Document:

4 West
Rockland Road, 1st Floor, Montchanin, Delaware 19710

     

    Phone:  (302)
656-1708    Fax:  (302) 994-3086

     

    
      
        
Certificate of Stock Option
Award

    

    
      Under
the Acorn Energy, Inc. 2006 Stock Incentive Plan

       

      
        

      

    

    JOHN
A. MOORE

    c/o Acorn
Energy, Inc.

    4 West
Rockland Road, 1st Floor

    Montchanin,
Delaware 19710

    

    You have
been granted an option ("Option") to buy shares of the Common Stock of Acorn
Energy, Inc. stock as follows:

    

    
      
        	
                Date
      of Grant

              	
                March
      4, 2008

              
	
                Stock
      Option Agreement

              	
                Nonqualified
      Stock Option

              
	
                Option
      Price per Share

              	
                $5.11

              
	
                Total
      Number of Options Granted

              	
                200,000

              
	
                Expiration
      Date

              	
                March
      4, 2018

              

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 	 	 	 
	 	 	
                                VESTING
      SCHEDULE

                              	 
	
                                On or After

                              	 	
                                Options Available

                                For Exercise

                              	 	 	
                                Cumulative Amount of

                                of Options Available 

                                For Exercise

                              	 
	
                                March 4,
      2008

                              	 	 	0	 	 	 	0	 
	
                                June
      4, 2008

                              	 	 	12,500	 	 	 	12,500	 
	
                                September
      4, 2008

                              	 	 	12,500	 	 	 	25,000	 
	
                                December
      4, 2008

                              	 	 	12,500	 	 	 	37,500	 
	
                                March
      4, 2009

                              	 	 	12,500	 	 	 	50,000	 
	
                                June
      4, 2009

                              	 	 	12,500	 	 	 	62,500	 
	
                                September
      4, 2009

                              	 	 	12,500	 	 	 	75,000	 
	
                                December
      4, 2009

                              	 	 	12,500	 	 	 	87,500	 
	
                                March
      4, 2010

                              	 	 	12,500	 	 	 	100,000	 
	
                                June
      4, 2010

                              	 	 	12,500	 	 	 	112,500	 
	
                                September
      4, 2010

                              	 	 	12,500	 	 	 	125,000	 
	
                                December
      4, 2010

                              	 	 	12,500	 	 	 	137,500	 
	
                                March
      4, 2011

                              	 	 	12,500	 	 	 	150,000	 
	
                                June
      4, 2011

                              	 	 	12,500	 	 	 	162,500	 
	
                                September
      4, 2011

                              	 	 	12,500	 	 	 	175,000	 
	
                                December
      4, 2011

                              	 	 	12,500	 	 	 	187,500	 
	
                                March
      4, 2012

                              	 	 	12,500	 	 	 	200,000	 

                      

                    

                  

                

              

            

          

        

      

    

    

    By your
signature and Acorn’s signature below, you and Acorn agree that this Option is
granted under and governed by the terms and conditions of Acorn’s Stock Option
Agreement and the 2006 Stock Incentive Plan, which are attachments hereto and
are made a part hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4 West
Rockland Road, 1st Floor, Montchanin, Delaware 19710

     

    Phone:  (302)
656-1708    Fax:  (302) 994-3086

     

    Attachments:

    

    1.           Stock
Option Award Agreement (dated March 4, 2008).

    
      	
              2.

            	
              Acorn
      Energy, Inc. 2006 Stock Incentive
Plan.

            

    

    

    
      
        
          
            
              	
                      ACORN ENERGY, INC.

                    	 
      	
                      OPTIONEE

                    
	 
      	 
      	 
      	 
      
	
                      By:

                    	    
      	 
      	   
      
	 
      	
                      Name: Michael Barth

                    	 
      	
                      John
      A. Moore

                    
	 
      	
                      Title:
      Chief Financial Officer

                    	 
      	 
      

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    NONQUALIFIED
OPTION AWARD AGREEMENT

     

    (Issued
Pursuant to the Acorn Energy, Inc. 2006 Stock Incentive Plan)

    

    THIS
OPTION AWARD AGREEMENT ("Agreement"), effective as of the date (the "Effective
Date") set forth in the Certificate to which this Agreement is attached (the
"Certificate"), represents the grant of a nonqualified option ("Option") by
Acorn Energy, Inc., a Delaware corporation (the "Company"), to John A. Moore
(the "Participant"), subject to the terms and conditions set forth below and
pursuant to the provisions of the Company’s 2006 Stock Incentive Plan adopted by
the Company's Board of Directors on February 8, 2007 (the
"Plan").  The Option granted hereby is intended to be an "NQSO" as
such term is defined in the Plan and is not intended to be an "Incentive Option"
as such term is defined in the Plan.

     

    All
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan. The parties hereto agree as follows:

     

    1. General Option Grant
Information. The individual named in the Certificate has been selected to
be a Participant in the Plan and receive a nonqualified option grant as
specified in the Certificate.

    

    2. Grant of Option. The Company
hereby grants to the Participant an Option to purchase the number of Shares set
forth in the Certificate, exercisable at the stated Option Price, which is equal
to or greater than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date specified in the Certificate, as determined in the
manner and subject to the terms and conditions of the Plan and this
Agreement.

     

    3. Option Term. The term of this
Option begins as of the Effective Date and continues through the Expiration Date
as specified in the Certificate, unless sooner terminated in accordance with the
terms of this Agreement.

     

    4. Vesting Period. (a) In General. Subject to
the terms of this Agreement and the Plan, this Option shall vest and be
exercisable as indicated in the Certificate, subject to accelerated vesting in
accordance with the terms of the Employment Agreement dated March 4, 2008
between the Participant and the Company (the “Employment Agreement”). For the
specified vesting to occur on any vesting date set forth therein, the
Participant must be continuously employed by the Company from the Effective Date
through such vesting date. Except as may otherwise be provided herein or in the
Employment Agreement, if the Participant's employment terminates before the last
vesting date set forth in the Certificate, the portion of the Option granted
hereby that is unvested as of the date of termination shall be automatically
forfeited.

    

    (b) No Partial
Vesting.  Except as may be otherwise set forth herein or in the
Plan, in no event shall the Participant have any rights to exercise any portion
of the Option granted hereunder prior to the date such portion vests pursuant to
the Vesting Schedule set forth in the Certificate.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Change of
Control.  Notwithstanding the vesting provisions set forth in
paragraph (a) above, upon the consummation of a Change of Control, this Option
shall automatically become 100% vested and exercisable and shall remain
exercisable through the Expiration Date.  As used herein, “Change of
Control” shall have the meaning set forth in the Employment
Agreement.

    

    5. Exercise. The Participant, or
the Participant's representative upon the Participant's death or disability, may
exercise this Option at any time prior to the termination of the Option, subject
to and as provided in Sections 3 and 8.

     

    6. How to Exercise. This Option
shall be exercised by written notice to the Committee or such other
administrator appointed by the Committee, specifying the number of Shares
subject to this Option Participant desires to exercise. The Option Price for the
number of Shares with respect to which this Option is being exercised shall be
payable to the Company in full: (a) in cash or its equivalent, (b) by cashless
(broker-assisted) exercise; or (c) by any other method approved or accepted by
the Committee in its sole discretion, including, without limitation, net
exercise. In no event may the Option be exercised for a fraction of a
share.

     

    Unless
otherwise determined by the Committee, all cash payments under all of the
methods indicated above shall be paid in United States dollars.

     

    7. Nontransferability. (a) In General. Except as may
be provided in Section 7(b) below, this Option may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution, except as provided in the Plan. No
assignment or transfer of this Option in violation of this Section 7, whether
voluntary or involuntary, by operation of law or otherwise, except by will or
the laws of descent and distribution or as otherwise required by applicable law,
shall vest in the assignee or transferee any interest whatsoever.

    

    (b) Transfers With The Consent of
the Committee. With the prior written consent of the Committee, the
Option granted hereby may be transferred by the Participant to any person or
entity specified in such prior written consent (each, a "Permitted Assignee");
provided, however, that if such consent is granted, the Permitted Assignee shall
be subject to the terms of this Agreement and the Plan unless an exception is
granted in writing by the Committee.

    

    8. Termination of Option.
(a) General. Except as
provided in paragraphs (b) and (c) below, in the event of the termination of
Participant's employment with the Company, vesting (including accelerated
vesting) and exercisability of this Option shall be governed by the terms of the
Employment Agreement.

    

    (b) Death. In the event the
Participant dies while employed by the Company, the Option to the extent not
previously expired or exercised shall, to the extent vested and exercisable on
the date of death, be exercisable by the estate of such Participant or by any
person who acquired such Option by bequest or inheritance, or by the Permitted
Assignee, at any time within 18 months after the death of the Participant,
unless earlier terminated pursuant to its terms, provided, however, that in no
instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 3 above.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (c) Disability. In the event the
Participant’s employment with the Company terminates on account of Disability,
the Participant, or his guardian or legal representative, or a Permitted
Assignee, shall have the unqualified right to exercise the vested portion of the
Option, to the extent not previously exercised or expired, as of the first date
of Disability (as determined in the sole discretion of the Committee), at any
time within 18 months after the first date of Disability, unless earlier
terminated pursuant to its terms, provided, however, that in no instance may the
term of the Option, as so extended, exceed the date of expiration set forth in
Section 3 above. For purposes of this Agreement, “Disability” shall have the
meaning set forth in the Employment Agreement.

    

    9. Administration. This
Agreement and the rights of the Participant hereunder and under the Certificate
are subject to all the terms and conditions of the Plan, as the same may be
amended from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. It is expressly understood
that the Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of the Plan, this
Agreement and the Certificate, all of which shall be binding upon the
Participant. Any inconsistency between the Agreement or the Certificate (on the
one hand) and the Plan (on the other hand) shall be resolved in favor of the
Plan.

    

    10. Reservation of Shares. The
Company hereby agrees that at all times there shall be reserved for issuance
and/or delivery upon exercise of this Option such number of Shares as shall be
required for issuance or delivery upon exercise hereof.

     

    11. Adjustments. The terms of
this Option, including the number and kind of underlying shares as well as the
Option Price, shall be subject to adjustment under the circumstances and in
accordance with the provisions of Section 4.4 and 17.2 of the
Plan.  This Option is also subject to cancellation under the
circumstances and in accordance with the provisions of Section 4.4 of the
Plan.

    

    12. Amendment. Except to the
extent necessary to avoid the imposition of additional tax and/or interest under
Section 409A of the Code with respect to Awards that are treated as nonqualified
deferred compensation, no termination, amendment, suspension, or modification of
the Plan or this Agreement shall adversely affect in any material way the Option
granted under this Agreement without the written consent of the Participant
holding such Options. Notwithstanding the foregoing, the Committee may make
adjustments to the Option granted under this Agreement to take account of
certain events as contemplated by Sections 4.4 and 17.2 of the
Plan.

     

    13. Notices. Any notice which
either party hereto may be required or permitted to give to the other shall be
in writing, and may be delivered personally or by mail, postage prepaid, or
overnight courier, addressed as follows: if to the Company, at its office at 4
West Rockland Road, 1st Floor, Montchanin, Delaware  19710, Attn:
Michael Barth, CFO, or at such other address as the Company by notice to the
Participant may designate in writing from time to time; and if to the
Participant, at the address shown below his or her signature on the Certificate,
or at such other address as the Participant by notice to the Company may
designate in writing from time to time. Notices shall be effective upon
receipt.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    14. Withholding Taxes. The Company
shall have the right to withhold from wages or other amounts otherwise payable
to the Participant (or a Permitted Assignee thereof), or otherwise require such
Participant or Permitted Assignee to pay, any Withholding Taxes arising as a
result of the grant or exercise of this Option, or any other taxable event
occurring pursuant to the Plan, this Agreement or the
Certificate.  If, notwithstanding the foregoing, the Participant (or a
Permitted Assignee thereof) shall fail to actually or constructively make such
tax payments as are required, the Company (or its Affiliates or Subsidiaries)
shall, to the extent permitted by law, have the right to deduct any such
Withholding Taxes from any payment of any kind otherwise due to such Participant
or to take such other action as may be necessary to satisfy such Withholding
Taxes. In satisfaction of the requirement to pay Withholding Taxes, the
Participant (or Permitted Assignee) may make a written election, which may be
accepted or rejected in the discretion of the Committee, (i) to have withheld a
portion of any Shares or other payments then issuable to the Participant (or
Permitted Assignee) pursuant to any Award, or (ii) to tender other Shares to the
Company (either by actual delivery or attestation, in the sole discretion of the
Committee, provided that, except as otherwise determined by the Committee, the
Shares that are tendered must have been held by the Participant for at least six
(6) months prior to their tender to satisfy the Option Price or have been
purchased on the open market), in either case having an aggregate Fair Market
Value equal to the Withholding Taxes.

    

    15. Registration; Legend. The
Company may postpone the issuance and delivery of Shares upon any exercise of
this Option until (a) the admission of such Shares to listing on any stock
exchange or exchanges on which Shares of the Company of the same class are then
listed and (b) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. The Participant shall make such
representations and furnish such information as may, in the opinion of counsel
for the Company, be appropriate to permit the Company, in light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act of 1933, as amended, to issue
the Shares in compliance with the provisions of that or any comparable
act.

    

    The
Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable upon
exercise of this Option unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS
ESTABLISHED BY AN OPINION FROM COUNSEL TO THE COMPANY.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    16. Miscellaneous. (a) Neither
this Agreement nor the Certificate shall confer upon the Participant any right
to continuation of employment by the Company, nor shall this Agreement interfere
in any way with the Company's right to terminate the Participant's employment at
any time.

    

    (b) The
Participant shall have no rights as a stockholder of the Company with respect to
the Shares subject to this Agreement until such time as the purchase price has
been paid, and the Shares have been issued and delivered to the
Participant.

    

    (c) This
Agreement and the Certificate shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

     

    (d) To
the extent not preempted by federal law, this Agreement and the Certificate
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the principles of conflicts of law which might
otherwise apply.  The Participant submits to the exclusive
jurisdiction and venue of the federal or state courts of New York, as determined
by the Company in its sole discretion, to resolve any and all issues that may
arise out of or relate to the Plan, this Agreement or the
Certificate.

     

    (e) All
obligations of the Company under the Plan, this Agreement and the Certificate
with respect to this Option shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

     

    (f) The
provisions of this Agreement and the Certificate are severable and if any one or
more provisions are determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.

     

    (g) By
accepting this Award or other benefit under the Plan, the Participant and each
person claiming under or through the Participant shall be conclusively deemed to
have indicated their acceptance and ratification of, and consent to, any action
taken under the Plan by the Company, the Board or the Committee.

    

    (h) The
Participant, every person claiming under or through the Participant, and the
Company hereby waives to the fullest extent permitted by applicable law any
right to a trial by jury with respect to any litigation directly or indirectly
arising out of, under, or in connection with the Plan, this Agreement or the
Certificate.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    17. Exculpation. This Option
and all documents, agreements, understandings and arrangements relating hereto
have been issued on behalf of the Company by officers acting on its behalf, and
not by any person individually. None of the Directors, officers or stockholders
of the Company, nor the directors, officers or stockholders of any subsidiary or
affiliate of the Company, shall be bound or have any personal liability
hereunder. Each party hereto shall look solely to the assets of the Company for
satisfaction of any liability of the Company in respect of this Option and all
documents, agreements, understanding and arrangements relating hereto and will
not seek recourse or commence any action against any of the Directors, officers
or stockholders of the Company or any of the directors, officers or stockholders
of any subsidiary or affiliate of the Company, or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.

     

    18. Captions. The captions in
this Agreement are for convenience of reference only, and are not intended to
narrow, limit or affect the substance or interpretation of the provisions
contained herein.

    
      
         

      

      
        64 West
Rockland Road, 1st Floor, Montchanin, Delaware 19710

     

    Phone:  (302)
656-1708    Fax:  (302) 994-3086

     

    
      
        

      

      
        Certificate of Stock Option
Award

        Under
the Acorn Energy, Inc. Amended and Restated 2006 Stock Incentive
Plan

      

    

    
       

      
        

      

    

    

    Joe
B. Cogdell, Jr.

    

    c/o Acorn
Energy, Inc.

    4 West
Rockland Road, 1st Floor

    Montchanin,
Delaware 19710

    

    You have
been granted an option ("Option") to buy shares of the Common Stock of Acorn
Energy, Inc. stock as follows:

    
      
        
          
            
              

              
                	 
      	
                         Date
      of Grant

                      	 
      	
                        January
      5, 2009

                      
	 
      	
                         Stock
      Option Agreement

                      	 
      	
                        Incentive
      Stock Option

                      
	  
      	
                         Option
      Price per Share

                      	 
      	
                        $1.61

                      
	 
      	
                         Total
      Number of Options Granted

                      	 
      	
                        120,000

                      
	 
      	
                         Expiration
      Date

                      	 
      	
                        January
      5, 2016

                      

              

              
                 

                
                  

                

              

              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 	 	
                                            VESTING
      SCHEDULE

                                          	 
	 
      	 	 	 	 	
                                            Cumulative
      Amount

                                          	 
	 
      	 	
                                            Options
      Available

                                          	 	 	
                                            of
      Options Available

                                          	 
	
                                            On or After

                                          	 	
                                            For Exercise

                                          	 	 	
                                            For Exercise

                                          	 
	
                                            January
      5, 2009

                                          	 	 	0	 	 	 	0	 
	
                                            January
      5, 2010

                                          	 	 	30,000	 	 	 	30,000	 
	
                                            April
      5, 2010

                                          	 	 	7,500	 	 	 	37,500	 
	
                                            July
      5, 2010

                                          	 	 	7,500	 	 	 	45,000	 
	
                                            October
      5, 2010

                                          	 	 	7,500	 	 	 	52,500	 
	
                                            January
      5, 2011

                                          	 	 	7,500	 	 	 	60,000	 
	
                                            April
      5, 2011

                                          	 	 	7,500	 	 	 	67,500	 
	
                                            July
      5, 2011

                                          	 	 	7,500	 	 	 	75,000	 
	
                                            October
      5, 2011

                                          	 	 	7,500	 	 	 	82,500	 
	
                                            January
      5, 2012

                                          	 	 	7,500	 	 	 	90,000	 
	
                                            April
      5, 2012

                                          	 	 	7,500	 	 	 	97,500	 
	
                                            July
      5, 2012

                                          	 	 	7,500	 	 	 	105,000	 
	
                                            October
      5, 2012

                                          	 	 	7,500	 	 	 	112,500	 
	
                                            January
      5, 2013

                                          	 	 	7,500	 	 	 	120,000	 

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    By your
signature and Acorn’s signature below, you and Acorn agree that this Option is
granted under and governed by the terms and conditions of the Stock Option
Agreement and the

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    4 West
Rockland Road, 1st Floor, Montchanin, Delaware 19710

     

    Phone:  (302)
656-1708    Fax:  (302) 994-3086

    

    Amended
and Restated 2006 Stock Incentive Plan, which are attachments hereto and are
made a part hereof.

    

    Attachments:

    

    
      	
              1.

            	
              Stock
      Option Award Agreement (dated January 5,
2009).

            

    

    
      	
              2.

            	
              Acorn
      Energy, Inc. Amended and Restated 2006 Stock Incentive
    Plan.

            

    

    

    
      	
              ACORN
      ENERGY, INC.

            	 
      	
              OPTIONEE

            
	 
      	 
      	 
      
	
              By:

            	
                

            	 
      	
                

            
	 
      	
              Name:
      John A. Moore

            	 
      	
              Joe
      B. Cogdell, Jr.

            
	 
      	
              Title:
      President and CEO

            	 
      	 
      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    INCENTIVE
OPTION AWARD AGREEMENT

     

    (Issued
Pursuant to the Acorn Energy, Inc. 2006 Stock Incentive Plan, as amended
and

    restated
effective November 3, 2008)

    

    THIS
OPTION AWARD AGREEMENT ("Agreement"), effective as of the date (the "Effective
Date") set forth in the Certificate to which this Agreement is attached (the
"Certificate"), represents the grant of an incentive stock option ("Option") by
Acorn Energy, Inc., a Delaware corporation (the "Company"), to Joe B. Cogdell,
Jr. (the "Participant"), subject to the terms and conditions set forth below and
pursuant to the provisions of the Company’s 2006 Stock Incentive Plan,
originally adopted by the Company's Board of Directors on February 8, 2007,
amended and restated by the Board of Directors in September 2008 and approved by
shareholders on November 3, 2008  (the "Plan").  The Option
granted hereby is intended to be an "Incentive Option" as such term is defined
in the Plan.

     

    All
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan. The parties hereto agree as follows:

     

    1.  General Option Grant
Information. The individual named in the Certificate has been selected to
be a Participant in the Plan and receive an incentive stock option award as
specified in the Certificate.

        

    2.  Grant of Option. The Company
hereby grants to the Participant an Option to purchase the number of Shares set
forth in the Certificate, exercisable at the stated Option Price, which is equal
to or greater than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date specified in the Certificate, as determined in the
manner and subject to the terms and conditions of the Plan and this
Agreement.

     

    3.  Option Term. The term of this
Option begins as of the Effective Date and continues through the Expiration Date
as specified in the Certificate, unless sooner terminated in accordance with the
terms of this Agreement.

     

    4.  Vesting Period. (a) In General. Subject to
the terms of this Agreement and the Plan, this Option shall vest and be
exercisable as indicated in the Certificate.  For the specified
vesting to occur on any vesting date set forth therein, the Participant must be
continuously employed by or serving as an Employee, Director or Third Party
Service Provider of the Company or any of its Affiliates from the Effective Date
through such vesting date. Except as may otherwise be provided herein, if the
Participant's employment or service as an Employee, Director or Third Party
Service Provider terminates before the last vesting date set forth in the
Certificate, the portion of the Option granted hereby that is unvested as of the
date of termination shall be automatically forfeited.

    

    (b)  No Partial
Vesting.  Except as may be otherwise set forth herein or in the
Plan, in no event shall the Participant have any rights to exercise any portion
of the Option granted hereunder prior to the date such portion vests pursuant to
the Vesting Schedule set forth in the Certificate.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c)  Change of Control.
Notwithstanding the vesting provisions set forth in paragraph (a) above, this
Option shall automatically become 100% vested and exercisable upon (i) the
consummation of a Change of Control of the Company or (ii) an Involuntary
Termination of the Participant during the Change of Control Period following a
Change of Control of the Company’s CoaLogix Inc subsidiary,.  As used
herein, the terms “Involuntary Termination”, “Change of Control Period” and
“Change of Control” shall have the meanings given them in the Employment
Agreement dated September 15, 2008 by and among the Participant, the Company and
the Company’s CoaLogix Inc subsidiary.

    

    5.  Exercise. The Participant, or
the Participant's representative upon the Participant's death or disability, may
exercise this Option at any time prior to the termination of the Option, subject
to and as provided in Sections 3 and 8.

     

    6.  How to Exercise. This Option
shall be exercised by written notice to the Committee or such other
administrator appointed by the Committee, specifying the number of Shares
subject to this Option Participant desires to exercise. The Option Price for the
number of Shares with respect to which this Option is being exercised shall be
payable to the Company in full: (a) in cash or its equivalent, (b) by cashless
(broker-assisted) exercise; (c) by tendering (either by actual delivery or
attestation) previously acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the Option Price (provided that except as
otherwise determined by the Committee, the Shares that are tendered must have
been held by the Participant for at least six months prior to their tender to
satisfy the Option Price or have been purchased on the open market) or (d) by
any other method approved or accepted by the Committee in its sole discretion,
including, without limitation, net exercise. In no event may the Option be
exercised for a fraction of a share.

     

    Unless
otherwise determined by the Committee, all cash payments under all of the
methods indicated above shall be paid in United States dollars.

     

    7.  Designation as Incentive
Stock Option. (a)
Designation. This Option is designated an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). If
and to the extent that this Option fails to qualify as an incentive stock option
under the Code, this Option shall remain outstanding according to its terms as a
nonqualified stock option.  If the aggregate fair market value of the
stock on the date of the grant with respect to which incentive stock options are
exercisable for the first time by the Participant during any calendar year,
under the Plan or any other stock option plan of the Company or a parent or
subsidiary, exceeds $100,000, then this Option, as to the excess, shall be
treated as a nonqualified stock option that does not meet the requirements of
Section 422.

     

     (b)  Tax Matters. The
Participant understands that favorable incentive stock option tax treatment is
available only if, among other things, (i) this Option is exercised while the
Participant is an employee of the Company or a parent or subsidiary of the
Company or within a period of time specified in the Code after the Participant
ceases to be an employee (generally 90 days or, in the case of death or
permanent disability, one year, which are less than the post-termination
exercise periods permitted under this Option as set forth in Sections 8(b), (c)
and (d) below) and (ii) there is no Disqualifying Disposition (as defined below)
of Shares acquired upon exercise of this Option. The Participant understands
that the Participant is responsible for the income tax consequences of the
Option, and, among other tax consequences, the Participant understands that he
or she may be subject to the alternative minimum tax under the Code in the year
in which the Option is exercised. The Participant will consult with his or her
tax adviser regarding the tax consequences of the Option.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)  Disqualifying Disposition
Notification.  Participant agrees to notify the Company in
writing immediately after such Participant makes a Disqualifying Disposition of
any Shares acquired pursuant to the exercise of this
Option.  "Disqualifying Disposition" means any disposition (including
any sale) of such Shares before the later of (i) two years after the date the
Participant was granted the Option or (ii) one year after the date the
Participant acquired such Shares by exercising the Option. If the Participant
has died before such Shares are disposed of, these holding period requirements
do not apply.

     

    8.  Nontransferability. This
Option may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution,
and may be exercised during Participant's lifetime only by the Participant or
his or her guardian or legal representative. No assignment or transfer of this
Option in violation of this Section 7, whether voluntary or involuntary, by
operation of law or otherwise, except by will or the laws of descent and
distribution or as otherwise required by applicable law, shall vest in the
assignee or transferee any interest whatsoever.

    

    9.  Termination of
Option. (a) Termination
for Cause. Except as may otherwise be provided in a written agreement
between the Company (or any Affiliate) and Participant, in the event of the
termination of the Participant's service as an Employee, Director or Third Party
Service Provider for “cause”, this Option and all rights granted hereunder shall
be forfeited and deemed cancelled and no longer exercisable on the date of such
termination, unless the Committee determines otherwise. For purposes of this
Agreement, the term "cause" shall have the meaning set forth in any employment,
consulting or similar agreement between the Company (or any Affiliate) and the
Participant or, in the event there is no such agreement (or if any
such  agreement does not contain a definition of “cause”), the term
“cause” shall mean (i) Participant’s conviction of, guilty or no contest plea
to, or confession of guilt of, any felony or other crime involving moral
turpitude, (ii) an act or omission by Participant in connection with
Participant’s employment with or service to the Company or its Affiliates that
constitutes fraud, criminal conduct, breach of fiduciary duty, dishonesty, gross
negligence, malfeasance or willful misconduct, in each case, which the Company
determines in good faith to be materially harmful or detrimental to the Company
or (iii) material breach by Participant of any agreement with the Company or its
Affiliates or continuing failure by Participant to perform such duties as are
properly assigned to Participant, in each case, if curable, after having failed
to cure the same within 30 days following notice from the
Company.  Any determination of “cause” shall be made in the sole good
faith discretion of the Committee.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)  Termination Without
Cause. Unless otherwise determined by the Committee, in the event of the
termination of the Participant's service as an Employee, Director or Third Party
Service Provider other than for cause or other than as a result of the
Participant's death or disability, this Option and all rights granted hereunder
shall be forfeited and deemed cancelled and no longer exercisable on the day
which is 18 months after the date of such termination, unless such termination
shall occur within the Change of Control Period following a Change of Control of
the Company or CoaLogix Inc., in which event this Option may be exercisable
through the Expiration Date, provided, however, that (i) in no instance may the
term of this Option, as so extended, exceed the Expiration Date, and (ii) only
Option(s) not previously expired or exercised, to the extent vested and
exercisable on the date of termination, shall be exercisable (i.e. no vesting
shall occur during the post-termination period).

     

    (c)  Death. In the event
the Participant dies while serving as an Employee, Director or Third Party
Service Provider, the Option to the extent not previously expired or exercised
shall, to the extent vested and exercisable on the date of death, be exercisable
by the estate of such Participant or by any person who acquired such Option by
bequest or inheritance, or by the Permitted Assignee, at any time within 18
months after the death of the Participant, unless earlier terminated pursuant to
its terms, provided, however, that in no instance may the term of the Option, as
so extended, exceed the date of expiration set forth in Section 3
above.

     

    (d)  Disability. In the event the
Participant ceases to perform services of any kind (whether as an Employee,
Director or Third Party Service Provider) for the Company or any of its
Subsidiaries or Affiliates due to permanent and total disability, the
Participant, or his guardian or legal representative, or a Permitted Assignee,
shall have the unqualified right to exercise the vested portion of the Option,
to the extent not previously exercised or expired, as of the first date of
permanent and total disability (as determined in the sole discretion of the
Committee), at any time within 18 months after the first date of permanent and
total disability, unless earlier terminated pursuant to its terms, provided,
however, that in no instance may the term of the Option, as so extended, exceed
the date of expiration set forth in Section 3 above. For purposes of this
Agreement, the term "permanent and total disability" means the Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months, and the permanence and degree of which shall be
supported by medical evidence satisfactory to the Committee. Notwithstanding
anything to the contrary set forth herein, the Committee shall determine, in its
sole and absolute discretion, (i) whether the Participant has ceased to perform
services of any kind due to a permanent and total disability and, if so, (ii)
the first date of such permanent and total disability.

    

    10.  Administration. This
Agreement and the rights of the Participant hereunder and under the Certificate
are subject to all the terms and conditions of the Plan, as the same may be
amended from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. It is expressly understood
that the Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of the Plan, this
Agreement and the Certificate, all of which shall be binding upon the
Participant. Any inconsistency between the Agreement or the Certificate (on the
one hand) and the Plan (on the other hand) shall be resolved in favor of the
Plan.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11. Reservation of Shares. The
Company hereby agrees that at all times there shall be reserved for issuance
and/or delivery upon exercise of this Option such number of Shares as shall be
required for issuance or delivery upon exercise hereof.

    

    12. Adjustments. The terms of
this Option, including the number and kind of underlying shares as well as the
Option Price, shall be subject to adjustment under the circumstances and in
accordance with the provisions of Section 4.4 and 17.2 of the
Plan.  This Option is also subject to cancellation under the
circumstances and in accordance with the provisions of Section 4.4 of the
Plan.

    

    13. Amendment. Except to the
extent necessary to avoid the imposition of additional tax and/or interest under
Section 409A of the Code with respect to Awards that are treated as nonqualified
deferred compensation, no termination, amendment, suspension, or modification of
the Plan or this Agreement shall adversely affect in any material way the Option
granted under this Agreement without the written consent of the Participant
holding such Options. Notwithstanding the foregoing, the Committee may make
adjustments to the Option granted under this Agreement to take account of
certain events as contemplated by Sections 4.4 and 17.2 of the
Plan.

     

    14. Notices. Any notice which
either party hereto may be required or permitted to give to the other shall be
in writing, and may be delivered personally or by mail, postage prepaid, or
overnight courier, addressed as follows: if to the Company, at its office at 4
West Rockland Road, 1st Floor, Montchanin, Delaware  19710, Attn:
Michael Barth, CFO, or at such other address as the Company by notice to the
Participant may designate in writing from time to time; and if to the
Participant, at the address shown below his or her signature on the Certificate,
or at such other address as the Participant by notice to the Company may
designate in writing from time to time. Notices shall be effective upon
receipt.

    

    15. Withholding Taxes. The
Company shall have the right to withhold from wages or other amounts otherwise
payable to the Participant (or a Permitted Assignee thereof), or otherwise
require such Participant or Permitted Assignee to pay, any Withholding Taxes
arising as a result of (i) the grant or exercise of this Option, or any other
taxable event occurring pursuant to the Plan, this Agreement or the Certificate
or (ii) a Disqualifying Disposition of Shares.  If, notwithstanding
the foregoing, the Participant (or a Permitted Assignee thereof) shall fail to
actually or constructively make such tax payments as are required, the Company
(or its Affiliates or Subsidiaries) shall, to the extent permitted by law, have
the right to deduct any such Withholding Taxes from any payment of any kind
otherwise due to such Participant or to take such other action as may be
necessary to satisfy such Withholding Taxes. In satisfaction of the requirement
to pay Withholding Taxes, the Participant (or Permitted Assignee) may make a
written election, which may be accepted or rejected in the discretion of the
Committee, (i) to have withheld a portion of any Shares or other payments then
issuable to the Participant (or Permitted Assignee) pursuant to any Award, or
(ii) to tender other Shares to the Company (either by actual delivery or
attestation, in the sole discretion of the Committee, provided that, except as
otherwise determined by the Committee, the Shares that are tendered must have
been held by the Participant for at least six (6) months prior to their tender
to satisfy the Option Price or have been purchased on the open market), in
either case having an aggregate Fair Market Value equal to the Withholding
Taxes.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    16. Registration; Legend. The
Company may postpone the issuance and delivery of Shares upon any exercise of
this Option until (a) the admission of such Shares to listing on any stock
exchange or exchanges on which Shares of the Company of the same class are then
listed and (b) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. The Participant shall make such
representations and furnish such information as may, in the opinion of counsel
for the Company, be appropriate to permit the Company, in light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act of 1933, as amended, to issue
the Shares in compliance with the provisions of that or any comparable
act.

    

    The
Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable upon
exercise of this Option unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS
ESTABLISHED BY AN OPINION FROM COUNSEL TO THE COMPANY.

     

    17. Miscellaneous. (a) Neither
this Agreement nor the Certificate shall confer upon the Participant any right
to continuation of employment by the Company, nor shall this Agreement interfere
in any way with the Company's right to terminate the Participant's employment at
any time.

    

    (b)  The
Participant shall have no rights as a stockholder of the Company with respect to
the Shares subject to this Agreement until such time as the purchase price has
been paid, and the Shares have been issued and delivered to the
Participant.

        

    (c) 
This Agreement and the Certificate shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

     

    (d) 
To the extent not preempted by federal law, this Agreement and the Certificate
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the principles of conflicts of law which might
otherwise apply.  The Participant submits to the exclusive
jurisdiction and venue of the federal or state courts of New York, as determined
by the Company in its sole discretion, to resolve any and all issues that may
arise out of or relate to the Plan, this Agreement or the
Certificate.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e) 
All obligations of the Company under the Plan, this Agreement and the
Certificate with respect to this Option shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

     

    (f) 
The provisions of this Agreement and the Certificate are severable and if any
one or more provisions are determined to be illegal or otherwise unenforceable,
in whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.

     

    (g) 
By accepting this Award or other benefit under the Plan, the Participant and
each person claiming under or through the Participant shall be conclusively
deemed to have indicated their acceptance and ratification of, and consent to,
any action taken under the Plan by the Company, the Board or the
Committee.

    

    (h) 
The Participant, every person claiming under or through the Participant, and the
Company hereby waives to the fullest extent permitted by applicable law any
right to a trial by jury with respect to any litigation directly or indirectly
arising out of, under, or in connection with the Plan, this Agreement or the
Certificate.

    

    18. Exculpation. This Option
and all documents, agreements, understandings and arrangements relating hereto
have been issued on behalf of the Company by officers acting on its behalf, and
not by any person individually. None of the Directors, officers or stockholders
of the Company, nor the directors, officers or stockholders of any subsidiary or
affiliate of the Company, shall be bound or have any personal liability
hereunder. Each party hereto shall look solely to the assets of the Company for
satisfaction of any liability of the Company in respect of this Option and all
documents, agreements, understanding and arrangements relating hereto and will
not seek recourse or commence any action against any of the Directors, officers
or stockholders of the Company or any of the directors, officers or stockholders
of any subsidiary or affiliate of the Company, or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.

    

    19. Captions. The captions in
this Agreement are for convenience of reference only, and are not intended to
narrow, limit or affect the substance or interpretation of the provisions
contained herein.

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