabilities for salary, bonus, vacation pay, severance payments damages for wrongful dismissal, or other compensation or benefits relating to Assignor’s employees employed in the conduct of the Business;

(e)any liability or claim for liability (whether in contract, in tort or otherwise, and whether or not successful) related to any lawsuit or threatened lawsuit or claim (including any claim for breach or non-performance of any contract) based upon actions, omissions or events relating to the Business; and

(f)any liability, ongoing duty or obligation, or any claim for liability or performance of any ongoing duty or obligation arising under any and all contracts to which Assignor is a party that relate to the Business or the Assets, or which affect the Business or the Assets.

EX-10.12

Exhibit 10.12

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 2, 2009, is made by and between Pioneer Power Solutions, Inc., a Delaware corporation (“Seller”), and David Davis (“Buyer”).

RECITALS

A.           Seller owns all of the issued and outstanding common stock (the “Shares”) of Sierra Concepts Holdings, Inc., a Delaware corporation (the “Company”), which Shares constitute, as of the date hereof, all of the issued and outstanding capital stock of the Company.

B.           Buyer holds 7,200,000 shares of common stock, $0.001 par value per share, of Seller (the “Purchase Price Shares”), and Buyer has agreed to transfer such shares back to Seller for cancellation (the “Repurchase”).

C.           In connection with the Repurchase, Buyer wishes to acquire from Seller, and Seller wishes to transfer to Buyer, the Shares, upon the terms and subject to the conditions set forth herein.

Accordingly, the parties hereto agree as follows:

1.           Purchase and Sale of Stock.

(a)           Purchased Shares. Subject to the terms and conditions provided below, Seller shall sell and transfer to Buyer and Buyer shall purchase from Seller, on the Closing Date (as defined in Section 1(c)), all of the Shares.

(b)           Purchase Price.  The purchase price for the Shares shall be the transfer and delivery by Buyer to Seller of the Purchase Price Shares, deliverable as provided in Section 2(b).

(c)           Closing. The closing of the transactions contemplated in this Agreement (the “Closing”) shall take place as soon as practicable following the execution of this Agreement.  The date on which the Closing occurs shall be referred to herein as the Closing Date (the “Closing Date”).

2.           Closing.

(a)           Transfer of Shares. At the Closing, Seller shall deliver to Buyer certificates representing the Shares, duly endorsed to Buyer or as directed by Buyer, which delivery shall vest Buyer with good and marketable title to all of the issued and outstanding shares of capital stock of the Company, free and clear of all liens and encumbrances.

(b)  Payment of Purchase Price. At the Closing, Buyer shall deliver to Seller a certificate or certificates representing the Purchase Price Shares duly endorsed to Seller, which delivery shall vest Seller with good and marketable title to the Purchase Price Shares, free and clear of all liens and encumbrances.

3.           Representations and Warranties of Seller. Seller represents and warrants to Buyer as of the date hereof as follows:

(a)           Corporate Authorization; Enforceability. The execution, delivery and performance by Seller of this Agreement is within the corporate powers and has been, duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(b)           Governmental Authorization. The execution, delivery and performance by Seller of this Agreement requires no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.

(c)           Non-Contravention; Consents. The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby do not (i) violate the certificate of incorporation or bylaws of Seller or (ii) violate any applicable Law or Order.

(d)           Capitalization. As of the date hereof, Seller owns the Shares, which shares represent 100% of the authorized, issued and outstanding capital stock of the Company. The Shares are duly authorized, validly issued, fully-paid, non-assessable and free and clear of any Liens.

4.           Representations and Warranties of Buyer. Buyer represents and warrants to Seller as of the date hereof as follows:

(a)           Enforceability. The execution, delivery and performance by Buyer of this Agreement are within Buyer’s powers. This Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.

(b)           Governmental Authorization. The execution, delivery and performance by Buyer of this Agreement require no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.

(c)           Non-Contravention; Consents. The execution, delivery and performance by Buyer of this Agreement, and the consummation of the transactions contemplated hereby do not violate any applicable Law or Order.

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(d)           Purchase for Investment.  Buyer is financially able to bear the economic risks of acquiring an interest in the Company and the other transactions contemplated hereby, and has no need for liquidity in this investment. Buyer has such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of the Company, so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares. Buyer is acquiring the Shares solely for his own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration is available. Buyer has (i) received all the information he has deemed necessary to make an informed investment decision with respect to the acquisition of the Shares, (ii) had an opportunity to make such investigation as he has desired pertaining to the Company and the acquisition of an interest therein, and to verify the information which is, and has been, made available to him and (iii) had the opportunity to ask questions of Seller concerning the Company. Buyer has received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyer realizes that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyer understands that any resale of the Shares by him must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for the Company at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyer acknowledges and consents that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.

Buyer understands that the Shares are being sold to him pursuant to the exemption from registration contained in Section 4(1) of the Securities Act and that Seller is relying upon the representations made herein as one of the bases for claiming the Section 4(1) exemption.

(e)           Liabilities.  Following the Closing, Seller will have no debts, liabilities or obligations relating to the Company or its business or activities, whether before or after the Closing, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to the Company or its business and that may survive the Closing.

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(f)           Title to Purchase Price Shares.  Buyer is the sole record and beneficial owner of the Purchase Price Shares. At Closing, Buyer will have good and marketable title to the Purchase Price Shares, which Purchase Price Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Seller, except for restrictions on transfer as contemplated by applicable securities laws.

5.           Indemnification and Release.

(a)           Indemnification. Buyer covenants and agrees to indemnify, defend, protect and hold harmless Seller, and its officers, directors, employees, stockholders, agents, representatives and affiliates (collectively, together with Seller, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of Buyer set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement on the part of Buyer under this Agreement, (iii) any debt, liability or obligation of the Company, whether incurred or arising prior to the date hereof or after, (iv) any debt, liability or obligation of Seller for actions taken prior to that certain share exchange by and between Seller Pioneer Transformers Ltd., a company incorporated under the Canada Business Corporations Act and Provident Pioneer Partners, L.P., a Delaware limited partnership (the “Exchange”), including, without limitation, any amounts due or owing to any former officer, director or Affiliate of Seller, (v) the conduct and operations of the business of the Company whether before or after the Closing, (vi) claims asserted against the Company whether arising before or after the Closing, or (vii) any federal or state income tax payable by Seller and attributable to the transaction contemplated by this Agreement or activities prior to the Exchange or with respect to the business of the Company after the Exchange.

(b)           Third Party Claims.

(i)           If any claim or liability (a “Third-Party Claim”) should be asserted against any of the Seller Indemnified Parties (the “Indemnitee”) by a third party after the Closing for which Buyer has an indemnification obligation under the terms of Section 5(a), then the Indemnitee shall notify Buyer within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give Buyer a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and in connection therewith and to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by Buyer. If Buyer

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agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then Buyer shall be entitled to control the conduct of such defense, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as Buyer continues such defense until the final resolution of such Third-Party Claim. Buyer shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by Buyer. Except as provided in subsection (ii) below, both Buyer and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Buyer from any indemnification liability except only to the extent that Buyer is materially and adversely prejudiced by such failure.

(ii)           If Buyer shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate. Buyer shall promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim. If no settlement of such Third-Party Claim is made, then Buyer shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.

(c)           Non-Third-Party Claims. Upon discovery of any claim for which Buyer has an indemnification obligation under the terms of this Section 5 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyer of such claim and, in any case, shall give Buyer such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyer shall not excuse Buyer from any indemnification liability except to the extent that Buyer is materially and adversely prejudiced by such failure.

(d)           Release.  Buyer, on behalf of himself and his Related Parties, hereby release and forever discharges Seller and its individual, joint or mutual, past and present representatives, Affiliates, officers, directors, employees, agents, attorneys, stockholders, controlling persons, subsidiaries, successors and assigns (individually, a “Releasee” and collectively, “Releasees”) from any and all claims, demands, proceedings, causes of action, orders, obligations, contracts, agreements, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which Buyer or any of his Related Parties now have or have ever had against any Releasee. Buyer hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter released hereby. “Related Parties” shall mean, with respect to Buyer, (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with Buyer, (ii) any Person in which Buyer holds a Material Interest or (iii) any Person with respect to which Buyer serves as a general partner or a trustee (or in a similar capacity). For purposes of this definition, “Material Interest” shall mean direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

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6.           Definitions. As used in this Agreement:

(a)           “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person. For the purposes of this definition, “Control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing;

(b)           “Governmental Authority” means any domestic or foreign governmental or regulatory authority;

(c)           “Law” means any federal, state or local statute, law, rule, regulation, ordinance, code, Permit, license, policy or rule of common law;

(d)           “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person will be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset;

(e)           “Order” means any judgment, injunction, judicial or administrative order or decree;

(f)           “Permit” means any government or regulatory license, authorization, permit, franchise, consent or approval; and

(h)           “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

7.           Miscellaneous.

(a)           Counterparts. This Agreement may be signed in any number of counterparts, each of which will be deemed an original but all of which together shall constitute one and the same instrument.

(b)           Amendments and Waivers.

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(i)           Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

(ii)           No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by Law.

(c)           Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer (including by operation of Law) any of its rights or obligations under this Agreement without the consent of each other party hereto.

(d)           No Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted successors and assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto, those referenced in Section 5 above, and such permitted successors and assigns, any legal or equitable rights hereunder.

(e)           Governing Law. This Agreement will be governed by, and construed in accordance with, the internal substantive law of the State of Delaware.

(f)           Headings. The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof.

(g)           Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof of this Agreement.

(h)           Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of the provisions of this Agreement (or the application of such provision in other jurisdictions or to Persons or circumstances other than those to which it was held invalid, illegal or unenforceable) will in no way be affected, impaired or invalidated, and to the extent permitted by applicable Law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the parties prior to the determination of such invalidity or unenforceability.

(i)           Notices. Any notice, request or other communication hereunder shall be given in writing and shall be served either personally, by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:

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(a)           If to Buyer:

David Davis

6074 Citation Court

Reno, Nevada 89523

Attention:  David Davis

(b)           If to Seller:

Pioneer Power Solutions, Inc.

c/o Provident Industries, Inc.

c/o Clinton Group

9 West 57th Street

New York, New York 10019

Attention: Nathan J. Mazurek

With a copy to:

Haynes and Boone, LLP

1221 Avenue of the Americas, 26th Floor

New York, New York 10020

Attention: Rick A. Werner, Esq.

[Signature Page Follows]

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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, effective as of the date first above written.

PIONEER POWER SOLUTIONS, INC.

By: /s/ Nathan J. Mazurek

Name: Nathan J. Mazurek

Title: President

/s/ David Davis

David Davis

EX-10.13

Exhibit 10.13

AGREEMENT

FOR

AUTHORIZED SALES REPRESENTATIVES

This agreement made this 1st day of March 1995, by and between Pioneer Transformers LTD (“PT”) in Mississauga, Ontario, Canada, having its principal place of business at 612 chemin Bernard, Granby, Quebec, Canada, and its Sales Representative,

CHAZ Sales Corp.

the post office address of which is:

P.O. Box 276

REGINA, Saskatchewan

S4P 3A1

a corporation organized and existing

under the laws of

Saskatchewan, Canada.

(hereinafter called the “Sales Representative”).

In consideration of the covenants and conditions herein contained, PT and the Sales Representative mutually undertake and agree as follows:

ARTICLE 1 - DEFINITIONS

As used herein:

1.1 The term “The Territory’ shall mean:

the Province of Alberta, Saskatchewan and Manitoba.

The term “The Market” shall mean:

1)           All electrical generating and electrical distribution utilities.

2) Distributors and industrial accounts not covered by Schneider Canada Inc sales force.

1.2           The term “PT” shall mean Pioneer Transformers LTD

1.3 The term “sales credit” shall mean the value of billed sales acknowledged by PT to have been procured by the Sales Representative pursuant to the terms and conditions contained in this Agreement, less any sales taxes, duty, brokerage or freight that may be included.

ARTICLE 2 - APPOINTMENT

CHAZ Sales Corp. is hereby appointed an authorized Sales Representative for PT and is authorized to solicit orders for PT products within the Territory under the terms and conditions herein described. It is understood that this appointment shall be exclusive to both parties for the Territory and Markets as previously described.

ARTICLE 3 - ORDERS

3.1 Orders for PT products which have been placed with the Sales Representative shall be promptly forwarded to PT in Granby Quebec with a copy to Mississauga Ontario for review. Such orders shall not be binding on PT until accepted by PT in writing or by the issue by PT of an official order acknowledgment.

3.2 PT reserves the right to reject any order for any reason which it deems sufficient, including but not limited to, such reasons as failure to conform to PT’s standard terms and conditions of sale, unrealistic specified delivery dates and unapproved credit of the purchaser.

3.3 The Sales Representative shall be excluded from entering orders in its own name to fill customer requirements.

3.4 PT shall not be liable for any loss or damage caused by late delivery or failure to otherwise perform under those orders which it has accepted where such delay or non-performance is due to labor disputes, strikes, lockouts, inability to obtain materials, fire, acts of God or the public enemy, accidents, governmental restrictions or appropriation, or any other cause beyond the reasonable control of PT, unless otherwise provided by the terms and conditions that have been quoted and accepted by PT.

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ARTICLE 4 - SALES CREDIT

4.1 The Sales Representative shall receive sales credit for those orders covering PT products which it solicits within the Territory and are accepted by PT, as well those accepted orders covering PT products which are submitted directly to PT by purchasers within the Territory or orders which are accepted from outside the territory but are shipped into the territory when the Sales Representative is requested by PT to perform the order follow-up activity.

ARTICLE 5 - COMMISSIONS

5.1 PT shall compute and pay commissions on the value of sales credits earned by the Sales Representative in accordance with the rates and conditions set forth in Exhibit A annexed hereto and made a part hereof.

5.2 Sales credit for sales of PT products and commissions payable thereon shall be calculated at the end of each month. Commissions shall be paid monthly, with commission cheques being mailed to the Sales Representative’s business address shown on the front page hereof, on or about the fifteenth day of the month immediately following the month in which the sales credits are earned and customer invoices paid. If the commission earned during any given month is less than $100.00, it will be held until a minimum amount of $100.00 is reached. Hold backs against commissions payable to the Sales Representative will be made for any overdue unpaid PT invoices.

5.3 In determining commissions to be paid by PT to the Sales Representative recognition will be given to circumstances where the shipping address and location and pre-engineering is outside the Territory. In such circumstances split credit or commission may apply so that recognition is given to the location of the engineering firm undertaking pre-engineering work, the location of the customer placing the order and the location of the shipping address for after sale service. Each such location shall be awarded an appropriate commission based on the value of the total billed sales as detailed in clause 1.3. Generally split credits will be applied at 1/3 credit for where the engineering work is undertaken, 1/3 credit for where the order is placed and 1/3 credit for where the shipment is made.  Example: An order engineered in one province, ordered in another province but shipped to the Territory - 1/3 credit is due - the appropriate commission would be based on 1/3 the value of the commissionable rate.

5.4 Commissions paid will be net billed sales less taxes, duty, brokerage or freight.

ARTICLE 6 - MARKETING ASSISTANCE

6.1 PT shall furnish the Sales Representative with:

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6.1.1 Reasonable quantities of bulletins and such promotional aids as catalogs, circulars and technical information, and other publications which PT may have available for distribution in connection with the sale of PT products.  There shall be no charge for the material furnished pursuant to this article 6.1.1. The Sales Representative’s use of the aforementioned materials shall be subject to the terms, conditions and limitations of this Agreement.

6.1.2 Quotations, proposals, customer visits, trade show participation, seminar programs or special advice as may from time to time be requested by the Sales Representative for the purpose of satisfying customer needs and government requirements.

ARTICLE 7 - SALES EFFORT

7.1 The Sales Representative shall use its best efforts to promote the sale and use of, and to secure orders for PT products within the Territory and Market, so as to create the largest volume of profitable business. for PT commensurate with the opportunities therefor. The Sales Representative shall promote the goodwill and name of PT, and do everything within its capabilities to further the interest of PT, its name and PT products including participation in trade shows, seminar programs and all sales activities undertaken by PT. It shall endeavor to provide PT with timely feedback on all major tenders. It shall assist PT in furnishing or obtaining, on request, information as to credit standing of purchasers or prospective purchasers of PT products.

7.2 The Sales Representative shall faithfully observe and comply with PT standard policies and procedures where applicable, when soliciting orders for PT products or otherwise handling PT business under this Agreement.

ARTICLE 8 - TELEPHONE AND TELEFAX EXPENSE

PT shall assume the charge and expense for telephone calls, telegraph, fax messages and couriers, which it may make or send to the Sales Representative. The Sales Representative shall pay for those telephone calls, telegraph, fax messages and normal courier service to PT which it may originate. Courier costs associated with forwarding tender requests or documents to PT, on a timely basis, will be paid for by PT.

ARTICLE 9 - COMPETITIVE CLAUSE

During the term of this Agreement, the Sales Representative shall not directly or indirectly handle, deal or become interested in the manufacture, marketing or selling of products which are similar in kind, character and/or use to PT products. The Sales Representative shall not directly or indirectly, provide any competitor of PT with PT product bulletins, special advices, PT products or other similar information and material which may be of competitive value.

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ARTICLE 10 - PROPERTY OF PT

Any property of PT received by the Sales Representative shall be and remain the property of PT and, upon request, shall be returned in as good condition as when received, ordinary wear and tear excepted. All records or papers of any kind relating to PT’s business shall be and remain the property of PT and shall be surrendered to PT upon demand or termination of this Agreement.

ARTICLE 11 - LIMITATION OF POWER

The Sales Representative’s authority to act as a representative of PT is strictly limited to those powers expressly conferred herein. The Sales Representative shall have no authority nor shall it hold itself out as having such to make contracts in the name of or binding on PT, pledge PT credit or to extend credit in its name. Furthermore, the Sales Representative shall not use the initials “PT” or PT’s registered trade names or registered trade marks unless expressly approved by PT in writing.

ARTICLE 12 - SEVERABILITY

Should any of the provisions contained herein contravene or be invalid under the laws of Canada and or the province or other jurisdiction where it is to be performed, the validity of the remaining portions or provisions shall not be affected thereby.

ARTICLE 13 - GOVERNING

This Agreement shall be construed in and according to the laws of the Province of Quebec, Canada.

ARTICLE 14 - DURATION

14.1 This Agreement shall become effective on the date first above written and shall continue thereafter in full force and effect.

14.2 Either party may terminate this Agreement at will without cause at the end of a calendar year by giving the other party three month written notice of its intention to terminate.

14.3 In the event of a termination of this Agreement, commissions in accordance with Exhibit A will be paid on all orders shipped after the termination date less that portion of the commission due for shipping location or after sales service ( 1/3 ) provided the order was received and accepted prior to the termination date. Should the shipment date be longer than 2 months after the termination date an additional amount not to exceed 17% of the commissionable amount may be deducted for servicing of the contract prior to shipment, at the discretion of PT. Any quotations for PT products that have not been ordered prior to the termination date will not be honored by PT and no commission shall be owing or payable with respect thereto.

14.4 Nothing in article 14.3 above shall be deemed to entitle the Sales Representative to sales credit other than that to which it would be entitled under Article 4 hereof.

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14.5 If at any time hereafter, either of the parties hereto shall fail to perform to the terms, covenants and conditions hereof at the time and in the manner herein provided, then the other party may forthwith cancel and terminate this Agreement by giving the other party written notice of its election to so cancel and terminate this Agreement and such cancellation and termination shall become effective upon the mailing or delivery of such notice, whichever occurs the earliest. This right to cancel and terminate shall be in addition to any other remedies available hereunder or at law.

ARTICLE 15 - -NOTICES

Any notice required under this Agreement shall be given in writing addressed to the respective party at the address indicated on the front page hereof, or at such other address as the respective party may, from time to time, hereafter designate in writing.

ARTICLE 16 - CONTRACT ADMINISTRATION

This Agreement shall be administered on behalf of PT by its Marketing & Sales Department in Mississauga. All questions concerning this Agreement or PT policy and procedure should be directed to the said Department at 2600 Skymark Ave Bldg 5 Suite 102 Mississauga, Ontario, L4W-5E7, Attention: Klaus Brockhausen, V.P. Marketing & Sales.

ARTICLE 17 - ENTIRE AGREEMENT

This Agreement constitutes the only agreement between the parties and supersedes all previous communications, representations or agreements, whether oral or written, with respect to the subject matter hereof. No modification of or amendment to this Agreement shall be binding upon the parties hereto unless in writing and duly executed by both parties.

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In Witness Whereof, the parties have executed this Agreement in duplicate on the dates indicated.

Sales Agency		Principal
CHAZ Sales Corp.		Pioneer Transformers LTD
By:	/s/  Dale Chastkiewicz	By:	/s/  Klaus Brockhausen
Date:	July 20, 1995	Date:	July 19, 1995

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EXHIBIT A

Pioneer Transformers LTD, Representative Commission Scale,

INDIVIDUAL ORDER VALUE	COMMISSION RATE*
Up to $200,000	3%
$200,001 to $500,000	$6,000
	plus 2.5% on the amount over $200,000
$500,001 to $1,000,000	$13,500
	plus 2% on the amount over $500,000
$1,000,001 to $2,000,000	$23,500
	plus 1% on the amount over $1,000,000

• On long term contracts like the SPC pole mount and mini pad agreements, the commission rate for the monthly shipments is based on the total annual dollar value shipped.

• Spare parts for Pioneer Transformer LTD products ……….10%

1) If to obtain an order it becomes necessary for PT to make a reduction in price that would otherwise apply, or to make some concession involving extra cost, PT may, prior to acceptance of such an order, request of the Representative that the commission payable thereon be negotiated to reflect the special circumstances involved with the order. In such cases, the commission rate specified above shall not apply.

2) For the purpose of determining the size of any order, any proposal to one customer for similar types of material with a common closing date that results in one or more purchase orders to facilitate accounting and/or shipments to different locations are considered to be one total order for the aggregate value of the different parts.

3) Orders with different closing dates but grouped together by the Customer at time of purchase in order to obtain a value or volume discount will be treated as one order for the total value of the order.

4) 1/3 site commission will be payed on all Pioneer Transformers LTD shipments male after February 28, 1995.

5) All securements received after February 28, 1995 that have the customer’s P.O. date of February 28, 1995 onwards are fully commissionable, regardless of the date of quotation.

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EX-10.14

Exhibit 10.14

AGREEMENT

FOR

AUTHORIZED SALES REPRESENTATIVES

This agreement is made this 1st day of April 1996, by and between Pioneer Transformers LTD (“PT”) in Mississauga, Ontario, Canada, having its principal place of business ;at 612 chemin Bernard, Granby, Quebec, Canada, and its Sales Representative,

Virelli & Associates Inc.

the post office address of which is:

15 Rosemount Ave.

Toronto Ontario

M6H 2M2

a corporation organized and existing

under the laws of

Ontario, Canada.

(hereinafter called the “Sales Representative”).

1

In consideration of the covenants and conditions herein contained, PT and the Sales Representative mutually undertake and agree as follows:

ARTICLE 1 - DEFINITIONS

As used herein:

1.1   The term “The Territory” shall mean:

the Province Ontario.

The term “The Market” shall mean:

la.) All electrical generating and electrical distribution utilities.

lb.) Except Ontario Hydro for three phase transformers and Hydro Mississauga for single phase and three phase transformers.

2.) Distributors, contractors, consultants and industrial accounts not covered by Schneider Canada Inc sales force.

1.2 The term “PT” shall mean Pioneer Transformers LTD

1.3 The term “sales credit” shall mean the value of billed sales acknowledged by PT to have been procured by the Sales Representative pursuant to ‘the terms and conditions contained in this Agreement, less any sales taxes, dut4 brokerage or freight that may be included.

ARTICLE 2 - APPOINTMENT

Virelli & Associates Inc. is hereby appointed an authorized Sales ‘Representative for PT and is authorized to solicit orders for PT products within the Territory under the terms and conditions herein described. It is understood that this appointment shall be exclusive to both parties for the Territory and Markets as previously described.

ARTICLE 3 - ORDERS

3.1 Orders for PT products which have been placed with the Sales Representative shall be promptly forwarded to PT in Granby Quebec with a copy to Mississauga Ontario for review. Such orders shall not be binding on PT until accepted by PT in writing or by the issue by PT of an official order acknowledgment.

3.2 PT reserves the right to reject any order for any reason which it deems sufficient, including but not limited to, such reasons as failure to conform to PT’s standard terms and conditions of sale, unrealistic specified delivery dates and unapproved credit of the purchaser.

3.3 The Sales Representative shall be excluded from entering orders in own name to fill customer requirements.

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ARTICLE 4 - SALES CREDIT

4.1 The Sales Representative shall receive sales credit for those orders covering PT products which it solicits within the Territory and are accepted by PT, as well those accepted orders covering PT products which are submitted directly to PT by purchasers within the Territory or orders which are accepted from outside the territory but are shipped into the territory when the Sales Representative is requested by PT to perform the order follow-up activity.

ARTICLE 5 - COMMISSIONS

5.1 PT shall compute and pay commissions on the value of sales credits earned by the Sales Representative in accordance with the rates and condition set forth in Exhibit A annexed hereto and made a part hereof.

5.2 Sales credit for sales of PT products and commissions payable thereon shall be calculated at the end of each month. Commissions shall be paid; monthly, with commission cheques being mailed to the Sales Representative’s business address shown on the front page hereof, on or about the fifteenth day of the month immediately following the month in which the sales credits are earned and customer invoices paid. If the commission earned during any give} month is less than $100.00, it will be held until a minimum amount of $100.00 is reached. Hold backs against commissions payable to the Sales Representative will be made for any overdue unpaid PT invoices.

5.3 In determining commissions to be paid by PT to the Sales Representative recognition will be given to circumstances where the shipping address and location and pre-engineering is outside the Territory. In such circumstances split credit or commission may apply so that recognition is given to the location of the engineering firm undertaking pre-engineering work, the location Of the customer placing the order and the location of the shipping address for after sale service. Each such location shall be awarded an appropriate commission based on the value of the total billed sales as detailed in clause 1.3. Generally split credits will be applied at 1/3 credit for where the engineering work is undertaken; 1/3 credit for where the order is placed and 1/3 credit for where the shipment is made.  Example: An order engineered in one province, ordered in another province but shipped to the Territory - 1/3 credit is due - the appropriate commission would be based on 1/3 the value of the commissionable rate.

5.4 Commissions paid will be net billed sales less taxes, duty, brokerage or freight.

ARTICLE 6 - MARKETING ASSISTANCE

6.1           PT shall furnish the Sales Representative with:

6.1.1 Reasonable quantities of bulletins and such promotional aids as catalogs, circulars and technical information, and other publications which PT may have available for distribution in connection with the sale of PT products. There shall be no charge for the material furnished pursuant to this article 6.1.1. The Sales Representative’s use of the aforementioned materials shall be subject to the terms, conditions and limitations of this Agreement.

3

6.1.2 Quotations, proposals, customer visits, trade show participation, seminar programs or special advice as may from time to time be requested by the Sales Representative for the purpose of satisfying customer needs and government requirements.

ARTICLE 7 - SALES EFFORT

7.1 The Sales Representative shall use its best efforts to promote the sale and use of, and to secure orders for PT products within the Territory and Market, so as to create the largest volume of profitable business for PT commensurate with the opportunities therefor ( to have at least one sales person on the road to cover adequately all major MEA’s in Ontario). The Sales Representative shall promote the goodwill and name of PT, and do everything within its capabilities to further the interest of PT, its name and PT products including participation in trade shows, seminar programs and all sales activities undertaken by PT. It shall endeavor to provide PT with timely feedback on all major tenders. It shall assist PT in furnishing or obtaining, on request, information as to credit standing of purchasers or prospective purchasers of PT products.

7.2 The Sales Representative shall faithfully observe and comply wits PT standard policies and procedures where applicable, when soliciting orders fair PT products or otherwise handling PT business under this Agreement.

ARTICLE 8 - TELEPHONE AND TELEFAX EXPENSE

PT shall assume the charge and expense for telephone calls, telegraph, fax messages and couriers, which it may make or send to the Sales Representative. The Sales Representative shall pay for those telephone calls, telegraph, fax messages and normal courier service to PT which it may originate. Courier costs associated with forwarding tender requests or documents to PT, on a timely basis, will be paid for by PT.

ARTICLE 9 - COMPETITIVE CLAUSE

During the term of this Agreement, the Sales Representative shall not directly or indirectly handle, deal or become interested in the manufacture, marketing or selling of products which are similar in kind, character and/or use to PT products with the exception of utilities and products listed under clause 1.1.1.). The Sales Representative shall not directly or indirectly, provide any competitor of PT with PT product bulletins, special advices, PT products or other similar information and material which may be of competitive value.

ARTICLE 10 - PROPERTY OF PT

Any property of PT received by the Sales Representative shall be nd remain the property of PT and, upon request, shall be returned in as good condition as when received, ordinary wear and tear excepted. All records or papers of any kind relating to PT’s business shall be and remain the property of PT and shall be surrendered to PT upon demand or termination of this Agreement.

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ARTICLE 11 - LIMITATION OF POWER

The Sales Representative’s authority to act as a representative of PT is strictly limited to those powers expressly conferred herein. The Sales Representative shall have no authority nor shall it hold itself out as having such to make 4ontracts in the name of or binding on PT, pledge PT credit or to extend credit in its name. Furthermore, the Sales Representative shall not use the initials “PT” or PT’s registered trade names or registered trade marks unless expressly approved by PT in writing.

ARTICLE 12 - SEVERABILITY

Should any of the provisions contained herein contravene or be invalid under the laws of Canada and or the province or other jurisdiction where it is to be performed, the validity of the remaining portions or provisions shall not be affected thereby.

ARTICLE 13 - GOVERNING

This Agreement shall be construed in and according to the laws of the Province of Quebec, Canada.

ARTICLE 14 - DURATION

14.1 This Agreement shall become effective on the date first above written and shall continue thereafter in full force and effect for at least twelve (12) month.

14.2 Either party may terminate this Agreement at will without cause at the end of a calendar year by giving the other party three month written notice of its intention to terminate.

14.3 In the event of a termination of this Agreement, commissions in accordance with Exhibit A will be paid on all orders shipped after the termination date less that portion of the commission due for shipping location or after sales service (1/3) provided the order was received and accepted prior to the termination date. Should the shipment date be longer than 2 months after the termination date an additional amount not to exceed 17% of the commissionable amount may be deducted for servicing of the contract prior to shipment, at the discretion of PT. Any quotations for PT products that have not been ordered prior to the termination date will not be honored by PT and no commission shall be owing or payable with respect thereto.

14.5 If at any time hereafter, either of the parties hereto shall fail to perform} to the terms, covenants and conditions hereof at the time and in the manner herein provided, then the other party may forthwith cancel and terminate this Agreement by giving the other party written notice of its election to so cancel and terminate this Agreement and such cancellation and termination shall become effective upon the mailing or delivery of such notice, whichever occurs the earliest. This right to cancel and terminate shall be in addition to any other remedies available hereunder or at law.

5

ARTICLE 15 - NOTICES

Any notice required under this Agreement shall be given in writing addressed to the respective party at the address indicated on the front page hereof, or at such other address as the respective party may, from time to time, hereafter designate in writing.

ARTICLE 16 - CONTRACT ADMINISTRATION

This Agreement shall be administered on behalf of PT by its Marketing & Sales Department in Mississauga. All questions concerning this Agreement or PT policy and procedure should be directed to the said Department at 2600 Skymark Ave Bldg 5 Suite 102 Mississauga, Ontario, L4W-5E7, Attention: Klaus Brockhausen, V.P. Marketing & Sales.

ARTICLE 17 - INDEMNIFICATION

PT agree to defend, indemnify and hold harmless the sales Representative, its officers, directors and employees from and against any and all losses, liabilities, claims, damages, counsel fees and other costs and expenses incurred by or asserted against them, resulting from or arising out of any breach by PT or any representation, warranty, covenant, agreement, agreement or obligation of PT made or incurred pursuant to this agreement, including but not limited to bodily injury and/or property damage however caused arising out of PT’s service and/or product.

ARTICLE 18 - ENTIRE AGREEMENT

This Agreement constitutes the only agreement between the parties and supersedes all previous communications, representations or agreements, whether oral or written, with respect to the subject matter hereof. No modification of or amendment to this Agreement shall be binding upon the parties hereto unless in writing and duly executed by both parties.

6

In Witness Whereof, the parties have executed this Agreement in duplicate on the dates indicated.

Sales Agency		Principal
Virelli & Associates Inc..		Pioneer Transformers LTD
By:	/s/  Greg Virelli	By:	/s/  Klaus Brockhausen
Date:	March 26, 1996	Date:	March 27, 1996

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EXHIBIT A

Pioneer Transformers LTD. Representative Commission Scale.

INDIVIDUAL ORDER VALUE	COMMISSION RATE*
Up to $200,000	3%
$200,001 to $500,000	$6,000
	plus 2.5% on the amount over $200,000
$500,001 to $1,000,000	$13,500
	plus 2% on the amount over $500,000
$1,000,001 to $2,000,000	$23,500
	plus 1% on the amount over $1,000,000

• On long term contracts over several years, the commission rate for the monthly shipments is based on the total annual dollar value shipped.

• Spare parts for Pioneer Transformer LTD products ……….10%

1) If to obtain an order it becomes necessary for PT to make a reduction in price that would otherwise apply, or to make some concession involving extra cost, PT may, prior to acceptance of such an order, request of the Representative that the commission payable thereon be negotiated to reflect the special circumstances involved with the order. In such cases, the commission rate specified above shall not apply.

2) For the purpose of determining the size of any order, any proposal t4 one customer for similar types of material with a common closing date that results in one or more purchase orders to facilitate accounting and/or shipments to different locations are considered to be one total order for the aggregate value of the different parts.

3) Orders with different closing dates but grouped together by the Customer at time of purchase in order to obtain a value or volume discount will be treated al one order for the total value of the order.

4) Full commission will be paid on all PT shipments to the market of the territory made after March 31, 96.

5.) PT will guarantee Virelli & Associated Inc. a commission of at least $4000.00/month for the first four month of this agreement. Should commissions paid by PT exceed commissions owing to Virelli & Associates Inc., those sums will be treated as an advance for commissions and will be deducted from future commissions.

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Virelli & Associates Inc.

590 Jarvis Street, 6th Floor

Toronto Ont.

M4Y 2J4

Att. Greg Virelli

Principle

Sub. Commission rates,

addendum I to agency agreement of March 27, 96

Jan. 16, 1997

Dear Greg,

As recently discussed, we wish to confirm that your commission rate for our new line of Stacked Core Design Units, i.e. Small Power Transformers, Regulators and Grounding Transformers will be 5%.  Please attach this addendum to your existing contract.

We trust that this new product line will be beneficial to both of our companies and look forward to bid on your upcoming requirements.

KLAUS BROCKHAUSEN

V.P. Marketing & Sales

Representative Commission Sale

INDIVIDUAL ORDER VALUE	COMMISSION RATE*
Up to $100,000	3%
$100,001 to $200,000	$5,000 plus 4% on the amount over $100,000
$200,001 to $300,000	$9,000 plus 3.5% on the amount over $200,000
$300,001 to $400,000	$12,500 plus 3% on the amount over $300,000
$400,001 to $500,000	$15,500 plus 2.75% on the amount over $400,000
$500,001 to $750,000	$18,250 plus 2.5% on the amount over $500,000
$750,001 to $1,000,000	$24,500 plus 2% on the amount over $750,000
$1,000,001 to $2,000,000	$29,500 plus 1% on the amount over $1,000,000

Above $2.0M of single order value of sales credit, complete commission subject to negotiation.

EX-10.15

Exhibit 10.15

AGREEMENT

FOR

AUTHORIZED SALES REPRESENTATIVES

This agreement made this 19th day of September 2003, by and between Pioneer Transformers LTD (“PT”) in Granby, Quebec Canada, having its principal place of business at 612 chemin Bernard, Granby, Quebec, Canada, and it’s Sales Representative,

AESCO Associates LTD

The post office address of which is:

14 Becks Way

Dartmouth, N.S.

B2V 2C3

(Hereinafter called the “Sales Representative”).

In consideration of the covenants and conditions herein contained, PT and the Sales Representative mutually undertake and agree as follows:

ARTICLE 1 – DEFINITIONS

As used herein:

1.1           The term “The Territory” shall mean:

The Province of New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island The term “The Market” shall mean:

All electrical generating and electrical distribution utilities, industrials and electrical distributors.

Product excluded:  Liquid Filled Network Transformers

1.2           The term “PT” shall mean Pioneer Transformers LTD

1.3 The term “sales credit” shall mean the value of billed sales acknowledged by PT to have been procured by the Sales Representative pursuant to the terms and conditions contained in this Agreement, less any sales taxes, duty, brokerage, freight, cost of bid bonds or performance bonds.

ARTICLE 2 – APPOINTMENT

AESCO Associates LTD is hereby appointed an authorized Sales Representative for PT and is authorized to solicit orders for PT products within the Territory under the terms and conditions herein described.  It is understood that this appointment shall be exclusive to both parties for the Territory and Markets as previously described.

ARTICLE 3 – ORDERS

3.1 Orders for PT products which have been placed with the Sales Representative shall be promptly forwarded to PT in Granby, Quebec with a copy to Mississauga, Ontario for review.  Such orders shall not be binding on PT until accepted by PT in writing or by the issue by PT of an official order acknowledgment.

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3.2 PT reserves the right to reject any order for any reason which it deems sufficient, including but not limited to, such reasons as failure to conform to PT’s standard terms and conditions of sale, unrealistic specified delivery dates and unapproved credit of the purchaser.

3.3. The Sales Representative shall be excluded from entering orders in its own name to fill customer requirements.

3.4 PT shall not be liable for any loss or damage caused by late delivery or failure to otherwise perform under those orders which it has accepted where such delay or non-performance is due to labor disputes, strikes, lockouts, inability to obtain materials, fire, acts of God or the public enemy, accidents, governmental restrictions or appropriation, or any other cause beyond the reasonable control of PT, unless otherwise provided by the terms and conditions that have been quoted and accepted by PT.

ARTICLE 4 – COMMISSIONS

4.1 PT shall compute and pay commissions on the value of sales credits earned by the Sales Representative in accordance with the rates and conditions set forth in Exhibit A annexed hereto and made a part hereof.

4.2 Sales credit for sales of PT products and commissions payable thereon shall be calculated at the end of each month.  Commissions shall be paid monthly, with commission checks being mailed to the Sales Representative’s business address shown on the front page hereof, on or about the fifteenth day of the month immediately following the month in which the sales credits are earned and customer invoices paid.  If the commission earned during any given month is less than $100.00, it will be held until a minimum amount of $100.00 is reached.  Hold backs against commissions payable to the Sales Representative will be made for any overdue unpaid PT invoices.

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4.3 Commissions paid will be net billed sales less taxes, duty, brokerage, freight, cost of bid bonds or performance bonds.

ARTICLE 5 – MARKETING ASSISTANCE

5.1           PT shall furnish the Sales Representative with:

5.1.1 Reasonable quantities of bulletins and such promotional aids as catalogs, circulars and technical information, and other publications which PT may have available for distribution in connection with the sale of PT products.  There shall be no charge for the material furnished pursuant to this article 5.1.1.  The Sales Representative’s use of the aforementioned materials shall be subject to the terms, conditions and limitations of this Agreement.

5.1.2 Quotations, proposals, customer visits, trade show participation, seminar programs or special advice as may from time to time be requested by the Sales Representative for the purpose of satisfying customer needs and government requirements.

ARTICLE 6 – SALES EFFORT

6.1 The Sales Representative shall use its best efforts to promote the sale and use of, and to secure orders for PT products within the Territory and Market, so as to create the largest volume of profitable business for PT commensurate with the opportunities therefore.  The Sales Representative shall promote the goodwill and name of PT, and do everything within its capabilities to further the interest of PT, its name and PT products including participation in trade shows, seminar programs and all sales activities undertaken by PT.  It shall endeavor to provide PT with timely feedback on all major tenders.  It shall assist PT in furnishing or obtaining, on request, information as to credit standing of purchasers or prospective purchasers of PT products.

6.2 The Sales Representative shall faithfully observe and comply with PT standard policies and procedures where applicable, when soliciting orders for PT products or otherwise handling PT business under this Agreement.

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ARTICLE 7 – COMPETITIVE CLAUSE

During the term of this Agreement, the Sales Representative shall not directly or indirectly handle, deal or become interested in the manufacture, marketing or selling of products which are similar in kind, character and/or use to PT products.  The Sales Representative shall not directly or indirectly, provide any competitor of PT with PT product bulletins, special advices, PT products or other similar information and material which may be of competitive value.

ARTICLE 8 – PROPERTY OF PT

Any property of PT received by the Sales Representative shall be and remain the property of PT and, upon request, shall be returned in as good condition as when received, ordinary wear and tear excepted.  All records or papers of any kind relating to PT’s business shall be and remains the property of PT and shall be surrendered to PT upon demand or termination of this Agreement.

ARTICLE 9 – LIMITATION OF POWER

The Sales Representative’s authority to act as a representative of PT is strictly limited to those powers expressly conferred herein.  The Sales Representative shall have no authority nor shall it hold itself out as having such to make contracts in the name of or binding on PT, pledge PT credit or to extend credit in its name.  Furthermore, the Sales Representative shall not use the initials “PT” or PT’s registered trade names or registered trade marks unless expressly approved in writing.

ARTICLE 10 – SEVERABILITY

Should any of the provisions contained herein contravene or be invalid under the laws of Canada and or the province or other jurisdiction where it is to be performed, the validity of the remaining portions or provisions shall not be affected thereby.

ARTICLE 11 – GOVERNING

This Agreement shall be construed in and according to the laws of the Province of Quebec, Canada.

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ARTICLE 12 – DURATION

12.1 This Agreement shall become effective on the date first above written and shall continue thereafter in full force and effect.

12.2 Either party may terminate this Agreement at will without cause by giving the other party three (3) month written notice of its intention to terminate.

12.3 In the event of a termination of this Agreement, commissions in accordance with Exhibit A will be paid on all orders shipped after the termination date.  Any quotations for PT products that have not been ordered prior to the termination date will not be honored by PT and no commission shall be owing or payable with respect thereto.

12.4 Nothing in article 12.3 above shall be deemed to entitle the Sales Representative to sales credit other than that to which it would be entitled under Article 4 hereof.

12.5 If at any time hereafter, either of the parties hereto shall fail to perform to the terms, covenants and conditions hereof at the time and in the manner herein provided, then the other party may forthwith cancel and terminate this Agreement by giving the other party written notice of its election to so cancel and terminate this Agreement and such cancellation and termination shall become effective upon the mailing or delivery of such notice, whichever occurs the earliest.  This right to cancel and terminate shall he in addition to any other remedies available hereunder or at law.

ARTICLE 13 – NOTICES

Any notice required under this Agreement shall be given in writing addressed to the respective party at the address indicated on the front page hereof, or at such other address as the respective party may, from time to time, hereafter designate in writing.

ARTICLE 14 – CONTRACT ADMINISTRATION

This Agreement shall be administered on behalf of PT by its Marketing & Sales Department in Mississauga.  All questions concerning this Agreement or PT policy and procedure should be directed to the said Department at 612 Bernard Road, Granby Quebec, Canada J2G 8E5.  Attention: Raymond Haddad, V.P. Operation’s.

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ARTICLE 15 – ENTIRE AGREEMENT

This Agreement constitutes the only agreement between the parties and supersedes all previous communications, representations or agreements, whether oral or written, with respect to the subject matter hereof.  No modification of or amendment to this Agreement shall be binding upon the parties hereto unless in writing and duly executed by both parties.

In Witness Whereof, the parties have executed this Agreement in duplicate on the dates indicated.

Sales Agency	Principal
AESCO Associates LTD	Pioneer Transformers LTD
By:  /s/  Lloyd Macleod	By:  /s/  Raymond Haddad
Date:  September 23, 2003	Date: September 30, 2003

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EXHIBIT A

Pioneer Transformers LTD. Representative Commission Scale.

INDIVIDUAL ORDER VALUE	COMMISSION RATE *
Up to $200,000	5%
$200,001 to $500,000	$10,000 plus 4.0% on the amount over $200,000
$500,001 to $1,000,000	$22,000 plus 3% on the amount over $500,000
$1,000,001 and more	$37,000 plus 2% on the amount over $1,000,000

On long term contracts, the commission rate for the monthly shipments is based on the total annual dollar value shipped.

1)           If to obtain an order it becomes necessary for PT to make a reduction in price that would otherwise apply, or to make some concession involving extra cost, PT may, prior to acceptance of such an order, request of the Representative that the commission payable thereon be negotiated to reflect the special circumstances involved with the order. In such cases, the commission rate specified above shall not apply.

2)           For the purpose of determining the size of any order, any proposal to one customer for similar types of material with a common closing date that results in one or more purchase orders to facilitate accounting and/or shipments to different locations are considered to be one total order for the aggregate value of the different parts.

3)           Orders with different closing dates but grouped together by the Customer at time of purchase in order to obtain a value or volume discount will be treated as one order for the total value of the order.

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EX-10.16

Exhibit 10.16

TRANSLATION

COLLECTIVE LABOUR AGREEMENT

between

PIONEER TRANSFORMERS LTD.

(hereinafter the “Company”)

Of the first part

and

THE STEELWORKERS UNION

On behalf of Local 9414

(hereinafter the “Union”)

Of the second part

JUNE 1, 2005 – MAY 31, 2010

TABLE OF CONTENTS

	Page
ARTICLE 1 – PURPOSE OF AGREEMENT	1
ARTICLE 2 – UNION RECOGNITION	1
ARTICLE 3 – DISCRIMINATION	1
ARTICLE 4 – MANAGEMENT	1
ARTICLE 5 – UNION SECURITY	2
ARTICLE 6 – GRIEVANCE PROCEDURE	2
ARTICLE 7 – DISMISSAL AND SANCTION PROCEDURE	4
ARTICLE 8 – SENIORITY	5
ARTICLE 9 – AUTHORIZED LEAVE	10
ARTICLE 10 – SAFETY AND HYGIENE	11
ARTICLE 11 – BULLETIN BOARD	13
ARTICLE 12 – COPIES OF AGREEMENT POCKETBOOK FORM	13
ARTICLE 13 – UNION REPRESENTATIVES	14
ARTICLE 14 – GRIEVANCE COMMITTEE AND STEWARDS	14
ARTICLE 15 – HANDICAPPED EMPLOYEES	14
ARTICLE 16 – UNINTERRUPTED PRODUCTION	14
ARTICLE 17 – WORKING HOURS	14
ARTICLE 18 – ATTENDANCE ALLOWANCE	15
ARTICLE 19 – SALARIES AND CLASSIFICATIONS	16
ARTICLE 20 – TEMPORARY TRANSFER	17
ARTICLE 21 – OVERTIME	17
ARTICLE 22 – SHIFT PREMIUM	18
ARTICLE 23 – STATUTORY HOLIDAYS	18
ARTICLE 24 – VACATION	19
ARTICLE 25 – BEREAVEMENT LEAVE	20
ARTICLE 26 – INSURANCE PLAN	20
ARTICLE 27 – INSURANCE AND TRAVEL EXPENSES	21
ARTICLE 28 – TECHNOLOGICAL CHANGES	21
ARTICLE 29 – TERM OF AGREEMENT: 5 YEARS	21

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TABLE OF CONTENTS

(continued)

			Page
Schedule A-1	–	Classifications and Rates of Salary	23
Schedule A-2	–	Classifications and Rates of Salary – Employees Concerned by
		Section 19.06	24
Schedule A	–	Increases In rates of salary	25
Schedule B	–	Group Insurance Plan	26
Schedule B	–	Group Insurance Plan	27
Schedule C	–	LETTER AGREEMENT	28
Schedule C	–	LETTER AGREEMENT  MEDICAL REPORT	29
Schedule C	–	LETTER AGREEMENT  EDUCATION ASSISTANCE	30
Schedule C	–	LETTER AGREEMENT  BARGAINING COMMITTEE	31
Schedule C	–	LETTER AGREEMENT  SUBCONTRACTING	32
Schedule D	–	PENSION PLAN	33
Schedule E	–	LETTER AGREEMENT  STUDENTS	36
Schedule F	–	LETTER AGREEMENT  TRAINING	37
Schedule G	–	LETTER AGREEMENT  COMPRESSED SCHEDULE	38

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ARTICLE 1 – PURPOSE OF AGREEMENT

1.01 The parties agree that it is mutually beneficial and desirable to establish and maintain fair and just salaries, wages and working conditions to achieve efficient and cost-effective operations, protect the security and hygiene of the employees and provide for a mechanism to settle any grievances that may arise between the parties hereto.

ARTICLE 2 – UNION RECOGNITION

2.01 The Company recognizes the Union as the sole and exclusive bargaining agent for all its employees in accordance with the union accreditation certificate issued by Commission des Relations du Travail on January 11, 1967 covering all the employees (paid by the hour) who work at the Granby plant who are employees as understood in the Labour Code, except for the office employees and assistant-foremen.

2.02 The clauses and conditions set out in this agreement shall be in force and shall fully apply to all the employees in the bargaining unit as described in the preceding section.

2.03 Persons whose regular position is excluded from the bargaining unit shall not work in any position included in the bargaining unit, except for purposes of instruction, experimentation, in an emergency or when the regular employees are not available.

ARTICLE 3 – DISCRIMINATION

3.01 The Company and the Union agree that no employee shall be discriminated against or intimidated because of his membership or non-membership in the Union, or because of his colour, gender, religion or affiliation with a legitimate political party or for any other reason whatsoever.

3.02 Furthermore, the Union agrees that neither its officers nor its members shall solicit membership in the Union or participate in any other Union activity except as set out in this agreement on Company property or during working hours unless management grants permission to take part in such activities.

3.03 The Company shall not use its workforce management rights in a discriminatory manner.

ARTICLE 4 – MANAGEMENT

4.01 The Union agrees that the Company has the right to manage its business and direct its work force subject to the provisions of this agreement.

For greater certainty but without limiting the generality of the foregoing, such rights include:

a) maintaining order, discipline and efficiency;

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b) hiring, classifying, promoting and demoting, granting and taking away grades, rotating, laying off, recalling and transferring employees and, for just and sufficient cause, suspending, dismissing and disciplining them;

c) determining the products to be manufactured;

d) deciding on the production methods and schedules, the types and location of the equipment, machines and tools to be utilized and, from time to time, the number of employees the Company requires for any operation;

e) determining whether an individual has the necessary skills and meets the requirements for a specific job, subject to the provisions of this agreement and the seniority clause.  The Company’s determination of an employee’s aptitude and ability to fill the requirements of a job shall be made objectively; and

f) hiring qualified employees when necessary to expand the scope of its products and its work force, either due to the creation of new positions or new job classifications or because there are no qualified employees available to do the work.

ARTICLE 5 – UNION SECURITY

5.01 a) It is established that as a condition of employment, all employees must become and remain Union members in good standing.  New employees and employees who are rehired or recalled shall become Union members within ninety (90) business days during the six (6) month period following their date of hire.

b) The employer agrees to make weekly deductions from each employee’s salary for the Union dues, initiation fees and special assessments currently in force pursuant to the Union’s charter in the amounts specified by the Union.

5.02 It is understood and agreed that the Union shall indemnify the Company and hold it harmless for any claims that may be made against it by one or more employees for the amounts deducted pursuant to this Article.

5.03 The T4 and Relevé 1 slips shall indicate the total amount of the Union contributions the employee has paid in the year.

ARTICLE 6 – GRIEVANCE PROCEDURE

6.01 An employee and his steward may discuss any grievance with the immediate supervisor.  In the employee’s absence, the steward may discuss the grievance or, in the steward’s absence, the employee may be accompanied by another employee in an emergency.  The supervisor must inform the steward or the employee of his decision within one (1) business day or within a mutually agreed time frame.

6.02 If a settlement cannot be reached under 6.01 above, the grievance shall be stated in writing and presented to the Director of Operations or his representative within ten (10) business days of the date the cause of action arose.  Notwithstanding that deadline, the parties agree that all reasonable efforts shall be made to present a grievance as soon as possible within less than such ten (10) business days so as to settle the grievance as quickly as possible.

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6.03 The Director of Operations shall hold a meeting with the Union’s grievance committee, which may be accompanied by representatives from the International Union, within four (4) business days of the presentation of the grievance.

The Director of Operations shall inform the Union and the employee or employees concerned of his decision in writing within five (5) business days of the meeting or within a mutually agreed time frame.

6.04 The Union shall be entitled to file collective grievances or grievances of a general nature In accordance with 6.02 above.  Similarly, the Employer may file a grievance by addressing the Union office directly.

6.05 If a grievance is not settled pursuant to the foregoing sections of this Article, either party may give the other written notice of its intention to refer the grievance to arbitration in accordance with Section 100 of the Labour Code of Province of Quebec, within thirty (30) days of the decision by the Director of Operations or his representative.

6.06 The procedure and deadlines established under the provisions of Article 6 of this agreement shall be firm and may not be amended except pursuant to a written agreement between the authorized representatives of the parties in question.

6.07 a) The arbitrator shall hear and resolve the grievance and render an award which shall be final and binding on the parties in question and any concerned employee, but in no event shall the arbitrator have the authority to change, modify or amend any part of this agreement.

b) In a disciplinary matter, confirm, modify or overturn the employer’s decision and, where applicable, substitute such decision as appears to him to be fair and reasonable in view of all the circumstances of the case.

6.08 At every stage of the grievance procedure, including arbitration, the opposing parties may call upon the assistance of the employee or employees concerned and any necessary witnesses, and all reasonable steps shall be taken to allow the opposing parties to have access to the establishment, inform themselves about the contested operations and consult the necessary witnesses.

6.09 Each party in question shall share the payment of the arbitrator’s expenses.

The expenses and allowances of the witnesses shall be paid for by the party that called the witnesses.

No arbitration costs shall be awarded to either party.

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The arbitrator shall be asked to render his award within twenty (20) business days of the end of the hearing.

6.10 Except for grievances of an ongoing nature, the parties shall not be bound to consider a grievance unless it is presented within ten (10) business days of the date the cause of action arose and in compliance with the procedure established in the foregoing sections.

6.11 No grievance may be presented regarding the dismissal, suspension, lay-off or transfer of an employee who has not acquired seniority rights.

ARTICLE 7 – DISMISSAL AND SANCTION PROCEDURE

7.01 a) Management shall not apply disciplinary measures without first warning the employee, unless the circumstances warrant immediate sanction or dismissal.  In the event of a claim alleging that an employee was wrongfully dismissed or sanctioned, the grievance shall be brought directly at the second (2nd) stage of the grievance procedure within ten (10) business days of the date the cause of action arose.

b) In the event of suspension or dismissal, the employee may see the president of the Union local or the steward before leaving the plant.

7.02 A copy of a written notice remitted to an employee shall be sent to the Union steward.  The Company and the Union agree that disciplinary sanctions shall not be unjustly imposed.

7.03 In certain instances, the Employer may ask to meet with the Union and the employee concerned in a final attempt to avoid dismissing the employee.

7.04 During a meeting at the third (3rd) stage of a suspension or dismissal grievance, the employee may see his disciplinary record upon request.

7.05 A written warning or disciplinary measure shall not be valid against an employee for more than:

–    written warning:                                        6 months

–    disciplinary measure:                               12 months

from the date of the disciplinary measure or written warning.

However, if other offences within the said time frame warrant a written warning or disciplinary measure of the same nature, all warnings or disciplinary measures of the same nature shall remain in force until the last one has passed the expiry date.

7.06 Disciplinary measures and written warnings shall not be issued more than ten (10) business days after the employer became aware of the incident, and the employer shall bear the onus of proof.

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ARTICLE 8 – SENIORITY

8.01 The parties acknowledge that job and security opportunities should increase based on length of service.  Accordingly, it is agreed that for all vacations, promotions, transfers, lay-offs, terminations and recalls after lay-off or termination, the most senior employees shall have preference.

8.02 In acknowledgement, however, of management’s responsibility for the efficient operation of the establishment, it is understood and agreed that in every instance management shall have the right to pass over any employee if it establishes that the employee has neither the skill, capacity or physical aptitude to perform the work after a reasonable trial period of five (5) days.

8.03 An employee shall have seniority status once he has actually worked for ninety (90) days with the Company over a period six (6) months.  If the employee remains in the Company’s employ after working for such ninety (90) days, his seniority shall commence as of his date of hire.

An employee who has not completed his probationary period and has not yet acquired seniority status cannot apply for another position.

Seniority shall be retained and shall accrue during absences due to:

a) a lay-off

an illness or accident

b) an illness or accident for a period of more than six (6) consecutive months with less than one (1) year of seniority; twenty-four (24) consecutive months with more than one (1) year of seniority; thirty (30) consecutive months with more than five (5) years of seniority;

c) a leave of absence.

8.04 An employee shall lose his seniority and his name shall be removed from all seniority lists for any of the following reasons:

a) if the employee voluntarily leaves his job;

b) if the employee is dismissed for just cause;

c) if the employee has been laid off and does not return to work within five (5) days of being notified to do so by registered letter sent to his last address known to the Company, unless he has a serious and acceptable reason.  A copy of such notice shall be sent to the Union.

d) if the employee has been laid off due to a work shortage for a period exceeding:

– six (6) months if he had less than one (1) year of seniority on the lay-off date.

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– twenty-four (24) months if he had more than one (1) year of seniority on the lay-off date.

– thirty (30) months if he had more than five (5) years of seniority on the lay-off date.

e) if the employee is absent due to illness or a non-industrial accident covered by a medical certificate he shall continue to accrue seniority while he is absent due to the illness or accident, but not beyond:

– six (6) consecutive months with less than one (1) year of seniority.

– twenty-four (24) consecutive months with more than one (1) year of seniority

– thirty (30) consecutive months with more than five (5) years of seniority.

8.05 a) A position shall become vacant due to the death, retirement, quitting, dismissal, promotion or permanent transfer of the employee who held the position, and also due to the creation of a new job or position.

b) If the Company decides to fill a position that has become vacant or has been newly created in the plant within the bargaining unit, the details of the position shall be posted on the plant’s bulletin board for three (3) business days.

A copy of the notice shall be sent by registered mail to the employees who are absent from the plant due to illness, accident or vacation to their last known address appearing in the Company’s books.  Employees who want the position shall apply in writing during the said period of three (3) business days on the forms provided for that purpose.

The posting shall indicate:

1.           The commencement and ending dates of the posting

2.           The title of the position

3.           The description of the position

4.           The work shift

Within three (3) business days of the end of the posting the Company shall send the Union a copy of the posting, with the names of the employees who applied and indicating the name of the candidate chosen for the position.

However, it shall be understood that if the employee to be chosen in accordance with this Article is absent from the plant due to illness, accident or authorized leave in accordance with this agreement or is on vacation, he must be available to assume his new responsibilities by no later than fifteen (15) days of the Company’s notice to begin working, otherwise his candidacy shall be set aside.

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If the Company must fill the position in the meantime, it may transfer someone to fill it temporarily, in keeping with the stipulations of this agreement.

An employee who obtains a position for which he applied during a posting may not apply for another position In an equal or lower classification than the one he obtained for a period of six (6) months.  However, it shall be understood than an employee promoted to a position and who remains in that position may always apply for a position in a higher classification.

c) The employer shall grant the employee who is chosen a trial period of five (5) business days so he can adapt.  After such five (5) days, if the employee does not have the aptitude to continue in the position, the employer shall inform him and he shall return to his former classification.

However, for testers, electrical mechanics and other trades or technical jobs recognized by the Ministry of Education, management shall not be required to accept the candidacy of an employee or to give him a trial period if the employer can establish that the candidate does not have the aptitude required for the position.

The qualified employees who held the position of tester as of June 1, 1997 and who later held another position may return to the position of tester in accordance with the posting procedure.

d) Temporary job postings

If the Company wishes to fill a temporarily vacant position, the following procedure shall apply:

A temporarily vacant position may be filled temporarily by transfer if it will be for less than thirty (30) days in cases of illness, accident, occupational disease or industrial accident in accordance with the procedure described in Section 8.01 of this agreement.

However, if the absence is expected to last longer than thirty (30) days or if it exceeds thirty (30) days, the employer shall post the vacant position in accordance with Section 8.01 of this agreement.

Within three (3) business days of the end of the posting, the Company shall send the Union a copy of the posting with the names of the employees who applied and indicating the name of the candidate chosen for the temporary position.

The chosen candidate must be able to perform the work immediately without any training; he shall then be transferred directly and temporarily to that position on the work shift specified In the posting .

1. If there is no qualified candidate, the employer may then recall the qualified employee with the most seniority back to work.

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2. The employer shall then recall the laid-off employee with the most seniority to take over for the qualified employee within two (2) months of the beginning of the assignment of the qualified employee to the temporary position.  The employee thus temporarily recalled must be able to satisfy the normal requirements of the position, in accordance with Sections 8.02 and 8.05 c).  He shall then be trained to perform the necessary work.

3. The qualified employee shall resume his position on the recall list if the more senior employee is able to perform the work satisfactorily.

4. If there is no qualified employee on lay-off, the employer shall recall the employee with the most seniority in accordance with Sections 8.02 and 8.05 c).

If there is no laid-off or capable employee, in accordance with Section 8.01 the Company may temporarily hire from outside, but such employees shall be covered by the provisions of the collective agreement.

In addition, if an employee has obtained a posting for a position that became vacant due to illness, accident, occupational disease or industrial accident and a lay-off is expected, and the employee who obtained the position temporarily is affected by the lay-off, he shall return to his regular position and avail himself of his seniority rights.  Similarly, if the position temporarily obtained is once again filled due to the return of the holder of the position, he shall return to his regular position.

However, the period contemplated In the 6th paragraph of Section 8.05 b) shall not apply to a temporary posting.

8.06 Seniority list

The Company shall maintain a seniority list in the plant.  Every four (4) months, it shall post a copy of the list so it can be checked by the employees.  It shall also give a copy to the Union.  The said copy shall indicate each employee’s classification and rate of salary.  The Union shall be advised of the number and dates of new hires and of the employees recalled to work.

8.07 Lay-off notice

a) In the event of a lay-off due a work shortage, the relevant employees shall receive five (5) business days’ advance notice unless the lay-off is due to a reason beyond the Company’s control.

b) An employee whose position is abolished or closed or who is required to change shifts for an indefinite period shall inform his foreman, indicating which employee with less seniority he wishes to bump and, on the same day, a copy shall be given to the Union and to the relevant employee.

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c) The employee who is bumped may in turn bump another employee with less seniority than he has and so on, in accordance with the established conditions, until a bumped employee can no longer bump another one.  He shall then be laid off after five (5) business days’ notice.  The notice shall be null and void if the employer does not go through with the lay-off.

d) The employee assigned to a new position shall have a maximum trial and/or training period of five (5) days to demonstrate that he is able to perform the work satisfactorily (trial period refers to a person who has already done the work and training period refers to a person who has never done the work).  If an employee fails to demonstrate such ability, the Company shall assign him to another position he is able to fill if such a position is available.

e) Bumping procedure for a lay-off involving the elimination of the evening shift:

1. If the evening shift is completely eliminated and one or more positions are simultaneously opened on the day shift, the following bumping procedure shall apply instead of the normal posting procedure:

2. An employee whose position is thus eliminated shall notify his foreman, indicating which less senior employee he wishes to bump or which vacant position he wishes to fill.

3. If the employee bumps another employee, he must satisfy the conditions stipulated for a lay-off notice, i.e. Sec. 8.07 d).

4. If the employee cannot bump another employee, he shall use his seniority to choose a position left vacant on the day shift, provided he is qualified for the position.

5. If there is no available position for which he is qualified, he shall choose another position that could not be filled by a qualified employee and shall be trained for the position.

6. If there is no available position in accordance with the procedure described in paragraph 5, the employee with more seniority shall have priority over an employee with less seniority.  The employee with more seniority who satisfies the normal requirements for the position, in accordance with Sections 8.02 and 8.05 c), shall be trained for the position thus obtained.

8.08 Position reopened following a lay-off

1. Work recalls shall be done inversely to the order of the lay-offs, that is, the last employee laid off shall be the first one recalled to work, provided he has the necessary qualifications to immediately perform the available work.

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2. If the last employee laid off is not qualified, the employer may then recall the qualified employee with the most seniority.

3. The employer shall then recall the laid-off employee with the most seniority to take over for the qualified employee within six (6) weeks of the beginning of the assignment of the qualified employee to the vacant position.  The employee thus recalled must be able to satisfy the normal requirements for the position, in accordance with Sections 8.02 and 8.05 c).  He shall then be trained to perform the necessary work.

4. The qualified employee shall resume his position on the recall list if the more senior employee is able to perform the work satisfactorily.

5. If there is no qualified employee on lay-off, the employer shall recall the employee with the most seniority, in accordance with Sections 8.02 and 8.05 c).

6. An employee who is laid off shall be reinstated in the position he held before the lay-off, without any posting, provided the position is reopened within two years of the lay-off.

8.09 Change of address and telephone number All employees shall be solely responsible for informing the employer in writing of any change of address or telephone number.

8.10 Position outside the bargaining unit If an employee is promoted or transferred to a position outside the bargaining unit, he shall thereupon be excluded from the bargaining unit.  The employee shall keep the seniority acquired in the position he was transferred from and it shall be credited to him if he returns to work in the bargaining unit.  This privilege shall expire after one (1) year of continuous service outside the bargaining unit.

ARTICLE 9 – AUTHORIZED LEAVE

9.01 Unpaid leave of no more than one (1) day may be granted to any employee by his immediate supervisor.

9.02 Unpaid leave for longer periods must be referred to the Director of Operations and shall require his approval.

9.03 No unpaid leave shall be granted if the employee’s absence will hinder production requirements and/or create additional expense for the Company.  This clause shall not apply to Union officials who must be absent on Union business.

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9.04 Leave to take care of Union business:

A maximum of three (3) employees elected or designated by the Union to attend a Union convention or business session shall be given unpaid leave for that purpose.  The Union shall notify the Company one week in advance of the names of the representatives who, except for the President, must be representing various departments.

However, with the exception of the President, the said employees may not be absent for more than ten (10) business days in a single year.  It is agreed that this time frame shall not apply to arbitration hearings, the preparation and presentation of cases to the C.S.S.T., or the bargaining period.

9.05         Leave to work full-time for the Union:

The Company shall grant an employee an unpaid leave of absence for up to one (1) year so he can work for the Union.  The employee must make a written request at least one (1) month in advance if possible, which request must first be approved by the Union.

9.06         The Union agrees that the number and length of such leave shall not be unreasonable.

9.07         Failure to return from leave:

Authorized leave shall be granted in writing and no such leave shall affect an employee’s seniority rights if used for the purpose for which it was granted, provided the employee returns to work after his leave.  A copy of the authorization shall be remitted to the Union representative.

ARTICLE 10 – SAFETY AND HYGIENE

10.00 The Company shall provide the following personal safety equipment free of charge:

– Safety gloves

– Non-prescription safety glasses Safety shoes

– Hearing protectors

or such other equipment as the Joint Health and Safety Committee deems necessary.

10.01 The Company and the Union mutually agree that they wish to maintain high safety and hygiene standards in the establishment.

10.02 a) The Company accepts responsibility for taking adequate and reasonable measures for the health and safety of its employees during their working hours.

b) The Union shall help management succeed with any reasonable accident prevention program.

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c) Should the Joint Health and Safety Committee not agree with the choice of the equipment to be worn, the issue shall be referred to Quebec’s Commission de la Santé et de la Sécurité du Travail for a decision.

10.03 The Company agrees to continue to provide the employees with the safety equipment necessary to protect them from hazardous working conditions.

10.04 There shall be a Health and Safety Committee made up of representatives for the Company and two (2) representatives for the employees, chosen by the Union.  The Committee shall meet every two months.  The Committee may meet more often if necessary, provided the Union and the Company both agree.

The Committee shall be notified as soon as possible of any serious accidents that occur and of major risks and a member representing each party shall investigate the nature and cause of accidents.

The Company shall continue its policy of assisting an injured employee to fill out his accident notice and apply for benefits from the Commission de la Santé et de la Sécurité du Travail in accordance with the law.

10.05 Pay on the day an employee is injured:

An employee who is injured in an industrial accident shall be paid for the time lost on the day he is injured at his regular daily rate, including any overtime premium or shift premium that applies.

10.06 The Company shall provide transportation and salary for the time spent by the employees during regular working hours on the medical treatment required as a result of an industrial accident or occupational illness on the day of the injury.

Transportation means transportation from the plant to the hospital, or from the hospital to the plant or the employee’s residence if the plant is closed, provided the employee cannot drive himself.

10.07 If an employee is injured while working for the Company and he is off work for more than one (1) week due to such accident or illness, every week the Company shall advance the employee, at his request, a sum of money equivalent to the weekly indemnity the employee should receive from the Commission de la Santé et de la Sécurité du Travail or disability insurance until he receives his first such payment or returns to work, unless the claim is disputed or contested by the Employer, and in any event for no more than six (6) months.

It is understood that the advances by the Company shall at all times be considered a debt to the Company, which the employee shall repay to the Company, whether or not he is paid by the Commission de la Santé et de la Sécurité du Travail or disability insurance, at the latest when he receives the amounts owed him by the Commission de la Santé et de la Sécurité du Travail or disability insurance.

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10.08 The Company shall give every employee hired after the signing of this collective agreement a copy of the Act respecting Occupational Health and Safety.  Any regulations enacted under that statute shall be posted on the bulletin board.

10.09 The Company shall inform newly hired employees of the normal risks inherent in their work and in the nature of the products manufactured or handled, as it understands those risks.  Employees shall not be required to work under dangerous or unhealthy conditions in excess of the operational risks.

10.10 All new employees or employees transferred to a new classification shall be informed of the safest way to complete their tasks.

10.11 The Company shall make first-aid equipment available on the Company premises during all working hours.

10.12 One employee per shift shall receive, at the Company’s expense, first-aid training equivalent to that of the St-John’s Ambulance to be utilized on the work premises if need be.

10.13 All medical exams required by the Company shall be done by the physician of its choosing during normal working hours, without loss of salary.  All expenses incurred due to such exams shall be borne by the Company.

10.14 The Company agrees to investigate the source of any dangerous working conditions identified by the Safety Committee.

10.15 No employee shall be required to work alone.  In addition, where that practice represents a risk to his health and safety beyond the normal operational risks, no employee shall be required to work alone in an isolated area.

10.16 The Company shall organize one or more programs and shall put the Safety Committee in charge of instituting the program under Sections 10.10, 10.11 and 10.12.

ARTICLE 11 – BULLETIN BOARD

11.01 The Company agrees to provide the Union with a bulletin board in the establishment for the posting of Union notices and official documents approved in advance by the Company.

ARTICLE 12 – COPIES OF AGREEMENT POCKETBOOK FORM

12.01 The Company and the Union want every employee to be familiar with the provisions of this agreement and the rights and duties stemming therefrom.  The Company shall have the collective agreement printed in pocketbook form and shall distribute it to the employees in the bargaining unit.  It shall give a copy to every new employee and forty (40) copies to the Union within three (3) months of the signing of the collective agreement.  If the Company is unable to meet that deadline, photocopies of the collective agreement shall be distributed to the employees

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ARTICLE 13 – UNION REPRESENTATIVES

13.01 When an authorized Union representative who is not a Company employee wishes to speak to the local Union representatives in the establishment about a grievance or other official Union business, he shall notify the Director of Operations or his representative, who shall then call the local Union representatives to the office where they may confer in private.  Such discussions shall be organized so as not to hinder production.

ARTICLE 14 – GRIEVANCE COMMITTEE AND STEWARDS

14.01 The Union shall notify management in writing of the members of the grievance committee and the shop stewards.  There shall be one steward per twenty-five (25) employee and at least one (1) steward per shift.  For purposes of meetings with the representatives of management, the grievance committee shall consist of not more than two (2) members appointed by the Union and the international Union representative.  The members of the grievance committee shall not lose any salary for time spent attending meetings with the representatives of management during normal working hours.

14.02 If a steward or member of the grievance committee must be absent from his job or his department for purposes of his duties, he shall first obtain permission from his foreman or departmental supervisor, which permission shall not be refused arbitrarily, and he shall not lose any salary for time spent on his duties during his regular working hours.

ARTICLE 15 – HANDICAPPED EMPLOYEES

15.01 Should employees be injured on the job or contract an occupational illness during their employment and become physically handicapped as a result, the Company shall strive, insofar as possible, to provide the handicapped employees with a suitable occupation, provided such an occupation is available.

ARTICLE 16 – UNINTERRUPTED PRODUCTION

16.01 The parties hereto agree that during the term of this agreement there shall be no lock-out, strike, slowdown or other work interruption or interference that could disrupt production.  The Union and the employees of the Company agree not to involve the employees of the Company or the Company as such in any dispute that could arise between any other employer and the employees of such other employer.

ARTICLE 17 – WORKING HOURS

17.01 The work week shall be forty (40) hours.

17.02 Definition of day and work day:

a) The basic work day is eight (8) consecutives hours of work in a period of twenty-four (24) hours, interrupted only by the established meal break.

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b) The first (1st) work shift shall be from 08:00 to 17:00 hours, with a one-hour (1-hr) unpaid meal break.

The second (2nd) shift shall be from 16:50 to 01:20 hours, with a 1/2- hour unpaid meal break from 21:00 to 21:30 hours.  (See “Compressed Schedule” in Schedule G.)

If the work schedules are changed or a third (3rd) work shift is created, the Union shall be informed in advance so as to be able to give the employees sufficient advance notice.

17.03 Definition of work week:

The basic work week shall consist of five (5) days, from Monday to Friday inclusively.

17.04 Work shifts and schedules:

When an employee works on one of his days off, he shall not be required to take another day off during his regular work week.

17.05 Break:

Between the second and third hour of each half work shift, there shall be a ten-minute (10-min.) break from work.

In addition, for every three (3) hours or more of planned overtime, the employee shall be entitled to a ten-minute (10-min.) break towards the end of the second (2nd) hour.

17.06 The employees on the day shift shall be entitled to one (1) hour for their meal between noon and 1:00 PM where possible.

17.07 Nothing In the foregoing sections shall constitute a guarantee of weekly working hours.

ARTICLE 18 – ATTENDANCE ALLOWANCE

18.01 If an employee reports to work at the beginning of his regular shift without receiving notice not to come in at least two (2) hours before the beginning of his shift, he shall be paid the equivalent of four (4) hours of work at the regular rate, but such obligation on the part of the Company shall not apply if the work shortage is due to conditions beyond the Company’s control, or the employee returns to work before being advised of same following an absence of more than three (3) days due to illness or accident.

In the event of a situation beyond the Company’s control, the Company shall strive to notify the employees where possible.

18.02 Call-in pay:

Any employee who is especially called in to work at any time after he has completed his working hours may finish work when the emergency is over, and he shall receive a minimum of four (4) hours of pay but never less than four (4) hours of pay at regular time.

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ARTICLE 19 – SALARIES AND CLASSIFICATIONS

19.01 Employees governed by this collective agreement shall be paid in accordance with:

– Schedule A-1 or

– Schedule A-2 only if they meet the conditions stipulated in the first paragraph of Section 19.06.

19.02 If the employer creates a new classification, it shall meet with the Union to negotiate the hourly rate, taking into account the hourly rates under this agreement.  In the event of a disagreement over the hourly rate, the employer shall determine the rate and the Union may contest the new rate under the grievance settlement procedure.

19.03 When a new employee has completed his probationary period, he shall then be remunerated in accordance with the provisions of Section 19.05 (1).  Thereafter, his hourly rate shall be increased in accordance with the conditions defined below.

19.04 An employee who has not yet reached the maximum rate for his classification shall receive an increase of $0.42 per hour every four (4) months until his hourly rate corresponds to the maximum rate for his classification.  However such increase shall be $0.41 instead of $0.42 on the anniversary of the employee’s seniority date, so the total annual increase shall be equal to $1.25.

19.05 An employee who obtains a position shall be remunerated as follows and in accordance with Schedule A-1 or, if he meets the conditions stipulated in the first paragraph of Section 19.06, in accordance with Schedule A-2:

1. An employee who has less than two years of seniority shall receive the maximum rate for the position, less the two following amounts:  $0.84 and $1.25 per year of seniority under two years calculated in accordance with the salary progression defined in 19.04.  The rate shall always be equal to or higher than the minimum rate for the position.

2. An employee who has completed at least two years of seniority shall receive the maximum rate for the position, less $0.84.

3. An employee who has completed at least two years of seniority and who has already been remunerated at the maximum rate for the position shall then be remunerated at the maximum rate for the position.

An employee who, on May 31, 2005, held a position as a day labourer, insulation cutter, winder or assembler and who, on May 31, 2005 was already remunerated at a rate higher than the rate in Schedule A-1 as at June 1, 2005, shall henceforth be remunerated in accordance with the rate determined for his position in Schedule A-2 and the provisions of Section 19.05.

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If that employee changes positions, he shall then be remunerated in accordance with the rate established for his position in Schedule A-1.

ARTICLE 20 – TEMPORARY TRANSFER

20.01 If an employee is required to work in a category other than his classification for a full half-day (4 hours) or more, he shall receive the rate for the position or his regular rate, whichever is higher.

For purposes of assessing an employee’s experience, the time spent working in a position other than his own shall be counted as experience in his own specialty.

ARTICLE 21 – OVERTIME

21.01       More than eight hours of work

The Company shall pay an employee one-and-a-half (11/2) times his regular hourly rate for all hours worked beyond eight (8) hours a day for the first four (4) hours of overtime, that same day, and twice (2X) his regular rate for hours in excess of four (4) that same day.

21.02 Saturdays and Sundays

The Company shall pay one-and-a-half (11/2) times the regular hourly rate for the first ten (10) hours worked on Saturday and double time for hours beyond ten (10) on Saturday and for work done on Sunday, unless it involves work being done at the end of the employee’s regular shift.

21.03 All overtime work shall be voluntary.  However, it is agreed that employees in classifications that are trades or technical jobs recognized by the Ministry of Education may be required to work a number of overtime hours not exceeding six (6) per normal work week.  However, an employee may refuse such overtime on serious and valid grounds.  All overtime work beyond such six (6) hours shall be done on a voluntary basis.

21.04       Distribution of overtime

Normally, the Company shall give five (5) hours’ advance notice of overtime.  However, this shall not rule out the possibility of overtime worked on shorter notice:

1.           When the need to work overtime is not known in advance.

2.           When the relevant employee is in agreement with working overtime.

Overtime opportunities shall be allotted to the employees holding the position for which overtime is required.  If they are not available, the Company shall choose, among the most senior employees, those having demonstrated their qualifications to perform the necessary work in the plant pursuant to Section 8.01.  It is of course understood that overtime shall always be on a voluntary basis.

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Employees who do not want to be called shall notify the Company in writing on a form provided for that purpose and they may revoke the notice in writing on a form provided for that purpose.  The Union shall be given a copy of such notices.

ARTICLE 22 – SHIFT PREMIUM

22.01       Afternoon shift: $0.50

Night shift:          $0.60

22.02       Night shifts

In general, if there is a second or third shift, the most senior employee shall have priority to post his name for the shift of his choosing in the event of an opening.

ARTICLE 23 – STATUTORY HOLIDAYS

23.01       The following days shall be paid holidays:

New Year’s Day

The day after New Years Day

Good Friday Easter Monday Victoria Day

St-Jean Baptiste Day

Canada Day Labour Day

Thanksgiving Day Christmas Eve Christmas Day Boxing Day

New Year’s Eve

A floating day may be taken between Christmas and New Year’s Day.

23.02 If one of the statutory holidays mentioned above falls on a Saturday, the holiday shall be the preceding Friday; if one of the statutory holidays falls on a Sunday, the holiday shall be the following Monday.

23.03 For each holiday mentioned above, every employee shall receive eight (8) hours of pay at his regular rate, including premiums where applicable.

23.04 An employee who works on one of the above-mentioned holidays shall receive, in addition to his pay for the holiday, double his regular hourly rate.

23.05 To be entitled to payment for the above-mentioned holidays, the employee must have worked at least eight (8) hours on the day preceding and the day following the holiday; an exception shall be made for absence due to vacation, death, illness and/or accident not exceeding two (2) weeks, jury duty, and authorized leave and/or lay-off not exceeding two (2) weeks before the holiday.

However, If the Company recalls laid-off employees the day following one of the above-mentioned holidays, they shall be paid for the holiday preceding their return so as to receive full salary for their first week of work.

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23.06 If one of the above-mentioned holidays falls during an employee’s vacation, he shall be paid for the holiday in addition to his vacation pay.

ARTICLE 24 – VACATION

24.01 Every employee shall be entitled to paid annual vacation commensurate with his length of service as stipulated in this collective agreement.

24.02 An employee who has not completed ten (10) months of continuous service on May 1st each year shall be entitled to paid vacation in accordance with the Labour Standards Regulation.

24.03 An employee who, on May 1st each year, has completed ten (10) months of service but less than four (4) years shall be entitled to ten (10) days of paid vacation.  The vacation pay shall be 4% of the employee’s gross salary.

24.04 An employee who, on May 1st each year, has completed four (4) or more years of service shall be entitled to fifteen (15) days of paid vacation.  The vacation pay shall be 6% of the employee’s gross salary.

24.05 An employee who, on May 1st each year, has completed ten (10) or more years of service shall be entitled to twenty (20) days of paid vacation.  The vacation pay shall be 8% of the employee’s gross salary.

24.06 An employee who, on May 1st each year, has completed twenty-one (21) or more years of service shall be entitled to twenty-five (25) days of paid vacation.  The vacation pay shall be 11% of the employee’s gross salary.

24.07 In this Article, gross earnings means the amount of gross earnings, as indicated on the previous year’s statements.

24.08 The Company shall prepare a separate cheque for the employees’ vacation pay.

24.09 a) The annual vacation period shall be from May 1st to April 30th of each year.

b) The employer agrees to close its plant for the last two full weeks of July.

c) All employees must take their vacation during a plant closure period, except pursuant to an agreement between the employer and an employee.

d) The employees whose vacation is longer than the plant closure period shall have until April 15th to advise the employer of their vacation preferences.

e) Preference for vacation dates shall be granted to the employees based on seniority and classification and having regard to operating requirements and efficiency.  The employer reserves the right to determine the number of employees who may be away at the same time.

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f) An employee who has completed ten (10) or more years of service on May 1st in the year shall be entitled to a third week of vacation immediately prior to or following the closure period, having regard to the other provisions of Article 24.  The employer shall grant this privilege to ten percent (10%) of its total work force at once.  For purposes of this section, the total work force includes all the Company’s employees on May 1st in a given year, excluding laid-off employees and students hired for vacation replacement.

g) The employer shall post the annual vacation list no later than May 15th each year.

h) Vacations shall not be cumulative and must be taken in the twelve (12) month period following the end of the reference year.  For purposes of applying Article 24, the reference year is a period of twelve (12) consecutive months from May 1st to April 30th.

i) If, at the end of the twelve (12) months following the end of a reference year, the employee is absent due to illness or an accident that occurred before his vacation period, the employer may defer the annual vacation to the next year at the employee’s request.  If the annual vacation is not deferred, the employer shall pay the annual vacation indemnity to which the employee is entitled.

ARTICLE 25 – BEREAVEMENT LEAVE

25.01 In the event of the death of a member of an employee’s immediate family, bereavement leave shall be granted to the employee so he can attend the funeral.

25.02 a) In the case of the death of his spouse or one of his children, or his father or mother, a maximum of five (5) business days from the death, provided one of those days is the day of the funeral.

b) In the case of the death of the employee’s brother, sister, father-in-law, mother-in-law, brother-in-law, sister-in-law or grandchild, a maximum of three (3) consecutive business days from the date of death.  Such three (3) day period may include the day after the funeral.

c) In the case of the death of the grandfather, grandmother, daughter-in-law or son-in-law, one (1) day, namely the day of the funeral.

d) If there is a cremation, the days may be saved, based on the periods mentioned in the foregoing paragraphs.

ARTICLE 26 – INSURANCE PLAN

26.01 The group, health and wellness insurance described in Schedule “B” of this agreement shall be maintained during the term of this agreement.

26.02 The Company agrees to pay 100% of the costs of such insurance.

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ARTICLE 27 – INSURANCE AND TRAVEL EXPENSES

27.01 Normally, the Company shall pay for travel time at the applicable rate if an employee must travel to do a job requested by the Company.

An employee who uses his own vehicle to travel outside Granby at the Company’s request shall be reimbursed for his travel expenses at the rates in force with the Company.

ARTICLE 28 – TECHNOLOGICAL CHANGES

28.01 If the existing positions are altered due to technological changes, before proceeding with such changes and the institution of such operations, written notice shall be given to the Union or the parties shall meet to negotiate the conditions and rates of salary for the position in question, having regard to the rates of salary under this agreement.

The Company shall provide a plan for reclassification of the employees displaced from their position due to technological changes.

To the greatest extent possible and taking due account of the seniority provisions of this agreement, the Company shall provide new training to each employee displaced by technology, with a view to a position he wishes to learn and which he is capable of learning after a reasonable training period.

If, after such a training period, the employee does not qualify or refuses the new position, the Company shall assign the employee to another position he is able to perform.

ARTICLE 29 – TERM OF AGREEMENT: 5 YEARS

29.01 Letter agreements:

The parties agree that all of the letter agreements shall form an integral part of the collective agreement.

29.02 This agreement shall come into force on the date of its signing and shall expire on May 31, 2010.  The provisions of this agreement shall remain in force until the new agreement is signed.

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IN WITNESS WHEREOF, the parties to hereto have had this agreement signed by their legally authorized representatives in Granby, Province of Quebec.

On this 1st day of June 2005

THE STEELWORKERS UNION	PIONEER TRANSFORMERS LTD.
LOCAL 9414	Granby, Quebec
/s/ Daniel Mailloux	/s/ James A. Wilkins
Daniel Mailloux	James A. Wilkins
/s/ Herman Breton	/s/ Alain Trépanier
Herman Breton	Alain Trépanier
/s/ Bertrand Gévry	/s/ Guy Beaudoin
Bertrand Gévry	Guy Beaudoin
/s/ Isabelle Proulx
Isabelle Proulx

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Schedule A-1 – Classifications and Rates of Salary

Classification	Class	1 June 2005		1 June 2006		1 June 2007		1 June 2008		1 June 2009
		Min.	Max.	Min.	Max.	Min.	Max.	Min.	Max.	Min.	Max.
Tester	2	17.45	19.95	18.07	20.57	18.60	21.10	19.12	21.62	19.65	22.15
Electrical mechanic	2	17.37	19.87	17.99	20.49	18.51	21.01	19.04	21.54	19.59	22.09
Coiler	3	17.20	19.70	17.71	20.21	18.13	20.63	18.56	21.06	19.00	21.50
Tank filler	3	16.82	19.32	17.37	19.87	17.82	20.32	18.29	20.79	18.76	21.26
Lift truck operator	3	16.36	18.86	16.95	19.45	17.44	19.94	17.94	20.44	18.45	20.95
Stock keeper	4	16.22	18.72	16.70	19.20	17.10	19.60	17.50	20.00	17.91	20.41
Finishing Core maker Welder Assembler	4	15.96	18.46	16.47	18.97	16.78	19.28	17.31	19.81	17.74	20.24
Winder Insulation cutter Day labourer	5	14.93	17.43	15.36	17.86	15.72	18.22	16.08	18.58	16.45	18.95
Minimum rate of hire	6	14.93		15.36		15.72		16.08		16.45

Shift leader premium: $0.50 more than the employee’s hourly rate.

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Schedule A-2 – Classifications and Rates of Salary – Employees Concerned by Section 19.06

Classification	Class	1 June 2005		1 June 2006		1 June 2007		1 June 2008		1 June 2009
		Min.	Max.	Min.	Max.	Min.	Max.	Min.	Max.	Min.	Max.
Assembler	4	17.00	19.50	17.48	19.98	17.88	20.38	18.29	20.79	18.71	21.21
Winder	5	16.64	19.14	17.12	19.62	17.51	20.01	17.91	20.41	18.32	20.82
Insulation cutter	5	16.20	18.70	16.66	19.16	17.05	19.55	17.44	19.94	17.84	20.34
Day labourer	5	15.64	18.14	16.10	18.60	16.47	18.97	16.85	19.35	17.23	19.73

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Schedule A

(cont’d)

Increases In rates of salary

The salary increases over the term of the collective agreement shall be as follows:

June 1, 2005: the maximum rates in Schedule A of the agreement expiring on May 31, 2005 are increased by 2.5% (See # 3 below)

June 1, 2006: the maximum rates in Schedules A-1 and A-2 as of June 1, 2005 in this agreement are increased by 2.5%

June 1, 2007: the maximum rates in Schedules A-1 and A-2 as of June 1, 2006 are increased by 2%

June 1, 2008: the maximum rates in Schedules A-1 and A-2 as of June 1, 2007 are increased by 2%

June 1, 2009: the maximum rates in Schedules A-1 and A-2 as of June 1, 2008 are increased by 2%

1. The minimum rate for a position is equal to the maximum rate for that position less $2.50 for each year of the agreement.  For example: from June 1, 2005 to May 31, 2006, the minimum rate for a coiler is $17.20.

2. The “minimum rate of hire” is equal to the minimum rate for class 5 as at June 1st in a year.  For example: from June 1, 2005 to May 31, 2006, the minimum rate of hire is $14.93.

3. A new salary structure is established as of June 1, 2005 and the hourly rates for the positions of welder, assembler, winder, insulation cutter and day labourer are listed in classes 4 and 5 of Schedule A-1.

4. Section 19.06 specifies the conditions necessary for receiving the rates of salary in Schedule A-2.

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Schedule B

Group Insurance Plan

Ø   Life insurance:            $30,000.00

Ø   Accidental death and dismemberment:      $30,000.00

Ø   Life insurance:

Spouse:                      $2,000.00

Children:                    $1,000.00

Ø   Hospital room: semi-private

Ø   Ambulance

Ø   Prescription drugs:

Deductible:            $25.00 per year for a single employee.

Deductible: $50.00 per year for an employee with dependants.  The employee shall be reimbursed 80% of the cost of all prescription drugs exceeding the deductible per year on presentation of appropriate receipts.

A direct payment card will be supplied to the employees to purchase prescription drugs.

Medications must be generic if they are available at the pharmacy.  If there is no generic medication, the prescribed medication shall be subject to reimbursement in accordance with the provisions of the insurance policy.

Ø   Private nursing care:  maximum $10,000.00 per 12 months

Ø   Physiotherapy

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Schedule B

(cont’d)

Group Insurance Plan

Ø   Hospital and medical care outside the province: reasonable costs in excess of the R.A.M.Q.’s rates

Ø   Prostheses : up to 80%

Ø   Chiropractor and podiatrist: $15.00 per visit – maximum 20 visits

WEEKLY BENEFITS

DISABILITY:

The weekly benefits shall be equal to 66 2/3% of the employee’s weekly salary, up to the maximum paid by the Canada Employment Insurance Commission and payable on the first day, in the case of an accident, and from the fourth day in the case of illness, up to fifteen (15) weeks in any continuous disability period.

If the disability lasts longer, the employee must apply to the Canada Employment Insurance Commission for another period of fifteen (15) weeks.

If, after those periods, the employee were to be considered totally disabled, being unable to perform his work for the employer or elsewhere, he shall be eligible for maximum benefits of $1,200.00/month until 65 years of age.  However, it is understood that those benefits will be reduced if the employee is eligible for other benefits from other sources.  In this paragraph, the “employee’s weekly salary” is the amount obtained by multiplying the employee’s regular hourly rate by 40.

COMMENT

The Company intends to register this plan with the Canada Employment Insurance Commission.  The Union and its members waive all deductions they might be entitled to due to the registration of this plan as benefits accrued under the Group Insurance Plan.  This is an overview of the benefits to which you are entitled.  All rights regarding the benefits of a member shall be exclusively governed by the universal policy issued by the Insurance Company.

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Schedule C

LETTER AGREEMENT

PRESIDENT

Considering the Union President’s responsibility, he shall be excluded from the night and evening shifts.  However, this agreement does not guarantee his job position.

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Schedule C

(cont’d)

LETTER AGREEMENT

MEDICAL REPORT

Further to our recent negotiations, we wish to confirm that if a medical report is prepared following an exam referred to in Section 10.13 of the collective agreement, the employee in question shall be given a copy of the report.

In addition, as is the current practice, the medical report shall be handled with discretion.

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Schedule C

(cont’d)

LETTER AGREEMENT

EDUCATION ASSISTANCE

Further to our recent negotiations, we wish to confirm our intent to apply the education-assistance plan currently in force for the executive employees (salaried employees) to the employees in the bargaining unit.

Under this policy, when the Company accepts a course or study program for an employee which is taken while the employee continues to work full-time, it will reimburse him for half the tuition for such program or course upon registration and the other half later, provided he successfully completes the course or program.

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Schedule C

(cont’d)

LETTER AGREEMENT

BARGAINING COMMITTEE

A maximum of three (3) employees on the bargaining committee shall be paid at their regularly hourly rate for time spent on negotiations which corresponds to their regular working hours, provided such employees are chosen from among the Company’s active work force.

The Company shall pay until the conciliation process starts for the negotiations.

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Schedule C

(cont’d)

LETTER AGREEMENT

SUBCONTRACTING

The Company agrees to keep the Union informed as soon as possible of the tasks normally performed by the unionized employees which may be subcontracted.

Except under exceptional circumstances, proof of which is up to the employer, the subcontracting of work shall not cause lay-offs or prevent work recalls provided the equipment and materials are available.

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Schedule D

PENSION PLAN

For purposes of the interpretation of this collective agreement, the holder of a position means a person who obtained the position further to a posting or a transfer due to a lay-off.

As of June 1, 1989, the Company instituted a pension plan having the following primary features:

Funding:	The pension plan is 100% funded by the Company.
Eligibility:	Every employee joins the pension plan when he begins work as a unionized hourly-wage employee at the Granby plant.
Past Service:	A credit of one (1) year is allocated for each year of participation.
Pension:	For an employee retiring between June 1, 2005 and May 31, 2007, the monthly pension benefit at normal retirement age is $24.00 per year of participation.
	For an employee retiring between June 1, 2007 and May 31, 2008, the monthly pension benefit is $25.00 per year of participation.
	For an employee retiring between June 1, 2008 and May 31, 2009, the monthly pension benefit is $26.00 per year of participation.
	For an employee retiring from and after June 1, 2009, the monthly pension benefit is $27.00 per year of participation.
Retirement Age:	The minimum retirement eligibility age is 65.
Early Retirement:	An employee who retires at age 63 or older is entitled to an immediate pension benefit without any actuarial reduction.

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Schedule D

(cont’d)

Pension benefit modalities:

If you do not have a spouse you will receive a simple lifetime pension.  This pension will be paid to you every month until death.  The monthly benefits will begin as of your retirement date and will only stop after your death.  Other than the simple lifetime pension, you may opt for any of the modalities described below.

If you have a spouse, you may opt for a joint and survivor pension.  In that case, the pension will be paid to you every month until death, after which your spouse will receive a monthly pension corresponding to 60 percent of the one you received until he or she dies.  The amount of your pension will be lower than for a simple lifetime pension to offset the greater number of payments that may be made to your spouse.

Five-year guaranteed annuity option:

You may choose another method of pension payments.  If you have a spouse, you will need their written consent.  If you choose this method, the amount of the pension you receive will be readjusted based on actuarial calculations.

The five-year guaranteed annuity pays an amount until your death and has a minimum guaranteed period of five years.  If you die before the end of this period, the monthly payments will go to your spouse or beneficiary until the end of the guaranteed period.  If you die after the period ends, the payments will stop.

Only one of the above options may be chosen and the election must be made before the employee retires.

The amount of the pension payable under either of the two (2) options will be the actuarial equivalent of the regular pension to be paid.  The whole in accordance with the actuarial methods and assumptions specifically adopted for this plan by the Company on the advice of an actuary.

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Schedule D

(cont’d)

Retirement allowance at age sixty (60):

An employee who retires on the first day of the month coinciding with his sixtieth (60th) birthday or the next month will receive a retirement allowance payable in a one-time lump sum of ten thousand dollars ($10,000).

To benefit from this retirement allowance, an employee must notify the employer in writing at least three (3) months before his retirement date.

The retirement allowance will be deposited directly in the employee’s registered retirement savings plan if the employee authorizes the employer to transfer the amount tax-free to the employee’s personal retirement account.

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Schedule E

LETTER AGREEMENT

STUDENTS

Students hired temporarily for vacation replacement will not have seniority status as defined in Section 8.03.

Students will be remunerated at the minimum rate of hire for the term of their employment and will not be eligible for any other benefits or direct or indirect remuneration.

If, for any reason, a student does not return to his studies, he will be deemed to have resigned his position and if he then applies for a position and the employer decides to rehire him, he will accrue seniority in accordance with the provisions of Section 8.03.

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Schedule F

LETTER AGREEMENT

TRAINING

The parties agree to form a joint training committee for the purpose of promoting employee training.  Outside consultants will be invited to facilitate the attainment of this objective.

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Schedule G

LETTER AGREEMENT

COMPRESSED SCHEDULE

The working hours for the second shift are defined in Section 17.02.

However, it is understood and agreed that the compressed work schedule described in this letter agreement shall remain in force for the term of the collective agreement.

Furthermore, and notwithstanding any other provision of this collective agreement, it is agreed that all hours worked on the second work shift shall be paid at the regular hourly rate without any overtime premium, unless an employee has already completed a normal day of work on the day shift.

Finally, and notwithstanding any other provision of this collective agreement, it is also agreed that payment for vacations or authorized paid holidays shall be as follows: the employee shall be paid for the number of regular hours he would normally have worked on his regular schedule for the holiday(s) or vacation day(s), provided he meets the requirements of Articles 23 and 24.

From Monday to Thursday inclusively:

Ø   Working hours:          16:50 to 01:30

Ø   Unpaid meal:               21:00 to 21:30

Ø   Breaks:                         2

Friday only:

Ø   Working hours:          16:50 to 00:30

Ø   Unpaid meal:               21:30 to 22:00

Ø   Break:                           only 1 break before supper.

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EX-10.17

Exhibit 10.17

AGREEMENT

FOR

AUTHORIZED SALES REPRESENTATIVES

This agreement made this day of May 11th 2006, by and between Pioneer Transformers LTD ("PT") in Granby, Quebec Canada, having its principal place of business at 612 chemin Bernard, Granby, Quebec, Canada, and it's Sales Representative,

Techno-Contact Inc.

The post office address of which is:

2291 Guenette

St-Laurent, QC

H4R 2E9

(Hereinafter called the "Sales Representative").

In consideration of the covenants and conditions herein contained, PT and the Sales Representative mutually undertake and agree as follows:

ARTICLE 1 - DEFINITIONS

As used herein:

1.1 The term "The Territory" shall mean:

The Province of Quebec, Canada

The term "The Market" shall mean:

All electrical generating and electrical distribution utilities, industrials and electrical distributors.

Customer excluded: Hydro-Quebec

Product excluded: Liquid Filled Network Transformers

1.2 The term "PT" shall mean Pioneer Transformers LTD

1.3. The term "sales credit" shall mean the value of billed sales acknowledged by PT to have been procured by the Sales Representative pursuant to the terms and conditions contained in this Agreement, less any sales taxes, duty, brokerage, freight, cost of bid bonds or performance bonds.

ARTICLE 2 - APPOINTMENT

Techno-Contact is hereby appointed an authorized Sales Representative for PT and is authorized to solicit orders for PT products within the Territory under the terms and conditions herein described. It is understood that this appointment shall be exclusive to both parties for the Territory and Markets as previously described.

ARTICLE 3 - ORDERS

3.1 Orders for PT products which have been placed with the Sales Representative shall be promptly forwarded to PT in Granby, Quebec with a copy to Mississauga, Ontario for review. Such orders shall not be binding on PT until accepted by PT in writing or by the issue by PT of an official order acknowledgment.

3.2 PT reserves the right to reject any order for any reason which it deems sufficient, including but not limited to, such reasons as failure to conform to PT's standard terms and conditions of sale, unrealistic specified delivery dates and unapproved credit of the purchaser.

3.3 The Sales Representative shall be excluded from entering orders in its own name to fill customer requirements.

ARTICLE 4 - COMMISSIONS

4.1 PT shall compute and pay commissions on the value of sales credits earned by the Sales Representative in accordance with the rates and conditions set forth in Exhibit A annexed hereto and made a part hereof.

4.2 Sales credit for sales of PT products and commissions payable thereon shall be calculated at the end of each month. Commissions shall be paid monthly, with commission checks being mailed to the Sales Representative's business address shown on the front page hereof, on or about the fifteenth day of the month immediately following the month in which the sales credits are earned and customer invoices paid. If the commission earned during any given month is less than $100.00, it will be held until a minimum amount of $100.00 is reached. Hold backs against commissions payable to the Sales Representative will be made for any overdue unpaid PT invoices.

4.3 Commissions paid will be net billed sales less taxes, duty, brokerage, freight, cost of bid bonds or performance bonds.

ARTICLE 5 - MARKETING ASSISTANCE

5.1 PT shall furnish the Sales Representative with:

5.1.1 Reasonable quantities of bulletins and such promotional aids as catalogs, circulars and technical information, and other publications which PT may have available for distribution in connection with the sale of PT products. There shall be no charge for the material furnished pursuant to this article 5.1.1. The Sales Representative's use of the aforementioned materials shall be subject to the terms, conditions and limitations of this Agreement.

5.1.2 Quotations, proposals, customer visits, trade show participation, seminar programs or special advice as may from time to time be requested by the Sales Representative for the purpose of satisfying customer needs and government requirements.

ARTICLE 6 - SALES EFFORT

6.1 The Sales Representative shall use its best efforts to promote the sale and use of, and to secure orders for PT products within the Territory and Market, so as to create the largest volume of profitable business for PT commensurate with the opportunities therefore. The Sales Representative shall promote the goodwill and name of PT, and do everything within its capabilities to further the interest of PT, its name and PT products including participation in trade shows, seminar programs and all sales activities undertaken by PT. It shall endeavor to provide PT with timely feedback on all major tenders. It shall assist PT in furnishing or obtaining, on request, information as to credit standing of purchasers or prospective purchasers of PT products.

6.2 The Sales Representative shall faithfully observe and comply with F'T standard policies and procedures where applicable, when soliciting orders for P1 products or otherwise handling PT business under this Agreement.

ARTICLE 7 - COMPETITIVE CLAUSE

During the term of this Agreement, the Sales Representative shall not directly or indirectly handle, deal or become interested in the manufacture, marketing or selling of products which are similar in kind, character and/or use to PT products. The Sales Representative shall not directly or indirectly, provide any competitor of PT with PT product bulletins, special advices, PT products or other similar information and material which May be of competitive value.

ARTICLE 8 - PROPERTY OF PT

Any property of PT received by the Sales Representative shall be and remain the property of PT and, upon request, shall be returned, in as good condition as when received, ordinary wear and tear excepted. All records or papers of any kind relating to PT's business shall be and remains the property of PT and shall be surrendered to PT upon demand or termination of this Agreement.

ARTICLE 9 - LIMITATION OF POWER

The Sales Representative's authority to act as a representative of PT is strictly limited to those powers expressly conferred herein. The Sales Representative shall have no authority nor shall it hold itself out, as having such to make contracts in the name of or binding on PT, pledge' PT credit or to extend credit in its name. Furthermore, the Sales Representative shall not use the initials "PT" or PT's registered trade names or registered trade marks unless expressly approved by PT in writing.

ARTICLE 10 - SEVERABILITY

Should any of the provisions contained herein contravene or be invalid under the laws of Canada and or the province or other jurisdiction where it is to be performed, the validity of the remaining portions or provisions hall not be affected thereby.

ARTICLE 11 - GOVERNING

This Agreement shall be construed in and according to the laws of the Province of Quebec, Canada.

ARTICLE 12 - DURATION

12.1 This Agreement shall become effective on the date first above written and shall continue thereafter in full force and effect.

12.2 Either party may terminate this Agreement at will without cause by giving the other party three (3) month written notice of its intention to terminate.

12.3 In the event of a termination of this Agreement, commissions in accordance with Exhibit A will be paid on all orders shipped after the termination date. Any quotations for PT products that have not been ordered prior to the termination date will not be honored by PT and no commission shall be owing or payable with respect thereto.

12.4 Nothing in article 12.3 above shall be deemed to entitle the Sales Representative to sales credit other than that to which it would be entitled under Article 4 hereof.

12.5 If at any time hereafter, either of the parties hereto shall fail to perform to the terms, covenants and conditions hereof at the time and in the manner herein provided, then the other party may forthwith cancel and terminate this Agreement by giving the other party written notice of its election to so cancel and terminate this Agreement and such cancellation and termination shall become effective upon the mailing or delivery of such notice, whichever occurs the earliest. This right to cancel and terminate shall be in addition to any other remedies available hereunder or at law.

ARTICLE 13 - NOTICES

Any notice required under this Agreement shall be given in writing addressed to the respective party at the address indicated on the front page hereof, or at such other address as the respective party may, from time to time, hereafter designate in writing.

ARTICLE 14 - CONTRACT ADMINISTRATION

This Agreement shall be administered on behalf of PT by its Marketing & Sales Department in Mississauga. All questions concerning this Agreement or PT policy and procedure should be directed to the said Department at 612 Bernard Road, Granby Quebec, Canada J2G 8E5. Attention: Raymond Haddad, V.P. Operations.

ARTICLE 15 - ENTIRE AGREEMENT

This Agreement constitutes the only agreement between the parties and supersedes all previous communications, representations or agreements, whether oral or written, with respect to the subject matter hereof. No modification of or amendment to this Agreement shall be binding upon the parties hereto unless in writing and duly executed by both parties.

In Witness Whereof, the parties have executed this Agreement in duplicate on the dates indicated.

Sales Agency	Principal
Techno-Contact Inc.	Pioneer Transformers LTD
By:   /s/  Ghislain Pépin ing.	By:   /s/ Raymond Haddad
Ghislain Pépin ing	Raymond Haddad
Date:  May 11th 2006	Date:   May 10, 20006

EXHIBIT A

Pioneer Transformers LTD. Representative Commission Scale.

INDIVIDUAL ORDER VALUE	COMMISSION RATE*
Up to $200,000	4%
$200,001 to $500,000	$8,000
	plus 3.0% on the amount over
	$200,000
$500,001 to $1,000,000	$17,000
	plus 2% on the amount over $500,000
$1,000,001 and more	$27,000
	plus 1% on the amount over
	$1,000,000

On long term contracts, the commission rate for the monthly shipments is based on the total annual dollar value shipped.

1)           If to obtain an order it becomes necessary for PT to make a reduction in price that would otherwise apply, or to make some concession involving extra cost, PT may, prior to acceptance of such an order, request of the Representative that the commission payable thereon be negotiated to reflect the special circumstances involved with the order. In such cases, the commission rate specified above shall not apply.

2)           For the purpose of determining the size of any order, any proposal to one customer for similar types of material with a common closing date that results in one or more purchase orders to facilitate accounting and/or shipments to different locations are considered to be one total order for the aggregate Value of the different parts.

3)           Orders with different closing dates but grouped together by the customer at time of purchase in order to obtain a value or volume discount will be treated as one order for the total value of the order.

EX-10.18

Exhibit 10.18

LEASE AMENDING AGREEMENT

THIS AGREEMENT made as of the 1st day of August, 2006,

BETWEEN:

PIONEER TRANSFORMERS LTD.

(the “Tenant”)

AND:

2600 SKYMARK INVESTMENTS INC.

(the “Landlord”)

WHEREAS pursuant to a lease dated the 8th day of October, 1998, as amended by a lease amending agreement made as of the 20th day of March, 2001 (collectively, the “Lease”), the Landlord, by its predecessor, as landlord, leased to the Tenant certain premises containing a rentable floor area of 1,407 square feet, being composed of part of the ground floor of Building 5, Suite 102 of the development municipally known as 2600 Skymark Avenue, Mississauga, Ontario (the Lands and Building as more particularly described in the Lease) for a term now expiring July 31, 2006 at the rents and upon the terms and conditions contained in the Lease;

AND WHEREAS 2600 Skymark Investments Inc. is successor in interest and title as owner and landlord of the Lands and Building

AND WHEREAS the Landlord and the Tenant have agreed to extend the Term of the Lease and to certain other amendments to the Lease and to execute this Agreement to give effect thereto;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants contained herein and the sum of TWO ($2.00) DOLLARS now paid by each party to the other and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereby covenant and agree as follows:

1.The above recitals are true in substance and in fact.

2.Effective from and after the 1st day of August, 2006, the Lease shall be and is hereby amended as follows:

(a)Section 3.01 is hereby deleted and replaced with the following;

“The Term of this Lease shall be Thirteen (13) years, commencing August 1, 1998 and ending July 31, 2011, unless the Term is otherwise terminated as provided for in this Lease.”

(b)Section 4.01 shall be amended by adding the following:

Period of Term	Annual Basic Rent	Monthly Basic Rent	Annual Rate per Square foot of Rentable Area
Lease Years 9, 10 & 11 Commencing 01/08/2006 Ending 31/07/2009	$18,994.50	$1,582.88	$13.50
Lease Years 12 & 13 Commencing 01/08/2009 Ending 31/07/2011	$20,401.50	$1,700.13	$14.50

(c)The Landlord’s address in Section 4.05 shall be deleted and replaced with the following:

2600 Skymark Investments Inc. Suite 217

55 St. Clair Avenue West

Toronto, Ontario, M4V 2Y7

(d)R2.03 of Schedule R shall be amended as follows:

“The Tenant accepts the Premises in their current “as is “condition.”

(e)R8.02 of Schedule R shall be amended as follows:

“During the Term the Landlord shall provide the Tenant with reserved parking for two (2) automobiles in the Building’s underground parking facility.”

(f)There shall be no rental credit, rent free period, tenant allowance, Landlord’s Work, leasehold improvements or other tenant inducement whatsoever provided by the Landlord.

3.   The Landlord and the Tenant hereby acknowledge, confirm and agree that in all other respects the terms of the Lease are to remain in full force and effect, unchanged and unmodified except in accordance with this Agreement.

4.   Except as specifically stated in this Agreement, any expression used in this Agreement has the same meaning as the corresponding expression in the Lease.

5.   This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective permitted successors and permitted assigns.

IN WITNESS WHEREOF each of the parties hereto have executed this Assignment as of the date first written above.

Tenant:

PIONEER TRANSFORMERS LTD.

Per: /s/ James A. Wilkins                     

Name:  James A. Wilkins

Title:  Vice-President

Per: /s/ Raymond Haddad                    

Name:  Raymond Haddad

Title:  Secretary

I/We have authority to bind the Corporation

Landlord:

2600 SKYMARK INVESTMENTS INC.

Per: /s/ Michael Bunston                     

Name:  Michael Bunston

Title:  President

I have authority to bind the Corporation

EX-10.19

Exhibit 10.19

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “[XX]”.

Contract

Distribution Transformers

05-041D

For:

Newfoundland Power Inc.

Maritime Electric Company Limited

FortisAlberta Inc.

FortisBC Inc.

TABLE OF CONTENTS

AGREEMENT

SCHEDULE A – GENERAL CONDITIONS

SCHEDULE B – STATEMENT OF WORK

SCHEDULE C – PAYMENT FOR WORK

SCHEDULE D – SAMPLE SUPPLIER PERFORMANCE EVALUATION FORM

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THIS AGREEMENT is made effective the 1st of September, 2006.

BETWEEN:

PIONEER TRANSFORMERS LTD. a corporation incorporated in 1995, having its head office in the City of Granby in the Province of Quebec.

(hereinafter referred to as the “Supplier”)

- and - -

NEWFOUNDLAND POWER INC., a corporation incorporated in Newfoundland, having its head office in the City of St. John’s in the Province of Newfoundland and Labrador.

(hereinafter referred to as the “Utility”)

- and - -

MARITIME ELECTRIC COMPANY, LIMITIED, a corporation incorporated in Prince Edward Island, having its head office in the City Charlottetown in the Province of Prince Edward Island.

(hereinafter referred to as “the Utility”)

- and - -

FORTISALBERTA INC., a corporation incorporated in Alberta, having its head office in the City of Calgary in the Province of Alberta.

(hereinafter referred to as the “Utility”)

- and - -

FORTISBC INC., a corporation incorporated by a special Act of the Legislature of the Province of British Columbia, having its head office in the City of Kelowna in the Province of British Columbia.

(hereinafter referred to as the “Utility”)

All together the Fortis companies are hereinafter referred to as the “Utilities.”

WHEREAS:

A.           The Supplier is in the business of providing certain material supply services in Canada;

B. The Utilities requires the provision of such material supply services for the purpose of completing the Work and the Supplier has agreed to provide such material supply services to the Utilities, and to do such other acts and things as are described in this Agreement upon the terms and conditions set forth below;

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 NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective covenants and agreements of the parties contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:

TERM:

The term of this agreement is from September 01, 2006 to December 31, 2007 with an option for renewal of thirty-six (36) months if mutually agreed upon in writing by each of the signatory parties. If extended, prices for January 1, 2008 to December 31, 2010 shipments will be subject to the Index Pricing as per “Schedule C — Payment for Work.”

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ARTICLE 1

INTERPRETATION

Definitions

1.1 In this Agreement:

a) “Contract Price” means the price set forth in “Schedule C – Payment for Work” to this Agreement;

b) “Material Supply Schedule” means the material supply schedule set forth in “Schedule B – Statement of Work” to this Agreement;

c) “Effective Date” means the date first set forth above;

d) “Services” means the services required to perform the Work as more fully described in “Schedule B – Statement of Work” to this Agreement;

e) “Work” means the work set forth in “Schedule B – Statement of Work” to this Agreement;.

0 “Items” refers to the materials set forth in “Schedule C – Payment for Work” to this Agreement;

g) “On Time Delivery” refers to the delivery of Items as per the criteria set forth in “Schedule B – Statement of Work” to this Agreement.

h) “Release Schedule” means a form provided to the Supplier at the beginning of each month displaying the delivery requirements for the following six (6) months.

Incorporation of Schedules

1.2 The following Schedules, annexed hereto, are incorporated in this Agreement and are deemed to be part hereof and any references to this Agreement shall mean this Agreement including such Schedules: Schedule A - General Conditions Schedule B - Statement of Work Schedule C – Payment for Work Schedule D – Sample Supplier Performance Evaluation Form   In the even of a conflict or inconsistency between the terms of a Schedule and terms of the main body of this Agreement, the terms of the main body of this Agreement shall’ prevail.

Governing Law

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Newfoundland Power Inc.  Agreement

1.3 This Agreement shall be governed by the laws of the Province in which the goods are used and the federal laws of Canada applicable therein.

ARTICLE 2

SERVICES

Services

2.1 Commencing on the Effective Date, the Supplier shall provide the Services to the Utilities in accordance with the Material supply Schedule and the General Conditions set forth in “Schedule A — General Conditions.”

ARTICLE 3

PRICING AND PAYMENT

Pricing and Payment

3.1 The Utilities shall pay the Supplier in accordance with “Schedule C- Payment for Work.”

Changes in the Product

3.3 The Utilities shall have the right to order, at any time changes to the product. The Utilities shall identify and document in sufficient detail all such changes and request the time for completion of the changes. When changes to the product have been so identified and documented in sufficient detail, the Supplier shall promptly estimate the effect of such changes on the Contract Price, if any, and so notify the Utilities. Upon approval by both parties of the change in writing, this Agreement shall be deemed to have been amended to reflect the amended Contract Price and the time for completion. Unless a change has been agreed to in writing, there will not be any changes to the Contract Price.

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Newfoundland Power Inc.  Agreement

IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their duly authorized representatives as of September 1, 2006.

SUPPLIER

Per: /s/ Raymond Haddad

Print Name: Raymond Haddad

Title: V-P of Operations

NEWFOUNDLAND POWER INC.

Per: /s/ Karl Smith

Print Name: Karl Smith

Title: CEO

MARITIME ELECTRIC COMPANY, LIMITED

Per: /s/ Fred O’ Brien

Print Name: Fred O’ Brien

Title: President + CEO

FORTISALBERTA, INC.

Per: /s/ P.G. Hughes

Print Name:  P.G. Hughes

Title: President + CEO

FORTISBC INC.

Per: /s/ Doyle Sam

Print Name: Doyle Sam

Title: V.P. Transmission & Distribution

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Newfoundland Power Inc.  Schedule A – General Conditions

TABLE OF CONTENTS

1. ENTIRETY AND ACCEPTANCE.  1

2. CURRENCY:  1

3. SHIPPING INSTRUCTIONS:  1

4. INSPECTION:  1

5. INVOICING:  1

6. ESCALATION:  1

7. WARRANTY.  2

8. LIABILITY AND INDEMNIFICATION.  2

9. TERMINATION:  3

9.1	Termination for Cause	3
9.2	Termination for Convenience	3
9.3	Suspension	4
9.4	Supplier’s Right to Payment	4
9.5	Terms surviving termination	4

10. INDEPENDENT SUPPLIER:  4

11. SUBSUPPLIERS:  4

12. ASSIGNMENT BY THE SUPPLIER:  4

13. CONFIDENTIALITY  5

14. ON-SITE WORK:  5

14.1	Insurance Provisions:	5
14,2	Union Compliance:	7
14.3	Environment, Health and Safety Rules:	7
14.4	Acceptance of the Work:	7
14.5	Responsibility:	7
14.6	WHMIS Legislation:	7
14.7	Environmental Protection:	8
14.8	Employment Legislation:	8
14.9	TDG Legislation:	8

15. FORCE MAJEURE:  8

16. DISPUTES:  8

17. COMPLIANCE WITH LAW:  9

18. VENUE:  9

19. NOTICES:  9

20. RIGHT TO AUDIT:  9

21. GENERAL:  9

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Newfoundland Power Inc.  Schedule A – General Conditions

1.           ENTIRETY AND ACCEPTANCE:

This Agreement, when executed by the parties, forms the entire Agreement between the parties and shall supersede all prior agreements, understandings and negotiations. No other terms shall apply unless agreed to in writing by the Utilities and the Supplier.

2.           CURRENCY:

All references to currency are deemed to mean lawful money of Canada.

3.           SHIPPING INSTRUCTIONS:

Every signed original bill of lading or express receipt shall be retained by the Supplier and supplied to the Utility upon request. A packing list shall accompany all shipments indicating the Agreement Number and fully describing all enclosed goods. All shipments must be packed or. crated to protect the goods from damage during transit, and in accordance with any special conditions otherwise stated herein. Export symbols, serial numbers, weights, measurements and other- identification shall be clearly marked on each shipment by the Supplier prior to transit. No extra charges for shipping shall be allowed, unless agreed to and specified in the Agreement. Shipping will be DDP destination with transfer of title on delivery.

4.           INSPECTION:

All goods covered by this Agreement shall, at all times and places be subject to inspection by the Utilities, its duly authorized agents, and representatives, with respect to progress, materials and workmanship, and prior to acceptance and commencement of the Warranty Period the Utilities shall be entitled to reject delivery of any such goods, or items thereof reasonably determined by the Utilities to be inadequate or deficient. Notwithstanding the foregoing, neither inspection nor non-inspection nor any acceptance of any goods by the Utilities shall in any way limit or relieve the Supplier of any of the Supplier’s obligations hereunder, including, without limitation, the obligation to supply such goods strictly in the quantities ordered and otherwise in accordance with the terms and conditions contained in this Agreement and any applicable purchase order.

5.           INVOICING:

a) Invoices (single copy) shall be rendered to the separate Utilities upon shipment see “Schedule C — Payment for Work” for addresses for each Utility’s accounts payable department.

b) Each invoice shall fully describe the goods supplied or services performed and shall state whether the billing is “Partial” or “Final.”

c) The Agreement Number shall appear on all invoices, packing lists and delivery tickets.

d) All sales tax, custom duties and shipping charges shall be shown separately on each invoice.

6.           ESCALATION:

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No claims for increase in price shall be allowed unless an escalator clause is a specified part of this Agreement. All claims shall be supported and justified with full proof and support by the Supplier. The Supplier shall advise the Utilities in writing the day an escalator clause becomes effective. Escalation invoked after the original promised delivery date for the related goods shall not be approved.

7.           WARRANTY:

The Supplier warrants that during the warranty period hereinafter defined the Product sold shall be free from defects in material and workmanship and shall be of the kind and quality designated or described in the specifications.

If within thirty (30) months from the date of notification of readiness of shipment or twenty-four (24) months from date of first use by the Utilities, whichever date occurs first, the Product does not meet the warranties specified above, the Supplier agrees to correct any defect, at its option, either by repairing any defective parts, or by making available, repaired or replacement parts, provided the Utilities notifies the Supplier promptly of any such defects.

In no case shall the Supplier be liable for the removal/reinstallation of non-Supplier Goods. The cost of removal of the defective Product from its related system, site and/or ancillary equipment, and the cost of its reinstallation in such system, site and/or ancillary equipment shall be borne by the Supplier up to a maximum of  [XX]%. The transportation costs (between the contractual delivery site and the Supplier’s plant or repair shop) shall be borne both ways by the Supplier. The Utilities shall not return or dispose of any Product or part thereof with respect to which it intends to make a claim under the foregoing warranty, without the Supplier’s express prior written authorization. During the warranty period all replacement parts will be shipped at the Supplier’s cost.

Any repair or replacement pursuant to the foregoing warranties hereto shall not renew or extend the warranties. The foregoing warranties shall be void to any deficiency or defect resulting from, the ‘Product being improperly installed or cared for, operated under abnormal conditions or contrary to specifications or instructions of’ the Supplier, normal wear and tear, modifications or alterations made by the Utilities or a third party without the Supplier’s consent.

The express warranties set forth in this Agreement are exclusive and no other warranties of any kind, whether statutory, oral, written, express or implied, including any implied warranty of merchantability or fitness for a particular purpose, shall apply. The Utilities’ exclusive remedies and the Supplier’s only obligations arising out of or in connection with defective equipment or services or both, whether based on warranty, contract, tort (including negligence) or otherwise, shall be those stated herein.

8.           LIABILITY AND INDEMNIFICATION:

The Supplier shall be liable for and shall indemnify and save harmless the Utilities, its officers, directors, employees, subsuppliers and agents, from and against any and all loss arising out of any and all claims, suits and demands with respect to personal injury and property damage, made or-brought against the Utilities, its officers, directors, employees, subsuppliers or agents arising directly out of or in connection with the negligent performance of the Services by the Supplier or its employees, subsuppliers, agents or others for whom it is responsible at law except to the extent that such claims, suits and demands result from the negligence or default of the Utilities, its officers, directors, employees, subsuppliers or agents.

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Newfoundland Power Inc.  Schedule A – General Conditions

For contracts whose prices are up to and including $[XX], the liability in relation to direct damages will be limited to an aggregate of [XX] times the value of the agreement. For contracts whose prices are above $[XX], the liability in relation to direct damages will be limited to an aggregate of [XX] times the value of the agreement or $[XX], whichever is the lessor. In no event shall the Supplier be liable for indirect and consequential damages including, but not limited to, loss of revenue or loss of profit.

9.           TERMINATION:

9.1. Termination for Cause

a) The Supplier’s failure to supply material with any terms and conditions of this Agreement, or any purchase order issued hereunder, or failure to complete any purchase order with promptness and diligence, or failure to deliver any Distribution Transformers and/or perform any Work in relation thereto, within the time specified therefore in the applicable purchase order (or any extension thereof authorized by The Utilities in writing), shall constitute default on the part of the Supplier.

b) If the Supplier is in default, the Utilities may give written notice (“Notice”) of default to the Supplier, calling upon the Supplier to remedy such default and specifying the date upon which this Agreement will terminate if the Supplier fails to remedy such default within five (5) days of receiving the Notice (or if such default is not reasonably capable of rectification within 5 days, if the Supplier fails to commence rectification of the default within 5 days and thereafter to proceed diligently with such rectification until the default has been remedied in full). The Supplier shall, upon receipt of the Notice, remedy its default in accordance with this Clause 9.1b) and at no further cost or expense to The Utilities.

c) If the Supplier fails to remedy its default in full pursuant to Clause 9.1b) above, this Agreement shall terminate on the date and to the extent set forth in the Notice. In such event, The Utilities may procure the Distribution Transformers and/or Work, as applicable, from other sources and the Supplier, shall be liable to the Utilities for any losses or excess costs occasioned thereby. The Utilities shall additionally be entitled to assert against the Supplier all other remedies that The Utilities may have under this Agreement (including, without limitation, liquidated damages, if applicable), at law and in equity.

9.2. Termination for Convenience The Utilities may terminate any purchase order, in whole or in part, at any time without cause prior to its completion by sending the Supplier written notice of such termination. The Utilities shall pay the Supplier’s reasonable costs actually

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Newfoundland Power Inc.  Schedule A – General Conditions

incurred as a direct result of such termination. The Utilities shall not be liable for anticipated profits based upon work not yet performed.

9.3. Suspension The Utilities may suspend performance of any purchase order, in whole or in part, at any time by written notice to the Supplier. Upon further written notice by The Utilities to the Supplier as to cessation of the suspension, the Supplier shall promptly resume performance of such purchase order to the extent requested by The Utilities and the Delivery Date therefore shall be extended by a period equal to the period of suspension and the Utilities shall reimburse the Supplier for the reasonable direct costs actually incurred by the Supplier as a result of such suspension.

9.4. Supplier’s Right to Payment Subject only to Clause 9.2 above, in the, event of any termination of this Agreement or any purchase order hereunder, the Utilities’ sole liability to the Supplier shall be for payment of items delivered and/or Work performed pursuant hereto up to and including the date of termination. In particular, but without limiting the generality of the foregoing, the Utilities shall not be liable to the Supplier for any loss of profits or like consequential losses, relating to such termination.

9.5. Terms surviving termination Notwithstanding any termination of this Agreement, the provisions of Clauses 6, 7, 8, 13, 16 and 20 shall continue in full force and effect following termination.

10. INDEPENDENT SUPPLIER: The Supplier is and shall remain at all times an independent Supplier and not an employee or agent of the Utilities. The. Supplier shall ensure that the work is performed to a workmanlike standard by persons properly skilled and trained to perform the Work. The Supplier shall be solely responsible for all training and supervision of its employees, subsuppliers and agents.

11. SUBSUPPLIERS: Supplier shall require any subsupplier to agree to be bound by these terms and conditions and to abide by the Utilities requirements for safety and loss management and shall be fully responsible for any part of the Work performed by subsuppliers and for the acts or omissions of subsuppliers and all persons either directly or indirectly employed. by them, to the same extent as the Supplier is for its own acts or omissions.

12. ASSIGNMENT BY THE SUPPLIER:

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The Supplier shall not assign this Agreement, nor any monies due or to become due hereunder, without the Utilities prior written consent. Any assignment that is attempted without the Utilities consent shall render this Agreement null and void.

13. CONFIDENTIALITY: The Supplier agrees to maintain confidentiality with regard to secret, confidential or restricted matters that are disclosed or developed in, connection with this Agreement, when so advised by the Utilities, agrees to execute a confidentiality agreement in form and content as determined by the Utilities acting reasonably forthwith upon the Utilities request therefore and may require a similar agreement of all employees, subsupplier and agents of the Supplier to whom any work or duty relating to this Agreement may be allotted. The Utilities agrees to maintain confidentiality with regard to secret, confidential or restricted matters that are disclosed or developed in connection with this Agreement, and, when so advised by the Supplier, agrees to execute a confidentiality agreement in form and content as determined’ by the Supplier forthwith upon the Supplier’s request therefore and shall require a similar agreement of all employees, subsuppliers and agents of the Utilities, to whom any work or duty relating to this Agreement may be allotted.

14. ON-SITE WORK: Any requests placed by the Utilities which results in the Supplier, its employees, agents or subsupplier, performing services or constructing, inspecting or delivering goods on premises owned or controlled by the Utilities (“On-Site Work”), shall be subject to the following additional terms and conditions:

14.1. Insurance Provisions:

14.1.1 The Supplier shall, without limiting any of its obligations and liabilities under this Agreement, procure and maintain, at its own expense, with respect to and for the duration of this Agreement, and shall require its Subcontractors to procure and maintain at their cost, appropriate insurance covering its obligations with respect to this Agreement, or such other insurance as may be required by law to provide, including the following minimum insurance coverages (collectively, the “Policies”):

a) Workers’ Compensation, to the full extent required in the jurisdiction in which the obligations arise from this Agreement and wherever such contracts of employment with its personnel are made or expressed to be made, or Employer’s Liability Insurance covering each of the personnel and providing limits of not less than two ($2,000,000) dollars where such personnel are not covered by applicable Worker’s Compensation coverage;

b) Automobile Liability Insurance, covering all owned, leased and hired vehicles used by the Supplier to perform its obligations hereunder, and providing limits of not less than two million ($2,000,000) dollars per occurrence for bodily injury, death and property damage;

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Newfoundland Power Inc.  Schedule A – General Conditions

c) Commercial General Liability Insurance providing coverage for a combined single limit of not less than two million ($2,000,000) dollars (plus associated defense costs) for each occurrence resulting in bodily injury, including death, sustained by any person or persons, or resulting in injury to or destruction of property arising out of or in connection with the operations of the Supplier, their. officers, directors, employees and agents. Coverage shall include, but is not limited to, Personal. Injury, Employer’s Liability, Contractual Liability, Owners and Contractor’s Protective Liability, Broad Form Property Damage, Cross-Liability, Blanket Contractual Liability, Non-Owned Automobile Liability and Broad Form Products and Completed Operations Liability and Forest and Prairie Fire Fighting Costs for a sub limit of not less than two million ($2,000,000) dollars (plus associated defense costs).

14.1.2 With respect to this Agreement, the Suppliers Policies shall include the Utilities and its employees, officers, directors, agents and contractors, as an additional insured, but only with respect to the operations of the Supplier hereunder.

14.1.3 The Policies shall contain a provision that the insurance thereunder shall be primary and shall not call into contribution any other insurance available to the Utilities. All such policies of insurance shall, where appropriate, provide by endorsement or otherwise that insurers waive their right of subrogation against the Utilities and all persons with whom the Utilities may be participating.

14.1.4 The Policies shall provide that thirty (30) days written notice shall be given to the other Party prior to any material change adversely affecting the Insured Party, or cancellation of any Policy.

14.1.5 The Supplier shall provide the Utilities with a certified certificate of insurance for the Supplier and for Subcontractors as appropriate within ten (10) days of signing this Agreement and at the start of each Term that is renewed.

14.1.6 If requested to do so, the Supplier shall provide to the Utilities, evidence of renewal of all Policies, within thirty (30) days following the date upon which the applicable Policy must be renewed.

14.1.7 All such policies shall be placed with insurers and in a form acceptable to the Utilities.

14.1.8 Before commencing any services under this Agreement, the Supplier will deliver to the Utilities a certificate from the appropriate Workers’ Compensation Board or Commission, showing that the Supplier has registered and is in good standing with such Board or Commission.

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14.1.9 Before, or at the time of applying to the Utilities for final payment under this Agreement, the Supplier will deliver to the Utilities a certificate showing the Supplier has paid all assessments and other amounts required by the Workers’ Compensation Commission.

14.2. Union Compliance: The Supplier shall carry out all Services performed on premises owned or controlled by the Utilities connected with this Agreement in accordance with the “contracting out” provisions set forth in the Collective Agreement between the Utilities and any applicable unions, provided the Utilities has given prior notice to the Supplier of the provisions that are applicable.

14.3. Environment, Health and Safety Rules:

a) The Supplier’s personnel while on premises owned or controlled by the Utilities, shall abide with all of the Utilities environmental, health and safety requirements including the Utilities incident management policies.

b) The Supplier shall inform the Utilities on-site supervisor of its presence and the number of personnel on-site on a daily basis.

c) The Supplier’s tools, equipment and procedures shall meet the environmental, health and safety requirements of all laws and regulations of the jurisdiction in which the work is performed.

14.2. Acceptance of the Work:   All Work shall at all times be subject to inspection by the Utilities, and any deficiency so detected shall be promptly corrected by the Supplier, provided however, that this inspection shall in no way release the Supplier from warranties as to material, design and workmanship. If the Supplier fails or is unable to correct any deficiency in a manner and within a’ time limit that is satisfactory, to the Utilities acting reasonably, the Supplier shall dismantle and remove that portion of the Work which is deficient; or which in any way fails to conform to the terms and conditions of this Agreement and the. Utilities may replace same and recover the cost from the Supplier and the Supplier shall provide such credit security as the Utilities may require in connection therewith.

14.5. Responsibility: When the on-site Work involves the Supplier’s utilization of any tools or equipment belonging to the Utilities, then the Supplier shall be:

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a) responsible for ensuring that such tools or equipment are adequate and in serviceable condition for the intended use;

b) responsible for such tools or equipment while in the Supplier’s use, control or possession; and

c) responsible for supervision of such use.

14.6. WHMIS Legislation: Any Services performed on premises owned or controlled by the Utilities shall comply with the Workplace Hazardous Materials Information System (“WHMIS”) legislation of the jurisdiction in which the work is performed. No WHMIS Controlled Products that are extra-ordinary to those in use by the Utilities shall be brought on-site unless the Supplier has first supplied the Utilities with Material Safety Data Sheets for such Products. The Supplier shall be specifically responsible for ensuring that all employees it assigns to the project have received appropriate training as required under the WHMIS legislation.

14.7. Environmental Protection: The Supplier shall keep the Utilities premises free from the accumulation of waste material and debris resulting from the Supplier’s activities hereunder, and shall leave the premises in a reasonably clean condition. The Supplier owns any waste generated by the Supplier’s actions and shall meet all of the’ Utilities disposal standards. The Supplier must receive approval from the Utilities before using any of the Utilities pollution control or waste disposal facilities.

14.8. Employment Legislation: The Supplier shall comply with the requirements of all applicable Unemployment Insurance, Worker’s Compensation and Occupational Health and Safety legislation and all similar regulations applicable to workers employed by it.

14.9. TDG Legislation: The transport of all dangerous goods shall comply with the Transportation of Dangerous Goods (“TDG”) legislation of the jurisdiction in which the work is performed. The Supplier shall be specifically responsible for ensuring that all employees it assigns to the project have received appropriate training as required under the TDG legislation.

15. FORCE MAJEURE: If either the Utilities or the Supplier is delayed in or prevented from exercising its rights or performing its obligations under this Agreement by any cause beyond its reasonable control, including but not limited to Acts of God, Acts of Government, strikes, lockouts, fire; floods, freight embargoes, or unusually severe weather and excluding any financial inability to perform, the date of delivery may be extended for a length of time equal to the period of delay if agreed to by all parties.

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Newfoundland Power Inc.  Schedule A – General Conditions

16. DISPUTES: All disputes concerning questions of fact which may arise under this Agreement and which are not disposed of by mutual agreement shall be referred to arbitration by a single arbitrator, if the parties agree upon one, otherwise to three arbitrators, one to be named by each party and a third to be chosen by the first two named. The decision of the arbitrators shall be final and conclusive. In the meantime, the Supplier shall diligently proceed with the work as directed.

17. COMPLIANCE WITH LAW: The Supplier shall comply with all applicable local, provincial and federal Laws and regulations, the Utilities operating licenses, Certificates of Approval, and other similar requirements including without limitation all environmental and employment laws.

18. VENUE:   This contract shall be construed according to the laws of the jurisdiction in which the goods are delivered or the On-Site Work is performed.

19. NOTICES: All notices hereunder shall be in writing and shall be sufficiently given if delivered by hand, mailed by prepaid mail or sent by telecommunications.

20. RIGHT TO AUDIT: The Utilities retains the right to audit the Supplier’s records’ with respect to services provided or goods delivered pursuant to this Agreement during a period of twelve (12). months following completion of the Work or supply of materials, for the sole purpose of verifying invoices provided to the Utilities by the Supplier.

21. GENERAL:

a) No failure or delay on the part of either party in exercising any power or privilege hereunder shall operate as a waiver thereof.

b) No waiver of any right, power or privilege by a party shall limit or affect that party’s rights with respect to any breach of this Contract by the other party.

c) Each of the parties hereto shall execute such further documents and give such further assurances as are required to give effect to this Contract.

d) Time is and shall continue to be of the essence of this Contract.

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Newfoundland Power Inc.  Schedule A – General Conditions

e) All of the covenants and agreements in this Contract on the party of either party shall apply to and enure to the benefit of and be binding upon their respective legal representatives, successors and permitted assigns.

f) Each party hereby represents and warrants that it has the power and authority to carry on its business and to enter into this Contract and to perform all of its obligations hereunder.

g) This Contract constitutes the entire agreement between the parties with respect to the Work and supersedes all previous communications, representations, warranties and agreements, either written or verbal.

h) Unless the context otherwise requires, words importing the singular shall include the plural and vice-versa and words importing gender shall include the masculine, feminine and neuter genders.

i) The terms “herein”, “hereunder”, “hereto” and similar expressions refer to this Contract and not to any particular general condition or paragraph of this Contract.

j) Any terms, covenants, provisions or conditions of this Contract which expressly or by their nature survive the termination of this Contract shall continue in full force and effect subsequent to and notwithstanding such termination and shall not be merged therein or therewith, until such terms, covenants, provisions or conditions are satisfied or by their nature expire.

k) This Contract shall be governed by and construed in accordance with the laws of the Province in which the goods are used and the parties hereto attorn to the jurisdiction of the courts of Canada.

1) This Contract shall be executed by the parties, or their representatives in person with original signatures. Subsequent Contract Documents may be executed by the parties, or their representatives, and such execution may be by way of facsimile or electronic transfer.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

TABLE OF CONTENTS

1. GENERAL DESCRIPTION  1

2. TERM OF CONTRACT

3. DRAWINGS  1

4. DELIVERY LOCATIONS  1

5. ESTIMATED FORECAST  2

6. PACKAGING  3

7. BILL OF LADING  3

8. SHIPPING  3

9. PRODUCT SAFETY  4

10. TEST REPORTS  4

11. FUTURE BUSINESS  4

12. LEAD TIMES  4

13. RIGHT TO ORDER  4

14. SUPPLIER EVALUATIONS  5

15. SCHEDULING  5

16. TOTAL EVALUATED COST AND LOAD LOSS PENALTY FORMULAS  5

17. INDEXING EXAMPLE FOR PRICING  7

18. INVOICING AND ORDER PLACING  8

19. TECHNOLOGICAL IMPROVEMENT

20. ACCEPTANCE OF LATE DELIVERY  9

21. REFUSAL OF GOODS  10

22. ADDITIONAL WARRANTY  10

23. WARRANTY TURNAROUND  10

24. UTILITIES DISTRIBUTION SPECIFICATIONS  11

24.1	UTILITIES - 1 POLE MOUNTED SINGLE PHASE	12
24.2	UTILITIES - 2 LOW PROFILE, SINGLE PHASE, DEAD-FRONT PAD-MOUNTED	19
24.3	UTILITIES - 3 THREE PHASE, DEAD-FRONT PAD-MOUNTED	29

25. REPRESENTATIVES  40

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Distribution Transformers 

Newfoundland Power Inc.  Schedule B – Statement of  Work

1.           GENERAL DESCRIPTION

To supply “Distribution Transformers” to the Utilities in a timely manner at the warehouse stated on the individual purchase orders (POs) for the term of this contract. Shipments to the Utilities will be Delivery Duty Paid (DDP) destination (as per Incoterms 2000). Each Utility will issue separate POs.

2.           TERM OF CONTRACT

The term of this contract will be for sixteen (16) months starting September 1, 2006 and ending December 31, 2007. Last delivery will be for April 2008. If by mutual agreement, this contract may be extended by thirty-six (36) months.

The first Material Supply Schedule shall be issued in July 2006. Deliveries are expected to begin in September 2006.

3.           DRAWINGS

Drawings of each transformer are to be issued to the Utilities within thirty (30) days from time of award.

4.           DELIVERY LOCATIONS

Transformers are to be delivered to the Utilities’ locations as specified on the monthly order. Delivery locations will be to but not limited to the following locations:

Newfoundland Power Inc.

Central Warehouse

3 Mews Place

St. John’s, NL. A1B 4M5

Service Warehouses

30 Goff Avenue

Carbonear, NL.  A1Y 1A6

Main Road

Whitbourne, NL. A0B 3K0

Greens Pond Road

Burin, NL. AOE 1GO

151 Memorial Drive

Clarenville, NL. A5A 1K7

6 Magee Road

Gander, NL.  A1V 1W2

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Newfoundland Power Inc.  Schedule B – Statement of  Work

Trans Canada Highway

Grand Falls, NL.  A2A 6T3

5.           ESTIMATED FORECAST

The Utilities will supply an estimated annual rolling forecast to the Supplier on a quarterly basis or by request from the Supplier. The Utilities reserves the right to change the estimated monthly requirements.

Each Utility will submit separate forecasts to the Supplier. Each Utility will make best efforts to satisfy the forecasting requirements of the Supplier.

6.           PACKAGING

Packaging for each of the Utilities as follows:

FortisAlberta:

FortisBC:

• When transformers arrive at the designated warehouses they will be on the correct pallet size two way pallet measuring 48” long by 42” wide to fit the racks, no dirt or mud on the transformers.

• All transformers shall be strapped to the pallets with high strength webbed plastic strapping.

• Packing slips must be attached to the ProBills and must accompany shipments. DO NOT attach to pallet.

Newfoundland Power:

• When transformers arrive at the designated warehouses they will be on pallets with one unit per pallet, no dirt or mud on the transformers.

• All transformers shall be strapped to the pallets with high strength webbed plastic strapping.

• Packing slips must be included for each shipment and should include the NP Stock No., the serial number, the NP Purchase Order Release Number, the size and quantity.

Maritime Electric:

• When transformers arrive at the designated warehouse they will be on CPC pallets (40 x 48). The number of transformers per pallet will be:

-   Four (4) per pallet for all 10 kVA and 15 kVA transformers.

-   Two (2) per pallet for all 25 kVA and 37 kVA transformers.

-   One (1) per pallet for all 50 kVA and 75 kVA transformers.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

• No dirt or mud on the transformers.

• All transformers shall be strapped to the pallets with high strength webbed plastic strapping.

• Packing slips must be included for each shipment and should include the Maritime Electric Stock No., the serial number, the Maritime Electric Purchase Order Release Number, the size and quantity.

7.           BILL OF LADING

The Bill of Lading should include the quantity of units shipped, the destination warehouse and the Purchase Order (PO) Release Number. Any additional labeling unique to each of the Utilities will be specified when the PO is issued.

8.           SHIPPING

Transformers are to be shipped on pallets, as specified by each of the. Utilities when the PO is issued. For each shipment, the Supplier will provide a Transformer Log. This Transformer Log will provide the following information for each transformer shipped:

(a) Company Number

(b) Transformer Serial Number

(c) KVA

(d) Primary Voltage

(e) Secondary Voltage

(f) Percentage (%) IZ (Impedance)

(g) KG Mass

(h) Litres Oil

(i) Tap Code

(j) PO Number

(k) Ship Date

9.           PRODUCT SAFETY

All Items will be manufactured and shipped following the best professional safety standards that are present in appropriate, current industry standards. The individual companies that form the Utilities may deem to have additional and/or unique safety requirements. Said additional or unique requirements shall be communicated on any or all Purchase Orders.

10.           TEST REPORTS

Certified test reports as per Canadian Standards Association (CSA) Purchasing Specifications DTWG-01, 02 and 03 for all distribution transformers are to be provided in electronic format for all Items purchased. Test results should be provided to each Utility for each shipment or upon request from the individual. Utilities.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

11.           FUTURE BUSINESS

If quantities increase due to future business acquisitions or system upgrades, the Utilities reserves the right to open negotiation on the price and delivery of distribution transformers and delivery locations. If not successfully negotiated, the Utilities reserves the right to go to tender.

12.           LEAD TIMES

Time from order to delivery as set forth in “Schedule C – Payment for Work” to this Agreement.

13.           RIGHT TO ORDER

The Utilities reserves the right to purchase any item that the Supplier cannot deliver on time from another Supplier without penalty to the Utilities. This order will then be cancelled from the contracted Supplier.

The Utilities reserves the right to tender all Distribution Transformer pilot programs or implementations as a result of different technologies and product line.

The Supplier is the preferred Supplier of distribution transformer products, however, the Utilities reserves the right to purchase all Items that are not listed within this contract from any other Suppliers.

14.           SUPPLIER EVALUATIONS

Supplier evaluations will be completed at the end of each quarter. A conference call will ‘be coordinated within one (1) month of the close of a quarter by the Utility that is chairing the meeting. The Supplier will be expected to attend at the location that the meeting is being chaired. Location will be rotated between each of the Utilities. As part of these reviews an ongoing Action list, Contact list and Supplier evaluation will be maintained by the Supplier (see “Schedule D - - Sample Supplier Performance Evaluation Form”).

15.           SCHEDULING

The Supplier is to keep the Utilities informed (biweekly) of all production schedules at the Utilities request.

The Supplier is to keep the Utilities informed (biweekly) of delivery schedules.

16.           TOTAL EVALUATED COST AND LOAD LOSS PENALTY FORMULAS

As per the “Bid Form” there is a separate Bid Sheet for each of the Utilities. All items listed are those most commonly used by the Utility. Additional items may be included on Purchase Orders (POs) throughout the term of this contract.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

The Total Evaluation Cost Formulas identified in the Formula column in each of the Bid Sheets is defined as follows:

Formula A = [XX]

Formula B = [XX]

Formula C = [XX]

Formula D = [XX]

Where:

[XX]

When actual losses exceed guaranteed losses, the transformer supplier must reduce the unit price of the transformer by the amount equal to the penalty calculated below:

Penalty A                      =           [XX]

Penalty B                      =           [XX]

Penalty C                      =           [XX]

Penalty D                      =           [XX]

Where:

[XX]

The loss penalty shall be assessed on the average of each Item on a given purchase order. For each Item, where the cost of total average losses is less than the cost of total guaranteed losses for that Item, the result will not be used to reduce the penalty amount of other Items.

The following information shall be provided with the quotation:

• Percent exciting current at 105% rated voltage

• No-load losses at 105% rated voltage and corrected to 85°C as per clause 9.3.2 of CSA Purchasing Specification DTWG-01 (98). Revised 1999 07, clause 8.3.2.1 of CSA Purchasing Specification DTWG-02 (99), or clause 7.3.2.1 of CSA Purchasing Specification DTWG-03 (99)

• Full load losses at 75 °C

• Percent impedance at 75 °C

• Where applicable, percent regulation at 1.0 pl. and 0.8 pl.

• Outline and nameplate drawings for approval

• A prototype transformer actual type test results, which are representative of design and manufacturing techniques

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Newfoundland Power Inc.  Schedule B – Statement of  Work

17.           INDEXING EXAMPLE FOR PRICING

Index pricing provided by the Supplier in the “Bid Form” is contained in “Schedule C –Payment for Work.” Justification for price increases will be provided to the Utilities using the format in the following example:

[XX]

18.           INVOICING AND ORDER PLACING

As identified in Clause 5 of this “Schedule B – Statement of Work,” the Utilities will supply an estimated annual rolling forecast to the Supplier on a quarterly basis or by request from the Supplier.

The Utilities may provide the Supplier with a Release Schedule on or before the first day of each month. The Release Schedule will display the delivery requirements for the following six months.

The Supplier will acknowledge by telephone, by fax or by E-mail the receipt of the Release Schedule within twenty four (24) hours. For Newfoundland Power Inc. and Maritime Electric Company, Limited, the Release Schedule will be deemed to be the requirements for the six month’s delivery as set out therein. For FortisAlberta and FortisBC a PO will be issued. The Release Schedule will also be electronically transmitted to the Supplier using the Estimated Forecast Schedule form found hereafter.

The Utility will have the right to change the forecasted quantities on previous Release Schedules, any time prior to the first day of the month preceding the shipment month, by increasing or decreasing up to 50% of the total quantities. Changes in the quantities of any individual item cannot exceed 25%. Quantities on the Release Schedule listed as the six month running forecast can be changed by any amount.

The initial delivery period shall take into account the design, and type testing time required for the various Items once an agreement is concluded.

19.           TECHNOLOGICAL IMPROVEMENT

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Newfoundland Power Inc.  Schedule B – Statement of  Work

Should the Utility decide to modify their specifications or requirements during the duration of contract, the two parties shall negotiate a reasonable price adjustment to cover the change in cost (up or down).

In the event that the Supplier and the Utility jointly agree to rework and review the technical requirements of the product/services during the term of the contract, the Supplier will share the benefits as described below:

1.           Transformer Losses:

Whenever a Value Engineering study is completed and it results in a net cost saving to the Utility in the no-load and/or load loss, the benefits for each stock item would be shared on the basis of the following formula :

[XX]

The [XX] is derived from the Supplier’s experience that shows that for every $[XX] of improvement in the cost of losses, the manufacturer has an increase in cost of $[XX]. This in turn leaves a $[XX] net saving that would be shared equally between the Utility and the Supplier. Therefore [XX]% of the reduced cost of loss goes to the manufacturer to cover costs and a share of the savings, and [XX]% of the reduced cost of losses goes to the Utility.

2. All Others:

All other agreed value analysis would have the resulting net savings shared on a [XX] basis.

20.           ACCEPTANCE OF LATE DELIVERY

The Utilities reserves to right to accept late deliveries upon written notice from the Supplier faxed to Inventory Control at the following fax numbers:

Newfoundland Power : (709) 737-2815

Maritime Electric Company, Limited : (902) 629-3706

FortisAlberta Inc. : (403) 514-4414

FortisBC Inc. : (250) 469-8096

Written notification and reasons for late delivery must be sent to the Utilities within three (3) working days of receipt of the order or upon awareness that the order will not be completed or shipped as scheduled. The Utilities reserves the right to apply or not apply penalties based on notification and reasons for late deliveries.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

21.           REFUSAL OF GOODS.

The Utilities will refuse transformers delivered on improper pallets, dirty transformers, transformers not individually strapped on pallets, damaged transformers and transformers that do not meet the agreed to specification. This will count as a late delivery.

22.           ADDITIONAL WARRANTY

Warranty is thirty (30) months from the date of notification of readiness of shipment or twenty four (24) months from date of first use by the Owner, whichever date occurs first.

In addition to the above extended warranty of 30/24 months, the Supplier is extending further the warranty against damage due to rust. For damage due to rust, the warranty period will be 10 years after shipment for units made of either painted or unpainted stainless steel 316L. This warranty is limited to the supply and shipping of a replacement tank and does not cover other related cost such as installation/removal cost and repair cost. Should the tank rust to such an extent that it needs to be replaced (imminent risk of perforation) within the warranty period, the Supplier will provide the Owner with a new tank.

This warranty against corrosion is void if the tank surface is damaged by the Owner.

23.           WARRANTY TURNAROUND

● Statement of general information from the Utility to start the process:

- Serial number of the failed unit

- Brief description of problem and circumstances

- Utilities preferred action (return to the Supplier, fix the problem in place, send to scrap if it is deemed, that the transformer cannot be repaired, etc.)

● If the unit is returned to the Supplier’s plant (from the DDP Destination), an authorization number (RP Number) is then given to the Utility.

● Once the unit has arrived at the plant, an initial assessment is normally made within forty eight (48) hours. At this point, the Supplier can notify the Utility of the estimated time necessary to make the repair which of course depends a lot on the cause of the failure.

● Shipping of the repaired unit to the Utility (to the DDP destination).

● The Supplier will send to the Utility a complete investigation report of the cause of failure (or the most likely cause) and what was done to repair the failed unit.

24.           UTILITIES DISTRIBUTION SPECIFICATIONS

24.1. UTILITIES - 1 POLE MOUNTED SINGLE PHASE DISTRIBUTION TRANSFORMERS

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Newfoundland Power Inc.  Schedule B – Statement of  Work

24.1.1. SCOPE This purchasing specification specifies the requirements for distribution transformers for operation by Newfoundland Power, Maritime Electric, FortisAlberta and FortisBC (referred to as the Owners).   This specification applies to single phase, 60 Hz, distribution transformers designed for operating on an effectively grounded-wye system, type ONAN, rated at 167 kVA or below, with one or two high voltage bushings suitable for direct pole mounting.

24.1.2. REFERENCES The provisions of the following standards and specifications latest revisions, shall apply, unless otherwise stated herein: CSA Purchasing Specification - Pole Mounted Single Phase Distribution Transformers DTWG-01 (98), Revised 1999 07.

24.1.3. CSA SPECIFICATION MODIFICATIONS The numbering of the following clauses is identical to those used in CSA Purchasing Specification DTWG-01 (98), Revised 1999 07. Where no reference is made, the CSA Specification DTWG-01 shall apply. Additional or modifying statements, as given in this specification shall govern.

4.4           Off-Circuit Voltage Taps:

4.4.1

Newfoundland Power:

Transformers are to be supplied without taps.

Maritime Electric:

The following transformers shall be equipped with taps:

(a)           All transformers with 347 volts secondary

(b)           All transformers 50 kVA and larger

FortisAlberta:

FortisBC:

At the time of order, transformers will be specified with or without high voltage taps. This information can be found in the appropriate Owner’s item number description.

4.4.2

FortisAlberta:

FortisBC:

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Distribution Transformers 

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Newfoundland Power Inc.  Schedule B – Statement of  Work

When specified, taps shall be four 2 1/2%, 1 FCAN and 3 RCBN. Transformer with tapped primary windings shall have external operated handles for off-circuit operation.

4.10           Impedance

FortisAlberta:

FortisBC:

There are no minimum impedance requirements for transformers of 25 kVA and below. For transformers of sizes 50 kVA and above, the impedance shall be limited to an absolute minimum of 1.5 %.

Newfoundland Power.

Maritime Electric:

Impedances to be as specified in CSA Purchasing Specification DTWG-01 (98) as required to limit the short circuit current at the service entrance equipment (Clause 4.10 and 11.1(m)).

5.2.2 Low Voltage Grounding Strap

FortisAlberta:

FortisBC:

Transformer with one H.V. Bushing - an external copper grounding strap shall be provided to connect the secondary neutral terminal to the transformer tank as per CSA Purchasing Specification DTWG-01 clause 5.2.2 and 6.2.2.

5.2.2.1

Newfoundland Power:

Maritime Electric:

The neutral grounding strap shall be extruded aluminum alloy type 6061, connected to the terminals with 12 mm galvanized steel hardware. Multi-grounding straps of the above material are permitted to a maximum of 6 straps.’

5.2.2.2

Newfoundland Power;

Maritime Electric:

The tank connection shall be a type 316L stainless steel spade terminal, welded to the tank with 3161, stainless steel material.

6.1.2 High Voltage Bushings

FortisAlberta:

FortisBC:

At the time of order, transformers will be specified to have one or two high voltage bushings. This information can be found in the Owner’s item number description.

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Newfoundland Power Inc.  Schedule B – Statement of  Work

Newfoundland Power:

All high voltage bushings shall be supplied with a minimum creepage distance as specified in CSA Purchasing Specification DTWG-0l (98), with, the exception of 18 kV insulation class units which shall have a minimum creepage distance of 762 mm. The high voltage bushing on all 18 kV class transformers, and 15 kV class transformers where specified, shall have its complete lower circumference in contact with the transformer cover and its complete upper circumference in contact with the high voltage terminal by means of a stainless steel anti-tracking spring, RTE #2601887A01 or equivalent. The lower anti-tracking spring shall be bonded to the transformer tank by means of a stainless steel or galvanized bolt. In place of the anti-tracking spring, the high voltage bushing may be supplied with other acceptable means of eliminating corona damage to the gaskets, and shall be approved prior to implementation.

6.2.1.2 H2 Terminal

FortisAlberta:

FortisBC:

When one H.V. bushing is specified, the H2 terminal shall be provided as per clause 6.2.1.2 of CSA Purchasing Specification DTWG-01. A clamp type H2 grounding connector suitable for #6 to #2 AWG copper conductor as per CSA Purchasing Specification Fig. 2(b) shall also be installed at the H2 terminal.

A 1/2” - -13 NC X 1 1/4” silicon bronze hex head bolt shall be installed on the top surge arrester boss.

Newfoundland Power:

An H2 grounding connector as per DTWG-01 (98) Clause 11.1(1) shall be provided.

Maritime Electric:

The H2 terminal shall be spade type 316 L stainless steel, welded to the tank with 316 L stainless steel material.

6.2.2 Low-Voltage Terminals

FortisAlberta:

FortisBC:

Bushings shall be complete with spade type or clamp type connectors suitable for stranded copper and aluminum conductors of sizes as follows:

120/240V	240/480V	346/600V	Secondary terminals
10 – 15 kVA	25 kVA and below	50 kVA and below	Clamp type terminal for #6 – 2/0 conductor size
25 kVA	50 kVA	-	Clamp type terminal for #2 – 350 MCM conductor size
50 kVA and above	75 kVA and above	75 kVA and above	Spade type terminal as Per CSA DTWG-01

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Newfoundland Power Inc.  Schedule B – Statement of  Work

For transformer terminals equipped with 2 hole NEMA pads, single barrel mechanical connectors (HOMAC Part No. ABK 1750) shall be supplied and installed on each of the secondary terminals. For transformer terminals equipped with 4 hole NEMA pads, double barrel mechanical connectors (HOMAC Part No. ABK 2750) shall be supplied and installed on each of the secondary terminals.

Maritime Electric:

The low voltage terminals shall be copper to copper basket type. The connector shall accommodate a conductor range from #6 - #4/0 for 25 kVA transformers and less and #2-350 MCM for 37 kVA and above.

6.2.2.7 Terminal Material

Newfoundland Power:

The low voltage terminals shall be unplated aluminum spade type and the X2 to X3 jumper strap, where required, shall be one-piece unplated aluminum. All material is to be extruded aluminum alloy type 6061 with galvanized hardware.

8. Mechanical Characteristics

8.1 Construction

All transformer material is to be new.

Newfoundland Power:

Maritime Electric:

The tank material shall be painted or unpainted 3161, stainless steel. The stainless steel tanks are to have passivation (pickling/acid wash) treatment.

Transformers are to be supplied without additional exterior cooling (no fins, cooling tubes or radiators).

Newfoundland Power:

Edges of the transformer cover and outer edge of the upper mounting bracket shall have sharp edges removed.

8.3 Pressure Relief

Maritime Electric:

The pressure relief device should be replaced with an Internal Fault Detector (IFDTM) fitted with a 5 psi pressure relief device.

8.11.1 General

Maritime Electric:

All fastening hardware used to secure the cover and external connections is to be hot dipped galvanized.

Newfoundland Power:

All fastening hardware used to secure the cover and external connections is to be stainless steel or silicon bronze.

Maritime Electric:

September 1, 2006

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Newfoundland Power Inc.  Schedule B – Statement of  Work

Newfoundland Power:

Preference is for non-cover band designs. However, if supplied, cover bands are to be 316L stainless steel secured with stainless steel hardware (Silicon Bronze Nut).

Cover clamp designs must have a protective barrier between the clamp and cover to protect the paint finish.

8.12 Surge Arrester Mounting Provision

Maritime Electric:

The Owner will have the option of installing a surge arrester on the pole-mounting brackets. The Owner will provide the Supplier with sufficient notice of any changes. Surge arrester mounting bosses shall be supplied.

Bidders when offering arresters are to quote Joslyn Cat #ZHP010-0011100 (for primary voltage 72 kV and 8 kV) and ZHP018-0011100 (for primary voltage 14.4 kV).

Arrester brackets must accommodate Joslyn arresters #ZHP010-0011100 and ZHP018-0011100.

Newfoundland Power:

Surge arrester mounting bosses shall be provided as per CSA Purchasing Specification DTWG¬01 (98) complete with surge arrester mounting bracket.

8.13 Welding

Newfoundland Power:

Maritime Electric:

All welding is to be carried out as per CSA Purchasing Specification DTWG-01, Clause 8.13. All welds to be properly shot blasted and all welding residue shall be removed.

9.2 Routine Tests

FortisAlberta:

FortisBC:

Certified Test Reports shall be submitted before shipment. Any discrepancy between the guaranteed and the test results shall be noted.

10.2.3 Information on Nameplate

FortisAlberta:

FortisBC:

The following additional information shall be included on the nameplate:

a.)           Owner’s material item number

b.)           Year and month the transformer is shipped (e.g. 95/01)

10.4 Tank Markings

Newfoundland Power:

Maritime Electric:

September 1, 2006

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Newfoundland Power Inc.  Schedule B – Statement of  Work

Transformers are to be numbered prior to shipment with numbers to be supplied by the Owner.

FortisAlberta:

FortisBC.

The year and month the transformer is shipped shall be marked with 50mm lettering at a location adjacent to the low voltage marking.

14

24.2.       UTILITIES - - 2

LOW PROFILE, SINGLE PHASE, DEAD-FRONT PAD-MOUNTED DISTRIBUTION TRANSFORMERS

September 1, 2006

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Newfoundland Power Inc.  Schedule B – Statement of  Work

24.2.1.        SCOPE

This purchasing specification applies to low-profile, single phase, dead-front, pad-mounted, distribution transformers, type ONAN, rated at 167 kVA or below, insulation class /8 kV or less, suitable for mounting outdoors on pads without additional protective enclosures.

The transformers covered in this specifications shall be designed to operate on 60 Hz, multi-grounded wye distribution systems with primary voltages up to 14,400/24,940 volts, and secondary voltages at 120/240 volts.

24.2.2.          REFERENCE STANDARDS

The provision of the following standards, latest editions, shall apply unless otherwise specified herein. This specification shall take precedence over any standard quoted herein in case of any conflict.

CANADIAN STANDARDS ASSOCIATION

CSA Purchasing Specification DTWG-02 (99), “Low Profile, Single Phase, Dead-Front, Pad-Mounted Distribution Transformers”.

24.2.3.           MATERIAL

Newfoundland Power:

Transformer material shall be 3161, stainless steel. This includes the transformer tank, base, hinges, hood and other exterior items.

24.2.4.           CSA SPECIFICATION MODIFICATIONS

The numbering of the following clauses is identical to that used in. CSA Specification DTWG¬02 (99). Where no reference is made, the CSA Specification DTWG-02 shall apply. Additional or modifying statements as given in this specification, shall govern.

4.4                 Off-Circuit Voltage Taps

4.4.1

FortisAlberta:

FortisBC:

At the time of order, transformers will be specified with or without high voltage taps. This information can be found in the appropriate owner’s material item number description. Transformers requiring taps shall have four 2 1/2 % taps (2 FCAN, 2 RCBN).

4.10 Impedance

Maritime Electric:

Newfoundland Power:

Minimum impedances shall be per DTWG-02 (99) Clauses 4.10 and 11.1(n) as follows:

50kVa	1.5%
75 kVA	2.0%
100-167 kVA	2.5%

September 1, 2006

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2

Newfoundland Power Inc.  Schedule B – Statement of  Work

5.2     Mechanical Features

5.2.1 Dimensions

FortisAlberta:

FortisBC:

The overall height of the transformer shall be 670 ± 25 mm.

5.2.2 Cable Entrance Compartment

5.2.2.4

FortisAlberta:

FortisBC:

For transformers rated at 12470GrdY/7200 volts only, the bonding connection between the hood and the tank shall be flexible rubber or neoprene coated copper of #2 AWG.

5.2.2.8

FortisAlberta:

FortisBC:

For the purpose of securing the transformer to the pad, four foundation clamps as shown in Fig 4 of this specification shall be supplied with each transformer.

Transformer Tank

FortisAlberta:

FortisBC:

Two of the top edges of the transformer tank shall be rounded with a minimum 25 mm radius as per Clause 5.2.3. of DTWG-02.

5.3.2 Drip Tray

FortisAlberta:

FortisBC:

Drip tray meeting the requirements of Clause 5.3.2 of DTWG-02 or a type approved by the Owner shall be installed below the location of the withdrawable fuses.

5.3.3 Fuse Identification

FortisAlberta:

FortisBC:

The fuse rating and manufacturer’s catalogue number of the bayonet fuse and current limiting fuse shall be identified on the nameplate as shown on Fig 6 of the CSA Purchasing Specification DTWG-02.

6.2  High-Voltage Bushings

6.2.1

FortisAlberta:

FortisBC:

High Voltage Bushing wells shall be provided as per Clause 6.2 of DTWG-02 and shall have replaceable studs and shall be externally clamped (ELASTIMOLD KI601PCC-R or equivalent).

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3

Newfoundland Power Inc.  Schedule B – Statement of  Work

Maritime Electric:

The high voltage bushings shall be short shank universal bushing well type with bail tabs. In addition, the bushing well shall be fitted with a load break thermoplastic bushing insert (RTE or Elastimold) and protected with a cap. All current carrying elements are to be copper based material.

Newfoundland Power:

The high voltage bushings shall be short shank universal bushing well type with bail tabs. Transformers shall be supplied without loadbreak bushing inserts. The universal bushing well shall be protected by a shipping cap.

6.3           Low Voltage Bushings

63.1.

FortisAlberta:

FortisBC:

Low Voltage Bushings of transformers up to 100 kVA shall be straight 7-hole spade. type. The threaded stud type terminal is acceptable as an alternative to the one-piece integral type.

Maritime Electric:

Newfoundland Power:

Terminals for all sizes of transformers shall be bronze or copper tin plated bar type.

Low voltage terminals for transformer sizes up to, and including, 167 kVA shall be in accordance with. Figure 9(a) of DTWG-02.

6.4           Grounding

6.4.2

FortisAlberta:

FortisBC:

For transformers rated at 12470GrdY/7200 volts only, the removable grounding strap between the X2 terminal and the grounding terminal should be of either aluminum or stainless steel of size as Table 7 of DTWG-02.

7.1           Off-Circuit Tap Changer and Voltage Selector Switches

FortisAlberta:

FortisBC:

Tap switches, when specified,’ shall be hot-stick operable type, and shall meet the requirements of Clause 7.1 of DTWG-02.

8.2           Routine Tests

FortisAlberta:

FortisBC:

Certified Test Reports shall be submitted before shipment. Any discrepancy between the guaranteed and the test results shall be noted.

9.1           Finish Performance

September 1, 2006

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4

Newfoundland Power Inc.  Schedule B – Statement of  Work

The exterior finish shall conform to ANSI C57.12.28, latest revision, except the salt spray test acceptance criteria shall be 1500 hours.

Maritime Electric:

Newfoundland Power:

The salt spray test painted panel shall conform to ANSI C57.12.29. The scribe through the paint for evaluation shall be at right angles to the weld bead. The samples shall be made using normal production welding material and equipment.

9.2           Colour

FortisAlberta:

FortisBC:

The exterior finish shall be in Seafoam Green, Munsell 4.82 G 4.07/ 3.35.

Maritime Electric:

Newfoundland Power:

Transformer shall be painted equipment green Munsell 9GY 1.5/2.6. Munsell gray shall also be provided if specified in the tender document.

10.2           Nameplate and Connection Diagram

FortisAlberta:

FortisBC:

A combination nameplate as per Clause 10.2 of DTWG-02 shall be provided. In addition, the following information shall also be included on the nameplate:

a)           Owner’s Material Item Number

b)           Year and month the transformer is shipped (e.g. 95/09)

10.5.2.4  Electrical Hazard Warning Signs

FortisAlberta:

FortisBC:

Electrical Hazard Warning Signs as per DTWG-02 shall be affixed on the inside and outside of the compartment hood by the manufacturer.

Caution Sign as per Fig 2 of this specification shall be stenciled or decaled in yellow on the exterior and front side of the cable compartment hood as shown in Fig 1 of this specification.

Danger Sign as per Fig 3 of this specification shall be stenciled or decaled in white on the exterior and front side of the cable compartment hood as shown in Fig 1 of this specification.

11.1           Optional Items

FortisAlberta:

FortisBC:

g) The material item number, kVA rating, year and month the transformer is shipped, shall be stenciled or decaled in white, on the exterior and front side of each compartment hood, in 50 mm, 65 mm and 65 trim lettering respectively, as per Fig. I of this specification.

Maritime Electric:

Newfoundland Power:

September 1, 2006

Distribution Transformers 

5

Newfoundland Power Inc.  Schedule B – Statement of  Work

c) All units shall be equipped with a drain and filler plug. Units for Maritime Electric shall also be equipped with a drain valve.

k) If specified in the tender document, the transformers shall have two 2-1/2% taps above rated voltage and two 2-1/2% taps below rated voltage. Units for Maritime Electric shall be equipped with taps as indicated above.

m) If specified in the tender document, the transformers shall be supplied with bar code labels.

12.0           Packaging

Maritime Electric:

Newfoundland Power:

Each transformer shall be shipped on a pallet as a completely assembled unit.

Each transformer shall be suitably packed so as to insure delivery in good condition.

Each transformer shall be shipped in an open-top carrier so as to allow easy removal with a crane.

September 1, 2006

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6

Newfoundland Power Inc.  Schedule B – Statement of  Work

NOTE: Four lifting bosses and bolts to be supplied and positioned such that balance is maintained when lifted.

September 1, 2006

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7

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

8

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

9

Newfoundland Power Inc.  Schedule B – Statement of  Work

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10

Newfoundland Power Inc.  Schedule B – Statement of  Work

24.3   UTILITIES – 3 THREE PHASE, DEAD-FRONT PAD-MOUNTED DISTRIBUTION TRANSFORMERS

September 1, 2006

Distribution Transformers 

Newfoundland Power Inc.  Schedule B – Statement of  Work

24.3.1.    Scope

This purchasing specification applies to three-phase, 60 Hz, dead front, pad-mounted, distribution transformers, type ONAN, rated at 3000 kVA or below, insulation class 18 kV or less, suitable for mounting outdoors on pads without additional protective enclosures.

24.3.2.     Reference Standards

The provisions of the following standards, latest editions, shall apply unless otherwise specified herein. This specification shall take precedence over any standard quoted herein in case of any. conflict.

CANADIAN STANDARDS ASSOCIATION

CSA Purchasing Specification DTWG-03 (99), “Three Phase, Dead-Front, Pad-Mounted Distribution Transformers”.

24.3.3.     Material

Newfoundland Power:

Transformer material shall be 3161, stainless steel. This includes the transformer tank, base, hinges, doors and other exterior items.

24.3.4.     CSA Specification Modifications

The numbering of the following Clauses is identical to that used in CSA Purchasing Specification DTWG-03 (99). Where no reference is made, the CSA Specification DTWG-03 shall apply. Additional or modifying statements as given in this specification, shall govern.

4.2.5         GrdY-GrdY Connected Transformers

FortisAlberta:

FortisBC:

The core shall be a five-legged design or an equivalent design that provides a path for unbalanced core flux.

4.5            Off-Circuit Voltage Taps

FortisAlberta:

FortisBC:

Transformers shall have high voltage taps as follows: 2-1/2% and 5% full capacity above the rated voltage, and 2V2% and 5% reduced capacity below rated voltage.

4.11           Impedance

Maritime Electric:

Newfoundland Power:

Transformers rated 500 kVA and above shall have a minimum impedance of 4%.

September 1, 2006

Distribution Transformers 

1

Newfoundland Power Inc.  Schedule B – Statement of  Work

5.13            Lifting Provisions

FortisAlberta:

FortisBC:

Four lifting lugs shall be mounted such that balance can be maintained when lifting.

5.1.4           Jacking Provision

FortisAlberta:

FortisBC:

Four jacking steps shall be mounted such that balance can be maintained when lifting.

5.1.6           Drain Plugs, Pressure Relief Device and Liquid Level Indicator

FortisAlberta:

FortisBC:

The 1” drain valve with sampling device shall be located on .the lower area of the front of the tank on the right side of the low voltage terminations.

The filler plug provided shall be a minimum 3/4” and located above the low voltage bushings.

5.1.9           Off-CircuitTap Changer and Voltage Selector Switches

FortisAlberta:

FortisBC:

Tap changer shall be mounted above the low voltage bushing or alternatively on the high voltage side of the compartment where it is accessible with cables in place. The tap changers shall be the externally operable handle type meeting the requirements of Clause 5.1.9 of CSA Purchasing Specification.

5.1.14           Radiators and Transformer Compartment

Maritime Electric:

Newfoundland Power:

Preference is for no exterior cooling (i.e., fins, cooling tubes or radiators). If exterior cooling is used, the material used shall be either 304 or 400 series stainless steel or galvanized for Maritime Electric and 3161, stainless steel for Newfoundland Power. Exterior cooling shall be painted as per Clause 8.0 of CSA DTWG-03.

5.2.1.6           Internal Flange

FortisAlberta:

FortisBC:

Four foundation clamps as shown in Figure 1 of this specification shall be supplied with each transformer.

5.2.1.7            Doors and. Roof

FortisAlberta:

FortisBC:

For transformers rated at 12470GrdY/7200 volts only, the bonding between the tank and the compartment side, sill, door and roof shall be flexible rubber or neoprene coated copper jumpers of #6 A WG or larger.

5.3           Fusing

September 1, 2006

Distribution Transformers 

2

Newfoundland Power Inc.  Schedule B – Statement of  Work

Maritime Electric:

Transformers shall be fused as per CSA DTWG-03.

Newfoundland Power:

Transformers shall be fused as per CSA DTWG-03 except, unless specified in the tender document, radial feed transformers shall be supplied without fusing.

5.3.1           Bayonet Fuse Assembly

FortisAlberta:

FortisBC:

All transformers shall be equipped with a two-fuse system, consisting of replaceable bayonet fuses, RTE type or equivalent, with flapper sidewall mount fuse assembly (Cooper Cat #4000361C99FV or equivalent) as per. Table 11 of CSA Purchasing Specification DTWG-03, and under oil partial range back up current limiting fuses (CLF), RTE type ELSP or equivalent. The voltage rating of the CLF shall be greater than or equal to the phase-to-neutral voltage of the transformer in the highest tap position, and for transformers with rated primary voltage of 24940GrdY/14400 volts, the voltage rating of the CLF shall be 23 kV. The manufacturer will ensure that the CLF supplied coordinates with the bayonet fuse at the transformer designed impedance. The connection of the fuses shall be as per Figure 7 of CSA DTWG-03.

6.1.2           High-Voltage Bushings

6.1.2.1

FortisAlberta:

FortisBC:

High voltage bushing wells have replaceable studs and shall be externally clamped (ELASTIMOLD K1 601PCC-R or equivalent).

Maritime Electric:

The high voltage bushings shall be short shank universal bushing well. In addition, the bushing well shall be fitted with a load break thermoplastic busing insert (RTE or Elastimold) and protected with a cap. All current carrying elements are to be copper based material.

Newfoundland Power:

The high voltage bushings shall be short shank universal bushing well. Transformers shall be supplied without loadbreak bushing inserts. The universal bushing well shall be protected by a shipping cap.

Maritime Electric:

Newfoundland Power:

Transformers with high voltage loop feed shall have the loop feed feature internally connected and capable of carrying 200 Amperes (continuous) and 10,000 Amperes (Symmetrical) for 0.17 seconds, minimum X/R = 6.

6.1.3           Low-Voltage Bushings

6.1.3.1

FortisAlberta:

FortisBC:

September 1, 2006

Distribution Transformers 

3

Newfoundland Power Inc.  Schedule B – Statement of  Work

Low voltage bushings for transformers with 480Y/277 volt secondary shall be spade type and of sizes equivalent to 600Y/347 volt secondary as per Table 9 and Figure. 10 of CSA Purchasing Specification DTWG-03.

Dimensions of spade terminals must be closely followed as per. Figure 10 of DTWG-03. Terminals may be used to accommodate CGE type JABO current transformers.

6.2.2           Grounding Assembly

FortisAlberta:

FortisBC:

For transformers rated at 12470GrdY/7200 volts only, the grounding assembly as per clause 6.2.2 of DTWG-03 shall be made of stainless steel.

6.2.3           Neutral Terminal

FortisAlberta:

FortisBC:

The connection between the neutral terminal and the ground bus shall be either aluminum or stainless steel of suitable ampacity.

7.2           Routine Tests

FortisAlberta:

FortisBC:

Certified Test Reports shall be submitted to FortisAlberta/FortisBC before shipment. Any discrepancy between the guaranteed and the test results shall be noted.

8.1           Finish Performance

The exterior finish shall conform to ANSI C57.12.28, latest revision, except the salt spray test acceptance criteria shall be 1500 hours.

Maritime Electric:

Newfoundland Power:

The salt spray test painted panel shall conform to ANSI C57.12.29. The scribe through the paint for evaluation shall be at right angles to the weld bead. The samples shall be made using normal production welding material and equipment.

Provisions shall be made so that water does not accumulate on top of the transformer tank compartment.

8.2           Colour

FortisAlberta:

FortisBC:

The exterior finish shall be seafoam green, Munsell 4.82 G 4.07/3.35.

Maritime Electric:

Newfoundland Power:

Transformer shall be painted equipment green Munsell 9 GY 1.5/2.6. Munsell gray shall also be provided if specified in the tender document.

9.1.3           Information on Nameplate

September 1, 2006

Distribution Transformers 

4

Newfoundland Power Inc.  Schedule B – Statement of  Work

FortisAlberta:

FortisBC:

The following additional information shall be included on the combination nameplate:

a)           FortisAlberta/FortisBC material item number

b)           Year and month the transformer is shipped (e.g., 95/01)

9.4.3.4                      Electrical Hazard Warning Signs

FortisAlberta:

FortisBC:

Caution Sign as per Figure 3 of this specification shall be stenciled or decaled in yellow on the exterior of the low voltage compartment door as shown in Figure 2.

Danger Sign as per Figure 4 of this specification shall be stenciled or decaled in white on the exterior of the high voltage compartment door as shown in Figure 2.

9.4.4.4                      Stock Code No.

FortisAlberta:

FortisBC:

In addition, the kVA rating, year and month the transformer is shipped, in 50 mm lettering, shall be stenciled or decaled in white on the exterior of the low voltage compartment door, below the caution sign as shown in Figure 2 of this specification. The FortisAlbertalFortisBC Material Item Number, in 25 mm lettering, shall be stenciled or decaled in white on the exterior of they high voltage compartment door as shown in Figure 2. All of the above information shall also be punched on the nameplate.

10.           Optional Items

FortisAlberta:

FortisBC:

(a) Loop feed transformers shall be equipped with two sets of three phase, two position, line loadbreak switches (SWA and SWB) meeting the requirements of clause 5.1.12 of CSA DTWG-03 and connected as per Figure 7 of CSA DTWG-03. A transformer winding switch is not required.

(i) For 750 kVA and larger transformers, a top oil temperature gauge with a drag hand for maximum temperature indication shall be installed and located above the low voltage bushings.

Maritime Electric:

Newfoundland Power:

(f) When specified, the transformer shall have two 2-’4% taps above rated voltage and two 2-V2% taps below rated voltage on the high voltage winding. Units for Maritime Electric shall be equipped with taps as indicated above.

(i) All transformers for Maritime Electric shall be supplied with a thermometer of the maximum indicating type.

September 1, 2006

Distribution Transformers 

5

Newfoundland Power Inc.  Schedule B – Statement of  Work

(k) If specified in the tender document, the transformers shall be supplied with bar code labels.

11.           Packaging

Maritime Electric:

Newfoundland Power:

Each transformer shall be shipped on a pallet as a completely assembled unit and suitably packed so as to insure delivery in good condition.

Each transformer shall be shipped in an open-top carrier so as to allow easy removal with a crane.

September 1, 2006

Distribution Transformers 

6

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

7

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

8

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

9

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

10

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

11

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

12

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

13

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

Distribution Transformers 

14

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

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15

Newfoundland Power Inc.  Schedule B – Statement of  Work

September 1, 2006

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16

Newfoundland Power Inc.  Schedule C – Payment for  Work

TABLE OF CONTENTS

1.	GENERAL	1
	1.1     Definitions	1
	1.2     Full and Complete Payment	1
2.	INVOICING	1
	2.1     Items Ordered	1
	2.2     Accounts Payable Addresses	1
	2.3     Payment of Invoices	2
3.	CONTRACT PRICE	2
4.	CONTRACT AWARD	2

September 1, 2006

Distribution Transformers

1.             General

Definitions

Capitalized terms used and not defined in this "Schedule C Payment for Work" shall have the meaning given thereto in the General Conditions where so defined.

Full and Complete Payment

As full and complete payment for the performance of the Work and the discharge of all obligations of the Utilities under the Contract, the Utilities shall pay Supplier the. Contract Price as set forth in Clause 3 of this "Schedule C - Payment for Work."

2.             Invoicing

Items Ordered

The Contract Price on items shall be paid based on the shipment of the material.  Supplier shall submit invoices based on the work performed and materials delivered to destination.

Accounts Payable Addresses

Newfoundland Power Inc.

55 Kenmount Road

St. John's, NL

A1B3P6

Maritime Electric Company, Limited

180 Kent Street

P.O Box 1328

Charlottetown, PE CIA 7N2

FortisAlberta Inc.

P.O Box 2570

Station "M"

Calgary, AB T2P 5H4

FortisBC Inc.

Landmark IV

5th Floor, 1628 Dickson Avenue

Kelowna, BC VI Y 9X1

Payment of Invoices

The Utilities shall pay approved invoice amounts or approved portions thereof within thirty (30) days of receipt of the invoice.

Supplier may offer a discount for early payment.

September 1, 2006

Distribution Transformers

3.           Contract Price

    The Contract Price is set using the information provided by the successful Supplier(s) in the "Bid Form".

4.           Contract Award

   The Contract was awarded for the items as per the following items attached. The quantities awarded are estimates only.

   [XX]

September 1, 2006

Distribution Transformers

BID FORM

National Distribution Transformers

February 6, 2006

05-041

For:

Newfoundland Power Inc.

Maritime Electric Company, Limited

FortisAlberta Inc.

FortisBC Inc.

IDENTIFICATION OF BIDDER

Pioneer Transformers Ltd.
(Name of Bidder)

506 Henderson Drive, Regina, SK  S4N 5X2

(Address of office of Bidder)

612 Chemin Bernard, Granby, Quebec, J2G 8E5

(Bidder’s Address)

Hereinafter called the "Bidder", hereby declares that the Bidder is a corporation duly incorporated under the laws of the Province of

Quebec: February 28th, 1995

(Jurisdiction and Date of Incorporation)

September 1, 2006

Distribution Transformers

Newfoundland Power Inc.   Bid Form

1.           ADMINISTRATION

1.1.        Pricing Precedence

The Bidder agrees that at the end of the contract, the total contract price shall be determined by the actual quantities multiplied by the unit prices set forth as adjusted by any changes approved in accordance with the Contract Documents.

1.2.         Personnel

The Supplier Personnel:

2.           PRICES

The undersigned Bidder, having carefully examined the Bid Documents and the proposed Work, and having full knowledge of the work required and of the material to be furnished and used, hereby agrees to provide all necessary material, supervision, labour, and equipment to perform and complete all work and fulfill everything as set forth and in strict accordance with the Bid Documents and Addenda as listed below for the sum provided in this "Bid Form" document.

September 1, 2006

Distribution Transformers

1

Newfoundland Power Inc.   Bid Form

The price detailed below must include all work to complete the work described in “Schedule B – Statement of Work” as per the defined milestone dates.

2.1.         Firm Pricing

Firm Pricing for July 1, 2006 to December 31, 2006. Pricing to be provided using the attached Utility Bid Sheets.

2.1.1.       Contract Price

The Contract Price as defined under "Contract Price" in "Schedule C Payment for Work." These prices will be DDP destination.

2.2.          Index Pricing

Index Pricing for January 1, 2007 to December 31, 2007 to be based on the following information provided by the Supplier(s)..

The items listed in the tables represent those most commonly used by the Utilities.

[XX]

September 1, 2006

Distribution Transformers

2

Newfoundland Power Inc.   Bid Form

2.2.1.  Contract Price

The Contract Price as defined under “Contract Price” in Schedule C-Payment for Work “These prices will be DDP destination.

Warranty Policy (state if better than what is stated in Schedule A – General Conditions”)

Liability for the in/out cost is limited to [XX]% of the value of the individual transformer.

Warranty Turnaround (state time from the Utilities notification)

Within 48 hours of notification, Pioneer will provide and action plan to remedy the problem.   The turn around time will depend on the problem.  Pioneer will choose between sending the transformer back to the factory or having a local company make the necessary repairs, which ever is most convenient to Fortis.

Additional costs for Radio Frequency Identification (RFID) for each item

Need clarification

Additional costs for providing and installing the lightning arrestor bracket as per “Schedule B-Statement of Work” Section 25.13 “8.12 Surge Arrestor Mounting Provision”

Not applicable

Contingency Plans to be attached to this Bid Form

a.   Delivery of urgent product requests:

Pioneer will make every effort to accommodate each request.

b.   Weather (ice storms, flooding, blizzards, etc) or any other emergencies:

September 1, 2006

Distribution Transformers

3

Newfoundland Power Inc.   Bid Form

Pioneer will make every effort to mitigate the effects of any event

c.   Labor disputes, which result in work stoppage, or work slow down for the Supplier's

Pioneer has a labour agreement in effect until 2010.

d.   Catastrophic Events

September 1, 2006

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4

SIGNATURES

September 1, 2006

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5

Pioneer Transformers Reference Number 53-036-116

[XX]

September 1, 2006

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6

Pioneer Transformers – Reference Number 53-036-116

Comments and Exceptions

[XX]

September 1, 2006

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7

CERTIFICATE OF INSURANCE

Please complete and Fax this Certificate of Insurance to Newfoundland Power; Materials Management Fax # (709) 737-5817. Mailing address is: P.O. Box 8910, St. John's, NL A1B 3P8

September 1, 2006

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8

Newfoundland Power Inc. Schedule D – Supplier Performance Evaluation

Supplier Performance Evaluation

September 1, 2006

Distribution Transformers

1

Newfoundland Power Inc. Schedule D – Supplier Performance Evaluation

Today’s Date:  _______________

Supplier Performance Evaluation

September 1, 2006

Distribution Transformers

2

Newfoundland Power Inc. Schedule D – Supplier Performance Evaluation

September 1, 2006

Distribution Transformers 

3

EX-10.20

Exhibit 10.20

ORACLE

ORACLE LICENSE AND SERVICES AGREEMENT

A.           Agreement Definitions

“You” and “your” refers to the individual or entity that has executed this agreement (“agreement”) and ordered programs and/or services from Oracle Corporation Canada Inc. (“Oracle”) or an authorized distributor. The term “ancillary programs” refers to third party materials as specified in the program documentation which may only be used for the purposes of installing or operating the programs with which the ancillary programs are delivered. The term “program documentation” refers to the program user manual and program installation manuals. The term “programs” refers to the software products owned or distributed by Oracle which you have ordered, program documentation, and any program updates acquired through technical support. The term “services” refers to technical support, education, hosted/outsourcing services, consulting or other services which you have ordered. The term “third party programs” refers to programs designated in an ordering document as a third party program.

B.           Applicability of Agreement

This agreement is valid for the order which this agreement accompanies.

C.           Rights Granted

Upon Oracle’s acceptance of your order, you have the non-exclusive, royalty free, perpetual (unless otherwise specified in the ordering document), limited right to use the programs and receive any services you ordered solely for your internal business operations and subject to the terms of this agreement, including the definitions and rules set forth in the order and the program documentation. For programs that are specifically designed to allow your customers and suppliers to interact with you in the furtherance of your internal business operations, such use is allowed under this agreement. You may allow your agents and contractors (including, without limitation, outsourcers) to use the programs for this purpose and you are responsible for their compliance with this agreement in such use. If accepted, Oracle will notify you and this notice will include a copy of your agreement. Program documentation is delivered with the programs, or you may access the documentation online at http://oracle.corn/contracts. Services are provided based on Oracle’s policies for the applicable services ordered, which are subject to change, and the specific policies applicable to you, and how to access them, will be specified on your order (except technical support services, which are as specified in section H of this agreement). Upon payment for services, you will have a perpetual, non-exclusive, non-assignable, royalty free license to use for your Internal business operations anything developed by Oracle and delivered to you under this agreement; however, certain deliverables may be subject to additional license terms provided in the ordering document.

The services provided under this agreement may be related to your license to use programs which you acquire under a separate order. The agreement referenced in that order shall govern your use of such programs. Any services acquired from Oracle are bid separately from such program licensee, and you may acquire either services or such program licenses without acquiring the other.

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D.           Ownership and Restrictions

Oracle or its licensors retain all ownership and intellectual property rights to the programs. Oracle retains all ownership and intellectual property rights to anything developed by Oracle and delivered to you under this agreement resulting from the services. You may make a sufficient number of copies of each program (other than for Siebel programs), for your licensed use and one copy of each program media. With respect to Siebel programs, you may only make a sufficient number of copies of each such program to support the maximum number of users of such program(s).

Third party technology that may be appropriate or necessary for use with some Oracle programs is specified in the program documentation, such third party technology is licensed to you under the terms of the third party technology license agreement specified in the program documentation and not under the terms of this agreement.

You may not:

• remove or modify any program markings or any notice of Oracle’s or its licensors’ proprietary rights;

• make the programs or materials resulting from the services available in any manner to any third party for use in the third party’s business operations (unless such access is expressly permitted for the specific program license or materials from the services you have acquired);

• cause or permit reverse engineering (unless required by law for interoperability), disassembly or decompilation of the programs;

• disclose results of any program benchmark tests without Oracle’s prior written consent;

• use third party programs except in connection with PeopleSoft and/or JD Edwards programs.

E.Warranties, Disclaimers and Exclusive Remedies

Oracle warrants that a program licensed to you will operate in all material respects as described in the applicable program documentation for one year after delivery (i.e., via physical shipment or electronic download). You must notify Oracle of any program warranty deficiency within one year after delivery. Oracle also warrants that services will be provided in a professional manner consistent with industry standards. You must notify Oracle of any services warranty deficiencies within 90 days from performance of the defective services.

ORACLE DOES NOT GUARANTEE THAT THE PROGRAMS WILL PERFORM ERROR-FREE OR UNINTERRUPTED OR THAT ORACLE WILL CORRECT ALL PROGRAM ERRORS.

FOR ANY BREACH OF THE ABOVE WARRANTIES, YOUR EXCLUSIVE REMEDY, AND ORACLE’S ENTIRE LIABILITY, SHALL BE: (A) THE CORRECTION OF PROGRAM ERRORS THAT CAUSE BREACH OF THE WARRANTY, OR IF ORACLE CANNOT SUBSTANTIALLY CORRECT SUCH BREACH IN A COMMERCIALLY REASONABLE MANNER, YOU MAY END YOUR PROGRAM LICENSE AND RECOVER THE FEES PAID TO ORACLE FOR THE PROGRAM LICENSE AND ANY UNUSED, PREPAID TECHNICAL SUPPORT FEES YOU HAVE PAID FOR THE PROGRAM LICENSE; OR (B) THE REPERFORMANCE OF THE DEFICIENT SERVICES, OR IF ORACLE CANNOT SUBSTANTIALLY CORRECT A BREACH IN A COMMERCIALLY REASONABLE MANNER, YOU MAY END THE RELEVANT SERVICES AND RECOVER THE FEES PAID TO ORACLE FOR THE DEFICIENT SERVICES.

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TO THE EXTENT PERMITTED BY LAW, THESE WARRANTIES ARE EXCLUSIVE AND THERE ARE NO OTHER EXPRESS OR IMPLIED WARRANTIES OR CONDITIONS, INCLUDING WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

F.           Trial Programs

You may order trial programs, or Oracle may include additional programs with your order which you may use for trial, non-production purposes only. You may not use the trial programs to provide or attend third party training on the content and/or functionality of the programs. You have 30 days from the delivery date to evaluate these programs. If you decide to use any of these programs after the 30 day trial period, you must obtain a license for such programs from Oracle or an authorized distributor. If you decide not to obtain a license for any program after the 30 day trial period, you will cease using and will delete any such programs from your computer systems. Programs licensed for trial purposes are provided “as is” and Oracle does not provide technical support or offer any warranties for these programs.

G.           Indemnification

If a third party makes a claim against either you or Oracle (“Recipient” which may refer to you or Oracle depending upon which party received the Material), that any information, design, specification, instruction, software, data, or material (“Material”) furnished by either you or Oracle (“Provide” which may refer to you or Oracle depending on which party provided the Material), and used by the Recipient infringes its intellectual property rights, the Provider, at its sole cost and expense, will defend the Recipient against the claim and indemnify the Recipient from the damages, liabilities, costs and expenses awarded by the court to the third party claiming infringement or the settlement agreed to by the Provider, if the Recipient does the following:

• notifies the Provider promptly in writing, not later than 30 days after the Recipient receives notice of the claim (or sooner if required by applicable law);

• gives the Provider sole control of the defense and any settlement negotiations; and

• gives the Provider the information, authority, and assistance the Provider needs to defend against or settle the claim.

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If the Provider believes or it is determined that any of the Material may have violated a third party’s intellectual property rights, the Provider may choose to either modify the Material to be non-infringing (while substantially preserving its utility or functionality) or obtain a license to allow for continued use, or if these alternatives are not commercially reasonable, the Provider may end the license for, and require return of, the applicable Material and refund any fees the Recipient may have paid for it and any unused, prepaid technical support fees you have paid for the license. If you are the Provider and such return materially affects Oracle’s ability to meet its obligations under the relevant order, then Oracle may, at its option and upon 30 days prior written notice, terminate the order. The Provider will not indemnify the Recipient if the Recipient alters the Material or uses it outside the scope of use identified in the Provider’s user documentation or if the Recipient uses a version of the Materials which has been superseded, if the infringement claim could have been avoided by using an unaltered current version of the Material which was provided to the Recipient. The Provider will not indemnify the Recipient to the extent that an infringement claim is based upon any information, design, specification, instruction, software, data, or material not furnished by the Provider. Oracle will not indemnify you to the extent that an infringement claim is based upon the combination of any Material with any products or services not provided by Oracle. Oracle will not indemnify you for infringement caused by your actions against any third party if the Oracle program(s) party as delivered to you and used in accordance with the terms of this agreement would not otherwise infringe any third par intellectual property rights. This section provides the parties’ exclusive remedy for any infringement claims or damages.

H.           Technical Support

For purposes of the ordering document, technical support consists of annual technical support services you may have ordered for the supportable programs. The term “supportable programs” refers to those programs for which Oracle offers annual technical support services, including third party programs specifically designated on the order as supportable programs. If ordered, annual technical support (including first year and all subsequent years) is provided under Oracle’s technical support policies in effect at the time the services are provided. The technical support policies, incorporated in this agreement, are subject to change at Oracle’s discretion; however, Oracle will not materially reduce the level of services provided for supported programs during the period for which fees for technical support have been paid. You should review the policies prior to entering into the ordering document for the applicable services. You may access the current version of the technical support policies at http://oracle.com/contracts.

Technical support is effective upon the effective date of the ordering document unless otherwise stated in your order. If your order was placed through the Oracle Store, the effective date is the date your order was accepted by Oracle.

Software Update License & Support (or any successor technical support offering to Software Update License & Support, “SULS”) acquired with your order may be renewed annually and, if you renew SULS for the same number of licenses for the same programs, for the first and second renewal years the fee for SULS, will not increase by more than 4% over the prior year’s fees. There is no cap on fee increases for SULS for third party programs; unless otherwise provided in your order, the SULS fee for third party programs that are identified as supportable programs licensed pursuant to an ordering document will equal the fee in effect at the time SULS is renewed. If your order is fulfilled by a member of Oracle’s partner program, the fee for SULS for the first renewal year will be the price quoted to you by your partner; the fee for SULS for the second renewal year will not increase by more than 4% over the prior year’s fees. There is no cap on fee increases for SULS for third party programs; unless otherwise provided in your order, the SULS fee for third party programs that are identified as supportable programs licensed pursuant to an ordering document will equal the fee in effect at the time SULS is renewed.

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If you decide to purchase technical support for any license within a license set, you are required to purchase technical support at the same level for all licenses within that license set. You may desupport a subset of licenses in a license set only if you agree to terminate that subset of licenses. The technical support fees for the remaining licenses will be priced in accordance with the technical support policies in effect at the time of termination. Oracle’s license set definition is available in the current technical support policies. If you decide not to purchase technical support, you may not update any unsupported program licenses with new versions of the program.

I.           End of Agreement

If either of us breaches a material term of this agreement and fails to correct the breach within 30 days of written specification of the breach, then the breaching party is in default and the non-breaching party may terminate this agreement. If Oracle ends this agreement as specified in the preceding sentence, you must pay within 30 days all amounts which have accrued prior to such end, as well as all sums remaining unpaid for programs ordered and/or services received under this agreement plus related taxes and expenses. If Oracle ends the license for a program under the Indemnification section, you must pay within 30 days all amounts for such license which have accrued prior to such end, as well as all sums remaining unpaid for services related thereto received under this agreement plus related taxes and expenses. Except for nonpayment of fees, the non-breaching party may agree in its sole discretion to extend the 30 day period for so long as the breaching party continues reasonable efforts to cure the breach. You agree that if you are in default under this agreement, you may not use those programs and/or services ordered. You further agree that if you have used an Oracle Financing Division contract to pay for the fees due under an order and you are in default under that contract, you may not use the programs and/or services that are subject to such contract. Provisions that survive termination or expiration are those relating to limitation of liability, infringement indemnity, payment, and others which by their nature are intended to survive.

J.           Fees and Taxes

All fees payable to Oracle are due within 30 days from the invoice date. You agree to pay any sales, value-added or other similar taxes imposed by applicable law that Oracle must pay based on the programs and/or services you ordered, except for taxes based on Oracle’s income. Also, you will reimburse Oracle for reasonable expenses related to providing the services. Fees for services listed in an ordering document are exclusive of taxes and expenses. You agree that you have not relied on the future availability of any programs or updates in entering into the payment obligations in your ordering document; however, (a) if you order SULS for programs, the preceding sentence does not relieve Oracle of its obligation to provide updates under your ordering document, if-and-when available, in accordance with Oracle’s then current technical support policies, and (b) the preceding sentence does not change the rights granted to you for any program licensed under your ordering document, per the terms of your ordering document and this agreement.

K.           Nondisclosure

By virtue of this agreement, the parties may have access to information that is confidential to one another (“confidential information”). We each agree to disclose only information that is required for the performance of obligations under this agreement. Confidential information shall be limited to the terms and pricing under this agreement and all information clearly identified as confidential at the time of disclosure.

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A party’s confidential information shall not include information that: (a) is or becomes a part of the public domain through no act or omission of the other party; (b) was in the other party’s lawful possession prior to the disclosure and had not been obtained by the other party either directly or indirectly from the disclosing party; (c) is lawfully disclosed to the other party by a third party without restriction on the disclosure; or (d) is independently developed by the other party.

We each agree to hold each other’s confidential information in confidence for a period of three years from the date of disclosure. Also, we each agree to disclose confidential information only to those employees or agents who are required to protect it against unauthorized disclosure. Nothing shall prevent either party from disclosing the terms or pricing under this agreement or orders submitted under this agreement in any legal proceeding arising from or in connection with this agreement or disclosing the confidential information to a federal or provincial governmental entity as required by law.

L.           Entire Agreement

You agree that this agreement and the information which is incorporated into this agreement by written reference (including reference to information contained in a URL or referenced policy), together with the applicable ordering document, are the complete agreement for the programs and/or services ordered by you, and that this agreement supersedes all prior or contemporaneous agreements or representations, written or oral, regarding such programs and/or services. If any term of this agreement is found to be invalid or unenforceable, the remaining provisions will remain effective and such term shall be replaced with a term consistent with the purpose and intent of this agreement. It is expressly agreed that the terms of this agreement and any Oracle ordering document shall supersede the terms in any purchase order or other non-Oracle ordering document and no terms included in any such purchase order or other non-Oracle ordering document shall apply to the programs and/or services ordered. This agreement and ordering documents may not be modified and the rights and restrictions may not be altered or waived except in a writing signed or accepted online through the Oracle Store by authorized representatives of you and of Oracle. Any notice required under this agreement shall be provided to the other party in writing.

M.           Limitation of Liability

NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR ANY LOSS OF PROFITS, REVENUE, DATA, OR DATA USE. ORACLE’S MAXIMUM LIABILITY FOR ANY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR YOUR ORDER, WHETHER IN CONTRACT OR TORT, OR OTHERWISE, SHALL BE LIMITED TO THE AMOUNT OF THE FEES YOU PAID ORACLE UNDER THIS AGREEMENT, AND IF SUCH DAMAGES RESULT FROM YOUR USE OF PROGRAMS OR SERVICES, SUCH LIABILITY SHALL BE LIMITED TO THE FEES YOU PAID ORACLE FOR THE DEFICIENT PROGRAM OR SERVICES GIVING RISE TO THE LIABILITY.

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N.           Export

Export laws and regulations of Canada and the United States and any other relevant local export laws and regulations apply to the programs. You agree that such export control laws govern your use of the programs (including technical data) and any services deliverables provided under this agreement, and you agree to comply with all such export laws and regulations (including “deemed export” and “deemed re-export” regulations). You agree that no data, information, program and/or materials resulting from services (or direct product thereof) will be exported, directly or indirectly, in violation of these laws, or will be used for any purpose prohibited by these laws including, without limitation, nuclear, chemical, or biological weapons proliferation, or development of missile technology.

O.           Other

1. This agreement is governed by the laws of the Province of Ontario and you and Oracle agree to submit to the exclusive jurisdiction of, and venue in, the courts in Toronto, Ontario in any dispute arising out of or relating to this agreement. You and Oracle have agreed that this agreement be drafted in English. Vous et Oracle avez convenu que ce contrat soit rédigé en anglais.

2. If you have a dispute with Oracle or if you wish to provide a notice under the Indemnification section of this agreement, or if you become subject to insolvency or other similar legal proceedings, you will promptly send written notice to: Oracle Corporation Canada Inc., 110 Matheson Blvd. W., Suite 100, Mississauga, ON, L5R 3P4, Attention: General Counsel, Legal Department.

3. You may not assign this agreement or give or transfer the programs and/or any services or an interest in them to another individual or entity. If you grant a security interest in the programs and/or any services deliverables, the secured party has no right to use or transfer the programs and/or any services deliverables, and if you decide to finance your acquisition of the programs and/or any services, you will follow Oracle’s policies regarding financing which are at http://oracle.com/contracts.

4. Except for actions for nonpayment or breach of Oracle’s proprietary rights, no action, regardless of form, arising out of or relating to this agreement may be brought by either party more than two years after the cause of action has accrued.

5. Upon 45 days written notice, Oracle may audit your use of the programs. You agree to cooperate with Oracle’s audit and provide reasonable assistance and access to information. Any such audit shall not unreasonably interfere with your normal business operations. You agree to pay within 30 days of written notification any fees applicable to your use of the programs in excess of your license rights. If you do not pay, Oracle can end your technical support, licenses and/or this agreement. You agree that Oracle shall not be responsible for any of your costs incurred in cooperating with the audit.

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P.           Force Majeure

Neither of us shall be responsible for failure or delay of performance if caused by: an act of war, hostility, or sabotage; act of God; electrical, interact, or telecommunication outage that is not caused by the obligated party; government restrictions (including the denial or cancellation of any export or other license); other event outside the reasonable control of the obligated party. We both will use reasonable efforts to mitigate the effect of a force majeure event. If such event continues for more than 90 days; either of us may cancel unperformed services upon written notice. This section does not excuse either party’s obligation to take reasonable steps to follow its normal disaster recovery procedures or your obligation to pay for programs delivered or services provided.

Q.           License Definitions and Rules

To fully understand your license grant, you need to review the definition for the licensing metric and term designation as well as the licensing rules which are listed below.

Adapter: is defined as each software code interface, installed on each Oracle Internet Application Server Enterprise Edition, which facilitates communication of information between each version of a third party software application or system and Oracle programs.

SM Annual Transaction Volume: is defined as one million one hundred and twenty-two thousand, two hundred Canadian dollars ($1,122,200.00) in all purchase orders transacted and all auctions conducted through the Oracle Exchange Marketplace by you and others during the applicable year of the Oracle Exchange Marketplace license, regardless of whether any such auction results in a purchase order, provided that an auction resulting in a purchase order shall only be counted against the Annual Transaction Volume once.

Applications National Language Support (NLS) Supplement Media Packs: Please be advised that only a subset of the products included on an Applications NLS Supplement Media Pack have been translated. For existing supported customers, MetaLink has information on which products have been translated for the supported languages (http://metalink.oragle.com). For new or unsupported customers, please contact your Oracle Account Manager for this information.

Application User, Enterprise Asset Management (EAM) User, Field Sales User, Financials User, Inventory/Shipping User, Marketing User, Manufacturing User, Purchasing User, TeleSales User: is defined as an individual authorized by you to use the applicable licensed application programs which are installed on a single server or on multiple servers regardless of whether the individual is actively using the programs at any given time. If you license the Self Service Work Request option in conjunction with EAM, you are required to maintain licenses for the equivalent number of EAM Users licensed and you are granted unlimited access to initiate work requests, view work request status and view scheduled completion dates for your entire employee population. Application Users licensed for Order Management are allowed to manually enter orders directly into the programs but any orders entered electronically from other sources must be licensed separately.

Application Read-Only User: is defined as an individual authorized by you to run only queries or reports against the application program for which you have also acquired non read-only licenses.

Beacon: is defined as each target that is deployed and managed by the program that measures the response time of remote software or hardware interfaces by communicating with those interfaces over protocols, api’s or programmatic interactions and measuring the total time elapsed between the initiation of communication and completion of the associated response from the remote interface.

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Case Report Form (CRF) Page: is defined as the “electronic equivalent” of what would be the total number of physical paper pages initiated remotely by the program (measured explicitly in the program as Received Data Collection Instruments) during a 12-month period. You may not exceed the licensed number of CRF Pages during any 12-month period unless you acquire additional CRF Page licenses from Oracle.

Collaboration Program User: is defined as an individual authorized by you to use the programs which are installed on a single server or on multiple servers regardless of whether the individual is actively using the programs at any given time. For the purposes of counting and licensing the number of Real Time Collaboration users, a Collaboration Program User within your company is defined as a user able to initiate, or host, a web conference and also participate in a web conference; all participants in the web conference external to your company and attending a web conference are not required to be licensed.

Compensated Individual: is defined as an individual whose compensation or compensation calculations are generated by the programs. The term Compensated Individual includes, but is not limited to, your employees, contractors, retirees, and any other Person.

Computer: is defined as the computer on which the programs are installed. A Computer license allows you to use the licensed program on a single specified computer.

Connector: is defined as each connector connecting the software product with an external product. A unique connector is required for each distinct product that the software product is required to interface.

$M Cost of Goods Sold: is defined as one million one hundred and twenty-two thousand, two hundred Canadian dollars ($1,122,200.00) in the total cost of inventory that a company has sold during their fiscal year. If Cost of Goods Sold is unknown to you then Cost of Goods Sold shall be equal to 75% of total company revenue.

Developer User: is defined as an individual authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether the individual is actively using the programs at any given time. Developer Users may create, modify, view and interact with the programs and documentation.

Electronic Order Line: is defined as the total number of distinct order lines entered electronically into the Oracle Order Management application from any source (not manually entered by licensed Order Management Users, Professional Users 2003, or Professional Users 2003 - External) during a 12 month period. This includes order lines originating as external EDI/XML transactions and/or sourced from other Oracle and non-Oracle applications. You may not exceed the licensed number of order lines during any 12-month period.

Employee: is defined as an active employee of yours. (note: The value of these applications is determined by the size of the active employee population and not the number of actual users. Therefore, all of your active employees must be included in your order when licensing these applications.)

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Employee User: is defined as an individual authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether or not the individual is actively using the programs at any given time.

Expense Report: is defined as the total number of expense reports processed by Internet Expenses during a 12-month period. You may not exceed the licensed number of expense reports during any 12-month period.

Federated Link: is defined as a one-to-one pairing between a source domain and a destination domain. A source domain is the point of origin for a request. A destination domain contains the resource that users from source domains want to access. One source domain might have many pairings with different destination domains and one destination domain might have many pairings with different source domains, Each and every pairing is a federated link.

Field Technician: is defined as an engineer, technician, representative, or other person who is dispatched by you, including the dispatchers, to the field using the programs.

$M Freight under Management: is defined as is defined as one million one hundred and twenty-two thousand, two hundred Canadian dollars ($1,122,200.00) the total transportation value of tendered orders for all shipments for a given calendar year during the term of the license. FUM shall include the combined total of actual freight purchased by you, plus the cost of freight for shipments managed by you (e.g., you are not purchasing transportation services on behalf of your clients but are providing transportation management services for your clients). Freight that is paid by a third party shall also be included in the FUM total (e.g., inbound shipments from suppliers to you with freight terms of prepaid).

Full Time Equivalent (FTE) Student: is defined as any full-time student enrolled in your institution and any part-time student enrolled in your institution counts as 25% of an FTE Student. The definition of “full-time” and “part-time” is based on your policies for student classification. If the number of FTE Students is a fraction, that number will be rounded to the nearest whole number for purposes of license quantity requirements.

Hosted Named User: is defined as an individual authorized by you to access the hosted service, regardless of whether the individual is actively accessing the hosted service at any given time.

Implementation Services, Packaged Methods, Architecture Services, Accelerator Services, Assessment Services and Workshops: Each Implementation Service, Packaged Method, Architecture Service, Accelerator Service, Assessment Service and Workshop is provided subject to the statement of obligation for that particular offering and Oracle’s consulting services policies. Oracle’s consulting services policies may be accessed at http://oracle.com/contracts, and are subject to change.

1K Invoice Line: is defined as one thousand invoice line items processed by the program during a 12 month period. You may not exceed the licensed number of Invoice Lines during any 12 month period unless you acquire additional Invoice Line licenses from Oracle.

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Learning Credits: may be used to acquire education products and services offered in the Oracle University online catalogue posted at http://www.oracle.com/education under the terms specified therein. Learning credits may only be used to acquire products and services at the list price in effect at the time you order the relevant product or service, and may not be used for any product or service that is subject to a discount or a promotion when you order the relevant product or service. The list price will be reduced by applying the discount specified in your order. Notwithstanding anything to the contrary in the previous three sentences, learning credits may also be used to pay taxes, materials and/or expenses related to your order; however, the discount specified above will not be applied to such taxes, materials and/or expenses. Learning credits are valid for a period of 12 months from the date your order is accepted by Oracle, and you must acquire products and must use any acquired services prior to the end of such period. You may only use learning credits in the country in which you acquired them, may not use them as a payment method for additional learning credits, and may not use different learning credits accounts to acquire a single product or service or to pay related taxes, materials and/or expenses. Learning credits are non-transferable and non-assignable. You may be required to execute standard Oracle ordering materials when using learning credits to order products or services.

$M in Managed Assets: is defined as one million one hundred and twenty-two thousand, two hundred Canadian dollars ($1,122,200.00) of the following total: (1) Book value of investment in capital leases, direct financing leases and other finance leases, including residuals, whether owned or managed for others, active on the program, plus (2) Book value of assets on operating leases, whether owned or managed for others, active on the program, plus (3) Book value of loans, notes, conditional sales contracts and other receivables, owned or managed for others, active on the program, plus (4) Book value of non earning assets, owned or managed for others, which were previously leased and active on the program, including assets from term terminated leases and repossessed assets, plus (5) Original cost of assets underlying leases and loans, originated and active on the program, then sold within the previous 12 months.

Membership: is defined as an individual authorized by you to access the hosted service, regardless of whether the individual is accessing the hosted service at any given time.

Module: is defined as each production database running the programs.

Named User Plus: is defined as an individual authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether the individual is actively using the programs at any given time. A non human operated device will be counted as a named user plus in addition to all individuals authorized to use the programs, if such devices can access the programs. If multiplexing hardware or software (e.g., a TP monitor or a web server product) is used, this number must be measured at the multiplexing front end. Automated batching of data from computer to computer is permitted. You are responsible for ensuring that the named user plus per processor minimums are maintained for the programs contained in the user minimum table in the licensing rules section; the minimums table provides for the minimum number of named users plus required and all actual users must be licensed.

For the purposes of the following programs: Configuration Management Pack for Non-Oracle Systems, System Monitoring Plug-in for Hosts, System Monitoring Plug-in for Non Oracle Databases, System Monitoring Plug-in for Non Oracle Middleware and Provisioning Pack, only the users of the third party program, that is being managed/monitored are counted for the purpose of determining the number of licenses required.

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For the purposes of the following programs: Application Management Pack for Oracle E-Business Suite, Application Management Pack for Siebel, and Application Management Pack for PeopleSoft Enterprise, all users of the middleware and/or database software that support the respective application program are counted for the purpose of determining the number of licenses required.

Network Device: is defined as the hardware and/or software whose primary purpose is to route and control communications between computers or computer networks. Examples of network devices include but are not limited to, routers, firewalls and network load balancers.

Non Employee User - External: is defined as an individual, who is not your employee, contractor or outsourcer, authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether or not the individual is actively using the programs at any given time.

Oracle Finance Division Contract: is a contract between you and Oracle (or one of Oracle’s affiliates) that provides for payments over time of some or all of the sums due under your order.

Oracle University Knowledge Center Service: is defined as a web based learning environment hosted by Oracle that provides on demand access to either an individual Oracle University training course (“Online Course”) or to all of the Oracle University training courses available on the Knowledge Center website (“Passport”). The Oracle University Knowledge Center service is available at http://www.oracle.corn/education/oukc/, and is made available to you subject to the terms of this agreement and Oracle University’s Online Hosting Access Policies, which are located at httn://www.oracle.com/education/oukc/hostingpolicies.html and may be updated by Oracle from time to time without notice to you. Online Courses are made available on a named user basis, and the Passport is made available on a membership basis. In the event that any Oracle programs are made available for download as part of the service, then use of such programs is subject to the terms of this agreement. If you acquire the Oracle University Knowledge Center service, the term shall be one year from the effective date of your order. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE AGREEMENT, ORACLE DOES NOT WARRANT THAT THE ORACLE UNIVERSITY KNOWLEDGE CENTER SERVICE WILL BE PROVIDED UNINTERRUPTED OR ERROR-FREE.

Order Line: is defined as the total number of order entry line items processed by the program during a 12 month period. Multiple order entry line items may be entered as part of an individual customer order or quote and may also be automatically generated by the Oracle Configuration. You may not exceed the licensed number of Order Lines during any 12 month period unless you acquire additional Order Line licenses from Oracle.

Order Management User: is defined as an individual authorized by you to use the applicable licensed application programs which are installed on a single server or on multiple servers regardless of whether the individual is actively using the programs at any given time. Order Management Users are allowed to manually enter orders directly into the programs but any orders entered electronically from other sources must be licensed separately.

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Orders: is defined as the total number of distinct orders for all programs that are a part of Electronic Orders, entered electronically (not manually entered by licensed professional users) through EDI, XML or other electronic means including purchase orders transmitted from Oracle Purchasing, during a 12-month period. You may not exceed the licensed number of orders during any 12-month period.

Partner Organization: is defined as an external third party business entity that provides value-added services in developing, marketing and selling your products. Depending upon the type of industry, partner organizations play different roles and are recognized by different names such as reseller, distributor, agent, dealer or broker.

Person: is defined as your employee or contractor who is actively working on behalf of your organization or a former employee who has one or more benefit plans managed by the system or continues to be paid through the system. For Time and Labor, a person is defined as an employee or contractor whose time or labor (piece work) or absences are managed by the application. For Project Resource Management, a person is defined as an individual who is scheduled on a project. For Internet Time, a person is defined as an individual who is charging time to a project via the application. The total number of licenses needed is to be based on the peak number of part-time and full-time people whose records are recorded in the system.

Ported Number: is defined as the telephone number that end users retain as they change from one service provider to another. This telephone number originally resides on a telephone switch and is moved into the responsibility of another telephone switch.

Processor: shall be defined as all processors where the Oracle programs are installed and/or running. Programs licensed on processor basis may be accessed by your internal users (including agents and contractors) and by your third party users. For the purposes of counting the number of processors which require licensing for a Sun UltraSPARC T1 processor with 4, 6 or 8 cores at 1.0 gigahertz or 8 cores at 1.2 gigahertz for only those servers specified on the Sun Server Table which can be accessed at http://oracle.com/contracts, “n” cores shall be determined by multiplying the total number of cores by a core processor licensing factor of .25. For the purposes of counting the number of processors which require licensing for AMD and Intel multicore chips, “n” cores shall be determined by multiplying the total number of cores by a core processor licensing factor of .50. For the purposes of counting the number of processors which require licensing for all hardware platforms not otherwise specified in this section, a multicore chip with “n” cores shall be determined by multiplying “n” cores by a core processor licensing factor of .75. All cores on all multicore chips for each licensed program for each core processor licensing factor listed above are to be aggregated before multiplying by the appropriate core processor licensing factor and all fractions of a number are to be rounded up to the next whole number. Notwithstanding the above, when licensing Oracle Standard Edition One or Standard Edition programs on servers with a maximum of 1 processor with 1 or 2 cores, only 1 processor shall be counted.

For example, a Sun UltraSPARC T1 based server installed and/or running the program on 6 cores would require 2 processor licenses (6 multiplied by a core processor licensing factor of .25 equals 1.50 which is then rounded up to the next whole number which is 2). An Intel or AMD based server installed and/or running the program on 7 cores would require 4 processor licenses (7 multiplied by a core processor licensing factor of .50 equals 3.50 which is then rounded up to the next whole number which is 4). Two multicore servers, for hardware platforms not specified above, installed and/or running the program on 10 cores would require 8 processor licenses (10 multiplied by a core processor licensing factor of .75 equals 7.50 which is then rounded up to the next whole number which is 8).

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For the purposes of the following programs: Configuration Management Pack for Non-Oracle Systems, System Monitoring Plug-in for Hosts, System Monitoring Plug-in for Non Oracle Databases, System Monitoring Plug-in for Non Oracle Middleware and Provisioning Pack, only the processors on which the third party program that is being managed/monitored are running are counted for the purpose of determining the number of licenses required.

For the purposes of the following programs: Application Management Pack for Oracle E-Business Suite, Application Management Pack for Siebel, and Application Management Pack for PeopleSoft Enterprise, all processors on which the middleware and/or database software that support the respective application program are running are counted for the purpose of determining the number of licenses required.

For the Healthcare Transaction Base program, only the processors on which Internet Application Server Enterprise Edition and this program are installed and/or running are counted for the purpose of determining the number of licenses required. For the iSupport, iStore and Configurator programs, only the processors on which Internet Application Server (Standard Edition and/or Enterprise Edition) and the licensed program are running are counted for the purpose of determining the number of licenses required for the licensed program; under these licenses you may also install and/or run the licensed program on the processors where a licensed Oracle Database (Standard Edition and/or Enterprise Edition) is installed and/or running. With respect to the Customer Data Hub program, in determining the number of licenses required, only processors on which both Oracle Database Enterprise Edition and the Customer Data Hub program are running in production shall be counted.

Purchase Line: is defined as the total number of purchase line items processed by the application during a 12-month period. Multiple purchase lines may be created on either a requisition or purchase order or may be automatically generated by other Oracle Application programs. For iProcurement, Purchase Lines are counted as all line items on an approved requisition created in iProcurement. For Purchasing Intelligence, Purchase Lines are counted as the line items on purchase orders processed through this application. This does not include communication on the same purchase order. For each application, you may not exceed the licensed number of Purchase Lines during any 12-month period unless you acquire additional Purchase Line licenses from us. You may acquire a different number of Purchase Line licenses for each program (the number of Purchase Lines for iProcurement could be a smaller number than for Purchasing Intelligence).

Program Documentation: is defined as the program user manual and program installation manuals.

$M in Revenue: is defined as one million one hundred and twenty-two thousand, two hundred Canadian dollars ($1,122,200.00) in all income (interest income and non interest income) before adjustments for expenses and taxes generated by you during a fiscal year.

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RosettaNet Partner Interface Processes® (PIPs®): are defined as business processes between trading partners. Preconfigured system-to-system XML-based dialogs for the relevant E-Business Suite Application(s) are provided. Each preconfigured PIP includes a business document with the vocabulary and a business process with the choreography of the message dialog.

Service Order Line: is defined as the total number of service order entry line items processed by the program during a 12 month period. Multiple service order entry line items may be entered as part .of an individual customer service order or quote. You may not exceed the licensed number of Service Order Lines during any 12 month period unless you acquire additional Service Order Line licenses from Oracle.

Subscriber: is defined as (a) a working telephone number for all wireline devices; (b) a portable handset or paging device that has been activated by you for wireless communications and paging; (c) a residential drop or a nonresidential device serviced by a cable provider; or (d) a live connected utility meter. The total number of Subscribers is equal to the aggregate of all types of Subscribers. If your business is not defined in the primary definition of Subscriber above, Subscriber is defined as each Cdn. $1,122.20 increment of your gross annual revenue as reported to the SEC in your annual report or the equivalent accounting or reporting document.

Suite: is defined as all the functional software components described in the product documentation.

Tape Drive: is defined as mechanical devices used to sequentially write, read and restore data from magnetic tape media. Typically used, but not limited to, data protection and archival purposes, tape drives are deployed either as a standalone units) or housed within a robotic tape library. Examples of tape drive include but are not limited to, Linear Tape Open (LTO), Digital Linear Tape (DLT), Advanced Intelligent Type (AIT), Quarter-Inch Cartridge (QIC), Digital Audio Tape (DAT), and 8mm Helical Scan.

Technical Reference Manuals

Technical Reference Manuals (“TRMs”) are Oracle’s confidential information. You shall use the TRMs solely for your internal data processing operations for purposes of: (a) implementing applications programs, (b) interfacing other software and hardware systems to the applications programs and (c) building extensions to applications programs. You shall not disclose, use or permit the disclosure or use by others of the TRMs for any other purpose. You shall not use the TRMs to create software that performs the same or similar functions as any of Oracle products. You agree: (a) to exercise either at least the same degree of care to safeguard the confidentiality of the TRMs as you exercise to safeguard the confidentiality of your own most important confidential information or a reasonable degree of care, whichever is greater; (b) to maintain agreements with your employees and agents that protect the confidentiality and proprietary rights of the confidential information of third parties such as Oracle and instruct your employees and agents of these requirements for the TRMs; (c) restrict disclosure of the TRMs to those of your employees and agents who have a “need to know” consistent with the purposes for which such TRMs were disclosed; (d) maintain the TRMs at all times on your premises; and (e) not to remove or destroy any proprietary or confidential legends or markings placed upon the TRMs. Oracle shall retain all title, copyright and other proprietary rights in the TRMs. TRMs are provided to you “as-is” without any warranty of any kind. Upon termination, you shall cease using, and shall return or destroy, all copies of the applicable TRMs.

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Terabyte: is defined as a terabyte of computer storage space used by a storage filer equal to one trillion bytes.

Test: is defined as each unit of interaction, with a software or hardware interface for which the total time elapsed between the initiation of communication and the completion of the resulting response is measured. A test may run on its own or be set up in conjunction with additional tests so that there are multiple units of interaction. Each unit of interaction must be counted as a Test; execution of a test or set of tests multiple times does not require additional tests. Examples of tests include but are not limited to, an http-get for a URL, icmp-echo for an IP address and sql-execute for a database.

Trainee: is defined as an employee, contractor, student or other person who is being recorded by the program.

UPK Developer: is defined as an individual authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether the individual is actively using the programs at any given time. UPK Developers may create, modify, view and interact with simulations and documentation.

UPK Employee: is defined as an active employee of yours. (note: The value of these applications is determined by the size of the active employee population and not the number of actual users. Therefore, all of your active employees must be included in your order when licensing these applications). UPK Employees may view and interact with simulations and documentation but may not create or modify simulations or documentation.

UPK User: is defined as an individual authorized by you to use the programs which are installed on a single server or multiple servers, regardless of whether the individual is actively using the programs at any given time. UPK Users may view and interact with simulations and documentation but may not create or modify simulations or documentation.

Warehouse Builder Connector: is defined as a software product that connects an Oracle database where the Oracle Warehouse Builder code is deployed, to an external product (e.g., SAP). A unique connector is required for each distinct external product for which the Oracle database is required to interface.

Workstation: is defined as the client computer from which the programs are being accessed, regardless of where the program is installed.

Term Designation

If your program license does not specify a term, the program license is perpetual and shall continue unless terminated as otherwise provided in the agreement.

1, 2, 3, 4, 5 Year Terms: A program license specifying a 1, 2, 3, 4 or 5 Year Term shall commence on the effective date of the order and shall continue for the specified period. At the end of the specified period the program license shall terminate.

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1 Year Hosting Term: A program license specifying a 1 Year Hosting Term shall commence on the effective date of the order and shall continue for a period of 1 year. At the end of the 1 year the program license shall terminate. A program license specifying a 1 Year Hosting Term may only be used for providing internet hosting services.

1 Year Oracle Hosted Term: A program license specifying a 1 Year Oracle Hosted Term shall commence on the effective date of the order and shall continue for a period of 1 year. At the end of the 1 year the program license shall terminate. A program license specifying a 1 Year Oracle Hosted Term must be hosted by Oracle.com via Computer and Administration services.

1 Year Subscription: A program license specifying a 1 Year Subscription shall commence on the effective date of the order and shall continue for a period of 1 year. At the end of the 1 year the program license shall terminate.

Licensing Rules

Fallover: Your license for the following programs, Oracle Database (Enterprise Edition, Standard Edition or Standard Edition One), Oracle Database Enterprise Edition Options, Oracle Internet Application Server (Enterprise Edition, Standard Edition, Standard Edition One or Java Edition) and Oracle Internet Application Server Options, includes the right to run the licensed program(s) on an unlicensed spare computer in a failover environment for up to a total of ten separate days in any given calendar year. Any use beyond the right granted in the previous sentence must be licensed separately and the same license metric must be used when licensing the program(s).

Testing: For the purpose of testing physical copies of backups, your license for the Oracle Database (Enterprise Edition, Standard Edition or Standard Edition One) includes the right to run the database on an unlicensed computer for up to four times, not exceeding 2 days per testing, in any given calendar year.

Primary Usage: Each licensed user of the following Oracle applications is counted only once based on primary usage: Financials, Discrete Manufacturing, Process Manufacturing, Project Costing and Purchasing. You must specify how many users you are licensed for each application. Primary Usage of one of the applications listed above provides the licensed user with the right to use any or all of the other application programs listed above for which you are licensed. This concept also apples to Application Read-Only Users. Each Application Read Only User of any of the applications listed above has the right to use any or all of the other application programs listed above for which you have also acquired Application Read-Only User licenses. Primary Usage does not provide you with the right to use other application programs including the extensions or options to the application programs listed above.

You are responsible for ensuring that the following restrictions are not violated:

• Oracle Database Standard Edition may only be used on servers that have the ability to run a maximum of 4 single-core processors. For multicore chips, the maximum number of cores per server is determined by multiplying the core processor licensing factors (as specified in the processor definition) by the number of cores. The result must be less than or equal to 4 and the total number of cores must be less than or equal to 8. Oracle Database Standard Edition may also be used on a single cluster of servers supporting up to a maximum of four single-core processors per cluster (2 2-way nodes, 4 1-way nodes, or 1 1-way node and 1 3-way node). For multicore chips, the maximum number of cores per cluster is determined by multiplying the core processor licensing factors (as specified in the processor definition) by the number of cores. The result must be less than or equal to 4 and the total number of cores in the cluster must be less than or equal to 8.

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• Oracle Standard Edition One and Internet Application Server Standard Edition One may only be used on servers that have the ability to run a maximum of 2 single-core processors. For multicore chips, the maximum number of cores per server is determined by multiplying the core processor licensing factors (as contained in the processor definition) by the number of cores. The result must be less than or equal to 2 and the total number of cores must be less than or equal to 4.

• The number of TRACE licenses (Rdb Server Option) must match the number of licenses of the associated database.

• The number of Diagnostics Pack and /or Configuration Management Pack licenses must match the number of licenses of the associated Internet Application Server program (Enterprise Edition, Standard Edition, Standard Edition One or Java Edition).

• The number of Service Registry licenses must match the number of licenses of the associated Internet Application Server program (Java Edition, Standard Edition One or Standard Edition).

• The number of Bpel Process Manager Option, Business Activity Monitoring, XML Publisher, Service Registry and SOA Suite for Oracle Middleware licenses must match the number of licenses of the associated Internet Application Server Enterprise Edition program.

• The number of Interactive Dashboard, Delivers, Answers, Office Plug-in and Reporting and Publishing licenses must match the number of licenses of the associated Business Intelligence Server Enterprise Edition program.

• Application licensing prerequisites as specified in the Applications Licensing Table which may be accessed at http://oracle.com/contracts.

• For the TimesTen In-Memory Database, Replication - TimesTen to TimesTen and Cache Connect to Oracle programs, the number of gigabytes (GB) specified in the program name is the maximum size of data store (aggregate of in-memory databases or caches on a single computer system or node in a cluster of servers) irrespective of the number of processors licensed. You may not exceed the specified GB data store limitation unless you acquire additional licenses from Oracle.

If you purchase Named User Plus licenses for the programs listed below, you must maintain the following user minimums and user maximums:

Program	Named User Plus Minimum
Oracle Database Enterprise Edition	25 Named Users Plus per Processor
Rdb Enterprise Edition	25 Named Users Plus per Processor

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Program	Named User Plus Minimum
CODASYL DBMS	25 Named Users Plus per Processor
TopLink and Application Development Framework	10 Named Users Plus per Processor
Internet Application Server Java Edition	10 Named Users Plus per Processor
Internet Application Server Standard Edition	10 Named Users Plus per Processor
Internet Application Server Enterprise Edition	10 Named Users Plus per Processor
BPEL Process Manager	10 Named Users Plus per Processor
Portal	10 Named Users Plus per Processor
Integration	10 Named Users Plus per Processor
Business Intelligence	10 Named Users Plus per Processor
Forms and Reports	10 Named Users Plus per Processor
Web Services Manager	10 Named Users Plus per Processor
XML Publisher	10 Named Users Plus per Processor
Virtual Directory	10 Named Users Plus per Processor
SOA Suite for Non Oracle Middleware	10 Named Users Plus per Processor
Business Activity Monitoring for Non Oracle Middleware	10 Named Users Plus per Processor
Fusion Middleware for PeopleSoft	10 Named Users Plus per Processor
Fusion Middleware for SAP	10 Named Users Plus per Processor
Business Intelligence Standard Edition	10 Named Users Plus per Processor

• The Named User Plus Minimum does not apply if the program is installed on a one processor machine that allows for a maximum of one user per program.

Program	Named User Plus Maximum
Personal Edition	1 Named User Plus per database

The number of licenses for the programs listed below must match the number of licenses of the associated database and if you purchase Named User Plus licenses for these programs, you must maintain, at a minimum, 25 Named Users Plus per Processor per associated database:

Real Application Clusters, Partitioning, OLAP, Data Mining, Spatial, Advanced Security, Label Security, Database Vault, Warehouse Builder Enterprise ETL, Warehouse Builder Data Quality, Diagnostics Pack, Tuning Pack, Change Management Pack, Configuration Management Pack

The effective date of this agreement shall be May 4, 2007.  (to be completed by Oracle)

Company Name: Pioneer Transformers Ltd.	ORACLE CORPORATION CANADA, INC.
Authorized Signature:   /s/  James A. Wilkins	Authorized Signature:   /s/ Ann Spicer
Name:   James A. Wilkins	Name:    Ann Spicer
Title:         Vice President Finance	Title:       Senior Manager Contract Services
Signature Date:     2/23/07	Signature Date:   5/4/07

19

SPECIAL EDITION ADDENDUM

TO THE

ORACLE LICENSE AND SERVICES AGREEMENT

A.           PROGRAMS AND SERVICES.

1. “Oracle E-Business Suite Special Edition” are those Oracle software programs specifically identified in Exhibit A to this Addendum, and any updates to such software programs that are acquired through software updates and product support (“technical support”). The term “traditional component programs of the Oracle E-Business Suite” refers to the following modules of the Oracle E-Business Suite programs: Financials, Purchasing, Order, Management, E-Business Intelligence, Inventory Management, Discrete Manufacturing, TeleService, Field Sales, TeleSales.

2. If you are acquiring technical support for the Oracle E-Business Suite Special Edition programs you acknowledge that such technical support shall be provided for a period of 12 months only, that such technical support is provided under the relevant terms of the agreement, and that fees for such technical support are due and payable annually in advance. The authorized Oracle partner from whom you purchased licenses for the E-Business Suite Special Edition programs and technical support will inform you of the fees for the second year of technical support services should you elect to purchase such services from Oracle.

B.           ORACLE E-BUSINESS SUITE SPECIAL EDITION TERMS

1. Application User. For purposes of this Addendum, the term “Application User” is defined as an individual authorized by you to use the Oracle E-Business Suite Special Edition programs (as defined below) which are installed on a single server or on multiple servers regardless of whether the individual is actively using the Oracle E-Business Suite Special Edition programs at any given time.

2. Licensing Minimum and Maximum. You must purchase a minimum of 10 Application Users for the Oracle E-Business Suite Special Edition programs and you may not exceed more than 50 Application Users for the Oracle E-Business Suite Special Edition programs.

3. Modifications to Reports Forms and/or Workbooks used with the Oracle E-Business Suite Special Edition Programs.

a. If you wish to make modifications implemented as Java programs which include Java that produces html interface or Java business logic, you must purchase: (i) JDeveloper for the total number of developers who are not licensed for Internet Developer Suite and are building Java programs using JDeveloper that accesses the existing application schema; (ii) Internet Developer Suite or Discoverer Desktop Edition for the total number of developers who are performing these modifications; (iii) Internet Application Server Enterprise Edition for the total number of end users or processors for which the modifications are deployed; and (iv) If deploying client/server workbooks, Discoverer Desktop edition for the total number of users.

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b. If you wish to make modifications that require Internet Developer Suite or Discoverer Desktop edition only (including creation/modification of reports, forms, and workbooks), you must purchase: (i) JDeveloper for the total number of developers who are not licensed for Internet Developer Suite and are building Java programs using JDeveloper that accesses the existing application schema; (ii) Internet Developer Suite or Discoverer Desktop Edition for the total number of developers who are performing these modifications; (iii) Internet Application Server Enterprise Edition for the total number of end users or processors for which the modifications are deployed; and (iv) if deploying client/server workbooks, Discoverer Desktop edition for the total number of users.

4. Modifications to the Database Program used with the Oracle E-Business Suite Special Edition Programs.

If you wish to make any modifications, outside of those stated in 3a. or 3b. above, or customizations to the Oracle E-Business Suite Special Edition programs or to the Oracle database, including adding/changing tables, columns, stored procedures, and triggers, you may no longer use the Oracle E-Business Suite Special Edition programs and must purchase: (1) Oracle E-Business Suite or traditional component programs of the Oracle E-Business Suite for the total number of actual users subject to applicable licensing and pricing metrics; (2) Database Enterprise Edition for the total number of actual users or Processors; (3) Internet Application Server Enterprise Edition for the total number of end users or Processors for which the modifications are deployed; (4) Internet Development Suite and/or Discoverer Desktop Edition for the total number of developers who are performing these modifications; (5) JDeveloper for the total number of developers who are not licensed for Internet Development Suite and are building Java Programs using JDeveloper that access the existing application schema; (6) If deploying client/server workbooks, Discoverer Desktop edition for the total number of users.

5. Customer Reference. Oracle may refer to you as an Oracle E-Business Suite Special Edition customer in sales presentations, marketing vehicles and activities. In addition you agree to become part of Oracle’s reference program by working with a representative from Oracle Marketing to define what marketing activities you will participate in. These marketing activities may include a reference in Oracle’s annual report, taking sales reference calls and participating in print advertising, marketing leadership forums and trade shows. At a minimum, you agree to develop a customer profile for use on Oracle.com and for other promotional activities at Oracle’s discretion. The profile will include a quote from an executive of your company and your company’s logo.

Pioneer Transformers Ltd.	Oracle Corporation Canada, Inc.
Authorized Signature:   /s/  James A. Wilkins	Authorized Signature:   /s/ Ann Spicer
Name:   James A. Wilkins	Name:    Ann Spicer
Title:         Vice President Finance	Title:       Senior Manager Contract Services
Signature Date:     2/23/07	Signature Date:   5/4/07
Effective Date:       5/4/07                        (to be completed by Oracle)

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Exhibit A

Oracle E-Business Suite Special Edition included Applications

Category	Programs
Intelligence	E-Business Intelligence
Sales	TeleSales, Field Sales
Service	TeleService
Order Management	Order Management
Logistics	Inventory Management
Procurement	Purchasing
Manufacturing	Discrete Manufacturing
Financial	Financials
Education	11I E-Business Suite End User Training Subscription, if available
Database	Oracle database – Enterprise Edition (restricted to use with the E-Business Suite Special Edition programs)

 22

EX-10.21

Exhibit 10.21

ValuePlan Lease

Agreement No.:366103/CFC4  Contract No. 0083939VT Customer No.: 00366103 Date Prepared: 2007/09/06	Attachment No.: INSTALLED AT LOCATION
Customer Name: LES TRANSFORMATEURS PIONEER LTEE	Company Name: LES TRANSFORMATEURS PIONEER LTEE
Address:  612, CHEMIN BERNARD	Address:  612, CHEMIN BERNARD
GRANBY   QC J2G 8E5	GRANBY   QC J2G 8E5
Tel. No.: Attn:	Tel. No.: Attn:

Customer, including successors and assigns ("you or "your') agrees to lease from and/or finance with IBM Canada Limited ("us”, "we" or "our'), the equipment and/or other items including software and services (collectively, the "Items') described in this Agreement. A transaction code F in the "Trans. Code” column indicates a loan; other transaction codes indicate leased Items. We make no representation whatsoever regarding your accounting treatment related to any transaction under /INS Agreement End of lease ("EOL") designations indicate your options which are detailed in paragraph 12. All decisions and options under this Agreement apply to all and not less than all Items listed in this Agreement.

Item Description -	EOL	Trans. Code	Qty	Unit Amount Financed		Unit Periodic Payment
9993 SWG IBM TRADITIONAL SOFTWARE		F	1	$	54247.44	$	1645.32
9993 SWG IBM TRADITIONAL SOFTWARE		F	1	$	86330.63	$	2618.41
9BCS N01 IBM BUSINESS CONSULTING SERVIC		F	2	$	5060.00	$	158.18

(Additional Items maybe listed on a Continuation Sheet)

Total Amount Financed (All Pages) $150698.07	Term in Months 36	Total Number of Payment Periods 36	Payment Description Monthly in Advance	Total Periodic Payment (All Pages – Taxes May Apply) $4580.09
Interim Rent                      No Direct Debit                      Yes Guarantee                          No	Security Deposit N/A	Payment Commencement Date 2007/10/01

1. TERM. The initial Term for each Item begins on the date of your acceptance and ends alter completion of the above Total Number of Payment Periods The Term and payment obligations are not cancellable and may not be terminated except as stated in this Agreement. 2. ACCEPTANCE. Your acceptance, unless otherwise noted by us, of an Item will be (a) for an Items not supplied by us, ten (10) calendar days following the latest date of your supplier's Invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (b) for all personal computing equipment including personal computer-based servers. or software, services or other financed Items supplied by us, ten (10) calendar days following the latest date of the corresponding invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (c) the date of installation for all Items supplied by us not covered by (b); or (d) the date we provide funds for any other financed Items.
3. PAYMENT. Payments are due as specified above. The Total Periodic Payment commences at the start of the Term unless a different date is specified in the box above. For the Total Periodic Payment to be valid and subject to change pursuant only to paragraph 8, the Term must begin within the month of 2007/10/01. For any payment not made by its due date, you agree to pay a late charge of 2% per month (or 24% per annum) on the unpaid amount subject to maximum limitations by law. Your commitment a pay and any other obligations hereunder are absolute and unconditional and not subject to set-off, counterclaim, termination or Item performance. 4. RIGHTS AND OBLIGATIONS. You assign and authorize us and we accept me obligation to pay the supplier and' de right to take title to any equipment Item after your acceptance. You retain all other rights, including all warranties, and obligations as per your agreement(s) with your supplier for all Items. When we are the supplier, our terms of supply are specified on the IBM Web site at: http://www-304 ibm.comlct03004dMOls/cpepertal/fileserve/downloads/67130/.

BY SIGNING BELOW, YOU AGREE THAT THIS AGREEMENT DOES NOT TAKE EFFECT UNTIL OUR RECEIPT AND ACCEPTANCE OF R. YOU FURTHER AGREE THAT AN EXECUTED COPY PRODUCED FROM AN ELECTRONIC FORM OR BY ANY OTHER RELIABLE MEANS (FOR EXAMPLE, PHOTOCOPY OR FACSIMILE OR E-MAIL) IS IN ALL RESPECTS EQUIVALENT TO AN ORIGINAL. THE TERMS ON THIS ANO THE FOLLOWING PAGES OR ATTACHMENTS ARE THE ONLY TERMS FOR THIS TRANSACTION. BY SIGNING BELOW, YOU REPRESENT ANO WARRANT THAT YOUR NAME AS SET FORTH IN THE SIGNATURE BLOCK BELOW IS YOUR EXACT LEGAL NAME.

Accepted by: IBM Canada Limited For or as Lessor:		LES TRANSFORMATEURS PIONEER LTEE
By:  /s/  Jean-Jacques Jette		By: /s/ James A. Wilkins	September 6, 2007
Authorized Signature		Authorized Signature
Name (Type or Print)	Date	Name (Type or Print)	Date

1

ADDITIONAL TERMS – Agreement No.: 0083939VT

5. DIRECT DEBIT; SECURITY. When Direct Debit is indicated on the face of this Agreement, the terms are specified on an attachment to this Agreement.  When guarantee is indicated, your guarantor must sign a guarantee attachment to this Agreement. 6. CHANGES; NOTICES. You authorize us or your supplier to complete the required information, including Item serial numbers, in the 'Item Description” on the first page of the Agreement. For any changes to the Unit Amount Financed that you and your supplier agree To, you authorize us to make the corresponding change to the "Total Periodic Payment” and the “Total Amount Financed' provided the change does not exceed 15% of the original “Total Amount Financed”. Notices and requests from you are to be submitted to the address on your periodic invoice. 7. OWNERSHIP; SELECTION; AND USE. Equipment Items remain our property during the Term and you will keep these Items free of encumbrances of any kind. You hereby authorize us to file personal property security financing statements relating to the Items listed on this Agreement You hereby grant to us, a first priority security interest in the Items (Including all related software) and all additions, attachments, and upgrades thereto and any and all substitutions, accessories, accession replacements or exchanges for any such Items or software and any and all proceeds of any of the foregoing, including, without limitation, payments under insurance or any indemnity or warranty relating to lass or damage to such Items. You agree that you are responsible for the selection, supply, delivery, installation, use, servicing and maintenance of the Items and the results from their use. You represent that the Items will be used for business or commercial, and not primarily for personal or household, purposes. 8. WARRANTY. We provide a warranty of quiet enjoyment but make no other warranty or condition, express or implied, about any matter, including, but not limited to, the Implied warranties of merchantability or fitness for a particular purpose. In no event will we have any liability for, nor will you have any remedy against us for special, Indirect or consequential damages, Including but not limited to lost profits, last business revenue, or failure to realize expected savings, even If you Informed us of their possibility. 9. MAINTENANCE: INSPECTION; AND MARKING. You shall keep and operate each Item according to the manufacturers specifications and in good repair and operating condition, ordinary wear and tear excepted. All parts installed and removed in connection with warranty and maintenance services become our property. You agree, upon request, to make Items and their maintenance records available for inspection by our representative during normal business hours and to mark Items as we require. 10.ALTERATIONS. With prior written notice to us, you may after any equipment Item. Any of our parts that you remove shall remain our proceed and you may not make such parts avertable for sale, transfer, exchange or other disposition without our prior written consent. Before you return an equipment Item to us. you must restore it, at your expense. to its original condition with the original parts that you removed. Alterations not removed when an equipment Item is returned to us shall become our property, without further payment by us and free of encumbrances. 11.  RELOCATION; SUBLEASE; AND ASSIGNMENT. You may not locate any Items outside of Canada and may only relocate an Item within your enterprise to different provinces within Canada with 30 days prior notice to us. You may sub/ease an Item only with our prior written consent. You may not assign, transfer or otherwise dispose of an Item or your interest or rights in this Agreement (in whole or in part). We may sell or assign all, or any pad, of our interest or rights in this Agreement without prior nonce to you including assigning or granting a security interest(s) in any Item. Any assignee will be subject to your right of quiet enjoyment. You agree not to assert against any such assignee any claim, set-off, defense or counterclaim that you may have against us or any other person. This Agreement shall be binding upon your successors or permitted assigns. 12.END OF LEASE OPTIONS. If you are not in default under this Agreement, your EOL options for equipment Items are: (a) renew to lease; (b) purchase the equipment Item, or (c) return the equipment Item. An EOL designation of FM indicates a lease renewal or purchase at the fair market value. A prestated % EOL designation indicates the percent of Me Total Amount Financed that is your purchase once. For a renewal with a prestated %, One-half of the purchase price due m advance is the payment for a 1 year renewal. An EOL designation of SI indicates your purchase price. For an EOL purchase at either the prestated % or $1, you will pay any applicable taxes and Unit Periodic Payments due to the dare of purchase. Upon our receipt of all amounts due, we will transfer title to you on an “As Is. Where Is” basis. 13.RETURN OF AN EQUIPMENT ITEM. If you elect to return an equipment Item to us upon expiration of the Term, you must notify us in writing of your intent at least three (3) months prior to expiration of the Term and you must return the equipment Item to us immediately upon expiration of the Term. The equipment Item must be in good condition and working order, reasonable wear and tear excepted (“Good Working Order”). Prior to the return of me equipment Item to us, you are responsible for removing all information and data including but not limited to programs not licensed to a specific equipment Item. We have no obligation to remove your or any other party's information from an equipment Item. We reserve the right to recover full reimbursement from you for the reasonable cost and expense incurred by us to restore such equipment Items to Good Working Order. However, such reasonable cost and expense shall not exceed me Stipulated Loss, defined in Paragraph 15, of such equipment Items. You will return the equipment Item to a location in Canada designated by us for that type of equipment. You are responsible for any costs associated with deinstallation, packing, proper content labeling and return of the equipment Item. The return of an equipment Item shall constitute a full release by you of any leasehold rights or possessory interest in the equipment Item. 14.AUTOMATIC EXTENSION PROVISIONS. The Term of the lease will automatically be extended on a month-to-month basis unless you give the required notice to return the equipment Item at the end of the Term. The Term of the lease will continue to be automatically extended until notice to return is given and the Item is returned Automatic extension can be terminated by you upon three (3) months notice to us, followed by equipment Item return to the designated location in compliance with return requirements. The extension will be under the same terms and conditions then in effect, including current Total Periodic Payment, but for equipment Items with a fair market value purchase option, not less than the fair market rental value as determined by us at the expiration of the Term. Total Periodic Payment shall be calculated as the sum of the lease payments over the initial Term divided by the initial Term of the lease. 15.CASUALTY INSURANCE. You are responsible for any risk of loss, theft or damage to any equipment Item (“Casualty Loss”) from the date the equipment Item is delivered to your location to the date it is received by us at our return location. You will, at your expense, (a) keep in effect an all risk insurance policy covering the equipment Item listed in the Agreement and we will be named as additional insured and loss payee on such policy, or (b) self-insure such equipment Items against Casualty Loss pursuant to a generally maintained program of self-insurance You will provide us, upon request, evidence of such policy or program of self-insurance. You will promptly notify us of any Casualty Loss. If we determine the equipment Item can be economically repaired, you will have it repaired and will continue to pay the Unit Periodic Payment to us. If we determine the equipment Item is not economically repairable, on the next Unit Periodic Payment due date, you will pay us an amount, to be determined by us, equal to one hundred ten percent (110%) of the original Unit Amount Financed minus seventy percent (70%) of the Unit Periodic Payments paid as of the date of the Casualty Loss (“Stipulated Loss”). Upon receipt of all amounts due under this Paragraph, we will transfer to you all of our rights, title and interest in and to such equipment Items on an “As Is, Where Is” basis. 16.         TAXES. You agree to pay any and all taxes and charges levied by any government body in connection with this Agreement except for taxes based on our net income. 17.         GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario. 18.         INDEMNITY; NO WAIVER. This is a net lease and we are not liable for any claim except one resulting from our sole negligence willful misconduct. You indemnify against any third park claims which apse en connection with this Agreement or your possession and use of the Items hereunder including all related liabilities, costs, and expenses. Failure to require full performance or waiver of any provision of this Agreement shall not prevent either party from requiring full performance of all provisions in the future. 19.         DEFAULT; REMEDIES. You will be in default under this Agreement if you or any guarantor: (a) do not pay any amount due within seven (7) days after its due date; (b) sublease, relocate, assign or make a transfer in violation of this Agreement; (c) misrepresent credit application information; (d) fail to remedy any other breach Of this Agreement within fifteen (15) days after receiving written notice from us; (e) make a voluntary assignment for the benefit of creditors; (f) file or have filed against you any petition or proceeding under any bankruptcy, insolvency, receivership or similar law; (g) have appointed against you a receiver over all or a substantial part of your Properly; (h) admit an inability to pay debts as they generally become due or otherwise acknowledge insolvency: (n have any execution, distress or other enforcement process (including under personal property security legislation) commenced against any of your property; (j) default on any other agreement with us; or (k) use any funds you receive from us for any purpose other than to acquire the specific Items herein. If you are in default, we may: (a) recover all payments and other amounts due and remaining to become due hereunder; (b) recover possession and sell or otherwise dispose of the Items and apply the proceeds to reduce the amounts due from you hereunder; (c) recover any costs incurred in enforcing or protecting our rights under this Agreement and any charges or claims made by third parties; (d) pursue any other remedy available at law and recover legal costs and legal fees incurred in exercising any of the remedies stated herein. Notwithstanding the foregoing, you shall remain liable for any deficiency following the exercise of our rights and remedies under this Paragraph or at law. We will be in default d we breach your quiet enjoyment unless such breach follows your default which remains uncured. If we are in default, your sole and exclusive remedy is to terminate this Agreement, return the applicable Items, and to recover actual damages aesing directly from the default and reasonable legal fees. 20.Language. Les parties aux preseines ont expressement exige que ce contrat soit redigé en langue anglaise. The parties hereto have expressly required that this Agreement be drafted in the English language.

2

LESTRANSFORMATEURS PIONEER LTEE

Certificate of Acceptance

The Leased or Financed Items to which this form applies are those items described in the below referenced contract number. For purposes of Rent billings, the Rent payments will commence the first day of the payment period following the Acceptance Date below unless otherwise indicated on the Transaction Document. If IBM Canada has not received this signed COA within 60 days of the Document Create Date (as shown below), IBM Canada may withdraw its obligation to provide financing of the referenced contract number upon written notice to you.

For these Items, you certify that they:

 - have been delivered and accepted.

 - are in all respects satisfactory.

You acknowledge that:

 - you have personally chosen these Items; and

 - these Items may only be used for commercial, industrial or professional purposes.

In order for thisCertificate of Acceptance to beeffective, you must confirm with IBMCanada:

 - the serial numbers provided by each supplier to IBM Canada for each accepted configured Item.

You authorize us to:

 - begin the Lease in accordance with its terms for each Item; and

 - pay the supplier directly the net price plus applicable taxes IBM Canada specified for each Item unless IBM has approved in writing, other terms of payment.

In the event that the Items fail to perform as expected or as represented by the supplier, you will continue to pay IBM Canada, in the normal course of business. You will look solely to the supplier of the Items for satisfaction of all claims, covenants or warranties.

Acceptance Date: __________________  Sept 06, 2007

Certified and Authorized by:

Customer Legal Name:	LES TRANSFORMATEURS PIONEER LTEE
Address:	612, CHEMIN BERNARD
	GRANBY QC J2G 8E5

IBM Agreement No.: 366103
By: /s/ James A. Wilkins
Signature
Name (type or print):  James A. Wilkins
Title:  Vice-President Finance
Date: September 6, 2007
Supplement Number:	366103-CFC4
Contract Number:	0083939VT
Certificate of Acceptance Reference:	0083940C
Certificate of Acceptance Financed Amount:	$150 698,07

3

LES TRANSFORMATEURS PIONEER LTEE

Supplier    Invoice No(s)   Invoice Date  Invoice Amount(s)

Document Create Date: 2007/09

***END***

4

IBM-ORACLE CFC4 80083939VT

150,698.07

DATE		VERSEMENTS	INTÉRETS	CAPITAL	BALANCE
JANVIER	2007
FÉVRIER	2007
MARS	2007
AVRIL	2007
MAI	2007
JUIN	2007
JUILLET	2007
AOUT	2007
SEPTEMBRE	2007				150,698.07
OCTOBRE	2007	4,580.09	745.33	3,834.76	146,863.31
NOVEMBRE	2007	4,580.09	726.36	3,853.73	143,009.58
DÉCEMBRE	2007	4,580.09	707.30	3,872.79	139,136.79
TOTAL	2007	13,740.27	2,178.99	11,561.28	139,136.79

JANVIER	2008	4,580.09	688.15	3,894.94	135,244.85
FÉVRIER	2008	4,580.09	668.00	3,911.19	131,333.66
MARS	2008	4,580.09	649.55	3,930.54	127,403.12
AVRIL	2008	4,580.09	630.11	3,949.98	123,453.14
MAI	2008	4,580.09	610.58	3,969.51	119,483.63
JUIN	2008	4,580.09	590.95	3,989.14	115,494.49
JUILLET	2008	4,580.09	571.22	4,008.87	111,485.62
AOUT	2008	4,58009	551.39	4,028.70	107,456.92
SEPTEMBRE	2008	4,580.09	531.46	4,048.63	103,408.29
OCTOBRE	2008	4,580.09	511.44	4,068.65	99,339.64
NOVEMBRE	2008	4,580.09	491.32	4,088.77	95,250.87
DÉCEMBRE	2008	4,580.09	471.09	4,109.00	91,141.87
TOTAL	2008	54,961.08	6,966.16	47,994.92	91,141.87

JANVIER	2009	4,580.09	450.77	4129.32	87,012.55
FÉVRIER	2009	4,580.09	430.35	4,149.74	82,862.81
MARS	2009	4,580.09	409.83	4,170.26	78,692.55
AVRIL	2009	4,580.09	389.20	4,190.89	74,501.66
MAI	2009	4,580.09	368.47	4,211.62	70,290.04
JUIN	2009	4,580.09	347.64	4,232.45	66,057.59
JUILLET	2009	4,580.09	326.71	4,253.28	61,804.21
AOUT	2009	4,580.09	305.67	4,274.42	57,529.79
SEPTEMBRE	2009	4,580.09	284.53	4,295.56	53,234.23
OCTOBRE	2009	4,580.09	263.29	4,316.80	48,917.43
NOVEMBRE	2009	4,580.09	241.94	4,338.15	44,579.28
DÉCEMBRE	2009	4,580.09	220.48	4,359.61	40,219.67
TOTAL	2009	54,961.08	4,038.88	50,922.20	40,219.67

JANVIER	2010	4,580.09	198.92	4,381.17	35,838.50
FÉVRIER	2010	4,580.09	177.25	4.402.84	31,435.66
MARS	2010	4,580.09	155.48	4,424.46	27,011.05
AVRIL	2010	4,580.09	133.59	4,446.50	22,564.55
MAI	2010	4,580.09	111.60	4,468.49	18,096.06
JUIN	2010	4,580.09	89.50	4,490.59	13,605.47
JUILLET	2010	4,580.09	67.29	4,512.80	9,092.67
AOUT	2010	4,580.09	44.97	4,535.12	4,557.55
SEPTEMBRE	2010	4,580.09	22.54	4,557.55	0.00
OCTOBRE	2010	0.00	0.00	0.00
NOVEMBRE	2010	0.00	0.00	0.00
DÉCEMBRE	2010	0.00	0.00	0.00
TOTAL	2010	41,220.81	1,001.14	40,219.67

5

EX-10.22

Exhibit 10.22

ValuePlan Lease

Agreement No.:366103/CFC1 Customer No.: 00366103 Date Prepared: 2007/06/04	Attachment No.: INSTALLED AT LOCATION
Customer Name: LES TRANSFORMATEURS PIONEER LTEE	Company Name: LES TRANSFORMATEURS PIONEER LTEE
Address:  612, CHEMIN BERNARD	Address:  612, CHEMIN BERNARD
GRANBY   QC  J2G  8E5	GRANBY   QC J2G  8E5
Tel. No.: Attn:	Tel. No.: Attn:

Customer, including successors and assigns ("you or "your') agrees to lease from and/or finance with IBM Canada Limited ("us”, "we" or "our'), the equipment and/or other items including software and services (collectively, the "Items') described in this Agreement. A transaction code F in the "Trans. Code” column indicates a loan; other transaction codes indicate leased Items. We make no representation whatsoever regarding your accounting treatment related to any transaction under /INS Agreement End of lease ("EOL") designations indicate your options which aredetailed in paragraph 12. All decisions and options under this Agreement apply to all and not less than allItems listed in this Agreement.

Item Description -	EOL	Trans. Code	Qty	Unit Amount Financed		Unit Periodic Payment
9994 N21 OEM TRAD. SERVICES (NTX)		F	1	$	13000.00	$	397.68
9994 TRN TRAD. MAINTENANCE		F	1	$	12721.66	$	389.17
9998 N01 PC OTHER AMNTS FINANCED (NTX)		F	1	$	36278.01	$	1109.77

(Additional Items maybe listed on a Continuation Sheet)

Total Amount Financed (All Pages) $61999.67	Term in Months 36	Total Number of Payment Periods 36	Payment Description Monthly in Advance	Total Periodic Payment (All Pages – Taxes May Apply) $1896.62
Interim Rent                      No Direct Debit                      No Guarantee                         No	Security Deposit N/A	Payment Commencement Date 2007/07/01

1.TERM. The initial Term for each Item begins on the date of your acceptance and ends alter completion of the above Total Number of Payment Periods The Term and payment obligations are not cancellable and may not be terminated except as stated in this Agreement.
2.ACCEPTANCE. Your acceptance, unless otherwise noted by us, of an Item will be (a) for an Items not supplied by us, ten (10) calendar days following the latest date of your supplier's Invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (b) for all personal computing equipment including personal computer-based servers. or software, services or other financed Items supplied by us, ten (10) calendar days following the latest date of the corresponding invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (c) the date of installation for all Items supplied by us not covered by (b); or (d) the date we provide funds for any other financed Items.
3.PAYMENT. Payments are due as specified above. The Total Periodic Payment commences at the start of the Term unless a different date is specified in the box above. For the Total Periodic Payment to be valid and subject to change pursuant only to paragraph 8, the Term must begin within the month of 2007/07/01. For any payment not made by its due date, you agree to pay a late charge of 2% per month (or 24% per annum) on the unpaid amount subject to maximum limitations by law. Your commitment a pay and any other obligations hereunder are absolute and unconditional and not subject to set-off, counterclaim, termination or Item performance.   4.RIGHTS AND OBLIGATIONS. You assign and authorize us and we accept me obligation to pay the supplier and' de right to take title to any equipment Item after your acceptance. You retain all other rights, including all warranties, and obligations as per your agreement(s) with your supplier for all Items. When we are the supplier, our terms of supply are specified on the IBM Web site at: http://www-304 ibm.comlct03004dMOls/cpepertal/fileserve/downloads/67130/.  

BY SIGNING BELOW, YOU AGREE THAT THIS AGREEMENT DOES NOT TAKE EFFECT UNTIL OUR RECEIPT AND ACCEPTANCE OF R. YOU FURTHER AGREE THAT AN EXECUTED COPY PRODUCED FROM AN ELECTRONIC FORM OR BY ANY OTHER RELIABLE MEANS (FOR EXAMPLE, PHOTOCOPY OR FACSIMILE OR E-MAIL) IS IN ALL RESPECTS EQUIVALENT TO AN ORIGINAL. THE TERMS ON THIS ANO THE FOLLOWING PAGES OR ATTACHMENTS ARE THE ONLY TERMS FOR THIS TRANSACTION. BY SIGNING BELOW, YOU REPRESENT ANO WARRANT THAT YOUR NAME AS SET FORTH IN THE SIGNATURE BLOCK BELOW IS YOUR EXACT LEGAL NAME.

Accepted by: IBM Canada Limited For or as Lessor:		LES TRANSFORMATEURS PIONEER LTEE
By: /s/  Jean-Jacques Jette		By: /s/ James A. Wilkins	June, 13, 2007
Authorized Signature		Authorized Signature
Name (Type or Print)	Date	Name (Type or Print)	Date

1

ADDITIONAL TERMS – Agreement No.: 0080732VT

5. DIRECT DEBIT; SECURITY. When Direct Debit is indicated on the face of this Agreement, the terms are specified on an attachment to this Agreement.  When guarantee is indicated, your guarantor must sign a guarantee attachment to this Agreement. 6. CHANGES; NOTICES. You authorize us or your supplier to complete the required information, including Item serial numbers, in the 'Item Description” on the first page of the Agreement. For any changes to the Unit Amount Financed that you and your supplier agree To, you authorize us to make the corresponding change to the "Total Periodic Payment” and the “Total Amount Financed' provided the change does not exceed 15% of the original “Total Amount Financed”. Notices and requests from you are to be submitted to the address on your periodic invoice. 7. OWNERSHIP; SELECTION; AND USE. Equipment Items remain our property during the Term and you will keep these Items free of encumbrances of any kind. You hereby authorize us to file personal property security financing statements relating to the Items listed on this Agreement You hereby grant to us, a first priority security interest in the Items (Including all related software) and all additions, attachments, and upgrades thereto and any and all substitutions, accessories, accession replacements or exchanges for any such Items or software and any and all proceeds of any of the foregoing, including, without limitation, payments under insurance or any indemnity or warranty relating to lass or damage to such Items. You agree that you are responsible for the selection, supply, delivery, installation, use, servicing and maintenance of the Items and the results from their use. You represent that the Items will be used for business or commercial, and not primarily for personal or household, purposes. 8. WARRANTY. We provide a warranty of quiet enjoyment but make no other warranty or condition, express or implied, about any matter, including, but not limited to, the Implied warranties of merchantability or fitness for a particular purpose. In no event will we have any liability for, nor will you have any remedy against us for special, Indirect or consequential damages, Including but not limited to lost profits, last business revenue, or failure to realize expected savings, even If you Informed us of their possibility. 9. MAINTENANCE: INSPECTION; AND MARKING. You shall keep and operate each Item according to the manufacturers specifications and in good repair and operating condition, ordinary wear and tear excepted. All parts installed and removed in connection with warranty and maintenance services become our property. You agree, upon request, to make Items and their maintenance records available for inspection by our representative during normal business hours and to mark Items as we require. 10. ALTERATIONS. With prior written notice to us, you may after any equipment Item. Any of our parts that you remove shall remain our proceed and you may not make such parts avertable for sale, transfer, exchange or other disposition without our prior written consent. Before you return an equipment Item to us. you must restore it, at your expense. to its original condition with the original parts that you removed. Alterations not removed when an equipment Item is returned to us shall become our property, without further payment by us and free of encumbrances. 11. RELOCATION; SUBLEASE; AND ASSIGNMENT. You may not locate any Items outside of Canada and may only relocate an Item within your enterprise to different provinces within Canada with 30 days prior notice to us. You may sub/ease an Item only with our prior written consent. You may not assign, transfer or otherwise dispose of an Item or your interest or rights in this Agreement (in whole or in part). We may sell or assign all, or any pad, of our interest or rights in this Agreement without prior nonce to you including assigning or granting a security interest(s) in any Item. Any assignee will be subject to your right of quiet enjoyment. You agree not to assert against any such assignee any claim, set-off, defense or counterclaim that you may have against us or any other person. This Agreement shall be binding upon your successors or permitted assigns. 12. END OF LEASE OPTIONS. If you are not in default under this Agreement, your EOL options for equipment Items are: (a) renew to lease; (b) purchase the equipment Item, or (c) return the equipment Item. An EOL designation of FM indicates a lease renewal or purchase at the fair market value. A prestated % EOL designation indicates the percent of Me Total Amount Financed that is your purchase once. For a renewal with a prestated %, One-half of the purchase price due m advance is the payment for a 1 year renewal. An EOL designation of SI indicates your purchase price. For an EOL purchase at either the prestated % or $1, you will pay any applicable taxes and Unit Periodic Payments due to the dare of purchase. Upon our receipt of all amounts due, we will transfer title to you on an “As Is. Where Is” basis. 13.RETURN OF AN EQUIPMENT ITEM. If you elect to return an equipment Item to us upon expiration of the Term, you must notify us in writing of your intent at least three (3) months prior to expiration of the Term and you must return the equipment Item to us immediately upon expiration of the Term. The equipment Item must be in good condition and working order, reasonable wear and tear excepted (“Good Working Order”). Prior to the return of me equipment Item to us, you are responsible for removing all information and data including but not limited to programs not licensed to a specific equipment Item. We have no obligation to remove your or any other party's information from an equipment Item. We reserve the right to recover full reimbursement from you for the reasonable cost and expense incurred by us to restore such equipment Items to Good Working Order. However, such reasonable cost and expense shall not exceed me Stipulated Loss, defined in Paragraph 15, of such equipment Items. You will return the equipment Item to a location in Canada designated by us for that type of equipment. You are responsible for any costs associated with deinstallation, packing, proper content labeling and return of the equipment Item. The return of an equipment Item shall constitute a full release by you of any leasehold rights or possessory interest in the equipment Item. 14.AUTOMATIC EXTENSION PROVISIONS. The Term of the lease will automatically be extended on a month-to-month basis unless you give the required notice to return the equipment Item at the end of the Term. The Term of the lease will continue to be automatically extended until notice to return is given and the Item is returned Automatic extension can be terminated by you upon three (3) months notice to us, followed by equipment Item return to the designated location in compliance with return requirements. The extension will be under the same terms and conditions then in effect, including current Total Periodic Payment, but for equipment Items with a fair market value purchase option, not less than the fair market rental value as determined by us at the expiration of the Term. Total Periodic Payment shall be calculated as the sum of the lease payments over the initial Term divided by the initial Term of the lease. 15.CASUALTY INSURANCE. You are responsible for any risk of loss, theft or damage to any equipment Item (“Casualty Loss”) from the date the equipment Item is delivered to your location to the date it is received by us at our return location. You will, at your expense, (a) keep in effect an all risk insurance policy covering the equipment Item listed in the Agreement and we will be named as additional insured and loss payee on such policy, or (b) self-insure such equipment Items against Casualty Loss pursuant to a generally maintained program of self-insurance You will provide us, upon request, evidence of such policy or program of self-insurance. You will promptly notify us of any Casualty Loss. If we determine the equipment Item can be economically repaired, you will have it repaired and will continue to pay the Unit Periodic Payment to us. If we determine the equipment Item is not economically repairable, on the next Unit Periodic Payment due date, you will pay us an amount, to be determined by us, equal to one hundred ten percent (110%) of the original Unit Amount Financed minus seventy percent (70%) of the Unit Periodic Payments paid as of the date of the Casualty Loss (“Stipulated Loss”). Upon receipt of all amounts due under this Paragraph, we will transfer to you all of our rights, title and interest in and to such equipment Items on an “As Is, Where Is” basis. 16.TAXES. You agree to pay any and all taxes and charges levied by any government body in connection with this Agreement except for taxes based on our net income. 17.GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario. 18.INDEMNITY; NO WAIVER. This is a net lease and we are not liable for any claim except one resulting from our sole negligence willful misconduct. You indemnify against any third park claims which apse en connection with this Agreement or your possession and use of the Items hereunder including all related liabilities, costs, and expenses. Failure to require full performance or waiver of any provision of this Agreement shall not prevent either party from requiring full performance of all provisions in the future. 19.DEFAULT; REMEDIES. You will be in default under this Agreement if you or any guarantor: (a) do not pay any amount due within seven (7) days after its due date; (b) sublease, relocate, assign or make a transfer in violation of this Agreement; (c) misrepresent credit application information; (d) fail to remedy any other breach Of this Agreement within fifteen (15) days after receiving written notice from us; (e) make a voluntary assignment for the benefit of creditors; (f) file or have filed against you any petition or proceeding under any bankruptcy, insolvency, receivership or similar law; (g) have appointed against you a receiver over all or a substantial part of your Properly; (h) admit an inability to pay debts as they generally become due or otherwise acknowledge insolvency: (n have any execution, distress or other enforcement process (including under personal property security legislation) commenced against any of your property; (j) default on any other agreement with us; or (k) use any funds you receive from us for any purpose other than to acquire the specific Items herein. If you are in default, we may: (a) recover all payments and other amounts due and remaining to become due hereunder; (b) recover possession and sell or otherwise dispose of the Items and apply the proceeds to reduce the amounts due from you hereunder; (c) recover any costs incurred in enforcing or protecting our rights under this Agreement and any charges or claims made by third parties; (d) pursue any other remedy available at law and recover legal costs and legal fees incurred in exercising any of the remedies stated herein. Notwithstanding the foregoing, you shall remain liable for any deficiency following the exercise of our rights and remedies under this Paragraph or at law. We will be in default d we breach your quiet enjoyment unless such breach follows your default which remains uncured. If we are in default, your sole and exclusive remedy is to terminate this Agreement, return the applicable Items, and to recover actual damages aesing directly from the default and reasonable legal fees. 20.Language. Les parties aux preseines ont expressement exige que ce contrat soit redigé en langue anglaise. The parties hereto have expressly required that this Agreement be drafted in the English language.

2

LESTRANSFORMATEURS PIONEER LTEE

Certificate of Acceptance

The Leased or Financed Items to which this form applies are those items described in the below referenced contract number. For purposes of Rent billings, the Rent payments will commence the first day of the payment period following the Acceptance Date below unless otherwise indicated on the Transaction Document. If IBM Canada has not received this signed COA within 60 days of the Document Create Date (as shown below), IBM Canada may withdraw its obligation to provide financing of the referenced contract number upon written notice to you.

For these Items, you certify that they:

 - have been delivered and accepted.

 - are in all respects satisfactory.

You acknowledge that:

 - you have personally chosen these Items; and

 - these Items may only be used for commercial, industrial or professional purposes.

In order for thisCertificate of Acceptance to beeffective, you must confirm with IBMCanada:

 - the serial numbers provided by each supplier to IBM Canada for each accepted configured Item.

You authorize us to:

 - begin the Lease in accordance with its terms for each Item; and

 - pay the supplier directly the net price plus applicable taxes IBM Canada specified for each Item unless IBM has approved in writing, other terms of payment.

In the event that the Items fail to perform as expected or as represented by the supplier, you will continue to pay IBM Canada, in the normal course of business. You will look solely to the supplier of the Items for satisfaction of all claims, covenants or warranties.

Acceptance Date: __________________  June, 13, 2007

Certified and Authorized by:

Customer Legal Name:	LES TRANSFORMATEURS PIONEER LTEE
Address:	612, CHEMIN BERNARD
	GRANBY QC J2G 8E5

IBM Agreement No.: 366103
By: /s/ James A. Wilkins
Signature
Name (type or print):  James A. Wilkins
Title:  Vice-President Finance
Date:June, 13, 2007
Supplement Number:	366103-CFC1
Contract Number:	0080732VT
Certificate of Acceptance Reference:	0080738VC
Certificate of Acceptance Financed Amount:	$61,999.67

3

LES TRANSFORMATEURS PIONEER LTEE

Supplier    Invoice No(s)   Invoice Date  Invoice Amount(s)

Document Create Date: 2007/06/04

***END***

4

IBM-ORACLE CFC1 # 0080732VT

150,698.07

DATE		VERSEMENTS	INTÉRETS	CAPITAL	BALANCE
JANVIER	2007				61,999.67
FÉVRIER	2007
MARS	2007
AVRIL	2007
MAI	2007
JUIN	2007				61,999.67
JUILLET	2007	1,896.62	329.22	1,567.40	60,432.27
AOUT	2007	1.896.62	320.90	1,575.72	58,856.55
SEPTEMBRE	2007	1,896.62	312.53	1,584.09	57,272.46
OCTOBRE	2007	1.896.62	304.12	1,592.50	55.679.96
NOVEMBRE	2007	1,896.62	295.66	1,600.96	54,079.00
DÉCEMBRE	2007	1,896.62	287.16	1,609.46	52,469.54
TOTAL	2007	11,379.72	1,849.59	9,530.13	52,469.54

JANVIER	2008	1,896.62	278.61	1,618.01	50,851.53
FÉVRIER	2008	1,896.62	270.02	1,626.60	49,224.93
MARS	2008	1,896.62	261.38	1,635.24	47,589.69
AVRIL	2008	1,896.62	252.70	1,643.92	45,945.77
MAI	2008	1,896.62	243.97	1,652.65	44,293.12
JUIN	2008	1,896.62	235.20	1,661.42	42,631.70
JUILLET	2008	1,896.62	226.37	1,670.25	40,961.45
AOUT	2008	1,896.62	217.51	1,679.11	39,282.34
SEPTEMBRE	2008	1,896.62	208.59	1,688.03	37,594.31
OCTOBRE	2008	1,896.62	199.63	1,696.99	35,897.32
NOVEMBRE	2008	1,896.62	190.61	1,706.01	34,191.31
DÉCEMBRE	2008	1,896.62	181.56	1,715.06	32,476.25
TOTAL	2008	22,759.44	2,766.15	19,993.29	32,476.25

JANVIER	2009	1,896.62	172.45	1,724.17	30,752.08
FÉVRIER	2009	1,896 62	163.29	1733.33	29,018.75
MARS	2009	1,896.62	154.09	1,742.53	27,276.22
AVRIL	2009	1,896.62	144.84	1,751.78	25,524.44
MAI	2009	1,896.62	135.53	1,761.09	23,763.35
JUIN	2009	1,896.62	126.18	1,770.44	21,992.91
JUILLET	2009	1,896.62	116.78	1779.84	20,213.07
AOUT	2009	1,896 62	107.33	1,78929	18,423.78
SEPTEMBRE	2009	1,896.62	97.83	1,798.79	16,624.99
OCTOBRE	2009	1,896.62	88.28	1,808.34	14,816.65
NOVEMBRE	2009	1,896.62	78.68	1,817.94	12,998.71
DÉCEMBRE	2009	1,896.62	69.02	1,827.60	11,171.11
TOTAL	2009	22,759.44	1,454.30	21,305.14	11,171.11

JANVIER	2010	1,896.62	59.32	1,837.30	9,333.81
FÉVRIER	2010	1,896.62	49.56	1,847.06	7,486.75
MARS	2010	1,896.62	39.75	1,856.87	5,629.88
AVRIL	2010	1,896.62	29.89	1,866.73	3,763.15
MAI	2010	1,896.62	19.98	1,876.64	1,886.51
JUIN	2010	1,896.62	10.02	1,886.60	-0.09
JUILLET	2010	0.00	0.00	0.00
AOUT	2010	0.00	0.00	0.00
SEPTEMBRE	2010	0.00	0.00	0.00
OCTOBRE	2010	0.00	0.00	0.00
NOVEMBRE	2010	0.00	0.00	0.00
DÉCEMBRE	2010	0.00	0.00	0.00
TOTAL	2010	11,379.72	208.52	11,171.20

5

EX-10.23

Exhibit 10.23

ValuePlan Lease

Agreement No.: 366103/CFC2 Customer No.: 00366103 Date Prepared: 2007/06/22	Attachment No.: INSTALLED AT LOCATION
Customer Name: LES TRANSFORMATEURS PIONEER LTEE	Company Name: LES TRANSFORMATEURS PIONEER LTEE
Address:  612, CHEMIN BERNARD	Address:  612, CHEMIN BERNARD
GRANBY   QC  J2G  8E5	GRANBY   QC J2G  8E5
Tel. No.: Attn:	Tel. No.: Attn:

Customer, including successors and assigns ("you or "your') agrees to lease from and/or finance with IBM Canada Limited ("us”, "we" or "our'), the equipment and/or other items including software and services (collectively, the "Items') described in this Agreement. A transaction code F in the "Trans. Code” column indicates a loan; other transaction codes indicate leased Items. We make no representation whatsoever regarding your accounting treatment related to any transaction under /INS Agreement End of lease ("EOL") designations indicate your options which aredetailed in paragraph 12. All decisions and options under this Agreement apply to all and not less than allItems listed in this Agreement.

Item Description -	EOL	Trans. Code	Qty	Unit Amount Financed		Unit Periodic Payment
		F	1	$	81696.22	$	2515.98
9993 SWG IBM TRADITIONAL SOFTWARE

(Additional Items maybe listed on a Continuation Sheet)

Total Amount Financed (All Pages) $81696.22	Term in Months 36	Total Number of Payment Periods 36	Payment Description Monthly in Advance	Total Periodic Payment (All Pages – Taxes May Apply) $2515.98
Interim Rent                      No Direct Debit                      No Guarantee                         No	Security Deposit N/A	Payment Commencement Date 2007/07/01

1.TERM. The initial Term for each Item begins on the date of your acceptance and ends alter completion of the above Total Number of Payment Periods The Term and payment obligations are not cancellable and may not be terminated except as stated in this Agreement.
2.ACCEPTANCE. Your acceptance, unless otherwise noted by us, of an Item will be (a) for an Items not supplied by us, ten (10) calendar days following the latest date of your supplier's Invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (b) for all personal computing equipment including personal computer-based servers. or software, services or other financed Items supplied by us, ten (10) calendar days following the latest date of the corresponding invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (c) the date of installation for all Items supplied by us not covered by (b); or (d) the date we provide funds for any other financed Items.
3.PAYMENT. Payments are due as specified above. The Total Periodic Payment commences at the start of the Term unless a different date is specified in the box above. For the Total Periodic Payment to be valid and subject to change pursuant only to paragraph 8, the Term must begin within the month of 2007/07/01. For any payment not made by its due date, you agree to pay a late charge of 2% per month (or 24% per annum) on the unpaid amount subject to maximum limitations by law. Your commitment a pay and any other obligations hereunder are absolute and unconditional and not subject to set-off, counterclaim, termination or Item performance.   4.RIGHTS AND OBLIGATIONS. You assign and authorize us and we accept me obligation to pay the supplier and' de right to take title to any equipment Item after your acceptance. You retain all other rights, including all warranties, and obligations as per your agreement(s) with your supplier for all Items. When we are the supplier, our terms of supply are specified on the IBM Web site at: http://www-304 ibm.comlct03004dMOls/cpepertal/fileserve/downloads/67130/.

BY SIGNING BELOW, YOU AGREE THAT THIS AGREEMENT DOES NOT TAKE EFFECT UNTIL OUR RECEIPT AND ACCEPTANCE OF R. YOU FURTHER AGREE THAT AN EXECUTED COPY PRODUCED FROM AN ELECTRONIC FORM OR BY ANY OTHER RELIABLE MEANS (FOR EXAMPLE, PHOTOCOPY OR FACSIMILE OR E-MAIL) IS IN ALL RESPECTS EQUIVALENT TO AN ORIGINAL. THE TERMS ON THIS ANO THE FOLLOWING PAGES OR ATTACHMENTS ARE THE ONLY TERMS FOR THIS TRANSACTION. BY SIGNING BELOW, YOU REPRESENT ANO WARRANT THAT YOUR NAME AS SET FORTH IN THE SIGNATURE BLOCK BELOW IS YOUR EXACT LEGAL NAME.

Accepted by: IBM Canada Limited For or as Lessor:		LES TRANSFORMATEURS PIONEER LTEE
By: /s/  Jean-Jacques Jette		By: /s/ James A. Wilkins	June 27, 2007
Authorized Signature		Authorized Signature
Name (Type or Print)	Date	Name (Type or Print)	Date

1

ADDITIONAL TERMS – Agreement No.: 0081596VT

5. DIRECT DEBIT; SECURITY. When Direct Debit is indicated on the face of this Agreement, the terms are specified on an attachment to this Agreement.  When guarantee is indicated, your guarantor must sign a guarantee attachment to this Agreement. 6. CHANGES; NOTICES. You authorize us or your supplier to complete the required information, including Item serial numbers, in the 'Item Description” on the first page of the Agreement. For any changes to the Unit Amount Financed that you and your supplier agree To, you authorize us to make the corresponding change to the "Total Periodic Payment” and the “Total Amount Financed' provided the change does not exceed 15% of the original “Total Amount Financed”. Notices and requests from you are to be submitted to the address on your periodic invoice. 7. OWNERSHIP; SELECTION; AND USE. Equipment Items remain our property during the Term and you will keep these Items free of encumbrances of any kind. You hereby authorize us to file personal property security financing statements relating to the Items listed on this Agreement You hereby grant to us, a first priority security interest in the Items (Including all related software) and all additions, attachments, and upgrades thereto and any and all substitutions, accessories, accession replacements or exchanges for any such Items or software and any and all proceeds of any of the foregoing, including, without limitation, payments under insurance or any indemnity or warranty relating to lass or damage to such Items. You agree that you are responsible for the selection, supply, delivery, installation, use, servicing and maintenance of the Items and the results from their use. You represent that the Items will be used for business or commercial, and not primarily for personal or household, purposes. 8. WARRANTY. We provide a warranty of quiet enjoyment but make no other warranty or condition, express or implied, about any matter, including, but not limited to, the Implied warranties of merchantability or fitness for a particular purpose. In no event will we have any liability for, nor will you have any remedy against us for special, Indirect or consequential damages, Including but not limited to lost profits, last business revenue, or failure to realize expected savings, even If you Informed us of their possibility. 9. MAINTENANCE: INSPECTION; AND MARKING. You shall keep and operate each Item according to the manufacturers specifications and in good repair and operating condition, ordinary wear and tear excepted. All parts installed and removed in connection with warranty and maintenance services become our property. You agree, upon request, to make Items and their maintenance records available for inspection by our representative during normal business hours and to mark Items as we require. 10. ALTERATIONS. With prior written notice to us, you may after any equipment Item. Any of our parts that you remove shall remain our proceed and you may not make such parts avertable for sale, transfer, exchange or other disposition without our prior written consent. Before you return an equipment Item to us. you must restore it, at your expense. to its original condition with the original parts that you removed. Alterations not removed when an equipment Item is returned to us shall become our property, without further payment by us and free of encumbrances. 11. RELOCATION; SUBLEASE; AND ASSIGNMENT. You may not locate any Items outside of Canada and may only relocate an Item within your enterprise to different provinces within Canada with 30 days prior notice to us. You may sub/ease an Item only with our prior written consent. You may not assign, transfer or otherwise dispose of an Item or your interest or rights in this Agreement (in whole or in part). We may sell or assign all, or any pad, of our interest or rights in this Agreement without prior nonce to you including assigning or granting a security interest(s) in any Item. Any assignee will be subject to your right of quiet enjoyment. You agree not to assert against any such assignee any claim, set-off, defense or counterclaim that you may have against us or any other person. This Agreement shall be binding upon your successors or permitted assigns. 12. END OF LEASE OPTIONS. If you are not in default under this Agreement, your EOL options for equipment Items are: (a) renew to lease; (b) purchase the equipment Item, or (c) return the equipment Item. An EOL designation of FM indicates a lease renewal or purchase at the fair market value. A prestated % EOL designation indicates the percent of Me Total Amount Financed that is your purchase once. For a renewal with a prestated %, One-half of the purchase price due m advance is the payment for a 1 year renewal. An EOL designation of SI indicates your purchase price. For an EOL purchase at either the prestated % or $1, you will pay any applicable taxes and Unit Periodic Payments due to the dare of purchase. Upon our receipt of all amounts due, we will transfer title to you on an “As Is. Where Is” basis. 13.RETURN OF AN EQUIPMENT ITEM. If you elect to return an equipment Item to us upon expiration of the Term, you must notify us in writing of your intent at least three (3) months prior to expiration of the Term and you must return the equipment Item to us immediately upon expiration of the Term. The equipment Item must be in good condition and working order, reasonable wear and tear excepted (“Good Working Order”). Prior to the return of me equipment Item to us, you are responsible for removing all information and data including but not limited to programs not licensed to a specific equipment Item. We have no obligation to remove your or any other party's information from an equipment Item. We reserve the right to recover full reimbursement from you for the reasonable cost and expense incurred by us to restore such equipment Items to Good Working Order. However, such reasonable cost and expense shall not exceed me Stipulated Loss, defined in Paragraph 15, of such equipment Items. You will return the equipment Item to a location in Canada designated by us for that type of equipment. You are responsible for any costs associated with deinstallation, packing, proper content labeling and return of the equipment Item. The return of an equipment Item shall constitute a full release by you of any leasehold rights or possessory interest in the equipment Item. 14.AUTOMATIC EXTENSION PROVISIONS. The Term of the lease will automatically be extended on a month-to-month basis unless you give the required notice to return the equipment Item at the end of the Term. The Term of the lease will continue to be automatically extended until notice to return is given and the Item is returned Automatic extension can be terminated by you upon three (3) months notice to us, followed by equipment Item return to the designated location in compliance with return requirements. The extension will be under the same terms and conditions then in effect, including current Total Periodic Payment, but for equipment Items with a fair market value purchase option, not less than the fair market rental value as determined by us at the expiration of the Term. Total Periodic Payment shall be calculated as the sum of the lease payments over the initial Term divided by the initial Term of the lease. 15.CASUALTY INSURANCE. You are responsible for any risk of loss, theft or damage to any equipment Item (“Casualty Loss”) from the date the equipment Item is delivered to your location to the date it is received by us at our return location. You will, at your expense, (a) keep in effect an all risk insurance policy covering the equipment Item listed in the Agreement and we will be named as additional insured and loss payee on such policy, or (b) self-insure such equipment Items against Casualty Loss pursuant to a generally maintained program of self-insurance You will provide us, upon request, evidence of such policy or program of self-insurance. You will promptly notify us of any Casualty Loss. If we determine the equipment Item can be economically repaired, you will have it repaired and will continue to pay the Unit Periodic Payment to us. If we determine the equipment Item is not economically repairable, on the next Unit Periodic Payment due date, you will pay us an amount, to be determined by us, equal to one hundred ten percent (110%) of the original Unit Amount Financed minus seventy percent (70%) of the Unit Periodic Payments paid as of the date of the Casualty Loss (“Stipulated Loss”). Upon receipt of all amounts due under this Paragraph, we will transfer to you all of our rights, title and interest in and to such equipment Items on an “As Is, Where Is” basis. 16.TAXES. You agree to pay any and all taxes and charges levied by any government body in connection with this Agreement except for taxes based on our net income. 17.GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario. 18.INDEMNITY; NO WAIVER. This is a net lease and we are not liable for any claim except one resulting from our sole negligence willful misconduct. You indemnify against any third park claims which apse en connection with this Agreement or your possession and use of the Items hereunder including all related liabilities, costs, and expenses. Failure to require full performance or waiver of any provision of this Agreement shall not prevent either party from requiring full performance of all provisions in the future. 19.DEFAULT; REMEDIES. You will be in default under this Agreement if you or any guarantor: (a) do not pay any amount due within seven (7) days after its due date; (b) sublease, relocate, assign or make a transfer in violation of this Agreement; (c) misrepresent credit application information; (d) fail to remedy any other breach Of this Agreement within fifteen (15) days after receiving written notice from us; (e) make a voluntary assignment for the benefit of creditors; (f) file or have filed against you any petition or proceeding under any bankruptcy, insolvency, receivership or similar law; (g) have appointed against you a receiver over all or a substantial part of your Properly; (h) admit an inability to pay debts as they generally become due or otherwise acknowledge insolvency: (n have any execution, distress or other enforcement process (including under personal property security legislation) commenced against any of your property; (j) default on any other agreement with us; or (k) use any funds you receive from us for any purpose other than to acquire the specific Items herein. If you are in default, we may: (a) recover all payments and other amounts due and remaining to become due hereunder; (b) recover possession and sell or otherwise dispose of the Items and apply the proceeds to reduce the amounts due from you hereunder; (c) recover any costs incurred in enforcing or protecting our rights under this Agreement and any charges or claims made by third parties; (d) pursue any other remedy available at law and recover legal costs and legal fees incurred in exercising any of the remedies stated herein. Notwithstanding the foregoing, you shall remain liable for any deficiency following the exercise of our rights and remedies under this Paragraph or at law. We will be in default d we breach your quiet enjoyment unless such breach follows your default which remains uncured. If we are in default, your sole and exclusive remedy is to terminate this Agreement, return the applicable Items, and to recover actual damages aesing directly from the default and reasonable legal fees. 20.Language. Les parties aux preseines ont expressement exige que ce contrat soit redigé en langue anglaise. The parties hereto have expressly required that this Agreement be drafted in the English language.

2

LESTRANSFORMATEURS PIONEER LTEE

Certificate of Acceptance

The Leased or Financed Items to which this form applies are those items described in the below referenced contract number. For purposes of Rent billings, the Rent payments will commence the first day of the payment period following the Acceptance Date below unless otherwise indicated on the Transaction Document. If IBM Canada has not received this signed COA within 60 days of the Document Create Date (as shown below), IBM Canada may withdraw its obligation to provide financing of the referenced contract number upon written notice to you.

For these Items, you certify that they:

 - have been delivered and accepted.

 - are in all respects satisfactory.

You acknowledge that:

 - you have personally chosen these Items; and

 - these Items may only be used for commercial, industrial or professional purposes.

In order for thisCertificate of Acceptance to beeffective, you must confirm with IBMCanada:

 - the serial numbers provided by each supplier to IBM Canada for each accepted configured Item.

You authorize us to:

 - begin the Lease in accordance with its terms for each Item; and

 - pay the supplier directly the net price plus applicable taxes IBM Canada specified for each Item unless IBM has approved in writing, other terms of payment.

In the event that the Items fail to perform as expected or as represented by the supplier, you will continue to pay IBM Canada, in the normal course of business. You will look solely to the supplier of the Items for satisfaction of all claims, covenants or warranties.

Acceptance Date: __________________  June 27, 2007

Certified and Authorized by:

Customer Legal Name:	LES TRANSFORMATEURS PIONEER LTEE
Address:	612, CHEMIN BERNARD
	GRANBY QC J2G 8E5

IBM Agreement No.: 366103
By: /s/ James A. Wilkins
Signature
Name (type or print):  James A. Wilkins
Title:  Vice-President Finance
Date:June 27, 2007
Supplement Number:	366103-CFC2
Contract Number:	0081596VT
Certificate of Acceptance Reference:	0081597VC
Certificate of Acceptance Financed Amount:	$81 696,22

3

LES TRANSFORMATEURS PIONEER LTEE

Supplier    Invoice No(s)   Invoice Date  Invoice Amount(s)

Document Create Date: 2007/06/22

***END***

4

IBM-ORACLE CFC2 # 0081596VT

150,698.07

DATE		VERSEMENTS	INTÉREST	CAPITAL	BALANCE
JANVIER	2007
FÉVRIER	2007
MARS	2007
AVRIL	2007
MAI	2007
JUIN	2007				81,696.22
JUILLET	2007	2,515.98	464.59	2,051 39	79,644.83
AOUT	2007	2,515.98	452.92	2.063.06	77,581.77
SEPTEMBRE	2007	2,515.98	441.19	2,074,79	75,506.98
OCTOBRE	2007	2,515.98	429.39	2,086.59	73,420.39
NOVEMBRE	2007	2,515.98	417.52	2,098.46	71,321.93
DÉCEMBRE	2007	2,515.98	405.59	2,110.39	69,211.54
TOTAL	2007	15,095.88	2,611.20	12,484.68	69,211.54

JANVIER	2008	2,515.98	393.59	2,122.39	67,089.15
FÉVRIER	2008	2,515.98	381.52	2,134,46	64,954.69
MARS	2008	2,515.98	369.38	2,146.60	62,808.09
AVRIL	2008	2,515.98	357.17	2,158.81	60,649.28
MAI	2008	2,515.98	344.90	2,171.08	58,478.20
JUIN	2008	2,51596	33255	2,183.43	56,294.77
JUILLET	2008	2,515.98	320.13	2,195.85	54,098.92
AOUT	2008	2,515,98	307.65	2,208.33	51,890.59
SEPTEMBRE	2008	2,515.98	295.09	2,220.89	49,669.70
OCTOBRE	2008	2,515.98	282.46	2,233.52	47,436.18
NOVEMBRE	2008	2,515.98	269.76	2,246.22	45,189.96
DÉCEMBRE	2008	2,515.98	256.98	2,259.00	42,930.96
TOTAL	2008	30,191.76	3,911.18	26,280.58	42,930.96

JANVIER	2009	2,515.98	244.14	2,271.84	40,659.12
FÉVRIER	2009	2,515.98	231.22	2,284.76	38,374.36
MARS	2009	2,515.98	218.23	2,297,75	36,078.61
AVRIL	2009	2,515.98	205.16	2,310.82	33,765.79
MAI	2009	2,515.98	192.02	2,323.96	31,441.83
JUIN	2009	2,515,98	178.80	2,337.18	29,104.65
JUILLET	2009	2,515.98	165.51	2,350.47	26,754.18
AOUT	2009	2,515.98	152.14	2.363.84	24,390.34
SEPTEMBRE	2009	2,515.98	138.70	2,377.28	22,013.06
OCTOBRE	2009	2,515.98	125.18	2,390.80	19,622 26
NOVEMBRE	2009	2,515.98	111.59	2,404.39	17,217.87
DÉCEMBRE	2009	2,515.98	97.91	2,418.07	14,799.80
TOTAL	2009	30,191.76	2,060.60	28,131.16	14,799.80

JANVIER	2010	2,515.98	84.16	2,431.82	12,367.98
FÉVRIER	2010	2,515.98	70.33	2,445.65	9,922.33
MARS	2010	2,515.98	56.43	2,459.55	7,462.78
AVRIL	2010	2,515.98	42.44	2,473.54	4,989.24
MAI	2010	2.515.98	28.37	2,487.61	2,501.63
JUIN	2010	2,515.98	14.23	2,501.75	-0.12
JUILLET	2010	0.00	0.00	0.00
AOUT	2010	0.00	0.00	0.00
SEPTEMBRE	2010	0.00	0.00	0.00
OCTOBRE	2010	0.00	0.00	0.00
NOVEMBRE	2010	0.00	0.00	0.00
DÉCEMBRE	2010	0.00	0.00	0.00
TOTAL	2010	15,095.88	295.96	14,799.92

5

EX-10.24

Exhibit 10.24

ValuePlan Lease

Agreement No.:366103/CFC3  Contract No. 0082647VT Customer No.: 00366103 Date Prepared: 2007-07-20	Attachment No.: INSTALLED AT LOCATION
Customer Name: LES TRANSFORMATEURS PIONEER LTEE	Company Name: LES TRANSFORMATEURS PIONEER LTEE
Address:  612, CHEMIN BERNARD	Address:  612, CHEMIN BERNARD
GRANBY   QC J2G 8E5	GRANBY   QC J2G 8E5
Tel. No.: Attn:	Tel. No.: Attn:

Customer, including successors and assigns ("you or "your') agrees to lease from and/or finance with IBM Canada Limited ("us”, "we" or "our'), the equipment and/or other items including software and services (collectively, the "Items') described in this Agreement. A transaction code F in the "Trans. Code” column indicates a loan; other transaction codes indicate leased Items. We make no representation whatsoever regarding your accounting treatment related to any transaction under /INS Agreement End of lease ("EOL") designations indicate your options which aredetailed in paragraph 12. All decisions and options under this Agreement apply to all and not less than allItems listed in this Agreement.

Item Description -	EOL	Trans. Code	Qty	Unit Amount Financed	Unit Periodic Payment
9993 SWG IBM TRADITIONAL SOFTWARE		F	1	$43226.57	$1341.97
9BCS N01 IBM BUSINESS CONSULTING SERVIC		F	1	$5060.00	$157.09

(Additional Items maybe listed on a Continuation Sheet)

Total Amount Financed (All Pages) $48286.57	Term in Months 36	Total Number of Payment Periods 36	Payment Description Monthly in Advance	Total Periodic Payment (All Pages – Taxes May Apply) $1499.06
Interim Rent                   No Direct Debit                   No Guarantee                      No	Security Deposit N/A	Payment Commencement Date 2007/08/01

1.TERM. The initial Term for each Item begins on the date of your acceptance and ends alter completion of the above Total Number of Payment Periods The Term and payment obligations are not cancellable and may not be terminated except as stated in this Agreement. 2.ACCEPTANCE. Your acceptance, unless otherwise noted by us, of an Item will be (a) for an Items not supplied by us, ten (10) calendar days following the latest date of your supplier's Invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (b) for all personal computing equipment including personal computer-based servers. or software, services or other financed Items supplied by us, ten (10) calendar days following the latest date of the corresponding invoices or the date of your verbal or written acceptance of such Items, whichever occurs first; (c) the date of installation for all Items supplied by us not covered by (b); or (d) the date we provide funds for any other financed Items.   3.PAYMENT. Payments are due as specified above. The Total Periodic Payment commences at the start of the Term unless a different date is specified in the box above. For the Total Periodic Payment to be valid and subject to change pursuant only to paragraph 8, the Term must begin within the month of 2007/08/01. For any payment not made by its due date, you agree to pay a late charge of 2% per month (or 24% per annum) on the unpaid amount subject to maximum limitations by law. Your commitment a pay and any other obligations hereunder are absolute and unconditional and not subject to set-off, counterclaim, termination or Item performance .4.RIGHTS AND OBLIGATIONS. You assign and authorize us and we accept me obligation to pay the supplier and' de right to take title to any equipment Item after your acceptance. You retain all other rights, including all warranties, and obligations as per your agreement(s) with your supplier for all Items. When we are the supplier, our terms of supply are specified on the IBM Web site at: http://www-304 ibm.comlct03004dMOls/cpepertal/fileserve/downloads/67130/.

BY SIGNING BELOW, YOU AGREE THAT THIS AGREEMENT DOES NOT TAKE EFFECT UNTIL OUR RECEIPT AND ACCEPTANCE OF R. YOU FURTHER AGREE THAT AN EXECUTED COPY PRODUCED FROM AN ELECTRONIC FORM OR BY ANY OTHER RELIABLE MEANS (FOR EXAMPLE, PHOTOCOPY OR FACSIMILE OR E-MAIL) IS IN ALL RESPECTS EQUIVALENT TO AN ORIGINAL. THE TERMS ON THIS ANO THE FOLLOWING PAGES OR ATTACHMENTS ARE THE ONLY TERMS FOR THIS TRANSACTION. BY SIGNING BELOW, YOU REPRESENT ANO WARRANT THAT YOUR NAME AS SET FORTH IN THE SIGNATURE BLOCK BELOW IS YOUR EXACT LEGAL NAME.

Accepted by: IBM Canada Limited For or as Lessor:	LES TRANSFORMATEURS PIONEER LTEE
By:  /s/  Jean-Jacques Jette	By: /s/ James A. Wilkins                                                                August 9, 2007
Authorized Signature	Authorized Signature
Name (Type or Print)                                                                                        Date	Name (Type or Print)                                                                Date

1

ADDITIONAL TERMS – Agreement No.: 0082647VT

5.     DIRECT DEBIT; SECURITY. When Direct Debit is indicated on the face of this Agreement, the terms are specified on an attachment to this Agreement.  When guarantee is indicated, your guarantor must sign a guarantee attachment to this Agreement. 6.     CHANGES; NOTICES. You authorize us or your supplier to complete the required information, including Item serial numbers, in the 'Item Description” on the first page of the Agreement. For any changes to the Unit Amount Financed that you and your supplier agree To, you authorize us to make the corresponding change to the "Total Periodic Payment” and the “Total Amount Financed' provided the change does not exceed 15% of the original “Total Amount Financed”. Notices and requests from you are to be submitted to the address on your periodic invoice. 7.     OWNERSHIP; SELECTION; AND USE. Equipment Items remain our property during the Term and you will keep these Items free of encumbrances of any kind. You hereby authorize us to file personal property security financing statements relating to the Items listed on this Agreement You hereby grant to us, a first priority security interest in the Items (Including all related software) and all additions, attachments, and upgrades thereto and any and all substitutions, accessories, accession replacements or exchanges for any such Items or software and any and all proceeds of any of the foregoing, including, without limitation, payments under insurance or any indemnity or warranty relating to lass or damage to such Items. You agree that you are responsible for the selection, supply, delivery, installation, use, servicing and maintenance of the Items and the results from their use. You represent that the Items will be used for business or commercial, and not primarily for personal or household, purposes. 8.     WARRANTY. We provide a warranty of quiet enjoyment but make no other warranty or condition, express or implied, about any matter, including, but not limited to, the Implied warranties of merchantability or fitness for a particular purpose. In no event will we have any liability for, nor will you have any remedy against us for special, Indirect or consequential damages, Including but not limited to lost profits, last business revenue, or failure to realize expected savings, even If you Informed us of their possibility. 9.     MAINTENANCE: INSPECTION; AND MARKING. You shall keep and operate each Item according to the manufacturers specifications and in good repair and operating condition, ordinary wear and tear excepted. All parts installed and removed in connection with warranty and maintenance services become our property. You agree, upon request, to make Items and their maintenance records available for inspection by our representative during normal business hours and to mark Items as we require. 10.         ALTERATIONS. With prior written notice to us, you may after any equipment Item. Any of our parts that you remove shall remain our proceed and you may not make such parts avertable for sale, transfer, exchange or other disposition without our prior written consent. Before you return an equipment Item to us. you must restore it, at your expense. to its original condition with the original parts that you removed. Alterations not removed when an equipment Item is returned to us shall become our property, without further payment by us and free of encumbrances. 11.         RELOCATION; SUBLEASE; AND ASSIGNMENT. You may not locate any Items outside of Canada and may only relocate an Item within your enterprise to different provinces within Canada with 30 days prior notice to us. You may sub/ease an Item only with our prior written consent. You may not assign, transfer or otherwise dispose of an Item or your interest or rights in this Agreement (in whole or in part). We may sell or assign all, or any pad, of our interest or rights in this Agreement without prior nonce to you including assigning or granting a security interest(s) in any Item. Any assignee will be subject to your right of quiet enjoyment. You agree not to assert against any such assignee any claim, set-off, defense or counterclaim that you may have against us or any other person. This Agreement shall be binding upon your successors or permitted assigns. 12.         END OF LEASE OPTIONS. If you are not in default under this Agreement, your EOL options for equipment Items are: (a) renew to lease; (b) purchase the equipment Item, or (c) return the equipment Item. An EOL designation of FM indicates a lease renewal or purchase at the fair market value. A prestated % EOL designation indicates the percent of Me Total Amount Financed that is your purchase once. For a renewal with a prestated %, One-half of the purchase price due m advance is the payment for a 1 year renewal. An EOL designation of SI indicates your purchase price. For an EOL purchase at either the prestated % or $1, you will pay any applicable taxes and Unit Periodic Payments due to the dare of purchase. Upon our receipt of all amounts due, we will transfer title to you on an “As Is. Where Is” basis.   13.         RETURN OF AN EQUIPMENT ITEM. If you elect to return an equipment Item to us upon expiration of the Term, you must notify us in writing of your intent at least three (3) months prior to expiration of the Term and you must return the equipment Item to us immediately upon expiration of the Term. The equipment Item must be in good condition and working order, reasonable wear and tear excepted (“Good Working Order”). Prior to the return of me equipment Item to us, you are responsible for removing all information and data including but not limited to programs not licensed to a specific equipment Item. We have no obligation to remove your or any other party's information from an equipment Item. We reserve the right to recover full reimbursement from you for the reasonable cost and expense incurred by us to restore such equipment Items to Good Working Order. However, such reasonable cost and expense shall not exceed me Stipulated Loss, defined in Paragraph 15, of such equipment Items. You will return the equipment Item to a location in Canada designated by us for that type of equipment. You are responsible for any costs associated with deinstallation, packing, proper content labeling and return of the equipment Item. The return of an equipment Item shall constitute a full release by you of any leasehold rights or possessory interest in the equipment Item.   14.         AUTOMATIC EXTENSION PROVISIONS. The Term of the lease will automatically be extended on a month-to-month basis unless you give the required notice to return the equipment Item at the end of the Term. The Term of the lease will continue to be automatically extended until notice to return is given and the Item is returned Automatic extension can be terminated by you upon three (3) months notice to us, followed by equipment Item return to the designated location in compliance with return requirements. The extension will be under the same terms and conditions then in effect, including current Total Periodic Payment, but for equipment Items with a fair market value purchase option, not less than the fair market rental value as determined by us at the expiration of the Term. Total Periodic Payment shall be calculated as the sum of the lease payments over the initial Term divided by the initial Term of the lease.   15.         CASUALTY INSURANCE. You are responsible for any risk of loss, theft or damage to any equipment Item (“Casualty Loss”) from the date the equipment Item is delivered to your location to the date it is received by us at our return location. You will, at your expense, (a) keep in effect an all risk insurance policy covering the equipment Item listed in the Agreement and we will be named as additional insured and loss payee on such policy, or   (b) self-insure such equipment Items against Casualty Loss pursuant to a generally maintained program of self-insurance You will provide us, upon request, evidence of such policy or program of self-insurance. You will promptly notify us of any Casualty Loss. If we determine the equipment Item can be economically repaired, you will have it repaired and will continue to pay the Unit Periodic Payment to us. If we determine the equipment Item is not economically repairable, on the next Unit Periodic Payment due date, you will pay us an amount, to be determined by us, equal to one hundred ten percent (110%) of the original Unit Amount Financed minus seventy percent (70%) of the Unit Periodic Payments paid as of the date of the Casualty Loss (“Stipulated Loss”). Upon receipt of all amounts due under this Paragraph, we will transfer to you all of our rights, title and interest in and to such equipment Items on an “As Is, Where Is” basis.   16.         TAXES. You agree to pay any and all taxes and charges levied by any government body in connection with this Agreement except for taxes based on our net income.   17.         GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario.   16.         INDEMNITY; NO WAIVER. This is a net lease and we are not liable for any claim except one resulting from our sole negligence willful misconduct. You indemnify against any third park claims which apse en connection with this Agreement or your possession and use of the Items hereunder including all related liabilities, costs, and expenses. Failure to require full performance or waiver of any provision of this Agreement shall not prevent either party from requiring full performance of all provisions in the future.   19.         DEFAULT; REMEDIES. You will be in default under this Agreement if you or any guarantor: (a) do not pay any amount due within seven (7) days after its due date; (b) sublease, relocate, assign or make a transfer in violation of this Agreement; (c) misrepresent credit application information; (d) fail to remedy any other breach Of this Agreement within fifteen (15) days after receiving written notice from us; (e) make a voluntary assignment for the benefit of creditors; (f) file or have filed against you any petition or proceeding under any bankruptcy, insolvency, receivership or similar law; (g) have appointed against you a receiver over all or a substantial part of your Properly; (h) admit an inability to pay debts as they generally become due or otherwise acknowledge insolvency: (n have any execution, distress or other enforcement process (including under personal property security legislation) commenced against any of your property; (j) default on any other agreement with us; or (k) use any funds you receive from us for any purpose other than to acquire the specific Items herein. If you are in default, we may: (a) recover all payments and other amounts due and remaining to become due hereunder; (b) recover possession and sell or otherwise dispose of the Items and apply the proceeds to reduce the amounts due from you hereunder; (c) recover any costs incurred in enforcing or protecting our rights under this Agreement and any charges or claims made by third parties; (d) pursue any other remedy available at law and recover legal costs and legal fees incurred in exercising any of the remedies stated herein. Notwithstanding the foregoing, you shall remain liable for any deficiency following the exercise of our rights and remedies under this Paragraph or at law. We will be in default d we breach your quiet enjoyment unless such breach follows your default which remains uncured. If we are in default, your sole and exclusive remedy is to terminate this Agreement, return the applicable Items, and to recover actual damages aesing directly from the default and reasonable legal fees.   20.         Language. Les parties aux preseines ont expressement exige que ce contrat soit redigé en langue anglaise. The parties hereto have expressly required that this Agreement be drafted in the English language.

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LESTRANSFORMATEURS PIONEER LTEE

Certificate of Acceptance

The Leased or Financed Items to which this form applies are those items described in the below referenced contract number. For purposes of Rent billings, the Rent payments will commence the first day of the payment period following the Acceptance Date below unless otherwise indicated on the Transaction Document. If IBM Canada has not received this signed COA within 60 days of the Document Create Date (as shown below), IBM Canada may withdraw its obligation to provide financing of the referenced contract number upon written notice to you.

For these Items, you certify that they:

- have been delivered and accepted.

- are in all respects satisfactory.

You acknowledge that:

- you have personally chosen these Items; and

- these Items may only be used for commercial, industrial or professional purposes.

In order for thisCertificate of Acceptance to beeffective, you must confirm with IBMCanada:

- the serial numbers provided by each supplier to IBM Canada for each accepted configured Item.

You authorize us to:

- begin the Lease in accordance with its terms for each Item; and

- pay the supplier directly the net price plus applicable taxes IBM Canada specified for each Item unless IBM has approved in writing, other terms of payment.

In the event that the Items fail to perform as expected or as represented by the supplier, you will continue to pay IBM Canada, in the normal course of business. You will look solely to the supplier of the Items for satisfaction of all claims, covenants or warranties.

Acceptance Date:                                       

Certified and Authorized by:

Customer Legal Name:                                                   LES TRANSFORMATEURS PIONEER LTEE

 Address:612, CHEMIN BERNARD

    GRANBY                           QC J2G 8E5

IBM Agreement No.: 366103

By: /s/ James A. Wilkins

_____________________________________________________________________

Signature

Name (type or print):  James A. Wilkins

_____________________________________________________________________

Title:  Vice-President Finance

_____________________________________________________________________

Date:              August 9, 2007

_____________________________________________________________________

Supplement Number:                               366103-CFC3

Contract Number:                                    0082647VT

Certificate of Acceptance Reference:         0082650VC

Certificate of Acceptance Financed Amount:  $48 286,57

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LESTRANSFORMATEURS PIONEER LTEE

Supplier                                                            Invoice No(s)         Invoice Date       Invoice Amount(s)

Document Create Date: 2007/07/20

***END***

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IBM-ORACLE CFC3 # 0082647VT

48286.57

DATE		VERSEMENTS	INTERÉTS	CAPITAL	BALANCE
JANVIER	2007
FÉVRIER	2007
MARS	2007
AVRIL	2007
MAI	2007
JUIN	2007
JUILLET	2007				48,286.57
AOUT	2007	1,499.06	296.42	1,202.64	47,083.93
SEPTEMBRE	2007	1,499.06	289.04	1,210.02	45,873.91
OCTOBRE	2007	1,499,06	281.61	1,217.45	44,656,46
NOVEMBRE	2007	1,499.06	274.14	1,224.92	43,431 54
DÉCEMBRE	2007	1,499.06	266.62	1,232.44	42,199.10
TOTAL	2007	7,495.30	1,407.83	6,087.47	42,199.10
JANVIER	2008	1,499.06	259.05	1,240.01	40,959 09
FÉVRIER	2008	1,499.06	251.44	1,247.62	39,711.47
MARS	2008	1,499.06	243.78	1,255.28	38,456.19
AVRIL	2008	1,499.06	236.08	1,262.98	37,193.21
MAI	2008	1,499.06	228.32	1,270.74	35,922.47
JUIN	2008	1,499.06	220.52	1,278.54	34,643.03
JUILLET	2008	1,499.06	212.67	1,286.39	33,357.54
AOUT	2008	1,499.06	204.78	1,294.28	32,063.26
SEPTEMBRE	2008	1,499.06	196.83	1,302.23	30,761.03
OCTOBRE	2008	1,499.06	188.84	1,310.22	29,450.81
NOVEMBRE	2008	1,499.06	180.79	1,318.27	28,132.54
DÉCEMBRE	2008	1,499.06	172.70	1,326.36	26,606.18
TOTAL	2008	17,988.72	2,595.80	15,392,92	26,806.18
JANVIER	2009	1,499.06	164.56	1,334.50	25,471.68
FÉVRIER	2009	1,499.06	156.37	1,342.69	24,128.99
MARS	2009	1,499.06	148.12	1,350.94	22,778.05
AVRIL	2009	1,499.06	139.83	1,359.23	21,418.82
MAI	2009	1,499.06	131.49	1,367.57	20,051.25
JUIN	2009	1,499.06	123.09	1,375.97	18,675.28
JUILLET	2009	1,499.06	114.64	1,384.42	17,290.86
AOUT	2009	1,499.06	106.15	1,392 91	15,897.95
SEPTEMBRE	2009	1,499.06	97.59	1,401.47	14,496.48
OCTOBRE	2009	1,499.06	88.99	1,410.07	13,086.41
NOVEMBRE	2009	1,499.06	80.34	1,418.72	11,667.69
DÉCEMBRE	2009	1,499.06	71.63	1,427.43	10,240.26
TOTAL	2009	17,988.72	1,422.80	16,565.92	10,240.26
JANVIER	2010	1,499.06	62.86	1,436.20	8,804.06
FÉVRIER	2010	1,499.06	54.05	1,445.01	7,359.05
MARS	2010	1,499.06	45.18	1,453.88	5,905.17
AVRIL	2010	1,499.06	36.25	1,462.81	4,442.36
MAI	2010	1,499.06	27.27	1,471.79	2,970.57
JUIN	2010	1,499.06	18.24	1,480.82	1,489.75
JUILLET	2010	1,499.06	9.15	1,489.91	-0.16
AOUT	2010	0.00	0.00	0.00
SEPTEMBRE	2010	0.00	0.00	0.00
OCTOBRE	2010	0.00	0.00	0.00
NOVEMBRE	2010	0.00	0.00	0.00
DÉCEMBRE	2010	0.00	0.00	0.00
TOTAL	2010	10,943.42	253.00	10,240.42

5

EX-10.25

Exhibit 10.25

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “[XX]”.

 

THIS AGREEMENT is made this 5 day of August, 2009,

BETWEEN:

TORONTO HYDRO-ELECTRIC SYSTEM LIMITED

a corporation incorporated under the laws of the Province of Ontario

(hereinafter called the “Buyer”)

and

PIONEER TRANSFORMERS LIMITED

a corporation incorporated under the laws of Canada

(hereinafter called the “Vendor”)

The Buyer and Vendor are referred to individually herein as a “Party” and collectively as “the Parties”.

1

WHEREAS:

1.           The Vendor carries on the business of designing, manufacturing and distributing certain transformers and providing certain services related thereto;

2.           The Buyer requires certain transformers and related equipment and services as more particularly described in Schedule A to this Agreement (“the Transformers”), which Schedule may be amended from time to time;

3.           The Buyer has issued, and the Vendor has responded to, a request for proposals bearing number 05P-074 and request for quotations bearing number 07Q-044;

4.           The Buyer has determined that the Vendor’s response satisfies the requirements as set forth. in the request for proposals bearing number 05P-074 and the request for quotations bearing number 07Q-044;

5.           The Vendor has agreed to provide the transformers to the Buyer and the Buyer has agreed to purchase the transformers from the Vendor upon the terms and conditions as set forth below. In this Agreement, the transformers supplied pursuant to the request for proposal 05P-074 and the transformer supplied pursuant to the request for quotations 07Q-44 shall be referred to as the “05 Transformers” and the “07 Transformer”, respectively, and collectively, “the Transformers”;

6.           The Vendor has agreed to provide a Warranty for the Transformers as set forth below;

NOW THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.           Interpretation

(a) All capitalized terms in this Agreement shall have the meaning hereby assigned to them except where the context otherwise requires;

(b) The recitals hereto shall form an integral part of this Agreement as if specifically restated herein;

(c) Words denoting the singular include the plural and vice versa and words denoting any gender include all genders.

(d) The word “including” shall mean “including without limitation”;

(e) Any reference to a statute shall mean the statute in force as of the date hereof, together with all regulations promulgated thereunder as may be amended, re¬enacted, consolidated and/or replaced, from time to time, and any successor statute thereto, unless otherwise provided;

(f) When calculating a period of time within which or following which any act is to be done or step taken, the, date which is the reference day in calculating such period shall be excluded, and if the last day of such period is a Saturday, Sunday or statutory holiday, the period shall end on the next Business Day;

2

(g) All dollar amounts in this Agreement are expressed in Canadian dollars, unless otherwise stated;

(h) The division of this Agreement into separate articles, sections, subsections and Schedules and the insertion of headings is for convenience of reference only and shall not affect the construction or interpretation of this Agreement; and

(i) Save and except as otherwise expressly defined within the body of this Agreement or in Schedule C hereto, words or abbreviations which have well known or trade meanings are used herein in accordance with their recognized meanings.

2.           Purchase and Sale

Subject to the terms and conditions of this Agreement, and in reliance on the representations, warranties and conditions set forth in this Agreement, the Buyer agrees to purchase the Transformers from the Vendor and the Vendor agrees to supply the Transformers to the Buyer during the Term of this Agreement, but the Buyer shall be under no obligation to purchase a minimum number of the 05 Transformers from the Vendor, and shall be entitled to purchase transformers of a similar nature, or otherwise, from any other supplier.

3.           Term

(a) Subject to any termination rights described herein, this Agreement shall be effective as at January 1, 2007 for a term of five (5) years until December 31, 2011 (the “Initial Term”).

(b) The Buyer may, at its sole option, and upon written notice to the Vendor at least sixty (60) days prior to the end of the Initial Term, elect to renew this Agreement for an additional period of up to five (5) years comprised of a single term or any combination of terms totalling up to five (5) years (the “Renewal Term”). The terms and conditions contained herein shall apply during the Renewal Term, save and except as amended by the Parties.

(c) The Initial Term and the Renewal Term, if any, shall hereinafter collectively be referred to as the “Term” of this Agreement.

(d) This Article 3 shall apply only in respect of the 05 Transformers.

4.           Price and Payment

(a) As consideration for the sale of the Transformers including, without limitation, the representations, warranties and conditions set forth in this Agreement,. the Buyer agrees to pay to the Vendor the amount in Canadian dollars (the “Purchase Price”) as detailed in Schedule B to this Agreement, for the 05 Transformers and the 07 Transformer. The purchase price for the 05 Transformers and the. 07 Transformer shall hereinafter be referred to as the “05 Purchase Price” and the “07 Purchase Price”, respectively, and collectively as the “Purchase Price”. The Purchase Price includes all applicable taxes, duties, packaging, handling and delivery costs.

3

(b) The 05 Purchase Price shall remain firm for the first three (3) months of the Initial Term of this Agreement, and shall thereafter be reviewed and agreed to in writing by both Parties at intervals of three (3) months (“Quarterly Review Periods”). In the event that there is no increase in the 05 Purchase Price after the price reviews for any four (4) consecutive Quarterly Review Periods, pricing shall thereafter be reviewed after intervals of one (I.) year (“Annual Review Periods”). The first Annual Review Period shall commence on the next day after the last Quarterly Review Period. The Purchase Price shall be agreed upon by the Parties and shall be effective as of the first day of the Quarterly or Annual Review Period for which it was to be determined.

(c) In the event of an abnormal increase or decrease in the Vendor’s cost of production for the Transformers during an Annual Review Period attributable to the cost of raw materials, the existence of which increase or decrease, and the reason therefor, shall be mutually agreed to by the parties, the parties shall agree upon an increase or decrease in the Purchase Price, as may be appropriate. The date on which this increase or decrease in the’ Purchase Price is agreed upon shall constitute the first day of a Quarterly Review Period, and the Purchase Price shall thereafter be reviewed and agreed upon in accordance with this Article 4.

(d) The Vendor shall submit invoices to the Buyer on a monthly basis for the 05 Transformers and within thirty (30) days of delivery of the 07 Transformer, which invoices shall be in accordance with Article 7 of this Agreement. The Buyer shall make payment to the Vendor within thirty (30) days of its receipt of an invoice submitted in accordance with Article 7 unless the Buyer disputes part or all of a particular invoice. For the 05 Transformers only, if the Buyer pays an invoice within three (3) days of receipt, the Vendor agrees that the Buyer is entitled to a rebate equal to [XX] per cent (%) of the invoice amount. All such rebates shall be paid by the Vendor to the Buyer within three (3) months of the date of the invoice to which they relate. In the event of a Dispute, the Buyer shall advise the Vendor, in writing, within ten (10) days of receipt of the invoice, the basis for the Dispute and shall pay the Vendor any undisputed portion of the invoice. If the Buyer disputes part of an invoice but pays the undisputed portion of the invoice within ten (10) days of receipt of the invoice, then the Buyer will he entitled to a discount equal to [XX] per cent (1.A) on the undisputed portion of the invoice. The Dispute shall be resolved in accordance with Article 21, and the non-payment by the Buyer for any disputed amount shall not be considered a default under Article 13(b) of this Agreement.

(e) Invoice amounts shall be in Canadian dollars. Delivery Transformers and their components shall be delivered. in accordance with the terms, specifications and schedules included in Schedule B to this Agreement. The Vendor shall immediately notify the Buyer, in writing, of any. circumstances known or suspected that may cause delay in delivery of the Transformers. Unless otherwise agreed in writing, the Buyer will not accept deliveries in excess of those specified in this Agreement or any purchase order made hereunder and such deliveries shall be entirely at the Vendor’s risk and may be returned by the Buyer to the Vendor at the Vendor’s sole cost and expense.

4

6.           Risk of Loss

All Transformers shall be safely and securely packed for shipment. Title to and risk in the Transformers shall pass to the Buyer on delivery at the Buyer’s location. All delivery costs, including insurance, are for the account of the Vendor.

7.           Invoice Requirements

The Vendor shall render invoices in accordance with the following:

(a) all invoice amounts shall be in Canadian dollars; and

(b) all invoices shall be in a form acceptable to the Buyer, rendered in triplicate, and be accompanied by a bill of lading.

8.           Time of the Essence

Time is of the essence in the Agreement. The Vendor shall deliver all Transformers in accordance with the dates and times for performance and delivery specified in Schedule B hereto, and the Buyer shall have the right to take possession of and use any completed or partially completed or delivered portions notwithstanding any provisions to the contrary.

9.           Force Majeure

Either Party will be relieved of liability for delays in delivery or performance because of the intervention of a Force Majeure. In no event shall lack of finances be considered as a Force Majeure. The Party affected by the Force Majeure shall as soon as reasonably practicable, give prompt notice thereof stating the date and extent of the Force Majeure and the cause thereof and, upon cessation of the Force Majeure, take all reasonable steps to resume compliance with its obligations. If a delay in delivery or performance extends beyond ten (10) days, either Party may terminate the Agreement by providing written notice thereof to the other Party.

10.           Warranty

The Transformers, or parts thereof, manufactured or distributed by the Vendor, are expressly warranted to be free from defects in workmanship or materials when subjected to normal and proper use for a period of five (5) years from the date of shipment of such equipment (“the Warranty”). For the 07 Transformer only, the Warranty as it applies to oil leaks shall apply for a period of three (3) years, but shall in all other respects apply for five (5) years. Notice of any claim arising out of this Warranty shall be made in writing within the Warranty period. Without limiting the. Buyer’s right to claim for all damages, losses, expenses, and costs of whatever nature arising out of the Vendor’s breach of this Agreement, if any Transformer supplied under this Agreement is deficient in workmanship or material, the Vendor shall, at the sole option of the Buyer, replace the Transformer or refund the Buyer the price paid for the Transformer. Additionally, if a Transformer should fail within the Warranty Period then the Vendor will pay to the Buyer the costs associated with labour and other associated costs of removal and replacement of the failed unit to a maximum actual cost of two thousand two hundred dollars ($2,200) per failure occurrence. This Warranty shall survive the expiration or termination of this Agreement.

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11.           Dedicated Inventory

The Vendors shall continuously maintain a quantity of stock dedicated to the exclusive use of the Buyer (“Dedicated Inventory”). The composition of this Dedicated Inventory shall consist of one unit of Toronto Hydro stock code 664-3201 and one unit of Toronto Hydro stock code 664- 3202, or their equivalents should the stock codes be changed. The Vendor shall deliver items from the Dedicated Inventory to the Buyer within forty-eight (48) hours of receipt of notification from the Buyer, on an as needed basis.

12.           Inspection

All Transformers will be subject to final inspection and approval by the Buyer after delivery, and notwithstanding any prior payment. In the event that Transformers are delivered which are not in conformity with the terms, conditions and specifications of this Agreement, the Buyer may, at its option:

(a) reject the good’s and require the Vendor to immediately deliver replacement goods;

(b) negotiate with the Vendor an agreeable reduction in the purchase price of the delivered, non-conforming goods; or

(c) repair/rework the delivered non-conforming goods or cause them to be repaired/reworked at the Vendor’s expense, which expense shall, constitute a proper set-off by the Buyer against amounts otherwise due the Vendor under this Agreement.

13.           Termination

(a) The Buyer may, for its convenience and at its sole option, terminate the Vendor’s services under this Agreement by providing at least sixty (60) days prior written notice of such termination, whereupon the Vendor shall stop performance of the Vendor’s services under the Agreement, except as may be necessary to carry out such termination and take any other action which the Buyer may reasonably direct. Without limiting the generality of the foregoing, Buyer may terminate this Agreement hi the event that its design specification requirements change. Buyer agrees that it will not terminate this Agreement for the sole purpose of purchasing the same Transformers as are being supplied under this Agreement from a competitor of the Vendor.

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(b) If the Vendor fails to fulfil its material obligations under this Agreement, including, without limitation, the failure to meet the delivery schedule contained in Schedule B hereto, then the Buyer may, without prejudice to any other right or remedy the Buyer may have, notify the Vendor in writing that the Vendor is in default of its contractual obligations and instruct the Vendor to correct the default within five (5) Business Days immediately following the receipt of such notice. If the Vendor fails to correct the default in the time specified then, without prejudice to any other right or remedy the Buyer may have, the Buyer may. either correct such default and deduct the cost thereof from any payment then or thereafter due to the Vendor and/or terminate the Agreement.

(c) If bankruptcy or insolvency proceedings are instituted by or against the Vendor or the Vendor is adjudicated a bankrupt, becomes insolvent, makes an assignment for the benefit of creditors or proposes or makes arrangements for the liquidation of its debts, or a receiver or receiver and manager is appointed with respect to all or part of the assets of the Vendor, the Buyer may, without prejudice to any other rights or remedies it may have, immediately terminate the Agreement.

14.           Liability and Indemnification

Subject to this Article, the Vendor shall be liable for and shall indemnify and save the Buyer and its Affiliates (as defined in the Business Corporations Act (Ontario)) and each of their respective officers, directors, employees, managers, advisors and agents (together and hereinafter the “Representatives”) harmless from and against all loss, damage or injury and all actions, claims, losses, damages, costs, expenses, obligations and liabilities arising out of any material breach of the. Vendor’s obligations under the Agreement and/or any of the acts or omissions of the Vendor or any of its employees, agents or subcontractors, whether negligent or otherwise. The Vendor’s liability and duty to indemnify under this Article shall not exceed five million dollars ($5,000,000) per occurance. This Article shall survive the termination of this Agreement.

15.           Insurance

The Vendor shall, during the term of this Agreement, and at its own expense, maintain and keep in full force and effect:

(a) commercial general liability insurance on an occurrence basis having a minimum inclusive coverage limit, including personal injury and property damage, of not less than five million dollars ($5,000,000) per occurrence, which shall be extended to cover contractual liability, products completed, operations liability, owners/contractors protective liability and must also contain a cross liability clause and a severability of interest. clause; and

(b) automobile liability insurance on all owned and non-owned vehicles used in • connection with this Agreement and such insurance coverage shall have a limit of not less than two million dollars ($2,000,000) per vehicle, in respect of bodily injury (including passenger hazard) and property damage inclusive of any one accident and mandatory accident benefits.

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The Buyer and its Affiliates must be added as an additional insured under the above-noted insurance policies. When requested, the Vendor shall provide the Buyer with proof of the above-noted insurance.

16.           Intellectual Property Protection

The Vendor expressly warrants that the manufacture, delivery, sale or use of the Vendor’s goods or services will not infringe any Canadian or foreign patents, trademarks, copyrights, industrial design or other intellectual property rights and the Vendor shall indemnify and save the Buyer harmless from all claims, judgments and decrees that may be entered against the Buyer and against, all damage, liability, costs and expenses (including legal fees and other attendant costs and expenses) the Buyer incurs by reason of any infringement or claim thereof

17.           Confidential Information

The Parties agree and acknowledge that, subject to applicable laws or court order,

(a) each Party (the “Receiving Party”) shall maintain in strict confidence any and all proprietary and confidential information about the business, operations or customers of the other Party or any of their Affiliates, which it acquires in any form from the other Party (the “Disclosing Party”) by virtue of this Agreement (“Confidential Information”) and will not disclose to any third party or make use of such Confidential Information for itself or any third party without the prior written consent of the Disclosing Party;

(b) the Buyer is subject to the Municipal Freedom of Information and Protection of Privacy Act (Ontario) (“MFIPPA”) and may be required to disclose Confidential Information concerning the Agreement in accordance with the provisions of MFIPPA.

(c) a Party shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with any breach of obligations pursuant to this section;

(d) upon termination of the Agreement, or upon ten (10) days prior written notice from the Disclosing Party requesting return of any or all Confidential Information, the Receiving Party shall forthwith return all such information to the Disclosing Party without retaining any copies thereof.

18.           Assignment

Save and except for the Buyers’ right to assign this Agreement to any of its Affiliates, neither Party may assign this Agreement or any of its rights or obligations hereunder, in whole or in part, without the prior written consent of the other Party, which consent may not be unreasonably withheld.

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19.           Relationship of the Parties

Nothing contained in the Agreement shall be construed to constitute either Party as the partner, employee or agent of, or joint venturer with the other Party, nor shall either Party have any authority to bind the other in any respect, it being intended that each Party shall remain an independent contractor of the other.

20.           Representations and Warranties

The Vendor represents and warrants to the Buyer that:

(a) it has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder, and that this Agreement constitutes the legal, valid, and binding obligation of the Vendor, enforceable against the Vendor in accordance with its terms;

(b) it is the absolute beneficial owner of the Transformers, with good and marketable title, free and clear of all liens, charges, encumbrances or rights of others and is exclusively entitled to possess and dispose of the same;

(c) all Transformers it supplies shall be in compliance with all Applicable Laws and will conform to the specifications, drawings, samples, symbols or other descriptions as specified in the Schedule A hereto, as may be amended from time to time, and will be fit and sufficient for their intended purpose, merchantable and free from defects in material and workmanship. This warranty is in addition to all other warranties specified in this Agreement or implied by law and shall survive acceptance and payment;

21.           Dispute Resolution

(a) Any and all disputes, disagreements, controversies, questions or claims arising out of or in relation to this Agreement which arise between the Parties shall be referred to, collectively, as a Dispute;

(b) The Parties undertake to cooperate fully and in good faith attempt to promptly resolve any Dispute by negotiation between their respective representatives, and further, upon the request of either party, executive officers of such Party. If the Dispute is resolved, such resolution shall be evidenced by an instrument in writing;

(c) If a Dispute has not been resolved within fifteen (15) days of a Party’s request for executive officer negotiation, the Parties may agree to submit the dispute to resolution. The Parties shall bear the costs of any mediation equally. If the matter is resolved through mediation, such resolution shall be evidenced by an instrument in writing.. Mediation shall be considered to have failed if either Party, at any time, gives written notice to such effect to the other Party;

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(d) Any Dispute that cannot be amicably settled by negotiation or mediation shall be finally settled by compulsory arbitration. Such arbitration shall be conducted in accordance with the Arbitration Act (Ontario) and shall take place in the City of Toronto. The Parties will bear the cost of any arbitration under this Article 21 in the manner specified by the arbitrator(s). If the arbitrator(s) do(es) not specify the cost, each. Party shall bear its own costs and will share the costs of the arbitrator(s) equally.

(e) This Article shall survive the expiration or termination of this Agreement.

22.           Reporting

On a monthly basis, throughout the Term of this Agreement, the Vendor shall submit to the Buyer a detailed report in accordance with the Buyer’s requirements providing information related to the status of deliveries under this Agreement and including an account of any delays, quality control or other issues experienced by the Vendor during the month which is the subject of the report.

23.           Severability

In the event that any of the covenants herein shall be held unenforceable or declared invalid for any reason whatsoever, to the extent permitted by law, such unenforceability or invalidity shall not affect the enforceability or validity of the remaining provisions of the Agreement and such unenforceable or invalid portion shall be severable from the remainder of the Agreement.

24.           No Waiver

A waiver of any provisions of this Agreement shall not constitute either a waiver of any other provisions or a continuing waiver, unless otherwise expressly indicated in writing.

25.           Enurement

This. Agreement and everything contained herein shall enure to the benefit of, and be binding upon, the Parties hereto and their respective successors and permitted assigns.

26.           Notice

All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed (in the absence of evidence of prior receipt) to have been validly and effectively given on the same day if personally served, the next Business Day if sent by facsimile or similar means of recorded communication or on the fifth Business Day next following where sent by registered mail.  Notices shall be addressed as follows:

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to the Buyer:

	Name:	Joanne Kehoe
	Title:	Supervisor, Supply Chain
	Address:.	500 Commissioners Street, Toronto, ON., M4M 3N7
	Telephone:	416-542-2505
	Facsimile:	416-542-2663
to the Vendor:
	Name:	Raymond Haddad
	Title:	General Manager
	Address:	612 Bernard Road, Granby, PQ., J2G 8E5
	Telephone:	450-378-9018
	Facsimile:	450-378-0626

27.           Permits and Applicable Laws

The Vendor shall, at its sole expense, obtain and maintain during the term of the Agreement, all permits, licences and approvals required by law to perform its obligations under the Agreement. The terms and conditions of the Agreement shall be carried out in strict compliance with all federal, provincial, and local laws, orders in council, directives, rules, regulations, codes and ordinances of the Government of Canada. Without limiting the generality of the foregoing, the Vendor shall comply with the Persona! Information Protection and Electronic Documents Act (Canada) (“PIPEDA”) and any other applicable privacy legislation with respect to any personal information it collects, uses or discloses in connection with the Agreement and shall indemnify and save harmless the Buyer and its Representatives from and against any and all claims, demands, suits, losses, damages, causes of action, fines or judgments (including related expenses and legal costs) they may incur related to or arising out of any non-compliance therewith.

28. Governing Law

The Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The Parties irrevocably attorn to the jurisdiction of the courts of Ontario with respect to any matter arising under or related to the Agreement.

29.           Entire Agreement

(a) This Agreement, including all Schedules hereto, constitutes the entire agreement between the Vendor and the Buyer relating to the subject matter hereof. This Agreement supersedes all prior correspondence, representations, warranties, covenants, collateral undertakings, discussions, negotiations, understandings or agreements, oral or otherwise, express or implied, unless otherwise provided in this Agreement.

(b) No modification or amendment to this Agreement shall be binding on the Buyer unless agreed to in writing.

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30.           Schedules

All schedules described in this Agreement shall be deemed to be incorporated in and made part of this Agreement, except that if there is any inconsistency between this Agreement and the provisions of any schedule, the, provisions of this Agreement shall prevail. Schedule A may be amended from time-to-time by the Buyer to reflect changes in the technical specifications for the Transformers. Amended specifications shall form part of this agreement, and shall supersede and replace all prior versions of the same specification.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written above:

PIONEER TRANSFORMERS LIMITED	TORONTO HYDRO-ELECTRIC SYSTEM LIMITED
Per: /s/ Raymond Haddad	Per: /s/  Johanne Kehoe
Name: Raymond Haddad	Name:   Johanne Kehoe
Title :V-P of Operations	Title:   Supervisor, Supply Chain
I have authority to bind the corporation.	I have authority to bind the Buyer.

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SCHEDULE A

The following specifications, as may be amended from time-to-time, form part of this Agreement:

05 Transformers:

DT-SW-02R1 – Three. Phase Subway-Type Distribution Transformers with Primary Disconnecting & Grounding

D-14-11R1 – Three Phase Network Transformers with Primary Disconnecting & Grounding Switches

PT-01R1 – 500 to 4000 MVA 27.6kV Grd Y/16000 or 27.6 kV Delta to 208 GrdY/120V or 600 GrdY/347V Power Transformer

07 Transformer:

ED 384 (and the addendum thereto) – Off-Load Tap Changing 10000/13333 kVA 60 Cycle,3Phase Outdoor Station Type Transformers

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TORONTO HYDRO

TECHNICAL SPECIFICATION

THREE PHASE SUBWAY-TYPE

DISTRIBUTION TRANSFORMERS WITH PRIMARY

DISCONNECTING & GROUNDING

SPECIFICATION NO. DT-SW-02R1

PREPARED BY:	/s/ H. Stucklus
	ENGINEER, STANDARDS & MATERIALS SECTION
REVIEWED BY:	/s/ L. Pen
	SUPERVISOR, STANDARDS & MATERIALS SECTION

CERTIFICATE OF APPROVAL THIS TECHNICAL SPECIFICATION MEETS THE SAFETY REQUIREMENTS OF SECTION 4 OF ONTARIO REGULATION 22/04
/s/ J. Petras	Aug. 31/-5
JOHN PETRAS PROFESSIONAL ENGINEER	DATE MANAGER, STANDARD & MATERIALS

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THREE PHASE SUBWAY-TYPE

DISTRIBUTION TRANSFORMERS

SCOPE

i This specification supplements the requirements of CSA Standard CAN/CSA-C199¬M1982 for Toronto Hydro Three Phase Subway - Type Distribution Transformers, Type ONAN, suitable for operation in a partially or totally submerged condition, with exposure to corrosive conditions, and for ratings up to 2500 kVA for installation on the Toronto Hydro 13800 V system.

ii Except where altered by the requirements of this specification, all transformers shall be designed and manufactured in accordance with CAN/CSA-C 199- M1982.

iii The numbering of clauses in this specification is identical to that used in CSA Standard CI99. Any additional or modifying statements added to the same numbered CSA clause shall form part of this specification and the requirements, as given in this specification, shall govern. Where no reference is made, the CSA Standard C199 applies as written.

iv All specifications mentioned herein shall be the latest editions.

REFERENCE PUBLICATIONS

ANSI Standard

C57.12.90 Test Code for Liquid-Immersed Distribution, Power, and Regulating Transformers and Guide for Short-Circuit Testing of Distribution and Power Transformers

ANSI\EEE 386-1985 Separable Insulated Connectors for Power Distribution Systems above 600 V.

C57.12.28 Padmounted Equipment – Enclosure Integrity

C57.12.32-2002 IEEE Standard for Submersible Equipment – Enclosure Integrity

C57.12.40-1994 Requirements for Secondary Network transformers, Subway and Vault Types (Liquid Immersed)

CSA Standards

C199-M1982 Three Phase Network Transformers

C2-M91 Single-Phase and Three-Phase Distribution Transformers; Types ONAN and LNAN

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C50 Insulating Oil, Electrical for Transformers and Switches

C22.2 No.0.15 Adhesive Labels

CAN3-108.3.1-1987   Tolerable Limits and Methods of Measurement of Electromagnetic Interference from Alternating Current High Voltage Power Systems 0.15 MHz-30 MHz.

ASTM Standard

D1816 Test Method for Dielectric Oil

B6-1 Insulating Oil for New Electrical Apparatus

ISO Standards

9001 Quality Systems- Model for Quality Assurance in Production, Installation and Servicing

3.2 Service Requirements

3.2.1 Operating conditions associated with Category 2 shall apply.

4.1 Tanks, General

4.1.2 The maximum dimensions for the transformer are given in Figure 1 attached to this specification.

4.1.3 The thicknesses for the tank wall, cover and bottom as shown in CSA Cl 99 Table 3 shall be changed to read a minimum of 8 mm.

Respondents are requested to submit a priced proposal for the fabrication of a stainless steel tank and provide rationale based on experience that shows the technical advantages for the use of stainless steel over finished mild steel. Toronto Hydro proposes to carry out a life cycle evaluation of each type of tank and determine which tank provides the lower cost.

4.1.4 Liquid Insulant

For ONAN type transformers, the dielectric oil shall meet the minimum requirements of CSA C50 and shall be Class B, Type II. The dielectric oil shall be new and shall contain no detectable amount of PCB’s in accordance with CSA C50. The minimum dielectric strength at time of shipment shall not be less than 40 kV when tested in accordance with ASTM D1816 using a 2 mm electrode spacing.

4.2.3 The access opening dimensions shall be increased for the circular opening to. 510 mm and for the rectangular one to 355 mm x 460 mm. The opening shall provide access to winding, tap changer and bushing terminals and shall project approximately 10 mm above the tank surface. All covers shall be equipped with handles or loops for lifting.

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4.3 Tank Finish

4.3.2 Category 2 service requirements apply. Add the following finishing requirements:

The standard exterior finish shall be light grey number 70, Munsell notation 51307.0/0.4. In addition, the exterior finish shall conform to ANSI C57.12.28-1988, clause 5.4, except the salt spray acceptance test criteria shall be 3000 hours.

Submersible transformers on the Toronto Hydro system are subjected to a very severe salt and wet environment and often display heavy corrosion. Toronto Hydro is prepared to consider an alternative paint standard such as IEEE Standard C57.12.32 – 2002 if the Respondent can show evidence that it provides a superior performance under these adverse conditions.

4.4 Moving Facilities

4.4.2 The transformer tank shall be provided with four jack steps 140mm wide, 76mm high and not less than 90mm deep, located at a. minimum distance of 100nun above the base.

4.5 Bushings and Terminations

4.5.1 The high and low voltage bushing locations are shown in the Figure 1 at the end of this specification. Provisions shall be made so that the bushings can. be removed and replaced without removing the transformer core from the tank.

4.5.2 The high voltage connection shall be three core lead covered cable. Clamp type connectors are to be used and are to be suitable for #210 copper or #4/0 aluminum conductors. The wiping sleeve shall be equipped with a vent hole with threaded plug. If predrilled, the wiping sleeve shall be capped, so that moisture cannot enter the chamber during transportation and outdoor storage.

4.5.5 Low-voltage terminals shall be spade-type sized and drilled according to CSA Standard C2-M1982, Figure 3, diagram IV (4 hole) and diagram V (6 hole) as applicable. The number of holes per phase are as follows:

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Table 1: Number of Holes Per Phase on Low-Voltage Termination

4.6 Low Voltage Neutral

4.6.1 The neutral bushing location is shown in the Figure 1 at the end of this specification. Sub-section (a) applies for voltage 208Y/125 and (b) for voltages 433Y/250 and 600Y/347.

4.6.2 The number of holes shall be according to Table 1.

4.7 Grounding

Also, connectors such as Bundy KPA 28 or equivalent that can accept cable sizes #1/0 to # 4/0 shall be provided.

4.8 Tap Changer

4.8.1 The off-load tap changer shall be located on the terminal side of the transformer. The tap changer handle shall be designed to allow the use of a standard Toronto Hydro padlock in any position (see drawing M-3-30 attached to this specification).

A separate warning sign shall be mounted close to the tap changer handle and shall be engraved using bold letters of at least 15mm high as follows:

OPERATE TAP CHANGER SWITCH ONLY WHEN TRANSFORMER IS DE-ENERGIZED

5. ELECTRICAL CHARACTERISTICS

5.1.2 Item (b)(65° rise) shall apply.

5.3 Voltage Rating

5.3.1 The nominal primary voltage shall be 13,800 volts, delta connection, and the nominal secondary voltages shall be 216Y/125 volts, 433Y/250 volts, and 600Y/347 volts. Tests and calculations shall be based on design ratios of 110:1, 55:1 or 40;1, respectively.

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5.3.2 The full load impedance shall not be less than 4%

6. HIGH VOLTAGE SWITCH

6.1.1 The primary switch is to be designed for 13,800 volt, three-phase, 60Hz operation and shall have a nominal rating of 15,000 volts. The dielectric strength of the primary switch in the open position shall be sufficient to permit periodic five-minute cable tests at 45 kV D.C. in the field.

The switch, non-interrupting type, shall be designed to operate in the sequence of open, close,: and ground as follows:

OPEN: incoming feeder is disconnected from transformer.

CLOSED: incoming feeder is connected to transformer.

GROUND: incoming feeder is solidly grounded and short circuited between phases.

The blade position shall be clearly marked on the front of the switch. The primary switch shall be designed so that a standard Toronto Hydro padlock (see drawing M¬3-30 attached to this specification).can be used to lock the switch in any position.

6.1.4 The primary switch operating handle shaft height shall not be excessively high or low. The most desirable heights are given in the table of Figure 1. The maximum operating force of the operating handle shall not exceed 180 Newtons (401bf).

6.2.3 The primary switch shall have a nominal continuous current rating of 200 amperes. It shall be capable of withstanding a short-circuit current of 25kA rms symmetrical for 2 seconds, and 40kA rms asymmetrical for 0.2 seconds without causing any damage to contacts, leads, or other parts, or permitting sufficient heat to be generated which could seriously lower insulating value of the oil or generate gases to increase the pressure to dangerous levels.

9. TESTS

In addition to clauses 9.1 to 9.7, the following shall apply.

(a) Type Tests

Type tests shall be performed and submitted by the successful Respondent(s) when changes are made to either the transformer design, manufacturing process, component(s) or raw material.

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The type tests for temperature rise, BIL, RN, sound level and short circuit shall be carried out on representative unit(s) on order when requested by Toronto Hydro unless Certified Test Reports are made available from other units whose equivalence with regard to the required tests are acceptable to Toronto Hydro. The successful Respondent(s) must submit such Certified Test Reports for approval prior by Toronto Hydro upon Toronto Hydro’s initial order of the transformer.

Respondents shall include in their Proposal, in addition to unit prices, the cost for performing each of the type tests noted should the Certified Type Test results, based on similar units, prove unacceptable to Toronto Hydro.

(b) Routine Tests

In addition to CSA C2 routine tests the following shall be conducted:

1) Resistance measurement

2) With reference to the tank leakage routine tests specified in the CSA C2, clause 9.2 (h), the manufacturer is required to submit to TH for approval, a detailed explanation of the test procedure and test parameters that he proposes to use to conduct the tank leak test on each unit.

3) An impulse test shall. be conducted on all units.

11. OPTIONAL ITEMS

11.1 The following optional items shall be provided:

(a) An automatic pressure relief devise per CSA C2 section 8.3

(b) A viewing window shall be provided on the front of the disconnecting and grounding switch such that the switch blades and the electrical interlock, including their operating states, are visible through the viewing window. The viewing window shall be scratch resistance and adequately strong to withstand the mechanical force under an electrical fault.

(g) High voltage bushing connector for copper or aluminum cable sized to transformer capacity for ANSI loading conditions.

SUPPLEMENTARY REQUIREMENTS

The following requirements are in addition to those outline above.

12. QUALITY ASSURANCE

Transformers shall be designed and manufactured to in accordance with a quality program, approved by a certified registrar to ISO 9001.

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13 MARKINGS

13.1 Transformer Nameplate

In addition to the information to be contained in the combination nameplate and connection diagram as outlined in CSA Standard C199, the nameplate shall contain the following information:

Toronto Hydro Purchase Order Number

Total weight of the insulating liquid

Total volume of the insulating liquid

PCB content

The nameplate shall contain the following warning in bold prints

(A) OPERATE THE PRIMARY DISCONNECTING AND GROUNDING SWITCH ONLY WHEN THE. TRANSFORMER AND INCOMING PRIMARY FEEDER ARE DE-ENERGIZED.

SWITCH IN OPEN POSITION:

HIGH VOLTAGE LINE OPEN AND DISCONNECTED FROM. TRANSFORMER.

SWITCH IN GROUND POSITION:

HIGH VOLTAGE LINE GROUNDED, AND SHORT-CIRCUITED.

SWITCH IN CLOSED POSITON:

HIGH VOLTAGE LINE CONNECTED TO TRANSFORMER

(B) OPERATE THE TAP CHANGER SWITCH ONLY WHEN THE TRANSFORMER IS DE-ENERGIZED.

13.2 High Voltage and Low Voltage Terminal Markings

The high and low, voltage terminals shall be stenciled H1, H2, etc. and X , X2, X3, etc: respectively in minimum 50mm high white lettering.

13.3 Stock Code, kVA and Voltage Markings

The stock code number shall be stenciled on the front of the switch chamber. “< 2 ppm PCB” note shall be shown on the transformer nameplate.

14. WITNESSING

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The successful Respondent(s) shall advise Toronto Hydro a minimum of four (4) Business Days in advance of scheduled, testing to enable Toronto Hydro to send inspectors to witness the production tests. All testing is to be completed during the normal working hours of Toronto Hydro (Monday, to Thursday, 7:30 a.m. to 3:30 p.m., Friday, 7:30 a.m. to 12:00 p.m., with the successful Respondent(s) responsible’ for all costs incurred by Toronto Hydro for time spent beyond said hours. Where the location of transformer testing is more than 200 km from Toronto Hydro, a minimum of seven (7) Business Days’ notice will be required.

All transformers of each rating on order may be test-witnessed at the discretion of the inspectors of Toronto Hydro.

The successful Respondent(s) shall provide the inspectors of Toronto Hydro, without restriction, access to its premises and test areas for the purpose of quality surveillance and verification.

Toronto Hydro reserves the right to select, at random, transformers from a production lot for the production tests, when necessary.

15.     EVALUATION DATA

Respondents must provide the following information to Toronto Hydro for the evaluation of the transformer losses and characteristics. Proposals lacking the required data may not be evaluated.

15.1 Guaranteed value of no-load losses at 105% rated voltage and corrected to 85°C.

15.2 Exciting current at 105% rated voltage.

15.3 Guaranteed value of load losses and impedance at rated current and voltage, corrected to 85° C.

15.4 Percentage regulation at 0.8 and unity power factors.

15.5 Efficiency at 1/4, 1/2, 3/4, full-load and 5/4 full-load.

15.6 Material used for high-voltage and low-voltage windings.

15.7 High voltage switch technical data.

15.8 A dimensional outline drawing.

15.9 Location of plant where transformers are to be manufactured.

16. DRAWINGS

In the event of an order, the successful Respondent(s) shall submit to Toronto Hydro three (3) copies of the following drawings for approval, prior to commencement of production:

16.1 Dimensional outline drawing.

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16.1.1 The drawing shall accurately display all features of the unit to be supplied. Any feature not being provided shall not be shown.

16.1.2 The drawing shall show primary and secondary voltages and kVA of unit being supplied.

16.1.3 The drawing shall also bear the name of Toronto Hydro and the relevant purchase order number.

16.2 Nameplate data such as weight, dimensions, litres of fluid, base detail, location of bushings and devises, height of switch handle, height if wiping sleeve, arrangement of accessories, etc.

16.3 Details of switch and termination chamber.

One copy of each, bearing Toronto Hydro’s approval with any remarks or comments, will be returned to the successful Respondent(s). If revision to the drawing is made, re-submission for approval is required unless stated otherwise, in writing, by Toronto Hydro.

Once the dimensional outline and the nameplate data drawings are approved by Toronto Hydro, new drawings are not required for the duration of the Strategic Supply Agreement.

17. CERTIFIED TEST REPORT

Upon the placement of Toronto Hydro’s initial order of the transformer, the successful Respondent(s) shall submit two (2) copies of a Certified Test Report reflecting all production and type test results as outlined in this specification.

Certified Test Reports shall include all the information as outlined in the attached sample Test Report format (see Appendices Al & A2 to this specification).

The Certified Test Reports must be approved by Toronto Hydro prior to the shipment of the equipment. Approval or rejection of the Certified Test Reports will be given within five (5) Business Days of their receipt.

If the manufactured equipment does not comply with all the requirements of this specification, Toronto Hydro reserves the right to reject all, or part of, the equipment under the Strategic Supply Agreement. The right of rejection will apply whether the equipment is in plant, in the warehouses of Toronto Hydro or in final installed position.

18. SHIPMENT

The successful Respondent(s) shall take an necessary precautions to avoid damage to the transformers during shipment and to ensure safe arrival at destination. Any damage to the paint, tank, hood, bushings or internal parts of any transformer on receipt at destination will be cause for rejection of the units until satisfactory repairs are arranged by the successful Respondent(s). Any claims against the transport company will be the responsibility of the successful Respondent(s).

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Shipment shall only be made when authorization is given by Toronto Hydro.

19. LATE DELIVERY

The successful Respondent(s) agrees that in the event it should fail to deliver the transformer within the time scheduled for delivery as specified in the purchase order, it may be required to pay to Toronto Hydro a fee, up to a maximum of ten percent (10%) of the total purchase price, which will be deducted from the invoice. This fee will be deducted only if Toronto Hydro, as a result of the shipment delay, is required to construct and remove temporary facilities which may be required to meet the commitments of Toronto Hydro to provide electric power.

Toronto Hydro also has the right to cancel the order without cost to Toronto Hydro if the late delivery is deemed unacceptable, in Toronto Hydro’s sole discretion.

20. WARRANTY

If a transformer is defective upon arrival or malfunctions in normal service, for causes other than accident, misapplication, or abuse, for a period of one (1) year after the unit is placed in service, or two (2) years after delivery, whichever occurs first, the defective transformer will be returned to the successful Respondent(s) by common carrier at the successful Respondent(s)’s expense.

The successful respondent(s) shall make good all defects or shall provide a new transformer to replace the defective one without cost to Toronto Hydro. If the successful Respondent(s) fails to repair or replace the returned transformer within a time period agreed upon by the parties, the successful Respondent(s) shall reimburse Toronto Hydro for the purchase price of the transformer. Transformers returned under warranty shall have a Certified Test Report and a report on the cause of failure.

Approval of tests by Toronto Hydro or its appointed agents shall not relieve the successful Respondent(s) of its responsibilities with respect to warranty.

21. INFORMATION SUBMITTED WITH THE PROPOSAL

Respondents shall submit the following information with their Proposal:

1. Layout drawing showing dimensions and weights and location of all devices and features.

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2. Toronto Hydro Data Sheets, as attached to this specification

3. Guaranteed losses, impedances and delivery times

4. Manufacturers technical data, bulletins, switch operation details and test reports on bushings, loadbreak switches and fusing

6. Separate optional pricing for type tests.

7. Clearly identified exceptions to this specification.

22. TRANSFORMER LOSSES EVALUATION

22.1 Evaluation of Proposals

Respondents shall note that, in evaluating the Proposals, Toronto Hydro will calculate the present value of the quoted transformer losses and add it to the quoted prices using the following formula:

[XX]

Full load losses result when the transformer supplies a load at rated current and does not include no-load loss.

For this purpose, the dollar values assigned to the losses are:

[XX]

22.2 Excessive Loss Evaluation

In cases where the final average measured losses of identical units exceed the guaranteed values, the Toronto Hydro reserves the right to reject all of said units. If the Toronto Hydro should choose to accept these units, the successful Respondent(s) must reimburse the Toronto Hydro for the additional cost of the transformer losses, which will be deducted from the successful Respondent(s)’s invoice.

In order to assess the value of non-guarantee, the average value of the measured no-load and full-load losses, taken from all of the identical units on order, will be used as the basis for the losses calculation. The cost. of losses will be calculated as follows:

a) If the no-load losses exceed the guarantee while the full-load losses are within the guarantee, the calculation for the cost of losses will be based on the following formula:

[XX]

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b) If the no-load losses are within guarantee while the full-load losses exceed the guarantee, the calculation for the cost of losses will be based on the following formula:

[XX]

c) If both no-load and full-load losses exceed the guarantee, the calculation for the cost of losses will be based on formula (2). Present value of cost of excess transformer losses in dollars

[XX]………(2)

Where:

[XX]

[XX]

[XX]

23. DELIVERY Respondents shall state in weeks the shipment time from the date of award of the Strategic Supply Agreement.. The location within the City of Toronto to which the delivery is to be made will be specified by the time of shipment. The successful Respondent(s) is to provide five (5) Business Days’ notice prior to shipment so that arrangements can be made to receive transformers. Transformers shall be delivered during normal working hours, Monday to Thursday (7:30 a.m. to 3:30 p.m.), Friday (7:30 a.m. to 12:00 p.m.) allowing sufficient time for receiving and offloading the transformers. Transformers shall only be delivered after the submitted drawings and test results have been approved by Toronto Hydro.

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TORONTO HYDRO •

TECHNICAL SPECIFICATION

THREE PHASE NETWORK TRANSFORMERS

WITH PRIMARY DISCONNECTING &

GROUNDING SWITCHES

SPECIFICATION NO. D-14:41 R1

PREPARED BY:	/s/ H. Stucklus
	ENGINEER, STANDARDS & MATERIALS SECTION
REVIEWED BY:	/s/ L. Pen
	SUPERVISOR, STANDARDS & MATERIALS SECTION

CERTIFICATE OF APPROVAL THIS TECHNICAL SPECIFICATION MEETS THE SAFETY REQUIREMENTS OF SECTION 4 OF ONTARIO REGULATION 22/04
/s/ J. Petras	August 31, 05
JOHN PETRAS PROFESSIONAL ENGINEER	DATE MANAGER, STANDARD & MATERIALS

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THREE PHASE NETWORK TRANSFORMERS

INTRODUCTION

i This specification supplements the requirements of CSA Standard CAN/CSA-C199- M1982 for Three Phase Neutral Transformers, Type ONAN and LNAN, suitable for operation in a partially or totally submerged condition, with exposure to corrosive conditions and for ratings up to 2000 kVA for installation on the Toronto Hydro 13800 V system.

ii Except where altered by the requirements of this specification, all transformers shall be designed and manufactured in accordance with CAN/CSA-C199- M1982.

iii The numbering of clauses in’ this specification is identical to that used in CSA Standard C199. Any additional or modifying statements added to the same numbered CSA clause shall form part of this specification and the requirements, as given in this specification, shall govern. Where no reference is made, the CSA Standard C199 applies as written. .

iv All specifications mentioned herein shall be the latest editions

REFERENCE PUBLICATIONS

CSA Standards

C199-M 1982 Three Phase Network Transformers

C2-M91 Single-Phase and Three-Phase Distribution Transformers, Types

ONAN and LNAN

C50 Insulating Oil, Electrical for Transformers and Switches

C22.2 No. 0.15 Adhesive Labels

CAN3-108.3.1-1987  Tolerable Limits and Methods of Measurement of Electromagnetic Interference from Alternating Current High Voltage Power Systems 0.15 MHz-30 MHz.

ANSI Standard

C57.12.90 Test Code for Liquid-Immersed Distribution, Power, and Regulating Transformers and Guide for Short-Circuit Testing of Distribution and Power Transformers

ANSINIEEE 386 Separable insulated Connectors for Power Distribution Systems

1985 Above 600 V.

C57.12.28 Padmounted Equipment – Enclosure Integrity

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C57.12.40-1994 Requirements for Secondary Network transformers, Subway and Vault Types (Liquid Immersed)

IEEE C57.12.32 Submersible Equipment – Enclosure Integrity

ASTM Standard

D1816 Test Method for Dielectric Oil

B6-1 Insulating Oil for New Electrical Apparatus

ISO Standards

9001 Quality Systems- Model for Quality Assurance In Production, Installation and Servicing

3.2 Service Requirements

Operating conditions associated with Category 2 shall apply. Add the following finishing requirements:

The standard exterior finish shall be light grey number 70, Munsell notation 513G7.0/0.4.

4.0 MECHANICAL CHARACTERISTICS AND TRANSFORMER ACCESSORIES

4.1.1 The transformer shall be of sealed construction with the cover bolted in place.

4.12 The transformer layout shall conform to CSA C199, Figure 2 except the low voltage neutral shall be located close to H1 of the termination chamber. The transformer dimensions shall conform to attached drawing #D-14-11-D10.

4.1.3 In addition, Respondents are requested to submit a priced proposal for the fabrication of a stainless steel tank and provide rationale based on experience that shows the technical advantages for the use of stainless steel over finished mild steel. Toronto Hydro proposes to carry out a life cycle evaluation of each type of tank and determine which tank provides the highest reliability for cost.

4.2 The access opening dimensions shall be increased for the circular opening to 510 mm and for the rectangular one to 355 mm x 460 mm. The opening shall provide access to winding, tap changer and bushing terminals and shall project approximately 10 mm above the tank surface. All covers shall be equipped with handles or loops for lifting.

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4.3.2 In addition, the exterior finish shall conform to ANSI C57.12.28 1988, clause 5.4, except the salt spray test acceptance criteria shall be 3000 hours.

Submersible transformers on the Toronto Hydro system are subjected to a very severe salt and wet environment and often display heavy corrosion. Toronto Hydro is prepared to consider an alternative paint standard to IEEE Standard C57.12.32 – 2002 if the Respondent can show evidence that it provides a superior performance under these adverse conditions.

4.4.1 The main cover and primary switch tank, if removable, shall be equipped for lifting in a properly balanced manner and shall have a safety factor of 5 in accordance with ANSI per clause C57.12.40.

4.4.2 The transformer tank shall be provided with four jack steps 140mm wide, 76mm high and not less than 90mm deep, located at a minimum distance of 100mm above the base channels and usable with or without skids attached.. The design in accordance with ANSI C57.12.40 shall provide a safety factor of 5.

4.5.2 Straight receptacle – three 600 A, 15kV, dead break apparatus bushing externally clamped shall be provided for receiving three straight receptacles with capacitive test points. The termination chamber has been eliminated and the switch chamber is used to terminate the primary connections. The three receptacles shall be connected to three single conductor 3/0 XLPE cables, 100% insulation. The bushings shall be Elastimold Cat. # 675T1 or approved equivalent in accordance with ANSI/IEEE 386.

4.5.9 Provision to mount the network protector to the transformer tank shall be in accordance with CSA C199 Figure 5 for 1875 A and Figure 6 for 3000 and 3500 A ratings. The support bracket shall be in the same plane as the compressed gasket for the LV flanged throat and recessed as shown in Figure 6. The gasket, which shall be included, shall be one piece. The dowel pin (see Figure 5 and 6) shall protrude 25 mm (1”)).

4.5.10 A steel backing plates 12.7 mm (1/2”) thick (see figures 5 and 6) shall be used at the mating surfaces and all fasteners such as washers, bolts, etc., required to secure the connection at the protector and transformer shall be provided. Bolting surfaces shall be silver plated; brush plated is unacceptable.

4.5.11 The flexible connections and secondary bushings shall be rated as follows:

216Y/I25 V	433Y250 V.	Minimum Current
500 kVA	1000 kVA .	1875 A
750 kVA	1500 kVA	3000 A
1000 kVA	2000 kVA	3500 A

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4.6.1 In addition, see CSA CI 99 Figure 2 for approximate location of the neutral terminal except the required location is between LV and /IV bushing arrangements, and below the cover to provide clear access to the neutral terminal. The terminal shall be 6 hole in accordance with CSA C2 Figure 3(iv). Bolting surfaces shall be silver plated; brush plated is unacceptable.

4.7 The ground terminal shall be supplied with a solderless connector suitable for receiving 1/0 to 4/0 stranded conductor.

4.8.1 The tap changer handle shall be designed to allow the use of a standard Toronto Hydro padlock (see attached drawing D-14-11-D20) in any position. The tap changer shall have a current carrying capacity that. corresponds to 150% of the current rating of the winding and shall not limit the loading of the transformer in accordance with ANSI C57.

A separate warning sign shall be mounted close to the tap changer handle and shall be engraved using bold letters of at least 15mm high as follows:

OPERATE TAP CHANGER SWITCH ONLY WHEN

TRANSFORMER IS DE-ENERGIZED

4.10 In addition, the thermometer shall be equipped with two auxiliary form “C” contacts: one to operate at 95° C and the other at 110° C. The auxiliary wiring shall terminate in a plug with a weatherproof cap. A sign shall be mounted close to the thermometer and shall be engraved using bold letters of at least 15mm high as follows:

Maximum Continuous temperature: 95° C

Maximum Permissible temperature: 110° C

4.12.1 In addition, the drain valve shall be Globe type and complete with sampling devise.

4.13 Oil Specification

The dielectric oil shall meet the minimum requirements of CSA C50 and shall be Class B, Type IL The oil shall be new and shall contain no detectable amount of PCB’s in accordance with CSA C50. The minimum dielectric strength at time of shipment shall be not less than 40 kV in accordance with ASTM D1816 using a 2 mm electrode spacing.

5.0 ELECTRICAL CHARACTERISTICS

5.1.1 The transformer shall be designed to deal with higher losses associated with harmonics that are generated as a result of supplying non-linear loads to our commercial customers. In order to deal with harmonic loading, a K-factor rating of 4 as defined by ANSI C57.110 is required.

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5.1.2 The kVA rating shall be based on item (a), continuous operation at a winding. temperature rise not exceeding 55° C but with a 65° C insulation system.

5.3.1 The nominal HV to LV turn ratio shall be 110:1 for 216Y/125 V and 55:1 . for 433Y/250

5.3.2 All taps shall be rated full capacity.

5.4 The full load impedance shall be 6.44%

5.8 No-load loss must be greater than or equal to 0.12% of the nameplate kVA rating and no special devises such as resistor banks shall be used to meet this requirement.

6.1.1 The switch voltage rating shall be 13,800 V, 15 kV class.

6.1.4 Three auxiliary form “A” contacts shall be provided, one per switch position. The wiring from the contacts shall be terminated in a plug that will be provided with a weatherproof cap. The switch shall be design to accept the Toronto Hydro standard padlock (see attached drawing D-14-11- DI 0). The operating handle shall be positioned 900 mm to 1200 mm above ground level and the maximum force to operate the handle shall not exceed 180 Newtons (40 lb°.

6.2.3 The short time current capability of the switch shall be 25 kA(sym) for 2 s and 40 kA(sym) for 0.2 s.

6.2.4 In addition, the interlock shall be internally mounted having a single phase coil connected line to ground and shall operate without noise or chatter.

7.2.6 A front viewing window shall be provided such that the disconnect and ground switch blades, their operating states and interlock are visible. The viewing window shall be scratch resistant and adequately strong to withstand mechanical forces from an internal fault.

9.1 In addition to the routine tests specified in CSA C2, Respondents shall conduct the following on each unit:

1) Resistant measurement

2) Pick up and drop out voltage of the electrical interlock

3) Tank test: Respondents are required to submit to Toronto Hydro, for approval, a detailed explanation of the test procedure and test parameters that they propose to use to conduct the tank leak test.

4) The switch with all terminals in position shall be subjected to a test of three times the operating voltage between phases for a period of five minutes. Further with the switch in the open position, a 36,000 V test shall be applied between phase and ground for one minute.

5) The interlock coil and leads must be subjected to 10,000 V to ground for one minute.

6) Percentage regulation at 1.0 and 0.8 power factors.

7) Efficiency at 1/4, 1/2, 3/4, full-load and 5/4 full-load.

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9.8 Type Tests

Type tests shall be submitted by the successful Respondent(s) when changes are made to either the transformer design,, manufacturing process, component(s) or raw material.

The type tests for temperature rise, BIL, RN, sound level and short circuit shall be carried out on representative unit(s) on order when requested by Toronto Hydro unless Certified Test Reports are made available from other units whose equivalence with regard to the required tests are acceptable to the Toronto Hydro. The Respondent(s) must submit such Certified Test Reports for approval by Toronto Hydro upon Toronto Hydro’s initial order of the transformer.

Respondents shall include in their Proposal, in addition to the unit prices, the cost for performing each of the type tests noted above in the event that the Certified Test Reports results, based on representative units, prove unacceptable.

10. NAMEPLATE

10.1 Transformer Nameplate

- In addition to the information to be contained in the •combination nameplate and connection diagram as outlined in CSA Standard C199, the nameplate shall contain the following information:

- Toronto Hydro purchase order number -

- Total weight and volume of the insulating liquid in switch chamber, termination chamber and main tank

- Total volume of the insulating liquid

- PCB content and k-factor, as applicable

- Title “3 Phase Network transformer”

- Transformer type e.g. Subway- Category II

- BIL and current ratings

- Primary switch type e.g. dead break, no load, etc.

- The following warnings:

OPERATE THE PRIMARY DISCONNECTING AND GROUNDING SWITCH ONLY WHEN THE TRANSFORMER AND INCOMING PRIMARY FEEDER ARE DE-ENERGIZED

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SWITCH ON OPEN POSITION:

HIGH VOLTAGE LINE OPEN AND DISCONNECTED FROM TRANSFORMER

SWITCH IN CLOSED POSITION:

HIGH VOLTAGE LINE CONNECTED TO TRANSFORMER

SWITCH IN GROUND POSITION:

HIGH VOLTAGE LINE GROUNDED

11. OPTIONAL ITEMS

The following items shall be provided:

a) Pressure relief devises

b) Viewing window for HV switch

12. MARKINGS

In addition “< 2 ppm PCB” shall be shown on the transformer nameplate.

The stock code number shall be stenciled at the front of the termination or switch chamber.

13. QUALITY ASSURANCE

Transformers shall be designed and manufactured to in accordance with a quality program, approved by a certified registrar to ISO 9001.

14. DRAWINGS

In the event of an order, the successful Respondent(s) shall, submit to Toronto Hydro three (3) copies of the following drawings for approval, prior to the commencement of production:

-   Outline and dimensional drawing. –

-   Nameplate data drawing.

These drawings shall accurately display all features of the unit to be supplied. Any feature not being provided shall not be shown.

One copy of each, bearing Toronto Hydro approval with any remarks or comments, will be returned to the successful Respondent(s). If revision to the drawing is made, resubmission for approval is required unless stated otherwise, in writing, by Toronto Hydro. The drawings shall also bear Toronto hydro’s name and the relevant purchase order number.

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15. TRANSFORMER LOSSES EVALUATION

15.1 Evaluation of Proposals

Respondents shall note that, in evaluating the Proposals, Toronto Hydro will calculate the present value of the quoted transformer losses and add it to the quoted prices using the following formula:=

[XX]

15.2 Excessive Loss Evaluation

In cases where the final average measured losses of identical units exceed the guaranteed values, Toronto Hydro reserves the right to reject all of said units. If Toronto Hydro should choose to accept these units, the successful Respondent(s) must reimburse Toronto Hydro for the additional cost of the transformer losses, which will be deducted from the successful Respondent(s)’s invoice.

In order to assess the value of non-guarantee, the average value of the measured no-load and full-load losses, taken from all of the identical units on order, will be used as the basis for the losses calculation. The cost of losses will be calculated as follows:

a) If the no-load losses exceed the guarantee while the full-load losses are within the guarantee, the calculation for the cost of losses will be based on the following formula:

[XX]

b) If the no-load losses are within guarantee while the full-load losses exceed the guarantee, the calculation for the cost of losses will be based on the following formula:

[XX]

c) If both no-load and full-load losses exceed the guarantee, the calculation for the cost of losses will be based on formula (2).

Present value of cost of excess transformer losses in dollars

[XX]

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16. CERTIFIED TEST REPORT

Upon the placement of Toronto Hydro’s initial order of the transformer, the successful Respondent(s) shall. submit two (2) copies of a Certified Test Report reflecting all production and type test results as outlined in this specification.

Certified Test Reports shall include all the information as outlined in the attached sample Test Report format (see Appendices A 1 & A2 to this specification).

The Certified Test Reports must be approved by Toronto Hydro prior to. shipment of the equipment. Approval or rejection, of the Certified. Test Reports will be given within five’ (5) Business Days of their receipt.

If the manufactured equipment does not comply with all the requirements of this specification, Toronto Hydro reserves the right to reject all, or part of, the equipment under the Strategic Supply Agreement. The right of rejection will apply whether the equipment is in plant, in Toronto Hydro warehouses or in final installed position.

17. SHIPMENT

The successful Respondent(s) shall take all necessary precautions to avoid damage to the transformers during shipment and to ensure safe arrival at destination. Any damage to the paint, tank, cover, bushings or internal parts of any transformer on receipt at destination will be cause for rejection of the units until satisfactory repairs are arranged by the successful Respondent(s). Any claims against the transport company will be the, responsibility of the successful Respondent(s).

Shipment shall only be made when authorization is given by Toronto Hydro.

18. LATE DELIVERY

The successful Respondent(s) agrees that in the event it should fail to deliver the transformer within the time scheduled for delivery as specified in the purchase order, it may be required to pay to Toronto Hydro a fee, up to a maximum of ten percent (10%) of the total purchase price, which will be deducted from the invoice. This fee will be deducted only if Toronto Hydro, as a result of the shipment delay, is required to construct and remove temporary facilities which may be required to meet Toronto. Hydro’s commitments to provide electric power.

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Toronto Hydro also has the right to cancel the order without cost to Toronto Hydro if the late delivery is deemed unacceptable, in Toronto Hydro’s sole discretion.

19. WARRANTY

If a transformer is defective upon arrival or malfunctions in normal service, for causes other than accident, misapplication, or abuse, for a period of one (1) year after the unit is placed in service, or two (2) years after delivery, whichever occurs first, the defective transformer will be returned to the successful Respondent(s) by common carrier at the successful Respondent(s)’s expense.

The successful Respondent(s) shall make good all defects or shall provide a new transformer to replace the defective one without cost to Toronto Hydro. If the successful Respondent(s) fails to repair or replace the returned transformer within a time period agreed upon by the parties, the successful Respondent(s) shall reimburse Toronto Hydro for the purchase price of the transformer. Transformers returned under warranty shall have a Certified Test Report and a report on the cause of failure.

Approval of tests by Toronto Hydro or its appointed agents shall not relieve the successful Respondent(s) of its responsibilities with respect to warranty.

20. EVALUATION DATA

Respondents must supply the following information to Toronto Hydro for the evaluation of the transformer losses and characteristics. Proposals lacking the required data may not be evaluated.

20.1 Guaranteed value of no-load losses at 105% rated voltage and corrected to 85 °C.

20.2 Exciting current at 105% rated voltage.

20.3 Guaranteed value of load losses and impedance at rated current and voltage, corrected to 85 °C.

20.4 Percentage regulation at 0.8 and unity power factors.

20.5 Efficiency at 1/4, 1/2, 3/4, full-load and 5/4 full-load.

20.6 Material used for high-voltage and low-voltage windings.

20.7 Fuse Characteristics, switches and bushing technical data.

20.8 Layout drawing showing dimensions and weights and location of all devices and features.

20.9 Location of plant where transformers are to be manufactured.

20.10 Delivery terms.

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21. DELIVERY

The successful Respondent(s) shall state in weeks the shipment time from the date of award of the Strategic Supply Agreement. The location within the City of Toronto to which the delivery is to be made will be specified by the time of shipment.

The successful Respondent(s) is to provide five (5) Business Days’ notice prior to shipment so that arrangements can be made to receive transformers. Transformers shall be delivered during normal working hours, Monday to Thursday (7:30 a.m.. to 3:30 p.m.), Friday (7:30 a.m. to 12:00 p.m.), allowing sufficient time for receiving and off loading the transformers.

Transformers shall only be delivered after the submitted drawings and test results have been approved by Toronto Hydro.

22 WITNESSING

The successful Respondent(s) shall advise Toronto Hydro a minimum of four (4) Business Days in advance of scheduled testing to enable a Toronto Hydro inspector to witness these tests. All testing is to be completed during Toronto Hydra’s normal working hours (Monday to Thursday, 7:30 a.m. to 3:30 p.m., Friday, 7:30 a.m. to 12:00 p.m., with the successful Respondent(s) responsible for all costs incurred by Toronto Hydro for time spent beyond said hours. Where the location of transformer testing is more than 200 km from Toronto Hydro, a minimum of seven (7) Business Days notice will be required.

All transformers of each rating on order may be test-witnessed at the discretion of Toronto Hydro’s inspectors.

The successful Respondent(s) shall provide the Toronto Hydro’s inspectors, without restriction, access to its premises and test areas for the purpose of quality surveillance and verification.

Toronto Hydro reserves the right to select, at random, transformers from a production lot for the production tests, when necessary.

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TORONTO HYDRO ELECTRIC SYSTEM LTD.

SPECIFICATION # PT-01 R1

FOR

500 to 4000 MVA

27.6KVGrd Y/16000 or 27.6 kV Delta

to 208 GrdY/120V or 600 GrdY/347V

POWER TRANSFORMER

PREPARED BY:	/s/ H. Stucklus
	ENGINEER, STANDARDS & MATERIALS SECTION
REVIEWED BY:	/s/ L. Pen
	SUPERVISOR, STANDARDS & MATERIALS SECTION

CERTIFICATE OF APPROVAL THIS TECHNICAL SPECIFICATION MEETS THE SAFETY REQUIREMENTS OF SECTION 4 OF ONTARIO REGULATION 22/04
/s/ J. Petras	Aug. 31, 2005
JOHN PETRAS PROFESSIONAL ENGINEER	DATE MANAGER, STANDARD & MATERIALS

33

1 SCOPE

1.1 This specification covers the requirements for an oil-filled, sealed tank design, power class transformer. The work to be done includes the design, manufacture, fabrication, shop testing, supply, delivery, placement in position and guarantee of the transformer. All work shall be in accordance with the following standards, current editions, except as specified herein.

2 REFERENCE STANDARDS

CSA Standards

CSA-C88 Power Transformers and Reactors

CSA-C2 Single Phase and Three Phase Distribution Transformers, Type ONAN and LNAN

CSA C50 Insulating Oil, Electrical for Transformers and Switches

ANSI Standards

C57.12.00 General Requirements for Distribution, Power, Regulating Transformers

C57.92 Guide for Loading Mineral Oil Immersed Power Transformers up to and Including 100 MVA with 55° C or 65° C Average Winding rise

C57.12.28 Switchgear and Transformers – Padmounted equipment – Enclosure Integrit

ISO Standards

9001 Quality Management and Quality Assurance Standard

3 RATINGS

3.1 Transformers Rating

The transformer three phase ONAN rating shall be based on the rating given in the item description in the RFP. The average winding temperature rise shall be 65° C. Provision for a further 33.3% increase in capacity with forced air cooling shall be provided. Limits of temperature rise for continuous operation shall be in accordance to CSA-C88-M90 Clause 9.2.

3.2 Voltage Ratings

The applicable primary and secondary voltages shall be those given in the item description in the RFP.

Primary: 27.6 kV GrdY/16000 or 27.6 kV delta connected

Secondary: 208Grd Y/120 or 600 GrdY/347

All voltages are based on the turns-ratio of the transformer at no-load.

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3.3 Electrical Characteristics

Transformer impedance shall be 5.5%

The transformer dissipation factor shall be 1.00% or less when corrected to 20°C.

Transformer sound level shall not exceed 58 dBA. Sound level tests shall be made in accordance with ANSI Standard C57.12.90.

Winding BIL

The minimum winding insulation requirements shall be:

Primary BIL

For the 27.6 kVGrdY connection – 150 kV BIL

For the 27.6 kV.deita connection – 170 kV BIL

Secondary BIL

For the 4160GrtlY connection – 50 kV BIL

For the 600GrdY and 208GrdY connections - 30 kV BIL

Winding Neutral BIL

The winding neutral BIL ratings shall meet the requirements in CSA C88 Table 4 as follows:

For 27.6kVGrdY neutral – 95 kV BIL

For 4160GrdY neutral – 50 kV BIL

For 208GrdY and 600GrdY — 30 kV BIL

4           CONSTRUCTION

4.1 Tank Features

A sealed tank design shall be provided in accordance with the requirements of section 15 of CSA-C88-M90 where the mechanical features and accessories listed in clauses 15.1.2 to 15.1.26. shall be considered standard. This specification provides clarification of Toronto Hydro’s requirements and items for clauses 15.1.2 to 15.1.26 where not specifically mentioned shall be supplied as per Respondent’s standard unless identified as an option in clauses 15.1.2 to 15.1.26.

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Hand hole suitably located and sized shall be provided on the tank cover.

The transformer core shall be designed and constructed to avoid tank •heating under, unbalanced loading or, secondary fault conditions. The Respondent shall specify whether it will use triplex, five-legged core, or other approved equivalent construction.

4.2 Angular displacement

Winding configuration shall be wye primary or delta primary to wye secondary with the secondary neutral brought out separately for solid grounding. The angular displacement for the star - star or delta – star winding connections shall be in accordance with CSA C88 Figure 1 designations for angular displacements Yy0 or Dy1.

4.3 Tap Changer

Transformer primary winding shall be provided with a five position off circuit tap changer with full capacity rating and features as detailed in CSA-C88-M90 clauses 8. and 15.1.4. Tap changer positions and corresponding ratings shall be as follows:

POSITION	VOLTAGE	PERCENT REGULATION
1	28,980	+5
2	28,290	+2 1/2
3	27,600	0
4	26,910	-2 1/2
5	26,220	-5

4.4 Lugs, Jacking Steps, Maximum dimensions, etc.

Four lifting lugs shall be provided at the top corners of the tank side walls, each of capacity sufficient to support at least half the weight of the oil-filled transformer.

Two lifting lugs shall be provided on the top cover of the transformer to enable removal of the cover only. These shall be located approximately equidistant from the center of gravity of the complete transformer.

Four jacking steps shall be provided, on the base or on the tank corners, each of capacity sufficient to support at least half the weight of the oil-filled transformer. These shall be located on the outermost base structure, where the side walls meet the base periphery. The step underside surface, free of obstruction, shall extend outwards (measured from the transformer base, or tank) for a minimum distance of 8 inches (step depth), and is of 6 inch minimum width.

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The steps shall be located to ensure an unobstructed space, which is dimensioned 7 by 7 inches extending directly downward from the step underside, for a minimum height of 14 inches (vertically) to accommodate the jack.

Transformer dimensions shall be such as to be able to access through the door of the transformer vault that measures 8’( 2440 mm )wide x 10’( 3050 mm ) high.

5. ACCESSORIES AND OPTIONS

5.1 General

Gauges, tap changer handle and other accessories shall be mounted on the transformer side not having junction boxes or radiators, etc., thus providing clear access for operating or viewing.

5.2 Accessories

a. A dial type oil temperature gauge complete with adjustable fan-start and alarm contacts shall be provided to indicate temperature of the hottest liquid. Dial is to be located on the tank wall and shall be “TESTON” or “QUALITROL” type or equivalent suitable for the application and subject to Toronto Hydro approval.

b. A magnetic oil level gauge with low level alarm contacts shall be provided and shall be “QUALITROL” type or equivalent suitable for application and subject to Toronto Hydro approval.

c. A “QUALITROL” series 208-60 pressure relief device or equivalent suitable for application and subject to Toronto Hydro approval shall be provided complete with the SPDT alarm switch option.

d. All alarm and trip contacts shall be wired to identified terminals in a common weatherproof terminal box located on the tank wall and accessible from ground level. Terminal box shall include terminals for the future addition of a 240/120 volt, 3 wire, 60 Hz. power supply for the purpose of powering cooling fans.

e. The transformer shall be equipped with a .10 PSI positive/negative compound pressure-vacuum gauge.

f. A pressure/vacuum bleeder device with provision to samples gas shall be provided.

g. For transformers equipped with cooling radiators, the radiators shall be permanently connected to the tank.

h. A one inch brass globe valve is to be provided for oil drainage.

i. The liquid sampling valve shall be coupled to the dry side of the one inch brass drainage globe valve. A plug shall be installed in the sampling valve to prevent accidental oil spillage.

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j. A one inch. brass globe valve shall be provided for the upper conditioning unit connection.

5.3 Nameplate

The vendor shall affix a nameplate to the transformer. The nameplate shall comply with CSA-C88-M90 Section 17. In addition, the words “CONTAINS NO PCB” shall be included on the nameplate.

For the purpose of this specification, “NO PCB” shall mean that, at the time of filling the transformer with insulating oil, the level of polychlorinated biphenyl in the oil was less than 2 ppm.

5.4 Finish

The finishing exterior paint shall be A.S.A. #61 Grey. The exterior finish shall conform to ANSI C57.12.28, clause 5.4, except the salt spray acceptance criteria shall be 3000 hours.

6 BUSHINGS

6.1 General

Primary, secondary and neutral bushings shall be sized for 200% of the highest current rating of the transformer and carry load and overload currents in accordance with ANSI C57.92. The electrical characteristics for the primary and secondary bushings shall be in accordance with CSA C88 Table 7. Compliance with EEMAC Standard is not required.

Clearances between live parts to ground and phase to phase for primary and secondary bushings shall comply with minimum dimensions for indoor application in accordance with CEC C22.1, Table 30. The dimensions shall be based on distances between live parts including allowance for fasteners, etc., and are not centre to centre clearances.

The Respondent shall state the conductor materials used in the windings and connections.

6.2 Primary Bushings

The primary bushings shall be supplied with a 4 – hole NEMA spade terminal in accordance with CSA C2, Figure 3, Type III.

The insulation class of the primary bushing shall be rated higher than the winding insulation class to which it is connected as follows:

For the 27.6 kV GrdY and 27.6 kV delta connections - 200kV BIL.

The high voltage phase and neutral bushings (HO) shall be brought out of the tank wall into an air insulated weatherproof junction box.

High voltage terminals shall be arranged right to left for H1 to H3 with HO to the right of H1 as seen when facing the high voltage side of the transformer.

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6.3 Secondary Bushings

The insulation class of the secondary bushing shall be higher than the winding insulation class to which it is connected as follows:

For the 4160GrdY connection – 50 kV

For the 600VGrdY and 208VGrdY connections - 45kV.

The low voltage bushings, which shall be 4 to 8 hole NEMA spade as required, including a fully rated neutral bushing (XO) .shall be brought out through the transformer tank wall. The low voltage bushings shall be housed in an air insulated weather-proof junction box while, the neutral bushing shall be located outside the box (i.e. exposed).

Low voltage terminals shall be arranged left to right for X1 to X3 with XO to the left of Xl, as seen when facing the low voltage side of the transformer.

6.4 Neutral Bushings

The BIL rating of the neutral bushings shall match that for the neutral end of both the primary and secondary windings in accordance with CSA C88 Table 4.

7. INSULATING MINERAL OIL

The insulating mineral oil shall be new and meet the requirements of CSA C50, Class 13, Type IL The transformer shall be filled to the required design level when shipped.

8. QUALITY ASSURANCE

The successful Respondent(s) shall establish and maintain a quality program in accordance with the requirements of ISO Standard 9001 .

9. TESTING REQUIREMENTS

9.1 Type Test

The type tests listed in CSA C88, section 16, shall be carried out on a representative unit when requested by Toronto Hydro unless Certified Test Reports on an equivalent unit, that are acceptable to Toronto Hydro, are made available. The successful Respondent(s) must submit such test reports for approval by Toronto Hydro upon Toronto Hydro’s initial order of the transformer. Pricing for conducting the type tests shall be included in the Proposal, in the event that the Certified Test Report results prove to be unacceptable to Toronto Hydro.

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9.2  Certified Test Reports   The Certified Test Report must be submitted by the successful Respondent(s) and approved by Toronto Hydro prior to shipment of the equipment. Approval or rejection of the Certified Test Report will be given within five (5) Business Days of their receipt. The impulse type test report shall include a print of the wave form, measured test data, test sequence and wave identification, if requested by Toronto Hydro.

Upon the placement of Toronto Hydro’s initial order of the transformer, the successful Respondent(s) shall submit two copies of a Certified Test Report reflecting all production and type test results as outlined in this specification.

If the manufactured equipment does not comply with all the requirements of this specification, Toronto Hydro reserves the right to reject all, or part of, the equipment under the Strategic Supply Agreement. The right of rejection will apply whether the equipment is in the plant, in Toronto Hydro warehouses or in the final installed position,

10. TRANSFORMER LOSS EVALUATION

10.1 Respondents shall note that, in evaluating the Proposals, Toronto Hydro will calculate the present value of the quoted transformer losses and add it to the quoted prices using the following formula:

[XX]

a. Excessive Loss Evaluation

The quoted losses will be considered as guaranteed losses. In cases, where the final measured losses (or the final average measured losses if more than one unit) exceed the guaranteed values, Toronto Hydro reserves the right to reject all of the said units. If Toronto Hydro should choose to accept these units, the successful Respondent(s) shall reimburse Toronto Hydro for the additional cost of the transformer losses, which will be deducted from the successful Respondent(s)’s invoice.

The additional cost of losses will be calculated as follows:

[XX]

c) If both no-load and full-load losses exceed the guarantee, the calculation for the additional cost of losses will be based on the following formula [XX]

11. INSTALLATION/MAINTENANCE MANUAL

The successful Respondent(s) shall submit two (2) copies of the relevant installation/maintenance manual to Toronto Hydro prior to testing of the units.

The manuals shall include the following:

 a) The successful Respondent(s)’s reference numbers, Toronto Hydro’s purchase order number and the proposed address at which the transformers are to be located.

 b) Installation and maintenance instructions.

 c) Accessories’ catalogue information, brochures, etc.

 d) A copy of the nameplate and outline drawings.

12 STORAGE

Respondents shall include in the quoted price the cost of storing the transformers for up to thirty (30) days past the scheduled delivery date indicated on the purchase order. A separate price shall be included for storage of the transformers on a weekly basis, in the event additional storage time is required, after the. thirty (30) day period.

13 MARKINGS

In addition the words “contains no PCB” shall be shown on the transformer nameplate, A Non-PCB sticker shall be applied by the successful Respondent(s).

In addition, the kVA rating and the voltage rating of the transformer shall be marked under the secondary bushings in white. This designation shall consist only of the numbers without kVA or volt wording. The numbers shall have a uniform minimum height of 50 mm. If decals are used, they shall meet the Type A label requirements of CSA C22.2 No. 0.15 and shall maintain their integrity down to -40°C. The stock code number shall be stenciled at the front of the unit under the kVA and voltage markings.

14 WITNESSING

The successful Respondent(s) shall advise Toronto Hydro a minimum of four (4) Business Days in advance of scheduled testing to enable Toronto Hydro to send inspectors to witness the production tests. All testing shall be completed during the Toronto. Hydro normal working hours (Monday to Thursday, 7:30 a.m. to 3:30 p.m., Friday, 7:30 a.m. to 12:00 p.m.), with the successful Respondent(s) being responsible for all costs incurred by Toronto Hydro for time spent beyond the said hours. Where the location of transformer testing is more than 200 km from Toronto Hydro, a minimum of seven (7) Business Days notice will be required.

All transformers of each rating on order may be test-witnessed at the discretion of Toronto Hydro inspectors.

The successful Respondent(s) shall provide Toronto Hydro inspectors, without restriction, access to its premises and test areas for the • purpose of quality surveillance and verification

Toronto Hydro reserves the right to select, at random, transformers from a production lot for the production tests, when necessary.

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15 EVALUATION DATA

Respondents must provide the following information to Toronto Hydro for the evaluation of the transformer losses and characteristics. Proposals lacking the required data may not be evaluated. •

Guaranteed value of no-load losses at 100% rated voltage and corrected to 85 °C.

Exciting current.

Guaranteed value of load losses and impedance at rated current and voltage, corrected to 85 °C.

Percentage regulation at 0.8 and unity power factors.

Efficiency at 1/4, 1/2, 3/4, full-load and 5/4 full-load.

Material used for high-voltage and low-voltage windings.

Bushing technical data.

Layout drawing showing dimensions and weights and location of all devices and features

Location of plant where transformers are to be manufactured.

Delivery terms.

16 DRAWINGS

In the event of an order, the successful Respondent(s) shall submit to Toronto Hydro three (3) copies of the following drawings for approval, prior to the commencement of production:

·   Dimensional outline drawing.

·   The drawing shall accurately display all features of the unit to be supplied. Any feature not being provided shall not be shown.

·   The drawing shall show primary and secondary voltages and kVA of unit being supplied.

·   The drawing shall also bear the Toronto Hydro name and the relevant purchase order number.

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·   Nameplate data such as weight, dimensions, litres of fluid, base detail, location of bushings and devises and other required data.

One copy of each, bearing Toronto Hydro approval with any remarks or comments, will be returned to the successful Respondent(s). If revision to the drawing is made, re-submission for approval is required unless stated otherwise, in writing, by Toronto Hydro.

Once the dimensional outline and the nameplate data drawings are approved by Toronto Hydro, new drawings for identical units are not required for the duration of the Strategic Supply Agreement.

The drawings shall also bear Toronto Hydro name and the relevant purchase order number.

17 SHIPMENT

The successful Respondent(s) shall take all necessary precautions to avoid damage to the transformers during shipment and to ensure safe arrival at destination. Any damage to the paint, tank, cover, bushings or internal parts of any transformer on receipt at destination will be cause for rejection of the units until satisfactory repairs are completed by the successful Respondent(s). Any claims against the transport company will be the responsibility of the successful Respondent(s).

Shipment shall only be made when authorization is given by Toronto Hydro.

18 LATE DELIVERY

The successful Respondent(s) agrees that m the event it should fail to deliver the transformer within the time scheduled for delivery as specified in the purchase order, it may be required to pay to Toronto Hydro a fee, up to a maximum of ten percent (10%) of the total purchase price, which will be deducted from the invoice.

This fee will be deducted only if Toronto Hydro, as a result of the shipment delay, is required to construct and remove temporary facilities which may be required to meet Toronto Hydro’s commitments to provide electric power.

Toronto Hydro also has the right to cancel the order without cost to Toronto Hydro if the late delivery is deemed unacceptable, in Toronto Hydro’s sole discretion.

19 WARRANTY

If a transformer is defective upon arrival or malfunctions in normal service, for causes other than accident, misapplication, or abuse, for a period of one (1) year after the unit is placed in service, or two (2) years after delivery, whichever occurs first, the defective transformer will be returned to the successful Respondent(s) by common carrier at the successful Respondent(s)’s expense.

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The successful Respondent(s) shall make good all defects or shall provide a new transformer to replace the defective one without cost to. Toronto Hydro. If the successful Respondent(s) fails to repair or replace the returned transformer within a time period agreed upon by the parties, the successful Respondent(s) shall reimburse Toronto Hydro for the purchase price of the transformer. Transformers returned under warranty -shall have a Certified Test Report and a report on the cause of failure.

Approval of tests by Toronto Hydro or its appointed agents shall not relieve the successful Respondent(s) of its responsibilities with respect to warranty.

20 DELIVERY

Respondents shall state in weeks the shipment time from the date of award of the Strategic Supply Agreement. The location within the City of Toronto to which the delivery is to be made will be specified by the time of shipment. ,

The successful Respondent(s) is to provide five (5) Business Days’ notice prior to shipment so that arrangements can be made to receive transformers. Transformers shall be delivered during normal working hours, Monday to Thursday (7:30 a.m. to 3:30 p.m.), Friday (7:30 a.m. to 12:00 p.m.) allowing sufficient time for receiving and offloading the transformers.

Transformers shall only be delivered after the submitted drawings and test results have been approved by Toronto Hydra

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Toronto Hydro-Electric System Limited

ED 384

TECHNICAL REQUIREMENTS

FOR

OFF-LOAD TAP CHANGING

10000/13333 KVA 60 CYCLE, 3 PHASE

OUTDOOR STATION TYPE TRANSFORMERS

TABLE OF CONTENTS

1.	PART 1- GENERAL CONDITIONS	2
2.	PART 2 -SCOPE OF WORK	2
	PART 3 - CONDITIONS OF OPERATION	2
	PART 4 - KVA RATING & TEMPERATURE RISE	2
3.	PART 5 -VOLTAGE RATING	3
4.	PART 6 - VOLTAGE TAPS	3
	PART 7 - POLARITY	3
	PART 8 - IMPEDANCE VOLTAGE	3
	PART 9 - STANDARDS	4
	PART 10 - TRANSFORMER TANKS
	PART 11 - PRESSURE RELIEF DEVICE	5
	PART 12 - PRESSURE VACUUM GAUGES
	PART 13 - FORCED AIR COOLING	5
	PART 14 - CORE & WINDINGS	6
	PART 15 - WINDING TEMPERATURE DEVICE6	6
	PART 16 - PRIMARY TERMINAL ARRANGEMENT	6
	PART 17 - SECONDARY TERMINAL ARRANGEMENT	6
	PART 18 – OIL	6
	PART 19 - INTERNAL CONNECTIONS	7
	PART 20 -CONTROL TERMINAL BOX	7
	PART 21 - ACCESSORIES	7
	PART 22 - NAMEPLATES	8
	PART 23 - PERFORMANCE CHARACTERISTICS	8
	PART 24 - INSPECTION OF MANUFACTURE	8
	PART 25 - TESTS	9
	PART 26 - INFORMATION REQUIRED WITH QUOTATION	10
	PART 27 - DRAWINGS	10
	PART 28 - INSTRUCTION MANUALS	11
	PART 29 - GUARANTEES	11
	PART 30 - SPARE PARTS	11

1

PART 1 — GENERAL CONDITIONS

All general details of construction must be approved by Toronto Hydro before production commences, but such approval Shall not be permitted to interfere with the time of shipment specified in the order.

Respondents shall submit with their Quotations their standard form of technical specifications, efficiencies, losses, regulation, approximate weight and dimensions, and all other information and documents requested herein. Nothing contained in the Quotation shall be construed as permitting any modification of the requirements of these specifications unless such modification is specifically approved in writing by the Engineer. Respondents’ are free to submit Quotations differing from this specification, provided that the differences proposed are clearly defined and are accepted and approved by the Engineer.

PART 2 — SCOPE OF WORK

This specification covers the supply, delivery FOB to Toronto Hydro premises, unloading of off-load tap changing, oil immersed, outdoor, station type transformers, having a self cooled continuous rating 10,000 kVA and a forced air cooled continuous rating of 13,333 kVA. The number of transformers will be specified in the enquiry.

PART 3 — CONDITIONS OF OPERATION

The transformers shall be suitable in all respects for operation on the 27,600 volt rated, 60 cycle system of Toronto Hydro. This is either a delta connected system grounded by means of a grounding transformer or a wye connected system grounded by means of a current limiting reactor connected between the star point of each Hydro One transformer winding and the multi-ground system neutral.

Respondents shall acquaint themselves with the conditions under which the transformers will be called upon to operate, and upon request, every reasonable facility will be accorded bonafide Respondents to investigate these conditions. The successful Respondent(s) will be deemed to have satisfied itself in this regard, and by executing the Contract, shall assume full responsibility for understanding the conditions of supply, operation, and service. While provision is made elsewhere in this specification for the Engineer to Approve drawings, inspect manufacture, and witness tests, none of these shall, in any way, relieve the successful Respondent(s) of this responsibility.

PART 4 — KVA RATING AND TEMPERATURE RISE

The transformer shall be capable of carrying their full load ratings continuously with an average temperature rise on any winding, by resistance, not exceeding 55°C.

2

PART 5 — VOLTAGE RATING

The rated high voltage of the high voltage (primary) windings shall be 27.6 kV delta and the rated voltage of the low voltage (secondary) winding shall be 13800/7970 volts grounded wye.

PART 6 — VOLTAGE TAPS

The high voltage (primary) winding shall have five full load or rated kVA taps such that normal secondary voltages can be obtained with a primary voltage of 27600, 26910. 26220, 25530 or 24840 volts. Oil immersed off-load tap selector switches shall have a common external operating mechanism to permit changing taps simultaneously on all phases, without removing the transformer cover.

A warning sign as follows will be mounted on the external face of the operating mechanism component, with the inscription stating:

“WARNING - - OPERATE TAP CHANGER ONLY WHEN TRANSFORMER IS DE-ENERGIZED”

The operating mechanism shall indicate the tap in use, and shall be provided. With facilities for locking in each position a standard Toronto Hydro padlock.

Accessibility of the tap changer contacts during repair/ maintenance shall not require removal of the windings, coil or other major components of the transformer.

PART 7 – POLARITY

The primary and secondary connections shall be arranged to produce the following delta-Y phase relations:

3

PART 8 – IMPEDANCE VOLTAGE

The transformer shall have an impedance voltage of 5.0%. with a tolerance of plus/minus 7.5%. and shall be based on the self-cooled rating of 10,000 kVA on the 27600-13800 volt tap.

PART 9 – STANDARDS

Unless otherwise specified, the equipment and accessories shall be designed, manufactured and tested, where applicable, in accordance with the following standards:

ANSI	C57.12  Distribution, Power and Regulating Transformers, and Reactors other than Current-Limiting Reactors
ANSI	C57.12.90 Test Code for Transformers, Regulators and Reactors
ANSI	C57.92 Guide for Loading Mineral-Oil Immersed Power Transformers up to and including 100 M VA with 55°C or 65°C Average Winding Rise
ANSI	C57.106Guide for Acceptance and Maintenance of Insulating Oil in Equipment
ANSI	C63.2 Radio Noise &.Field Strength Meters
ASTM	D3487Standard Specification for Mineral Insulation Oil Used in Electrical Apparatus

CSAC88- 1990 Standard Specification for Power Transformers

CSAB11-1949 Unified and American Screw Threads

CSAC13-1958 Instrument Transformers

CSAC22.1 & C22.2 Canadian Electrical Code

CSAC22.2 No.28Wiring

CSAC88 Transformer Nameplates

CSA	C22.4, No.103 Tolerable Limits and Special Methods of Measurement of Radio Interference from high Voltages Lines and Apparatus
EEMAC	1 GL-1-1957 Standard for Transformer and Apparatus Bushing
EEMAC	6 L-1-1959Accessories for Power Transformers

4

EEMAC	Ml Motors
EEMAC	LI3- 1Dielectric Tests for Test Procedures for Power Transformers

PART 10 – TRANSFORMER TANK

Each transformer shall be sealed, with a gas space above the fluid, to prevent breathing under normal operating conditions. The gas space shall be dry air, and must allow for expansion and Contraction with temperature changes. The tank and fittings must be designed to withstand the internal operating pressures without leaking liquid or gas.

Each tank and cover shall be of steel plate construction, with a sled type structural steel base designed to permit skidding or moving the transformer on pipe rollers in either direction, and fitted with jack steps suitable for use with toe jacks. A vertical clearance of 21 inches shall be provided above the jack steps. The transformer shall meet the stability requirements of ANSI Standard C57.12.

All gaskets shall be made from cork nitrite rubber sheets or other non-aging material, which will permit removing and replacing the cover, bushings, etc., without damaging the gasket. Separable radiators, if used, shall be complete with top and bottom valves and drain plugs. Lifting lugs shall permit the handling of the transformer complete with all fittings and oil.

All steel parts of the transformer, before painting, shall be thoroughly cleaned of rust, oil, or scale by blasting with sand or steel shot. All internal steel parts, including core clamps, shall then be finished with two coats of oil resistant paint, the exterior with a red non-lead or other approved primer, followed by two coats of high quality weather resistant enamel, the last of which shall be equipment green, Munsell 9 GY 1.5/2.6. •

Each transformer base shall be fitted at two diagonal corners, with a ground terminal, consisting of a flat terminal pad of bronze or stainless steel, 2” x 3”, drilled with 9/16” holes at 1-3/4” centers. Blind tapped holes are not acceptable.

PART 11 – PRESSURE RELIEF DEVICE

Each transformer shall be equipped with a pressure relief device, Qualitrol Series 208, and a Fluid Deflector, Qualitrol SLD-603. Each transformer shall also provide 4” pipe securely mounted for discharge 315mm (12”) above grade.

PART 12 – PRESSURE VACUUM GAUGE

Each transformer shall be equipped with a pressure vacuum gauge, Qualitrol model 050-010-01.

PART 13 FORCED AIR COOLING

All fans supplied for forced air cooling shall be suitable for outdoor operation. Motors shall be 230 volt, single-phase, 60 cycle, and shall be complete with all wiring and auxiliary control devices. A terminal strip shall be provided in the control terminal box described in Section 20, for termination of an external 230 volt, single phase supply. Wiring to fans and accessories is to be in EMT conduit with waterproof fittings. Fan guards shall have maximum grid opening of ½” x ½”.

5

PART 14 – CORE & WINDINGS

Each transformers shall have the core ground brought to the outside of the transformer tank through an insulating bushing and grounded externally via a removable link.

Windings shall be copper conductors. Aluminum conductors are not acceptable

PART 15 – WINDING TEMPERATURE DEVICE

The winding temperature device shall be a Qualitrol Model /ED509, Electronic Temperature Monitor, complete with Ambient Temperature Sensor, Qualitrol Model 103L 049-01. The electronic temperature sensor shall be provided in a weather proof enclosure, with a 120VAC heater. The heater shall be of anti-condensation type and arranged to operate at ambient air temperature of 10°C and below with a normally open dry alarm contact.

PART 16 – PRIMARY TERMINAL ARRANGEMENT

Primary phase terminal leads shall leave the transformer case through an approved Air Terminal Chamber (ATC), suitable for both bottom entrance of cable terminators, or top entrance with a bushing. The ATC shall be suitable for three (3) single conductors, 4/0 kcmil, 27.6kV, XLPE cable. Access panels should be hinged at the side, and bolted at the top and bottom.

PART 17 – SECONDARY TERMINAL ARRANGEMENT

Secondary phase terminal leads shall leave the transformer case through an approved Air Terminal Chamber (ATC), suitable for both bottom entrance of cable terminators, or top entrance with a bushing. The ATC shall be suitable for six (6) single conductors, two(2) per phase. 500 kcmil, 27.6kV. XLPE cable. Access panels should be hinged at the side, and bolted at the top and bottom.

The secondary neutral lead shall be brought out through a cover mounted outdoor porcelain bushing rated 5 kV, 1200 amperes, and shall be in accordance with the latest revision of EEMAC GL1-2, and having a 3” x 3” flat terminal pad drilled with four 9/16” holes at 1-3/4” centres.

AU terminal pads shall be drilled in accordance with NEMA Standard SG1, Sections SG1-4.04 and SG1-4.05 (4 hole 1/2” bolts on buildings, 2 hole 1/2” bolts on case ground)

PART 18 – OIL

All transformers shall be vacuum filled with insulating oil.

Each transformer shall be complete with a first filling of insulating oil that meets or exceeds CSA-050-97 Specification for Class A, Type II oil.

6

The bulk of the oil shall be contained in the transformer case during shipment, any small quantity which is removed to facilitate shipping being forwarded in sealed cans or in returnable sealed steel drums. As an alternative method of shipment, the transformer cases may be filled with an approved, dry, inert gas, maintained automatically at a pressure slightly above atmospheric. In this case, all oil shall be supplied in sealed drums, as specified above. In either case, the final filling shall be carried out by the successful Respondent.

PART 19 – INTERNAL CONNECTIONS

All bolted internal connections shall be provided with lock nuts or other locking devices approved by the Engineer. In the case of bolted flat surface connections, single bolt connections are not acceptable.

PART 20 – CONTROL TERMINAL BOX

At the side of the transformer tank,. at a convenient working height, shall be located a weather tight steel plate terminal box with a hinged cover, complete with glands or connectors to receive Toronto Hydro’s PVC sheathed control cables from below. To this box shall be brought the alarm and trip connections from the oil gauge contacts, the pressure vacuum gauge, the winding temperature device, and the fan supply wiring, etc..

All alarm and status indication devices shall have electrically separate, normally open contacts suitable for I25V DC brought out to a terminal block in the control cabinet.

Each device shall be furnished with a descriptive nameplate. The wiring shall be fully labeled for its function and terminations.

The cabinet shall be NEMA 4, slightly vented to prevent condensation. The cabinet shall have a thermostatically controlled space heater, programmed to operate at ambient air temperatures of 10°C and below with a manually operable ON/OFF switch: The cabinet shall have a 120VAC light with a door activated switch, and a 120VAC ground fault receptacle.

PART 21 – ACCESSORIES

Each transformer shall be equipped with a standard maximum registering oil temperature thermometer, Qualitrol model 151-103-01, located in a separate well from the transformer tank.. Suitable manholes shall provide access to the interior of the transformer for inspection purposes.

Each transformer shall be equipped with an oil level gauge, Qualitrol Series 035, with switches for alarm functions.

Each transformer shall be equipped with a 1/4” oil sampling valve and two 1” filter press valves, one at the top of the tank, and one at the bottom. A petcock should be provided in series with the 1/4” oil sampling valve. The petcock outlet shall be suitable for attaching a rubber tube of 3/16” inside diameter. An illustration of a typical Toronto Hydro installation is shown on Sketch #1. All valves shall be rated for 150 pound service of Jenkins manufacture or equal, having American Standard flanges or taper pipe threads, shall be titled with brass pipe plugs, and must not project beyond the main dimensions of the transformers.

7

PART 22 — NAMEPLATES

Nameplates shall be of etched stainless steel, monel metal, or other approved stainless metal. Markings shall conform to the latest revision of CSA Standard C88. The winding material shall be indicated on the nameplate.

In addition to the main nameplate, each valve shall be provided with a nameplate indicating its function and normal position.

PART 23 - PERFORMANCE CHARACTERISTICS

A) The Respondent shall specifically state and guarantee the performance characteristics on the attached “Quotation Information Form”.

B) The Respondent must confirm that the unit is suitable for 125% overloads for 12 hours in a 0°C ambient without exceeding the rated temperature rise of the windings, or of any other current carrying component (i.e., tap switch and all bushings, etc...).

PART 24 – INSPECTION OF MANUFACTURE

During the period of manufacture, the successful Respondent shall afford the Engineer safe and proper facilities for inspection of the work. In particular, the successful Respondent shall specifically inform the Engineer when the core and coil assembly of each transformer has been completed, so that he or she may inspect it before it is placed in its tank.

At least three weeks prior to the commencement of acceptance tests, the successful Respondent shall submit, for Toronto Hydro review and approval, a detailed test program and schedule indicating the sequence of tests, proposed dates, the unit numbers to be tested, diagrams showing proposed connection, thermocouple locations for temperature rise tests, test methods or procedures and description of test equipment. Tests shall be conducted during the following hours: Monday to Thursday, 7:30 a.m. to 3:30 p.m. and Friday, 7:30 a.m. to 12:00 p.m., unless otherwise agreed upon by the Engineer.

Before the acceptance tests are made, the successful Respondent shall give Toronto Hydro notice in writing (at least five (5) Business Days plus travel time prior to commencement of tests), so that the Engineer or his or her representatives may witness the tests.

PART 25 - TESTS

A) Irrespective of any clauses in the. Quotation, the successful Respondent shall run full and complete shop tests, in the presence of the Engineer, on all equipment supplied. These tests shall include the following, all as set out in ANSI Standards C57 12.90-1973 and CSA-C88-1990 or later revisions.

a)           Winding resistance measurements of high and low voltage sides at all tap positions.

b)           Ratio, polarity and phase relations.

8

c)           No load loss and exciting current at 100%, 110% and 115% normal voltage.

d)           Load loss and impedance voltage.

e) Temperature tests - heat run on one transformer (must be done on the transformer with the highest. losses).

f) Dielectric tests at 75°C (approximately) including chopped wave tests.

g) Standard impulse tests one transformer (exception: 75kV BIL on the 4.16kV winding)

h) Standard NEMA transformer noise level tests (exception: maximum sound level of 58 dB)

i) Calibration tests on winding temperature indicator.

j)           Oil pressure test – 5 p.s.i. above top oil

k) Ratio, polarity, insulation and functional checks on current transformers and associated wiring.

l) Power factor tests shall be made on all windings in accordance with Method 2 of ANSI C57.12.90 after the transformer is completely assembled and filled with oil.

The maximum acceptance level for any power factor test is 0.5%.

B) Certified Results - Four (4) copies of the certified results will be submitted in a report form that will include the certified test results, test program and test procedures.

The test procedures document shall define the operating steps and expected results and tolerances for each test. As a minimum, each test procedure shall include the following subsections:

•           purpose

•           scope

•           reference documents

•           test equipment

•           test procedures and

•           acceptance criteria

A test record shall be created for each equipment delivered. It shall be a form which identifies, for each test, the following information:

•           identification of the equipment tested, by model number and serial number

•           test results and

•           date and signature of person responsible for conducting the test

9

4.1           PART 26 – INFORMATION REQUIRED WITH QUOTATION

The information and drawings (5 sets) submitted with the Quotation shall include the following:

•  Completed technical data and guarantee sheets (Quotation Information Form)

• Outline drawings, drawn approximately to scale, indicating the overall dimensions of the equipment and location of major components, cable openings, weight and foundation and anchor details

•   Schedule for submission of approval drawings

•   SHIPPING DIMENSIONS, WEIGHTS

In addition, Respondents shall include a complete description of the tap changer mechanism, the transformer construction, details of the auxiliary power requirements for operation of the cooling fans. etc.. and continuous current ratings of the tap switch and bushings.

4.2           PART 27 - DRAWINGS

Respondents shall submit with their Quotations drawings giving approximate outline dimensions and weights of the various pieces of equipment, together with bulletins; photographs, etc., showing the general construction of the equipment they propose to supply. After the Contract is awarded and an order for equipment is placed, the successful Respondent shall submit to the Engineer, for his/her approval and comments, three (3) prints certified for construction purposes, of drawings and diagrams of connections for the transformers. Production shall not commence until the successful Respondent receives formal approval of these drawings from the Engineer, and no  allowance will be made by Toronto Hydro for any additional cost to the successful Respondent arising from his/her failure to secure such approval.

The final drawings shall be submitted in Microstation DGN format (DOS or UNIX). In case the successful Respondent chooses to use software other than Microstation for production of drawings, it is the successful Respondent’s sole responsibility to ensure that the translation between the systems occurs free of errors and that the resulting final product is 100% Microstation compatible. Files converted on DGN format that do not plot in Microstation plotting environment will not be accepted.

Data may be submitted in one of the four (4) formats listed below with MicroStation –DGN being the most preferred:

1.           MicroStation - - DGN format

2.           AutoCAD - - DWG format (up to Release 2004, although Release 13/14 is preferred) ..

3.           Intergraph CCIT Group4 - CIT format (scanned raster drawing @ 200 dpi)

4.           Autodesk - - DXF format

Note: DXF formats may not be accepted due to the large number of incompatibilities with file translation.

One set of prints shall be submitted with discs.

10

PART 28 – INSTRUCTION MANUALS

At the time shipment is made, the successful Respondent shall forward to the Engineer five (5) copies of an instruction manual, incorporating manufacturer technical literature, maintenance and adjustment instructions, and repair parts list for the transformers and their accessories which include all control devices, including without limitation, switches, relays and winding temperature indicators.

PART 29 – GUARANTEES

Except where otherwise set out in this specification, the successful Respondent shall guarantee all equipment supplied for a period of five (5) years after delivery, against defects in design, materials or workmanship, and against oil leaks (unless caused by abuse on the part of Toronto Hydro) for a period of three (3) years after delivery.

PART 30 – SPARE PARTS

Respondents shall supply with the Quotations a separate list of recommended spare parts, including recommended quantities and current unit costs. The list shall include the off-load tap changer mechanism and the tap contacts.. The Respondent’s spare parts shall be considered separate from the Quotation, and as such, their costs shall be quoted separately from the costs for the manufacture, supply and delivery of the transformers. Toronto Hydro reserves the right, but shall not be obligated, to purchase any quantities of the recommended spare parts at the quoted prices for a period of one (1) year from the Date for Execution of the Contract.

11

APPENDIX A

QUOTATION INFORMATION FORM PAGE

1.0	SCHEDULE OF EVENTS	2
2.0	PERFORMANCE DATA	3
2.1	RATING S	3
2.2	TAP CHANGERS	4
2.3	BUSHINGS	4
2.4	OIL 4,	5
3.0	LIST OF DEVIATIONS	6

NOTES:

1.           All information requested herein shall be submitted to render the Quotation valid. ..

2.           Items which do not apply shall be marked “NA”.

1

1.0           SCHEDULE OF EVENTS.

The targets are given in weeks and are based on the first item listed.

EVENTS	DATES SPECIFIED	DATE OFFERED
BY TORONTO HYDRO	BY RESPONDENT

1 .Award of Contract Week 0

2. Post award meeting to submit

simplified critical path network

for approval. Outline drawings

indicating foundation details Week 2

3. General arrangement drawings

with bills of material for

approval Week 6

4. Schematic diagrams for

approval Week 6

5. Wiring diagrams for information Week 8

6. Final general arrangement

drawings, schematic and

wiring diagrams Week 12

7. Tests Week 20

8. Final instruction manuals Week 22

9. Delivery Week 22

2

2.0         GUARANTEES

2.1	Performance Ratings	Unit of Measure
	MVA Transformer
	1. No-load loss at 75°C winding:
	100% of the rated voltages kW
	110% of the rated voltages kW
	2. Full-load loss at 75°C winding: temperature at:
	100% rated voltages kW
	110% rated voltages kW
	3. Exciting current at:
	100% rated voltage Amps
	115% rated voltage Amps
	4. Efficiency- when operating at
	rated voltages and frequency
	and at unity power factor at
	75°C winding temperature:
	25% of full load rating%
	50% of full load rating%
	75% of full load rating %
	100% of full load rating %
	125% of full load rating %
	5. Thermal time constant Hours
	6. Positive sequence impedance %
	7. Zero sequence impedance %
	8. Guaranteed noise level dB
	9. Regulation at 75°C
	100% P F%
	80% P F%
	10. Type of Windings

3

2.2	Tap Changers		Unit of Measure
	1.	Manufacturer
	2.	Type
	3.	Is literature enclosed?
	4.	Total range %
	5.	Number of steps
	6.	Method of operation
	7.	Capacity Amps
	8.	BIL level kV
	9.	Relative position on windings

2.3         Bushings 27.6kV13.8kVN

	1.60Hz with stand kV __________________
		- 1 minute dry kV       ____________
		-10 seconds wet kV   ____________
2.           BIL level kV
2.4         Oil
	1.           Manufacturer _____________
	2.           Dielectric constant  _________________
	3.           Dielectric Strength kV  _____________
		ASTM D8777-64
		(60Hz, 25 C)
4.           PCB content ppm
5.           Water content ppm

4

2.5         Dimensions	Unit of Measure
Total net weight with oil kg
Net weight of core & coils kg
Net weight of oil kg
Quantity of oil L
Minimum shipping dimensions
- height mm
- width mm
- length mm
Overall height incl. bushings mm
Overall width incl. cooling mm
equipment & accessories
Overall length incl. cooling mm
equipment & accessories
Tank height mm
Height required for untanking mm
Heaviest piece
- weight kg    ___________
- height mm   ___________
- width mm  ____________
- length mm____________

5

3.0           LIST OF DEVIATIONS

We hereby confirm that the equipment offered is in accordance with the present technical specification, except for the following:

4.0           Pricing

Please provide unit price     + Taxes

6

ADDENDUM A to Technical Specification ED 384

The following amendments are made to Technical Specification. ED 384:

1)           “Successful Respondent” shall mean Pioneer Transformers Ltd.

2)           The last sentence of Part 1 (GENERAL CONDITIONS) is hereby deleted.

3)           Part 26 is hereby deleted and replaced with the following:

4.1           PART 26 – INFORMATION REQUIRED WITH QUOTATION

The following information, including without limitation the drawings, technical bulletins and all other necessary documents included with the Quotation are incorporated into this specification:

• Completed technical data and guarantee sheets (Quotation Information Form)

• Outline drawings, drawn approximately to scale, indicating the overall dimensions of the equipment and location of major components, cable openings, weight and foundation and anchor details

• Schedule for submission of approval drawings

• Shipping dimensions, weights

• a complete description of the tap changer mechanism, the transformer construction, details of the auxiliary power requirements for operation of the cooling fans, etc., and continuous current ratings of the tap switch and bushings.

4)           Part 30 (SPARE PARTS) is hereby deleted.

5)           Part 1.0 (SCHEDULE OF EVENTS).of Appendix A to ED 384 is hereby deleted.

6)           Part 2.0 (GUARANTEES) of Appendix A to ED 384 is hereby deleted and replaced with the following:

2.0           GUARANTEES

2.1	Performance Ratings
	MVA Transformer		Unit of Measure
	1.	No-load loss at 75°C winding:
		100% of the rated voltages	7.2 kW
		110% of the rated voltages	8.0 kW
	2.	Full-load loss at 75°C winding:
		temperature at:
		100% rated voltages	55.9 kW
		110% rated voltages	N/A kW
	3.	Exciting current at:
		100% rated voltage	0.2 Amps
		115% rated voltage	0.6 Amps

1

4.	Efficiency- when operating at	Used NL @ 100% for calculations
	rated voltages and frequency
	and at unity power factor at
	75°C winding temperature:
	25% of full load rating	9.57%
	50% of full load rating	99.58%
	75% of full load rating	99.49%
	100% of full load rating	99.37%
	125% of full load rating	99.25%
5.	Thermal time constant	N/A Hours
6.	Positive sequence impedance	5.0%
7.	Zero sequence impedance	4.7%
8.	Guaranteed noise level	58 @ 10 MVA dB
9.	Regulation at 75°C
	100% P F% 0.68
	80% P F% 3.49
10.	Type of Windings	HV Continuous Disk
	LV Barrel

2

2.2	Tap Changers	Unit of Measure
	1.  Manufacturer	Specialty Switch Company
	2.  Type	Off Load
	3.  Is literature enclosed?	Yes
	4.  Total range	10%
	5.  Number of Steps	4
	6.  Method of operation	External
	7.  Capacity	400 Amps
	8.  BIL level	200 kV
	9.  Relative position windings	N/A

2.3           Bushings 27.6kV13.8 kVN                                      IIV                                   LV                                  N

1.  60 Hz withstand kV_____                                70______                       34_____                      34

-1 minute dry _____                               N/A_____                     N/A____                     kV

-10 seconds wet ___                               N/A_____                    N/A____                      kV

2.  BIL level kV________                                      200_____                       95_____                      kV

2.4           Oil

1.           Manufacturer                                           Luminol Tri

2.           Dielectric constant                                Per ASTM

3.           Dielectric Strength                                           48                      kV

ASTM D8777-64

(60 Hz, 25 C)

4.           PCB content                                                     0                      ppm

4.           Water content                                                18                      ppm

2.5  Dimensions		Unit of Measure
Total net weight with oil	25,850	kg
Net weight of core & coils	12,945	kg

3

Net weight of oil	6,385	kg
Quantity of oil	7,415	l
Minimum shipping dimensions
- height	3727	mm
-width	3226	mm
-length	4177	mm
Overall height incl. bushings	3727	mm
Overall width incl. cooling equipment & accessories	3226	mm
Overall length incl. cooling equipment & accessories	4177	mm
Tank height	3375	mm
Height required for untanking	N/A	mm
Heaviest piece
-weight as above kg
-height as above mm
-width as above mm
Length as above mm

7)           Part 3.0 (DEVIATIONS) of Appendix A to ED 384 is hereby deleted.

8)           Part 4.0 (PRICING) of Appendix A to ED 384 is hereby deleted.

4

Schedule B

1.           Pricing

Appendix A and Appendix B, which form part of this Agreement, contains the price schedules for the 05 Transformers and 07 Transformer, respectively, and are subject to the terms and conditions of this Agreement, including, but not limited to, Article 4 “Price and Payment”.

2.           Delivery

For the 05 Transformers, the Parties agree that the times listed below represent the maximum acceptable Lead Times, but do not apply to the Dedicated Inventory.

Subway Transformer                                           (3 phase, all sizes)                                12 weeks

Network Transformer                                           (3 phase, all sizes)                                12 weeks

Power Transformer                                               (3 phase, all sizes)                                12 weeks

The parties agree that the 07 Transformer shall be delivered by no later than May 31, 2008. For greater certainty, failure by the Vendor to deliver an order within:

(i) the applicable Lead Time for 05 Transformers;

(ii) in the case of the 07 Transformer, by May 31, 2008; or

(iii) in the case of Dedicated Inventory, within twenty-four (24) hours of receipt of notice by the Buyer.

shall constitute a breach of a material obligation by the Vendor for the purposes of Article 13(b).

1

APPENDIX “A”

[XX]

2

APPENDIX “B”

Price Schedule for 07 Transformer:

[XX]

3

SCHEDULE B

1.           Pricing

Appendix A and Appendix B, which form part of this Agreement, contains the price schedules for the 05 Transformers and 07 Transformer, respectively, and are subject to the terms and conditions of this Agreement, including, but not limited to, Article 4 “Price and Payment”.

2.           Delivery

For the 05 Transformers, the Parties agree that the times listed below represent the maximum acceptable Lead Times, but do not apply to the Dedicated Inventory.

Subway Transformer                                                      (3 phase, all sizes)                                           12 weeks

Network Transformer                                                      (3 phase, all sizes)                                           12 weeks

Power Transformer                                                          (3 phase, all sizes)                                           12 weeks

The parties agree that the 07 Transformer shall be delivered by no later than May 31, 2008. For greater certainty, failure by the Vendor to deliver an order within:

(i) the applicable Lead Time for 05 Transformers;

(ii) in the case of the 07 Transformer, by May 31, 2008; or

(iii) in the case of Dedicated Inventory, within twenty-four (24) hours of receipt of notice by the Buyer.

shall constitute a breach of a material obligation by the Vendor for the purposes of Article I3(b).

4

SCHEDULE C

Defined Terms

In this Agreement, the following definitions shall apply:

“

Affiliates”	shall have the meaning as prescribed in the Business Corporations Act (Ontario);
“Agreement”	means this Agreement for Purchase of Transformers, including all Schedules hereto and subsequent amendments;
“Business Day”	means a day on which banks are open for business in the City of Toronto, Ontario, but does not include a Saturday, Sunday, or a statutory holiday in the Province of Ontario;
“Business Hours”	means 9:00 a.m. to 4:00 p.m., EST, on a Business Day;
“Competent Persons”	shall have the meaning as prescribed in the Occupational Health and Safety Act (Ontario);
“Confidential Information”	has the meaning prescribed to it in Article 17;
“Disclosing Party”	has the meaning prescribed to it in Article 17;
“Dispute”	has the meaning prescribed to it in Article 21;
“Force Majeure”	means any event or cause beyond the control of the party affected, including, without limitation, strikes, lockouts, riots, epidemics, acts of war or conditions arising out of or attributable to war (whether declared or undeclared), governmental regulations, terrorism, fire, explosion, or acts of God;
“Initial Term”	has the meaning prescribed to it in Article 5;
“Lead Time”	means the length of time from the Release Date to the date of delivery to the locations designated by the Buyer;
“MFIPPA”	means Municipal Freedom of Information and Protection of Privacy Act (Ontario);
“Transformers”	means the Transformers and related equipment, parts and components to be supplied to the buyer by the Vendor under this Agreement;

1

“PIPEDA”	means Personal Information Protection and Electronic Documents Act (Canada);
“Purchase Price”	has the meaning prescribed to it in Article 4 and Schedule B;
“Receiving Party”	has the meaning prescribed to it in Article 17;
“Release Date”	means the date on which the Buyer places an order with the Vendor;
“Renewal Term”	has the meaning prescribed to it in Article 3;
“Representative”	in respect of a party, means such party’s directors, officers, employees, agents and contractors, the party’s Affiliates, and all such Affiliates’ respective directors, officers, employees, agent and contractors;
“Term”	has the meaning prescribed to it in Article 3;
“WSIA”	means Workplace Safety and Insurance Act, 1997 (Ontario) and the regulations thereunder;

2

EX-10.26

Exhibit 10.26

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “[XX]”.

TRANSLATION

HYDRO QUÉBEC	Contract
Supplier No.:  OA 104 18850	Contract:	4600010831
Supplier	Call for tenders:	6100098418
	Request for proposals:	11954845
PIONEER TRANSFORMERS LTD.		yyyy/mm/dd
612 BERNARD ST., P.O. BOX 272	Date of issue:	2006/04/01
GRANBY QC  J2G 8E5
Attention:  Raymond Haddad
Phone:  450-378-9018 # 309                                                                Fax:  450-378-0626
Billing must be as stipulated in this document.

Contract term	Ship to:
yyyy/mm/dd                      to           yyyy/mm/dd
2006/04/01                                2008/03/31
FOB Point: Destination, prepaid
Terms of payment NET 30 DAYS

For information                                Phone Marc Desautels                                514-840-3000 ext. 6765	(sgd) Marc Desautels
	Authorized representative

1

GENERAL CONDITIONS

SUPPLY

(Revised March 2005)

Table of Contents

1.	DEFINITIONS
A.	Request for proposals
B.	Contract amendment
C.	Notice of award
D.	Goods
E.	Not used
F.	Contract
G.	Not used
H.	Supplier
I.	Not used
J.	Material
K.	Equipment
L.	Contract price
M.	Proposal
M.	Subcontractor
O.	Work
P.	Plant
2.	GENERAL PROVISIONS
A.	Interpretation of contract
B.	Assignment of contract
C.	Standards
D.	Advertising and requests for information
E.	Place of execution of contract
F.	Representatives of the parties and communications
G.	Confidentiality
H.	Language of work and communications
I.	Due dates
J.	Notice of default
3.	NOT USED
4.	CONTROL OF WORK

2

A.	Scope of contract
B.	Subcontracting
5.	RIGHTS TO USE OF GOODS
6.	AUTHORITY OF HYDRO-QUÉBEC REPRESENTATIVE
A.	Administration of contract
B.	Inspection, control and supervision of work
7.	EXECUTION OF WORK
A.	Not used
B.	Not used
C.	Drawings and lists provided by the supplier
D.	Technical notices
E.	Rating plates
F.	Not used
G.	Delay attributable to Hydro-Québec
H	Changes to contract
I.	Not used
J.	Not used
K.	Not used
L.	Ownership
M.	Not used
N.	Not used
O.	Packaging
P.	Shipping
8.	NOT USED
9.	GOODS, MATERIALS AND EQUIPMENT
A.	Origin, quality and implementation of materials
B.	Not used
C.	Goods, materials and equipment made available to the supplier by Hydro-Québec
10.	NOT USED
11.	LIABILITY OF THE SUPPLIER
12.	CONTROLLED PRODUCTS
13.	ENVIRONMENTAL PROTECTION
14.	PAYMENT
15.	GUARANTEE ON LABOUR AND MATERIALS
16.	NOT USED
17.	NOT USED
18.	DEFAULT – TERMINATION

3

A.	Default by supplier
B.	Withdrawal of work from the supplier
C.	Contract termination
D.	Not used
19.	NOT USED
20.	RELEVANT DOCUMENTS
A.	Accounting principles
B.	Retention period
C.	Right to inspect

4

1.           DEFINITIONS

When used in this contract, unless the context otherwise requires, the following terms shall have the following meanings:

(a)           REQUEST FOR PROPOSALS

The document remitted by Hydro-Québec for purposes of obtaining a bid or proposal.

(b)            CONTRACT AMENDMENT

A document signed by Hydro-Québec and the supplier the purpose of which is to amend the contract.

(c)           NOTICE OF AWARD

The document by which Hydro-Québec informs the supplier that is has been awarded the contract.

(d)           GOODS

The goods the supplier must supply pursuant to the contract.

(e)           NOT USED

(f)           CONTRACT

The contract consists of the following documents:

-   The request for proposals document and its addenda;

-   The supplier’s proposal accepted by Hydro-Québec;

-   The notice of award;

-   The contract amendments.

(g)           NOT USED

(h)           SUPPLIER

The person to whom the contract is awarded.

(i)           NOT USED

(j)           MATERIAL

Anything incorporated in the goods to be supplied or consumed to perform the contract.

(k)           EQUIPMENT

All of the tools, plant, instruments, devices, machines, vehicles, structures and installations required for the performance of the work or the maintenance of the goods to be supplied and which are not incorporated in the goods.

(l)           CONTRACT PRICE

All of the stipulated prices, unit prices and other remuneration provided for in the contract, subject to such adjustments as may be made pursuant to the provisions of the contract.

(m)           PROPOSAL

The supplier’s bid or proposal.

5

(n)           SUBCONTRACTOR

Any person to whom the supplier entrusts the performance of work or the supply or manufacture of materials or equipment.

(o)           WORK

All of the goods the supplier must supply and the activities it must carry on to perform the contract, in particular the design, manufacture and delivery of the goods covered by the contract.

(p)           PLANT

The place where the goods are manufactured or assembled.

2.           GENERAL PROVISIONS

A.           INTERPRETATION OF CONTRACT

In the event of ambiguity or contradiction between the various documents constituting the contract, they shall prevail in the following order of precedence:

-   The notice of award;

-   The proposal accepted by Hydro-Québec;

-   The instructions to tenderers;

-   The specific clauses;

-   The general clauses;

-   The specific technical clauses;

-   The specific drawings;

-   The general or standardized technical clauses;

-   The standardized drawings.

Large-scale drawings shall prevail over smaller-scale drawings.

B.           ASSIGNMENT OF CONTRACT

The supplier shall not assign the contract without the prior written consent of Hydro-Québec’s representative.

C.           STANDARDS

Where the contract refers to standards, such reference shall mean the standards in force on the date the proposals are submitted.  In the event of ambiguity or contradiction between the contract and such standards, the more stringent document shall prevail.

D.           ADVERTISING AND REQUESTS FOR INFORMATION

The request for proposals document and all other information communicated to the supplier in connection with the contract shall remain the property of Hydro-Québec and shall not be used for any purpose other than the performance of the contract.

Any advertising intended by the supplier concerning the contract shall be subject to approval by Hydro-Québec’s representative.  This shall apply to all means of advertising, such as signs and billboards, and to all written and electronic media.

All requests for information concerning the contract or the work from any written or electronic media or from any other person shall be forwarded to Hydro-Québec’s representative.

6

E.           PLACE OF EXECUTION OF CONTRACT

The parties agree that the contract was executed in Montreal and shall be governed by the applicable laws of Quebec and that any dispute arising from its performance shall be under the exclusive jurisdiction of the courts of Quebec.

F.           REPRESENTATIVES OF THE PARTIES AND COMMUNICATIONS

Each party shall appoint a representative who shall have the power to act on its behalf. The parties shall advise each other in writing of the names of their respective representatives and of their replacements, as the case may be.

Each party’s representative shall have the requisite authority and power to see to the performance of the contract and to handle and decide any matter related thereto.

Any communications between Hydro-Québec and the supplier regarding the contract shall be in writing and be addressed to the other party’s representative.

G.           CONFIDENTIALITY

The supplier shall protect the confidentiality of the information communicated to it by Hydro-Québec in connection with the performance of the contract.

H.           LANGUAGE OF WORK AND COMMUNICATIONS

The language of work shall be French.  All written and oral communications pertaining to the contract shall be in French.  All documents or drawings the supplier remits to Hydro-Québec shall be drafted in French.

I.           DUE DATES

Unless otherwise stipulated in the contract, all due dates shall be calculated from the date the supplier receives the notice of award.

In computing any due date established under the contract:

-   The day that marks the start date shall not be counted, but the due date shall;

-   Saturdays, Sundays and statutory holidays shall be counted, but if the last day is a Saturday, Sunday or statutory holiday, the due date shall be postponed to the next business day.

J.           NOTICE OF DEFAULT

If the contract establishes a due date for the performance of an obligation, the parties shall be put in default by the mere lapse of time.

3.           NOT USED

4.           CONTROL OF WORK

A.           SCOPE OF CONTRACT

In the framework of this contract, the supplier shall perform all the activities required for the design, manufacture and delivery of the goods covered by the contract, except as expressly excluded in the Specific Clauses.

B.           SUBCONTRACTING

The supplier agrees that any subcontracts shall be subject to the provisions of this contract.

7

5.           RIGHTS TO USE OF GOODS

The supplier agrees to obtain and assign to Hydro-Québec all rights required to permit the use of the goods for the purposes for which they are intended and, as the case may be, their maintenance, repair or reconditioning.

These rights shall include copyright and rights contemplated by the laws respecting industrial drawings, trade-marks, patents and integrated-circuit topography.

6.           AUTHORITY OF HYDRO-QUÉBEC REPRESENTATIVE

A.           ADMINISTRATION OF CONTRACT

Hydro-Québec’s representative shall be responsible for administering the contract on Hydro-Québec’s behalf and shall have the authority to do so.

B.           INSPECTION, CONTROL AND SUPERVISION OF WORK

At any time, Hydro-Québec’s representative may inspect the supplier’s work and check its quality.  For such purposes, he shall have access to any place where the goods are manufactured and to the materials required for the performance of the contract.

The trials, tests and checks required under the contract or prescribed by the laws and regulations in force shall be carried out in the presence of Hydro-Québec’s representative and the supplier shall be responsible for giving him sufficient advance notice to be able to attend.

7.           EXECUTION OF WORK

A.           NOT USED

B.           NOT USED

C.           DRAWINGS AND LISTS PROVIDED BY THE SUPPLIER

The supplier shall submit to Hydro-Québec’s representative, for his verification, the detailed or general drawings required to validate the manufacture, operation, assembly and disassembly, start-up, utilization and maintenance of the goods.  The supplier shall also give Hydro-Québec the lists relating to the drawings: e.g. lists of materials, connections, terminations, settings, spare parts, special tools, etc.

The supplier shall give Hydro-Québec’s representative the requisite number of copies.  The drawings and lists shall be submitted on a timely basis so as not to delay the progress of the work, while allowing Hydro-Québec’s representative twenty (20) business days from receipt of the drawings and lists to review them.

Every drawing or list or copies thereof remitted to Hydro-Québec shall remain the property of Hydro-Québec, which may utilize them as it sees fit.

Drawings shall be prepared in accordance with the requirements and recommendations of sections 1 to 10 of standard B78.5-93 “Computer-Aided Design Drafting (Buildings)” of the Canadian Standards Association (CSA/ACN).  All notations on the drawings and lists shall be in French and dimensions shall be in the SI system.

When Hydro-Québec’s representative verifies the supplier’s drawings or lists, it means that Hydro-Québec’s representative has found that the proposed elements and systems are consistent with the object of the contract. But it in no way means that the supplier’s drawings or lists that were submitted or provided meet the requirements of the contract in every respect.

Work begun without the submission and verification of the drawings and lists as aforesaid may be refused by Hydro-Québec’s representative.  The costs incurred shall be borne by the supplier.

8

D.           TECHNICAL NOTICES

To permit the operation, maintenance and reconditioning of the goods by Hydro-Québec, the supplier shall, in accordance with the stipulations in the Specific Clauses, prepare technical notices describing in detail the construction and recommended methods for the assembly, disassembly, maintenance and operation of the goods and a list of all spare parts.  The said notices shall include all appropriate bulletins and the instructions prepared by the manufacturers of the parts incorporated in the goods.

E.           RATING PLATES

The rating plates on the goods shall be in French.  Warning notices shall be in French and English.

F.           NOT USED

G.           DELAY ATTRIBUTABLE TO HYDRO-QUÉBEC

If an incident attributable to Hydro-Québec causes delay in the performance of the contract, the supplier shall be entitled to an extension of the performance period, on the express condition that it makes a written request therefor to Hydro-Québec’s representative no later than fifteen (15) days after the incident warranting such a request. The request shall specify the nature of the incident and its impact on the work performance period.

Absent such notice within the aforesaid period, the supplier waives the right to an extension of the performance period.

H.           CHANGES TO CONTRACT

Hydro-Québec may, until the end of the contract, make changes to the contract and demand their performance by the supplier.

The supplier shall not proceed with any changes before signing a contract amendment specifying the nature of the change, the method of payment and the performance period.  However, in the event of an emergency or a disagreement over the terms of the contract amendment, the supplier shall promptly proceed with any change demanded by Hydro-Québec’s representative in writing.

Changes shall not entail any extension of the contractual periods unless expressly mentioned in the contract amendment. Any change to the size of the contract or its terms of performance made or authorized by Hydro-Québec shall entitle the supplier or Hydro-Québec to obtain a revision of the contract prices to account for the increase or decrease (as the case may be) in costs due to such change.

I.           NOT USED

J.           NOT USED

K.           NOT USED

L.           OWNERSHIP

All of the goods covered by the contract shall become the property of Hydro-Québec as they are progressively fabricated.  However, the supplier shall be responsible for their custody and control and any liability arising therefrom until they are received by Hydro-Québec.

M.           NOT USED

N.           NOT USED

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O.           PACKAGING

To facilitate handling and protect the goods during shipping and storage, the goods shall be packaged in accordance with Hydro-Québec’s standard SN-1.1 or such other standard as may replace it.

The goods shall be identified as required below to facilitate delivery, receiving and storage.  Each container shall bear the following minimum mandatory information in easily legible form:

-   Supplier’s name;

-   “Hydro-Québec” followed by the order number;

-   Item number of the order;

-   Hydro-Québec’s article code, if any;

-   Delivery address.

If the container contains several packages, each package shall also bear the above-mentioned information specific to its contents.  Each container shall have a hermetically sealed pocket in which the supplier shall deposit at least four (4) copies of the list of articles.

P.           SHIPPING

No shipment shall be made without prior specific instructions from Hydro-Québec’s representative as to the availability of the delivery location.  No shipment may be made more than two (2) months before the date required, unless Hydro-Québec’s representative provides his written authorization.

At least three (3) days before sending any shipment, full or partial, the supplier shall give written notice to the addressee indicated on the waybill.

For any shipments coming from outside Canada, the supplier shall remit to the carrier along with the waybill:

-   A duly completed “Canada Customs Invoice” specifying the following:

-   vendor’s name;

-   purchaser’s order number;

-   name and address of the addressee (to whom the goods are being shipped);

-   name and address of the purchaser (to whom the goods are sold);

-   payment currency;

-   detailed description of the goods, quantity, unit price, total;

-   total amount of the invoice;

-   a duly completed NAFTA (North American Free Trade Agreement) certificate of origin, if the goods were manufactured in the United States and/or Mexico.

8.           NOT USED

9.           GOODS, MATERIALS AND EQUIPMENT

A.           ORIGIN, QUALITY AND IMPLEMENTATION OF MATERIALS

The materials, their implementation and the execution of the work shall be consistent with the requirements of the contract.

If the quality of a material or labour is not specified, the material shall be new and of the best quality and the labour shall be performed in accordance with generally accepted standards.

Unless otherwise stipulated in the contract, the supplier may use a material equivalent to the one referred to in the contract by a trade-mark, provided the substitution is previously authorized in writing by Hydro-Québec.

10

Hydro-Québec’s representative will accept or refuse the equivalent material within a time frame which will depend on the information to be obtained and the trials, tests and checks necessary to evaluate the proposed material.

The supplier shall submit the equivalent material for approval by Hydro-Québec’s representative on a timely basis to avoid any delay in the performance of the work.

B.           NOT USED

C.GOODS, MATERIALS AND EQUIPMENT MADE AVAILABLE TO THE SUPPLIER BY HYDRO-QUÉBEC

The supplier shall be responsible for the maintenance, safekeeping and control of all goods, materials or equipment made available to it by Hydro-Québec and shall use same solely for the purposes for which they were intended.

The supplier must at all times be in a position to report to Hydro-Québec’s representative on the use and condition of such goods, materials and equipment.

10.           NOT USED

11.           LIABILITY OF THE SUPPLIER

The supplier shall be liable to Hydro-Québec for the proper performance of the contract.

It shall also be liable for any damages resulting from such performance, save damages for loss of profits or income, loss of use of the goods supplied under this contract or of any related equipment, interest and other charges on borrowed money and the costs of any interruption.  However, the supplier’s liability to Hydro-Québec shall be limited to $[XX] or another sum equivalent to the contract price if same exceeds $[XX].

It shall defend Hydro-Québec against any claims or lawsuits stemming from the contract and the execution of the work and shall indemnify and hold it harmless with respect to capital, interest and the indemnity stipulated in the Civil Code of Quebec, costs of expert reports and costs of any other nature, any judgment pronounced against it and, where applicable, shall obtain a discharge of any legal hypothec related to the performance of the contract.

12.           CONTROLLED PRODUCTS

In the framework of the application of the Hazardous Products Act, R.S.C. (1985), c. H-3, the supplier is responsible for determining whether the goods or part thereof are controlled products.

Before delivery, the supplier shall forward to Hydro-Québec’s representative a list of the controlled products, in duplicate, and the relevant safety data sheets, in French, for each such product.

The supplier shall be liable for all costs incurred due to its failure to provide the required information on a timely basis.

13.           ENVIRONMENTAL PROTECTION

The supplier shall comply with all laws and regulations applicable in Quebec concerning the protection of the environment. It shall be responsible for preventing pollution or any nuisance that could be caused by the products, services and activities arising from this contract.  In that regard it shall, at its expense, take all necessary steps to protect the environment and prevent any form of pollution or nuisance.  In addition, it shall ensure that it has properly trained personnel who can take action in the event of an environmental emergency.

11

The supplier shall notify Hydro-Québec’s representative as quickly as possible of any environmental incident, non-compliance or emergency that arises in the framework of the performance of the obligations under this contract.

Furthermore, it shall comply with the environmental provisions set out in the specific clauses of this contract.

14.           PAYMENT

Payment of the contract price shall be made thirty (30) days following receipt of the equipment at the delivery point or receipt of the invoice, whichever is later.

At any time, Hydro-Québec may set-off any debt owed to it by the supplier against any sums it may owe the supplier or any security delivered pursuant to the contract.

15.           GUARANTEE ON LABOUR AND MATERIALS

The supplier shall guarantee to Hydro-Québec that all goods and materials it has supplied will operate properly and conform to the stipulations of the contract, which guarantee shall apply for a period of eighteen (18) months following receipt of the equipment at the delivery point, unless additional guarantees and different time frames are stipulated elsewhere in the contract.  This guarantee shall be in addition to the legal warranty.

During the warranty period, upon request by Hydro-Québec, the supplier undertakes, within the time frame determined by Hydro-Québec’s representative, to repair, correct or replace all defective goods and any resulting deterioration or degradation, at its own expense, including costs of removal, shipment, replacement and reinstallation of the property required to access such goods, except, however, costs of removal, shipment, replacement and reinstallation of property other than the goods that are the subject of the contract.

In the event of a disagreement between the supplier and Hydro-Québec as to which party shall be responsible for the costs of repairs, modifications or replacement, the supplier agrees to perform such repairs, modifications or replacement diligently in accordance with the decisions of Hydro-Québec’s representative.  Failing an agreement between Hydro-Québec and the supplier as to responsibility for costs of repair, Hydro-Québec acknowledges that the fact that the supplier has performed the work required by Hydro-Québec’s representative shall not extinguish the supplier’s right to bring a legal action.

All goods thus repaired, corrected or replaced by the supplier shall be under a new guarantee of the same nature and for the same term as the original guarantee.

Should the supplier fail to repair, modify or replace the equipment at the request of Hydro-Québec’s representative, Hydro-Québec shall be entitled to perform such repairs, modifications or replacements or have them performed by a third party at the supplier’s expense.

16.           NOT USED

17.           NOT USED

18.           DEFAULT – TERMINATION

A.           DEFAULT BY SUPPLIER

If the supplier fails to comply with the provisions of the contract or the instructions of Hydro-Québec’s representative, the latter shall give it a notice of default stipulating the time period for the supplier to comply with the requirements of the contract.

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If the supplier fails to comply with the notice from Hydro-Québec’s representative within the stipulated period or becomes insolvent, it shall be in default and Hydro-Québec may exercise one or all of the remedies stipulated in the clauses entitled “Withdrawal of Work from the Supplier” and “Contract Termination”.

B.           WITHDRAWAL OF WORK FROM THE SUPPLIER

If the supplier is in default under the contract, Hydro-Québec may withdraw the work which is as yet uncompleted from the supplier, without thereby releasing it from its contractual obligations, save the obligation to complete such work.

The supplier shall indemnify Hydro-Québec for all losses and damages resulting from its default and the withdrawal of the work and shall also reimburse Hydro-Québec for all costs and expenses Hydro-Québec has incurred further to such withdrawal to arrange for the full completion of the work.

C.           CONTRACT TERMINATION

Hydro-Québec shall at all times have the right to terminate the contract in whole or in part upon written notice.

If Hydro-Québec terminates the contract unilaterally without any default by the supplier, the supplier shall be entitled to the value of the work performed and the materials supplied as of the termination, less such amounts as it may owe Hydro-Québec, as well as damages, if any.

If the supplier is in default under the contract, Hydro-Québec may terminate the contract in whole or in part. The supplier shall then be entitled to the value of the work performed and the materials supplied as of the termination, less such sums as it may owe Hydro-Québec. It shall not be entitled to any damages. The supplier shall remain liable to Hydro-Québec for any loss or damages resulting from its default.

D.           NOT USED

19.           NOT USED

20.           RELEVANT DOCUMENTS

A.           ACCOUNTING PRINCIPLES

The supplier shall keep separate accounts for the cost of the work in accordance with Canadian generally accepted accounting principles.

B.           RETENTION PERIOD

The supplier shall retain all books and accounting records and the documents pertaining to the contract for three (3) years after the end of the contract. Upon request by Hydro-Québec, the retention period shall be extended.

C.           RIGHT TO INSPECT

Upon written request, the supplier shall make all books and accounting records and documents pertaining to the contract available to Hydro-Québec.  Hydro-Québec may inspect same and make any copies.

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TRANSLATION

SPECIFIC CONDITIONS

Table of Contents

1.            TERM OF MASTER AGREEMENT

2.            CONTRACT REVIEW AND FOLLOW-UP

3.            APPROVAL STATUS

4.            NEW SUPPLIER

5.            QUALITY MANAGEMENT SYSTEM, ISO 9001:2000 (F1)

6.            CERTIFICATE OF REGISTRATION (F15)

7.            NOTICE OF PROCEDURE (F18)

8.            QUALITY RECORD (F21)

9.            HYDRO-QUÉBEC’S QUALITY PLAN REQUIREMENTS (F61)

10.          DECISION TO UTILIZE (F11)

11.          POST-D.U. DELIVERY AUTHORIZATION

12.          DELIVERY PERIOD

13.          LATE DELIVERY

14.          COMPLIANCE WITH QUANTITIES

15.          DELIVERY PERFORMANCE

16.          PENALTY FOR LATE DELIVERY

17.          DELIVERY ON PALLETS

18.          DELIVERY BY TRUCK

19.          DELIVERY ADDRESS

20.          INDEXING CLAUSE

21.          ENERGY LOSS VALUES

22.          PENALTY ON SURPLUS EFFECTIVE AVERAGE LOSSES

23.          QUEBEC CONTENT

24.          INVOICING OF TAXES

25.          GUARANTEE

26.          PAYMENT

27.          SUPPLY SECURITY

28.          CONTRACT ADMINISTRATION

29.          CONTRACT DOCUMENTS

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1.           TERM OF MASTER AGREEMENT

The initial term of the master agreement shall be two (2) years commencing on April 1, 2006.

Hydro-Québec reserves the right to extend the master agreement for a further period of two (2) years, based on two (2) renewal options of twelve (12) months each.

For the extension, no less than three (3) months before the expiration of the master agreement, Hydro-Québec shall send written notice to the supplier of its intention to extend or not to extend the master agreement.

Within five (5) business days of the date of Hydro-Québec’s notice, the supplier shall send written notice to Hydro-Québec of its acceptance or refusal to extend the master agreement.

It shall be understood and agreed that the option to extend shall be under the same terms and conditions as those prevailing until then under the master agreement.

2.           CONTRACT REVIEW AND FOLLOW-UP

Hydro-Québec shall call the supplier to a contract review meeting before production of the first order is begun.  All of the relevant representatives from Hydro-Québec shall attend to ensure a mutual understanding of the requirements stipulated in the master agreement.

Hydro-Québec’s representatives shall be:  the technical officer for the product, the quality control officer, the materials-in-stock management officer and the master agreement administrator.

Further meetings may be called at the parties’ request.

3.           APPROVAL STATUS

If any of the products covered by the master agreement are approved products, any change to the production of the goods, such as the procurement of materials, the manufacturing or assembly location, etc. shall require prior approval from Hydro-Québec, which shall assess the impact of the change on the approval status of the goods.

Hydro-Québec’s technical officer shall determine the type testing required to extend the approval status.  The costs inherent in such tests shall be borne by Hydro-Québec.  However, if the test results do not meet the requirements, the costs of retesting shall be borne by the supplier.

The price list (taxes extra) for the type testing shall be:

[XX]

4.           NEW SUPPLIER

Clause deleted.

5.           QUALITY MANAGEMENT SYSTEM, ISO 9001:2000 (F1)

The quality management system of the product’s designer, manufacturer and installer shall be duly ISO 9001:2000 registered.

15

If the design or development activities form part of the contract, the exclusion of section 7.3 “Design and Development” </˃ of ISO 9001:2000 shall not be acceptable for the designer of the product.

At the specific request of Hydro-Québec’s representative, the supplier shall send him the quality manual, quality procedures and quality management system forms for the product’s designer, manufacturer and installer.

Hydro-Québec or its representative may visit the premises of the supplier and its subcontractors at any time to verify that the contract requirements are being met.

Any proposal involving the use, alteration or repair of the product which is not consistent with the contract requirements shall be submitted to Hydro-Québec’s representative.

6.           CERTIFICATE OF REGISTRATION (F15)

The supplier must hold an ISO certificate of registration issued by an accredited registrar indicating that the manufacturer and designer of the product meet the above-mentioned quality system standards.

Any change to their quality system or certification shall be sent to Hydro-Québec’s quality officer during the term of the contract.

7.           NOTICE OF PROCEDURE (F18)

Any request made by the supplier for a quality control procedure shall be made in writing and sent to Hydro-Québec’s representative.  The request shall be made in advance within a reasonable period of time, having regard to the place where the procedure will be carried out.  At least two business days are requested for local procedures.  That time frame may be several weeks for a procedure carried out in a foreign country.

The request shall specify the purpose, date and place of the procedure, the order number, the item number in the order, the material to be controlled and, where applicable, the serial number.

Hydro-Québec shall cover its representative’s costs for such procedures. However, if the control or testing results do not meet the requirements of the client and the order, or if the procedure is delayed, the repeat or waiting costs shall be covered by the supplier.

8.           QUALITY RECORD (F21)

The quality records containing any documents or objective proof which can demonstrate the conformity of the product to the contract requirements shall be retained for at least three (3) years after delivery or three (3) years after the guarantee expires, whichever is later.

The records shall be available for consultation by Hydro-Québec or its representative at all times during that period at the premises of the supplier and the subcontractors.

9.           HYDRO-QUÉBEC’S QUALITY PLAN REQUIREMENTS (F61)

This clause sets out the minimum requirements for the content of a quality plan and how it must be submitted to Hydro-Québec and managed.  A quality plan shall be required for each specific product or family of products listed in the order.

The quality plan covers all of the development, monitoring and measurement activities. In addition to the inspection and testing activities, formerly known as the “Inspection and Testing Plan” (“ITP” or “PIE”), the review activities for the requirements pertaining to the product, design and development, purchase, product preservation, etc. shall be covered therein.

Where the supplier is not also the designer, manufacturer or installer, it shall be responsible for ensuring that its subcontractors provide their quality plan in conformity with the requirements.

16

It shall not be necessary to resubmit a quality plan if it covers a family of products provided it has already been accepted by Hydro-Québec; and there has been no change to the product’s material, form, function or manufacturing process. However, acceptance of the quality plan shall be valid for no more than 3 years from the date of acceptance.

Upon request, the supplier shall provide Hydro-Québec with the manual, procedures, instructions and forms referred to in the quality plans, and those relating to the quality plans of the subcontractors.

1.0   GENERAL REQUIREMENTS 1.1    Issue Deadline At least four (4) weeks prior to the commencement of realization, the supplier shall submit quality plans prepared in accordance with the requirements to Hydro-Québec’s quality officer for approval.   1.2    Revision of Quality Plan   The supplier shall keep the quality plans up to date throughout the term of the contract or the order.  Any revision made to a quality plan relating to the contract requirements shall be submitted immediately to Hydro-Québec’s quality officer for approval.

2.0   QUALITY PLAN PRESENTATION The quality plan shall include: 2.1   A cover page with:

-   The name of the supplier/manufacturer.

-   The quality plan number.

-   The revision date and number.

-   The product description.

-   The order number, master agreement number or lot number, if any.

-   The name and signature of the person responsible for approval by the supplier.

2.2    A table of contents listing the sections and their page numbers, if any, in the quality plan.

2.3    A process diagram (if required by Hydro-Québec’s quality officer); that is, a graphic representation of the development, monitoring and measurement activities, also including Hydro-Québec’s hold points.

Note:           An example of a “CQ-Ps-07/IN01” quality plan is available from Hydro-Québec’s quality officer upon request.

3.0   ACTIVITIES COVERED IN QUALITY PLAN The quality plan shall include the following activities: (If some activities do not apply, this must be explained in the quality plan.)

3.1   Review of the product requirements (contract review).

3.2   Design and development The design and development activities shall include, without limitation, the following:

3.2.1   Design and development planning (stages and responsibility for design and development)

17

3.2.2   Design and development inputs (Hydro-Québec order requirements, Hydro-Québec specifications, standards)

3.2.3   Design and development outputs (approval of drawings, data sheets, calculation notes)

3.2.4   Design and development review (internally and/or with the client)

3.2.5   Verification of design and development (conformity of drawings, calculation notes, testing reports compared to inputs)

3.2.6   Validation of design and development (installation tests, operating instructions)

3.2.7   Control of design and development modifications (quality notification, technical modification request (“TMR” or “DMT”))

3.3   Purchasing

3.3.1   Principal suppliers and subcontractors For each principal product or service purchased or subcontracted, the quality plan shall mention (or cite in a schedule):

-   The description of the principal products and services purchased and subcontracted.

-   The names and contact information for the suppliers and subcontractors.

-   The quality requirements sought (including the subcontractors’ quality plans).

3.3.2   Purchasing documents The supplier’s purchasing documents shall include all the requirements stipulated in the contract documents.  Hydro-Québec or its representative may visit the premises of the supplier and its subcontractors at any time to verify that the contract requirements are being met.

3.4   Client’s property (products supplied by the client, if any).

3.5   All relevant development, monitoring and measurement operations.  Including the hold points previously identified by Hydro-Québec in its request for proposals documents and specifications.  Hydro-Québec’s representative may, when reviewing the quality plan, ask for the inclusion of additional hold points and specify the advance notice required for carrying out the procedures.

3.6   The tests, pre-delivery installation tests and testing programs (where required, including the sequence, procedures and test circuit diagrams).

3.7   The identification and traceability (where applicable, an identification and recording method to ensure the product can be traced)

3.8   Preservation of the product (packaging and handling: Hydro-Québec requirements SN-1.1 or other, if specified).

3.9   Record control (review and closure of quality record).

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3.10   Issuance of decision to utilize (DU).  Hold point.

4.0   CONTENT OF QUALITY PLAN

4.1   Development, monitoring and measurement activities.  (Include or refer to the activities of subcontractors, where applicable) For each development, monitoring and measurement activity, the quality plan shall include the following information:

-   The activity and its reference number.

-   The reference documents (procedures, drawings, data sheets, technical documents reviewed by Hydro-Québec).

-   The characteristics to be controlled.

-   The acceptance criteria.

-   The monitoring and measurement frequency.

-   The title of the person in charge of the activity.

-   The expected quality records.

In addition, the quality plan shall cover the following:

4.2   The special skills of the personnel (welders, inspectors) where applicable.

4.3   The validation of the production processes and service preparation processes, if any.  (Special processes: processes where the characteristics of the product in the finished product cannot be fully verified.  For instance, welding, plating, heat treatment, non-destructive tests).

4.4   Control of the monitoring and measurement instruments (measuring and testing equipment).

4.5   Control of non-conforming products (non-conformity of supplier and Quality Notification).

4.6   Mention all requirements of the quality plan that do not apply.

10.           DECISION TO UTILIZE (F11)

The supplier shall obtain a decision to utilize from Hydro-Québec’s quality officer before any product is delivered.

If you do not know the quality officer’s name, please contact:

Pierre Guyon

Head, Electrical Apparatus

Phone:  (514) 840-3000 ext. 4915

Fax:  (514) 840-4320

11.           POST-D.U. DELIVERY AUTHORIZATION

Further to the issuance of a D.U. (decision to utilize) the supplier may ship the equipment directly if the receiving point is a store or a Hydro-Québec material distribution centre (“MDC” or “CDM”).  For any other delivery point, the supplier must have authorization from the person who signed the order, otherwise receipt may be refused and the equipment may be returned to the shipper, at its expense.

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12.           DELIVERY PERIOD

The delivery period shall be between twelve (12) and fifteen (15) weeks from issuance of the order, depending on the listings.

The supplier may deliver transformers from the time the order is issued until the end of the contractual delivery period (ongoing delivery).

Any delivery which is late due to a non-conformity or which is the subject of a “Quality Notification” shall be covered by the supplier.

13.           LATE DELIVERY

If the supplier expects a delivery to be late, it shall immediately notify the person who signed the order.

14.           COMPLIANCE WITH QUANTITIES

The quantities delivered shall be identical to those indicated in the order. There shall be no changes without the prior approval of the person who signed the order.

15.           DELIVERY PERFORMANCE

Every quarter, the supplier’s delivery performance shall be measured based on the quantities per article code delivered on time.  Any breach of performance shall be subject to a penalty in accordance with section 16 “Penalty for Late Delivery”, which may even include withdrawal of the article code.  In addition, the supplier’s performance may be used as a criterion for awarding any future contracts.  Within 15 days of receipt of the delivery performance report, the supplier shall validate the results transmitted and notify Hydro-Québec of any discrepancies.

Calculation of actual delivery period:

Starting point for delivery period calculation: the date the order is issued. This date is recorded in Hydro-Québec’s SAP system and cannot be altered.  The order is sent to the supplier the same day by fax or e-mail.  The supplier is responsible for notifying the person who signed the order if there is a delay.

End point for delivery period calculation: the date of physical receipt of the equipment recorded in the SAP system.

16.           PENALTY FOR LATE DELIVERY

If the supplier fails to meet the later of the date of delivery to the F.O.B. point determined on the order and the contractual delivery period, Hydro-Québec will calculate a penalty as contractual damages without the necessity to provide proof in an amount equal to [XX]%, but in no event exceeding [XX]%, of the price (excluding shipping costs, GST, QST where applicable) to the F.O.B. point indicated on the order for each undelivered unit for each week or partial week delivery is late between the contractual date and the effective date of delivery of the said unit to the F.O.B. point.

If the supplier wishes to have the penalty waived because it was delayed for reasons beyond its control, it shall submit a written request to the contract administrator.  Hydro-Québec shall notify the supplier in writing within ten (10) days of its acceptance or refusal of the request.

Penalties shall be compiled quarterly with the delivery performance report. Penalties shall be paid to Hydro-Québec once a year.

17.           DELIVERY ON PALLETS

The equipment shall be delivered on pallets open on four (4) sides, built and sized for the equipment they will support.  They shall be manufactured of hardwood and the equipment shall be packaged in accordance with standards (use of metal straps is prohibited) but not exceeding the exterior dimensions of the pallet.

20

Shipments that do not meet these criteria will be returned at the supplier’s expense.

18.           DELIVERY BY TRUCK

Equipment shall only be delivered on OPEN trucks.

19.           DELIVERY ADDRESS

Deliveries shall be made to the following addresses:

CDM St-Hyacinthe

7300 Avenue Choquette

St-Hyacinthe, Quebec

J2S 8S7

CDM Quebec

2600 Rue Decelles

Quebec City, Quebec

G2C 1R1

The exact addresses shall appear on each order under contract.

20.           INDEXING CLAUSE

For purposes of this contract, the basic unit price for each item shall be subject to an upward or downward adjustment based on the following formula for orders in each of the eight (8) quarters corresponding to the contract term commencing as of April 1, 2006:

[XX]

Notes:

For purposes of calculating the indexing factor, the months of November 2005, October 2005 and December 2005 shall respectively be deemed as the month of opening and the months preceding and following the opening of the tenders.

If, when the orders are issued, the indexes required to calculate the price have not been published, the successful tenderer may issue an initial invoice based on the prices in force in the previous period.

The calculations shall be made as of the initial publication of the last index required for each calculation; the revisions already made to the indexes for the prior months shall be taken into account, but the subsequent revisions of the indexes shall not be taken into account.

The exchange rate used for a given month shall correspond to the monthly average of the noon rates for US$ expressed in CA$.

Indexing calculations shall be made to at least four decimal points.

21.           ENERGY LOSS VALUES

The economic value of energy losses during the contract term shall be:

[XX]

21

22.           PENALTY ON SURPLUS EFFECTIVE AVERAGE LOSSES

Where, for a given item, the average effective losses referred to above exceed the specified losses, the amount of the penalty shall be calculated as follows:

[XX]

23.           QUEBEC CONTENT

Validation of contractual Quebec content

If an award is made that includes contractual Quebec content, Hydro-Québec shall proceed to validate same and it shall be determined by Hydro-Québec.  This shall include, in particular, an audit of the manufacturing process used by the successful tenderer and its subcontractors, the provenance of the materials and services and the successful tenderer’s actual outlays.  As the Quebec content aspects are gradually attained, the successful tenderer shall be granted the percentages associated with these aspects.  For that purpose, Hydro-Québec may require interim reports.  At the end of the production phase, the successful tenderer shall submit a final report on the Quebec content reached.

The successful tenderer shall keep accounting records consistent with generally accepted accounting principles for all such outlays invoiced.  The successful tenderer shall retain all supporting documentation regarding Quebec content until final payment.

On forty-eight (48) hours’ notice, the successful tenderer shall allow Hydro-Québec access to all its accounting documentation relating to Quebec content and to copy and take excerpts of same.

Penalty for failure to meet contractual Quebec content

If the successful tenderer fails to meet the contractual Quebec content percentage, a penalty calculated on the contract price, excluding GST and QST, for the product for which the contractual Quebec content has not been met shall be determined based on the following formula:

[XX]

24.           INVOICING OF TAXES

On each invoice, the goods and services tax (G.S.T.) and Quebec sales tax (Q.S.T.) at the legal rates in force shall be indicated separately.

The registration number for G.S.T. purposes and the registration number for Q.S.T. purposes shall also appear on each invoice.

If the successful tenderer fails to comply with these requirements, Hydro-Québec may refuse the invoice and return it for correction or rectification.

25.           GUARANTEE

Not Used

26.           PAYMENT

Not used

27.           SUPPLY SECURITY

Whenever delivery is compromised in the short or medium term (raw materials supply problem, strike, lockout, calamity, earthquake, etc.) the supplier shall forward the contingency plan it plans to follow to the contract administrator within ten (10) days of the occurrence of the problem.

22

To offset any risk of a shortage and further to the sending of the contingency plan explaining why the supplier can no longer accept orders, Hydro-Québec reserves the right in such instance to obtain its supplies elsewhere during such period as may be necessary pending resumption of normal deliveries by the supplier.

The supplier may not claim to have sustained a loss of profits or claim compensation or an extension of its contract on the pretext that Hydro-Québec did not order a minimum volume of its needs.

28.           CONTRACT ADMINISTRATION

Marc Desautels

Advisor – Contract Management

Supply Agreements

Strategic Goods

Procurement Branch, 7th Floor

855 Ste-Catherine St. East,

Montreal, Quebec  H2L 4P5

Phone:  (514) 840-3000 ext. 6765

Fax:  (514) 840-3322

Email: Desautels.Marc@hydro.qc.ca

29.           CONTRACT DOCUMENTS

This contract is consistent with our request for proposals no. 11954845 dated October 24, 2005, your tender no. 6100098418 dated November 23, 2005, our correspondence dated January 10 and 31, 2006 and March 9, 2006 and your correspondence dated December 21, 2005, January 12, 2006, February 7 and 24, 2006 and March 1 and 23, 2006.

23

A           REQUEST FOR AMENDMENT – MASTER AGREEMENT OR ORDER

Supply Agreement - Strategic Goods and Information Technologies

SUPPLIER: Pioneer Transformers Ltd. 612 Chemin Bernard, P.O. Box 272 Granby QC J2G 8E5 DATE:  2008/03/04

Amendment No. 1 Contract No. 4600010831 Order No. Hydro-Québec Official Marc Desautels Tel: 514-840-3000 ext. 6765 Fax: 514-840-3322

A – CURRENT AMENDMENT

Extension of the master agreement, under the same business conditions, for a further period of 24 months, namely from April 1, 2008 to March 31, 2010.

B- SUPPLIER

[x]         [  ]   [  ]   We agree to perform the requested amendment on the same terms and conditions as the above-mentioned contract, it being agreed that this request does not constitute a firm undertaking by Hydro-Québec and that the mere authorization to proceed in “C”, approved by the Hydro-Québec contract official, will allow the supplier to proceed.   Delivery date:                                                                (signed)                                           25-3-08 Signature                                 Date We refuse to perform the requested change                                 Signature                                 Date Not applicable

C- AUTHORIZATION TO PROCEED

You are authorized to proceed with this change immediately

                                            ;   

H.Q. Official                                                      Signature                                           Issue date

c.c. Supplier, Quality Assurance (CQ)

1

HYDRO QUÉBEC Contract

2

EX-10.27

Exhibit 10.27

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

COMMITMENT LETTER

NEEDS			SOURCES
Future acquisitions (building & equipment)	$	1,750,000	Term loan facility	$	1,750,000
Foreign exchange contracts	$	500,000	Settlement risk facility	$	500,000
Misc business expenses	$	50,000	Corporate MasterCard account	$	50,000
	$	10,000,000		$	10,000,000

DEFINED TERMS:	In this Commitment Letter, certain terms used with the upper-case aredefined in Schedule I hereto. Please refer to such Schedule I for the meaning of such terms. All amounts herein arein Canadian dollars unless expressly stated otherwise.
BORROWER:	PIONEER TRANSFORMERS LTD. (“Pioneer”) and/or BERNARD GRANBY REALTY INC. (“Bernard”), henceforth collectively, the “Borrower”.
LENDER:	BANK OF MONTREAL (henceforth, “BMO” or the “Bank”)
CREDIT FACILITIES:	FACILITY A:Revolving overdraft demand loan not exceeding CDN$ 7,700,000 or the Equivalent Amount in US$.
	FACILITY B:Non-revolving demand loan(s) up to CDN$ 1,750,000.
	FACILITY C:MasterCard credit cards up to CDN$ 50,000 or the Equivalent Amount in US$.
	FACILITY D:Treasury risk management facility for foreign exchange forward contracts having an aggregate risk content not exceeding CND$ 500,000.
LOAN PURPOSES:	FACILITY A: To finance ongoing operations. FACILITY B: To finance future acquisitions & working capital injection. FACILITY C: For business expenses. FACILITY D: To hedge foreign exchange risk.
AVAILABILITY:	The Facilities will be available for drawdown for the specified Loan Purposes upon satisfaction of Conditions Precedent. Availability will be by way of:

BMO Bank of Montreal

Page 1 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

FACILITY A (subject to monthly Margin Requirement):
	▪ ▪	By way of direct advances in CDN$ or USD$ through overdraft in the accounts of the Borrower set up for such purpose; By way of issue of letters of credit (standby and documentary) and letters of guarantee for a maximum term of 365 days, subject to renewal and extension.
FACILITY B (available for drawdown for a period of 12 months):
	▪ ▪	By way of direct advances through demand note(s) at variable interest and or; By way of fixed rate term loans (1 to 5 year terms).
FACIITY C: Available through use of MasterCard cards issued from time to time by the Bank, at its discretion, in accordance with the terms and conditions of the MasterCard Card Agreement. FACILITY D: By way of foreign exchange forward contracts for a maximum term of 365 days for each agreement;

MARGIN REQUIREMENT: Notwithstanding any other provision of this Commitment Letter, the amount at any time outstanding under Facility A (including the aggregate undrawn amount of all outstanding Letters of Credit and Letters of Guarantee) and of all other obligations of the Borrower in respect of any Letter of Credit and Letter of Guarantee shall not exceed the Borrowing Base. For the purposes hereof, “Borrowing Base” shall mean the total of: 80% of the Bank’s estimated worth of eligible accounts receivable (excluding Excluded Receivables) of the Borrower owing by debtors located in Canada and in the United States of America (advances supported by US receivables shall be Limited to CDN$ 1,000,0(10); plus The lesser of (i) CDN$ 3500,000 and (ii) 50% of the Bank’s estimated worth of eligible inventory, (excluding Excluded Inventory) of the Borrower. Eligible inventory shall include work in progress supported by booked orders to a maximum of CDN$ 1,000,000; less any amount secured by a Lien ranking prior to the security for the benefit of the Bank with respect to accounts receivable and/or inventory of the Borrower, and all current and past due amounts owed to the various governments by the Borrower, including, without limitation, Federal and Provincial income taxes, deductions at source, G.S.T., P.S.T., Q.S.T. and any other amount that could be considered as prior claim or as a deemed trust or as a super priority in favour of the various governments or governmental authorities or the payment of which would rank prior to the payment of debts and liabilities of the Borrower or any other Obligor under or pursuant to the Facilities or the Loan Documents; less Excluded Receivables.

BMO Bank of Montreal

Page 2 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

	For the purposes hereof, “Excluded Receivables” shall mean accounts receivable which the Bank does not, according to its usual practice, consider as an eligible receivable, including without limitation, accounts over which the Bank does not have a fast ranking Lien, accounts receivable owing by debtors located outside of Canada and the United States of America, accounts receivable subject to set-off or compensation, accounts receivable owing by an affiliate, a shareholder, a director, an officer or an employee of the Borrower, accounts receivable which the Bank in good faith determines to be not of good quality or collectible in the ordinary course of business, accounts receivable subject to undue credit risk, accounts in dispute and accounts receivable which remain unpaid for more than 90 days from the date of invoice. For the purposes hereof, “Excluded Inventory” shall mean inventory which the Bank, in accordance with its usual practice, does not consider as eligible inventory, including without limitation, inventory over which the Bank does not have a first ranking Lien, 30-day goods, inventory located outside the premises of the Borrower or outside of Canada, in transit or otherwise not in possession of the Borrower or the relevant Obligor, goods on consignment, spare parts and production supplies. Value of inventory shall be determined at the lesser of its cost and fair market value. FACILITY D:Outstanding foreign exchange forward contracts shall riot exceed a risk content of CND$ 500,000.
PROGRESS DRAWS:	Advances for Facility B will be available by way of multiple draws for the specified Loan Purposes upon satisfaction of Conditions Precedent and shall not exceed: 65% of land & building (existing + expansion) based on market value as determined by a professional evaluation to be remitted to the Lender; plus 50% of equipment based on market value as determined by a professional evaluation to be remitted to the Lender; plus 75% of new equipment based on value of invoices before taxes.
MATURITY AND INSTALMENTS:
	FACILITY A:Repayable on demand (revolving overdraft facility). FACILITY B:Interest only for a maximum of 12 months, after which advances will be reimbursed as follows:
	▪	Advances based on land & buildings: Amortization not to exceed 12 years with monthly capital payments plus interest, or fixed monthly payments including capital & interest.
	▪	Advances based on existing and new equipment:  Amortization not to exceed 5 years with monthly capital payments plus interest, or fixed monthly payments including capital & interest.

BMO Bank of Montreal

Page 3 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

	FACILITY C:Balance payable in full, monthly.
PREPAYMENTS:	Direct advances (including any overdraft) in CDN$ and in US$ bearing interest based on the CDN Prime Rate and the US Base Rate respectively may be prepaid at any time and from time to time without penalty, subject to any applicable of prior notice periods to be determined by the Bank. Advances at a fixed rate of interest may be prepaid at any time, subject to penalties and to any application of prior notice periods to be determined by the Bank. Any outstanding Letter of Credit or Letter of Guarantee may be cancelled upon receipt by the Bank of the original thereof (and any amendment thereto) and evidence satisfactory to the Bank that the beneficiary has consented to such cancellation.
INTEREST RATES:	FACILITY A:CND Prime Rate and/or US Base Rate plus 0.75%, payable monthly in arrears. FACILITY B:CND Prime Rate plus 1.00%, payable monthly in arrears. A fixed rate option is available as per rates at loan drawdown or at reservation date. FACILITY C:Subject to the interest rates and fees set from time to time in accordance with the MasterCard Card Agreement and related agreements.
FEES:	Overdraft Facility fee of CND$ 950 payable monthly and subject to annual review. A fixed monthly fee of CND$ 350 covering all Banking services, including electronic cash management services and wholesale lockbox services); Subject to annual review. The Borrower shall pay to the Bank a one time non-refundable Application Fee of CDN$ 10,000 equivalent to 10 bps of credit facilities. Such fee shall be payable at closing. AB legal and other direct out of pocket costs of the Bank incurred with respect to due diligence and preparation of loan documents, arrangement expenses and advertising shall be for the account of the Borrower. The Borrower agrees to guarantee payment of all such legal fees and other direct out of pocket costs upon and by virtue of acceptance hereof by the Borrower.

BMO Bank of Montreal

Page 4 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

SECURITY: The following security to be provided by the Borrower shall, unless otherwise indicated, support all present and future indebtedness and liability of the Borrower to the Bank including without limitation indebtedness and liability under guarantees and cash management products. Security shall be registered on the Bank’s standard forms, supported by resolutions and solicitor’s opinion, all acceptable to the Bank:   a)Revolving overdraft loan facility agreement (Facility A).   b)Demand notes (Facility B).   c)Fixed rate term loan agreement(s) when and if option is selected.   d)First ranking deed on hypothec on all present and future movable and immovable property of the Borrower for the amount of CDN$ 10,000,000.   e)Security pursuant to Section 427 of the Bank Act on all present and future inventory of the Borrower.   f)First ranking collateral mortgage on the land & buildings belonging to the Borrower for the amount of CDN$ 10,000,000.   g)Satisfactory letter of opinion from notary as to validity and enforceability of the security.   h)Cross guarantees between Pioneer Transformers Ltd and Bernard Granby Realty Inc. with required resolutions and legal opinions.   i)Bank to be named as loss payee on business and fire insurance. Certified copy of policy to be provided. Standard mortgage clause to be contained in the policy.   j)Environmental evaluation by a recognized firm confirming satisfactory status of the property, and acceptable to the Bank.   k)Required documentation for foreign exchange forward contracts.   l)Bank’s standard application and indemnity agreement for letters of credit, letters of guarantee or documentary letter of credit.   m)MasterCard Agreement and other related agreements for Facility C.   n)Commercial Loan Insurance for principal shareholders & officers to be offered.  

BMO Bank of Montreal

Page 5 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

CONDITIONS PRECEDENT TO DRAWDOWN:	Those customarily found in loan documentation for credit facility of this nature including, without limitation, the following:
		a)Completion of all security documentation and all loan documentation in form and substance satisfactory to the Bank’s legal counsel; b)Receipt of all necessary material governmental, regulatory and other third party approvals and compliance with all laws to specifically include all appropriate environmental approvals and certificates, to the satisfaction of the Bank’s legal counsel; c)Receipt of professional evaluations for land, buildings, and equipment belonging to the Borrower, to the satisfaction of the Bank (for Facility B only); d)Accuracy of representations and warranties; e)Satisfactory legal opinions relating to all matters considered relevant by the Bank, including due authorization, execution, delivery and enforceability of the loan and security documentation by the Borrower; f)Release and mainlevée of all prior ranking Liens; g)Nothing shall have occurred which would have a Material Adverse Effect on the business, operations or properties of the Borrower, on the rights and remedies of the Lender, or on the ability of the Borrower to perform their obligations to the Lender; h)No default or event of default exists at the time of, or after giving effect to the closing and/or disbursement; i)Due diligence review satisfactory to the Bank including but not limited to review of the Borrower’s existing operations and financial position, review of contracts, review of historical financial information.
REPRESENTATIONS & WARRANTIES:	Usual, including confirmation of corporate status and authority, non-violation of law or existing agreements, no material litigation, satisfactory insurance coverage, continued compliance with environmental regulations and other such representations and warranties customarily contained in loan agreements for similar financing.
NEGATIVE COVENANTS:	Usual negative covenants for transactions of this nature including but not limited to the following and subject to exceptions and limitations to be agreed: ·Amalgamate, merge or consolidate with any legal entity and cause its subsidiaries to wind up, liquidate or dissolve its affairs; ·Change the nature of its core business; ·Alter its capital structure in a manner that would be materially adverse to the Bank or undergo a change of control. ·No investments and/or advances to affiliated or related companies without the Bank’s prior written consent.

BMO Bank of Montreal

Page 6 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

FINANCIAL COVENANTS:	The following covenants will be tested annually (based on consolidated financial statements of the Borrower): ·Minimum Debt Service Coverage Ratio of 1.25 ·Minimum Current Ratio of 120 ·Maximum Total Debt to Tangible Net Worth Ratio of 3.00 for the fiscal 2009 and reduced to 230 starting in fiscal 2010 (to be tested quarterly.)
REPORTING REQUIREMENTS:	The Borrower shall deliver to the Bank the following:
		a)From Pioneer Transformers Ltd.: Signed, aged lists of accounts receivable, accounts payable (including declaration of any deemed touts) and inventory are to be provided by the 20th day of each month. Inventory lists are to be provided on the Bank’s standard form. b)From Pioneer Transformers Ltd.: Quarterly in-house financial statements within 45 days of quarter end. c)Annual audited financial statements of the Borrower (non-consolidated + consolidated) within 120 days of fiscal year end. d)Annual forecasts to be provided at time of annual review including income statement, balance sheet and cashflow. e)Other documents as the Bank may reasonably require from time to time.
EVENTS OF DEFAULT:	Those customarily found in loan documentation for similar financing including but not limited to failure to pay principal and interest when due; representations and warranties materially incorrect; breach of covenants and security undertakings; Material Adverse Change; failure to comply with the terms of other financing agreements of the Borrower (with notice and cure periods as applicable); cross-default to material obligations of the Borrower, bankruptcy/insolvency of the Borrower, non-compliance with any environmental regulation imposed by any government or its agency, change of ownership - either directly or indirectly; merger with any other corporation or person.
BANKING SERVICES:	The borrower agrees to maintain bank accounts only with the Bank of Montreal.
GOVERNING LAW:	The laws of the Province of Québec and the laws of Canada applicable therein shall apply subject to the right of the Bank to subject any security to the laws of the jurisdiction which the Bank deems most appropriate.

BMO Bank of Montreal

Page 7 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

LANGUAGE CLAUSE:

The parties hereby confirm their express wish that this Commitment Letter and all documents and agreements directly or indirectly related thereto, including notices, be drawn up in the English language. Notwithstanding such express wish, the parties agree that any of such documents, agreements and notices or any part thereof may be drawn up in the French language. Les parties reconnaissent leer volonté expresse que le present Sommaire des termes et conditions ainsi que tons les documents et conventions qui s’y rattachent directement ou indirectement, y compris les avis, soient rédigés en langue anglaise. Nonobstant telle volonté expresse, les parties conviennent que n importe quel desdits documents, conventions et avis ou toute panic de ceux-ci puissent etre rédigés en langue française.

ACCEPTANCE:

This Commitment Letter is open for acceptance until close of business on August 7, 2009 after which date. it will automatically become null and void unless accepted as provided for below or unless such delay has been extended in writing by the Bank. This Commitment Letter may be accepted by signing the attached copy in the space provided for herein and returning it to the Bank.

BMO Bank of Montreal

Page 8 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

ACCEPTANCE

We hereby accept the foregoing terms and conditions.

This 3 day of    August  2009.

PIONEER TRANSFORMERS LTD

By:   /s/  Nathan J. Mazurek   , president

duly authorized

By:   /s/  Nathan J. Mazurek   , president

duly authorized

BMO Bank of Montreal

Page 9 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

SCHEDULE I

DEFINITIONS

“CDN$” means lawful money of Canada.

“Current Ratio” means the ratio of current assets to• current liabilities at such time, all as shown on the financial statements in accordance with GAAP.

“Debt Service Coverage Ratio” means total earnings before depreciation and interest less unfinanced capital expenses divided by annual interest expenses, current portion of long-term debt, dividends, purchase, redemption, defeasance, retirement or other acquisition of any shares of any class of capital stock of the Borrower.

“Equivalent Amount” means, on any date, the amount in CDN$ or US$, as the case may be, which would be obtained on the conversion of an amount in US$ or any other currency to CDN$ or an amount in CDN$ or any other currency into US$, respectively, at the Bank of Canada noon spot rate for the purchase of US$ or such other currency with CDN$ or for the purchase of CDN$ or such other currency with US$, respectively, as quoted or published or otherwise made available by the Bank of Canada on such date.

“GAAP” means generally accepted accounting principles in Canada in effect from time to time, applied in a consistent manner from period to period.

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

a)	any obligation of such Obligor for borrowed money;
b)	any obligation of such Obligor evidenced by a bond, debenture, note or other similar instrument;
c)	any obligation of such Obligor 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 Obligor as lessee under any capital lease;
e)	any obligation of such Obligor 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 Obligor 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 Obligor or any other person, valued, in the case of redeemable preferred stock, at the greater of its voluntary liquidation reference plus accrued and unpaid dividends;

BMO Bank of Montreal

Page 10 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

g)	any obligation of such Obligor 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 Obligor;
i)	any Indebtedness of others guaranteed by such Obligor, and
j)	all obligations and liabilities of such Obligor 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 Association, Inc.).

“Lien” means a mortgage, hypothec, legal hypothec, prior claim, pledge, lien, charge or encumbrance, whether fixed or floating, on, or any Security Interest in any property, whether immovable or real, movable or immovable, or mixed, tangible or intangible or a pledge for hypothecation thereof or trust or presumed or deemed mist or any other mechanisms of right benefiting the holder thereof or any conditional sale agreement or other title retention agreement or equipment trust relating thereto or any lease relating to property which would be required to be accounted for as a capital lease on the balance sheet.

“Loan Documents” means, collectively, this Commitment Letter, the Credit Agreement, the Security Documents and all other documents, instruments and agreements executed and delivered by any Obligor in connection directly or indirectly with this Commitment Letter, the Facilities or otherwise referred to or contemplated under or by this Commitment Letter or any such documents, instruments or agreements.

“Material Adverse Event” means a material adverse change in or effect on, either individually or in the aggregate, the business, assets, liabilities, financial positions or operating results of the Obligors taken as a whole or which adversely affects or could reasonably be expected to adversely affect the ability of any Obligor to perform any of its obligations under or pursuant to the Facilities and this Commitment Letter or the other Loan Documents in accordance with their respective terms or the validity or enforceability of any of the Loan Documents.

“Person” means any individual, corporation, company, partnership, association, trust or joint venture.

“Prime Rate” means the variable annual rate of interest established by the Bank from time to time as the reference rate of interest it will use at such time to determine interest rates for loans in CDN$ to its Canadian commercial borrowers in Canada and designated as its Prime Rate.

“Security Documents” means the collective reference to all present and future documents, agreements and instruments pursuant to which an Obligor grants a Security Interest to or for the benefit of the Bank, alone or together with any other person or persons, in any of its assets securing all or part of the obligations of the Borrower under or pursuant to the Facilities and this Commitment Letter or any other LoanDocuments.

“Security Interest” means a hypothec, mortgage, pledge, fixed or floating charge, assignment by way of security or any other security interest securing payment or performance of an obligation.

BMO Bank of Montreal

Page 11 of 12

 TRANSFORMATEURS  PIONEER  TRANSFORMERS COMMITMENT LETTER July 9, 2009

“Subordinated Debt” of a Person means indebtedness of such Person for borrowed money (including principal and accrued interest), which is validly and effectively subordinated and postponed in right of payment of principal, interest and premium if any, to the payment in full of all amounts owing from time to lime under or pursuant to any of the Facilities by way of an agreement in form and substance satisfactory to the Lender and is unsecured on the property of such Person, provided (a) that such indebtedness is treated as subordinated debt in accordance with GAAP, (b) without limiting the foregoing, the Lender shall be satisfied with the covenants and default clauses in the agreement pursuant to which such indebtedness is created, and (c) the terms of the instrument evidencing such indebtedness or under which such indebtedness is outstanding reflect the provisions of this definition to the satisfaction of the Lender.

“Tangible Net Worth” of a Person means, as of any date, the sum of Shareholders’ Equity of such Person and the Subordinated. Debt of such Person, less, without duplication, any goodwill, organizational expenses, trademarks, trade names, copyrights, patents, patent applications, licenses, deferred costs, deferred charges, and any other assets that am properly classified as “intangible” less amounts due by directors, officers and other Persons related to the Borrowers and its Affiliates, all determined as of such date in accordance with GAAP and to the satisfaction of BMO acting reasonably.

“Total Debt” of a Person shall mean the total amount of liabilities of such Person, plus the amount of all cheques in circulation less deferred taxes and Subordinated Debt of such Person.

“Total Debt to Tangible Net Worth Ratio” means the ratio of Total Debt to Tangible Net Worth, in accordance with GAAP.

“US Base Rate” means the variable annual rate of interest established by the Bank from time to time as being the reference rate of interest it will use at such time in Canada to determine rates of interest on US$ commercial loans to Canadian residents in Canada and designated as its US Base Rate.

“US$”-means lawful money for the time being of the United States of America in same day immediately available funds or, if such funds are not available, the form of money of the United States of America which is customarily used in the settlement of international banking transaction on that day.

BMO Bank of Montreal

Page 12 of 12

EX-16.1

Exhibit 16.1

Maddox Ungar Silberstein, PLLC CPAs and Business Advisors

Phone (248) 203-0080

Fax (248) 281-0940

30600 Telegraph Road, Suite 2175

Bingham Farms, MI 48025-4586

www.maddoxungar.com

December 4, 2009

U.S. Securities and Exchange Commission

100 F. Street, NE

Washington, DC 20549-7561

Re: Pioneer Power Solutions, Inc.

Dear Ladies and Gentlemen:

We have read Item 4.01 on Form 8-K dated December 7, 2009 of Pioneer Power Solutions, Inc. and are in agreement with the statements about our firm.  We have no basis to agree or disagree with other statements of the registrant contained therein.

Yours truly,

/s/ Maddox Ungar Silberstein, PLLC

Maddox Ungar Silberstein, PLLC

EX-99.1

Exhibit 99.1

Pioneer Transformers Ltd.

Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

RSM Richter LLP

Chartered Accountants

Montreal

RSM Richter LLP is an independent member firm of RSM International,

an affiliation of independent accounting and consulting firms.

Pioneer Transformers Ltd.

Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

Contents
Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheets	2
Consolidated Statements of Shareholders' Equity	3
Consolidated Statements of Earnings and Comprehensive Income	4
Consolidated Statements of Cash Flows	5
Notes to Financial Statements	6 - 26

RSM Richter S.E.N.C.R.L./LLP

Comptables agréés

Chartered Accountants

2, Place Alexis Nihon

Montréal (Québec) H3Z 3C2

Téléphone / Telephone : 514-934-3400

Télécopieur / Facsimile : 514-934-3408

www.rsmrichter.com

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Pioneer Transformers Ltd.

We have audited the accompanying consolidated balance sheets of Pioneer Transformers Ltd. as at December 31, 2008 and 2007 and the related consolidated statements of earnings and comprehensive income, shareholders' equity and cash flows for the years ended December 31, 2008 and December 31, 2007.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended December 31, 2008 and December 31, 2007 in accordance with accounting principles generally accepted in the United States.

Chartered Accountants

Montreal, Quebec

January 30, 2009, except for note 18 which is dated November 30, 2009

-1-

 

Pioneer Transformers Ltd.

Consolidated Balance Sheets

As At December 31, 2008 and 2007

(Expressed in U.S. Funds)

	2008			2007
Assets
Current
Cash	$	367,668		$	658,168
Accounts receivable		4,837,256			6,184,767
Inventories (note 5)		5,474,384			6,283,657
Prepaid expenses and deposits		47,631			95,867
		10,726,939			13,222,459
Property, Plant and Equipment (note 6)		827,672			1,091,656
Deferred Income Tax Assets (note 11)		-			51,952
Advances to Companies Controlled by Shareholders		-			407,500
	$	11,554,611		$	14,773,567
Liabilities
Current
Bank indebtedness (note 7)		4,116,452			4,221,681
Accounts payable and accrued liabilities		3,880,345			5,328,839
Current maturity of long-term debt (note 8)		148,168			166,717
Income taxes payable		854,844			3,401,005
		8,999,809			13,118,242
Pension Deficit (note 13)		109,442			377,888
Deferred Income Tax Liabilities (note 11)		68,473			-
Long-Term Debt (note 8)		111,519			316,773
Advances From Ultimate Shareholders		150,000			150,000
Commitments (note 9)
Shareholders' Equity
Capital Stock (note 10)
Authorized without limit and without par value, 750,000 issued and outstanding		590,133			590,133
Accumulated Other Comprehensive Loss		(969,663	)		(586,225	)
Accumulated Retained Earnings		2,494,898			806,756
		2,115,368			810,664
	$	11,554,611		$	14,773,567

See accompanying notes

Approved on Behalf of the Board

-2-

Pioneer Transformers Ltd.

Consolidated Statement of Shareholders' Equity

For the Year Ended December 31, 2008 and 2007

(Expressed in U.S. Funds)

					Accumulated
	Capital Stock				Other Comprehensive			Retained Earnings			Total Shareholders'
	Number		Amount		Income (Loss)			(Deficit)			Equity
Balance - December 31, 2006		750,000	$	590,133	$	(646,563	)	$	(280,124	)	$	(336,554	)
Foreign currency translation adjustment		-		-		41,995			-			41,995
Pension adjustment, net of taxes of ($8,380)		-		-		18,343			-			18,343
Net earnings		-		-		-			1,086,880			1,086,880
Balance - December 31, 2007		750,000		590,133		(586,225	)		806,756			810,664
Foreign currency translation adjustment		-		-		(462,719	)		-			(462,719	)
Pension adjustment, net of taxes of ($34,673)		-		-		79,281			-			79,281
Dividends paid		-		-		-			(449,817	)		(449,817	)
Net earnings		-		-		-			2,137,959			2,137,959
Balance - December 31, 2008		750,000	$	590,133	$	(969,663	)	$	2,494,898		$	2,115,368

-3-

Pioneer Transformers Ltd.

Consolidated Statements of Earnings and Comprehensive Income

For the Year Ended December 31, 2008 and 2007

(Expressed in U.S. Funds)

	2008		2007
Sales	$	43,884,261	$	46,012,015
Cost of Goods Sold (including depreciation of $117,566;  2007 - $52,455)		34,895,796		37,823,720
Gross Margin		8,988,465		8,188,295
Expenses

Selling, general and administrative	4,205,135		3,972,929
Depreciation	174,043		132,890
Foreign exchange gain	(98,428	)	(857,228	)
	4,280,750		3,248,591
Operating Income	4,707,715		4,939,704
Interest and factoring fees	(512,421	)	(653,824	)
Write-down of advances to companies controlled by shareholders	(700,335	)	-
Earnings Before Income Taxes	3,494,959		4,285,880
Income Taxes
Current income taxes	1,265,000		1,230,000
Prior years' assessments	-		1,855,000
Deferred income taxes	92,000		114,000
	1,357,000		3,199,000

Net Earnings		2,137,959			1,086,880
Other Comprehensive Income
Foreign currency translation adjustments		(462,719	)		41,995
Pension adjustment, net of taxes $34,673 (2007 - $8,380)		79,281			18,343
Comprehensive Income	$	1,754,521		$	1,147,218
Basic Weighted Average Number of Shares Outstanding		750,000			750,000
Basic and Diluted Earnings Per Common Share (note 17)	$	2.85		$	1.45

See accompanying notes

-4-

Pioneer Transformers Ltd.

Consolidated Statements of Cash Flows

For the Year Ended December 31, 2008 and 2007

(Expressed in U.S. Funds)

	2008			2007
Funds Provided (Used) -
Operating Activities
Net earnings	$	2,137,959		$	1,086,880
Depreciation		291,609			185,345
Deferred income taxes		92,000			114,000
Accrued pension		(112,173	)		(166,108	)
Write-down of advances to companies controlled by shareholders		700,335			-
		3,109,730			1,220,117
Changes in non-cash operating elements of working capital		(2,857,833	)		1,780,260
		251,897			3,000,377

Financing Activities
Increase (decrease) in bank indebtedness	776,766		(1,398,249	)
Dividends paid	(449,817	)	-
Repayment of long-term debt	(152,736	)	(42,597	)
Advances from (to) ultimate shareholders	31,867		(308,223	)
Advance to company under common significant influence	-		(279,330	)
	206,080		(2,028,399	)

Investing Activities
Additions to property, plant and equipment	(222,213	)	(237,642	)
Advances to companies controlled by shareholders	(427,407	)	(367,997	)
	(649,620	)	(605,639	)
Increase (Decrease) in Cash	(191,643	)	366,339
Effect of Foreign Exchange on Cash	(98,857	)	69,841

Cash
Beginning of Year		658,168		221,988
End of Year	$	367,668	$	658,168

See accompanying notes

-5-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

1. Organization and Basis of Presentation

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States.  This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

The consolidated financial statements include the accounts of the Company and its subsidiary company.  On consolidation, all inter-entity transactions and balances have been eliminated.

The financial statements are expressed in U.S. funds.

2. Nature of Business

The Company is a manufacturer of liquid-filled electrical transformers ranging in various sizes and voltage selling primarily to utility companies in North America.

3. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United Stated requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The financial statements include estimates based on currently available information and management's judgment as to outcome of future conditions and circumstances.  Significant estimates in these financial statements include inventory provision, useful lives and impairment of long-lived assets and cost of pension benefits.  Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial statements and actual results could differ from the estimates and assumptions.

Revenue Recognition

Revenue is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery occurs, (3) the sales price is fixed or determinable and (4) collectibility is reasonably assured.  Revenue is recognized on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer upon delivery, provided that the Company maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold.

-6-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Financial Instruments

The Company estimates the fair value of its financial instruments based on current interest rates, market value and pricing of financial instruments with comparable terms.  Unless otherwise indicated, the carrying value of these financial instruments approximates their fair market value.

Accounts Receivable

The Company accounts for trade receivables at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history and current economic conditions.  The Company writes off trade receivables when they are deemed uncollectible.  The Company records recoveries of trade receivables previously written-off when they receive them.  Management considers an allowance for doubtful accounts of $Nil is sufficient to cover any exposure to loss in its December 31, 2008 and December 31, 2007 accounts receivable.

Property, Plant  and Equipment

Property, plant and equipment are recorded at cost.  Provisions for depreciation are based on their estimated useful lives using the declining balance or straight-line method as follows:

On the declining balance method -

Building                                                                              4%

Furniture and fixtures                                                       20%

On the straight-line method -

Leasehold improvements                                                 over the term of the lease

Machinery and equipment                                               20%

Computer hardware and software                                   33.3%

Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income.  Expenditures for repairs and maintenance are expensed as incurred.

-7-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Impairment of Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the estimated undiscounted cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value thereof.

Foreign Currency Translation

The Company's reporting currency is the United States dollar.  The Canadian dollar is the functional currency of the Company's Canadian operations which is translated to the United States dollar using the current rate method.  Under this method, accounts are translated as follows:

Assets and liabilities - at exchange rates in effect at the balance sheet date;

Revenue and expenses - at average exchange rates prevailing during the year.

Gains and losses arising from foreign currency translation are included in other comprehensive income.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes".  Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Sales Tax

A Company should disclose the amount of those taxes that is recognized on a gross basis in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant.  While the amounts are not material, the Company's policy is to present such taxes on a net basis in the consolidated statements of earnings.

-8-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Employee Benefit Plan

The Company sponsors a defined benefit plan as described in note 13.  The cost of pension benefits earned by employees is actuarially determined using the accumulated benefit method and a discount rate, used to measure interest cost on the accrued employee future benefit obligation, based on market interest rates on high-quality debt instruments with maturities that match the timing and benefits expected to be paid by the plan.  Plan assets are valued using current market values and the expected return on plan assets is based on the fair value of the plan assets.

The costs that relate to employees' current service are charged to income annually.

The transitional obligation created upon adoption of the SFAS 158 is amortized over the average remaining service period of employees.  For a given year, unrecognized actuarial gains or losses are recognized into income if the unamortized balance at the beginning of the year is more than 10% of the greater of the plan asset or liability balance.  Any unrecognized actuarial gain or loss in excess of this threshold is recognized in income over the remaining service period of the employees.

The Company reflects the funded status of its defined pension plans as a net asset or net liability in its balance sheet, with an offsetting amount in accumulated other comprehensive income, and recognizes changes in that funded status in the year in which the changes occur through comprehensive income.

Inventory Valuation

Inventories are priced at the lower of cost or market value.  Cost is determined on a first-in first-out (FIFO) basis.  Raw materials and purchased finished goods are valued at purchase cost.  The cost of work-in-process and manufactured finished goods comprises materials, direct labour and attributable production overheads based on normal levels of activity.

Periodical reviews of the inventory are performed for excess inventory, obsolescence and declines in market value below cost and allowances are recorded against the inventory balance for any such declines.  The Company writes down the value of ending inventory for obsolete and unmarketable inventory equal to the difference between the cost of inventory and the estimated market value.  These reviews require management to estimate future demand for products and evaluate market conditions.  Possible changes in these estimates could result in a write-down of inventory.  If actual market conditions are less favorable than those projected, additional inventory write-downs may be required.  If actual market conditions are more favorable than projected, inventory previously written down may be sold, resulting in lower cost of sales and higher income from operations than expected in that period.

-9-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Recently Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations.  Under SFAS 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions.  SFAS 141R will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing non-controlling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business.  SFAS 141R also includes a substantial number of new disclosure requirements.  SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009.  We expect SFAS 141R will have an impact on our accounting for future business combinations once adopted but the effect is dependent upon the acquisitions that are made in the future.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”).  SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a non-controlling interest in a subsidiary (minority interest) is an ownership interest in the consolidated entity that should be reported as equity in the Consolidated Financial Statements and separate from the parent company’s equity.  Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest.  It also requires disclosure, on the face of the Consolidated Statement of Operations, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.  We expect SFAS 160 will have an impact on our accounting for future business combinations once adopted but the effect is dependent upon the acquisitions that are made in the future.

In March 2008, the Financial Accounting Standards Board issued SFAS Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161").  This standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows.  It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The Company is currently evaluating the impact that this statement will have on its disclosures related to derivative instruments and hedging activities.

-10-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Recently Accounting Pronouncements (Cont'd)

The FASB issued SFAS 162, “The Hierarchy of Generally Accepted Accounting Principles”.  The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for non-governmental entities.  Statement 162 is effective 60 days following the Securities and Exchanges Commission's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.  The adoption of SFAS 162 will not have a material effect on the Company’s financial position or results of operations.

The FASB issued FSP APB-14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).  FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.  Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.  This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  Early adoption is not permitted.  The adoption of FSP ABB-18-1 is not expected to have a material effect on the Company's financial position or results of operations.

The FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets.  This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets.  This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  The adoption of FSP FAS 142-3 is not expected to have a material effect on the Company’s financial position or results of operations.

The FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.  This FSP states that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.  The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.  The adoption of FSP EITF 03-6-1 is not expected to have a material effect on the Company's financial position or results of operations.

-11-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

3. Summary of Significant Accounting Policies (Cont'd)

Recently Accounting Pronouncements (Cont'd)

EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock was ratified by the FASB.  This EITF addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity's own stock.  This EITF is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  The adoption of EITF 07-5 is not expected to have a material effect on the Company’s financial position or results of operations.

EITF 08-3, Accounting by Lessees for Non-refundable Maintenance Deposits was ratified by the FASB.  This EITF prescribes the accounting for all non-refundable maintenance deposits.  This EITF is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of EITF 08-3 is not expected to have a material effect on the Company’s financial position or results of operations.

The EITF issued EITF 08-6, “Equity Method Investment Accounting Considerations”.  This EITF considers whether all of the provisions of Statement 141(R) and Statement 160 should be applied when accounting for an equity method investment.  This EITF is effective on a prospective basis in fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years.  The adoption of EITF 08-6 is not expected to have a material effect on the Company's financial position or results of operations.

The EITF issued EITF 08-8, “Accounting for an Instrument (or an Embedded Feature) with a Settlement Amount That Is Based on the Stock of an Entity's Consolidated Subsidiary”.  This Issue addresses the determination of whether a financial instrument for which the payoff to the counterparty is based, in whole or in part, on the stock of an entity's consolidated subsidiary, is indexed to the reporting entity's own stock and therefore should not be precluded from qualifying for the first part of the scope exception in paragraph 11(a) of Statement 133 or being within the scope of Issue 00-19.  This EITF is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years.  The adoption of EITF 08-8 is not expected to have a material effect on the Company's financial position or results of operations.

The FASB issued FSP FAS 132(R)-1, “Employers' Disclosures about Postretirement Benefit Plan Assets”.  This FSP provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan.  This FSP also includes a technical amendment to Statement 132R that requires a nonpublic entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented.  This FSP is effective for fiscal years ending after December 15, 2008.

-12-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

4. Adoption of New Accounting Standards

Fair Value Measurements

SFAS No. 157 is effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for non-financial assets and liabilities in fiscal years beginning after November 15, 2008.  The Company adopted SFAS No. 157 for financial assets and liabilities in fiscal 2008 with no material impact to the consolidated financial statements.  The Company is currently evaluating the potential impact of the application of SFAS No. 157 on the non-financial assets and liabilities found on its consolidated financial statements.

SFAS No. 157 applies to all assets and liabilities that are being measured and reported on a fair value basis.  SFAS No.  157 requires new disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.  The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1:         Quoted market prices in active markets for identical assets or liabilities.

Level 2:         Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3:         Unobservable inputs that are not corroborated by market data.

In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to SFAS No. 157.  At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.  There are no assets or liabilities measured at fair value as at December 31, 2008.

Fair Value of Financial Instruments

The fair value represents management’s best estimates based on a range of methodologies and assumptions.  The advances to companies controlled by shareholders and the advances from ultimate shareholders are presumed to have a fair value measured by the cash proceeds exchanged at issuance in accordance with APB-21 “Interest on Receivables and Payables”.

-13-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

5. Inventories

	2008		2007
Raw materials	$	2,713,644	$	2,646,557
Work-in-process		1,956,021		2,912,788
Finished goods		804,719		724,312
	$	5,474,384	$	6,283,657

Included in raw materials are goods in transit of approximately $394,000 (2007 - $562,000).

The write-down of inventories to their net realizable value amounted to approximately $217,000 (2007 - $255,000) and related to finished goods.  There were no reversals of write-down from previous year.

6. Property, Plant and Equipment

	Cost		Accumulated Depreciation		2008 Net Carrying Amount		2007 Net Carrying Amount
Land	$	6,158	$	-	$	6,158	$	7,566
Building		263,255		94,940		168,315		213,195
Machinery and equipment		2,049,559		1,717,805		331,754		329,487
Furniture and fixtures		103,953		95,998		7,955		8,331
Computer hardware and software		462,026		150,986		311,040		529,641
Leasehold improvements		32,906		30,456		2,450		3,436
	$	2,917,857	$	2,090,185	$	827,672	$	1,091,656

-14-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

7. Bank Indebtedness

The Company's $5,747,000 credit facility is subject to review annually and consists of a revolving loan bearing interest at prime plus 1.5% per annum.  As at December 31, 2008, the interest rates charged were 6% per annum on U.S. funds and 5.5% per annum on Canadian funds.

In February 1995, the Company entered into an agreement with its lender to sell its accounts receivable.  Substantially, all of the accounts receivable as of December 31, 2008 were sold to the lender.  To the extent that the Company draws funds prior to the collection of the accounts receivable (the bank indebtedness), the funds bear interest at prime plus 1.5% per annum.  The Company is contingently liable for credit risk, merchandise disputes and other claims on accounts receivable sold to the lender and, accordingly, accounts receivable are presented on the balance sheet.

The indebtedness is secured by a first ranking hypothec of $32,000,000, security interest on all assets, unlimited personal guarantees by the ultimate shareholders and a principal hypothec of $4,900,000 on immoveable property owned by the Company's wholly-owned subsidiary.

The terms of the banking agreement require the Company to comply with certain financial covenants.  The Company was in compliance with his financial covenants.

8. Long-Term Debt

	2008		2007
Equipment loans bearing interest at rates varying from 5.93% to 9.93%, repayable in monthly instalments of $15,325 including interest, with a final payment on December 10, 2010, secured by liens on specific equipment having an     original cost of $491,000 and net carrying value     of $287,000	$	259,687	$	483,490
Current maturity		148,168		166,717
	$	111,519	$	316,773

Interest during the year amounted to approximately $28,000 (2007- $9,000).  Principal payments due in each of the next two years are approximately as follows:

2009	$	148,000
2010		112,000

-15-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

9. Commitments

The minimum annual rental payable under the leases for the Company's premises and other operating leases expiring in 2011 are approximately as follows:

2009	$	48,000
2010		33,000
2011		11,000

10. Capital Stock

Authorized without limit as to number and without par value -
Class A redeemable (at an amount equal to the fair market value at the date of issue), non-voting shares, with the right to a non-cumulative annual dividend not to exceed 8%
Class B redeemable (at $0.79 per share), voting shares, with the right to a non-cumulative annual dividend of $0.06 per share
Class C non-voting shares, with the right to dividends as determined by the directors (but equal to any dividends declared on the common shares)
common shares
Issued -
750,000   common shares	$590,133

-16-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

11. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes.  Significant changes of the Company's deferred tax liabilities and assets as of December 31, 2008 and 2007 are as follows:

	2008			2007
Property, plant and equipment	$	(102,627	)	$	(65,570	)
Pension plan deficit		34,154			117,522
		(68,473	)		51,952
Valuation allowance		-			-
Net Deferred Tax Assets (Liabilities)	$	(68,473	)	$	51,952

The reconciliation of the effective income tax rate, to the statutory rate for the years ended December 31, 2008 and 2007 is as follows:

	2008			2007
Statutory income taxes	$	1,126,000		$	1,345,000
Write-down of advances to companies controlled by shareholder		248,000			-
Prior years' assessments		-			1,855,000
Other		(17,000	)		(1,000	)
Effective income taxes	$	1,357,000		$	3,199,000

In 2007, the Company received notices of reassessments from the Federal and Provincial governments amounting to approximately $2,030,000 including interest and penalties of approximately $400,000.  A portion of the reassessed taxes, interest and penalties, approximately $860,000, relate to withholding taxes and have been expensed in 2007.  The remaining taxes, interest and penalties relate to a transfer pricing adjustment and although they have been expensed in 2007, the Company has filed a notice of objection against the said reassessments.  Management believes that the success of the appeal on the transfer pricing adjustment is unknown.

-17-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

11. Income Taxes (Cont'd)

Unrecognized Tax Benefits

On January 1, 2007, the Company adopted the provisions for FIN 48, which is an interpretation of SFAS No. 109. FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.  FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109.  The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes, if any.  The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.  Prior to January 1, 2007 and the implementation of FIN 48, the Company recorded tax contingencies when the exposure item became probable and reasonably estimable, in accordance with SFAS No. 5, Accounting for Contingencies.  The adoption of FIN 48 has not had a material effect on our financial position or results of operations for the years 2007 and 2008.

The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months.

Classification of Interest and Penalties

Additionally, FIN 48 requires the Company to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws.

The Company’s policy to include interest and penalties related to unrecognized tax benefits within the provision for income taxes did not change as a result of adopting FIN 48.

-18-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

11. Income Taxes (Cont'd)

Tax Years and Examination

The Company files tax returns in each jurisdiction in which it is registered to do business.  For each jurisdiction a statute of limitations period exists.  After a statute of limitations period expires, the respective tax authorities may no longer assess additional income tax for the expired period.  Similarly, the Company is no longer eligible to file claims for refund for any tax that it may have overpaid.  The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by these jurisdictions as of December 31, 2008:

Tax Jurisdictions	Tax Years
Federal - Canada	2004 and onward
Provincial - Quebec	2004 and onward
Provincial - Ontario	2004 and onward

12. Statement of Cash Flows Information

	2008			2007
Accounts receivable	$	224,142		$	339,316
Inventories		(411,218	)		(868,993	)
Prepaid expenses		34,691			(25,264	)
Income taxes recoverable		-			65,210
Accounts payable and accrued liabilities		(521,244	)		(869,475	)
Income taxes payable		(2,184,204	)		3,139,466
Changes in non-cash operating elements of working capital	$	(2,857,833	)	$	1,780,260
Additional Cash Flows Information:
Interest paid	$	285,373		$	446,723
Income taxes paid (recovered)		3,448,911			(118,760	)

-19-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

13. Pension Plan

The Company sponsors a defined benefit pension plan in which a majority of its employees are members.  The employer contributes 100% to the plan.  The benefits, or the rate per year of credit service, are established by the Company and updated at its discretion.

Cost of Benefits

The components of the expense we incurred under our pension plan are as follows:

	2008			2007
Current service cost, net of employee contributions	$	62,037		$	83,022
Interest cost on accrued benefit obligation		129,885			131,746
Actual loss (return) on plan assets		323,868			(59,316	)
Actuarial gain on plan assets		(457,221	)		(89,277	)
Amortization of transitional obligation		12,557			13,518
Amortization of past service costs		5,716			6,154
Amortization of net actuarial gain		16,493			18,360
Total benefit cost	$	93,335		$	104,207

Benefit Obligation

Our obligation for the pension plan is valued annually as of the beginning of each fiscal year.  The projected benefit obligation represents the present value of benefits ultimately payable to plan participants for both past and future services expected to be provided by the plan participants.

Our obligations pursuant to our pension plan are as follows:

	2008			2007
Projected benefit obligation at beginning of year	$	2,523,858		$	2,462,322
Current service cost		62,037			76,629
Interest cost		129,885			121,601
Actuarial loss		(536,407	)		(74,022	)
Benefits paid		(89,776	)		(67,412	)
Foreign exchange adjustment		(415,951	)		4,740
Projected benefit obligation at end of year	$	1,673,646		$	2,523,858

-20-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

13. Pension Plan (Cont'd)

A summary of expected benefit payments related to our pension plan are as follows:

	Pension Plan
Fiscal year 2009	$	87,200
Fiscal year 2010		100,900
Fiscal year 2011		121,900
Fiscal year 2012		137,100
Fiscal year 2013		153,900
Fiscal year 2014 - 2020		1,224,300

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

	2008		2007
Amortization of past service cost	$	5,716	$	5,680
Amortization of net actuarial gain		16,494		16,946
Amortization of transitional obligation		12,557		12,477
Net actuarial loss (gain) adjustment		79,187		(8,380	)
Total recognized in other comprehensive income	$	113,954	$	26,723

The estimated net loss (gain) amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year amounts to $16,495.  The estimated prior service cost amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year amounts to $5,715.  The estimated transitional asset amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year amounts to $12,555.

The accumulated other comprehensive loss consists of the following amounts that have not yet been recognized as components of net benefit cost:

	2008			2007
Unrecognized prior service cost	$	95,420		$	101,136
Unrecognized net actuarial loss		423,425			519,106
Unrecognized transitional obligating		135,271			147,828
Deferred income taxes		(196,292	)		(230,965	)
	$	457,824		$	537,105

-21-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

13. Pension Plan (Cont'd)

Plan Assets

Assets held by the pension plan are invested in accordance with the provisions of our approved investment policy. The pension plan’s strategic asset allocation was structured to reduce volatility through diversification and enhance return to approximate the amounts and timing of the expected benefit payments.  The asset allocation for our pension plan at the end of fiscal years 2008 and 2007 and the target allocation for fiscal year 2009, by asset category are as follows:

	Pension Plan
	Allocation at December 31, 2008			Allocation at December 31, 2007			2009 Target Allocation
Equity securities		55	%		55	%		55	%
Fixed income securities		41			41			41
Real estate		4			4			4
Total		100	%		100	%		100	%

Changes in the assets held by the pension plan in fiscal 2008 and 2007 are as follows:

	2008			2007
Fair value of plan asset at beginning of year	$	2,145,970		$	1,875,517
Actual return on plan assets		(323,868	)		54,749
Employer contributions		205,510			262,291
Benefits paid		(89,776	)		(67,412	)
Foreign exchange adjustment		(373,632	)		20,825
Fair value of plan assets at end of year	$	1,564,204		$	2,145,970

Contributions

Our policy is to fund the pension plan at or above the minimum required by law.  The Company made $205,000 (2007 - $262,000) of contributions to its defined benefit pension plan during the year.  The Company expects to make contributions of less than $275,000 to the defined benefit pension plan in fiscal 2009.  Changes in the discount rate and actual investment returns which continue to remain lower than the long-term expected return on plan assets could result in the Company making additional contributions.

-22-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

13. Pension Plan (Cont'd)

Funded Status

The funded status of our pension plan is as follows:

	2008		2007
Projected benefit obligation	$	1,673,646	$	2,523,858
Fair value of plan assets		1,564,204		2,145,970
Accrued obligation (long-term)	$	109,442	$	377,888

Assumptions

	2008			2007
Assumptions used in accounting for the pension plan -
Weighted average discount rate used to determine the accrued benefit obligations		7.25	%		5.50	%
Discount rate used to determine the net pension expense		5.50			5.25
Expected long-term rate of return on plan assets		6.50			7.50

To determine the expected long-term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets.  The Company applies the expected rate of return to a market related value of the assets which reduces the underlying variability in assets to which the Company applies that expected return.  The Company amortizes gains and losses as well as the effects of changes in actuarial assumptions and plan provisions over a period no longer than the average future service of employees.

-23-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

13. Pension Plan (Cont'd)

Primary actuarial assumptions are determined as follows:

·   The expected long-term rate of return on plan assets is based on the Company’s estimate of long-term returns for equities and fixed income securities weighted by the allocation of assets in the plans.  The rate is impacted by changes in general market conditions, but because it represents a long-term rate, it is not significantly impacted by short-term market swings.  Changes in the allocation of plan assets would also impact this rate.

·   The assumed discount rate is used to discount future benefit obligations back to today’s dollars.  The discount rate is reflective of yield rates on U.S. long-term investment grade corporate bonds on and around the December 31 valuation date.  This rate is sensitive to changes in interest rates.  A decrease in the discount rate would increase the Company’s obligation and expense.

14. Major Customer

Sales to one customer accounted for approximately 26% of sales in 2008 (33% in 2007).  Outstanding accounts receivable sold to the lender for this customer at December 31, 2008 accounted for 22% (25% in 2007) of total trade receivables.

15. Related Party Transactions

The following table summarizes the Company's related party transactions for the year measured at the exchange amount, which is the amount of the consideration established and agreed to by the related parties:

	2008		2007
Company Under Common Significant Influence
Administration fee expense	$	124,000	$	73,000
Ultimate Shareholder
Consulting fee expense		150,000		68,000

-24-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

15. Related Party Transactions (Cont'd)

The advances from ultimate shareholders amounting to $150,000 (2007 - $150,000), have no specific terms of repayment and bear interest at 12% per annum.  Interest incurred during the year amounted to approximately $18,000 (2007 - $18,000).  The advances are not to be repaid prior to October 1, 2010.

The advances to company controlled by shareholders were written off during the year (2007 - $407,500), and bear no interest.

The above related party transactions have been measured of the exchange amount, which is the amount of the consideration established and agreed to by the related parties.

16. Segmented Information

The Company has one operating segment, being the sale of electrical transformers.  Revenues are attributable to countries based on the location of the Company's customers.

	2008		2007
Canada	$	37,301,622	$	39,110,209
United States		5,266,111		4,141,081
Others		1,316,528		2,760,725
Total	$	43,884,261	$	46,012,015

17. Basic and Diluted Earnings Per Common Share

Basic and diluted earnings per common share is calculated based on the weighted average number of shares outstanding during the year.

-25-

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

December 31, 2008 and 2007

(Expressed in U.S. Funds)

18. Subsequent Events

Subsequent to year end, the Company obtained a new $ 8,825,000 credit facility which is subject to review annually and consists of an operating demand line of credit, a demand loan and foreign exchange contracts.  Borrowings under the credit facility are limited by certain margin requirements concerning accounts receivable and inventories and bear interest at bank prime rate per annum.  The terms of the banking agreement require the Company to comply with certain financial covenants.  As security for the credit facility, the Company and its wholly-owned subsidiary have pledged properties in the amount of $9,300,000 and have furnished cross guarantees to the lender. The new credit facility will replace the credit facility described in note 7.

On November 30, 2009, Sierra Concepts, Inc. changed its name to Pioneer Power Solutions, Inc. and on the days following, completed the acquisition of 100% of the outstanding shares of common stock of the Company in a transaction that has been accounted for as a recapitalization of Pioneer Transformers Ltd.

Immediately prior to the share exchange, Pioneer Transformers Ltd. declared and paid a dividend amounting to $2,000,000.

All of the Company’s shares were exchanged for 22,800,000 newly issued shares of common stock of Pioneer Power Solutions, Inc. and a five-year warrant to purchase up to 1,000,000 shares of common stock of Pioneer Power Solutions, Inc. at an exercise price of $3.25 per share.  In connection with the closing of the share exchange, Pioneer Power Solutions, Inc. sold 5,000,000 shares of its common stock at a purchase price of $1 per share in a private placement, resulting in aggregate gross proceeds of $5,000,000.  In addition, at the close of the share exchange, Pioneer Power Solutions, Inc. sold five-year warrants to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $2 per share to certain investors for aggregate gross proceeds of $10,000. Following the closing of the share exchange and the private placement, Pioneer Power Solutions, Inc. transferred all of its pre-share exchange assets and liabilities to a wholly-owned subsidiary, Sierra Concepts Holdings, Inc., and immediately thereafter, transferred all of the outstanding common stock of Sierra Concepts Holdings, Inc., in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 7,200,000 shares of Pioneer Power Solutions, Inc.’s common stock.

-26-

EX-99.2

Exhibit 99.2

Pioneer Transformers Ltd.

Consolidated Interim Financial Statements

September 30, 2009

Expressed in U.S. Funds

RSM Richter LLP

Chartered Accountants

Montreal

RSM Richter LLP is an independent member firm of RSM International,

an affiliation of independent accounting and consulting firms.

Consolidated Interim Financial Statements

September 30, 2009

Expressed in U.S. Funds

Contents
Consolidated Balance Sheet	1
Consolidated Statement of Shareholders' Equity	2
Consolidated Statement of Operations and Comprehensive Income	3
Consolidated Statement of Cash Flows	4
Notes to Consolidated Financial Statements	5-12

Consolidated Balance Sheet

As at September 30, 2009

Expressed in U.S. Funds

Assets

Current

	September 30, 2009 (Unaudited)		December 31, 2008
Cash	$	200,650	$	367,668
Accounts receivable		6,850,016		4,837,256
Inventories (note 4)		7,056,852		5,474,384
Prepaid expenses and deposits		417,206		47,631
		14,524,724		10,726,939
Property, Plant and Equipment		802,313		827,672
	$	15,327,037	$	11,554,611

Liabilities Current
Bank indebtedness	$	4,218,545	$	4,116,452
Accounts payable and accrued liabilities		3,869,954		3,880,345
Current maturity of long-term debt		135,806		148,168
Income taxes payable		984,819		854,844
		9,209,124		8,999,809
Pension Deficit (note 5)		297,656		109,442
Deferred Income Tax Liabilities		69,487		68,473
Long-Term Debt		23,858		111,519
Advances From Ultimate Shareholders		150,000		150,000

Shareholders' Equity

Capital Stock

-Authorized without limit and without par value, 750,000 shares issued and outstanding		590,133			590,133
Accumulated Other Comprehensive Loss		(559,828	)		(969,663	)
Accumulated Retained Earnings		5,546,607			2,494,898
		5,576,912			2,115,368
	$	15,327,037		$	11,554,611

See accompanying notes

Approved on Behalf of the Board

__________________________

__________________________

- 1 - -

Pioneer Transformers Ltd.

Consolidated Statement of Shareholders' Equity

For the 9 month Period Ended September 30, 2009

Expressed in U.S. Funds

(Unaudited)

					Accumulated
					Other			Retained Earnings			Total
	Capital Stock				Comprehensive						Shareholders'
	Number		Amount		Income (Loss)			(Deficit)			Equity
Balance - December 31, 2008		750,000	$	590,133	$	(969,663	)	$	2,494,898		$	2,115,368
Foreign currency translation adjustment		-		-		560,183			-			560,183
Pension adjustment, net of taxes of $67,524		-		-		(150,348	)		-			(150,348	)
Dividends paid		-		-		-			(368,038	)		(368,038	)
Net earnings		-		-		-			3,419,747			3,419,747
Balance - September 30, 2008		750,000	$	590,133	$	(559,828	)	$	5,546,607		$	5,576,912

See accompanying notes

- 2 - -

Pioneer Transformers Ltd.

Consolidated Statement of Operations and Comprehensive Income

Expressed in U.S. Funds

(Unaudited)

	Nine-Month Period Ended September 30,
	2009		2008
Sales	$	30,398,312	$	35,525,663
Cost of Goods Sold (including depreciation 2009 - $98,838; 2008 - $92,026)		22,063,240		28,240,811
Gross Margin		8,335,072		7,284,852

Expenses              

Selling, general and administrative		2,714,972			3,357,757
Depreciation		122,228			136,260
Foreign exchange		280,790			(37,136	)
		3,117,990			3,456,881
Operating Income		5,217,082			3,827,971
Interest and factoring fees		282,335			410,164
Write-down of advances to companies controlled by shareholders		-			700,335
Earnings Before Income Taxes		4,934,747			2,717,472
Income Taxes
Current income taxes		1,455,169			991,580
Future income taxes		59,831			(22,580	)
		1,515,000			969,000
Net Earnings		3,419,747			1,748,472
Other Comprehensive Income (Loss)
Foreign currency translation adjustment		560,183			(147,105	)
Pension adjustment ,net of taxes $67,524  (2008 - $55,958)		(150,348	)		(126,249	)
Comprehensive Income	$	3,829,582		$	1,475,118
Basic Weighted Average Number of Shares Outstanding		750,000			750,000
Basic and Diluted Earnings Per Common Share	$	4.56		$	2.33

See accompanying notes

- 3 - -

Consolidated Statement of Cash Flows

Expressed in U.S. Funds

(Unaudited)

	Nine-Month Period Ended September 30,
Funds Provided (Used) -	2009			2008
Operating Activities
Net earnings	$	3,419,747		$	1,748,472
Depreciation		221,066			228,286
Deferred income taxes		59,831			(22,580	)
Accrued pension		(59,404	)		(70,782	)
Write-down of advances to companies controlled by shareholders		-			700,335
		3,641,240			2,583,731
Changes in non-cash operating elements of working capital		(2,811,143	)		(3,853,016	)
		830,097			(1,269,285	)

Financing Activities

Increase (decrease) in bank indebtedness	(424,839	)	1,924,896
Dividends paid	(368,038	)	(353,419	)
Repayment of long-term debt	(124,232	)	(132,111	)
Advances from ultimate shareholders	(18,885	)	10,735
	(935,994	)	1,450,101

Investing Activities

Additions to property and equipment	(93,653	)	(144,218	)
Advances to an ultimate shareholder	-		(342,294	)
	(93,653	)	(486,512	)
Decrease in Cash	(199,550	)	(305,696	)
Effect of Foreign Exchange on Cash Balance	32,532		(31,950	)

Cash

Beginning of Period		367,668		658,168
End of Period	$	200,650	$	320,522

See accompanying notes

- 4 - -

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

1.   Organization and Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  All such adjustments are of a normal and recurring nature.     These financial statements should be read in conjunction with the audited financial statements at December 31, 2008.  Operating results for the nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.  The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States.  This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.     Management has performed an evaluation of the Company’s activities through the date and time these financial statements were issued on November 30, 2009 and concluded that except for the events disclosed in note 9, there are no additional significant events requiring recognition or disclosure.   The consolidated financial statements include the accounts of the Company and its subsidiary company.  On consolidation, all inter-entity transactions and balances have been eliminated.

2.   Recently Issued Accounting Pronouncements In June 2009, the FASB issued FAS 166, "Accounting for Transfers of Financial Assets an amendment of FASB Statement No. 140", which amends the derecognition guidance in FASB Statement No. 140 and eliminates the exemption from consolidation for qualifying special-purpose entities.  This statement is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year that begins after November 15, 2009.  The adoption of FASB Statement No. 140 is not expected to have a material effect on the Company’s financial position or results of operations.   In June 2009, the FASB issued FAS 167, "Amendments to FASB Interpretation No. 46(R)", which amends the consolidation guidance applicable to variable interest entities. The amendments will significantly affect the overall consolidation analysis under FASB Interpretation No. 46(R).  This statement is effective as of the beginning of the first fiscal year that begins after November 15, 2009.  The adoption FAS 167 is not expected to have a material effect on the Company’s financial position or results of operations.

- 5 - -

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

2. Recently Issued Accounting Pronouncements (Cont’d) In August 2009, the FASB issued Accounting Standards Update No. 2009-05 “Fair Value Measurements and Disclosures” (“ASU 2009-05”).  The amendment is to subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of liabilities.  The purpose of this amendment is to reduce ambiguity in financial reporting when measuring fair value of liabilities.  The guidance in the update is effective for the first interim reporting period beginning after issuance, which would be the reporting period ending   December 31, 2009 for the Company.  The Company is currently evaluating the impact of this Statement on its (consolidated) financial statements   In September 2009, the FASB issued Update No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820)   —Investments in Certain Entities that Calculate Net Asset Value per share (or Its Equivalent)” (ASU 2009-12).   ASU 2009-12 provides amendments to ASC 820-10 “Fair Value Measurements and Disclosures—Overall” for the fair value measurement of investments in certain entities.  In addition, ASU 2009-12 requires disclosures by major category of investment about the attributes of investments within the scope of the amendments in the update.   ASU 2009-12 is effective for interim and annual periods ending after December 15, 2009.  The adoption of ASU 2009-12 is not expected to have a material effect on the Company’s financial position or results of operations.   In October 2009, the FASB issued Update No. 2009-13, “Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force” (ASU 2009-13).  ASU 2009-13 provides amendments to the criteria in ASC 605-25 for separating consideration in multiple-deliverable arrangements.  As a result of those amendments, multiple-deliverable arrangements will be separated in more circumstances than under existing U.S. GAAP. ASU 2009-13: 1) establishes a selling price hierarchy for determining the selling price of a deliverable, 2) eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, 3) requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis, 4) significantly expands the disclosures related to a vendor’s multiple-deliverable revenue arrangements.  ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010.  The Company is currently evaluating the impact of adopting ASU 2009-13.   In October 2009, the FASB issued Update No. 2009-14, “Software (Topic 985)—Certain Revenue Arrangements that     include Software Elements a consensus of the FASB Emerging Issues Task Force” (ASU 2009-14).  ASU 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements and provides additional guidance on how to determine which software, if any, relating to tangible product would be excluded from the scope of the software revenue guidance.  In addition, ASU 2009-14 provides guidance on how a vendor should allocate arrangement consideration to deliverables in an arrangement that includes both tangible products and software.  ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010.  The adoption of ASU 2009-14 is not expected to have a material effect on the Company’s financial position or results of operations.

- 6 - -

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

3.   Adoption of New Accounting Standards Fair Value Measurements SFAS No.157, as codified in FASB ASC 820 “Fair Value Measurement and Disclosures”, is effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for non-financial assets and liabilities in fiscal years beginning after November 15, 2008.  The Company adopted ASC 820 for financial assets and liabilities in the first quarter of fiscal 2008 with no material impact to the consolidated financial statements.  The Company adopted ASC 820 for non-financial assets and liabilities in the first quarter of fiscal 2009 with no material impact to the consolidated financial statements. ASC 820 applies to all assets and liabilities that are being measured and reported on a fair value basis.  ASC 820 requires new disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.  The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1:                Quoted market prices in active markets for identical assets or liabilities. Level 2:                Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3:                Unobservable inputs that are not corroborated by market data. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to ASC 820.  At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. There are no assets or liabilities measured at fair value as at September 30, 2009. Fair Value of Financial Instruments The fair value represents management’s best estimates based on a range of methodologies and assumptions.  The advances to companies controlled by shareholders and the advances from ultimate shareholders are presumed to have a fair value measured by the cash proceeds exchanged at issuance in accordance with APB-21 “Interest on Receivables and Payables”. Interim Disclosures about Fair Value of Financial Instruments In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” now codified in FASB ASC 825. This FSP, amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about the fair value of financial instruments in interim as well as in annual financial statements.  This FSP also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods. Since this FSP at most requires additional disclosures, its adoption did not have a material impact on its consolidated financial statements.

- 7 - -

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

3.   Adoption of New Accounting Standards (Cont’d) Subsequent Events FASB ASC 855, "Subsequent Events", which established principles and requirements for subsequent events is effective for interim or annual reporting periods ending after June 15, 2009.  The statement details the period after the balance sheet date during which the Company should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which the Company should recognize events or transactions occurring after the balance sheet date in its financial statements and the required disclosures for such events.  SinceFASB ASC 855 at most requires additional disclosures, the adoption of FASB ASC 855 did not have a material impact on its consolidated financial statements. FASB Codification On July 1, 2009, the FASB released the final version of its new Accounting Standards Codification (the “Codification”) as the single authoritative source for U.S. generally accepted accounting principle (“GAAP”).   The Codification replaces all previous U.S. GAAP accounting standards as described in SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles FAS 168.   The Codification replaces all previous U.S. GAAP accounting standards. While not intended to change U.S. GAAP, the Codification significantly changes the way in which the accounting literature is organized.  It is structured by accounting topic to help accountants and auditors more quickly identify the guidance that applies to a specific accounting issue.  The Company has applied the Codification for the first time for its interim financial statements for the nine months ending September 30, 2009.  The adoption of the Codification will not have an effect on the Company’s financial position and results of operations.  However, because the Codification completely replaces existing standards, it will affect the way U.S. GAAP is referenced by FactSet in its consolidated financial statements and accounting policies.

4.   Inventories

	Nine-Month Period Ended September 30,
	2009		2008
Raw materials	$	2,101,927	$	2,411,380
Work-in-process		3,096,962		2,827,098
Finished goods		1,857,963		1,193,510
	$	7,056,852	$	6,431,988

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Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

5.   Pension Plan The Company sponsors a defined benefit pension plan in which a majority of its employees are members.  The employer contributes 100% to the plan.  The benefits, or the rate per year of credit service, are established by the Company and updated at its discretion.   The Company adopted the provisions of ASC 715, Employers’ Disclosures about Postretirement BenefitPlan Assets, on January 1, 2009.  This standard requires more detailed disclosures about the Company’s plan assets, including investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets.  Additional disclosures are required beginning with the year ended 2009 consolidated financial statements.  There was no impact to the Company’s interim consolidated financial statements. Cost of Benefits: The components of the expense we incurred under our pension plan are as follows:

	Nine-Month Period Ended September 30,
	2009			2008
Current service cost, net of employee contributions	$	25,642		$	48,791
Interest cost on accrued benefit obligation		93,422			101,902
Expected return on plan assets		(79,918	)		(103,670	)
Amortization of transitional asset		8,633			4,516
Amortization of past service costs		3,932			12,959
Amortization of net actuarial loss		9,744			9,915
Total benefit cost	$	61,455		$	74,413

Contributions

The Company made $120,859 of contributions to its defined benefit pension plan in the nine month period ended September 30, 2009 and $145,196 for the period ended September 30, 2008.  Changes in the discount rate and actual investment returns which continue to remain lower than the long-term expected return on plan assets could result in the Company making additional contributions.

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Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

6.   Statement of Cash Flow Information

	Nine-Month Period Ended September 30,
	2009			2008
Accounts receivable	$	(1,232,982	)	$	(1,927,782	)
Inventories		(758,979	)		(604,673	)
Prepaid expenses		(332,225	)		34,905
Income taxes recoverable		-			-
Accounts payable and accrued liabilities		(498,052	)		591,191
Income taxes payable		11,095			(1,946,657	)
Changes in non-cash operating elements of working capital	$	(2,811,143	)	$	(3,853,016	)
Additional Cash Flows Information:
Interest paid	$	165,432		$	233,508
Income taxes paid		2,343,832			2,937,564

7.   Related Party Transactions The following table summarizes the Company's related party transactions for the period measured at the exchange amount which is the amount of the consideration established and agreed to by the related parties:

	Nine-Month Period Ended September 30,
	2009		2008
Company Under Common Significant Influence
Administration fee expense	$	113,000	$	93,000
Ultimate Shareholder
Consulting fee expense		187,500		113,000

The advances from ultimate shareholders amounting to $150,000 (2008 - $150,000), have no specific terms of repayment and bear interest at 12% per annum.  Interest incurred during the year amounted to approximately $13,500 (2008 - $13,500).  The advances are not to be repaid prior to October 1, 2010.

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Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

8.   Segmented Information   The Company has one operating segment, being the sale of electrical transformers.  Revenues are attributable to countries based on the location of the Company's customers.  Except for revenues derived from United States, it is impracticable to disclose revenues derived from each individual country.

	Nine-Month Period Ended September 30,
	2009		2008
Canada	$	29,048,766	$	30,196,814
United States		857,575		4,263,079
Others		491,971		1,065,770
Total	$	30,398,312	$	35,525,663

9.   Subsequent Events Subsequent to September 30, 2009, the Company obtained a new $ 8,825,000 credit facility which is subject to review annually and consists of an operating demand line of credit, a demand loan and foreign exchange contracts.  Borrowings under the credit facility are limited by certain margin requirements concerning accounts receivable and inventories and bear interest at bank prime rate per annum.  The terms of the banking agreement require the Company to comply with certain financial covenants.  As security for the credit facility the Company and its wholly owned subsidiary have pledged properties in the amount of $9,300,000 and have furnished cross guarantees to the lender.   On November 30, 2009, Sierra Concepts, Inc. changed its name to Pioneer Power Solutions, Inc. and on the days following, completed the acquisition of 100% of the outstanding shares of common stock of the Company in a transaction that has been accounted for as a recapitalization of Pioneer Transformers Ltd.   Immediately prior to the share exchange, Pioneer Transformers Ltd. declared and paid a dividend amounting to $2,000,000.   All of the Company’s shares were exchanged for 22,800,000 newly issued shares of common stock of Pioneer Power Solutions, Inc. and a five-year warrant to purchase up to 1,000,000 shares of common stock of Pioneer Power Solutions, Inc. at an exercise price of $3.25 per share.  In connection with the closing of the share exchange, Pioneer Power Solutions, Inc. sold 5,000,000 shares of its common stock at a purchase price of $1 per share in a private placement, resulting in aggregate gross proceeds of $5,000,000.  In addition, at the close of the share exchange, Pioneer Power Solutions, Inc. sold five-year warrants to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $2 per share to certain investors for aggregate gross proceeds of $10,000.

- 11 - -

Pioneer Transformers Ltd.

Notes to Consolidated Financial Statements

September 30, 2009

Expressed in U.S. Funds

(Unaudited)

9.   Subsequent Events (Cont'd) Following the closing of the share exchange and the private placement, Pioneer Power Solutions, Inc. transferred all of its pre-share exchange assets and liabilities to a wholly owned subsidiary, Sierra Concepts Holdings, Inc., and immediately thereafter, transferred all of the outstanding common stock of Sierra Concepts Holdings, Inc., in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 7,200,000 shares of Pioneer Power Solutions, Inc.’s common stock.

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EX-99.3

Exhibit 99.3

Pioneer Power Solutions, Inc.

Pro Forma Consolidated Financial Statements

(Unaudited)

(Expressed in U.S. Funds)

Pioneer Power Solutions, Inc.

Pro Forma Consolidated Financial Statements

(Unaudited)

(Expressed in U.S. Funds)

Contents

Pro Forma Consolidated Balance Sheet	1
Pro Forma Consolidated Statement of Earnings for the Nine-Month Period Ended September 30, 2009	2
Pro Forma Consolidated Statement of Earnings for the Year Ended December 31, 2008	3
Notes to Pro Forma Consolidated Financial Statements	4-5

Pioneer Power Solutions, Inc.

Pro Forma Consolidated Balance Sheet

As At September 30, 2009

(Unaudited)

(Expressed in U.S. Funds)

	Pioneer Transformers Ltd.			Pioneer Power Solutions, Inc.					Pro Forma Adjustments			Pro Forma Consolidated Balance Sheet
Assets
Current
Cash		200,650		$	14,519		e	)	$	(14,519	)		200,650
Accounts receivable		6,850,016			-					-			6,850,016
Inventories		7,056,852			-					-			7,056,852
Prepaid expenses		417,206			-					-			417,206
		14,524,724			14,519					(14,519	)		14,524,724
Property and Equipment		802,313			-					-			802,313
	$	15,327,037		$	14,519				$	(14,519	)	$	15,327,037
Liabilities
Current
Bank indebtedness		4,218,545		$	-		a	)	$	2,000,000			1,428,545
							c	)		210,000
							d	)		(5,000,000	)
Accounts payable and accrued liabilities		3,869,954			50,624		e	)		(50,624	)		3,869,954
Current maturity of long-term debt		135,806			-					-			135,806
Income taxes payable		984,819											984,819
		9,209,124			50,624					(2,840,624	)		6,419,124
Pension Deficit		297,656			-					-			297,656
Deferred Income Tax Liabilities		69,487			-					-			69,487
Long-Term Debt		23,858			-					-			23,858
Advances From Ultimate Shareholders		150,000			-					-			150,000
Shareholders' Equity
Capital Stock		590,133			8,400		b	)		(567,333	)		29,000
							c	)		5,000
							e	)		(7,200	)
Additional Paid in capital		-			9,600		b	)		567,333			5,351,133
							c	)		(210,000	)
							d	)		4,995,000
							e	)		(10,800	)
Other Comprehensive Loss		(559,828	)		-					-			(559,828	)
Retained Earnings		5,546,607			(54,105	)	a	)		(2,000,000	)		3,546,607
							e	)		54,105
		5,576,912			(36,105	)				2,826,105			8,366,912
		15,327,037		$	14,519				$	(14,519	)		15,327,037

See accompanying notes

-1-

Pioneer Power Solutions, Inc.

Pro Forma Consolidated Statement of Earnings

For the Nine-Month Period Ended September 30, 2009

(Unaudited)

(Expressed in U.S. Funds)

	Pioneer Transformers Ltd.		Pioneer Power Solutions, Inc.			Pro Forma Adjustments		Pro Forma Consolidated Statement of Earnings
Net Sales	$	30,398,312	$	-		$	-	$	30,398,312
Cost of Goods Sold (including depreciation of $98,838)		22,063,240		-			-		22,063,240
Gross Margin		8,335,072		-			-		8,335,072
Expenses
Selling, general and administrative		2,714,972		47,855			-		2,762,827
Depreciation		122,228		-			-		122,228
Foreign exchange		280,790		-			-		280,790
		3,117,990		47,855			-		3,165,845
Operating Income		5,217,082		(47,855	)		-		5,169,227
Interest and factoring fees		282,335		-			-		282,335
Earnings Before Income Taxes		4,934,747		(47,855	)		-		4,886,892
Income Taxes
Current income taxes		1,455,169		-			-		1,455,169
Deferred income taxes		59,831		-			-		59,831
		1,515,000		-			-		1,515,000
Net Earnings	$	3,419,747	$	(47,855	)	$	-	$	3,371,892
Weighted Average Number of Shares Outstanding									29,000,000
Basic and Diluted Earnings Per Common Share								$	0.12

See accompanying notes

-2-

Pioneer Power Solutions, Inc.

Pro Forma Consolidated Statement of Earnings

For the Year Ended December 31, 2008

(Unaudited)

(Expressed in U.S. Funds)

	Pioneer Transformers Ltd.			Pioneer Power Solutions, Inc.			Pro Forma Adjustments		Pro Forma Consolidated Statement of Earnings
Sales	$	43,884,261		$	-		$	-	$	43,884,261
Cost of Goods Sold (including depreciation of $117,566)		34,895,796			-			-		34,895,796
Gross Margin		8,988,465			-			-		8,988,465
Expenses
Selling, general and administrative		4,205,135			6,250			-		4,211,385
Depreciation		174,043			-			-		174,043
Foreign exchange		(98,428	)		-			-		(98,428	)
		4,280,750			6,250			-		4,287,000
Operating Income		4,707,715			-6,250			-		4,701,405
Interest and factoring fees		512,421			-			-		512,421
Write-down of advances to companies controlled by shareholders		700,335			-			-		700,335
Earnings (Loss) Before Income Taxes		3,494,959			(6,250	)		-		3,488,709
Income Taxes
Current income taxes		1,265,000			-			-		1,265,000
Future income taxes		92,000			-			-		92,000
		1,357,000			-			-		1,357,000
Net Earnings	$	2,137,959		$	(6,250	)	$	-	$	2,131,709
Weighted Average Number of  Shares Outstanding										29,000,000
Basic and Diluted Earnings Per Common Share									$	0.07

See accompanying notes

-3-

Pioneer Power Solutions, Inc.

Notes to Pro Forma Consolidated Financial Statements

For the Nine-Month Period Ended September 30, 2009 and For the Year Ended December 31, 2008

(Unaudited)

(Expressed in U.S. Funds)

1. Basis of Presentation

Effective November 30, 2009, Sierra Concepts, Inc. changed its name to Pioneer Power Solutions, Inc. and on December 2, 2009 completed the acquisition of 100% of the outstanding shares of common stock of Pioneer Transformers Ltd. in a transaction that has been accounted for as a recapitalization of Pioneer Transformers Ltd.

All of Pioneer Transformers Ltd.’s shares are exchanged for 22,800,000 newly issued shares of common stock of Pioneer Power Solutions, Inc. and a five-year warrant to purchase up to 1,000,000 shares of common stock of Pioneer Power Solutions, Inc. at an exercise price of $3.25 per share.  In connection with the closing of the share exchange, Pioneer Power Solutions, Inc. sold 5,000,000 shares of its common stock at a purchase price of $1 per share in a private placement, resulting in aggregate gross proceeds of $5,000,000.  In addition, at the close of the share exchange, Pioneer Power Solutions, Inc. sold five-year warrants to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $2 per share to certain investors for aggregate gross proceeds of $10,000.  Following the closing of the share exchange and the private placement, Pioneer Power Solutions, Inc. transferred all of its pre-share exchange assets and liabilities to a wholly owned subsidiary, Sierra Concepts Holdings, Inc., and immediately thereafter, transferred all of the outstanding common stock of Sierra Concepts Holdings, Inc., in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 7,200,000 shares of Pioneer Power Solutions, Inc.’s common stock.

In the pro forma unaudited consolidated financial statements, pro forma adjustments are made to reflect the financial position and results of operations of Pioneer Transformers Ltd. as the independent public operating entity.

The pro forma unaudited consolidated financial information may not be indicative of the financial position and results of operations that would have occurred if the recapitalization had been in effect on the date indicated or of the financial position and operating results which may be obtained in the future.

The pro forma unaudited consolidated balance sheet of Pioneer Power Solutions, Inc. as at September 30, 2009 and the related pro forma unaudited consolidated statement of earnings for the nine-month period ended September 30, 2009 and for the year ended December 31, 2008 have been derived from the unaudited interim and the year-end audited consolidated financial statements of Pioneer Transformers Ltd. as at September 30, 2009 and December 31, 2008, and from the year-end audited and unaudited interim financial statements of Pioneer Power Solutions, Inc. as at September 30, 2009 and December 31, 2008 with the assumptions and adjustments outlined in note 2.

The Pioneer Power Solutions, Inc.’s audited financial statements have been audited by Maddox Ungar Silberstein, PLLC, while Pioneer Transformers Ltd.’s audited consolidated financial statements have been audited by RSM Richter, LLP.

-4-

Pioneer Power Solutions, Inc.

Notes to Pro Forma Consolidated Financial Statements

For the Nine-Month Period Ended September 30, 2009 and For the Year Ended December 31, 2008

(Unaudited)

(Expressed in U.S. Funds)

2. Pro Forma Assumptions and Adjustments

The accompanying pro forma unaudited consolidated financial statements of Pioneer Power Solutions, Inc. have been prepared to reflect the following assumptions and adjustments:

a)   Prior to the share exchange, Pioneer Transformers Ltd. declares and pays a dividend amounting to $2,000,000.

b)   All of Pioneer Transformers Ltd.’s shares are exchanged for 22,800,000 shares of common stock of Pioneer Power Solutions, Inc. and a five-year warrant to purchase up to 1,000,000 shares of common stock of Pioneer Power Solutions, Inc. at an exercise price of $3.25 per share.  The five year warrant has a fair value of $167,500 which was determined using the Black-Scholes option pricing model.

c)   Pioneer Power Solutions, Inc. issues a five-year warrant to purchase an aggregate of 1,000,000 shares of its common stock at an exercise price of $2 per share in exchange for aggregate gross proceeds of $10,000 and consulting services received.  The five-year warrant has a fair value of $275,600 which was determined using the Black-Scholes option pricing model. In addition, Pioneer Power Solutions Inc. incurs professional fees amounting to $220,000, for total transaction fees of $485,600 relating to the share exchange transaction.

d) Pioneer Power Solutions, Inc. issues 5,000,000 shares of its common stock at a purchase price of $1 per share in a private placement, resulting in aggregate gross proceeds of $5,000,000.  The proceeds are used to pay down bank indebtedness.  The interest expense has not been adjusted since the ultimate usage of funds is not factually supportable.

e) Pioneer Power Solutions, Inc. transfers all of its pre-share exchange assets and liabilities to a newly incorporated wholly owned subsidiary, and immediately thereafter, transfers all of the outstanding common stock of the subsidiary to a person who was a stockholder of Pioneer Power Solutions, Inc. prior to the share exchange, in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 7,200,000 shares of Pioneer Power Solutions, Inc.’s common stock leaving 1,200,000 shares of common stock outstanding held by persons who were stockholders of the Company prior to the share exchange.

-5-