Document:

Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY
AGREEMENT is made and dated as of August 13, 2015 and is entered into by and between ACORN ENERGY, INC., a Delaware corporation
(“Borrower”), GRIDSENSE INC., a Georgia company (“GridSense”), OMX HOLDINGS INC., a Georgia corporation
(“OMX”), OMNIMETRIX, LLC, a Georgia limited liability company (“OmniMetrix”), LEAP TIDE CAPITAL PARTNERS
III, LLC, a Delaware limited liability company (“Lender”) and the Guarantors as hereinafter defined.

 

RECITALS

 

		A.	Borrower wishes to obtain credit from Lender, and Lender
desires to extend credit to Borrower;

 

		B.	Lender is willing to provide the Loan (as defined herein)
to the Borrower on the terms and conditions set forth in this Agreement;

 

		C.	OMX and GridSense are wholly-owned subsidiaries of Borrower;
and

 

		D.	OmniMetrix is a wholly-owned subsidiary of OMX.

 

AGREEMENT

 

NOW, THEREFORE, Borrower
and Lender agree as follows:

 

SECTION
1. DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1         Unless
otherwise defined herein, the following capitalized terms shall have the following meanings:

 

“Additional Grantor”
means any Person, other than Borrower that at any time pledges its interest in any property or rights under the Intellectual Property
Security Agreement.

 

“Affiliate”
means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls
or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors,
and general partners.

 

“Agreement”
means this Loan and Security Agreement, as amended from time to time.

 

“Board” means
Borrower’s board of directors.

 

“Business Day”
means any day other than Saturday, Sunday and any other day on which banking institutions in the State of Delaware are closed for
business.

 

“Capitalization Increase”
has the meaning set forth in Section 7.26.

 

“Cash Settlement
Period” has the meaning set forth in Section 2.9.

 

     

     

    

 

“Closing Date”
means the date of this Agreement.

 

“Collateral”
shall mean all assets of the Borrower and OMX, including without limitation all of the Borrower’s rights, title and interests
in and to all of the following, whether now or hereafter existing or acquired by the Borrowers: (i) accounts; (ii) as-extracted
collateral; (iii) chattel paper; (iv) deposit accounts; (v) documents; (vi) equipment; (vii) farm products; (viii) fixtures; (ix)
general intangibles; (x) inventory; (xi) instruments; (xii) investment property, including without limitation all of Borrower’s
equity interest in each of DSIT, OMX and GridSense and all of OMX’s equity interest in OmniMetrix; (xiii) letter-of-credit
rights; (xiv) other goods; (xv) supporting obligations; (xvi) commercial tort claims; and (xvii) all proceeds and products of all
of the foregoing, including without limitation whatever is received when any of the foregoing Collateral is sold, exchanged, leased,
licensed, collected or otherwise disposed of and includes all distributions on account thereof, rights and claims arising therefrom.

 

“Confidential Information”
has the meaning given to it in Section 11.11.

 

“Default” means
any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.

 

“DSIT” means
DSIT Solutions Ltd., a company under the laws of Israel.

 

“Event of Default”
has the meaning given to it in Section 9.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“GAAP” means
generally accepted accounting principles in the United States of America, as in effect from time to time, consistently applied.

 

“Guarantee”
of any Person shall mean the obligation of such Person guaranteeing the Obligations including, but not limited to, payment thereof.

 

“Guarantor”
means each Person which joins this Agreement as a guarantor on or after the date hereof and includes GridSense (subject to Section
10.11), OMX and OmniMetrix.

 

“Indebtedness”
means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or
services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations
evidenced by notes, bonds, debentures or similar instruments and (c) all capital lease obligations.

 

“Initial Shares”
has the meaning set forth in Section 2.7.

 

“Intercreditor Agreement”
means the Intercreditor Agreement, dated as of the date hereof, by and among the Lender, DSIT and Borrower, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“Intellectual Property
Collateral” has the meaning ascribed to that term in the Intellectual Property Security Agreement.

 

    	 	2	 

     

    

 

“Intellectual Property
Security Agreement” means the security agreement by and among the Borrower, the Guarantors and the Lender, executed in connection
with this Agreement and, as applicable, any Additional Grantor, creating a security interest in the Borrower’s and any Additional
Grantor’s intellectual property, securing the Obligations.

 

“Lender” has
the meaning given to it in the preamble to this Agreement.

 

“Lien” means
any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale
or other title retention agreement, and any lease in the nature of a security interest; provided that in no event shall an operating
lease entered into in the ordinary course of business or any precautionary UCC filings made pursuant thereto by an applicable lessor
or lessee, be deemed to be a Lien.

 

“Loan” shall
have the meaning assigned to such term in Section 2.1.

 

“Loan Documents”
means this Agreement, the Note, the Intellectual Property Security Agreement, the Intercreditor Agreement, all UCC Financing Statements,
any subordination agreement, and any other documents executed in connection with the Obligations or the transactions contemplated
hereby, as the same may from time to time be amended, modified, supplemented or restated.

 

“Loan Interest Rate”
shall mean ten percent (10.0%) per annum.

 

“Material Adverse
Effect” means a material adverse effect on the financial condition, properties or operations of the Borrower and its Subsidiaries
on a consolidated basis.

 

“Maturity Date”
shall mean August 13, 2016.

 

“Maximum Rate”
shall have the meaning assigned to such term in Section 2.9.

 

“Note” means
a promissory note issued by Borrower to the Lender to evidence the Loan, substantially in the form of Exhibit A hereto.

 

“Obligations”
means the obligation of the Borrower:

 

(a)          to
pay the principal of and interest on the Note in accordance with the terms thereof and to satisfy all of its other liabilities
to the Lender, whether hereunder or otherwise, whether now existing or hereafter incurred, matured or unmatured, direct or contingent,
joint or several, including any extensions, modifications, renewals thereof and substitutions therefor and including, but not limited
to, any obligations under letter of credit agreements;

 

(b)          to
repay to the Lender all amounts advanced by the Lender hereunder or otherwise on behalf of the Borrower and interest thereon, including,
but without limitation, advances for principal or interest payments to prior secured parties, mortgagees or licensers, or taxes,
levies, insurance, rent or repairs to, or maintenance or storage of, any of the real or personal property securing the Borrower’s
payment and performance of this Agreement; and

 

    	 	3	 

     

    

 

(c)          to
reimburse the Lender, on demand, for the Lender’s reasonable out-of-pocket expenses and costs, including the reasonable fees
and expenses of its counsel (subject to the cap referred to in Section 2.11), in connection with the preparation, administration,
amendment, modification, or enforcement of this Agreement and the Loan Documents required hereunder, including, without limitation,
any proceeding brought or threatened to enforce payment of any of the Obligations referred to in the foregoing subparagraphs (a)
and (b).

 

“Permitted Indebtedness”
means: (i) Indebtedness in favor of Lender arising under this Agreement or any other Loan Document; (ii) Indebtedness existing
on the Closing Date which are disclosed in Schedule 1.1A ; (iii) Indebtedness of up to $200,000 outstanding at any time secured
by a Lien described in clause (v) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed
the lesser of the cost or fair market value of the Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors
incurred in the ordinary course of business, including Indebtedness incurred in the ordinary course of business with corporate
credit cards; (v) other Indebtedness in an amount not to exceed $100,000 at any time outstanding; (vi) Indebtedness of (A) OMX
and OmniMetrix, on a consolidated basis, or of (B) GridSense in the nature of accounts receivable or other working capital financing
in each case in an amount not to exceed $500,000 with respect to OMX and OmniMetrix, on a consolidated basis, or $750,000 with
respect to Gridsense and (vii) extensions, refinancings, renewals, modifications, amendments or restatements of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the terms modified do not impose materially more burdensome
terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Liens”
means any and all of the following: (i) Liens in favor of Lender; (ii) Liens existing on the Closing Date which are disclosed in
Schedule 1.1A; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being
contested in good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor in accordance
with GAAP; (iii) statutory Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords
and other like Persons arising in the ordinary course of Borrower’s business and imposed without action of such parties;
provided, that the payment thereof is not yet required; (iv) Liens arising from judgments, decrees or attachments in circumstances
which do not constitute an Event of Default hereunder; (v) Liens on Equipment or software or other intellectual property constituting
purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted
Indebtedness”; (vi) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities
in favor of banks, other depository institutions and brokerage firms; (vii) Liens securing Permitted Indebtedness of the type referred
to in clause (vi) of the definition thereof and (viii) Liens incurred in connection with the extension, renewal or refinancing
of the Indebtedness secured by Liens permitted by the above clauses; provided, that any extension, renewal or replacement Lien
shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed,
refinanced, modified, amended or restated (as may have been reduced by any payment thereon) does not increase.

 

    	 	4	 

     

    

 

“Person” means
any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, other entity or government.

 

“Put Obligation”
shall have the meaning set forth in Section 9.3.

 

“SEC Reports”
has the meaning set forth in Section 5.7.

 

“Subsidiary”
means any corporation, partnership or limited liability company or joint venture, other than the Borrower’s US Seismic Systems,
Inc. subsidiary, in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest
or joint venture of which by the terms thereof ordinary voting power to elect the board of directors, managers or trustees of the
entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

“UCC” means
the Uniform Commercial Code as the same is, from time to time, in effect in the State of Delaware; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect
to, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect
in a jurisdiction other than the State of Delaware, then the term “UCC” shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such provisions.

 

“Vested Share Right”
has the meaning set forth in Section 2.8.

 

Unless otherwise specified,
all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,”
“Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule
in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other
Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents,
terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.

 

SECTION
2. THE LOAN

 

2.1         Loan.
Subject to the terms and conditions of this Agreement, on the Closing Date, Lender shall loan $2,000,000 (the “Loan”)
to Borrower. The Loan shall be funded in cash of which (a) $1,383,856 shall be wired to Borrower in accordance with written instructions
provided by Borrower, (b) $100,000 shall be wired to Eilenberg & Krause LLP (“Escrow Agent”) pursuant to the terms
and conditions of that certain escrow agreement in the form of Exhibit B hereto, and (c) $483,144 shall be wired to Square 1 Bank
to fully pay off the outstanding term loan payable by GridSense to Square 1 Bank (the “GridSense Loan”). Borrower shall
make additional payments into the escrow as needed to maintain a balance of at least $50,000 in the account until 90 days prior
to the Maturity Dare after which the escrow may be fully disburse to pay monthly payments if interest through the Maturity Date.

 

    	 	5	 

     

    

 

2.2         Use
of Proceeds. The proceeds of the Loan shall be used (i) to fully pay the GridSense Loan and (ii) the balance shall provide
liquidity to Borrower for working capital purposes to fund its operating Subsidiaries and other costs. The Borrower will not, directly
or indirectly, use any part of such proceeds for the purpose of purchasing or carrying any margin stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System or to extend credit to any Person for the purpose of purchasing or carrying
any such margin stock, or for any purpose which violates, or is inconsistent with, Regulation X of such Board of Governors. The
Borrower further agrees that the proceeds of the Loan have not been and shall continue not to be used to purchase any stock or
equity in any form or invest in or loan any funds to any entity other than to fund its operating Subsidiaries existing on the date
hereof.

 

2.3         Note.
The Loan shall be evidenced by the Note issued to Lender.

 

2.4         Principal
Amount. The principal amount payable under this Agreement and the Note at any time outstanding (the “Outstanding Principal
Amount”) shall be equal to the amount of the Loan increased by any Put Obligation less any payments against principal or
Put Obligation.

 

2.5         Interest.
The Outstanding Principal Amount shall bear interest thereon from the date of the funding in the case of the Loan or from the date
of incurrence in the case of any Put Obligation, in each case at the Loan Interest Rate based on a year consisting of 360 days,
with interest computed daily based on the actual number of days elapsed.

 

2.6         Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at
a rate per annum of twenty percent (20%) (the “Default Rate”). Payment or acceptance of the increased interest rate
provided in this Section 26 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event
of Default or otherwise prejudice or limit any rights or remedies of Lender.

 

2.7         Payment.
Borrower will pay, or will direct the Escrow Agent to pay, interest on the Outstanding Principal Amount on the first Business Day
of each quarter, beginning October 1, 2015. The entire Principal Amount and all accrued but unpaid interest hereunder, and all
other Obligations with respect to the Loan, shall be due and payable on the Maturity Date unless accelerated pursuant to the terms
of this Agreement. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless
of any counterclaim or defense. Any and all payments shall be first applied to any accrued but unpaid interest.

 

2.8         Initial
Shares; Vested Share Rights. In addition to the interest payable in cash provided for under this Agreement, Borrower shall
issue to Lender on the date of funding 850,000 shares of fully paid and nonassesable Common Stock of Borrower (the “Initial
Shares”). In addition to the interest payable in cash and the issuance of the Initial Shares provided for herein, Lender
shall become entitled to a vested right to receive, without payment of any additional consideration, an additional 179,167 shares
of Borrower Common Stock (each such vested right to receive one share, a “Vested Share Right”) per month for each full
month through the Maturity Date that the full Loan shall remain outstanding. The number of Vested Share Rights shall be prorated
to the extent less than the full principal amount is outstanding and/or for any partial month in which no principal amount is outstanding.
Subject to Borrower’s cash settlement rights referred to in Section 2.9 below, the Lender shall be entitled to receive all
Common Stock for all Vested Share Rights after the expiration of the Cash Settlement Period. Prior to expiration of the Cash Settlement
Period, Lender shall not be permitted to sell, transfer or otherwise dispose of the Initial Shares or Vested Share Rights (or shares
underlying Vested Share Rights) except to a purchaser or transferee who agrees to be bound by the Borrower’s cash settlement
rights referred to in Section 2.9 below, and any such purported sale, transfer or disposition shall be void ab initio.

 

    	 	6	 

     

    

 

2.9         Prepayment;
Cash Settlement. Borrower may pre-pay all principal of the Loan and interest accrued thereon at any time. In addition, Borrower
may at any time and from time to time on or prior to 30 days after the Maturity Date or 30 days after the earlier acceleration
or repayment of the Loan (such period being referred to herein as the “Cash Settlement Period”) (i) repurchase any
or all Initial Shares and (ii) settle any or all Vested Share Rights accrued under the Loan, for cash in lieu of stock. The cash
repurchase or settlement price shall be an amount equal to $0.30 for each (i) Initial Share so repurchased and (ii) Vested Share
Right so settled. Borrower’s right to (i) repurchase the Initial Shares and (ii) settle the Vested Share Rights in cash shall
be subject to Lender’s right to put the same to Borrower at a higher price as described under Capitalization Increase in
Section 9.3.

 

2.10       Maximum
Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to
contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent
jurisdiction shall deem applicable hereto (the “Maximum Rate”). If a court of competent jurisdiction shall finally
determine that Borrower has actually paid to Lender an amount of interest in excess of the amount that would have been payable
if all of the Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower
shall be applied as follows: first, to the payment of the Obligations consisting of the outstanding principal amount of the Loan;
second, after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and
any other Obligations; and third, after all Obligations are repaid, the excess (if any) shall be refunded to Borrower.

 

2.11       Fees
and Cost of Loan. The Borrower shall pay all costs associated with the Closing of the Loan, including, but not limited to,
any taxes and Lender’s legal fees, subject to a cap on Lender’s legal fees in the amount of $33,000.

 

SECTION
3. SECURITY INTEREST

 

3.1         As
security for the due and punctual payment of any and all of the present and future Obligations, Borrower and OMX hereby grant to
the Lender a continuing security interest in all of the Collateral, whether now or hereafter existing or acquired.

 

3.2         Borrower
represents and warrants to the Lender that neither Borrower nor any Guarantor has created or is aware of any security interest,
Lien or encumbrance on or affecting the Collateral other than that created hereby or the Permitted Liens.

 

3.3         Borrower
assumes all liability and responsibility in connection with the Collateral and the obligations of Borrower to pay all Obligations
shall in no way be affected or diminished by reason of the fact that any such Collateral may be lost, destroyed, stolen, or for
any reason whatsoever unavailable to Borrower.

 

    	 	7	 

     

    

 

3.4         So
long as the Obligations remain outstanding, Borrower agrees that:

 

(a)          In
order to enable the Lender to comply with the law of any jurisdiction, including state, federal and foreign, applicable to any
security interest granted hereby or to the Collateral, Borrower shall execute and deliver upon request, in form reasonably acceptable
to the Lender, any financing statement, notice, statement, instrument, document, agreement or other paper and/or perform any act
requested by the Lender as the Lender may deem necessary or desirable to create, perfect, preserve, validate or otherwise protect
such security interest or to enable the Lender to exercise and enforce its rights hereunder or with respect to such security interest.

 

(b)          Except
for the security interest granted hereby and any Permitted Liens, Borrower shall keep the Collateral and proceeds, products, accessions
and substitutions therefor free and clear of any Lien of any kind, and Borrower shall promptly pay, when due, all taxes, charges
and fees affecting or arising out of the Collateral, shall defend the Collateral against all claims and demands of all persons
or entities at any time claiming the same or any interest therein adverse to the Lender and Borrower shall diligently and in good
faith pursue collection of all accounts receivable included in the Collateral.

 

(c)          The
Lender’s duty with respect to the Collateral shall be solely to use reasonable care in the custody and preservation of the
Collateral in its possession; Lender shall not be obligated to take any steps necessary to preserve any rights in any of the Collateral
against prior parties and Borrower hereby agree to take such steps. Borrower shall pay to Lender all reasonable costs and expenses
in connection with the collection of the Collateral; Lender may, but is not obligated to, exercise any and all rights of conversion
or exchange or similar rights, privileges and options relating to the Collateral; and Lender shall have no obligation to sell or
otherwise realize upon any of the Collateral as herein authorized and shall not be responsible for any failure to do so or for
any delay in so doing.

 

3.5         All
options, powers and rights granted to Lender hereunder or under any promissory note, instrument, document or other writing delivered
to the Lender in connection herewith shall be cumulative and shall be in addition to any other options, powers or rights which
Lender may now or hereafter have as a secured party under the Uniform Commercial Code or under any other applicable law or otherwise.

 

3.6         Upon
and during the continuance of an Event of Default, Lender shall have the right, for and in the name, place and stead of Borrower
to execute endorsements, assignments or other instruments of conveyance or transfer with respect to any of the Collateral.

 

SECTION
4. CONDITIONS PRECEDENT TO LOAN

 

The obligation of Lender
to make the Loan hereunder is subject to the satisfaction by Borrower of the following conditions:

 

    	 	8	 

     

    

 

4.1         On
or prior to the Closing Date, Borrower shall have delivered to Lender the following:

 

(a)          executed
originals of the Loan Documents, including the Note, and any other documents and instruments reasonably required by Lender to effectuate
the transactions contemplated hereby or to create and perfect the Liens of Lender with respect to all Collateral, in all cases
in form and substance reasonably acceptable to Lender;

 

(b)          certified
copy of resolutions of Borrower’s Board evidencing approval of the Loan and other transactions evidenced by the Loan Documents;

 

(c)          certified
copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower;

 

(d)          a
certificate of good standing for Borrower from its state of incorporation

 

(e)          a
favorable opinion of counsel for the Borrower, in the form and substance reasonably acceptable to the Lender; and

 

(f)           such
other documents as Lender may reasonably request.

 

4.2         On
the Closing Date:

 

(a)          The
representations and warranties set forth in Section 5 of this Agreement shall be true and correct in all material respects on the
Closing Date with the same effect as though made on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material
respects as of such earlier date.

 

(b)          Borrower
shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed
or performed, and at the time of and immediately after advance of the Loan proceeds no Event of Default shall have occurred and
be continuing.

 

4.3         No
Default. As of the Closing Date, no fact or condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default.

 

SECTION
5. REPRESENTATIONS AND WARRANTIES OF BORROWER AND EACH GUARANTOR

 

Borrower and each Guarantor,
jointly and severally, represent and warrant that:

 

5.1         Corporate
Status. Borrower and each of its Subsidiaries is a corporation or limited liability company duly organized or formed, legally
existing and in good standing under the laws of their respective states of incorporation or formation, and is duly qualified as
a foreign corporation or limited liability company in all jurisdictions in which the nature of its business or location of its
properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse
Effect. Borrower’s and each Guarantor’s present name, former names (if any), locations, place of formation, tax identification
number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by Borrower
and each Guarantor in a written notice (including any Compliance Certificate) provided to Lender after the Closing Date.

 

    	 	9	 

     

    

 

5.2         Collateral.
Borrower owns the Collateral, free of all Liens, except for Permitted Liens. Borrower has the power and authority to grant to Lender
a Lien in the Collateral as security for the Obligations.

 

5.3         Consents.
Borrower’s execution, delivery and performance of the Note, and Borrower’s and each Guarantor’s execution, delivery
and performance of this Agreement and all other Loan Documents (i) have been duly authorized by all necessary corporate or limited
liability company action of Borrower and each Guarantor, (ii) will not result in the creation or imposition of any Lien upon the
Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate
any provisions of Borrower’s or any Guarantor’s Certificate of Incorporation or Certificate of Formation (as applicable),
bylaws, limited liability company operating agreements, any other formation documents of Borrower or any Guarantor, or any, law,
regulation, order, injunction, judgment, decree or writ to which Borrower or any Guarantor is subject and (iv) except as described
on Schedule 5.3, do not materially violate any material contract or agreement or require the consent or approval of any other Person
which has not already been obtained except for consents and approvals the failure of which to obtain could not reasonably be expected
to have a Material Adverse Effect. The individual or individuals executing the Loan Documents are duly authorized to do so.

 

5.4         Actions
Before Governmental Authorities. Except as described on Schedule 5.4, there are no actions, suits or proceedings at law or
in equity or by or before any governmental authority now pending or, to the knowledge of Borrower, after due inquiry, threatened
against or affecting Borrower, any Subsidiary or their respective property.

 

5.5         Laws.
None of Borrower nor any Subsidiary is in violation of any law, rule or regulation, or in default with respect to any judgment,
writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in a
Material Adverse Effect.

 

5.6         Capitalization
and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.6 annexed hereto. All of
the outstanding shares of common stock of Borrower have been duly authorized, are validly issued, fully paid and non-assessable.
All of the outstanding shares of common stock of Borrower were issued in compliance with applicable laws. None of the outstanding
shares of common stock of Borrower were issued in violation of any agreement, arrangement or commitment to which Borrower is a
party or is subject to or in violation of any preemptive or similar rights of any Person. Other than as set forth on Schedule 5.6,
there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of Borrower or obligating Borrower to issue or sell any shares of capital stock
of, or any other interest in Borrower. Borrower does not have outstanding or authorized any stock appreciation, phantom stock,
profit participation or similar rights. Borrower does not own any stock, partnership interest or other securities of any Person,
except for Permitted Investments. Attached as Schedule 5.6 is a true, correct and complete list of each Subsidiary and its capitalization.
All of the issued and outstanding shares of capital stock of the Subsidiaries have been duly and validly authorized and issued
and are fully paid and non-assessable and, except as otherwise disclosed in Schedule 5.6, are owned directly by the Company, free
and clear of any Liens.

 

    	 	10	 

     

    

 

5.7         SEC
Reports.

 

(a)          Since
before January 1, 2010, Borrower has filed all reports, schedules, forms, statements or other documents required to be filed by
the Company under the Exchange Act (the foregoing materials filed during such period, including the exhibits thereto and documents
incorporated by reference therein, the “SEC Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such extension; as of their respective filing or amendment
dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations
of the Securities and Exchange Commission (“SEC”) promulgated thereunder.

 

(b)          Each
of the financial statements (including, in each case, any notes and schedules thereto) included (or incorporated by reference)
in the SEC Reports (collectively, the “Borrower Financials”) (i) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act), and (ii) fairly presents in
all material respects the financial position, results of operations, cash flows and changes in stockholders’ equity of Borrower
and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein except as
otherwise noted therein (except that the unaudited statements may not contain footnotes and are subject to normal and recurring
year-end adjustments, none of which are or are expected to be material in nature or amount) all in accordance with GAAP and in
all material respects in accordance with the applicable rules and regulations promulgated by the SEC.

 

(c) Borrower, on a consolidated
basis with its Subsidiaries, has no liabilities, other than (i) liabilities reflected on the audited balance sheet of Borrower
as of December 31, 2014, as included in its Form 10-K as filed with the SEC on March 31, 2015 (the “Company Reference Balance
Sheet”) (or disclosed in the notes thereto) or reflected on balance sheets contained in SEC Reports filed for the Company’s
first fiscal quarter during the year ending December 31, 2015, (ii) liabilities incurred subsequent to the date of the Company
Reference Balance Sheet in the ordinary course of the business of the Company and its subsidiaries, (iii) liabilities incurred
in connection with or as permitted or contemplated by this Agreement; and (iv) liabilities that would not be reasonably expected
to have a Material Adverse Effect.

 

    	 	11	 

     

    

 

(d) Borrower (i) has established
and maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 promulgated under the Exchange Act) designed
to ensure that material information relating to Borrower is made known to the Chief Executive Officer and Chief Financial Officer
and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Borrower’s outside
auditors and the audit committee of Borrower (A) any significant deficiencies and material weaknesses in the design or operation
of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would be reasonably likely
to adversely affect Borrower’s or any of its Subsidiaries’ ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role
in the Borrower’s or any of its Subsidiaries’ internal controls over financial reporting. To the knowledge of the Company,
after due inquiry, since January 1, 2011, none of Borrower nor any of its Subsidiaries has suffered, discovered or been informed
of any material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f)
of the Exchange Act), except as disclosed in the report on Form 10-Q of the Borrower for the quarter ended March 31, 2015.

 

(e) Since January 1, 2011,
to the Company’s knowledge, after due inquiry, neither Borrower, its Subsidiaries, nor any director, officer, employee, auditor,
accountant or representative of Borrower or any of its Subsidiaries, has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Borrower or any of its Subsidiaries or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that Borrower or any of its Subsidiaries has engaged in questionable accounting
or auditing practices.

 

5.8         Absence
of Certain Changes or Events. Since January 1, 2015, Borrower and its Subsidiaries have conducted their respective businesses
in the ordinary course consistent with past practice and as of the date of this Agreement there has not occurred any effect, including
any damage to, destruction or loss of any asset of Borrower or any of its Subsidiaries (whether or not covered by insurance), constituting
or that would reasonably be expected to have a Material Adverse Effect.

 

5.9         Vested
Share Rights.  The Initial Shares have been duly authorized for issuance and, when issued as provided for herein, will be duly
and validly issued, fully paid and non-assessable, and will have been issued in compliance with all applicable state, federal and
foreign securities laws and will not have been issued in violation of or subject to any preemptive or similar right. Subject to
completion of the Capitalization Increase, when issued pursuant to the provisions of this Agreement, the shares of Borrower’s
common stock underlying the Vested Share Rights shall be duly authorized and reserved for issuance and, when issued, shall be duly
and validly issued, fully paid and non-assessable, and will have been issued in compliance with all applicable state, federal and
foreign securities laws and will not have been issued in violation of or subject to any preemptive or similar right. The Vested
Share Rights constitute valid and binding obligations of the Borrower to issue the underlying shares of Common Stock in accordance
with the terms thereof and each such Vested Share Right is enforceable against the Company in accordance with its terms, except:
(i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under foreign, federal
and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

    	 	12	 

     

    

 

5.10       No
Violation. None of the Company nor any Subsidiary: (i) is in violation of its certificate or articles of incorporation, memorandum
and articles of association, by-laws, certificate of formation, limited liability company agreement, joint venture agreement, partnership
agreement or other organizational documents, (ii) is in default under, and no event has occurred which, with notice or lapse of
time or both, would constitute a default under or result in the creation or imposition of any Lien upon any of its property or
assets pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is subject, or (iii) is in violation in any respect of any law,
rule, regulation, ordinance, directive, judgment, decree or order of any judicial, regulatory or other legal or governmental agency
or body, foreign or domestic, except in the case of clauses (ii) and (iii) where such violation or default, as the case may be,
would not have or reasonably be expected to result in a Material Adverse Effect.

 

5.11       Due
Authorization. Borrower and each Guarantor has duly and validly authorized this Agreement and the Loan Documents and each of
the transactions contemplated thereby. This Agreement and the Loan Documents have been duly and validly executed and delivered
by Borrower and each Guarantor and constitute the legal, valid and binding obligations of Borrower and each Guarantor and are enforceable
against Borrower and each Guarantor in accordance with their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and except as enforceability
may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity
or at law).

 

5.12       Taxes.
Borrower and each Subsidiary have filed all federal, state and local tax returns which to their knowledge, after due inquiry, are
required to be filed, and Borrower and each Subsidiary has paid or caused to be paid to the respective taxing authorities all taxes
as shown on said returns or on any assessment received by it to the extent such taxes have become due except those which Borrower
or such Subsidiary is contesting in good faith and with respect to which adequate reserves have been set aside.

 

5.13       Labor
Disputes and Acts of God. Neither the business nor the properties of Borrower, nor any Subsidiary, has been subject to any
fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy, or other casualty (whether or not covered by insurance) having a Material Adverse Effect.

 

5.14       Other
Agreements. Except as provided on Schedule 5.14, neither Borrower nor any Guarantor is a party to any indenture, loan or credit
agreement, or to any lease or other agreement or instrument, or subject to any charter or corporate restriction which would reasonably
be anticipated to have a Material Adverse Effect on the ability of the Borrower or any Guarantor to carry out its obligations under
the Loan Documents to which it is a party. Neither the Borrower nor any Guarantor is in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which
it is a party, except as provided in Schedule 5.14 hereto.

 

5.15       Ownership
and Liens. Borrower and each Subsidiary have title to, or valid leasehold interests in, all of their material properties and
assets, real and personal, (other than any properties or assets disposed of in the ordinary course of business), and none of the
properties and assets owned by Borrower or any Subsidiary and none of their leasehold interests are subject to any Lien, except
Permitted Liens.

 

    	 	13	 

     

    

 

5.16       Operation
of Business and Good Standing. The Borrower and each Subsidiary possess all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct their respective businesses substantially as now conducted and as presently
proposed to be conducted, and Borrower and each Subsidiary are not, to their knowledge, after due inquiry, in violation of any
valid rights of others with respect to any of the foregoing. Borrower and each Subsidiary is in compliance with all applicable
local, state, federal and trade laws, rules and regulations to operate its business in the ordinary course and is in good standing
with all necessary bodies to operate in the ordinary course and exercise its rights, privileges, permits, licenses and franchises
(including all governmental authorizations) necessary in the normal conduct of its business.

 

5.17       Debt.
Schedule 5.16 is a complete and correct list of all Indebtedness incurred by or pursuant to which the Borrower or any Subsidiary
is in any manner directly or contingently obligated; the maximum principal or face amounts of the credit in question, outstanding
or to be outstanding, all Liens of any nature given or agreed to be given as security therefor and are correctly described or indicated
in such Schedule.

 

5A. REPRESENTATION AND WARRANTIES OF LENDER

 

The Lender hereby represents
and warrants:

 

5A.1      Investment Intent.
The Lender is entering into this Agreement which provides for the issuance of the Initial Shares and the Vested Share Rights as
principal for its own account for investment purposes only and not with a view to or for distributing or reselling the Initial
Shares, the Vested Share Rights or any shares issuable thereunder; provided, however, that the foregoing shall be without prejudice
to such Lender’s right, at all times, to sell or otherwise dispose of all or any part of any securities acquired under this
Agreement pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”)
or under an exemption from such registration and in compliance with applicable federal and state securities laws.

 

5A.2      Organization;
Authority. The Lender is a limited liability company duly organized and in good standing under the laws of the State of Delaware.
Each of the Loan Documents to which the Lender is a party has been duly executed by the Lender, and when delivered by the Lender
in accordance with the terms hereof, will constitute the valid and legally binding obligations of the Lender, enforceable against
it in accordance with their respective terms.

 

5A.3      Purchaser Status;
Experience. The Lender is an “accredited investor” as defined in Rule 501(a) under the Securities Act.

 

5A.4      General Solicitation.
Lender is not entering into this transaction as a result of any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement.

 

    	 	14	 

     

    

 

5A.5      Legends.
The Lender understands and acknowledges that each certificate evidencing the Initial Shares and any shares of common stock issued
pursuant to the Vested Share Rights will bear the following legends:

 

“The securities represented hereby
have not been registered under the Securities Act of 1933, as amended (“Act”), nor have they been registered or qualified
under the securities laws of any state. No transfer of such securities will be permitted unless a registration statement under
the Act is in effect as to such transfer, the transfer is made in accordance with Rule 144 under the Act, or in the opinion of
counsel registration under the Act is unnecessary in order for such transfer to comply with the Act and with applicable state securities
laws.”

 

“The securities
represented hereby may be subject to certain cash settlement rights in favor of the issuer as set forth in Sections 2.8 and 2.9
of the Loan and Security Agreement dated August 13, 2015 to which the issuer is a party and may not be sold, transferred or otherwise
disposed of except in compliance with the provisions of such sections. Any sale, transfer or other disposition in violation of
such provisions shall be void ab initio.”

 

SECTION
6. INDEMNIFICATION

 

6.1         Borrower
agrees to indemnify and hold Lender and its officers, directors, employees, agents, in-house attorneys, representatives and members
(each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damages and liabilities
(including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort),
including reasonable and invoiced out-of-pocket costs (including reasonable attorneys’ fees) and disbursements and other
costs of investigation or defense (including those incurred upon any appeal) within ten (10) days of receipt of such invoice (collectively,
“Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of
such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or
failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases
Liabilities to the extent resulting solely from any Indemnified Person’s gross negligence or willful misconduct. Borrower
agrees to pay, and to save Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income of Lender) that may
be payable or determined to be payable with respect to any of the Collateral or this Agreement or any of the Loan Documents. In
no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive
damages (including any loss of profits, business or anticipated savings).

 

    	 	15	 

     

    

 

SECTION
7. COVENANTS OF BORROWER

 

Borrower and each Guarantor
agrees as follows:

 

7.1         Maintenance
of Existence. Borrower shall preserve and maintain, and cause each Subsidiary to preserve and maintain (i) their corporate
existence and good standing in the respective jurisdictions of their incorporation, and qualify and remain qualified, and cause
each Subsidiary to qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is required
and (ii) all rights, privileges, permits, licenses and franchises (including all governmental authorizations) necessary in the
normal conduct of its business.

 

7.2         Maintenance
of Records. Borrower shall keep, and cause each Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Borrower and its
Subsidiaries.

 

7.3         Maintenance
and Properties. Borrower shall maintain, keep and preserve, and cause each Subsidiary to maintain, keep and preserve, all of
their properties (tangible and intangible) necessary or useful in the proper conduct of their business in adequate working order
and condition, ordinary wear and tear excepted.

 

7.4         Conduct
of Business. Borrower shall continue, and cause each Subsidiary to continue, to operate their business in the ordinary course.

 

7.5         Maintenance
of Insurance. Borrower shall maintain, and cause each Subsidiary to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the
same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof.

 

7.6         Compliance
With Laws. Borrower shall comply, and cause each Subsidiary to comply, in all respects with all applicable laws, rules, regulations
and orders.

 

7.7         SEC
Filings; Financial Reports. Borrower shall furnish to Lender copies of the SEC Filings made by Borrower. Borrower shall also
provide, and cause each Subsidiary to provide, Lender with such internal monthly and other financial data and reports as are prepared
for and provided to Borrower’s management with respect to Borrower and each Subsidiary.

 

7.8         Inspection
Rights. Borrower shall permit, and cause each Subsidiary to permit, any representative that Lender authorizes, including any
of their attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account
and records of Borrower and each Subsidiary at reasonable times and upon reasonable notice during normal business hours.

 

7.9         Further
Assurances. Borrower shall, and shall cause each Guarantor, from time to time execute, deliver and file, alone or with Lender,
any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to perfect
or give the highest priority to Lender’s Lien on the Collateral. Borrower shall, and shall cause each Guarantor, from time
to time procure any instruments or documents related to the Collateral as may be requested by Lender, and take all further action
that may be necessary or desirable, or that Lender may reasonably request, to perfect and protect the Liens granted hereby and
thereby.

 

    	 	16	 

     

    

 

7.10       Indebtedness.
Borrower shall not create, incur, assume or guarantee, or permit any Subsidiary to create, incur, assume or guarantee, any Indebtedness
other than Permitted Indebtedness.

 

7.11       Liens.
Borrower shall not create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
any Lien, upon or with respect to any of their properties, now owned or hereafter acquired, except Permitted Liens.

 

7.12       Mergers,
Etc. Borrower shall not wind up, liquidate or dissolve itself, reorganize, merge or consolidate with or into, or convey, sell,
assign, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially
all of their assets (whether now owned or hereafter acquired) to any Person, or acquire all or substantially all of the assets
or the business of any Person, or permit any Subsidiary to do so, except that (a) Borrower may merge into or transfer assets to
any Subsidiary and (b) any Subsidiary may merge into or consolidate with or transfer assets to the Borrower.

 

7.13       Dividends.
Borrower shall not declare or pay any dividends; or purchase, redeem, retire or otherwise acquire for value any of their capital
stock now or hereafter outstanding; or make any distribution of assets to their stockholders as such whether in cash, assets or
obligations of Borrower; or allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for
the purchase, redemption or retirement of any shares of, their capital stock; or make any other distribution by reduction of capital
or otherwise in respect of any shares of their capital stock; or permit any Subsidiary to purchase or otherwise acquire for value
any stock of the Borrower, itself or another Subsidiary, except that the Borrower may declare and deliver dividends and make distributions
payable solely in common stock of the Borrower.

 

7.14       Sale
of Assets. Borrower shall not sell, lease, assign, transfer, license or otherwise dispose of, or permit any Subsidiary to sell,
lease, assign, transfer, license or otherwise dispose of, any of their owned or hereafter acquired assets (including, without limitation,
the sale, lease, assign, transfer or the disposition of shares of stock and indebtedness of Subsidiaries, receivables and leasehold
interests), except (a) inventory disposed of in the ordinary course of business; (b) the sale or other disposition of
assets no longer used or useful in the conduct of their business; and (c) that Borrower may sell, lease, assign or otherwise
transfer its assets to any Subsidiary or any Subsidiary may sell, lease, assign or otherwise transfer its assets to any other Subsidiary.

 

7.15       Guaranties,
Etc. Borrower shall not assume, guaranty, endorse or otherwise be or become directly or contingently responsible or liable,
or permit any Subsidiary to assume, guaranty, endorse or otherwise be or become directly or contingently responsible or liable
(including, but not limited to, an agreement to purchase any obligation, stock, assets, goods or services, or to supply or advance
any funds, assets, goods or services, or an agreement to maintain or cause such Person to maintain a minimum working capital or
tangible net worth, or to otherwise assure the creditors of any Person against loss), for obligations of any Person (other than
Borrower or any Subsidiary), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business and guarantees of any Obligations under the Loan Documents.

 

    	 	17	 

     

    

 

7.16       Transactions
With Affiliates. Borrower shall not enter into any transaction, including, without limitation, the purchase, sale or exchange
of property, with any Affiliate, or permit any Subsidiary to enter into any transaction, including, without limitation, the purchase,
sale or exchange of property or the rendering of any service, with any Affiliate, other than transactions for director and executive
compensation on terms not inconsistent with past practice.

 

7.17       Conduct
of Business. Borrower shall not engage, or permit any Subsidiary to engage in any business other than the business engaged
in by the Borrower on the date hereof or fail to conduct its business in accordance with good business practices customary in the
industry; or fail to collect its accounts in the ordinary course of business; or fail to maintain all of its material properties,
assets and equipment used in its business in good repair, working order and condition (normal wear and tear excepted) and from
time to time make all repairs, renewals and replacements thereof, as determined by Borrower using commercially reasonably business
judgment; or fail to maintain and keep in full force and effect its existence and all material qualifications to do business and
good standing in each jurisdiction in which the use of such property or the nature of its business makes such qualification necessary.

 

7.18       Amendments
to Contracts or Organizational Documents. Borrower shall not amend, or allow any Subsidiary to amend or permit any amendments
to, or terminate or waive any provision of, any contract or organizational document if such amendment, termination or waiver would
be adverse to Lender.

 

7.19       Collateral.
Borrower shall at all times keep the Collateral free and clear of any and all Liens, and shall give Lender prompt written notice
of any legal process affecting the Collateral, provided however, that the Collateral may be subject to Permitted Liens.

 

7.20       Taxes.
Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower, Lender or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.
Borrower shall file on or before the due date therefor all personal property tax returns in respect of the Collateral. Notwithstanding
the foregoing, Borrower may contest, in good faith and by appropriate proceedings, taxes for which Borrower maintains adequate
reserves therefor in accordance with GAAP.

 

7.21       Corporate
Changes. Borrower shall not change its corporate name, legal form or jurisdiction of formation without twenty (20) days’
prior written notice to Lender. Borrower shall not relocate its chief executive office or its principal place of business unless
it has provided prior written notice to Lender.

 

7.22       Notification
of Event of Default. Borrower shall notify Lender promptly, and in any event, within five (5) business days after the occurrence
of any Default or Event of Default, a written notice setting forth the details of such Default or Event of Default and the action
which is proposed to be taken by Borrower with respect thereto.

 

    	 	18	 

     

    

 

7.23       Notice
of Litigation. Borrower shall within two business days after notification of the commencement thereof, notify Lender of all
actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Borrower or any Subsidiary which, if determined adversely to the Borrower or such Subsidiary,
would have a Material Adverse Effect.

 

7.24       Reports
to Other Creditors. Borrower shall promptly after the furnishing thereof, deliver copies of any statement or report furnished
to any party pursuant to the terms of any indenture, loan, credit or similar agreement and not otherwise required to be furnished
to the Lender pursuant to any other clause of this Section 7.

 

7.25       Subsidiary
Guarantors and Additional Grantors. In the event that any Person not currently a Subsidiary becomes a Subsidiary of the Borrower,
Borrower shall (a) concurrently with such Person becoming a Subsidiary cause such Subsidiary to become a Guarantor hereunder and
an Additional Grantor under the Intellectual Property Security Agreement. With respect to each Subsidiary, Borrower shall promptly
send to Lender written notice setting forth with respect to such Person the date on which such Person became a Subsidiary of the
Borrower. 

 

7.26       Capitalization
Increase. Borrower does not have sufficient authorized common stock to cover the full amount of Vested Share Rights that will
accrue through scheduled maturity of the Loan. Borrower covenants to use its best efforts to amend its certificate of incorporation
by March 31, 2016 to authorize sufficient additional common stock to cover the full amount of Vested Share Rights that will accrue
through the scheduled maturity of the Loan (the “Capitalization Increase”).

 

7.27       Director
Designee.

 

(a)          Upon
closing of the Loan, Borrower shall cause Jan Loeb to be elected as a director of Borrower and shall, at the request of Lender,
shall cause Jan Loeb to be included in the slate of Borrower-nominated directors at each annual meeting of stockholders held at
a time when the Loan or any portion thereof continues to remain outstanding.

 

(b)          Upon
closing of the Loan, the Company shall cause Jan Loeb to be elected as a director of DSIT as a designee of Borrower and shall cause
Jan Loeb to be maintained as a Borrower-designee on the board of directors of DSIT for so long as the Loan or any portion thereof
continues to remain outstanding. Each of Borrower and DSIT shall maintain Directors and Officers Liability Insurance in an amount
not less than $5,000,000 (combined limit for Borrower and its Subsidiaries) for so long as Jan Loeb is a member of such board of
directors.

 

7.28       Demand
Registration.

 

(a)          Subject
to Section 7.28(b), within 30 days of the date Borrower files its annual report on Form 10-K for the year ended December 31, 2015,
Borrower shall file a Registration Statement on Form S-1 (the “Long Form Registration Statement”) covering the resale
of all of the shares of Borrower Common Stock issuable to Lender hereunder, whether or not rights thereto have vested (the “Registrable
Securities”). Borrower shall use its best efforts to cause such Long Form Registration Statement to be declared effective
by the SEC as soon as practicable thereafter.

 

    	 	19	 

     

    

 

(b)          Borrower
shall use its best efforts to qualify and remain qualified to register the offer and sale of securities under the Securities Act
pursuant to a Registration Statement on Form S-3 or any successor form thereto. At such time as Borrower shall have qualified for
the use of a Registration Statement on Form S-3 or the then appropriate form for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Short Form Registration Statement”),
Borrower shall file a Short Form Registration Statement or convert the Long Form Registration Statement to a Short Form Registration
Statement covering the resale of all of the Registrable Securities and shall use its best efforts to cause such Short Form Registration
Statement to be declared effective by the SEC as soon as practicable thereafter.

 

(c)          Borrower
may postpone for up to 30 days the filing or effectiveness of the Registration Statement if the Board determines in its reasonable
good faith judgment that registration of the Registrable Securities covered thereby would (i) materially interfere with a significant
acquisition, corporate organization, financing, securities offering or other similar transaction involving Borrower; (ii) require
premature disclosure of material information that Borrower has a bona fide business purpose for preserving as confidential; or
(iii) render Borrower unable to comply with requirements under the Securities Act or Exchange Act.

 

(d)          Borrower
shall not include in any Long Form Registration Statement or Short Form Registration Statement any securities which are not Registrable
Securities without the prior written consent of Lender.

 

7.29       Piggyback
Registration.

 

(a)          Whenever
Borrower proposes to register the offer and sale of any shares of its common stock under the Securities Act (other than a registration
(i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees
or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration
Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor
rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account
or for the account of one or more stockholders of the Company and the form of Registration Statement (a “Piggyback Registration
Statement”) to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”),
Borrower shall give prompt written notice (in any event no later than thirty (30) days prior to the filing of such Registration
Statement) to Lender of its intention to effect such a registration and, subject to Sections 7.29 (b) and (c), shall include in
such registration all Registrable Securities of Lender. If any Piggyback Registration Statement pursuant to which Lender has registered
the offer and sale of Registrable Securities is a Registration Statement on Form S-3 or the then appropriate form for an offering
to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Piggyback
Shelf Registration Statement”), Lender shall have the right, but not the obligation, to be notified of and to participate
in any offering under such Piggyback Shelf Registration Statement (a “Piggyback Shelf Takedown”).

 

    	 	20	 

     

    

 

(b)          If
a Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of Borrower and
the managing underwriter advises Borrower and Lender in writing that in its reasonable and good faith opinion the number of shares
of common stock proposed to be included in such registration or takedown, including all Registrable Securities and all other shares
of common stock proposed to be included in such underwritten offering, exceeds the number of shares of common stock which can be
sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration or takedown
would adversely affect the price per share of the common stock to be sold in such offering, Borrower shall include in such registration
or takedown (i) first, the shares of common stock that Borrower proposes to sell; (ii) second, the shares of common stock requested
to be included therein by Lender; and (iii) third, the shares of common stock requested to be included therein by holders of common
stock other than Lender, allocated among such holders in such manner as they may agree.

 

(c)          If
any Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of Borrower, Borrower
shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

SECTION
8. EVENTS OF DEFAULT

 

The occurrence of any one
or more of the following events shall be an Event of Default:

 

8.1         Payments.
Borrower fails to pay any amount due under this Agreement, the Note, or any of the other Loan Documents on the due date.

 

8.2         Covenants.
Borrower breaches or defaults in the performance of any covenant or Obligation under this Agreement or any of the other Loan Documents,
and with respect to a default under any covenant under this Agreement, or any other Loan Document, other than the covenants set
forth in Section 7.10 (Indebtedness and 7.26 (Capitalization) hereof, such default continues for more than ten (10) days after
the earlier of the date on which (a) Lender has given notice of such default to Borrower and (b) Borrower has actual knowledge
of such default. Irrespective of Borrower’s best efforts, (a) if the Indebtedness covenant set forth in Section 7.10 hereof
is breached, such breach shall be an Event of Default on such date and Borrower shall have no period to cure such Event of Default,
or (b) the Capitalization Increase does not occur by March 31, 2016, such non-occurrence shall be an Event of Default on such date
and Borrower shall have no period to cure such Event of Default. Without creating or imposing any obligation or duty on Lender
to inquire, investigate or monitor, in the event that Lender becomes aware of any failure by Borrower to observe or perform any
obligation to be observed or performed by the Borrower hereunder or under any Loan Document, Lender shall notify Borrower of such
failure and Borrower shall cure such failure within ten (10) business days thereafter. The failure of the Borrower to so cure such
failure within such ten (10) business day period shall constitute an Event of Default under this Subsection. The parties hereto
agree that the delay of Lender to so notify the Borrower as provided in this Subsection shall not constitute a waiver of any provision
of this Agreement but shall only require that Lender notify Borrower and Borrower be granted such right to cure such failure within
such period prior to the exercise of the Lender’s rights hereunder.

 

    	 	21	 

     

    

 

8.3         Representations.
Any representation or warranty made by Borrower in any Loan Document, when taken as a whole, shall have been false or misleading
in any material respect when made.

 

8.4         Insolvency.
Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become
due, or be unable to pay or perform under the Loan Documents or shall become insolvent; or (iii) shall fail to pay any Indebtedness
for borrowed money in an aggregate principal amount in excess of $100,000 due any third persons and such failure shall continue
beyond any applicable grace period; or (iv) shall file a voluntary petition in bankruptcy; or (iv) shall file any petition, answer,
or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to
or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part of the assets
or property of Borrower; or (vi) shall cease operations of its business as its business has normally been conducted, or terminate
substantially all of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating
any of the foregoing actions described in clauses (i) through (vi); or (B) either (i) forty-five (45) days shall have expired after
the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such
order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower
shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings;
or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings;
or (v) forty-five (45) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee,
receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being
vacated.

 

8.5         Attachments;
Judgments. Any portion of Borrower’s assets having a value in excess of $50,000 is attached or seized, or a levy is filed
against any such assets, or a judgment or judgments is/are entered for the payment of money (not covered by independent third-party
insurance as to which liability has not been rejected by such insurance carrier), individually or in the aggregate, of at least
$150,000, or Borrower is enjoined or in any way prevented by court order from conducting any part of its business, and such attachment,
seizure, levy, judgment, or enjoinment is not, within ten (10) days after the occurrence thereof, discharged or stayed (whether
through the posting of a bond or otherwise); provided, however, no Advances shall be made during any ten (10) day cure period.

 

    	 	22	 

     

    

 

SECTION
9. REMEDIES

 

9.1         General.
Upon and during the continuance of any one or more Events of Default, (i) all Obligations shall, at the election of Lender and
upon notice to Borrower, become immediately due and payable; (ii) Lender may, at its option, sign and file in Borrower’s
name any and all collateral assignments, notices, control agreements, security agreements and other documents it deems necessary
or appropriate to perfect or protect the repayment of the Obligations, and in furtherance thereof, Borrower hereby grants Lender
an irrevocable power of attorney coupled with an interest, and (iii) Lender may notify any of Borrower’s account debtors
to make payment directly to Lender, and endorse Lender’s name without recourse on any such payment for deposit directly to
Lender’s account. Lender may exercise all rights and remedies with respect to the Collateral under the Loan Documents or
otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral. All Lender’s rights and remedies shall be cumulative and not exclusive.

 

9.2         Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its
then condition or following any commercially reasonable preparation or processing, in such order as Lender may elect. Any such
sale may be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or
private sale may occur upon seven (7) calendar days’ prior written notice to Borrower. Lender may require Borrower to assemble
the Collateral and make it available to Lender at a place designated by Lender that is reasonably convenient to Lender and Borrower.
The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Lender in
the following order of priorities:

 

First, to Lender in an amount sufficient
to pay in full Lender’s costs and professionals’ and advisors’ fees and expenses;

 

Second, to Lender in an amount equal
to the then unpaid amount of the Obligations (including principal and interest), in such order and priority as Lender may choose
in its sole discretion; and

 

Finally, after the full, final, and
indefeasible payment of all of the Obligations, to any creditor holding a junior Lien on the Collateral, or to Borrower or its
representatives or as a court of competent jurisdiction may direct.

 

Lender shall be deemed to have acted
reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured
party under the UCC.

 

In addition to the rights and remedies given
to Lender hereunder or otherwise, Lender shall have all of the rights and remedies to the Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of Delaware and any other applicable jurisdiction.

 

    	 	23	 

     

    

 

9.3         Put.
Upon the occurrence and during the continuance of any Event of Default under Section 8.2 with respect to the Capitalization Increase,
Lender shall be entitled to put all the Initial Shares and Vested Share Rights to Borrower, and Borrower shall be obligated (the
“Put Obligation”) to purchase all such Initial Shares and Vested Share Rights, at a purchase price equal to the total
number of such Initial Shares and Vested Share Rights multiplied by $0.40. Borrower shall pay to Lender the aggregate amount of
such Put Obligation within two (2) business days following Lender’s notice to Borrower that it is exercising such put right.
At such time that Lender notifies Borrower that it is exercising its put right under this Section 9.3 until such time as the aggregate
amount of such Put Obligation is paid to Lender, such aggregate amount of the Put Obligation shall be added to the principal amount
due under the Note.

 

9.4         No
Waiver. Lender shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person,
and Borrower expressly waives all rights, if any, to require Lender to marshal any Collateral.

 

9.5         Cumulative
Remedies. The rights, powers and remedies of Lender hereunder shall be in addition to all rights, powers and remedies given
by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein
shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Lender.

 

SECTION
10. GUARANTY

 

10.1       Each
Guarantor jointly and severally, unconditionally, absolutely and irrevocably guarantees, as a primary obligor and not merely as
surety, the due and punctual payment of the full principal required to be paid pursuant to the Note, the interest thereon (including
default interest thereon, if any), the Obligations and any other moneys due or which may become due under the Loan Documents, and
the due and punctual performance and observance of all of the other terms, covenants and conditions of the Loan Documents, whether
according to the present terms thereof, at any earlier or accelerated date or dates as provided therein, or pursuant to any extension
of time or to any change or changes in the terms, covenants and conditions of the Loan Documents now or at any time hereafter made
or granted.

 

10.2       Each
Guarantor waives diligence, presentment, protest, notice of dishonor, demand for payment, extension of time of payment, notice
of acceptance of this Agreement, non-payment at maturity and indulgences and notices of every kind, and consents to any and all
forbearances and extensions of the time of payment under the Loan Documents, to any and all changes in the terms, covenants and
conditions thereto hereafter made or granted and to any and all substitutions, exchanges or releases of all or any part of the
Collateral, if any, it being the intention hereof that each Guarantor shall remain liable as principal until the full amount of
all sums due and payable under the Loan Documents shall have been fully paid, notwithstanding any act, omission or thing which
might otherwise operate as a legal or equitable discharge of the Guarantors, and without regard to the validity regularity or enforceability
of the Loan Documents.

 

10.3       Each
Guarantor agrees that the Guarantors shall have no right of subrogation whatsoever with respect to the aforesaid indebtedness or
to any moneys due and unpaid thereon or any Collateral securing the same, unless and until Lender shall have received payment in
full of all Obligations.

 

    	 	24	 

     

    

 

10.4       Each
Guarantor agrees that the Guaranty provided for in this Section 10 may be enforced by Lender without first resorting to or exhausting
any other security or Collateral or without first having recourse to the Note; provided, however, that nothing herein contained
shall prevent Lender from suing on the Guaranty provided for in this Section 10.

 

10.5       Each
Guarantor agrees that in the event the Guaranty provided for in this Section 10 is placed in the hands of an attorney for enforcement,
the Guarantors shall be jointly and severally responsible to reimburse Lender for all reasonable expenses incurred, including,
without limitation, reasonable attorneys’ fees.

 

10.6       Each
Guarantor agrees that the Guaranty provided for in this Section 10 shall inure to the benefit of and may be enforced by Lender
and any subsequent holder of the Note and their successors and assigns, and shall be binding upon and enforceable against each
of the Guarantors and each of the Guarantors’ legal representatives, successors and assigns.

 

10.7       Each
Guarantors acknowledge that the Guaranty provided for in this Section 10 and each Guarantor’s obligations under the Guaranty
provided for in this Section 10 are and shall at all times continue to be absolute and unconditional in all respects and shall
at all times be valid and enforceable irrespective of any other agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to the Guaranty provided for in this Section 10 and the obligations of each Guarantor hereunder.

 

10.8       Each
Guarantor agrees that the Guaranty provided for in this Section 10 sets forth the entire agreement and understanding of Lender
and each Guarantor and each Guarantor absolutely, unconditionally and irrevocably waives any and all rights to assert any defense,
set-off, counterclaim or cross-claim of any nature whatsoever with respect to the Guaranty provided for in this Section 10 or the
obligations of any other person or party relating to the Guaranty provided in this Section 10 or the obligations of each Guarantor
under the Guaranty provided for in this Section 10 in any action or proceeding brought by the holder hereof to collect the indebtedness
or any portions thereof or to enforce the obligations of the each Guarantor under the Guaranty provided for in this Section 10.

 

10.9       Each
Guarantor acknowledges that no oral or other agreements, understandings, representations or warranties exist with respect to the
Guaranty provided for in this Section 10 or with respect to the obligations of each Guarantor under the Guaranty for in this Section
10.

 

10.10     Each
Guarantor agrees that the Guaranty provided for in this Section 10 is a guaranty of payment and not of collection and is absolute
and in no way conditional or contingent.

 

10.11     Notwithstanding
anything to the contrary in this Agreement, GridSense shall have no obligation or liability as a Guarantor under the Loan Documents
unless and until Gridsense, Lender and Square 1 Bank shall have entered into a subordination agreement on terms and in a form reasonably
satisfactory to Square 1 Bank, subordinating the obligations of GridSense under the Guaranty to the obligations of GridSense to
Square 1 Bank under the existing accounts receivable financing agreement between GridSense and Square 1 Bank. Borrower and GridSense
agree to use reasonable commercial efforts to obtain the aforementioned subordination by Square 1 Bank.

 

    	 	25	 

     

    

 

SECTION
11. MISCELLANEOUS

 

11.1       Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective
only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

11.2       Notice.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in
writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission
by email (provided such email is not returned with an undeliverable, delayed or similar message) and by facsimile or hand delivery
or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in
the United States mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:

 

(a)          If
to Lender:

 

c/o Jan Loeb

Leap Tide Capital Management

10451 Mill Run Circle

Suite 400

Owings Mills, MD  21117

Email: jloeb@leaptidecapital.com

 

With a copy (which shall not constitute
notice) to:

 

Olshan Frome Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, NY 10022

Attention: Steve Wolosky, Esq.

Email: swolosky@olshanlaw.com

 

(b)          If
to Borrower:

 

Acorn Energy, Inc.

Attention: John A Moore, CEO

3844 Kennett Pike

Suite 204-4

Mall Building

Powder Mill Square

Greenville, Delaware 19807

Email: jmoore@acornenergy.com

 

    	 	26	 

     

    

 

With a copy (which shall not constitute
notice) to:

 

Eilenberg & Krause LLP

11 East 44th Street

New York, NY 10017

Attention: Sheldon Krause, Esq.

Email: sk@eklawllp.com

 

or to such other address as each party may
designate for itself by like notice.

 

11.3       Entire
Agreement; Amendments.

 

(a)          This
Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure
or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to
the subject matter hereof or thereof.

 

(b)          Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented, waived or modified except
by written consent of the party or parties to be charged.

 

11.4       No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

11.5       No
Waiver. The powers conferred upon Lender by this Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. No omission
or delay by Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Lender is entitled,
nor shall it in any way affect the right of Lender to enforce such provisions thereafter.

 

11.6       Survival.
All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered
pursuant hereto or thereto shall be for the benefit of Lender and shall survive the execution and delivery of this Agreement and
the expiration or other termination of this Agreement.

 

11.7       Successors
and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on
Borrower and its permitted assigns. Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents
without Lender’s express prior written consent, and any such attempted assignment shall be void and of no effect. Lender
may assign, transfer, or endorse its rights hereunder and under the other Loan Documents upon notice to Borrower, and all of such
rights shall inure to the benefit of Lender’s successors and assigns.

 

    	 	27	 

     

    

 

11.8       Governing
Law. This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws
of the State of Delaware, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

11.9       Dispute
Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware
and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or
other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising
out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District
of Delaware and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in
or by such court.

 

11.10     Waiver
of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE LOAN DOCUMENTS OR THE SUBJECT MATTER HEREOF OR THEREOF. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH
PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

11.11     Professional
Fees. Borrower shall be responsible for all fees and expenses related to the transaction.

 

11.12     Confidentiality.
Lender acknowledges that certain items of Collateral and information provided to Lender by Borrower are confidential and proprietary
information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”). Accordingly,
Lender agrees that any Confidential Information it may obtain shall not be disclosed to any other Person or entity in any manner
whatsoever, in whole or in part, without the prior written consent of Borrower, except that Lender may disclose any such information:
(a) to its own directors, officers, employees, accountants, counsel and other professional advisors and to its affiliates if Lender
in its sole discretion determines that any such party should have access to such information in connection with such party’s
responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information
either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality
restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available
to the public; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having
or claiming to have jurisdiction over Lender; (d) if required or appropriate in response to any summons or subpoena or in connection
with any litigation, to the extent permitted or deemed advisable by Lender’s counsel; (e) to comply with any legal requirement
or law applicable to Lender; (f) to the extent reasonably necessary in connection with the exercise of any right or remedy under
any Loan Document, including Lender’s sale, lease, or other disposition of Collateral after an Event of Default; (g) to any
participant or assignee of Lender or any prospective participant or assignee; provided, that such participant or assignee or prospective
participant or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior consent
of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower under
this Agreement or the other Loan Documents.

 

    	 	28	 

     

    

 

11.13     Revival
of Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if
any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets,
or if any payment or transfer of Collateral is recovered from Lender. The Loan Documents and the Obligations and Collateral security
shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of
the Obligations or any transfer of Collateral to Lender, or any part thereof is rescinded, avoided or avoidable, reduced in amount,
or must otherwise be restored or returned by, or is recovered from, Lender or by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral
had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned,
or recovered, the Loan Documents and the Obligations shall be deemed, without any further action or documentation, to have been
revived and reinstated except to the extent of the full, final, and indefeasible payment to Lender.

 

11.14     Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.

 

11.15     No
Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create
any third-party beneficiary rights or any other rights of any kind in any Person other than Lender, Borrower and the Guarantors
unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will
be personal and solely among Lender, Borrower and the Guarantors.

 

11.16     Publicity.
None of the parties hereto nor any of its respective member businesses and affiliates shall, without the other parties’ prior
written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party’s name (including
a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately
or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations
materials or on its web site (together, the “Publicity Materials”); (b) the names of officers of such other parties
in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning
such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent
necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party, pursuant to any listing
agreement with any national securities exchange (so long as such party provides prior notice to the other party hereto to the extent
reasonably practicable) and (ii) to comply with Section 11.11.

 

    	 	29	 

     

    

 

11.17     Termination;
Release. On the date on which all Obligations have been paid and performed or otherwise satisfied in full Lender will, at the
request and sole expense of the Borrower, (a) duly assign, transfer and deliver to or at the direction of the Borrower (without
recourse and without any representation or warranty) such of the Collateral as may then remain in the possession or control of
Lender, together with any monies at the time held by Lender hereunder, and (b) execute and deliver to Borrower a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement.

 

(SIGNATURES TO FOLLOW)

 

    	 	30	 

     

    

 

IN WITNESS WHEREOF, Borrower
and Lender have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

 

 

	 	BORROWER:
	 	 
	 	ACORN ENERGY, INC.
	 	 
	 	Signature:	 
	 	Print Name:	John A. Moore
	 	Title:	Chief Executive Officer

 

	 	GUARANTORS:
	 	 
	 	GRIDSENSE INC.
	 	 
	 	Signature:	 
	 	Print Name:	 
	 	Title:	 

 

	 	OMX HOLDINGS INC.
	 	 
	 	Signature:	 
	 	Print Name:	 
	 	Title:	 

 

	 	OMNIMETRIX, LLC
	 	 
	 	Signature:	 
	 	Print Name:	 
	 	Title:	 

 

    	 	31	 

     

    

 

	 	LENDER:
	 	 
	 	LEAP TIDE CAPITAL PARTNERS III, LLC
	 	 
	 	Signature:	 
	 	Print Name:	 
	 	Title:	 

 

    	 	32Exhibit 10.2

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This Intellectual Property
Security Agreement, executed as of the 13th day of August, 2015 (this “Agreement”), is made by and between ACORN ENERGY,
INC., a Delaware corporation (“Borrower”), GRIDSENSE INC., a Colorado corporation (“GridSense”), OMNIMETRIX,
LLC, a Georgia limited liability company (“OmniMetrix”; and collectively with Gridsense, the “Grantors”),
and LEAP TIDE CAPITAL PARTNERS III, LLC, a Delaware limited liability company (“Secured Party”).

 

RECITALS

 

A.           Pursuant
to that certain Loan and Security Agreement dated as of even date herewith (the “Loan Agreement”) by and among the
Borrower, the subsidiaries of the Borrower who are party thereto including the Grantors (the “Guarantors”), and the
Secured Party, the Secured Party has made a loan to the Borrower in the principal amount of $2,000,000.

 

B.           To
secure the Secured Obligations (as defined below), the Grantors have agreed to grant the Secured Party a security interest in and
lien upon the Intellectual Property Collateral (as defined below).

 

NOW, THEREFORE, for good
and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree
as follows:

 

1.           Grant
of Security Interest in Intellectual Property. The Grantors hereby unconditionally and irrevocably pledge and grant to the
Secured Party a security interest in and to and continuing lien upon, all of their right, title and interest in and to their property
and assets set forth below (the “Intellectual Property Collateral”):

 

(a)          all
of such Grantor’s right, title and interest in and to trademarks, trade names, service marks, logos, emblems, prints and
labels, all elements of package or trade dress of goods, and all general intangibles of like nature, now existing or hereafter
adopted or acquired by such Grantor, together with the goodwill of such Grantor’s business connected with the use thereof
and symbolized thereby, and any and all registrations, applications for registration, and recordings thereof, in the United States
Patent and Trademark Office or in any similar office or agency of the United States or in any office of the Secretary of State
(or equivalent) of any state thereof, or in any similar office or agency of any country or political subdivision thereof throughout
the world, whether now owned or hereafter acquired by such Grantor, including, but not limited to, those described in Schedule A
annexed hereto and made a part hereof (provided that no security interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark applications under applicable federal law), together with all extensions,
renewals and corrections thereof and all licenses thereof or pertaining thereto (but with respect to any such license, only to
the extent permitted by the applicable licensing agreement) (all of the foregoing assets encompassed by this subparagraph 1(a)
being hereinafter collectively referred to as the “Trademarks”);

 

    	 	 	 

     

    

 

(b)          all
of such Grantor’s right, title and interest in and to all inventions, and any and all patents and applications for registration
therefor, and all registrations and recordings thereof in the United States Patent and Trademark Office or in any similar office
or agency of the United States or any state thereof, or in any similar office or agency of any country or political subdivision
thereof throughout the world, whether now owned or hereafter acquired by such Grantor, including, but not limited to, those described
in Schedule A annexed hereto and made a part hereof, together with all re-examinations, reissues, continuations, continuations-in-part,
divisions, improvements and extensions thereof and all licenses thereof or pertaining thereto and all licenses of patent rights
to such Grantor now in effect or entered into during the term of this Agreement (but with respect to any such license, only to
the extent permitted by the applicable licensing agreement) and the rights to make, use and sell, and all other rights with respect
to, the inventions disclosed or claimed therein, all inventions, designs, proprietary or technical information, know-how, other
data or information, software, databases, all embodiments or fixations thereof and related documentation, and all other trade secret
rights not described above (all of the foregoing assets encompassed by this subparagraph 1(b) being hereinafter collectively referred
to as the “Patents”);

 

(c)          all
of such Grantor’s right, title and interest in and to copyrights in works of authorship of any kind, and all registrations,
applications for registration and recordings thereof in the Office of the United States Register of Copyrights, Library of Congress,
or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter
acquired by such Grantor, including, but not limited to, those described in Schedule A annexed  hereto and made
a part hereof, together with any and all extensions, renewals, reversionary rights, and corrections thereof and all licenses thereof
or pertaining thereto (but with respect to any such license, only to the extent permitted by the applicable licensing agreement)
(all of the foregoing assets encompassed by this subparagraph 1(c) hereinafter collectively referred to as the “Copyrights”);
and

 

(d)          the
proceeds and products, whether tangible or intangible, of any of the foregoing, including (w) proceeds from any claims by
such Grantor against third parties for past, present or future infringement of the Trademarks, Patents or Copyrights and any royalties
from licenses to third parties of the Trademarks, Patents or Copyrights, (x) proceeds of insurance covering any or all of
the foregoing, (y) royalties or other income derived from the licensing of such Intellectual Property Collateral and (z) any
and all money, deposit accounts, or other tangible or intangible property, solely to the extent, in the case of each of the foregoing
clauses (w) and (x), resulting from the sale, exchange, collection or other disposition of any of the foregoing, or any portion
thereof or interest therein, and the proceeds thereof; provided, however, that the Intellectual Property Collateral shall not include
such general intangibles: (i) which cannot be subject to a consensual security interest in favor of the Secured Party without
the consent of the licensor or other Parties thereto, (ii) as to which any such restriction described in clause (i) is
effective and enforceable under applicable law including Section 9-408 of the Uniform Commercial Code as adopted in Delaware
(the “Code”), and (iii) to which such consent described in clause (i) has not been obtained by the Parties
granting the security interest.

 

2.           Continuing
Security Interest. This Agreement will create a continuing security interest in the Intellectual Property Collateral and will
(i) remain in full force and effect until payment or performance in full of the Secured Obligations, (ii) be binding upon each
Grantor and its respective successors and assigns and (iii) inure to the benefit of the Secured Party and its successors and assigns.

 

    	 	2	 

     

    

 

3.           Perfection.
As of the date of execution of this Agreement, each Grantor shall have furnished the Secured Party with properly executed financing
statements in form, number and substance suitable for filing, sufficient under applicable law, and satisfactory to the Secured
Party in order that upon the filing of the same the Secured Party shall have a duly perfected security interest in all Intellectual
Property Collateral in which a security interest can be perfected by the filing of financing statements with the effect that the
liens conferred in favor of Secured Party shall be and remain duly perfected. All financing statements (including all amendments
thereto and continuations thereof), certificates, acknowledgments, instruments and other documents furnished in connection with
the creation, enforcement, protection, perfection or priority of the Secured Party’s security interest in the Intellectual
Property Collateral, including such items as are described above in this Section 3, are sometimes referred to herein
as “Perfection Documents”. The delivery of possession of items of or evidencing the Intellectual Property Collateral,
causing other persons to execute and deliver Perfection Documents as appropriate, the filing or recordation of Perfection Documents,
the establishment of control over items of Intellectual Property Collateral, and the taking of such other actions as may be necessary
or advisable in the determination of the Secured Party to create, enforce, protect, perfect, or establish or maintain the priority
of, the security interest of, the Secured Party in the Intellectual Property Collateral is sometimes referred to herein as “Perfection
Action”.

 

4.           Secured
Obligations. This Agreement is made and the security interests created hereby are granted to the Secured Party to secure the
full and prompt payment or performance of the following (the “Secured Obligations”): (a) the $2,000,000 principal amount
of indebtedness owing by the Borrower pursuant to the Loan Agreement and all accrued and unpaid interest on the principal amount
due; (b) the Guarantees of the Guarantors under the Loan Agreement, jointly and severally guaranteeing payment of all the Borrower’s
obligations under the Loan Agreement; (c) all other Obligations as defined in the Loan Agreement; (d) all reasonable costs incurred
by the Secured Party to obtain, preserve, perfect and enforce the liens and security interests created hereby; and (e) any renewals,
continuations, modifications or extensions of any of the foregoing. “Secured Obligations” will also include the principal
and interest amounts of any Additional Financing (as defined in Section 24 hereof) provided to Borrower or any Grantor by
the Secured Party as contemplated by Section 24 hereof.

 

5.           Authorization
and Request. Each Grantor authorizes and requests that the Register of Copyrights, the Commissioner of Patents and Trademarks
and any other relevant U.S. or foreign governmental authority record this Agreement or the Grant of Security

 

6.           Covenants
and Warranties. Each Grantor represents, warrants, covenants and agrees, with respect to itself, as follows:

 

(a)          The
Grantor is now the sole owner of the Intellectual Property Collateral, except as indicated on the attached schedules and except
for non-exclusive licenses granted by the Grantor to third parties in the ordinary course of business.

 

(b)          The
Grantor has the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of
the Grantor. The performance of this Agreement does not conflict with or result in a breach of any other agreement or contract
to which the Grantor is bound which breach would have a material adverse effect (“MAE”) on the Grantor, except as otherwise
disclosed in writing to the Secured Party.

 

    	 	3	 

     

    

 

(c)          During
the term of this Agreement, the Grantor will not transfer or otherwise encumber any of its Intellectual Property Collateral, except
as set forth in this Agreement or agreed to in writing by the Secured Party.

 

(d)          To
its knowledge, each of the Patents, if any, which has been issued in the name of the Grantor is valid and enforceable, and no part
of the Intellectual Property Collateral has been judged invalid, unenforceable or unprotectable, in whole or in part, and no claim
has been made that any part of the Intellectual Property Collateral violates the rights of any third parties.

 

(e)          The
Grantor shall promptly advise the Secured Party in writing of any adverse change in the composition of its Intellectual Property
Collateral or any adverse determination against its Intellectual Property Collateral, as well as any subsequent ownership right
of the Grantor in or to any Copyright, Patent or Trademark.

 

(f)          The
Grantor shall, at its own cost and expense, use reasonable commercial efforts to diligently prosecute, file and make (to the extent
that it has not already done so) an application to register with all appropriate offices or agencies any of the Intellectual Property
Collateral created, acquired or held by the Grantor now or in the future.

 

(g)          The
Grantor shall use reasonable commercial efforts to (i) protect, defend and maintain the validity and enforceability of the Copyrights,
Patents and Trademarks, (ii) detect infringements of the Copyrights, Patents and Trademarks and promptly advise the Secured Party
in writing of infringements detected and (iii) not allow any Copyright, Patent or Trademark to be abandoned, forfeited or dedicated
to the public without the written consent of the Secured Party, which shall not be unreasonably withheld, unless in either case
the Grantor determines that reasonable business practices suggest that failing to protect or defend is appropriate or that abandonment
is appropriate, as the case may be.

 

(h)          In
the event that the Grantor shall register, seek to register, or apply for or seek issuance of any copyright, patent or trademark
with the United States Copyright Office, the United States Patent and Trademark Office or any similar office or agency of any foreign
country such Grantor shall: (i) promptly after such registration or the filing of such an application, give notice to the Secured
Party of such registration or the filing of such application and provide the Secured Party with a copy thereof; (ii) promptly upon
the delivery by the Secured Party of a security agreement or such other documents as the Secured Party may reasonably request in
order to maintain and perfect the priority of the Secured Party’s security interest in the Copyright, Patent or Trademark
registered, execute the same; and (iii) promptly after such execution, record such security documents with the United States Copyright
Office, the United States Patent and Trademark Office or any similar office or agency of any foreign country. The Grantor shall,
upon request, promptly provide to the Secured Party a copy of the Copyright, Patent or Trademark application(s) so filed, together
with evidence of the recording of the security documents necessary for the Secured Party to maintain and perfect the priority of
its security interest in such Copyright, Patent or Trademark.

 

    	 	4	 

     

    

 

(i)          This
Agreement creates and, in the case of after acquired Intellectual Property Collateral, this Agreement will create at the time the
Grantor first has rights in such after acquired Intellectual Property Collateral in favor of the Secured Party a valid and perfected
priority security interest in the Intellectual Property Collateral securing the payment and performance of the Secured Obligations
upon making the filings referred to in clause (j) below.

 

(j)          Except
for the filing of appropriate UCC financing statements, and the filing with the United States Patent and Trademark Office (or similar
office or agency of the appropriate foreign countries) with respect to the Patents and Trademarks and the filing with the Register
of Copyrights (or similar office or agency of the appropriate foreign countries) with respect to the Copyrights necessary to perfect
the security interests created hereunder, no authorization, approval or other action by, and no notice to or filing with, any U.S.
or foreign governmental authority or regulatory body is required for the grant by the Grantor of the security interest granted
hereby or for the execution, delivery or performance of this Agreement by such Grantor or for the perfection of or the exercise
by the Secured Party, of its rights and remedies hereunder.

 

(k)          No
action or proceeding is pending or, to the Grantor’s knowledge, threatened seeking to limit, cancel or question the validity
of any part of the Intellectual Property Collateral.

 

(l)          The
Grantor has granted any release, covenant not to sue, or non-assertion assurance to any third person with respect to any part of
the Intellectual Property Collateral.

 

(m)          The
actions contemplated under or in connection with the loan documents will not impair the legal right of the Grantor to use any of
the Intellectual Property Collateral.

 

(n)          The
Grantor has no knowledge of the existence of any right under any patent, trademark, license agreement, trade name, trade secret,
know-how, confidential research, development and commercial information, or other proprietary information held by any other third
parties that would materially interfere with the ability of the Grantor to carry on its business as currently carried on, and the
Grantor has no knowledge of any claim to the contrary.

 

(o)          To
the Grantor’s knowledge, none of the Grantor’s subsidiaries or related entities that is not also itself a Grantor has
an ownership interest in any patents, patent applications, copyrights, copyright applications, trademark, trade name, trade dress,
service marks, trademark or service mark registrations or any applications for trademark or service mark registration or any other
intellectual property of a nature that would be Intellectual Property Collateral hereunder if owned by the Grantor.

 

(p)          No
claim has been made in writing, and the Grantor has no knowledge of any claim, that the use by the Grantor of any Intellectual
Property Collateral does or may violate the rights of any third parties.

 

(q)          No
financing statement or other instrument similar in effect covering all or any part of the Intellectual Property Collateral purported
to be granted by the Grantor hereunder shall be on file in any recording office, including, without limitation, the United States
Patent and Trademark Office, except such as may have been filed in favor of the Secured Party.

 

    	 	5	 

     

    

 

(r)          Set
forth on Schedules A hereto is a list of all of the Patents, Trademarks and Copyrights owned by the Grantor.

 

(s)          Each
Patent of the Grantor identified on Schedule A hereto is validly subsisting and has not been adjudged unpatentable,
invalid or unenforceable, in whole or in part, and to the knowledge of the Grantor is patentable, valid and enforceable, and each
of such Patent applications has been filed in conformity with applicable rules and procedures of the United States Patent and Trademark
Office in all material respects and the Grantor will use commercially reasonable efforts to ensure that the same will be prosecuted
in conformity therewith so as not to become improperly abandoned.

 

(t)          Each
Trademark and Copyright of the Grantor identified on Schedule A hereto is validly subsisting and has not been abandoned
or adjudged invalid, unregistrable or unenforceable, in whole or in part, and is, to the Grantor’s knowledge, valid, registerable
and enforceable, and each application for registration of any such Trademark or Copyright has been filed in conformity with applicable
rules and procedures of the United States Patent and Trademark Office or United States Copyright Office in all material respects
and the Grantor will use commercially reasonable efforts to ensure that the same will be prosecuted in conformity therewith.

 

7.           The
Secured Party’s Rights. The Secured Party shall have the right, but not the obligation, to take, at the applicable Grantor’s
sole expense, any actions that such Grantor is required under this Agreement to take but which such Grantor fails to take, after
fifteen (15) business days’ written notice to such Grantor. Such Grantor shall reimburse and indemnify the Secured Party
for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this section.

 

8.           Inspection
Rights. Each Grantor hereby grants to the Secured Party and its employees, representatives and agents the right to visit, during
reasonable hours upon prior reasonable written notice to such Grantor, any of such Grantor’s plants and facilities that manufacture,
install or store products (or that have done so during the prior six-month period) that are sold utilizing any of the Intellectual
Property Collateral, and to inspect the products and quality control records relating thereto upon reasonable written notice to
such Grantor and as often as may be reasonably requested.

 

9.           Further
Assurances; Attorney in Fact.

 

(a)          On
a continuing basis, each Grantor will make, execute, acknowledge and deliver, and file and record in the proper filing and recording
places in the United States and foreign countries, as appropriate, all such instruments, including appropriate financing and continuation
statements and collateral agreements and filings with the United States Patent and Trademarks Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Secured Party, to
perfect the Secured Party’s security interest in the Intellectual Property Collateral, and otherwise to carry out the intent
and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a security interest
in all Intellectual Property Collateral.

 

    	 	6	 

     

    

 

(b)          Each
Grantor hereby irrevocably appoints the Secured Party as the such Grantor’s attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor, the Secured Party or otherwise, from time to time in the Secured
Party’s discretion, upon such Grantor’s failure or inability to do so, to take any action and to execute any instrument
which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including:

 

(i)          To
modify, in its sole discretion, this Agreement without first obtaining such Grantor’s approval of or signature to such modification
by amending Schedule A, hereof, as appropriate, to include reference to any right, title or interest in any Copyrights,
Patents or Trademarks or Collateral acquired by such Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents, or Trademarks in which such Grantor no longer has or claims any right, title or interest;
provided, however, that the Secured Party may not exercise the rights granted to it pursuant to this Section 9(b)(i) unless (A)
it shall have given such Grantor notice of its intent to exercise such rights (which notification must set forth the manner in
which the Secured Party intends to modify Schedule A) and the opportunity to amend such schedules in the manner contemplated
by such notice and (B) such Grantor has not so modified such exhibits within at least fifteen (15) business days after it received
such notice from the Secured Party;

 

(ii)         To
file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Intellectual
Property Collateral without the signature of such Grantor where permitted by law and

 

(iii)        To
transfer, sell, or assign any or all Intellectual Property Collateral in the Event of Default

 

10.         Events
of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:

 

(a)          A
default occurs under any obligation owed by Borrower or any Guarantor to the Secured Party under the Loan Agreement or any document
or instrument evidencing the Secured Obligations; or

 

(b)          Any
Grantor breaches any warranty or agreement made by such Grantor in this Agreement and such warranty or agreement is not capable
of being cured by such Grantor or, if such warranty or agreement is capable of being cured by such Grantor, it is not cured within
ten (10) business days of such breach.

 

    	 	7	 

     

    

 

11.         Remedies.
Upon the occurrence and continuance of an Event of Default, the Secured Party shall have the right to exercise all the remedies
of a secured party under the Uniform Commercial Code, including, but not limited to, the right to require the applicable Grantor
to assemble the Intellectual Property Collateral and any tangible property in which the Secured Party have a security interest
and to make it available to the Secured Party at a place designated by the Secured Party and also may (i) require such Grantor
to, and Grantors hereby agree that they will at their expense and upon request of the Secured Party forthwith, assemble all or
part of the documents embodying the Intellectual Property Collateral as directed by the Secured Party and make both available to
the Secured Party, at a place to be designated by the Secured Party that is reasonably convenient to both the Secured Party and
such Grantor, (ii) occupy any premises owned or leased by such Grantor where documents embodying such Intellectual Property Collateral
or any part thereof are assembled for a reasonable period in order to effectuate the Secured Party’s rights and remedies
hereunder or under applicable law, without obligation to such Grantor in respect of such occupation, and (iii) without notice except
as specified below, sell or assignsuch Intellectual Property Collateral or any part thereof at public or private sale in a commercially
reasonable manner, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Secured Party may deem commercially reasonable. Each Grantor agrees that at least ten days’ notice
to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Secured Party shall not be obligated to make any sale of the Intellectual Property Collateral regardless
of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. The Secured Party shall have a nonexclusive, royalty free license to use the Copyrights, Patents and Trademarks to
the extent reasonably necessary to permit the Secured Party to exercise their rights and remedies upon the occurrence of an Event
of Default. Such Grantor will pay any reasonable expenses (including, but not limited to, reasonable attorneys’ fees) incurred
by the Secured Party in connection with the exercise of any of the Secured Party’s rights hereunder, including, but not limited
to, any expense incurred in disposing of the Intellectual Property Collateral. The cash proceeds received by the Secured Party
in respect of any such sale are to be applied, first, to the payment of any expenses incurred by the Secured Party in connection
with the exercise of any of its rights hereunder and to the payment of expenses that are the responsibility of such Grantor pursuant
to other provisions of this Agreement (to the extent that they are then unpaid), second, to the payment of the Secured Obligations,
and third, the remaining proceeds, if any, are to be paid over to such Grantor. All of the Secured Party’s rights and remedies
with respect to the Intellectual Property Collateral shall be cumulative.

 

12.         Indemnity.
Each Grantor agrees to defend, indemnify and hold harmless the Secured Party and their owners, directors, officers, employees,
and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other parties in connection
with the transactions contemplated by this Agreement, and (b) all losses or expenses in any way suffered, incurred, or paid by
the Secured Party as a result of or in any way arising out of transactions between the Secured Party and such Grantor, under this
Agreement or otherwise relating to the Intellectual Property Collateral (including, but not limited to, reasonable attorneys fees
and reasonable expenses), including, but not limited to, all losses or expenses arising out of any defect or malfunction in any
product manufactured, promoted or sold by such Grantor in connection with any Copyright, Patent or Trademark. Notwithstanding the
foregoing, the Grantor shall have no obligations pursuant to this Section 12 for losses, claims, liabilities, demands or expenses
to the extent the same result from the Secured Party’s gross negligence or willful misconduct.

 

13.         Fees
and Expenses. Each party shall bear its own expenses in connection with the negotiation, drafting and execution of this Agreement,
except that Borrower shall bear the reasonable legal fees of counsel to the Secured Party in connection therewith. The Borrower
shall bear the expenses associated with all filings contemplated hereby.

 

    	 	8	 

     

    

 

14.         Confidentiality.
In handling any information of a confidential nature that comes into its possession pursuant to the rights granted to it by this
Agreement (“Confidential Information”), the Secured Party shall exercise the same degree of care that they exercise
in respect of their own confidential information. The foregoing sentence shall not be deemed to prohibit disclosure of Confidential
Information (a) to prospective assignees or transferees of the rights and obligations of the Secured Party under this Agreement
or (b) as the Secured Party reasonably determine appropriate in exercising the remedies provided to them in this Agreement.

 

15.         Termination
and Reassignment. Upon the date on which a Grantor shall completely satisfy all of its obligations to the Secured Party, the
collateral assignment and security interest granted hereunder with respect to that Grantor shall be deemed of no further force
or effect and the Secured Party shall execute and deliver to such Grantor all termination statements, deeds, amendments on UCC-3,
assignments, and other instruments as may be necessary or proper to reinvest in such Grantor full title to the property assigned
hereunder, subject to any permitted disposition thereof which may have been made by the Secured Party pursuant hereto.

 

16.         Course
of Dealing. No course of dealing, nor any failure to exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

 

17.         Additional
Collateral. If any Grantor shall acquire or hold any additional material Patents, Trademarks, Copyrights or other collateral
not listed on Schedules A, (any such Patents, Trademarks, Copyrights or other collateral being referred to herein as
the “Additional Collateral”), such Grantor shall promptly deliver to the Secured Party a revised Schedule A
hereto, as applicable, reflecting the ownership and pledge of such Additional Collateral. Such Grantor shall comply with the requirements
of this Section 17 promptly following the acquisition of any such Additional Collateral.

 

18.         Attorneys’
Fees. If any action relating to this Agreement is brought by any of the parties hereto against the other parties, the prevailing
parties shall be entitled to recover reasonable attorneys’ fees, costs and disbursements.

 

19.         Amendments.
Except as otherwise expressly provided herein, this Agreement may be amended only by a written instrument signed by the parties
hereto.

 

20.         Counterparts.
This Agreement may be executed (including by way of facsimile transmission) in one or more counterparts, each of which when executed
shall be deemed an original but all of which taken together shall constitute one and the same instrument.

 

21.         Severability.
Each provision of this Agreement is intended to be severable from every other provision, and the invalidity or illegality of any
provision of this Agreement shall not affect the validity or legality of any other provision hereof.

 

22.         Governing
Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware,
excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

    	 	9	 

     

    

 

23.         Dispute
Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware
and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or
other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising
out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District
of Delaware and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in
or by such court.

 

24.         Waiver
of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE THIS AGREEMENT OR THE SUBJECT MATTER HEREOF. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

 

25.         Assignment.
The Secured Party may assign or otherwise transfer their rights and obligations hereunder to any other person or entity in connection
with an assignment or other transfer of its rights and assumptions of its obligations pursuant to an agreement in form and substance
reasonably satisfactory to the Borrower, and, in such event, the assignee shall be entitled, upon notifying the Borrower and delivering
to the Borrower evidence of such agreement, to the rights of the Secured Party hereunder and shall be liable for all of the obligations
of the Secured Party hereunder. No Grantor may assign or otherwise transfer any of its respective rights or obligations hereunder
except in connection with a sale of substantially all of the assets then comprising such Grantor’s business, or on a merger,
consolidation or similar transaction involving the Grantor, but in each such case only with the prior written consent of the Secured
Party (which consent shall not be unreasonably withheld or delayed).

 

26.         Additional
Financing. The Borrower may require additional financing from time to time after the date hereof (the “Additional Financing”)
to fund its working capital requirements. If and to the extent the Additional Financing is provided by the Secured Party only,
the Secured Obligations shall be deemed to include the principal amount of such Additional Financing, together with interest and
costs. If and to the extent the Additional Financing is provided by persons other than the Secured Party, the Intellectual Property
Collateral may not be encumbered by Grantor without the prior written consent of the Secured Party.

 

[SIGNATURE PAGE FOLLOWS]

 

    	 	10	 

     

    

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the day and year first above written.

 

	 	BORROWER:
	 	 
	 	ACORN ENERGY, INC.
	 	 
	 	By:	
           
	 	Name:
	 	Title:
	 	Address:

 

	 	GRANTORS:
	 	 
	 	OMNIMETRIX, LLC
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	Address:	 

 

	 	GRIDSENSE, INC.
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	Address:	 

 

	 	SECURED PARTY:
	 	 
	 	LEAP TIDE CAPITAL PARTNERS III, LLC
	 	
	 	

	 	Name:	 
	 	Title:	 
	 	Address:	 

 

    	 	11	 

     

    

 

SCHEDULE A

 

GridSense Inc. Intellectual Property

 

The GridSense Trademark

Serial #85691621

Registration # 4312486

 

TransformerIQ Trademark

Serial# 856166898

Registration #4264029

 

LineIQ Trademark

Serial #85062524

Registration #3991129

  

DistributionIQ

Serial # 85520790

Registration #4318395

 

BreakerIQ

Serial #85062546

Registration #4013606

 

CableIQ

Serial # 85062531

Registration #3991130

 

OmniMetrix LLC Intellectual Property

 

Patents

 

US Patent 8,224,499 Remote annunciator issued July 17, 2012

 

US Patent 8,763,107 Cross-connected, server based, IP-connected,
point-to-point connectivity issued June 24, 2014

 

Trademarks

 

The OmniMetrix trademark

Serial # 85957963

Registration #4574605

 

The OmniView Trademark

Serial #85957989

819-SU- Registration Review Complete

Status Date 2014-09-16

 

    	 	12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00253-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00253-of-00352.parquet"}]]