UNCONDITIONAL
GUARANTY 


 


For
and in consideration of the loan by SQUARE 1 BANK (“Bank”) to GRIDSENSE INC. (“Borrower”), which loan
is made pursuant to a Loan and Security Agreement dated as of November 2, 2012 (as amended from time to time, the “Agreement”),
and acknowledging that Bank would not enter into the Agreement without the benefit of this Guaranty, the undersigned guarantor
(“Guarantor”) hereby unconditionally and irrevocably guarantees the prompt and complete payment of all amounts that
Borrower owes to Bank and performance by Borrower of the Agreement and any other agreements between Borrower and Bank, as amended
from time to time (collectively referred to as the “Agreements”), in strict accordance with their respective terms.
All terms used without definition in this Guaranty shall have the meaning assigned to them in the Agreement.


 


1.If
Borrower does not pay any amount or perform its obligations in strict accordance with the Agreements, Guarantor shall immediately
pay all amounts due thereunder (including, without limitation, all principal, interest, and fees) and otherwise to proceed to
complete the same and satisfy all of Borrower’s obligations under the Agreements.


 


2.If
there is more than one guarantor, the obligations hereunder are joint and several, and whether or not there is more than one guarantor,
the obligations hereunder are independent of the obligations of Borrower and any other person or entity, and a separate action
or actions may be brought and prosecuted against Guarantor whether action is brought against Borrower or whether Borrower be joined
in any such action or actions. Guarantor waives the benefit of any statute of limitations affecting its liability hereunder or
the enforcement thereof, to the extent permitted by law. Guarantor’s liability under this Guaranty is not conditioned or
contingent upon the genuineness, validity, regularity or enforceability of the Agreements.


 


3.Guarantor
authorizes Bank, without notice or demand and without affecting its liability hereunder, from time to time to (a) renew, extend,
or otherwise change the terms of the Agreements or any part thereof; (b) take and hold security for the payment of this Guaranty
or the Agreements, and exchange, enforce, waive and release any such security; and (c) apply such security and direct the order
or manner of sale thereof as Bank in its sole discretion may determine.


 


4.Guarantor
waives any right to require Bank to (a) proceed against Borrower, any guarantor or any other person; (b) proceed against or exhaust
any security held from Borrower; or (c) pursue any other remedy in Bank’s power whatsoever. Bank may, at its election, exercise
or decline or fail to exercise any right or remedy it may have against Borrower or any security held by Bank, including without
limitation the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any
way the liability of Guarantor hereunder. Guarantor waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower. Guarantor waives any setoff, defense
or counterclaim that Borrower may have against Bank. Guarantor waives any defense arising out of the absence, impairment or loss
of any right of reimbursement or subrogation or any other rights against Borrower. Until all of the amounts that Borrower owes
to Bank have been paid in full, Guarantor shall have no right of subrogation or reimbursement, contribution or other rights against
Borrower, and Guarantor waives any right to enforce any remedy that Bank now has or may hereafter have against Borrower. Guarantor
waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor,
and notices of acceptance of this Guaranty and of the existence, creation, or incurring of new or additional indebtedness. Guarantor
assumes the responsibility for being and keeping itself informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of nonpayment of any indebtedness or nonperformance of any obligation of Borrower, warrants to Bank that
it will keep so informed, and agrees that absent a request for particular information by Guarantor, Bank shall not have any duty
to advise Guarantor of information known to Bank regarding such condition or any such circumstances. Guarantor waives the benefits
of California Civil Code sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.


 


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Energy – Unconditional Guaranty


 




    	 



    	 



    


 


5.If
Borrower becomes insolvent or is adjudicated bankrupt or files a petition for reorganization, arrangement, composition or similar
relief under any present or future provision of the United States Bankruptcy Code, or if such a petition is filed against Borrower,
and in any such proceeding some or all of any indebtedness or obligations under the Agreements are terminated or rejected or any
obligation of Borrower is modified or abrogated, or if Borrower’s obligations are otherwise avoided for any reason, Guarantor
agrees that Guarantor’s liability hereunder shall not thereby be affected or modified and such liability shall continue
in full force and effect as if no such action or proceeding had occurred. This Guaranty shall continue to be effective or be reinstated,
as the case may be, if any payment must be returned by Bank upon the insolvency, bankruptcy or reorganization of Borrower, Guarantor,
any other guarantor, or otherwise, as though such payment had not been made.


 


6.Any
indebtedness of Borrower now or hereafter held by Guarantor is hereby subordinated to any indebtedness of Borrower to Bank; and
such indebtedness of Borrower to Guarantor shall be collected, enforced and received by Guarantor as trustee for Bank and be paid
over to Bank on account of the indebtedness of Borrower to Bank but without reducing or affecting in any manner the liability
of Guarantor under the other provisions of this Guaranty.


 


7.Guarantor
agrees to pay reasonable attorneys’ fees and all other costs and expenses which may be incurred by Bank in the enforcement
of this Guaranty. No terms or provisions of this Guaranty may be changed, waived, revoked or amended without Bank’s prior
written consent. Should any provision of this Guaranty be determined by a court of competent jurisdiction to be unenforceable,
all of the other provisions shall remain effective. This Guaranty, together with any agreements (including without limitation
any security agreements or any pledge agreements) executed in connection with this Guaranty, embodies the entire agreement among
the parties hereto with respect to the matters set forth herein, and supersedes all prior agreements among the parties with respect
to the matters set forth herein. No course of prior dealing among the parties, no usage of trade, and no parol or extrinsic evidence
of any nature shall be used to supplement, modify or vary any of the terms hereof. There are no conditions to the full effectiveness
of this Guaranty. Bank may assign this Guaranty without in any way affecting Guarantor’s liability under it. This Guaranty
shall inure to the benefit of Bank and its successors and assigns. This Guaranty is in addition to the guaranties of any other
guarantors and any and all other guaranties of Borrower’s indebtedness or liabilities to Bank.


 


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Energy – Unconditional Guaranty


 




    	 



    	 



    


 


8.Guarantor
represents and warrants to Bank that (i) Guarantor has taken all necessary and appropriate action to authorize the execution,
delivery and performance of this Guaranty, (ii) execution, delivery and performance of this Guaranty do not conflict with or result
in a breach of or constitute a default under Guarantor’s Articles / Certificate of Incorporation or Bylaws or other organizational
documents or agreements to which it is party or by which it is bound, and (iii) this Guaranty constitutes a valid and binding
obligation, enforceable against Guarantor in accordance with its terms.


 


9.Guarantor
covenants and agrees that Guarantor shall do all of the following:


 


9.1Guarantor
shall maintain its corporate existence, remain in good standing in Delaware, and continue to qualify in each jurisdiction in which
the failure to so qualify could have a material adverse effect on the financial condition, operations or business of Guarantor.
Guarantor shall maintain in force all licenses, approvals and agreements, the loss of which could have a material adverse effect
on its financial condition, operations or business.


 


9.2Guarantor
shall comply with all statutes, laws, ordinances, directives, orders, and government rules and regulations to which it is subject
if non-compliance with such laws could adversely affect the financial condition, operations or business of Guarantor.


 


9.3Guarantor
shall maintain, either: (i) Guarantor’s cash (excluding Guarantor’s cash on the balance sheet of USSI, OmniMetrix,
DSIT and Borrower) of at least $5,000,000, measured on a quarterly basis as set forth in the Guarantor’s reports on Form
10-Q filed with the Securities and Exchange Commission, or (ii) Current Ratio of at least 1.50 to 1.00, measured on a quarterly
basis as set forth in the Guarantor’s reports on Form 10-Q filed with the Securities and Exchange Commission.


 


For
the purposes of this Section 9.3:


 


	 	1.	“Current
    Ratio” means the ratio of Current Assets to Current Liabilities.
	 	 	 
	 	2.	“Current
    Assets” means, as of any applicable date, all amounts that should, in accordance with GAAP, be included as current assets
    on the consolidated balance sheet of Guarantor and its subsidiaries, as at such date, excluding Guarantor’s cash on
    the balance sheet of USSI, OmniMetrix, DSIT and Borrower.
	 	 	 
	 	3.	“Current
    Liabilities” means, as of any applicable date, all amounts that should, in accordance with GAAP, be included as current
    liabilities on the consolidated balance sheet of Guarantor and its subsidiaries, as at such date.


 


9.4Within
5 days of filing for each quarter, Guarantor shall deliver to Bank a complete copy of Guarantor’s reports on Form 10-Q filed
with the Securities and Exchange Commission for the preceding quarter.


 


9.5At
any time and from time to time Guarantor shall execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Guaranty.


 


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Energy – Unconditional Guaranty


 




    	 



    	 



    


 


10.This
Guaranty shall be governed by the laws of the State of California, without regard to conflicts of laws principles. GUARANTOR WAIVES
ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
Guarantor submits to the exclusive jurisdiction of the state and federal courts located in San Mateo County, California for purposes
of this Guaranty and the Agreements. IF THIS JURY WAIVER IS UNENFORCEABLE FOR ANY REASON THE PARTIES WILL RESOLVE ALL DISPUTES
ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN BY BINDING ARBITRATION CONDUCTED IN SAN MATEO COUNTY, CALIFORNIA
IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. The arbitrator shall apply California
law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment
on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing,
the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration
in accordance with this Section. The costs and expenses of the arbitration, including without limitation, the arbitrator’s
fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded
to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate
by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses,
both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.


 


11.All
payments made by Guarantor hereunder will be made free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any governmental
authority or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding
any tax imposed on or measured by the net income or profits of a Bank pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office or applicable lending office of such Bank is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to collectively as “Taxes”). If any Taxes are so
levied or imposed, Guarantor agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Guaranty, after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein and in the Loan Documents.


 


[Signature
Page Follows]



 


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Energy – Unconditional Guaranty


 



    	 



    	 



    




 


In
Witness Whereof, the undersigned Guarantor has executed this
Guaranty as of this 30th day of December, 2013.


 


	 	ACORN ENERGY, INC.
	 	 
	 	By:	 
	 	Name:

        
	 
	 	Title:	 


 


	 	Address
    of Guarantor:
	 	 
	 	 
	 	 


 


Acorn
Energy – Unconditional Guaranty