EXHIBIT 10.4

 
 
COALOGIX INC.
 
AMENDED AND RESTATED
 
STOCKHOLDERS’ AGREEMENT
 
 
 
 

--------------------------------------------------------------------------------

 
 
TABLE OF CONTENTS
 
Page

    1.    Definitions.
1
    2.    Registration Rights.
3
2.1.
Participation in Subsequent Registration Rights.
3
    3.    Information Rights
4
3.1.
 Delivery of Financial Statements
4
3.2.
 Inspection.
5
3.3.
 Termination of Information and Inspection Covenants
5
3.4.
 Confidentiality
6
    4.    Right of First Offer on Company Offerings
6
4.1.
Right of First Offer.
6
4.2.
Management Shareholders Rights
7
4.3.
Termination.
7
    5.    Rights of Refusal and Co-Sale
8
5.1.
 Company Right of First Refusal
8
5.2.
 Secondary Refusal Right of Key Holders
8
5.3.
 Consideration; Closing
8
5.4.
 Right of Co-Sale.
9
5.5.
 Drag-Along Right
10
5.6.
 Effect of Failure to Comply
11
5.7.
 Assistance with Pledging of Interests
12
    6.    Exempt Transfers.
12
6.1.
 Transfers to Affiliates, Etc
12
6.2.
 Public Offering
12
    7.    Key Holder Buy/Sell
13
7.1.
 Triggering Notice
13
7.2.
 Response Notice
13
7.3.
 Cure Period
13
7.4.
 Closing
14
    8.    Stock Option Plan
14
    9.    Additional Covenants
14
9.1.
Insurance.
14

 
 
 
-i-

--------------------------------------------------------------------------------

 
 
 
9.2.
 Employee Agreements.
14
9.3.
 Employee Vesting
14
9.4.
 Board of Directors
15
9.5.
 Meetings of the Board of Directors
15
9.6.
 Successor Indemnification
15
9.7.
 Transactions with Related Parties
15
9.8.
 Actions Requiring Majority Stockholder Approval
15
9.9.
 Actions Requiring Super-Majority Stockholder Approval
16
9.10.
Termination of Covenants.
17
   
10.    Miscellaneous
17
10.1.
Transfers, Successors and Assigns.
17
10.2.
Governing Law.
17
10.3.
Counterparts.
17
10.4.
Titles and Subtitles.
17
10.5.
Notices
17
10.6.
Amendments and Waivers.
18
10.7.
Severability.
18
10.8.
Additional Stockholders
18
10.9.
Entire Agreement.
19
10.10.
Transfers of Rights
19
10.11.
Delays or Omissions
19
10.12.
Effectiveness
19
10.13.
Legend on Stock Certificates
19
     
Schedule A
- Schedule of Stockholders
 

 
 
 
-ii-

--------------------------------------------------------------------------------

 
 
AMENDED AND RESTATED
STOCKHOLDERS’ AGREEMENT
 
THIS AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT (the “Agreement”) is made as
of April 8, 2009 by and among CoaLogix Inc., a Delaware corporation (the
“Company”), and each of the stockholders listed on Schedule A hereto, each
person to whom the rights of a Stockholder are assigned pursuant to Section 10.1
and each person who hereafter becomes a signatory to this Agreement pursuant to
Section 10.8 (each, a “Stockholder” and, collectively, the “Stockholders”).
 
RECITALS
 
WHEREAS, the Company, EnerTech (as defined below) and Acorn Energy (as defined
below) previously entered into that certain Stockholders’ Agreement as of
February 29, 2008 (the “Original Agreement”), and such parties desire to amend
and restate the Original Agreement as set forth in this Agreement; and
 
WHEREAS, EnerTech, Acorn Energy and the individual Management Stockholders
listed on Schedule A (collectively, the “Purchasers”) and the Company are
parties to the Common Stock Purchase Agreement dated the date hereof (the
“Purchase Agreement”); and
 
WHEREAS, in order to induce the Purchasers to enter into the Purchase Agreement
and to induce the Purchasers to invest funds in the Company pursuant to the
Purchase Agreement, the Stockholders and the Company hereby agree that this
Agreement shall govern the rights of the Stockholders to receive certain
information from the Company, to participate in future equity offerings by the
Company and certain other matters as set forth in this Agreement;
 
NOW, THEREFORE,  for and in consideration of the mutual promises of the parties
hereto and other good and valuable consideration, the receipt of sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree to amend and
restate the Original Agreement in its entirety, and the Original Agreement is
hereby amended and restated in its entirety as follows.
 
1.      Definitions.  For purposes of this Agreement:
 
“Acorn Energy” shall mean Acorn Energy, Inc and it Affiliates.
 
“Affiliate” shall mean with respect to any individual, corporation, partnership,
association, trust, or any other entity (in each case, a “Person”), any Person
which, directly or indirectly, controls, is controlled by or is under common
control with such Person, including, without limitation any general partner,
officer or director of such Person and any venture capital fund now or hereafter
existing which is controlled by or under common control with one or more general
partners or shares the same management company with such Person.
 
 
-1-

--------------------------------------------------------------------------------

 
 
“Common Stock” shall mean shares of the Company’s common stock, $0.001 par value
per share.
 
“Company Notice” means written notice from the Company notifying a selling
Stockholder that the Company intends to exercise its Right of First Refusal as
to some or all of the Transfer Stock with respect to any Proposed Transfer.
 
“EnerTech” shall mean EnerTech Capital Partners III L.P. and its Affiliates.
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
 
“GAAP” shall mean U.S. generally accepted accounting principles.
 
 “IPO” means the Company’s first underwritten public offering of its Common
Stock under the Securities Act.
 
“Key Holders” means Acorn Energy and EnerTech, so long as they are Stockholders
owning at least five percent (5.0%) of the issued and outstanding capital stock
of the Company. If either Acorn Energy or EnerTech no longer owns at least five
percent of the issued and outstanding capital stock of the Company, but still
owns some capital stock of the Company, such former Key Holder shall still be a
Stockholder.
 
“Key Holder Secondary Notice” means written notice from a Key Holder notifying
the Company and the selling Key Holder or Stockholder, as the case may be, that
such Key Holder intends to exercise its Secondary Refusal Right as to a portion
of the Transfer Stock with respect to any Proposed Transfer.
 
“Key Holder Stock” means any Common Stock now owned or subsequently acquired by
any Key Holder or such Key Holder’s permitted transferees or assigns.
 
“Management Stockholder” means a Stockholder currently employed in the
management of the Company, for so long as such Stockholder is employed in such a
capacity.
 
“New Securities” shall mean equity securities of the Company, whether now
authorized or not, or rights, options, or warrants to purchase said equity
securities, or securities of any type whatsoever that are, or may become,
convertible into or exchangeable into or exercisable for said equity securities
(collectively “New Securities”).
 
“Proposed Transfer” means any proposed assignment, sale, offer to sell, pledge,
mortgage, hypothecation, encumbrance, disposition of or any other like transfer
or encumbering of any Common Stock (or any interest therein) proposed by any of
the Stockholders; provided that Proposed Transfer shall not include any merger,
consolidation or like transfer effected pursuant to a vote of the Stockholders
of Common Stock of the Company.
 
 
 
-2-

--------------------------------------------------------------------------------

 
 
“Proposed Transfer Notice” means written notice from a Stockholder setting forth
the terms and conditions of a Proposed Transfer.
 
“Prospective Transferee” means any Person to whom a Stockholder proposes to make
a Proposed Transfer.
 
 “Registrable Securities” means (i) the Common Stock owned by either Key Holder,
and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of the shares referenced in clause (i), excluding in all cases,
however, any Registrable Securities sold by a Person in a transaction in which
such Person’s rights under Section 2 hereof are not assigned or any shares for
which registration rights have terminated.
 
“Right of Co-Sale” means the right, but not an obligation, of a Key Holder or
Management Stockholder to participate in a Proposed Transfer on the terms and
conditions specified in the Proposed Transfer Notice.
 
“Right of First Refusal” means the right, but not an obligation, of a Key Holder
or the Company, as the case may be, or his, her or its permitted transferees or
assigns, to purchase some or all of the Transfer Stock with respect to a
Proposed Transfer, on the terms and conditions specified in the Proposed
Transfer Notice.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
“Secondary Notice” means written notice from the Company notifying the selling
Key Holder and the other Key Holder that the Company does not intend to exercise
its Right of First Refusal as to all shares of Transfer Stock with respect to
any Proposed Transfer.
 
“Secondary Refusal Right” means the right, but not an obligation, of each Key
Holder to purchase up to its pro rata portion (based upon the total number of
shares of Common Stock then held by all Key Holders) of Transfer Stock not
purchased pursuant to the Company’ s Right of First Refusal, on the terms and
conditions specified in the Proposed Transfer Notice.
 
“Transfer Stock” means shares of Common Stock subject to a Proposed Transfer.
 
2.      Registration Rights.  The Company covenants and agrees as follows:
 
2.1.           Participation in Subsequent Registration Rights.  So long as
either Key Holder remains a Key Holder, from and after the date of this
Agreement, the Company shall not, without the prior written consent of each Key
Holder, enter into any agreement with any stockholder or prospective stockholder
of any securities of the Company which would grant such stockholder or
prospective stockholder registration rights in respect of Registrable
Securities, unless the Company shall thereunder grant each Key Holder
registration rights identical to the most favorable registration rights provided
to any other stockholder or prospective stockholder of any securities of the
Company.
 
 
-3-

--------------------------------------------------------------------------------

 
 
3.           Information Rights.
 
3.1.    Delivery of Financial Statements.  So long as EnerTech owns one percent
(1.0%) of the issued and outstanding capital stock of the Company, the Company
shall deliver to EnerTech or its Affiliate, as the case may be:
 
(a)           as soon as practicable, but in any event within ninety (90) days
after the end of each fiscal year of the Company, a balance sheet and income
statement as of the last day of such year; a statement of cash flows for such
year and a comparison between the actual figures for such year, the comparable
figures for the prior year and the comparable figures included in the Budget (as
defined below) for such year, with an explanation of any material differences
between them and a schedule as to the sources and applications of funds for such
year, such year-end financial reports to be in reasonable detail, prepared in
accordance with GAAP, of the Company;
 
(b)           as soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited income statement, schedule as to the sources and
application of funds for such fiscal quarter, an unaudited balance sheet and a
statement of stockholder’s equity as of the end of such fiscal quarter;
 
(c)           as soon as practicable, but in any event with forty-five (45) days
after the end of each of the first three (3) quarters of each fiscal year of the
Company, a statement showing the number of shares of each class and series of
capital stock and securities convertible into or exercisable for shares of
capital stock outstanding at the end of the period, the number of common shares
issuable upon conversion or exercise of any outstanding securities convertible
or exercisable for common shares and the exchange ratio or exercise price
applicable thereto and number of shares of issued stock options and stock
options not yet issued but reserved for issuance, if any, all in sufficient
detail as to permit EnerTech or its Affiliate to calculate its percentage equity
ownership in the Company and certified by the Chief Financial Officer or Chief
Executive Officer of the Company as being true, complete and correct;
 
(d)           as soon as practicable, but in any event within thirty (30) days
of the end of each month, an unaudited income statement, an unaudited profit or
loss statement;
 
(e)           as soon as practicable, but in any event thirty (30) days prior to
the end of each fiscal year, a budget and business plan for the next fiscal year
(collectively, the “Budget”), prepared on a monthly basis, including balance
sheets and sources and applications of funds statements for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
 
 
-4-

--------------------------------------------------------------------------------

 
 
(f)           with respect to the financial statements called for in subsections
(a) and(b) of this Section 3.1, an instrument executed by the Chief Financial
Officer and President or Chief Executive Officer of the Company and certifying
that such financials were prepared in accordance with GAAP consistently applied
with prior practice for earlier periods (with the exception of footnotes that
may be required by GAAP) and fairly present the financial condition of the
Company and its results of operation for the periods specified therein, subject
to year-end audit adjustment;
 
(g)           such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as EnerTech or any
assignee of EnerTech may from time to time reasonably request, provided,
however, that the Company shall not be obligated under this subsection (g) or
any other subsection of Section 3.1 to (i) provide information which the Company
reasonably deems in good faith to be a trade secret or similar confidential
information (unless covered by an enforceable confidentiality agreement, in form
acceptable to the Company) or (ii) would adversely affect the attorney-client
privilege between the Company and its counsel;
 
(h)           if for any period the Company shall have any subsidiary whose
accounts are consolidated with those of the Company, then in respect of such
period the financial statements delivered pursuant to the foregoing sections
shall be the consolidated and consolidating financial statements of the Company
and all such consolidated subsidiaries.
 
(i) notices describing in reasonable detail any claim, action, suit, proceeding,
arbitration, complaint, charge or investigation pending or to the knowledge of
the Company threatened against the Company or any officer or director of the
Company involving the Company or any default or breach by any party under any
agreement of the Company as soon as practicable, but in any event within five
(5) days after the Company becomes aware of such litigation or contract default.
 
3.2.    Inspection.  So long as EnerTech owns one percent (1.0%) of the issued
and outstanding capital stock of the Company, the Company shall permit, at
EnerTech’s expense, EnerTech to visit and inspect the Company’s properties, to
examine its books of account and records and to discuss the Company’s affairs,
finances and accounts with its officers, all at such reasonable times as may be
reasonably requested by at EnerTech; provided, however, that the Company shall
not be obligated pursuant to this Section 3.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information (unless covered by an enforceable confidentiality
agreement in a form acceptable to the Company) or would adversely affect the
attorney-client privilege between the Company and its counsel.
 
3.3.           Termination of Information and Inspection Covenants.  The
covenants set forth in Section 3.1 and Section 3.2 shall terminate as to
EnerTech and be of no further force or effect immediately prior to the
consummation of the sale of shares of Common Stock in the Company’s IPO or when
the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the Exchange Act, unless EnerTech ceases to own one
percent (1.0%) of the issued and outstanding capital stock of the Company prior
to the occurrence of such events, in which case the covenants shall terminate as
of the date that EnerTech no longer owns one percent (1.0%) of the issued and
outstanding capital stock of the Company.
 
 
 
-5-

--------------------------------------------------------------------------------

 
 
3.4.    Confidentiality.  Each Stockholder agrees that such Stockholder will
keep confidential and will not disclose, divulge or use for any purpose, other
than to monitor its investment in the Company, any confidential information
obtained from the Company pursuant to the terms of this Agreement, unless such
confidential information (i) is known or becomes known to the public in general
(other than as a result of a breach of this Section 3.4 by such Stockholder),
(ii) is or has been independently developed or conceived by the Stockholder
without use of the Company's confidential information or (iii) is or has been
made known or disclosed to the Stockholder by a third party without a breach of
any obligation of confidentiality such third party may have to the Company;
provided, however, that a Stockholder may disclose confidential information
(a) to its attorneys, accountants, consultants, and other professionals to the
extent necessary to obtain their services in connection with monitoring its
investment in the Company, (b) to any prospective purchaser of any Registrable
Securities from such Stockholder as long as such prospective investor agrees to
be bound by the provisions of this Section 3.4, (c) to any Affiliate, partner,
member, stockholder or wholly owned subsidiary of such Stockholder in the
ordinary course of business, as long as such Affiliate, partner, member
stockholder or wholly owned subsidiary of such Stockholder agrees to be bound by
the provisions of this Section 3.4, or (d) as may otherwise be required by law,
provided that the Stockholder takes reasonable steps to minimize the extent of
any such required disclosure.  The Company, EnerTech, and the Stockholders
hereby acknowledge that EnerTech invests in numerous companies, some of which
may be competitive with the Company’s business.  The Company, EnerTech and the
Stockholders agree that EnerTech shall not be liable for any claim arising out
of, or based upon, (i) the investment by EnerTech in any entity competitive to
the Company, (ii) actions taken by any partner, officer or other representative
of EnerTech to assist any such competitive company, whether or not such action
was taken as a board member of such competitive company, or otherwise, and
whether or not such action has a detrimental effect on the Company, unless such
claim arises directly from the EnerTech’s misuse of confidential information in
material breach of this Section 3.4.
 
4.      Right of First Offer on Company Offerings
 
4.1.           Right of First Offer.  Subject to the terms and conditions
specified in this Section 4.1, and applicable securities laws, in the event the
Company proposes to offer or sell any New Securities other than the Common Stock
to be issued under the Purchase Agreement, the Company shall first make an
offering of such New Securities to EnerTech and Acorn (collectively, the
“Offerees”, and individually, an “Offeree”) in accordance with the following
provisions of this Section 4.1.  An Offeree shall be entitled to apportion the
right of first offer hereby granted it among itself and its partners, members
and Affiliates in such proportions as they each deem appropriate.
 
(a)           The Company shall deliver a notice, in accordance with the
provisions of Section 10.5 hereof,  (the “Offer Notice”) to the Offerees stating
(i) its bona fide intention to offer such New Securities, (ii) the number of
such New Securities to be offered, and (iii) the price and terms, if any, upon
which it proposes to offer such New Securities.
 
 
-6-

--------------------------------------------------------------------------------

 
 
(b)           By written notification received by the Company, within twenty
(20) calendar days after mailing of the Offer Notice, an Offeree may elect to
purchase or obtain, at the price and on the terms specified in the Offer Notice,
up to that portion of such New Securities which equals the proportion that the
number of shares of Common Stock issued and then held by such Offeree bears to
the total number of shares of Common Stock of the Company issued and then held
by all the Stockholders.
 
(c)           In the event that the Company proposes to offer New Securities
contingently, each Offeree will be issued warrants (“Contingent Warrants”) to
purchase its pro rata portion of equity securities which may be purchased
pursuant to such New Securities, or into which such New Securities may become
convertible, as the case may be, in lieu of receiving such New Securities on the
same terms as stated in the Offer Notice. The exercise of such Contingent
Warrants will be subject to the same contingencies as the New Securities
proposed to be offered. An Offeree must exercise such Contingent Warrants within
twenty (20) calendar days after the Company has properly delivered a notice to
the Offeree, in accordance with Section 10.5 hereof, that such Contingent
Warrants may be exercised.
 
(d)           If the consideration proposed to be paid for New Securities is in
property, services or other non-cash consideration, the value of the
consideration shall be as agreed in good faith by the Offeree and the Company.
If the Offeree and the Company fail to agree in good faith as to the value of
such consideration, the price paid for such offered New Securities shall be
deemed to be the value of such consideration as calculated in accordance with
GAAP.
 
(e)           The right of first offer in this Section 4.1 shall not be
applicable to: (i) the shares of Common Stock properly issued or deemed issued
to employees or directors of, or consultants to, the Company or any of its
subsidiaries pursuant to the Stock Option Plan (as defined in Section 8); or
(ii) securities issued in connection with any stock split or stock dividend of
the Company.
 
(f)           The right of first offer set forth in this Section 4.1 may not be
assigned or transferred except that such right is assignable by an Offeree to
any of its Affiliates.
 
4.2.    Termination.  The provisions of this Section 4 shall terminate upon the
first to occur of (i) the consummation of an IPO or (ii) a failure by an Offeree
to elect to purchase a portion of New Securities to which it is entitled under
Section 4.1(b), or to exercise its Contingent Warrants, if any, as provided
under Section 4.1(c); provided, however, in the case of the immediately
preceding clause (ii) this Section 4 shall terminate only as to the Offeree who
has failed to so elect or exercise.
 
4.3.            Management Stockholders’ Rights.  The parties hereto acknowledge
that certain Management Stockholders have a right of first offer to purchase New
Securities of the Company under the terms of their individual option agreements
entered into in connection with the Stock Option Plan, and the Company shall
coordinate the administration of the right of first offer described in Section
4.1 with the right of first offer held by such Management Stockholders.
 
 
 
-7-

--------------------------------------------------------------------------------

 
 
5.      Rights of Refusal and Co-Sale
 
5.1.    Company Right of First Refusal.  Each Stockholder hereby unconditionally
and irrevocably grants to the Company a Right of First Refusal to purchase all
or any portion of Transfer Stock that such Stockholder may propose to transfer
in a Proposed Transfer, at the same price and on the same terms and conditions
as those offered to the Prospective Transferee. Each Stockholder proposing to
make a Proposed Transfer must deliver a Proposed Transfer Notice to the Company
and the Key Holders, not later than 10 days prior to the consummation of such
Proposed Transfer.  Such Proposed Transfer Notice shall contain the material
terms and conditions of the Proposed Transfer and the identity of the
Prospective Transferee.  The Company must exercise its Right of First Refusal
under this Section 5.1 by giving a Company Notice to such selling holder of
Common Stock within fifteen (15) days after delivery of the Proposed Transfer
Notice.
 
5.2.    Secondary Refusal Right of Key Holders.  
 
(a)           Each Key Holder hereby unconditionally and irrevocably grants to
the other Key Holder a Secondary Refusal Right to purchase the shares of Key
Holder Stock not purchased by the Company pursuant to the Company’s Right of
First Refusal under Section 5.1, as provided in this Section 5.2.  If the
Company does not intend to exercise its Right of Refusal under Section 5.1 with
respect to all Key Holder Stock subject to a Proposed Transfer, the Company must
deliver a Secondary Notice to the other Key Holder to that effect no later than
fifteen (15) days after the selling Key Holder delivers the Proposed Transfer
Notice to the Company.  To exercise its Secondary Refusal Right, a Key Holder
must deliver a Key Holder Secondary Notice to the selling Key Holder and the
Company within ten (10) days after the deadline for delivery of the Secondary
Notice.
 
(b)           Each Stockholder that is not a Key Holder hereby unconditionally
and irrevocably grants to the Key Holders a Secondary Refusal Right to purchase
up to each Key Holder’s pro rata portion (based upon the total number of shares
of each Key Holder’s Stock) of the Stockholder’s stock not purchased by the
Company pursuant to the Company’s Right of First Refusal under Section 5.1, as
provided in this Section 5.2.  If the Company does not intend to exercise its
Right of Refusal under Section 5.1 with respect to all of the selling
Stockholder’s Common Stock subject to a Proposed Transfer, the Company must
deliver a Secondary Notice to the Key Holders to that effect no later than
fifteen (15) days after the selling Stockholder delivers the Proposed Transfer
Notice to the Company.  To exercise its Secondary Refusal Right, a Key Holder
must deliver a Key Holder Secondary Notice to the selling Stockholder and the
Company within ten (10) days after the deadline for delivery of the Secondary
Notice.
 
5.3.    Consideration; Closing.  If the consideration proposed to be paid for
the Transfer Stock is in property, services or other non-cash consideration, the
fair market value of the consideration shall be determined in good faith by the
Company’s Board of Directors.  If the Company or any Key Holder cannot for any
reason pay for the Transfer Stock in the same form of non-cash consideration,
the Company or such Key Holder may pay the cash value equivalent thereof, as
determined by the Board of Directors.  The closing of the purchase of Transfer
Stock by the Company and/or the other Key Holder, as the case may be, shall take
place, and all payments from the Company and/or the other Key Holder, as the
case may be, shall have been delivered to the selling Stockholder by the later
of (i) the date specified in the Proposed Transfer Notice as the intended date
of the Proposed Transfer and (ii) forty-five (45) days after delivery of the
Proposed Transfer Notice.
 
 
-8-

--------------------------------------------------------------------------------

 
 
5.4.    Right of Co-Sale. 
 
(a)           If any Transfer Stock subject to a Proposed Transfer by a
Stockholder is not purchased pursuant to Sections 5.1 and 5.2 above and
thereafter is to be sold to a Prospective Transferee, a Key Holder or Management
Stockholder may elect to exercise its Right of Co-Sale and participate on a
pro-rata basis in the Proposed Transfer on the same terms and conditions
specified in the Proposed Transfer Notice.  A Key Holder or Management
Stockholder who desires to exercise its Right of Co-Sale must give the selling
Stockholder written notice to that effect within fifteen (15) days after the
deadline for delivery of the Key Holder Secondary Notice as described above, and
upon giving such notice such Key Holder or Management Stockholder shall be
deemed to have effectively exercised the Right of Co-Sale.
 
(b)           Each Key Holder or Management Stockholder who timely exercises its
Right of Co-Sale by delivering the written notice provided for above in Section
5.4(a) may include in the Proposed Transfer all or any part of his, her or its
Common Stock equal to the product obtained by multiplying (i) the aggregate
number of shares of Stockholder Common Stock subject to the Proposed Transfer
(excluding shares purchased by the Company pursuant to the Right of First
Refusal of the Company) by (ii) a fraction, the numerator of which is the number
of shares of Common Stock owned by such Key Holder or Management Stockholder
immediately before consummation of the Proposed Transfer  and the denominator of
which is the total number of shares of Common Stock owned, in the aggregate, by
all Stockholders immediately prior to the consummation of the Proposed
Transfer.  To the extent a Key Holder or Management Stockholder exercises such
right of participation in accordance with the terms and conditions set forth
herein, the number of shares of Common Stock that the selling Stockholder may
sell in the Proposed Transfer shall be correspondingly reduced.
 
(c)           Each participating Key Holder or Management Stockholder shall
effect its participation in the Proposed Transfer by delivering to the
transferring Stockholder, no later than fifteen (15) days after such Key
Holder’s or Management Stockholder’s exercise of the Right of Co-Sale, one or
more stock certificates, properly endorsed for transfer to the Prospective
Transferee, representing the number of shares of Common Stock that such Key
Holder or Management Stockholder elects to include in the Proposed Transfer.
 
(d)           The terms and conditions of any sale pursuant to this Section 5.4
will be memorialized in, and governed by, a written purchase and sale agreement
with customary terms and provisions for such a transaction.
 
(e)           Each stock certificate a participating Key Holder or Management
Stockholder delivers to the selling Stockholder pursuant to subparagraph (c)
above will be transferred to the Prospective Transferee against payment therefor
in consummation of the sale of the Transfer Stock pursuant to the terms and
conditions specified in the Proposed Transfer Notice and the purchase and sale
agreement, and the selling Stockholder shall concurrently therewith remit to the
appropriate Key Holder or Management Stockholder the portion of the sale
proceeds to which such Key Holder or Management Stockholder is entitled by
reason of its participation in such sale.  If any Prospective Transferee or
Transferees refuse(s) to purchase securities subject to the Right of Co-Sale
from a Key Holder or Management Stockholder exercising its Right of Co-Sale
hereunder, no Stockholder may sell any Common Stock to such Prospective
Transferee or Transferee unless and until, simultaneously with such sale, such
selling Stockholder purchases all securities subject to the Right of Co-Sale
from such other Stockholders.
 
 
-9-

--------------------------------------------------------------------------------

 
 
(f)           If any Proposed Transfer is not consummated within forty-five (45)
days after receipt of the Proposed Transfer Notice by the Key Holders, the
Management Stockholders, or the Company, as the case may be, the Stockholder
proposing the Proposed Transfer may not sell any of its Common Stock unless it
first complies in full with each provision of this Section 5.  The exercise or
election not to exercise any right by any Key Holder or Management Stockholder
hereunder shall not adversely affect its right to participate in any other sales
of Transfer Stock subject to this Section 5.4.
 
5.5.    Drag-Along Right.  
 
(a)           In the event that any Key Holder owns more than fifty percent
(50%) of the Company’s issued and outstanding capital stock and such Key Holder
desires to accept a bona fide offer (a "Purchase Offer") from any person or
persons, other than an Affiliate or another Stockholder, to purchase all (a
"Divestiture") the shares of Common Stock then held by such Key Holder, then
such Key Holder shall promptly deliver to each of the other Stockholders a
written notice (the "Purchase Offer Notice") stating such Key Holder’s intention
to sell such shares pursuant to such Purchase Offer and setting forth the terms
and conditions of such Purchase Offer, including, without limitation, the
identity of the proposed purchaser and the amount and type of consideration to
be paid therefor.  The Purchase Offer Notice shall include a copy of any written
offer, letter of intent, term sheet or contract of sale pertaining to the
Purchase Offer.
 
(b)            In connection with a Divestiture, any Key Holder owning more than
fifty percent (50%) of the Company’s issued and outstanding capital stock shall
have the right ("Drag Along Right") to require each other Stockholder to
participate in such sale of Common Stock by such Key Holder on the terms and
conditions set forth in the Purchase Offer Notice (which shall be the same terms
and conditions (on a per share basis) as are applicable to such Key Holder’s
sale of shares of Common Stock to the proposed purchaser).  Such Drag Along
Right shall be exercisable by such Key Holder including in its Purchase Offer
Notice a statement to the effect that such Key Holder elects to exercise its
Drag Along Right in connection with the proposed sale.  At any time prior to the
closing of such sale, such Key Holder may withdraw its election to exercise its
Drag Along Right upon written notice to the Stockholders.
 
(c)           The closing of the purchase and sale of any shares of Common Stock
to be sold pursuant to the Drag Along Right shall occur concurrently with the
closing of the sale of the shares of the Common Stock by the Key Holder owning
more than fifty percent (50%) of the Company’s issued and outstanding capital
stock, which shall be a date not less than sixty (60) days after the giving of
the Purchase Offer Notice.  At any such closing, each Stockholder  shall deliver
to the purchaser a certificate or certificates representing the number of shares
of Common Stock to be sold by such Stockholder, duly endorsed in blank or
accompanied by a duly executed stock power in blank, with signatures duly
guaranteed and all requisite stock transfer stamps affixed thereto.  All
Stockholders shall be treated equally under this Section 5.5.  It shall be a
condition of the obligation to sell under this Section 5.5 that all facts and
circumstances and all material aspects of any transaction under this Section 5.5
shall be disclosed.  The provisions of this Section 5.5 shall terminate upon an
IPO.
 
 
-10-

--------------------------------------------------------------------------------

 
 
5.6.    Effect of Failure to Comply.  
 
(a)           Any Proposed Transfer not made in compliance with the requirements
of this Agreement shall be null and void ab initio, shall not be recorded on the
books of the Company or its transfer agent and shall not be recognized by the
Company.  Each party hereto acknowledges and agrees that any breach of this
Agreement would result in substantial harm to the other parties hereto for which
monetary damages alone could not adequately compensate.  Therefore, the parties
hereto unconditionally and irrevocably agree that any non-breaching party hereto
shall be entitled to seek protective orders, injunctive relief and other
remedies available at law or in equity (including, without limitation, seeking
specific performance or the rescission of purchases, sales and other transfers
of Common Stock not made in strict compliance with this Agreement).
 
(b)           If any Stockholder becomes obligated to sell any Common Stock to
the Company under this Agreement and fails to deliver such Common Stock in
accordance with the terms of this Agreement, the Company may, at its option, in
addition to all other remedies it may have, send to such Stockholder the
purchase price for such Common Stock as is herein specified and cancel on its
books the certificate or certificates representing the Common Stock to be sold.
 
(c)           If any Stockholder purports to sell any Common Stock in
contravention of the terms of this Agreement (a “Prohibited Transfer”), the
Company or a Key Holder, as the case may be, in addition to such remedies as may
be available by law, in equity or hereunder, is entitled to require the
following actions of such Stockholder, and such Stockholder will be bound by the
terms of such option:
 
(i)           If a Stockholder makes a Prohibited Transfer, a Key Holder or the
Company, as the case may be, who timely exercises his, her or its Right of First
Refusal under Sections 5.1 and 5.2 may require such Stockholder, to sell to the
other Key Holder or the Company, as the case may be, the number of shares of
Common Stock that such other Key Holder or the Company, as the case may be,
would have been entitled to purchase under Sections 5.1 and 5.2 had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
of Sections 5.1 and 5.2.
 
(ii)           If a Key Holder makes a Prohibited Transfer, the other Key Holder
that timely exercises its Right of Co-Sale under Section 5.4 may require such
Key Holder to purchase from it the number of shares of Common Stock that such
Key Holder would have been entitled to sell to the Prospective Transferee under
Section 5.4 had the Prohibited Transfer been effected pursuant to and in
compliance with the terms of Section 5.4.
 
 
-11-

--------------------------------------------------------------------------------

 
 
In each case, the sale will be made on the same terms and subject to the same
conditions as would have applied had the Stockholder not made the Prohibited
Transfer, except that the sale (including, without limitation, the delivery of
the shares or the purchase price, as the case may be) must be made within ninety
(90) days after the Company or the other Key Holder, as the case may be, learns
of the Prohibited Transfer, as opposed to the timeframe proscribed in Sections
5.1, 5.2, 5.3, 5.4, or 5.5 as the case may be.  Such Stockholder shall also
reimburse the other Key Holder and the Company, as the case may be, for any and
all fees and expenses, including legal fees and expenses, incurred pursuant to
the exercise or the attempted exercise of the Key Holder’s or the Company’s, as
the case may be, rights under Sections 5.1, 5.2, 5.3, 5.4, or 5.5 as the case
may be.
 
5.7.    Assistance with Pledging of Interests.  The rights of the Company and
the Key Holders under this Section 5 shall not pertain or apply to any pledge by
a Key Holder of its Common Stock which creates a mere security interest in such
Common Stock. The Company shall consent to any pledging of any Key Holder’s
Common Stock and other matters customarily requested of the Key Holders by the
Key Holders’ lenders; provided that any pledge of Common Stock shall be
contingent upon the pledgee providing a written instrument to the Company
agreeing in writing that its lien is subject to the terms of this Agreement.
 
6.      Exempt Transfers.
 
6.1.    Transfers to Affiliates, Etc.  Notwithstanding the foregoing or anything
to the contrary herein, the provisions of Sections 5.1, 5.2 and 5.4 shall not
apply: (i) in the case of a Key Holder that is an entity, upon a transfer by
such Key Holder to its stockholders, members, partners or other equity holders,
(ii) to a repurchase of Common Stock from a Key Holder by the Company at a price
no greater than that originally paid by such Key Holder for such Common Stock
and pursuant to an agreement containing vesting and/or repurchase provisions
approved by a majority of the Board of Directors, or (iii) to the sale or
transfer of Common Stock between Key Holders and their respective Affiliates;
provided, however, that such transfer shall be contingent upon the transferee
providing a written instrument to the Company notifying the Company of such
transfer and assignment and agreeing in writing to be bound by the terms of this
Agreement; and provided further, notwithstanding any such permitted transfer,
such transferred Common Stock shall remain Common Stock and Key Holder Stock for
all purposes hereunder, and such transferee shall be treated as a Key Holder, as
the case may be, (but only with respect to the securities so transferred to the
transferee) for all purposes of this Agreement (including the obligations of a
Key Holder with respect to Proposed Transfers of such Capital Stock pursuant to
Section 5); and provided, further, in the case of any transfer pursuant to
clause (i), that such transfer is made pursuant to a transaction in which there
is no consideration actually paid for such transfer. 
 
6.2.    Public Offering.  Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Section 5 shall not apply to the sale of any
Common Stock to the public in an IPO, and the provisions of Section 5 shall
terminate and be of no further force or effect upon (a) the consummation of the
IPO, or (b) the Company first becoming subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the Exchange Act, whichever event
shall first occur.
 
 
-12-

--------------------------------------------------------------------------------

 
 
7.      Key Holder Buy/Sell.
 
7.1.    Triggering Notice.  Either Key Holder (such Key Holder, the “Triggering
Key Holder”) may deliver a written notice in accordance with the provisions of
Section 10.5 hereof,  (a “Triggering Notice”) to the other Key Holder (the
“Responding Key Holder”) and in such event will also deliver a copy of the
Triggering Notice to the Management Stockholders in accordance with the
provisions of Section 10.5 hereof stating: (i) its intent to commence a purchase
or sale of Key Holder Stock under this Section 7 and (ii) the per-share price
(the “Per-Share Buy/Sell Price”) which will be applicable to such transaction.
 
7.2.    Response Notice and Election Notice.  Within 90 days of the delivery of
a Triggering Notice, the Responding Key Holder shall deliver a written notice in
accordance with the provisions of Section 10.5 (the “Response Notice”) to the
Triggering Key Holder stating whether the Responding Key Holder has elected: (i)
to  purchase the entirety of the Triggering Key Holder’s Common Stock at the
Per-Share Buy/Sell Price or (ii) to sell the entirety of its Common Stock to the
Triggering Key Holder at the Per-Share Buy/Sell Price.  Within 90 days of the
delivery of a Triggering Notice, Management Stockholders shall have the right to
deliver written notices in accordance with the provisions of Section 10.5 (the
“Election Notice”) to the Triggering Key Holder and Responding Key Holder
stating the Management Stockholders’ intent to exercise its right to tag along
and sell the Management Stockholders’ Common Stock in accordance with the terms
of this Section 7.  Management Stockholders who elect to exercise their right to
tag along and sell their shares of Common Stock after delivering such Election
Notice shall sell their shares of Common Stock to whichever one of the
Triggering Key Holder and Responding Key Holder is the purchaser of the Common
Stock as described in Section 7.3 in accordance with the terms and purchase
price set forth in the Triggering Notice.  The Management Stockholders’ tag
along rights set forth in this Section 7.2 shall not be applicable to (i) the
shares of Common Stock properly issued or deemed issued to employees or
directors of, or consultants to, the Company or any of its subsidiaries pursuant
to the Stock Option Plan (as defined in Section 8); or (ii) securities issued in
connection with any stock split or stock dividend of the Company relating to the
shares of Common Stock described in clause (i) of this Section 7.2.
 
7.3.    Cure Period.  If no Response Notice is delivered within 90 days of a
Triggering Notice, the Triggering Key Holder shall deliver a written notice in
accordance with the provisions of Section 10.5 (the “Cure Period Notice”) to the
Responding Key Holder stating that the Responding Key Holder has failed to
deliver a Response Notice and stating that the Responding Key Holder (with a
copy to the Management Stockholders) has 15 days from delivery of the Cure
Period Notice (the “Cure Period”) to deliver a Response Notice to the Triggering
Key Holder. If the Responding Key Holder does not deliver a Response Notice
within the Cure Period, the Triggering Key Holder shall, at its sole option,
within ten days of the conclusion of the Cure Period elect:  (i) to  purchase
the entirety of the Responding Key Holder’s Common Stock at the Per-Share
Buy/Sell Price or (ii) to sell the entirety of its Common Stock to the
Responding Key Holder at the Per-Share Buy/Sell Price.  The Management
Stockholders who earlier delivered an Election Notice shall sell their shares of
Common Stock to the purchaser as determined by the immediately preceding
sentence.  The Key Holders and the Management Stockholders who earlier delivered
an Election Notice shall thereupon effect a Closing of a sale or purchase in
accordance with the provisions of Section 7.4 pursuant to the terms of the
preceding sentence.
 
 
-13-

--------------------------------------------------------------------------------

 
 
7.4.    Closing.  The closing of a sale or purchase under this Section 7 shall
take place, and stock certificates representing all of the shares of Common
Stock of the Selling Key Holder and Management Shareholders who delivered an
Election Notice, properly endorsed for transfer to the purchasing Key Holder, as
well as all payments from the purchasing Key Holder shall have been delivered to
the selling Key Holder and Management Shareholders who delivered an Election
Notice within forty-five (45) days after delivery of the Response Notice, the
Cure Period Notice or the expiration of the Cure Period, as the case may be.
 
8.      Stock Option Plan.  Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Sections 4 and 5 shall not apply to the
issuance of options under the Company’s 2008 Stock Option Plan a management
option plan (the “Stock Option Plan”), provided that: (i) the total Company
equity available for issuance under the Stock Option Plan will not exceed 12.5%
ownership of the Company, on a fully diluted basis following Closing (as defined
in the Purchase Agreement); (ii) the exercise price per share for any options
issued under the Stock Option Plan on or after the date hereof will be equal to
or greater than the price per share paid by EnerTech under the Purchase
Agreement; and (iii) the option pool under the Stock Option Plan shall not be
increased without EnerTech’s written consent.
 
9.      Additional Covenants.  
 
9.1.    Insurance.  Acorn Energy maintains Directors and Officers Errors and
Omissions insurance pursuant to a policy of insurance substantially in the form
provided to EnerTech. The Company and Acorn Energy will use reasonable best
efforts to cause such insurance policy to be maintained until such time as the
Board of Directors of the Company determines that such insurance should be
discontinued. The policy shall not be cancelable by Acorn Energy without prior
approval of the Board of Directors.
 
9.2.    Employee Agreements.  The Company will cause each person now or
hereafter employed by it or any subsidiary (or engaged by the Company or any
subsidiary as a consultant/independent contractor) with access to confidential
information and/or trade secrets to enter into a proprietary information,
inventions, non-competition and non-solicitation agreement substantially in the
form approved by the Board of Directors and satisfactory to the Stockholders.
 
9.3.    Employee Vesting.  All future employees and consultants of the Company
who shall purchase, or receive options to purchase, shares of the Company’s
capital stock following the date hereof shall be required to execute stock
purchase or option agreements providing for vesting of shares over a four-year
period with the first 25% of such shares vesting following 12 months of
continued employment or services after the grant date of each such security, and
the remaining shares vesting in equal quarterly installments over the following
36 months. The issuance or transfer of any options to purchase shares of the
Company’s capital stock shall be contingent upon the holder or transferee
becoming a party to this Agreement by executing and delivering an additional
counterpart signature page to this Agreement, and thereafter such holder or
transferee shall be deemed a “Stockholder” for all purposes hereunder.
 
 
-14-

--------------------------------------------------------------------------------

 
 
9.4.    Board of Directors.  Each Stockholder agrees to vote all of his, her or
its shares of voting securities in the Company, whether now owned or hereafter
acquired or which such Stockholder may be empowered to vote, from time to time
and at all times, in whatever manner shall be necessary to ensure that at each
annual or special meeting of stockholders at which an election of directors is
held or pursuant to any written consent of the stockholders, the following
persons shall be elected to the Board: five to seven individuals designated in
the following proportions: (i) one designee of EnerTech, for so long as EnerTech
remains a Key Holder , (ii) two designees of Acorn Energy, (iii) one to three
outside directors designated by the Stockholders voting together as a single
class, and (iv) the chief executive officer of the Company.
 
9.5.    Meetings of the Board of Directors.  The Board shall meet no less
frequently than once every quarter, with monthly telephone conversations on an
as-needed basis.  Each authorized committee of the Board shall include the
director elected by EnerTech.  EnerTech shall be entitled to appoint an
observer, who is approved by the Company’s Chief Executive, to all Board
meetings.  The Company will reimburse non-employee directors for all reasonable
out-of-pocket expenses incurred in attending board and committee meetings.
 
9.6.    Successor Indemnification. In the event that the Company or any of its
successors or assigns (i) consolidates with or merges into any other entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person or entity, then, and in each such case,
to the extent necessary, proper provision shall be made so that the successors
and assigns of the Company assume the obligations of the Company with respect to
indemnification of members of the Board of Directors as in effect immediately
prior to such transaction, whether in the Company’s bylaws, Certificate of
Incorporation, or elsewhere, as the case may be.
 
9.7.    Transactions with Related Parties.  The Company shall not enter into any
business dealing, undertaking, contract, agreement, lease or other arrangement
for the furnishing to or by the Company of goods, services or space or any other
transaction with any Stockholder or any Affiliate of any Stockholder (an
“Affiliate Contract”) and shall not take any action pertaining to the rights and
obligations of the Company under such Affiliate Contract, without the approval
of a majority of the disinterested members of the Company’s Board of Directors.
 
9.8.    Actions Requiring Majority Stockholder Approval.  Consent of the
Stockholders holding a majority of the outstanding voting shares of Common
Stock, which Stockholders must include EnerTech, provided that (x) EnerTech
holds 5% or more of the Company’s issued and outstanding Common Stock and (y)
EnerTech has exercised all of its rights under Section 4 to acquire New
Securities prior to the termination of such rights under Section 4.2, shall be
required for any action that (including by way of merger, consolidation,
reclassification, reorganization or other similar event) creates, authorizes, or
issues: (i) any class of stock or securities of the Company having any right,
preference, privilege, power or priority superior to the Common Stock, or (ii)
any debt or lease transaction resulting in an obligation to the Company, in the
aggregate, in excess of $3,000,000.
 
 
-15-

--------------------------------------------------------------------------------

 
 
9.9.    Actions Requiring Super-Majority Stockholder Approval.  Consent of the
holders of more than 67% of the outstanding voting shares of the Common Stock
shall be required for any action that (including by way of merger,
consolidation, reclassification, reorganization or other similar event):
 
(a)           increases or decreases the number of authorized shares of Common
Stock or creates or authorizes any obligation or security convertible into
shares of Common Stock,
 
(b)           liquidates, dissolves or winds up the business and affairs of the
Company or consents to any of the foregoing,
 
(c)           amends or waives any provision of the charter, by-laws or articles
of the Company in a manner which adversely affects the holders of the Common
Stock,
 
(d)           acquires any other corporation or entity,
 
(e)           adversely alters, affects or changes the rights, preferences,
privileges, powers, or interests of, or the restrictions provided for the
benefit of, the holders of  the Common Stock,
 
(f)           creates, authorizes shares of, or issues shares of any class or
series of shares stock having any right, preference, privilege, power or
priority on parity with the Common Stock,
 
(g)           effects or authorizes any merger, recapitalization,
reorganization, acquisition, consolidation, liquidation, winding up, or sale of
all or substantially all of the assets of the Company,
 
(h)           makes any loan or advance to, or own any stock or other securities
of, any subsidiary or other corporation, partnership, or other entity unless it
is wholly owned by the Company;
 
(i)           makes any loan or advance to any person, including, any employee
or director,
 
(j)           guarantees any indebtedness except for trade accounts of the
Company or any subsidiary arising in the ordinary course of business,
 
(k)           makes any investment other than investments in prime commercial
paper, money market funds, certificates of deposit in any United States bank
having a net worth in excess of $100,000,000 or obligations issued or guaranteed
by the United States of America, in each case having a maturity not in excess of
two years, or
 
 
-16-

--------------------------------------------------------------------------------

 
 
(l)           enters into or causes the Company to be a party to any transaction
with any director, officer or employee of the Company or any “associate” (as
defined in Rule 12b-2 promulgated under the Exchange Act) of any such person or
any Affiliate of the Company.
 
9.10.    Termination of Covenants.  The covenants set forth in this Section 9,
shall terminate and be of no further force or effect upon (a) the consummation
of the IPO, or (b) the Company first becoming subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the Exchange Act, whichever event
shall first occur.
 
10.    Miscellaneous.  
 
10.1.    Transfers, Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
 
10.2.    Governing Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
its principles of conflicts of laws.
 
10.3.    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may also
be executed and delivered by facsimile signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
10.4.    Titles and Subtitles.  The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
10.5.    Notices.  All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed effectively
given:  (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed electronic mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent to the respective
parties at their address as set forth on the signature page or Schedule A
hereto, or to such email address, facsimile number or address as subsequently
modified by written notice given in accordance with this Section 10.5.
 
 
 
-17-

--------------------------------------------------------------------------------

 
 
If notice is given to the Company or Acorn Energy, a copy shall also be sent to:
 
CoaLogix Inc.
11701 Mt. Holly Road
Charlotte, NC 28214
Attention: General Counsel
 
If notice is given to EnerTech, a copy shall also be sent to:
 
Dechert LLP
Cira Centre
2929 Arch St.
Philadelphia, PA 19104-2808
Fax No. (215) 994-2222
Attention:  Ian A. Hartman, Esq.

10.6.    Amendments and Waivers.  This Agreement may be amended or modified and
the observance of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument executed by each of the Key Holders, provided that such consent shall
not be required if the Key Holders do not then own shares representing at least
50% of the outstanding Common Stock.  Any amendment or waiver so effected shall
be binding upon the Company, the Stockholders and all of their respective
successors and permitted assigns whether or not such party, assignee or other
shareholder entered into or approved such amendment or waiver.  Notwithstanding
the foregoing, (a) this Agreement may not be amended or terminated and the
observance of any term hereunder may not be waived with respect to any
Stockholder without the written consent of such Stockholder unless such
amendment, termination or waiver applies to all Stockholders, respectively, in
the same fashion and (b) the consent of the Key Holders shall not be required
for any amendment or waiver if such amendment or waiver does not apply to the
Key Holders.  The Company shall give prompt written notice of any amendment or
termination hereof or waiver hereunder to any party hereto that did not consent
in writing to such amendment, termination or waiver.  No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
 
10.7.    Severability.  The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
 
10.8.    Additional Stockholders.  Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of Common Stock
or options under the Stock Option Plan after the date hereof, the Company’s
issuance to any purchaser of such shares of Common Stock or recipient of stock
options shall be contingent on such purchaser or option holder becoming a party
to this Agreement by executing and delivering an additional counterpart
signature page to this Agreement and thereafter such purchaser shall be deemed a
“Stockholder” for all purposes hereunder.
 
 
-18-

--------------------------------------------------------------------------------

 
 
10.9.    Entire Agreement.  This Agreement (including the Exhibits hereto, if
any) and the other Transaction Agreements (as defined in the Purchase Agreement)
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties are
expressly canceled.
 
10.10.    Transfers of Rights.  Each Stockholder hereto hereby agrees that it
will not, and may, not assign any of its rights and obligations hereunder,
unless such rights and obligations are assigned by such Stockholder to (a) any
person or entity to which Registrable Securities are transferred by such
Stockholder, or (b) to any Affiliate of such Stockholder, and, in each case,
such transferee shall be deemed a “Stockholder” for purposes of this Agreement;
provided that such assignment of rights shall be contingent upon the transferee
providing a written instrument to the Company notifying the Company of such
transfer and assignment and agreeing in writing to be bound by the terms of this
Agreement or such transfer or assignment shall be void.
 
10.11.    Delays or Omissions.  No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing.  All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
 
10.12.    Effectiveness.  This Agreement shall be effective as of the date
hereof.
 
10.13.    Legend on Stock Certificates.  Each certificate representing shares of
Common Stock shall bear a legend substantially in the following form:
 
“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN
AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT DATED AS OF APRIL 8, 2009 BY AND
AMONG THE ISSUER OF THIS SECURITY AND CERTAIN HOLDERS OF THE STOCK OF SUCH
CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE CORPORATION AT
ITS PRINCIPAL EXECUTIVE OFFICE.”
 
[Remainder of Page Intentionally Left Blank]
 
 
 
-19-

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
COALOGIX INC.:
 
 
By:  /s/ William J. McMahon
Name:  William J. McMahon
Title:     CEO
 
 
ACORN ENERGY, INC.:
 
 
By:  /s/ John A. Moore
Name:  John A. Moore
Title:    CEO
 
 
ENERTECH CAPITAL PARTNERS III L.P.
 
 
By:  ECP III Management L.P.,
Its general partner
 
By:  ECP III Management LLC,
Its general partner
 
 
By:  /s/ Scott Ungerer
Name: Scott Ungerer
Title:   CEO
 
 
 
-20-

--------------------------------------------------------------------------------

 
 
 
/s/ William J. McMahon
WILLIAM J. MCMAHON
 
 
/s/ Michael F. Mattes
MICHAEL F. MATTES
 
 
/s/ Frank Wenz
FRANK WENZ
 
 
/s/ Michael Cooper
MICHAEL COOPER
 
 
/s/ Eric B. Dana
ERIC B. DANA
 
 
/s/ Joe B. Cogdell, Jr.
JOE B. COGDELL, JR.

 
-21-

--------------------------------------------------------------------------------

 

SCHEDULE A
Stockholders

Acorn Energy, Inc.
4 W. Rockland Road
P.O. Box 9
Montchanin, Delaware 19710

EnerTech Capital Partners III L.P.
435 Devon Park Drive
700 Building
Wayne, PA  19087

Management Stockholders

William J. McMahon

Michael F. Mattes

Eric B. Dana

Joe B. Cogdell, Jr.
 
 
 

--------------------------------------------------------------------------------