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•	The Company has appointed a new Chief Executive Officer, Chief Financial Officer and Vice President, Internal Audit, with oversight from the Board and the Audit Committee consisting of new members;

•	The Company has updated its Code of Business Conduct and Ethics and has initiated an ongoing training program to help ensure that employees understand and comply with the Code;

•	The Company will continue to enhance the program to provide extensive communications and training to employees across the entire organization regarding the importance of integrity and accountability;

•	In addition to naming a new Chief Executive Officer and Chief Financial Officer, the Company has either replaced or appointed personnel for critical accounting positions with certified public accountants who have the appropriate level of public-company experience, including, among others, a Corporate Controller, a Director of Accounting and a Director of Financial Reporting; and

•

The Company has developed and begun implementing a more comprehensive internal controls program along with a formal, enterprise-wide remediation plan, including detailed and prioritized action plans, owners and a phased timeline. This remediation plan is overseen by an executive Internal Control Steering Committee, and progress will be communicated to the Audit Committee on a quarterly basis. The Internal Control Steering Committee is comprised of the following members: Chief Executive Officer, Chief Financial Officer, General Counsel, Vice President, Internal Audit, Chief Information Officer, Corporate Controller and Vice President of Operations.

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•	Increasingly stringent regulations and growing efforts to reduce emissions, which are driving demand for alternatives to diesel power engines (e.g., EPA Tier 4 emission standards, CARB regulations, MEE policies in China), in particular, in several markets such as the power generation market for oil and gas, school bus, arbor care and the China bus market, among others;

•	Growth in e-commerce activity around the world, which is driving demand for last-mile delivery vehicles;

•	The growth of intermittent sources of energy, such as wind and solar, which is driving increased demand for generators, microgrids and demand response equipment; and

•	The reduced availability of automotive engines that are suited for industrial application.

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•	The liquidity of its Common Stock;

•	The market price of its Common Stock;

•	The number of institutional and other investors that will consider investing in its Common Stock;

•	The number of market makers in its Common Stock;

•	The availability of information concerning the trading prices and volume of its Common Stock;

•	The number of broker-dealers willing to execute trades in shares of its Common Stock;

•	The Company's ability to obtain equity financing for the continuation of its operations;

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•	The Company's ability to use its equity as consideration in any merger transaction; and

•	The effectiveness of equity-based compensation plans for its employees used to attract and retain individuals important to the Company's operations.

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•	Continue to expand the Company's research and product investments and sales and marketing organization;

•	Expand operations both organically and through acquisitions; and

•	Respond to competitive pressures or unanticipated working capital requirements.

•	Limiting funds available for borrowing through the imposition of availability blocks;

•	Limiting funds otherwise available for financing capital expenditures by requiring dedication of a portion of cash flows from operating activities to the repayment of debt and the interest on such debt;

•	Limiting the ability to incur additional indebtedness;

•	Limiting the ability to capitalize on significant business opportunities, including mergers, acquisitions and other strategic transactions;

•	Making the Company more vulnerable to rising interest rates or higher interest rates; and

•	Making the Company more vulnerable in the event of a downturn in its business.

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•	General economic conditions;

•	The imposition of tariffs and other import or export barriers;

•	The imposition of foreign withholding taxes on the remittance of foreign earnings to the U.S.;

•	Compliance with regulations governing import and export activities;

•	Import and export duties and restrictions;

•	Currency fluctuations and exchange restrictions;

•	Transportation delays and interruptions;

•	Potentially adverse income tax consequences;

•	Political and economic instability;

•	Terrorist activities;

•	Labor unrest;

•	Natural disasters; and

•	Public health concerns.

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Item 3.	Legal Proceedings.

Item 4.	Mine Safety Disclosures.

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*	See Note 3. Weichai Transactions for additional information.

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1.	Amounts consist of noncash changes in fair value of the Company’s Private Placement Warrants and Weichai Warrant.

2.	Amounts consist of changes in fair value of contingent consideration related to the Company's acquisitions. The adjustments in 2016, 2015 and 2014 relate to the Bi-Phase, Powertrain and 3PI acquisitions.

3.	Amounts reflect noncash stock-based compensation expense (2017 amount excludes $1.0 million associated with the retention programs, see note 6 below).

5.	Amounts primarily consist of charges related to the extinguishment of the TPG Term Loan (the “TPG Term Loan”) with TPG Specialty Lending, Inc. (“TPG”) in 2017 coupled with other debt modification related charges.

6.	Amount represents incremental compensation costs (including $1.0 million of stock-based compensation) incurred to provide retention benefits to certain employees.

7.	Represents professional services expenses incurred in connection with the evaluation of strategic alternatives and financing options.

8.	Amounts represent professional services fees related to the Company’s restatement efforts as well as fees related to the SEC and the USAO investigations.

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NM	Not meaningful

*	See Note 3. Weichai Transactions for additional information.

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•	Future volume projections;

•	Estimated margins on sales;

•	Estimated growth rate for SG&A costs;

•	Future effective tax rate for the Company; and

•	Weighted-average cost of capital (“WACC”) used to discount future performance of the Company.

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•	Expected Volatility. The expected volatility is a measure of the amount by which a financial variable such as a share price is expected to fluctuate during a period. The Company considers the historical volatility of its stock price over a term similar to the expected life of the related awards in determining expected volatility.

•	Expected Term. The expected terms are determined based upon the simplified approach, which assumes that the stock awards will be exercised evenly from vesting to expiration.

•	Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the related award.

•	Dividend Yield. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the expected dividend yield is zero.

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•	Continue to expand the Company's research and product investments and sales and marketing organization;

•	Expand operations both organically and through acquisitions; and

•	Respond to competitive pressures or unanticipated working capital requirements.

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*

Litigation reserves primarily consist of accruals for the settlement of the Securities Litigation as of December 31, 2017 and 2016 as well as the tentative settlement of the Federal Derivative Litigation as of December 31, 2017. The Company concluded that insurance recovery was probable and recognized full recovery of the settlement amounts in “Prepaid expenses and other assets”. See Note 10. Commitments and Contingencies for additional information.

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*

Change in estimates for pre-existing warranties reflect changes in the Company’s estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historic and expected trends. The Company’s warranty liability is generally affected by failure rates, repair costs and the timing of failures. Future events and circumstances related to these factors could materially change the estimates and require adjustments to the warranty liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available. In 2016, the Company recorded charges for adjustments for changes in estimates of $1.9 million ($1.2 million, net of tax), or $0.11 per diluted share.

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Note 3.	Weichai Transactions

•	2,728,752 shares of Common Stock;

•	2,385,624 shares of Series B Redeemable Convertible Preferred Stock (“Series B Convertible Preferred Stock”) convertible on a two-for-one basis into 4,771,248 shares of Common Stock; and

•	The Weichai Warrant was exercisable for any number of additional shares of Common Stock such that Weichai, upon exercise, would hold 51% of the Common Stock then outstanding (on a fully-diluted as-converted basis). The Weichai Warrant also included an option to be exercised for Series B Convertible Preferred Stock upon approval of the Company's stockholders.

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*

Unamortized financing costs and deferred fees on the Wells Fargo revolving credit facility are not presented in the above table as they are classified as “Current Assets” on the Consolidated Balance Sheets. Debt issuance costs incurred, including gross waiver fees (primarily paid to the lenders), were $0.9 million, $17.2 million, $1.5 million and $0.2 million in 2017, 2016, 2015 and 2014, respectively.

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•	Provided an initial maximum $75.0 million revolving line of credit to the Company, with flexibility to increase up to $100.0 million;

•	Bore interest at Wells Fargo’s prime rate plus a margin ranging from 0% to 0.50% per annum or at the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 1.50% to 2.00% per annum at the Company’s option;

•	Had an unused line fee of 0.25%;

•	Required the Company to meet a minimum fixed charge coverage ratio of 1.0 to 1.0 and to report such coverage ratio if availability was below the greater of $9.4 million or 12.5% of the maximum revolver amount;

•	Limited borrowings to the lesser of the maximum revolving line of credit and the borrowing base, which is defined as a percentage of the Company’s eligible accounts receivable and inventory.

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•

Matures on May 1, 2018, provided that a mandatory offer to purchase must be made for all Unsecured Senior Notes at a purchase price of 100% of the principal amount, plus accrued and unpaid interest, in the event the Company does not certify certain financial metrics related to pro-forma EBITDA and EBITDA-to-fixed charges ratios prior to March 15, 2017 (the offer was eliminated by the Second Supplemental Indenture on April 1, 2016, see table below);

•	Accrues interest at 5.50% per annum, payable semiannually in arrears on May 1 and November 1 of each year beginning November 1, 2015;

•	Redeemable at the Company’s option, in whole or in part, at any time on or after May 1, 2016, together with accrued and unpaid interest to the date of redemption (expressed as percentages of the principal amount), at 101.0% plus a “make whole” premium as further defined in the Unsecured Senior Notes;

•	Redeemable by the holders in whole or in part upon a change in control at a purchase price of 101% of the principal amount, plus accrued and unpaid interest;

•	Contains restrictive covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional debt, prepay subordinated indebtedness, pay dividends or make other distributions on capital stock; and

•	Provides for customary events of default (subject in certain cases to customary grace and cure periods).

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•	Bore interest at LIBOR plus 9.75% per annum (or 10.75% per annum at June 28, 2016) or at the Base Rate, as defined in the TPG Term Loan;

•	Required quarterly principal repayments of (i) $0.4 million, commencing September 30, 2017 and ending on June 30, 2018, and (ii) $0.8 million thereafter, with any remaining unpaid principal or interest due on the maturity date;

•	Permitted prepayment at any time after December 31, 2017;

•	Required a minimum EBITDA covenant of trailing twelve-month EBITDA commencing October 31, 2016;

•	Permitted the lender to require the Company to pay additional interest of 2.00% per annum during an event of default;

•	Redeemable by the lender in an event of default or various other situations; and

•

Matured on the earlier of (i) June 28, 2021, (ii) the maturity date of the Wells Fargo Credit Agreement, which at the time of issuance of the TPG Term Loan was January 31, 2018, because the Wells Fargo Credit Agreement matures 90 days prior to the maturity of the Unsecured Senior Notes, or (iii) 90 days prior to the final maturity of the Unsecured Senior Notes, which at the time of issuance of the TPG Term Loan was May 1, 2018. Therefore, the TPG Term Loan maturity date upon issuance was January 31, 2018.

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•	Level 1 — based on quoted prices in active markets for identical assets or liabilities;

•	Level 2 — based on other significant observable inputs for the assets or liabilities through corroborations with market data at the measurement date; and

•	Level 3 — based on significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

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*	Loss (gain) related to the change in fair value of the warrants for each year are presented as “Loss (gain) from change in fair value of warrants” in the Company's Consolidated Statements of Operations.

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1.	Includes $0.1 million of interest on contingent consideration recorded in Interest expense on the Consolidated Statement of Operations.

2.	Includes $0.1 million of cash paid in excess of the initial fair value estimate of contingent consideration at the time of the Powertrain acquisition and presented in “Other, net” within cash flows from operating activities in the Consolidated Statement of Cash Flows.

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•	What claims, if any, will survive dispositive motion practice;

•	The extent of the claims, particularly when damages are not specified or are indeterminate;

•	How the discovery process will affect the litigation;

•	The settlement posture of the other parties to the litigation; and

•	Any other factors that may have a material effect on the litigation or investigation.

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*	See Note 3. Weichai Transactions for additional information.

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Item 9A.	Controls and Procedures

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Control Environment: The Company was unable to demonstrate that it had maintained a corporate culture that (i) instilled an adequate enterprise-wide attitude of control consciousness supporting the Code of Business Conduct and Ethics, (ii) promoted accountability and timely communication across the organization and the Board and (iii) had sufficiently robust processes or focus to identify or address internal control weaknesses. This weakness in the control environment likely contributed to many of the other material weaknesses disclosed herein.

•	Skillset and Competency: The Company did not have sufficient resources with appropriate levels of technical accounting or information technology (“IT”) knowledge, including the following:

◦	Technical accounting knowledge to reach accounting conclusions in accordance with U.S. GAAP, leading to issues including, but not limited to, properly accounting for revenue, capitalization, complex and non routine transactions and reserves.

◦	IT resources to adequately support the organization including, but not limited to, the design and implementation of robust IT general controls (“ITGC”) to support internal control over financial reporting, the oversight of the Company's applications, systems and related training to the IT system user group.

•	Policies and Procedures: The Company did not maintain adequate policies or procedures, contributing to a breakdown in related controls, including the following:

◦	Accounting policies and procedures were not appropriately designed, established, published or maintained. There was no formalized process for determining, documenting, communicating, implementing and monitoring the Company’s accounting policies and procedures, including updates for new accounting pronouncements and guidance.

◦	Enterprise-wide policies and procedures related to record retention and the delegation of authority policy were not updated, approved or communicated across the organization.

◦	IT policies and procedures were neither broadly enforced, nor did they directly support a sustainable ITGC framework.

•	Internal Control Function: The Company did not have an effective internal control program in place, including a robust risk assessment, and did not clearly communicate responsibilities to control owners, or consistently communicate deficiencies to the Audit Committee.

•

Segregation of Duties: The Company did not maintain effective policies, procedures or controls in aggregate to ensure adequate segregation of duties within its business processes, financial applications and IT systems. Specifically, the Company did not have appropriate controls in place to adequately assess the segregation of job responsibilities and system user access for initiating, authorizing and recording transactions. In addition, the Company did not have adequate mitigating or monitoring controls in place.

•	Revenue Accounting: The Company did not maintain effective policies, procedures or controls to ensure that revenue recognition criteria were met prior to recognizing sales transactions. Specifically, the Company did not:

◦	Timely or accurately communicate information to the accounting department including, but not limited to, terms of sales agreements, including rebates and other contractual discounts.

◦	Perform adequate review and approval controls for recording manual revenue entries, including revenue-related reserves (such as sales allowances).

•	Capitalization: The Company did not have defined policies, procedures or controls to consistently review capitalization of costs incurred on capital asset projects and accounting treatment for research and development activities.

•

Complex and Nonroutine Transactions: The Company did not have defined policies, procedures or controls to identify and determine the appropriate accounting treatment for certain complex and nonroutine transactions, including but not limited to identification of reporting units and triggering events that could impact the assessment of potential impairments of plant, property and equipment, intangibles and goodwill, accounting for debt transactions, purchase accounting for business combinations and lease classification.

•	Reserves and Accruals: The Company did not have sufficiently defined policies, procedures or controls to ensure consistent recognition of accrued liabilities and reserve balances, including but not limited to excess and obsolete inventory and warranty reserves.

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•

Period End Close / Accounting Documentation: The Company did not maintain effective policies, procedures or controls in aggregate over the period-end financial close and reporting process to enable timely reporting of complete and accurate financial information. Specifically, it lacked controls to define financial statement review thresholds, consistently review journal entries prior to posting, review procedures related to taxes and inventory in-transit, consistently prepare, approve and retain adequate supporting documentation for balance sheet account reconciliations. Additionally, the Company did not have an effective Section 302 certification process to support the completeness and accuracy of required financial statement disclosures.

•

Information Technology: The Company’s ITGC framework was not adequately designed and implemented to support the effective operation of internal control over financial reporting. Specifically, ITGCs were not designed to ensure that logical access was appropriately segregated and restricted based on business needs, and controls were not consistently implemented to support timely and effective changes to financial systems and applications. The aggregated IT deficiencies impact each ITGC domain and in-scope application, and the pervasive nature and lack of adequate compensating controls limited management’s ability to rely on the completeness and accuracy of data processed by and reports generated from financial applications.

•

Data Maintenance: The Company did not have defined procedures or controls, in aggregate, to validate the completeness and accuracy of information maintained, input or edited within master and transaction files, including but not limited to customer and vendor master files, employee data files, perpetual inventory records, stock compensation agreements and debt arrangements. Additionally, the Company did not have compensating controls to review and validate the underlying data maintained.

•	Control Environment:

◦

The Company has either replaced or appointed the new Board and the Audit Committee members, a Chief Executive Officer, a Chief Financial Officer and a Vice President, Internal Audit. These changes, along with the actions of these individuals and other senior management, have collectively improved the tone of integrity, transparency and support of the Company’s updated Code of Business Conduct and Ethics.

◦	The Company has updated its Code of Business Conduct and Ethics and has initiated an ongoing training program to help ensure employees understand and comply with the Code. The Company will continue to enhance the program to provide extensive communications and training to employees across the entire organization regarding the importance of integrity and accountability.

◦	The Company has established a process to identify and address internal control weaknesses through the Internal Control Function, described below.

•	Skillset and Competency:

▪

In addition to the new Chief Executive Officer, Chief Financial Officer and Vice President, Internal Audit, the Company has either replaced or appointed personnel for critical accounting positions who are certified public accountants with the appropriate level of public-company experience, including, among others, a Corporate Controller, a Director of Accounting and a Director of Financial Reporting.

▪	The Company has supplemented existing accounting resources with temporary resources to assist with performing technical accounting activities. The Company continues to evaluate its needs, and it plans to hire additional full-time employees with technical accounting expertise and public company experience, as needed.

▪	The Company is assessing the level and technical skills in the IT function to support the design and implementation of ITGCs.

•	Policies and Procedures:

•	The Company has developed and begun implementing a delegation of authority policy that appoints tiered approvers based upon risk and materiality of the transaction.

•	The Company is in the process of identifying a central repository to maintain all the Company’s policies, providing training to users, and developing a framework to establish responsibility and accountability for executing and monitoring policies and procedures.

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•	The Company has identified critical accounting, IT and record retention policies, developed a prioritized plan to draft policies and determined a framework to ensure that all policies are formally communicated to the relevant stakeholders and that training is administered. The Company is in the process of drafting these policies.

•	The Company is creating a culture of continuous improvement by designing a framework for management to proactively and openly self-identify, document, reassess, report and remediate policies, procedures and control issues.

•	Internal Control Function:

•	The Company has developed and begun implementing a more comprehensive internal controls program, which includes the following:

•	completing a more robust financial reporting risk assessment and review process to ensure that it has identified, designed and implemented appropriate key internal control over financial reporting;

•	reviewing, analyzing and properly documenting its processes related to internal control over financial reporting;

•	performing a more robust fraud risk assessment and evaluating key fraud controls;

•	testing the design and operating effectiveness of key internal control over financial reporting (including ITGCs and application controls); and

•	tracking and communicating U.S. Sarbanes-Oxley Act of 2002 (“SOX”) deficiencies and associated risks and remediation plans to management, the Internal Control Steering Committee and the Audit Committee.

•	The Company developed an Internal Control Steering Committee comprised of the following members: Chief Executive Officer, Chief Financial Officer, General Counsel, Vice President, Internal Audit, Chief Information Officer, Corporate Controller and VP of Operations.

•	The Company has developed a formal, enterprise-wide remediation plan, including detailed and prioritized action plans, owners and a phased timeline. This remediation plan is overseen by the Internal Control Steering Committee, and progress will be communicated to the Audit Committee on a quarterly basis.

•	The Company has developed a SOX training program to educate Accounting, Sales, Operations, IT and corporate executives on internal control concepts and responsibilities. This training program will be administered annually and will reinforce accountability and the importance of sustaining a strong internal control environment.

•	Segregation of Duties:

◦	The Company is establishing policies governing the segregation of incompatible duties across the organization.

◦	The Company is designing various accounting processes and application and system controls to adequately segregate job responsibilities and system access throughout the organization and to implement applicable mitigating internal controls.

•	Revenue Accounting:

•	The Company is designing and implementing policies and procedures to ensure that critical inputs affecting the accuracy and timeliness of revenue recognition and related reserves and sales allowances are communicated to the accounting department on a timely basis.

•	The Company is establishing and implementing improved review and approval controls across the Company to ensure that revenue, including that of nonroutine revenue transactions, is recognized consistently in accordance with U.S. GAAP.

•	The Company has created a sales audit function to review certain key transaction attributes.

•	Capitalization:

•	The Company is designing and implementing policies, procedures and controls over capitalization, including but not limited to the capitalization of costs incurred on capital asset projects and accounting treatment for research and development activities.

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•	Complex and Nonroutine Transactions:

•

The Company is designing and implementing policies, procedures and controls over the evaluation, review and approval of complex and nonroutine transactions, including but not limited to identification of reporting units and triggering events that could impact the assessment of potential impairments of plant, property and equipment, intangibles and goodwill, accounting for debt transactions, purchase accounting for business combinations and lease classification.

•	Reserves and Accruals:

•	The Company is designing and implementing policies, procedures and controls over the review and approval of key reserves and accruals, including, but not limited to, excess and obsolete inventory and warranty reserves.

•	Period-End Close / Accounting Documentation:

•	The Company is designing and implementing policies, procedures and controls over the period-end close process and related documentation including, but not limited to, period-end checklists, review and approval of journal entries, taxes, inventory in-transit, account roll forwards and reconciliations, general-ledger account maintenance and financial statement analysis/thresholds.

•	The Company has implemented a formal Section 302 disclosure and certification program that requires management to complete quarterly representation letters and disclosure sub-certification questionnaires.

•	Information Technology:

•	The Company is reconstructing its ITGC framework to focus on controls that mitigate key financial reporting risks.

•	The Company is designing and implementing controls over access, change management and IT operations to ensure that access rights are restricted to appropriate individuals, and that data integrity is maintained via effective change controls over system updates and over the flow of data between systems.

•	Data Maintenance:

•

The Company is designing and implementing procedures and controls to appropriately identify and assess changes made to data repositories that could significantly impact data integrity and the internal control framework, including but not limited to (i) creating centralized, complete and accurate data repositories, (ii) maintaining customer and vendor master files, employee data files, perpetual inventory records, inventory cycle counts, stock compensation agreements and debt arrangements and (iii) communicating an enterprise data management policy and record retention policy.

•	The Company is developing procedures to review and validate underlying data supporting the internal controls.

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•	Corporate Governance Guidelines. The Corporate Governance Guidelines address, among other things, the Board’s composition, qualifications and responsibilities, independence of directors, stock ownership guidelines, director compensation, and communications between stockholders and directors.

•	Audit Committee Charter. The Charter for the Audit Committee addresses, among other things, the purpose, organization and responsibilities of the Audit Committee.

•	Compensation Committee Charter. The Charter for the Compensation Committee addresses, among other things, the purpose, organization and responsibilities of the Compensation Committee.

•

Code of Ethics for Principal and Senior Financial Officers. The Code of Ethics for Principal and Senior Financial Officers articulates standards of business and professional ethics applicable to the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Vice President of Finance and all other Senior Financial Executives of the Company. This Code functions as the “code of ethics for senior financial officers” under Section 406 of the SOX and “code of ethics” within the meaning of Item 406 of Regulation S-K.

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Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics applies to all of the members of the Board, Executive Officers and employees and is designed to ensure that all such individuals observe the highest standards of ethics in the conduct of the Company's business, avoiding even the appearance of impropriety, and conduct themselves with the highest regard and respect for others.

•	Related Party Transaction Policy. The Related Party Transaction Policy provides policies and procedures by which all transactions are required to be reviewed, approved and reported pursuant to and in accordance with Item 404 of Regulation S-K.

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•	John P. Miller, Chief Executive Officer and President (as of May 17, 2017);

•	Raymond Anderson, former Interim Chief Executive Officer (from April 6, 2017 until May 17, 2017);

•	Gary S. Winemaster, former Chief Executive Officer and President (until April 6, 2017).

•	Charles F. Avery, Jr., Chief Financial Officer (as of July 31, 2017).

•	Kenneth J. Winemaster, Executive Vice President (as of November 28, 2017).

2.	Represents the value of restricted stock awards of 36,000 shares on May 31, 2017 and 55,000 shares on July 12, 2017.

3.	The amount for fiscal 2017 is below the annual reporting requirements per SEC Regulation S-K 229.402(c) (2) (ix).

5.	Fees paid to Huron Consulting Services LLC in connection with Mr. Anderson's service as Interim Chief Executive Officer.

6.	Resigned as Chief Executive Officer and President effective April 6, 2017 and transitioned to a role of nonexecutive Chief Strategy Officer until his resignation from the position and retirement effective May 3, 2019.

7.	The reported amount included $19,980 for sporting events tickets, $12,874 for automobile-related payments, $6,523 for golf club membership and $4,449 for other miscellaneous reimbursements.

8.	The reported amount included $72,128 for golf club membership, $54,282 for automobile-related payments, $20,040 for sporting events tickets and $7,374 for other miscellaneous reimbursements.

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11.	Represents the value of a restricted stock award of 45,223 shares on July 12, 2017.

12.	The reported amount included $19,980 for sporting events tickets, $13,320 for automobile-related payments and $5,004 for other miscellaneous reimbursements.

13.	The reported amount included $20,040 for sporting events tickets, $13,320 for automobile-related payments and $1,493 for other miscellaneous reimbursements.

14.	Represents the value of a restricted stock award of 52,277 shares on July 12, 2017.

15.	The reported amount included $11,981 for automobile payments and $326 for other miscellaneous reimbursements.

16.	Represents the value of a stock appreciation rights award of 1,500 shares on February 22, 2016.

17.	The reported amount included $11,681 for automobile payments and $774 for other miscellaneous reimbursements.

(1)	Computed using the closing price of the Common Stock as reported by the OTC market on December 31, 2017.

1.	Amount presented was determined in accordance with the employment agreement of Mr. Miller and assumes that Mr. Miller executed and delivered a general release in favor of the Company. The amount is Mr. Miller’s base salary of $360,000.

2.	Amount presented was determined in accordance with the employment agreement of Mr. Winemaster and assumes that Mr. Winemaster executed and delivered a general release in favor of the Company. The amount is Mr. Winemaster’s base salary of $325,000.

3.	Amount presented was determined in accordance with the employment agreement of Mr. Buzogany and assumes that Mr. Buzogany executed and delivered a general release in favor of the Company. The amount is Mr. Buzogany’s base salary of $315,000.

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•	The Company will pay each of the Board's nonemployee Directors $50,000 per year (prior to July 10, 2017, Directors received an annual retainer of $30,000);

•	The Company will pay the Chair of the Board and the Chair of the Audit Committee an additional $25,000 per year;

•

The Company will award 5,000 shares of restricted stock to each Director per year (prior to July 10, 2017, Directors did not receive shares of Restricted Stock). The stock awards to Directors in 2017 vest one year from either (i) July 10, 2017 or (ii) the date of joining the Board after July 10, 2017 (In accordance with Weichai's internal policies, Dr. Sun and Messrs. Jiang and Liu have relinquished their rights to receive any stock-based compensation for their service as a Director);

•	The Company will pay meeting fees to each Director in the amount of $1,000 per day for each in-person Board and Committee meeting and $1,000 per day for each Board and Committee meeting by telephone conference; and

•	The Company will reimburse Directors for necessary and reasonable travel and other related expenses incurred in connection with their performance of their official duties, if any, of attendance at each meeting of the Board or any Committee.

1.

On November 10, 2017, the reporting person was granted 5,000 shares of restricted stock under the Company's 2012 Plan, as reported in a Form 4 filed by the reporting person on April 9, 2018. In accordance with Weichai's internal policies, the reporting person cannot accept the Company's stock as compensation for serving on the Board. The grant was mutually rescinded on October 8, 2018. Both the grant and the mutual rescission were approved by the Board in accordance with the SEC Rule 16b-3(d).

2.	Mr. Lin’s annual retainer was prorated from the date of his nomination to the Board on May 15, 2017.

3.	The amount reported for 2017 represents a grant of 5,000 shares of restricted stock granted on November 10, 2017, computed according to FASB guidance.

4.	Ms. Coolidge’s and Mr. Simpkins’s annual retainers were prorated from the date of their nomination to the Board on July 13, 2017.

6.	Mses. Hoffing’s and Vogt's and Mr. Hansen's annual retainers were prorated based on their service on the Board prior to their resignation on May 31, 2017.

•	Each person known by the Company to own beneficially more than 5% of the outstanding shares of its Common Stock;

•	Each of the Company's Directors;

•	Each of the Company's named Executive Officers; and

•	All Directors and Executive Officers as a group.

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3.	On April 23, 2019, Weichai exercised the Weichai Warrant resulting in the Company issuing 4,049,759 shares of the Company’s Common Stock and Weichai becoming the owner of 51.5% of the outstanding shares of the Company’s Common Stock.

6.

On November 10, 2017, the reporting person was granted 5,000 shares of restricted stock under the Company's 2012 Plan, as reported in a Form 4 filed by the reporting person on April 9, 2018. In accordance with Weichai's internal policies, the reporting person cannot accept the Company's Common Stock as compensation for serving on the Board. The grant was mutually rescinded on October 8, 2018. Both the grant and the mutual rescission were approved by the Board in accordance with the SEC Rule 16b-3(d).

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**	This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

†	Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish a supplemental copy of an omitted exhibit or schedule to the SEC upon request.

†††	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been separately filed with the SEC.

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(a)	Each party hereto shall have executed and delivered this Amendment to

(b)	Agent shall have received an executed waiver and amendment to the Term

(b)	No Default or Event of Default has occurred and is continuing; and

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8.	Miscellaneous.

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7.	Miscellaneous.

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1.	The First Amendment Fee Letter

2.	Consent and Reaffirmation, dated as of the First Amendment Effective Date and duly executed by all of the Guarantors in substantially the form attached hereto as Annex C

3.	Amendment and Waiver to ABL Credit Agreement

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(b)	No Default or Event of Default has occurred and is continuing.

7.	Miscellaneous.

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1.	Closing Date Fee Letter

2.	Consent and Reaffirmation, dated as of the Second Amendment Effective Date and duly executed by all of the Guarantors in substantially the form attached hereto as Annex B

3.	Amendment and Waiver to ABL Credit Agreement

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I.	PREMISES AND TERM     1

II.	BASE RENT/SECURITY DEPOSIT    2

III.	OPERATING EXPENSES    3

IV.	PERSONAL PROPERTY TAXES    6

V.	LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS    7

VI.	TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS    7

VII.	ALTERATIONS, ADDITIONS, IMPROVEMENTS    8

VIII.	SIGNS    9

IX.	UTILITIES    10

X.	INSURANCE    10

XI.	CASUALTY DAMAGE    11

XII.	LIABILITY /INDEMNIFICATION/WAIVER OF SUBROGATION    12

XIII.	USE    13

XIV.	VACATION/RESTORATION/HOLDING OVER    14

XV.	ASSIGNMENT AND SUBLETTING    16

XVI.	CONDEMNATION    17

XVII.	QUIET ENJOYMENT    18

XVIII.	EVENTS OF DEFAULT    18

XIX.	REMEDIES    19

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XX.	LANDLORD DEFAULT/LIMITATION OF LIABILITY    21

XXI.	MORTGAGES    22

XXII.	TENANT ENCUMBRANCES    22

XXIII.	NOTICES    23

XXIV.	HAZARDOUS MATERIALS    23

XXV.	MISCELLANEOUS    24

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6.	rents under ground leases,

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IV.	PERSONAL PROPERTY TAXES

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V.	LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS

VI.	TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS

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VII.	ALTERATIONS, ADDITIONS, IMPROVEMENTS

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VIII.	SIGNS

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IX.	UTILITIES

X.	INSURANCE

1.	worker's compensation - statutory limits;

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XI.	CASUALTY DAMAGE

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XII.	LIABILITY /INDEMNIFICATION/WAIVER OF SUBROGATION

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XVI.	CONDEMNATION

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XVII.	QUIET ENJOYMENT

XVIII.	EVENTS OF DEFAULT

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XIX.	REMEDIES

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XX.	LANDLORD DEFAULT /LIMITATION OF LIABILITY

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XXI.	MORTGAGES

XXII.	TENANT ENCUMBRANCES

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XXIII.	NOTICES

XXIV.	HAZARDOUS MATERIALS

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1.	All lighting shall be in good working order, including replacement of bulbs, ballasts and lenses as needed.

2.	All truck doors and dock levelers shall be serviced and in good operating order, including replacement of any dented truck door panels and adjustment of door tension to insure proper operation. All door panels which are replaced shall be painted to match the Building standard.

3.	All structural steel columns in the warehouse and office portions of the Premises shall be inspected for damage and all damage repaired in a manner subject to Landlord's prior approval.

4.	Heating/air conditioning systems, warehouse heaters and exhaust fans shall be in good working order, including the replacement of any parts, to return the unit to a well-maintained condition. Landlord will have the right, but not the obligation, to have an exit inspection performed by a certified mechanical contractor to determine the condition.

5.	All holes in sheetrock walls shall be repaired to match surrounding surfaces.

6.	The portions of the Premises consisting of offices, kitchens, restrooms and windows shall be cleaned.

7.	The warehouse area of the Premises shall be in broom clean condition with all inventory and racking removed. There shall be no protrusion of anchors from the warehouse floor and all holes shall be appropriately patched. If machinery/ equipment is removed, the electrical lines shall be properly terminated at the nearest junction box.

8.	All broken and cracked exterior windows shall be replaced.

9.	Tenant shall provide keys for all locks on the Premises, including front doors, rear doors and interior doors.

10.

Items that have been added by Tenant and affixed to the Building shall remain the property of Landlord unless Landlord requires their removal. This includes, without limitation, mini-blinds, air conditioners, electrical systems, water heater s, cabinets and flooring. If alterations have been made to the Premises, such as the addition of office areas, unless Landlord otherwise agreed when such alterations were made by Tenant or otherwise instructs, Tenant shall

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11.	All electrical systems shall be in a safe condition that conforms to code. Bare wires and dangerous installations shall be corrected.

12.	All plumbing fixtures shall be in good working order, including any water heater. Faucets and toilets shall not leak.

13.	All dock bumpers shall be left in place and well secured.

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XX.VI.	OPTION TO EXTEND TERM

XX.VII.	CALCULATION OF RENT

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If to Buzogany:	William A. Buzogany At the address on file with the Company.

If to the Company:	Power Solutions International, Inc. 201 Mittel Drive Wood Dale, IL 60191 Attn: John Miller JMiller@psiengines.com

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1.	Effective February 15, 2016, Section 4.1(b) of the Plan is hereby amended and restated in its entirety to read as follows:

2.

In all other respects, the provisions of the Plan are hereby ratified and confirmed, and they shall continue in full force and effect. In order to continue to set forth the provisions of the Plan in a single document, changes made by this Amendment may be incorporated into the most recent restatement of the Plan and the Table of Contents, and any section references or cross-references may be corrected and/or updated at any time.

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1.	Employment Discrimination

2.	Reasonable Accommodation

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3.	Sexual and Discriminatory Harassment

(i)	submission to such conduct is made an explicit or implicit term or condition of employment;

(ii)	submission to or rejection of such conduct is used as a basis for any employment decision; or

(iii)	such conduct has the purpose or effect of interfering with an employee’s work performance or creating an intimidating, offensive or hostile work environment.

4.	Workplace Violence

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5.	Alcohol and Illegal Drugs

6.	Employee Health and Safety, and the Environment

A.	Conflicts of Interest

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1.	Financial Interests in Other Businesses

2.	Relationships with Suppliers and Customers

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3.	Outside Activities

B.	Diversion of Corporate Opportunity

C.	Confidential Information

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1.	Company Information

(a)	treat confidential information on a “need to know” basis within the Company;

2.	Other Companies’ and Our Customers’ Information

3.	Protection of Nonpublic Information; Insider Trading

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4.	Required Disclosure

D.	Free and Fair Competition

1.	Supplier and Customer Relationships

2.	Competitor Relationships

3.	Free and Fair Competition

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E.	Protection and Proper Use of Company Assets

1.	Books and Records

2.	Financial Records

3.	Improper Use of Company Assets

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4.	Information Technology Assets

(a)	protect computer hardware from loss, theft or damage;

(b)	protect computer software and Company data against unauthorized access;

(c)	avoid actions that increase the risk of computer viruses;

(e)	limit personal use of Company computer hardware and software; and

(f)	responsibly use the Company-wide electronic mail system.

5.	Company Funds

F.	Compliance with Laws, Rules and Regulations

1.	Generally

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2.	Anti-Bribery

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3.	Trade Association Activities

4.	Government Relations

a)	Political Activity

b)	Political Contributions in the United States

5.	Government and Regulatory Investigations

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(d)	attempt to get anyone else to engage in these prohibited activities.

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*	Corporate joint ventures not shown by name in the above listing, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary.

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

1.	I have reviewed this annual report on Form 10-K of Power Solutions International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.