FOURTH
AMENDMENT

TO

LOAN AND SECURITY AGREEMENT


 


This
Fourth Amendment to Loan and Security Agreement (the “Amendment”) is entered into as of December 30,
2013, by and between SQUARE 1 BANK (the “Bank”) and GRIDSENSE INC. (the “Borrower”).


 


RECITALS


 


Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of November 2, 2012 (as amended from time to time, the
“Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.


 


NOW,
THEREFORE, the parties agree as follows:


 


	1)	Bank
    hereby consents to Borrower’s one (1) time payment of up to $850,000 Subordinated Debt with Acorn Energy, Inc. to be
    made on or about December 30, 2013, provided that no Event of Default has occurred under the Agreement which is continuing
    or would exist immediately after giving effect to such payment.
	 	 
	2)	Section
    2.1(b) of the Agreement is hereby amended and restated, as follows:


 


(b)Advances
Under Revolving Line.


 


(i)Amount.
Subject to and upon the terms and conditions of this Agreement (1) Borrower may request Advances in an aggregate outstanding principal
amount not to exceed the Revolving Line, less any amounts outstanding under the Ancillary Services Sublimit, and (2) amounts borrowed
pursuant to this Section 2.1(b) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all
Advances under this Section 2.1(b) shall be immediately due and payable. Borrower may prepay any Advances without penalty or premium.


 


(ii)Form
of Request. Whenever Borrower desires an Advance, Borrower will notify Bank by facsimile transmission, telephone or email
no later than 3:30 p.m. Eastern time (2:30 p.m. Eastern time for wire transfers), on the Business Day that the Advance is to be
made. Each such notification shall be promptly confirmed by a Loan Advance/Paydown Request Form in substantially the form of Exhibit
C. Bank is authorized to make Advances under this Agreement, based upon instructions received from an Authorized Officer, or without
instructions if in Bank’s discretion such Advances are necessary to meet Obligations which have become due and remain unpaid.
Bank shall be entitled to rely on any telephonic or email notice given by a person whom Bank reasonably believes to be an Authorized
Officer or a designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages, loss, costs and expenses suffered
by Bank as a result of such reliance. Bank will credit the amount of Advances made under this Section 2.1(b) to Borrower’s
deposit account.


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


(iii)Ancillary
Services Sublimit. Subject to the availability under the Revolving Line, at any time and from time to time from the date hereof
through the Business Day immediately prior to the Revolving Maturity Date, Borrower may request the provision of Ancillary Services
from Bank. The aggregate limit of the Ancillary Services shall not exceed the Ancillary Services Sublimit, provided that availability
under the Revolving Line shall be reduced by the aggregate limits of (i) corporate credit card services provided to Borrower,
(ii) the total amount of any Automated Clearing House processing reserves, (iii) the applicable Foreign Exchange Reserve Percentage,
and (iv) any other reserves taken by Bank in connection with other treasury management services requested by Borrower and approved
by Bank. In addition, Bank may, in its sole discretion, charge as Advances any amounts for which Bank becomes liable to third
parties in connection with the provision of the Ancillary Services. The terms and conditions (including repayment and fees) of
such Ancillary Services shall be subject to the terms and conditions of the Bank’s standard forms of application and agreement
for the applicable Ancillary Services, which Borrower hereby agrees to execute.


 


(iv)Collateralization
of Obligations Extending Beyond Maturity. If Borrower has not secured to Bank’s satisfaction its obligations with respect
to any Ancillary Services by the Revolving Maturity Date, then, effective as of such date, the balance in any deposit accounts
held by Bank and the certificates of deposit or time deposit accounts issued by Bank in Borrower’s name (and any interest
paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates or accounts),
shall automatically secure such obligations to the extent of the then continuing or outstanding Ancillary Services. Borrower authorizes
Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person
to pay or otherwise transfer any part of such balances for so long as the applicable Ancillary Services are outstanding or continue.


 


	3)	Section
    2.2 of the Agreement is hereby amended and restated, as follows:


 


2.2Overadvances.
If the aggregate amount of the outstanding Advances exceeds the Revolving Line at any time, Borrower shall immediately pay to
Bank, in cash, the amount of such excess.


 


	4)	Section
    5.3 of the Agreement is hereby amended and restated, as follows:


 


5.3Collateral.
Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse
claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property such
as laptop computers, all Collateral having an aggregate book value not in excess of $100,000 is located solely in the Collateral
States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for
Inventory for which adequate reserves have been made. Except as set forth in the Schedule, none of the Borrower’s Cash is
maintained or invested with a Person other than Bank or Bank’s affiliates.


 


	5)	Section
    6.2(a) of the Agreement is hereby amended and restated, as follows:


 


(a)Intentionally
Omitted.


 


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	6)	Section
    6.7 of the Agreement is hereby amended and restated, as follows:


 


6.7Intentionally
Omitted. 


 


	7)	A
    new Section 8.9 is hereby added to the Agreement, as follows:



 

 8.9 Guaranty. If any guaranty of all or a portion of the Obligations (a “Guaranty) ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any Guaranty or a security agreement securing any Guaranty (collectively, the “Guaranty Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.9 occur with respect to any guarantor.




 


	8)	The
                                         following definitions in Exhibit A to the Agreement are hereby amended and restated,
                                         as follows:



 


  “Ancillary Services Sublimit” means a sublimit for Ancillary Services under the Revolving Line not to exceed $375,000.




 


“Revolving
Line” means a Credit Extension of up to $1,500,000 (inclusive of any amounts outstanding under the Ancillary Services Sublimit).


 


“Revolving
Maturity Date” means June 30, 2014.


 


	9)	The
    defined terms “Borrowing Base”, “EBITDA”, “Eligible Accounts”, and “Eligible Foreign
    Accounts” and their respective definitions in Exhibit A to the Agreement are hereby deleted.
	 	 
	10)	The
    Schedule of Exceptions of the Agreement is hereby replaced with a new Schedule of Exceptions which is attached hereto as Appendix
    X and made part hereof.
	 	 
	11)	Exhibit
    D of the Agreement is hereby deleted. 
	 	 
	12)	Unless
    otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement,
    as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified
    and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment
    shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect
    prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection
    with the Agreement.



 


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	13)	Borrower
    represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the
    date of this Amendment. 
	 	 
	14)	This
    Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
    shall constitute one instrument.
	 	 
	15)	As
    a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank,
    the following:


 


	 	a)	this
    Amendment, duly executed by Borrower;
	 	 	 
	 	b)	an
    officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery
    of this Amendment;
	 	 	 
	 	c)	an
    unconditional guaranty, duly executed by Acorn Energy, Inc. (including an officer’s certificate of Acorn Energy, Inc.
    with respect to incumbency and resolutions authorizing the execution and delivery of the unconditional guaranty);
	 	 	 
	 	d)	payment
    of a $5,000 facility fee, which may be debited
	 	 	 
	 	e)	payment
    for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of
    this Amendment, and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of
    Borrower’s accounts; and 
	 	 	 
	 	f)	such
    other documents and completion of such other matters, as Bank may reasonably deem necessary or appropriate.


 


[Signature
Page Follows]


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.


 


	GRIDSENSE INC.	 	SQUARE 1 BANK
	 	 	 	 	 
	By:
    	 	 	By:
    	 
	Name:
    	 	 	Name:
    	 
	Title:
    	 	 	Title:
    	 


 


[Signature
Page to Fourth Amendment to Loan and Security Agreement]


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


APPENDIX
X


 


SCHEDULE
OF EXCEPTIONS


 


[Please
see attached]


 


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Permitted
Indebtedness


 


None


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


Permitted
Investments


 


See “Inbound
Licenses”


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


Permitted
Liens


 


None


 


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Inc. –4 th Amendment to LSA


 




    	 



    	 



    


 


Intellectual
Property – Patents


 


	 	 	 	 	Date
    of	 	Pending	 	Issued
    Patent
	Description	 	 	 	Application	 	Issue	 	Serial
    No.	 	No.
	 	 	 	 	 	 	 	 	 	 	 
	Apparatus
    and Method for	 	AUS	 	11/9/2001	 	1/22/2004	 	37972/00	 	766044
	Fault
    Detection on Conductors	 	GB	 	4/12/2000	 	8/9/2006	 	00916700.8	 	1198717
	 	 	ZA	 	4/12/2000	 	5/13/2002	 	2001/9293	 	2001/9293
	 	 	USA	 	1/18/2002	 	8/3/2004	 	09/958,631	 	6,771,078
	 	 	 	 	 	 	 	 	 	 	 
	A
    Transformer and a Method of Monitoring an	 	AUS	 	1/2/2009	 	7/30/2009	 	2009200007	 	2009200007
	Operation
    Property of the Transformer	 	CA	 	1/8/2009	 	 	 	2648816	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Method
    and Apparatus for	 	USA	 	5/14/2004	 	9/18/2007	 	10/845,892	 	7,272,520
	Determining
    a Current in a Conductor	 	CA	 	5/11/2004	 	1/10/2012	 	2467054	 	2467054
	 	 	 	 	 	 	 	 	 	 	 
	Apparatus
    and Method for	 	AUS
    	 	4/12/2000
    	 	11/14/2000
    	 	37973/00
    	 	766435
    
	Electrical
    Measurements	 	ZA	 	11/21/2001	 	5/13/2002	 	2001/9294	 	2001/9294
	on
    Conductors	 	USA	 	10/11/2001	 	12/7/2004	 	09/958,848	 	6,828,770
	 	 	CA	 	10/8/2001	 	12/29/2009	 	2366467	 	2366467
	 	 	 	 	 	 	 	 	 	 	 
	Systems
    & Methods for Monitoring Distribution Line Capacitor Systems	 	USA	 	6/8/2012	 	 	 	61/657,335	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Systems
    & Methods for Providing Transformer Rating using Harmonics Data	 	USA	 	2/28/2012	 	 	 	61/604,173	 	 


 


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Intellectual
Property – Trademarks


 


		 	 	 	Date
    of	 	Pending	 	Registered
	Trademarks	 	 	 	Application.	 	Registration	 	Serial No	 	Trademark
    No
	DGWatch	 	USA	 	3/6/2012	 	 	 	85561555	 	 
	HighV	 	USA	 	1/31/2012	 	 	 	85530109	 	 
	Grid
    Insite	 	USA	 	1/31/2012	 	 	 	85529947	 	 
	DistributionIQ	 	USA	 	1/19/2012	 	 	 	85520790	 	 
	TransformerIQ	 	USA	 	5/4/2012	 	 	 	85616898	 	 
	DemandIQ	 	USA	 	4/29/2011	 	 	 	85308403	 	 
	BreakerIQ	 	USA	 	6/14/2010	 	8/16/2011	 	85062546	 	4013606
	CableIQ	 	USA	 	6/14/2010	 	7/5/2011	 	85062531	 	3991130
	LineIQ	 	USA	 	6/14/2010	 	7/5/2011	 	85062524	 	3991129


 


We have
started the process to trademark our company name, GridSense. We have identified another company operating in a different field
that is using the GridSense name. We are investigating whether to take any action necessary.


 


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Intellectual
Property – Copyrights


 


All sales
and marketing material, including user, owner, instruction and installation manuals.


 


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Prior
Names


 


CHK Wireless
Technologies (USA) Inc.


 


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Litigation


 


None


 


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Inbound
Licenses


 


None


 


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Inc. –4 th Amendment to LSA