| 1.1 | Schedules |
|-----|-----------|

| Schedule 1 – Definitions | Appendix A – Promissory Note |
|--------------------------------|------------------------------------|

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| Schedule 2 – Loan Documents |   |
|-----------------------------------|--------|
| Schedule 3 – Disclosures    |   |

| 1.2 | Headings |
|-----|----------|

| 1.3  | Currency |
|-----------|----------|

| 1.4  | Conflicts |
|-----------|-----------|

| 2. | Acknowledgement of Outstanding Loan |
|----|-------------------------------------|

| 3. | Loan and Rate of Interest |
|----|---------------------------|

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| 4. | Terms of Repayment |
|----|--------------------|

| 5. | Payment Date |
|----|--------------|

| 6. | Payment |
|----|---------|

| 7. | Prepayment |
|----|------------|

| 8. | Conditions Precedent |
|----|----------------------|

|   | (a) | Receipt of Loan Documents: The Borrower shall execute and deliver, in form and substance satisfactory to the Lender and the Lender’s legal counsel, acting reasonably, the loan documents set out in Schedule 2 (the “Loan Documents”). |
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|   | (b) | Perfection of Security: All registrations or filings required to perfect the security interests granted to the Lender shall have been made in all applicable jurisdictions to provide the Lender with the priority position it requires pursuant to the Loan Documents. |
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|   | (c) | No Default or Event of Default: No Default or Event of Default shall have occurred and be continuing or shall occur as a result of the transactions contemplated by this Agreement. |
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|   | (d) | Documents: The Lender shall have received all Loan Documents executed by the Borrower and all agreements, statements, information, reports and certificates contemplated herein and as the Lender may otherwise require, all in form and substance satisfactory to it required by it to consummate the lending arrangements contemplated hereby. |
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|   | (e) | Waivers: The Lender shall have received all waivers, estoppels, consents, priority agreements and/or subordinations it requires to provide it with its desired priority security position (subject only to Permitted Encumbrances), all in form and substance satisfactory to the Lender and the Lender’s legal counsel, acting reasonably. |
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|   | (f) | Resolutions: The Lender shall have received, in form and substance satisfactory to it, a certified copy of the resolutions of the directors of the Borrower (as applicable) authorizing the transactions contemplated herein, this Agreement and the Loan Documents, together with an officer’s certificate of the Borrower (as applicable) as to the incumbency and signature of the authorized signing officers of the Borrower. |
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|   | (g) | Compliance with Laws: The Lender and the Lender’s legal counsel shall be satisfied with the Borrower's compliance with any and all applicable Laws relating to its businesses. |
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| 9. | Covenants |
|----|-----------|

|   | (a) | Payment of Principal, Interest, Fees and Expenses: The Borrower shall duly and punctually pay to the Lender all amounts evidenced by the Promissory Note payable by the Borrower hereunder, and in the manner provided herein, without set-off, abatement or deduction of any kind whatsoever. |
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|   | (b) | Notification: The Borrower shall forthwith deliver notice to the Lender of: (i) any Material Adverse Change with respect to the Borrower; and (ii) any occurrence that is or that reasonably will, with the giving of notice or the lapse of time, result in a Default or Event of Default. |
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|   | (c) | Preservation of Corporate Existence: The Borrower will maintain its existence in good standing in its governing jurisdiction and shall remain qualified to do business and own assets in such jurisdictions except where the failure to do so would not constitute a Material Adverse Change. |
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|   | (d) | Collateral: The Borrower shall keep its Intellectual Property free and clear of all Liens (other than Permitted Encumbrances). |
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|   | (e) | Observance of Agreements:  The Borrower will observe and perform, in a timely fashion: |
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|   | (i) | all obligations, covenants, agreements and undertakings on its part required to be observed or performed under the terms of this Agreement and the Loan Documents; and |
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|   | (ii) | all obligations, covenants, agreements and undertakings on its part required to be observed or performed under the terms of any document in respect of any other financing to which it is a party. |
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|   | (f) | Payment of Remittances: The Borrower shall pay, on a timely basis and within the prescribed period of time, all governmental remittances to any Government Authority as required by Law other than those it is disputing in good faith. |
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|   | (g) | Conduct of Business: The Borrower will conduct its business in a proper and prudent manner so as not to materially affect its ability to perform its obligations under this Agreement or the Loan Documents. |
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|   | (h) | Preservation of Intangible Property: The Borrower shall at all times renew or cause to be preserved and renewed all material rights, powers, permits, consents, privileges, franchises, licences, goodwill and intellectual property owned by it and necessary for the conduct of its business in its reasonable opinion and shall at all times comply with all Laws applicable to it. |
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|   | (i) | Financial and Business Reporting: The Borrower shall deliver, or cause to be delivered, to the Lender: |
|--------|-----|--------------------------------------------------------------------------------------------------------|

|   | (i) | using its best efforts as soon as possible, and in any event, within ninety (90) days of the Borrower's financial year-end in each year during the term of the Loan, annual consolidated financial statements of the Borrower audited by a chartered accountant licensed to practice in the Province of Ontario and prepared in accordance with GAAP, together with a calculation of repayments accrued and payable, report of sales pipeline and backlog; |
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|   | (ii) | quarterly, using its best efforts within thirty (30) days, and in any event within forty-five (45) days, following each fiscal quarter end, management-prepared financial statements of the Borrower (comprising a balance sheet, statements of operations and income and changes in cash flows, and notes thereto), prepared in accordance with GAAP, together with a calculation of repayments accrued and payable, report of sales pipeline and backlog with respect to such periods; and |
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|   | (j) | Notices: The Borrower shall promptly give written notice to the Lender of: |
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|   | (i) | the commencement of any claim, litigation, proceeding or investigation against the Borrower or any of its assets which, in the event that a decision is rendered which is adverse to it, may have an adverse effect on the ability of the Borrower to repay the Amended Loan or have a material adverse effect on the business of the Borrower; and |
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|   | (ii) | the occurrence of any Default or Event of Default under this Agreement or the Loan Documents, or any documents required to be delivered thereunder. |
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|   | (k) | Insurance: The Borrower shall maintain all risks comprehensive insurance coverage with reputable insurers satisfactory to the Lender in its sole discretion, and to provide the Lender with evidence of such insurance satisfactory to it, in amounts and against risks normally insured by owners of similar businesses (which insurance, at a minimum, shall cover against risk of loss or damage to property of the Borrower up to its full replacement value, and including public liability and damage to property of third parties and business interruption insurance) and the Borrower shall provide written notice to the Lender within three (3) Business Days of any change to the insurance coverage of the Borrower or any change by the Borrower of any of its insurers. |
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|   | (l) | Keeping of Books: Keep proper books of record and account in which full and correct entry shall be made of all financial transactions, assets and business of the Borrower in accordance with GAAP. |
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| 10. | Negative Covenants |
|-----|--------------------|

|   | (a) | No Transfer or Pledge of Intellectual Property: Sell, exchange, transfer, assign, lease, license, encumber, pledge or otherwise dispose of or deal in any way with the Intellectual Property or any interest therein, or enter into any agreement or undertaking to do so, except as may be permitted in this Agreement or in the ordinary course of business; provided that, unless and until the Borrower has failed to pay any amounts when due hereunder, or to discharge any of its obligations hereunder or under the Loan Documents, or unless the Borrower is in default under any of the provisions of this Agreement or under the Loan Documents, the Borrower may continue to exploit, license, franchise, use, enjoy and protect (whether in Canada or any foreign jurisdiction) the Intellectual Property in the ordinary course of the Borrower’sbusiness. |
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|   | (b) | No Amalgamation or Reorganization: Enter into a transaction (whether by way of a reorganization, consolidation, financing, amalgamation, merger, transfer, liquidation, sale, purchase, assumption of liabilities or obligations, lease or otherwise), whereby all or a material portion of the undertaking, property or assets of the Borrower would become the property of any other Person. |
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|   | (c) | Change in Nature of Business: Make any material change in the nature of its business as carried on by it on the date hereof. |
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|   | (d) | Transactions With Related Parties:  Enter into any transaction or transactions with Persons not dealing at arm’s length (as defined in the Income Tax Act (Canada)) with the Borrower, except in the ordinary course of, and pursuant to the reasonable requirements of, business and at prices and on terms not less favourable to the Borrower than could be obtained in a comparable arm’s length transaction with another Person. |
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|   | (e) | Liquidation, etc.:  Take or institute proceedings for the winding-up, liquidation, reorganization or dissolution of the Borrower. |
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| 11. | Representations and Warranties |
|-----|--------------------------------|

|   | (a) | Incorporation and Corporate Power: The Borrower has been duly incorporated and/or organized and is validly existing under the laws of its governing jurisdiction and it has the necessary power, and is qualified, to carry on its business in those jurisdictions in which it carries on business. |
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|   | (b) | Authorization and Enforceability: The Borrower has the necessary corporate power and authority to enter into this Agreement and the Loan Documents to which it is a party and this Agreement and each Loan Document has been, or on the Closing Date will be, duly executed and delivered by the Borrower and each such document constitutes, or on the Closing Date will constitute, a legal, valid and binding obligation of the Borrower, enforceable in accordance with its respective terms. |
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|   | (c) | Conflict: The execution and delivery by the Borrower of this Agreement and each of the Loan Documents to which it is a party, performance by it of its obligations thereunder in compliance with the provisions thereof do not and will not: |
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|   | (i) | conflict with or result in a breach of any of the terms, conditions or provisions of: |
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|   | (A) | its constating or organizational documents, by-laws or shareholders' agreement, if any; |
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|   | (B) | any Law applicable to it or its property and assets; |
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|   | (C) | any contractual provision, including, without limitation any Material Contract, binding on or affecting it or any of its property and assets, the breach of which could reasonably be expected to have a material adverse effect upon the business, assets, condition financial or otherwise of them, respectively; or |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (D) | any writ, judgment, injunction, termination or award which is binding on it or any of its property and assets; or |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (ii) | result in or permit: |
|--------|------|----------------------|

|   | (A) | the imposition of any Lien on any of its property and assets, other than in favour of the Lender or in respect of the Concurrent Financing; or |
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|   | (B) | the acceleration of the maturity of any indebtedness of the Borrower. |
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|   | (d) | Governmental Approvals: The execution and delivery of this Agreement and each of the Loan Documents by the Borrower and the performance by it of its obligations thereunder do not require any consent, approval, order, authorization, licence, exemption or designation of or by any Governmental Authority. |
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|   | (e) | Ownership of Assets: The Borrower is the sole and beneficial owner of, or it has the necessary contractual rights with respect to, all of the Intellectual Property which is the subject of a Lien in favour of the Lender, with good and marketable title thereto, free and clear of all Liens except for Permitted Encumbrances. |
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|   | (f) | Financial Information: Any and all financial statements provided by the Borrower have been prepared in accordance with GAAP and present fairly in all material respects, the financial position of the Borrower, on a consolidated basis, as at such date, including, without limitation, all contingent liabilities. |
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|   | (g) | Subsidiaries and Affiliates: Other than as disclosed in Schedule 3 hereto, there are no Affiliates or Subsidiaries of the Borrower who are not a party to this Agreement. |
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|   | (h) | Consent Respecting Loan Documents:  The Borrower has obtained, made, or taken all consents, approvals, authorizations, declarations, registrations, filings, notices and other actions whatsoever required (except for registrations or filings which may be required in respect of any security granted hereunder) in connection with the execution and delivery by it of each of the Loan Documents to which it is a party, and the consummation of the transactions contemplated in the Loan Documents. |
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|   | (i) | Filing of Taxes:  The Borrower has filed all federal and provincial tax returns which are required to be filed and have paid all taxes as shown on such returns or any assessment received by it to the extent that such taxes have become due.  No additional proposed tax assessment against the Borrower is known to any of them.  The provisions for taxes on the books of the Borrower are adequate under GAAP for all relevant years and for their current fiscal periods. |
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|   | (j) | No Litigation:  There is no action or proceeding outstanding, pending or, to the knowledge of the Borrower, threatened against the Borrower before any court, administrative agency, tribunal, arbitrator or Governmental Agency which might involve any Material Adverse Change in the properties, business, prospects or condition of the Borrower, or question the validity of this Agreement or any Loan Document to which the Borrower is a party and there are no outstanding judgments, writs of execution, work orders, injunctions or directives against the Borrower or any of its properties. |
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|   | (k) | Intellectual Property: The Borrower owns or has all proprietary or contractual rights provided in law, at equity and by statute to all patents, trademarks, copyrights, industrial designs, software, trade secrets, know-how, concepts, information and other intellectual and industrial property (collectively, the “Intellectual Property”) necessary to permit the Borrower to conduct its business as currently conducted and, following completion of the Loan, proposed to be conducted.  The Borrower has not received any notice nor does the Borrower have knowledge of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances that would render any Intellectual Property invalid or inadequateto protect the interests of the Borrower therein and which infringement or conflict (if subject to an unfavourable decision, ruling or finding) or invalidity or inadequacy would have an adverse material effect on the Borrower.  Schedule 3 hereto sets forth a full, complete and true list of all of the Borrower’s registered and unregistered trademarks, copyrights, patents, tradenames and service marks included in the Intellectual Property, and any applications thereof, and specifies the jurisdictions in which an application for such issuance and any applications therefor, and specifies the jurisdictions in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners. |
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|   | (l) | Registration of Intellectual Property: |
|--------|-----|----------------------------------------|

|   | a. | To the extent it has not already done so, the Borrower will take all commercially reasonable steps to as soon as possible, and in any event the Borrower shall within 60 days, following the Closing Date, register in the Borrower’s name all material Copyrights and Trademarks with the appropriate intellectual property offices of the Canadian Intellectual Property Office, and will take all steps necessary to prosecute such applications in a timely manner. |
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|   | b. | The filings, if any, in the various patent, trade mark, copyright and other intellectual property offices, are in good standing, and are registered in the Borrower’s name, and all steps necessary to maintain such filings and to prosecute the applications have been taken and will be taken in a timely manner. |
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|   | c. | Upon all appropriate filings being made in any applicable patent office, copyright office, trade mark office and all relevant personal property registries, this Agreement is effective to create a valid and continuing first priority security interest and charge in favour of the Lender in the Trade Marks, Copyrights and Patents for which any filings have been made in such offices. |
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|   | (m) | Permitted Encumbrances: Schedule 3 hereto sets forth all Permitted Encumbrances in respect of the Borrower as at the date hereof referred to in clause (v) of the definition of “Permitted Encumbrances”. |
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|   | (n) | Compliance with Laws: The Borrower is in compliance with any and all applicable Laws relating to its business. |
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|   | (o) | Capitalization:  Schedule 3 hereto sets forth the capitalization of the Borrower as of the date hereof including the following: (i) the number of shares of the Borrower’s issued and outstanding common stock; (ii) the number of options, warrants and other securities or rights pursuant to which the holders thereof may acquire shares of the Borrower’s common stock; (iii) the amount of the Borrower’s outstanding debentures; and (iv) the name of each holder of the Borrower’s common stock, options, warrants, other convertible securities and debentures, together with the number of such securities registered in the name of each such holder. |
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| 12. | Default |
|-----|---------|

|   | (a) | Non-Payment: The non-payment when due (whether at stated maturity, upon acceleration, or otherwise) of any amounts owing to the Lender under this Agreement or any other Loan Document. |
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|   | (b) | Non-Performance: Any breach (other than by reason of non-payment pursuant to Section 14(a) hereto) by the Borrower of any of its undertakings, representations, warranties, covenants, conditions or other obligations under the terms of this Agreement or any of the Loan Documents, which breach is not cured within thirty (30) days following the date on which the Lender gives written notice to the Borrower of such default. |
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|   | (c) | Ceasing to Carry on Business: If the Borrower ceases or threatens to cease to carry on its business, whether voluntarily or involuntarily. |
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|   | (d) | Winding Up: If an order is made, an effective resolution is passed, or agreement is made for the winding-up, liquidation or dissolution of the Borrower. |
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|   | (e) | Bankruptcy, Insolvency, etc.: If the Borrower: |
|--------|-----|------------------------------------------------|

|   | (i) | makes a sale of its assets in bulk or makes a general assignment for the benefit of creditors or any proceeding is instituted by the Borrower seeking relief on its behalf as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the appointment of receiver, receiver and manager, liquidator, trustee, or other similar official for it or for any substantial part of its properties or assets or if the Borrower shall take any action to authorize any of the actions set forth in this paragraph; |
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|   | (ii) | has any proceeding instituted against it seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of receiver, trustee, custodian or other similar official for it or for any substantial part of its properties or assets; or |
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|   | (iii) | if a custodian or a sequestrator or a receiver or manager or any other officer with similar power shall be appointed of the Borrower or of the property of the Borrower or any part thereof. |
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|   | (f) | Seizure of Property: If an encumbrancer seizes or takes possession of any material property or assets of the Borrower, or any part thereof, or if any process of distress of execution be levied or enforced upon or against such property and remains unsatisfied for such period as would permit such property to be sold thereunder, less two (2) Business Days; provided that such process is not in good faith disputed by the Borrower, in appropriate proceedings, in which case it shall give security which, in the absolute discretion of the Lender, shall be deemed sufficient to pay in full the amount claimed in the event it shall be held to be a valid claim. |
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|   | (g) | Cross-Default: If the Borrower defaults in any obligation in respect of (i) indebtedness for money borrowed (or security granted pursuant thereto), where as a result of such default, the maturity of such indebtedness is or may be accelerated, provided that any such default has not been cured within the time frame provided thereunder. |
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|   | (h) | Unperfection of Security: If at any time after execution and delivery of this Agreement, any of the Loan Documents ceases to be in full force and effect or if any of the Loan Documents is declared by a court or tribunal of competent jurisdiction to be null and void or the validity, enforceability or priority thereof is contested by the Borrower. |
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| 13. | Remedies |
|-----|----------|

| 14. | Set-Off |
|-----|---------|

| 15. | Power of Attorney |
|-----|-------------------|

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| 16. | Indemnity |
|-----|-----------|

| 17. | Performance of Covenants |
|-----|--------------------------|

| 18. | Assignment |
|-----|------------|

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| 19. | Waiver of Breach |
|-----|------------------|

| 20. | Interest and Loan Charges Not to Exceed Maximum allowed By Law |
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| 21. | Further Assurances |
|-----|--------------------|

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| 22. | Governing Law |
|-----|---------------|

| 23. | Successors and Assigns |
|-----|------------------------|

| 24. | Amendment and Waiver |
|-----|----------------------|

| 25. | Severability |
|-----|--------------|

| 26. | No Obligation to Advance |
|-----|--------------------------|

| 27. | Evidence of Indebtedness |
|-----|--------------------------|

| 28. | Survival and Non-Merger |
|-----|-------------------------|

| 29. | Time of Essence |
|-----|-----------------|

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| 30. | Notices |
|-----|---------|

|   | (a) | if to the Borrower, at: |
|--------|-----|-------------------------|

|   | (b) | if to the Lender, at: |
|--------|-----|-----------------------|

| 31. | Communications |
|-----|----------------|

| 32. | Permitted Encumbrances |
|-----|------------------------|

| 33. | Counterparts |
|-----|--------------|

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|   | ACORN ENERGY, INC.                       |
|--------|------------------------------------------|
|   |                           |
|   |                                |
|   | Name:                                    |
|   | Title:                                   |
|   |                                     |
|   |                                |
|   | Name:                                    |
|   | Title:                                   |
|   |                                     |
|   | I/We have authority to bind the company. |
|   |                                     |
|   | COREWORX INC.                            |
|   |                                     |
|   |                                |
|   | Name:                                    |
|   | Title:                                   |
|   |                                     |
|   | I/We have authority to bind the company. |

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| (a) | “Affiliate” shall have the meaning ascribed to it in the Business Corporations Act (Ontario). |
|-----|-----------------------------------------------------------------------------------------------------------|

| (b) | “Business Day” means any day except Saturday, Sunday or any statutory holiday in the Province of Ontario. |
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| (c) | “Change of Control” means the occurrence of any of the following in one or a series of related transactions: (i) an acquisition after the date hereof by a Person or more than one Person, acting jointly and in concert with each other, other than the Lender and/or its Affiliates, of more than fifty percent (50%) of the voting rights or equity interests or shares in the Borrower; (ii) a replacement of more than one-half of the members of the Borrower's board of directors in a single election of directors, other than any new directors that are approved by the Lender and/or its Affiliates and an acquisition after the date hereof by a Person or more than one Person, acting jointly and in concert with each other, other than the Lender and/or its Affiliates, of more than thirty-five percent (35%) of the voting rights or equityinterests or shares in the Borrower; (iii) a merger or consolidation of the Borrower or any subsidiary or a sale of more than one-half of the assets of the Borrower in one or a series of related transactions, other than with or to the Lender and/or its Affiliates, unless following such transaction or series of transactions, the holders of the Borrower's securities prior to the first such transaction continue to hold at least two-thirds of the voting rights and equity interests or shares in the surviving entity or acquirer of such assets; (iv) a recapitalization, reorganization or other transaction involving the Borrower or any subsidiary that constitutes or results in a transfer of more than fifty percent (50%) of the voting rights or equity interests or shares in the Borrower, other than to the Lender and/or its Affiliates, unless following such transaction or series of transactions, the holders of the Borrower's securities prior to the first such transaction continue to hold at leasttwo-thirds of the voting rights and equity interests or shares in the surviving entity or acquirer of such assets; or (v) the execution by the Borrower or its controlling shareholders of an agreement providing for or reasonably likely to result in any of the foregoing events, other than with the consent of the Lender. |
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| (d) | “Closing Date” means the date on which this Agreement, the Promissory Note evidencing the Amended Loan and any and all Loan Documents are executed by the parties hereto and thereto. |
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| (e) | “Concurrent Financing” means the convertible debenture financing to be completed by the Borrower resulting in gross proceeds to the Borrower of up to $3,000,000, on or before the Closing Date, of which at least $1,000,000 shall have been invested by management and employees of the Borrower. |
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| (f) | "Copyrights" means all of the Borrower’s current and future copyrights including the copyrights, if any, listed in Schedule "A" to the Intellectual Property Security Agreement. |
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| (g) | “Default” means any event or circumstance, the occurrence or non-occurrence of which would, with the giving of a notice, lapse of time or combination thereof, constitute an Event of Default. |
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| (h) | “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. |
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| (i) | "GAAP", when used in respect of accounting terms or accounting determinations relating to a Person, means generally accepted accounting principles in effect from time to time in Canada, being those accounting principles set forth in the Handbook or other official record of accounting principles in Canada from time to time published by the Institute of Chartered Accountants in Canada, as those principles may be amended, varied or replaced by International Financial Reporting Standards (IFRS) then in effect and generally accepted in Canada and adopted or required to have been adopted by the Person. |
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| (j) | “Governmental Authority” means any nation, federal government, province, state, municipality or other political subdivision of any of the foregoing, and any entity exercising executive, legislative, judicial, regulatory or administrative functions. |
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| (k) | "Gross Revenues" means all revenues of the Borrower and its Affiliates from all sources including the fair market value of any non-cash consideration received directly or indirectly by the Borrower and its Affiliates and all proceeds and personal property in any form derived directly or indirectly from any dealing with the Intellectual Property, calculated in accordance with GAAP consistently applied.  For greater certainty, no deductions will be allowed in such calculation except for documented Reimbursable Expenses. |
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| (l) | “Intellectual Property” has the meaning ascribed thereto in paragraph 11(k) of this Agreement. |
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| (m) | “Intercreditor Agreement” means the agreement dated on or about the date hereof among the Borrower, the Lender, certain employees of the Borrower and the Investors. |
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| (n) | “Investors” means purchasers of certain secured convertible debentures under the Concurrent Financing. |
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| (o) | “Law” shall mean all statutes, codes, ordinances, decrees, rules, regulations, customs, treaties, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, directives, customs, policies or guidelines whether or not having the force of law, or any provisions of the foregoing. |
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| (p) | “Lien” means any mortgage, charge, pledge, right of set-off, title retention, hypothec, security interest, lien, assignment, claim or other encumbrance of any nature or kind whatsoever, whether fixed or floating, statutory or consensual, and howsoever created. |
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| (q) | “Loan Documents” shall mean this Agreement any and all documents ancillary to this Agreement, including, without limitation, those documents referred to in Schedule 2 hereto. |
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| (r) | “Material Contract” means any contract to which the Borrower is a party and which has a value, on an annualized basis, equal to or greater than Fifty Thousand Dollars (CDN$50,000) to the Borrower, as the case may be and which shall include any agreement or other document entered into by the Borrower in respect of any Concurrent Financing. |
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| (s) | “Material Adverse Change” means any material adverse change in the business, condition (financial or otherwise), operations, properties, assets, liabilities or prospects of the Borrower, taken as a whole. |
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| (t) | "Patents" means all of the Borrower’s patents that have been or will be granted, including any and all: (i) inventions and improvements thereof; (ii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof; (iii) income, royalties, damages and payments now and hereafter due and/or payable to the Borrower with respect thereto including damages and payments for past or future infringements or misappropriations thereof; (iv) rights to sue for past, present and future infringements or misappropriations thereof; and (v) all other rights corresponding thereto throughout the world; and includes the patents and patent applications, if any, listed in Schedule "C" to the Intellectual Property Security Agreement. |
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| (u) | “Permitted Encumbrance” means Liens set forth in Schedule 3 hereto in respect of which a priorities agreement or an estoppel confirmation, satisfactory to the Lender in its sole discretion, has been entered into with the Lender or provided to it; provided that any indebtedness secured thereby is not increased without the Lender’s prior written consent. |
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| (v) | “Person” means an individual, partnership, corporation, trustee, trust, unincorporated organisation, non-share capital corporation, limited liability company, or any federal, provincial or municipal governmental body, corporation, commission, board, agency, foundation, association, counsel or other governmental authority of any kind whatsoever, or any other entity whatsoever. |
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| (w) | “Promissory Note” shall have the meaning given such term in Section 3 hereto. |
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| (x) | "Reimbursable Expenses" means those out-of-pocket costs and expenses incurred by the Borrower or its employees or consultants in the ordinary course of business, and which are specifically invoiced and paid to the Borrower by its customers and reimbursed by the Borrower to its employees or consultants, as the case may be. |
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| (y) | “Shareholders Agreement” means the shareholders agreement dated on or about the date hereof among the Borrower, the Lender and all of the Investors. |
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| (z) | “Subsidiary” shall have the meaning ascribed to it in the Business Corporations Act (Ontario). |
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| (aa) | "Trade Marks" means all of the Borrower’s current and future trade marks including the trade marks, if any, listed in Schedule "D" to the Intellectual Property Security Agreement. |
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| (bb) | “Warrants” shall mean warrants to be issued by the Borrower, each warrant entitling its holder to purchase one common share of the Borrower at a price of CDN$0.10, subject to adjustment in certain circumstances, during the period of 60 months commencing upon the Closing Date. |
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|   | 1. | The Promissory Note. |
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|   | 2. | An intellectual property security agreement (the “Intellectual Property Security Agreement”) providing for a first Lien in favour of the Lender (subject only to any future Lien in favour of the Lender ranking pari passu with the indebtedness of the Borrower to the Lender and the security pursuant to the terms of any Concurrent Financing) over all of the Borrower's present and after acquired intellectual property; provided however that, notwithstanding the foregoing, the Amended Loan and the security interest of the Borrower hereunder and under the Intellectual Property Security Agreement shall rank in priority to all other indebtedness and all other security interests granted by the Borrower including all indebtedness incurred under the Concurrent Financing and all security interests to be granted pursuant thereto in theevent that the management and employees of the Borrower have not invested a minimum of $1,000,000 under the Concurrent Financing. |
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|   | 3. | The Intercreditor Agreement. |
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|   | 4. | A form of royalty agreement to be executed by and between the Lender and the Borrower. |
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|   | 5. | A form of warrant certificate representing 3,625,209 Warrants of the Borrower, to be executed and delivered by the Borrower to the Lender. |
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|   | 6. | All necessary acknowledgements, estoppels, subordinations, non-disturbance agreements, priority agreements, inter-creditor agreements, waivers or consents, which are necessary in the Lender's sole opinion to provide it with its desired priority position of the Lender. |
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