Document:

Exhibit
10.1

       

      US SENSOR SYSTEMS INC.

       

      COMMON
STOCK OPTION PURCHASE AGREEMENT

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      COMMON
STOCK OPTION PURCHASE AGREEMENT

       

      This
Common Stock Option Purchase Agreement (the “Agreement”) is made as of
February 23, 2010 by and among US Sensor Systems Inc., a Delaware corporation
(the “Company”), and
Acorn Energy, Inc., a Delaware corporation (the “Purchaser”).

       

      Preliminary
Statement

       

      The
Company issued and sold to the Purchaser, and Purchaser did purchase, 50,917
shares (the “Initial
Shares”) of the Company’s common stock, $0.001 par value per share (the
“Common Stock”) and such
sale and purchase closed on November 30, 2009 (the “Initial
Closing”).

       

      The
Company desires to grant to the Purchaser certain options for the Purchaser to
purchase shares of Common Stock, and the Purchaser desires to acquire such
options, all in accordance with the terms of this Agreement. The shares of
Common Stock subject to the options granted to the Purchaser pursuant to this
Agreement shall be referred to in this Agreement as the “Shares.”

      

      NOW,
THEREFORE, for and in consideration of the Purchaser’s purchase of the shares of
Common Stock at the Initial Closing and other good and valuable consideration,
the receipt and sufficiency of which, are hereby acknowledged, the parties
hereto do hereby agree as follows:

       

      1.           Options to Purchase Common
Stock.

       

      1.1.           Grant of Options to Purchase
Common Stock.  Subject to the terms and conditions of this
Agreement, the Company hereby grants to the Purchaser, and the Purchaser hereby
accepts, options to purchase Shares as follows:

       

      (a)           An
option to purchase 254,584 Shares with such option being exercisable in the
following increments and time periods and upon payment by the Purchaser to the
Company of the following applicable option purchase prices: (i) for three-eights
of such Shares the option must be exercised no later than March 1, 2010 with
payment of $300,000; (ii) for an additional one-quarter of such Shares the
option must be exercised no later than May 31, 2010 with payment of $200,000;
and (iii) for the remaining three-eights of such Shares the option must be
exercised no later than August 27, 2010 with payment of
$300,000.  Such options may be exercised, if at all, only sequentially
in the order set forth in this subparagraph (a) and, if any incremental option
is not exercised in full on or before the applicable expiration date for such
incremental option, such incremental option together with any remaining
incremental options in this subparagraph (a) and all options set forth in
subparagraph (b) below shall terminate and be of no further force or
effect.

       

      (b)           An
option to purchase 3,386,782 Shares with such option being exercisable in the
following increments and time periods and upon payment by the Purchaser to the
Company of the following applicable option purchase prices: (i) for one-half of
such Shares such option must be exercised no later than November 30, 2010 with
payment of $1,500,000; and (ii) for the remaining one-half of such Shares the
option must be exercised no later than May 31, 2011 with payment of
$1,500,000.  Such options may be exercised, if at all, only
sequentially in the order set forth in this subparagraph (b) and simultaneously
with or following exercise in full of all of the options specified in
subparagraph (a) above and in that certain Capital Stock Option Purchase
Agreement by and among the Purchaser and the stockholders named therein dated
the date hereof (the “Capital
Stock Option Purchase Agreement”).  If any incremental option
hereunder is not exercised in full on or before the expiration of the prior
applicable option period, such option together with any remaining incremental
options in this subparagraph (b) shall terminate and be of no further force or
effect.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      1.2.           Exercise of Options.
Each option granted above may be exercised by the Purchaser providing written
notice of such exercise to the Company (the “Exercise Notice”) prior to the
expiration of the applicable option period together with payment therefor as
specified below. Any such notice shall specify the number of Shares being
exercised by the Purchaser and the applicable purchase price, with such option
to be deemed exercised upon receipt by the Company of payment
therefor.

       

      1.3.           Closing; Delivery.
The purchase price for the number of Shares with respect to which an option is
being exercised shall be payable to the Company in full in cash or by check or
wire transfer. Upon receipt of such purchase price, the Company shall promptly
deliver to the Purchaser a stock certificate for the Shares with respect to
which such option has been exercised, and in no event shall such certificate be
delivered later than fifteen (15) business days following date of payment of the
purchase price by the Purchaser.

       

      1.4.           Defined Terms Used in this
Agreement.  In addition to the terms defined above, the
following terms used in this Agreement shall be construed to have the meanings
set forth or referenced below.

       

      “Affiliate” means with respect
to any person or entity (a “Person”) any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with such Person, including, without limitation, any partner, officer, director,
or member of such Person and any venture capital fund now or hereafter existing
which is controlled by or under common control with one or more general partners
or shares the same management company with such Person.

       

      “Code” means the Internal
Revenue Code of 1986, as amended.

       

      “Company Intellectual Property”
means all trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes and all patents and
patent rights owned or possessed by the Company.

       

      “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

       

      “Key Employee” means any of
James Andersen, Gerald Baker, and Eric Goldner.

       

      “Material Adverse Effect” means
a material adverse effect on the business, assets (including intangible assets),
liabilities, financial condition, property or results of operations of the
Company.

       

      “Options” means all of the
options to purchase shares of Common Stock granted by the Company to the
Purchaser under Section
1.

       

      
        
           

        

        
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      “Preferred Stock” shall mean
the shares of the Company’s Preferred Stock, $0.001 par value per
share.

       

      “Purchaser” means the Purchaser
who is a party to this Agreement.

       

      “Rights Agreement” means the
Amended and Restated Investors’ Rights Agreement among the Company, the
Purchaser and the Stockholders, dated as of the date hereof, in the form of
Exhibit B
attached to this Agreement.

       

      “Securities Act” means the
Securities Act of 1933, as amended.

       

      “Shares” means the shares of
Common Stock of the Company subject to the options granted to Purchaser under
this Agreement.

       

      “Stock” shall mean all of the
shares of the Company’s Common Stock and Preferred Stock.

       

      “Stockholders” means the
holders of all shares of common and preferred stock of the Company as of the
date hereof.

       

      “Stockholders’ Agreement” means
the agreement between the Company, the Purchaser and the Stockholders, dated as
of the date hereof, in the form of Exhibit C attached to
this Agreement.

       

      “Transaction Agreements” means
this Agreement, the Rights Agreement, the Stockholders’ Agreement, the Capital
Stock Option Purchase Agreement (solely in the Company’s capacity as “notice
agent” thereunder) and any other agreements, instruments or documents entered
into in connection with this Agreement.

       

      2.           Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Purchaser that, except as set forth on the Disclosure
Schedule attached to this Agreement which exceptions shall be deemed to
be part of the representations and warranties made hereunder, the following
representations are true and complete as of the date hereof, except as otherwise
indicated. The Disclosure
Schedule shall be arranged in sections corresponding to the numbered and
lettered sections and subsections contained in this Section 2, and the
disclosures in any section or subsection of the Disclosure
Schedule shall qualify other sections and subsections in this Section 2 only to the
extent it is readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections and subsections.

       

      For
purposes of these representations and warranties, the phrase “to the Company’s
knowledge” shall mean the knowledge after reasonable investigation of the Key
Employees of the Company.

       

      2.1.           Organization, Good Standing,
Corporate Power and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as presently conducted and as proposed to be
conducted.  The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect.

       

      
        
           

        

        
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      2.2.           Capitalization.  The
authorized capital of the Company consists, as of the date hereof (unless
otherwise noted), of:

       

      (a)           2,500,000 shares of Common Stock,
889,906 shares of which are issued and outstanding as of the date hereof, and
141,507 shares of Preferred Stock, all of which are issued and outstanding as of
the date hereof.  All of the outstanding shares of Stock have been
duly authorized, are fully paid and nonassessable and were issued in compliance
with all applicable federal and state securities laws.  The Company
holds no treasury stock.

       

      (b)           The
Company is not committed to granting any options other than the options
described in Section
1 and options to be issued under the “Management Option Plan” (as such
quoted term is defined in the Stockholders’ Agreement).

       

      (c)           Section
2.2(c) of the Disclosure
Schedule sets forth the capitalization of the Company as of the date
hereof including the number of shares of the following: (i) issued and
outstanding Common Stock and Preferred Stock; (ii) stock options not yet
issued but reserved for issuance; and (iii) warrants or stock purchase
rights, if any.  Except for (A) the options granted under Section 1 and the
Capital Stock Option Purchase Agreement, (B) the rights provided in Section 3 of the
Rights Agreement, (C) the rights provided in Section 2.5 of the Stockholders’
Agreement, and (D) the securities and rights described in Section 2.2(b) of
this Agreement and Section
2.2(c) of the Disclosure
Schedule, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, to purchase or acquire from the Company, or
sell to the Company, any shares of Stock, or contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue Stock or any securities convertible into or exchangeable for shares of
Stock.  Except as set forth in the Company’s Amended and Restated
Certificate of Incorporation, no current or former stockholder of the Company’s
capital stock has, or with the giving of notice or any other actions may have,
any appraisal rights or the right to obtain payment of the fair value of that
stockholder’s shares of Stock other than as required by applicable
law.  Except as provided in this Agreement, the Rights Agreement, the
Stockholders’ Agreement, and the Company’s Amended and Restated Certificate of
Incorporation, no stockholder of the Company or other person has any right to
designate members to serve on the Company’s board of directors or any committee
thereof.

       

      (d)           None
of the Company’s stock purchase agreements or stock option documents contains a
provision for acceleration of vesting (or lapse of a repurchase right) upon the
occurrence of any event or combination of events. Except as set forth on Section
2.2(d) of the Disclosure
Schedule, the Company has never adjusted or amended the exercise price of
any stock options previously awarded, whether through amendment, cancellation,
replacement grant, repricing, or any other means.

       

      2.3.           Subsidiaries and
Affiliates.  The Company does not own, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity ownership in any business.

       

      
        
           

        

        
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      2.4.           Authorization.  All
corporate action required to be taken by the Company’s Board of Directors and
stockholders in order to authorize the Company to enter into the Transaction
Agreements, and to issue the Shares upon exercise of the applicable Options, has
been taken.  The Transaction Agreements, when executed and delivered
by the Company, shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or (iii) to
the extent the indemnification provisions contained in the Stockholders’
Agreement may be limited by applicable federal or state securities laws.

       

      2.5.           Valid Grant of Option and
Issuance of Shares. Upon execution of this Agreement by all parties, the
Options will be validly granted and freely exercisable in accordance with the
terms of Section
1 of this Agreement, other than restrictions on transfer of this
Agreement, the Stockholders’ Agreement, applicable state and federal securities
laws and liens for encumbrances created by or imposed by the Purchaser. The
Shares, when issued, upon exercise of the applicable Options and delivered in
accordance with the terms and for the consideration set forth in this Agreement,
will be validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement, the
Stockholders’ Agreement, applicable state and federal securities laws and liens
or encumbrances created by or imposed by the Purchaser.  Assuming the
accuracy of the representations of the Purchaser in Section 3 of this
Agreement, the Options will be granted and Shares will be issued in compliance
with all applicable federal and state securities laws. All certificates
representing all issued and outstanding shares of Stock contain a restrictive
legend similar to that set forth in Section
3.8(a).

       

      2.6.           Governmental Consents and
Filings.  Assuming the accuracy of the representations made by
the Purchaser in Section 3 of this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except for  filings, if any, pursuant to Regulation D of
the Securities Act, and applicable state securities laws, which have been made
or will be made in a timely manner.

       

      2.7.           Litigation.  Except
as set forth on Section 2.7 of the Disclosure Schedule,
there is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or, to the Company’s knowledge, currently threatened that
questions the validity of the Transaction Agreements or the right of the Company
to enter into them, or to consummate the transactions contemplated by the
Transaction Agreements.

       

      2.8.           Compliance with Other
Instruments.  The execution, delivery and performance of the
Transaction Agreements and the consummation of the transactions contemplated by
the Transaction Agreements will not result in any violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either (i) a default under any instrument, judgment, order, writ, decree,
contract or agreement to which the Company is a party or by which it is bound or
(ii) an event which results in the creation of any lien, charge or encumbrance
upon any property or assets of the Company or the suspension, revocation,
forfeiture, or nonrenewal of any permit or license applicable to the
Company.

       

      
        
           

        

        
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      2.9.           Rights of Registration and
Voting Rights.  Except as provided in the Rights Agreement, the
Company is not under any obligation to register under the Securities Act any of
its currently outstanding securities or any securities issuable upon exercise or
conversion of its currently outstanding securities.  Except as
contemplated in the Rights Agreement, the Stockholders’ Agreement, and the
Company’s Amended and Restated Certificate of Incorporation, no stockholder of
the Company has entered into any agreements with respect to the voting of
capital shares of the Company.

       

      2.10.                      Company Operations and
Material Liabilities.  A description of the Company’s material
liabilities and obligations in excess of $10,000, contingent or otherwise, as of
the date hereof is as set forth on Section
2.10 of the Disclosure
Schedule. For the purposes of meeting the foregoing threshold of
$10,000, all liabilities and obligations involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated.

       

      2.11.                      Changes.  To
the Company’s knowledge, except as set forth in Section
2.11 of the Disclosure
Schedule, since January 1, 2009, there has not been:

       

      (a)           Other
than continuing losses from operations, any change in the assets, liabilities,
financial condition or operating results of the Company, except changes in the
ordinary course of business that have not caused, in the aggregate, a Material
Adverse Effect on the Company;

       

      (b)           any
damage, destruction or loss, whether or not covered by insurance, that would
have a Material Adverse Effect on the Company;

       

      (c)           any
waiver or compromise by the Company of a valuable right or of a material debt
owed to the Company;

       

      (d)           any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and the
satisfaction or discharge of which would not have a Material Adverse Effect on
the Company;

       

      (e)           any
material adverse change to a material contract or agreement by which the Company
or any of its assets is bound or subject;

       

      (f)           any
mortgage, pledge, transfer of a security interest in, or lien, created by the
Company, with respect to any of the material properties or assets of the
Company, except liens for taxes not yet due or payable and liens that arise in
the ordinary course of business and do not materially impair the Company’s
ownership or use of such property or assets;

       

      (g)           any
sale, assignment or transfer of any Company Intellectual Property that could reasonably be
expected to result in a Material Adverse Effect to the Company;

       

      
        
           

        

        
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      (h)           receipt
of notice that there has been a loss of, or material order cancellation by, any
major customer of the Company; or

       

      (i)           any
other event or condition of any character, other than events affecting the
economy or the Company’s industry generally, that could reasonably be expected
to result in a Material Adverse Effect to the Company.

       

      To the
Company’s knowledge, since January 1, 2008 (x) the Company has carried on and
operated its business in the ordinary course of business and (y) other than
continuing losses from operations, the Company has not suffered a Material
Adverse Effect.

       

      2.12.                      Corporate
Documents.  The Amended and Restated Certificate of
Incorporation and Bylaws of the Company are in the form provided to the
Purchaser.  The copy of the minute books of the Company provided to
the Purchaser contains minutes of all material meetings of directors and
stockholders and all material actions by written consent without a meeting by
the directors and stockholders since incorporation of the Company and accurately
reflects in all material respects all actions by the directors (and any
committee of directors) and stockholders with respect to all material
transactions referred to in such minutes.

       

      2.13.                      Offering.  Subject
in part to the truth and accuracy of the Purchaser’s representations set forth
in Section 3 of
this Agreement, the grant of the Options and issuance of the Shares upon
exercise of the Options as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended, and neither
the Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption. 

       

      2.14.                      Preemptive
Rights.  The Company has fully satisfied (including with
respect to rights of timely notification) or obtained enforceable waivers in
respect of any preemptive or similar rights directly or indirectly affecting any
of its securities.

       

      2.15.                      Consents.  All
consents, approvals, releases, filings, terminations and waivers by third
parties necessary to complete the transactions contemplated hereby that are set
forth in Section
2.15 of the Disclosure
Schedule have been obtained and delivered to the Purchaser and such
consents, approvals, releases, filings, terminations and waivers have not
expired or been withdrawn.

       

      3.           Representations and
Warranties of the Purchaser.  The Purchaser hereby represents
and warrants to the Company that:

       

      3.1.           Authorization.  The
Purchaser has full power and authority to enter into the Transaction
Agreements.  The Transaction Agreements to which the Purchaser is a
party, when executed and delivered by the Purchaser, will constitute valid and
legally binding obligations of the Purchaser, enforceable in accordance with
their terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Rights Agreement and the
Stockholders’ Agreement may be limited by applicable federal or state securities
laws.

       

      
        
           

        

        
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      3.2.           Compliance with Other
Instruments.  The execution and delivery of this Agreement by
the Purchaser, and the performance by the Purchaser of its obligations
hereunder, will not conflict, or result in any violation of, or default under,
any provision of any certificate of incorporation, bylaws or other governing
instrument applicable to the Purchaser, or any agreement or other instrument to
which the Purchaser is a party or by which the Purchaser or any of its
properties are bound, or any permit, franchise, judgment, decree, order, rule or
regulation applicable to the Purchaser or the Purchaser’s business or
properties.

       

      3.3.           Purchase Entirely for Own
Account.  This Agreement is made with the Purchaser in reliance
upon the Purchaser’s representation to the Company, which by the Purchaser’s
execution of this Agreement, the Purchaser hereby confirms, that the Initial
Shares were, and the Options and Shares to be acquired by the Purchaser will be,
acquired for investment for the Purchaser’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Purchaser, when it purchased the Initial Shares, had no intention
of selling, granting any participation in, or otherwise distributing the Initial
Shares, and has no present intention of selling, granting any participation in,
or otherwise distributing the Initial Shares, Options and Shares.  By
executing this Agreement, the Purchaser further represents that, when it
purchased the Initial Shares, the Purchaser did not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Initial Shares, and does not presently have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Initial Shares,
Options and Shares. The Purchaser has not been formed for the specific purpose
of acquiring the Initial Shares, Options and Shares.

       

      3.4.           Disclosure of
Information.  The Purchaser has had an opportunity to discuss
the Company’s business, management, financial affairs and the terms and
conditions of the offering of the Options and Shares with the Company’s
management. Except as set forth in the Transaction Agreements, no
representations or warranties, whether written or oral, have been made to the
Purchaser by the Company or any officer, employee, affiliate or agent of the
Company.  The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this
Agreement or the right of the Purchaser to rely thereon.

       

      3.5.           Restricted
Securities.  The Purchaser understands that the Initial Shares,
Options and Shares have not been, and will not be, registered under the
Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser’s
representations as expressed herein.  The Purchaser understands that
the Initial Shares, Options and Shares are “restricted securities” under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, the Purchaser must hold the Initial Shares, Options and Shares
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available.  The
Purchaser acknowledges that the Company has no obligation to register or qualify
the Initial Shares, Options and Shares for resale except as set forth in the
Stockholders’ Agreement.  The Purchaser further acknowledges that if
an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Initial Shares, Options and Shares,
and on requirements relating to the Company which are outside of the Purchaser’s
control, and which the Company is under no obligation and may not be able to
satisfy.

       

      
        
           

        

        
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      3.6.           No Public
Market.  The Purchaser understands that no public market now
exists for the Initial Shares, Options and Shares, and that the Company has made
no assurances that a public market will ever exist for the Initial Shares,
Options and Shares.

       

      3.7.           Suitability of
Investment.  The Purchaser has such knowledge and experience in
financial, business and tax matters that the Purchaser is capable of evaluating
the merits and risks relating to the Purchaser’s investment in the Initial
Shares, Options and Shares and making an investment decision with respect to the
Company.  The Purchaser acknowledges that it has had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with its own legal counsel.  The Purchaser is not relying on any
statements or representations of the Company or any of its agents for legal
advice with respect to this investment or the transactions contemplated by this
Agreement other than as set forth in the Transaction Agreements. 

       

      3.8.           Legends.  The
Purchaser understands that the Initial Shares and Shares and any securities
issued in respect of or exchange for the Initial Shares and Shares, may bear one
or all of the following legends:

       

      (a)           “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT, UNLESS SUCH TRANSFER SHALL (I) CONSTITUTE A ROUTINE SALE UNDER RULE 144 OF
THE ACT OR (II) BE OF SHARES THAT ARE ELIGIBLE FOR RESALE UNDER RULE 144(B)(1)
OF THE ACT.”

       

      (b)           Any
legend set forth in, or required by, the other Transaction
Agreements.

       

      (c)           Any
legend required by the securities laws of any state to the extent such laws are
applicable to the Shares represented by the certificate so
legended.

       

      3.9.           Accredited
Investor.  The Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.

       

      3.10.                      Residence.  The
Purchaser is a United States person.

       

      4.           Covenants of the
Company.  

       

      
        
           

        

        
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      4.1.           Qualifications.  The
Company shall use its commercially reasonable efforts to assure that all
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance of the Shares after exercise of the
applicable Options pursuant to this Agreement shall be obtained and effective
prior to any exercise of the Options.

       

      4.2.           Representations and
Warranties of Company.  Upon the exercise of each Option or any
increment thereof by the Purchaser, the Company shall deliver to the Purchaser a
certificate of its President stating that the representations and warranties of
the Company contained in Section 2 are true
and correct in all material respects as of the date of such exercise, except as
set forth in such certificate; provided, however, that the Company shall only be
obligated to deliver such certificate within five (5) business days after having
received notice of such exercise.

       

      4.3.           Stockholders’ Agreement and
Preferred  Stock Option Agreement.  As of the date
hereof, the Company shall have executed and delivered the Rights Agreement and
the Stockholders’ Agreement and shall use its commercially reasonable efforts to
cause the Stockholders to have executed and delivered the Rights Agreement and
the Stockholders’ Agreement as of the date hereof.

       

      4.4.           Secretary’s
Certificate.  The Secretary of the Company shall deliver to the
Purchaser as of the date hereof a certificate certifying (i) the Certificate of
Incorporation and Bylaws of the Company and (ii) resolutions of the Board of
Directors of the Company approving the Transaction Agreements and the
transactions contemplated under the Transaction Agreements, and upon exercise of
each Option or any increment thereof by the Purchaser the Secretary of the
Company shall deliver to the Purchaser an update to such certificate certifying
there have been no changes or amendments to the Certificate of Incorporation and
Bylaws of the Company since the date of the certificate first referenced in this
Section 4.5 or
the date of the last update provided by the Secretary of the
Company.

       

      4.5.           Proceedings and
Documents.  The Company shall have provided to the Purchaser
all such counterpart original and certified or other copies of such documents as
reasonably requested.  Such documents may include good standing
certificates.

       

      4.6.           Securities Laws
Compliance.  The Company shall make in a timely manner any
filings required by applicable federal or state securities or Blue Sky laws, or
those of any other applicable jurisdiction.

       

      4.7.           Use of
Proceeds.  The Company agrees that the purchase price paid by
the Purchaser upon exercise of each Option shall be used by it for working
capital expenses only, and shall not be used to reduce any outstanding
indebtedness of the Company or to make payments to any stockholder or affiliate
of the Company, other than salary payments (including payments of unpaid salary)
and payments of indebtedness incurred prior to the date hereof.  For
the avoidance of doubt, outstanding indebtedness of the Company shall not
include past due payments on supplier or vendor invoices incurred in the
ordinary course of business.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      4.8.           Access and
Information.  From the date hereof through March 1, 2010, the
Company will give the Purchaser and its authorized representatives (including
accountants and legal counsel) full access at all reasonable times, upon
reasonable notice, to all of the offices and other facilities of the Company, to
all contracts, agreements, commitments, books and records of the Company, to the
personnel (including auditors) of the Company and to the customers and suppliers
of the Company.

       

      4.9.           Conduct of the Company’s
Business.                                                                                     

       

      (a)           Except
as contemplated by this Agreement, during the period from the date of this
Agreement to the exercise by Purchaser of the last of the Options or termination
of all Options, as the case may be, the Company shall conduct the operations of
the Company according to its ordinary course of business and consistent with
past practice, and shall use commercially reasonable efforts to preserve intact
its business organization, keep available the services of its officers and
employees, and maintain satisfactory relationships with suppliers, contractors,
distributors, customers and others having business relationships with the
Company.  During such period of time, the Company agrees that it will
not take any action reasonably within its control, or omit to take any action
reasonably within its control, which would cause any of the representations and
warranties of the Company in this Agreement to become untrue.

       

      (b)           Without
limiting the foregoing, during such period of time, the Company shall not take
any of the actions specified in Section 2.11 without
the prior written consent of the Purchaser.

       

      (c)           Without  limiting
the foregoing, during such period of time, the Company shall not alter or change
its capitalization in any manner including, without limitation, issuing any
additional shares of Stock except in accordance with this Agreement, issue or
grant any options, warrants or other rights, other than in connection with the
Management Option Plan, accept any contributions to capital, engage in any stock
split or recapitalization, and amend or revise its Amended and Restated
Certificate of Incorporation or Bylaws without the prior written consent of the
Purchaser.

       

      4.10.                      Notices to
Purchaser.  Prior to the exercise by Purchaser of the last of
the Options or termination of all Options, as the case may be, the Company shall
give prompt written notice to the Purchaser of: (a) any breach or default by the
Company, of which the Company becomes aware, of the representations, warranties,
covenants or agreements hereunder or under any document or instrument
contemplated hereby; (b) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (c) any notice
or other communication from any governmental authority in connection with the
transactions contemplated by this Agreement; (d) any Material Adverse Effect;
and (e) any claim, action, or proceeding against the Company which could
reasonably be expected to have a Material Adverse Effect.

       

      4.11.                      Exclusivity.  From
the date hereof to the exercise by Purchaser of the last of the Options or
termination of all Options, as the case may be, the Company shall not, nor shall
it authorize or permit any officer, director or employee of or any investment
banker, broker, attorney, accountant, or other representative retained by the
Company to, solicit, initiate or encourage (including by way of furnishing
information) submission of any proposal or offer from any person which
constitutes, or may reasonably be expected to lead to, a Financing
Proposal.  As used herein, a “Financing Proposal” shall mean
any proposal for a merger or other business combination involving the Company,
or any proposal or offer to acquire in any manner an equity interest in or a
material portion of the assets of the Company (other than sales in the ordinary
course of business consistent with past practice) or to extend indebtedness to
the Company.  If the Company receives a Financing Proposal during such
period of time, the Company shall notify the Purchaser immediately and shall
provide to the Purchaser a copy of any written documentation of such Financing
Proposal.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      4.12.                      Distribution through
DSIT.  From the date hereof to the exercise by Purchaser of the
last of the Options or termination of all Options, the Company covenants and
agrees that the Company will use its commercially reasonable efforts to maximize
worldwide distribution of its security products through DSIT Solutions Ltd. of
Israel for distribution by DSIT Solutions Ltd., subject to the Company’s
currently existing commitments and sales opportunities, including but not
limited to currently existing commitments and sales opportunities with
Safeguards Technologies LLC, Proprietary Control Systems Corporation, RAE
Systems, Inc. and Petrus Aviation.

       

      The
Company covenants and agrees that it shall use its reasonable best efforts to
cause all employees of the Company to promptly and without delay execute the
agreements described in Section 6.1 of the Stockholders’ Agreement.

       

      5.           Survival Period;
Indemnification.

       

      5.1.           Survival of Representations,
Warranties and Covenants.  Unless otherwise set forth in this
Agreement, the representations and warranties of the Company and the Purchaser
contained in or made pursuant to this Agreement  (x) shall survive the
execution and delivery of this Agreement until May 27, 2011 or the earlier
expiration of all the Options, except that the representations and warranties in
Sections 2.1, 2.2,
2.3, 2.4 and 2.5 shall survive the
exercise of the Options indefinitely, and (y) shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchaser or the Company and shall bind the parties’ successors and assigns
(including, without limitation, any successor to the Company by way of
acquisition, merger or otherwise), whether so expressed or not.  This
Section 5 shall
survive the exercise of all Options and the covenants contained in this
Agreement shall survive for the periods contemplated by their
terms.

       

      5.2.           Indemnification.  The
Company and the Purchaser shall, with respect to the representations, warranties
and agreements made by them herein, indemnify, pay, defend and hold the Company
or the Purchaser, as the case may be, and each of the Company or the Purchaser’s
officers, directors, partners, employees and agents and their respective
Affiliates, as the case may be, (the “Indemnitees”) harmless against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding (collectively, “Losses”), whether or not such
Indemnitees shall be designated a party thereto, which may be (a) imposed on
such Indemnitee, or (b) incurred by such Indemnitee, as a result of (i) the
violation or breach of any representation, warranty or covenant of the Company
or the Purchaser, as the case may be, under this Agreement, the Rights
Agreement, or the Stockholders’ Agreement; (ii) the Purchaser’s investment in or
ownership of the Options and the Shares; or (iii) actions or omissions by any
agent, representative or employee of the Company or the Purchaser, as the case
may be.  

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      5.3.           Limitations on
Indemnification.  The Company or the Purchaser, as the case may
be, shall not have liability under Section 5.2 until the
aggregate amount of Losses of the Indemnitees exceeds $25,000, in which case the
Indemnitees shall be entitled to Losses in an amount up to the aggregate of the
purchase price paid by Purchaser under this Agreement.

       

      6.           Miscellaneous.

       

      6.1.           Transfer; Successors and
Assigns.  The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  The Company may not assign this Agreement or
any rights or obligations hereunder without the prior written consent of
Purchaser.  Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.   

       

      6.2.           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
its principles of conflicts of laws.

       

      6.3.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Agreement may also be executed and delivered by
facsimile signature and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

       

      6.4.           Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

       

      6.5.           Notices.  All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given:  (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day, (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent to the
respective parties at their address as set forth below, or to such e-mail
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Section
6.5.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      If notice
is given to Purchaser, it shall be sent to:

       

      Acorn
Energy, Inc.

      4 W.
Rockland Road

      P.O. Box
9

      Montchanin,
Delaware 19710

      Attn:  President
& CEO

      

      A copy
shall also be sent to:

       

      Acorn
Energy, Inc.

      11701 Mt.
Holly Road

      Charlotte,
NC 28214

      Attn:  General
Counsel

      

      If notice
is given to the Company, it shall be sent to the address set forth
below:

       

      US Sensor
Systems Inc.

      19835
Nordhoff St., Suite B

      Northridge,
CA 91324

      Attn:  President

      

      A copy shall also be sent
to:

      

      Reed Smith LLP

      355 South Grand Ave.

      Los Angeles, CA 90071

      Attn:  Deborah Gunny,
Esq.

      

      6.6.           No Finder’s
Fees.  Except as set forth in Section
6.6 of the Disclosure
Schedule, each party represents that it neither is nor will be obligated
for any finder’s fee, commission or other compensation in connection with this
transaction.  The Purchaser agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finder’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
the Purchaser or any of its officers, employees, or representatives is
responsible.  The Company agrees to indemnify and hold harmless the
Purchaser from any liability for any commission or compensation in the
nature of a finder’s or broker’s fee arising out of this transaction (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its officers, employees or representatives
is responsible.

       

      6.7.           Amendments and
Waivers.  Any term of this Agreement may be amended, terminated
or waived only with the written consent of the Company and the
Purchaser.  Any amendment or waiver effected in accordance with this
Section 6.7
shall be binding upon the Company, the Purchaser, and their respective
successors and assigns.  In the event a nonmaterial provision of this
Agreement is required to be amended by the Purchaser after the date hereof, the
Company will not unreasonably withhold its consent to such
amendment.

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      6.8.           Severability.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

       

      6.9.           Delays or
Omissions.  No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such
writing.  All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not
alternative.

       

      6.10.                      Entire
Agreement.  This Agreement (including the Exhibits hereto, if
any), and the other Transaction Agreements constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.

       

      6.11.                      Publicity.  The
Company may disclose the existence of the financing, as well as the investment
in the Company by the Purchaser, solely to the Company’s investors, investment
bankers, lenders, accountants, legal counsel, bona fide prospective investors
and employees, in each case only where such persons or entities were under
appropriate nondisclosure obligations.  In addition, the Company may
disclose to third parties that the Purchaser is an investor in the Company
without the requirement for nondisclosure agreements.  The Company is
permitted to issue a press release within 60 days of the date hereof disclosing
that the Purchaser has invested in the Company; provided that the release does
not disclose the amount or other specific terms of the investment and the final
form of the press release is approved in advance in writing by the
Purchaser.  The Company may not use the name of the Purchaser, or any
of its Affiliates in any trade publication, in any marketing materials or
otherwise to the general public without the prior written consent of the
Purchaser, which consent may be withheld in the sole discretion of the
Purchaser.

       

      6.12.                      Right to Conduct
Activities.  The Company acknowledges and agrees that (i) the
Purchaser and its respective partners, affiliates and affiliates of its partners
engage in a wide variety of activities and have investments in many other
companies, some of which may be competitive with the business of the Company;
(ii) subject to any fiduciary obligations of the Purchaser’s designees to the
Company’s Board of Directors, except as waived by the Company pursuant to this
Section, it is critical that the Purchaser be permitted to continue to develop
its current and future business and investment activities without any
restriction arising from an investment by the Purchaser in the Company, the
right of the Purchaser to designate directors of the Company or any other
relationship, contractual or otherwise, between the Purchaser, on the one hand,
and the Company or any of its affiliates, on the other hand; and (iii) from time
to time, in connection with the foregoing activities of the Purchaser
(collectively, the “Activities”), the Purchaser
may have information that may be useful to the Company or its other stockholders
(which information may or may not be known by the member or members of the
Company’s Board of Directors designated by the Purchaser), and neither the
Purchaser nor any director so designated shall have any duty to disclose any
information known to such person or entity to the Company or any of its other
stockholders. In addition, the Purchaser shall not be liable for any claim
arising out of, or based upon, (i) the investment by the Purchaser in any entity
competitive to the Company, (ii) actions taken by any officer, director,
stockholder or other representative of the Purchaser to assist any such
competitive company, whether or not such action was taken as a board member of
such competitive company, or otherwise, and whether or not such action has a
detrimental effect on the Company, unless such claim arises directly from the
Purchaser’s misuse of confidential information in material breach of Section 2.5
of the Rights Agreement.

       

      

       

      [Remainder
of page intentionally left blank; signature pages follow.]

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      The parties have executed this Common
Stock Option Purchase Agreement as of the date first written above.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	
                                    US
      SENSOR SYSTEMS INC.

                                  
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                    By:

                                  	
                                     /s/ James K. Andersen

                                  	 
      
	 
      	
                                    Name:

                                  	
                                    James
      K. Andersen

                                  
	 
      	
                                    Title:

                                  	
                                    President
      and Chief Executive Officer

                                  
	 
      	 
      	 
      	 
      
	 
      	
                                     

                                    ACORN
      ENERGY, INC.

                                     

                                  
	 
      	 
      	 
      	 
      
	 
      	
                                    By:

                                  	
                                     /s/ John A. Moore

                                  	 
      
	 
      	
                                    Name:

                                  	
                                    John
      A. Moore

                                  
	 
      	
                                    Title:

                                  	
                                    President
      and Chief Executive
OfficerExhibit
10.2

       

      US
SENSOR SYSTEMS INC.

       

      CAPITAL
STOCK OPTION PURCHASE AGREEMENT

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      CAPITAL
STOCK OPTION PURCHASE AGREEMENT

       

      This
Capital Stock Option Purchase Agreement (the “Agreement”) is made as of
February 23, 2010 by and among US Sensor Systems Inc., a Delaware corporation
(the “Company”), Acorn
Energy, Inc., a Delaware corporation (the “Purchaser”) and each of the
holders of Capital Stock of the Company listed on Exhibit A hereto
(collectively, the “Capital
Stockholders”).

       

      Preliminary
Statement

       

      The
Company issued and sold to the Purchaser, and Purchaser did purchase, 50,917
shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”) and such sale
and purchase closed on November 30, 2009 (the “Initial Closing”). The Company
and the Purchaser entered into that certain Common Stock Option Purchase
Agreement dated of even date (the “Common Stock Option Purchase
Agreement”) providing for the grant by the Company to the Purchaser of
certain options to purchase shares of the Company’s common stock.

       

      The
Capital Stockholders desire to grant to the Purchaser certain options for the
Purchaser to purchase all shares of Capital Stock of the Company held by the
Capital Stockholders, and the Purchaser desires to acquire such options, all in
accordance with the terms of this Agreement. The shares of Capital Stock subject
to the options granted to the Purchaser pursuant to this Agreement including any
shares of Preferred Stock converted into shares of Common Stock by certain of
the Capital Stockholders as described on Exhibit A prior to
exercise of the options described below shall be referred to in this Agreement
as the “Shares.”

      

      NOW,
THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:

       

      1.           Options
to Purchase Capital Stock.

       

      1.1.           Grant of Options to Purchase
Capital
Stock.  Subject
to the terms and conditions of this Agreement, each of the Capital Stockholders
hereby grants to the Purchaser, and the Purchaser hereby accepts, an option to
purchase Shares as follows:

       

      An option
to purchase all of the Shares owned by each of the Capital Stockholders as
described in Exhibit
A with such option being exercisable no later than August 27, 2010 with
payment to each Capital Stockholder of a purchase price equal to $4.09
multiplied by the number of Shares owned by such respective Capital Stockholder
as set forth in Exhibit
A.  With respect to the Preferred Stockholders, the option
granted by such Preferred Stockholders under this Section 1.1 shall cover and
include all shares of preferred stock of the Company held by such Capital
Stockholders and all shares of common stock of the Company into which such
shares of preferred stock are converted in accordance with Section 1.5 below,
and the above per share purchase price shall be applicable to such shares of
common stock, including all shares of common stock issued in lieu of payment of
dividends.  The purchase price for such Shares will be payable by
Purchaser in shares of its common stock as described below or if required by
Nasdaq regulations a minimal amount of cash with the balance in shares of
Purchaser’s common stock. Such option may be exercised, if at all, only
simultaneously with or following exercise in full of all options granted under
Section 1.1 of the Common Stock Option Purchase Agreement and, if not exercised
in full on or before August 27, 2010, such option shall terminate and be of no
further force or effect.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      1.2.           Exercise of Options.
The Options granted above may be exercised by the Purchaser providing written
notice of such exercise to the Company which shall serve as notice agent for the
Capital Stockholders (the “Exercise Notice”) prior to the
expiration of the option period. Such exercise shall only be effective for
purchase of all of the Shares owned by all of the Capital
Stockholders.

       

      1.3.           Closing;
Delivery.

       

      (a)           The
Company as notice agent for the Capital Stockholders shall, upon receiving the
Exercise Notice, promptly notify the Capital Stockholders of same, and the
Capital Stockholders shall within ten (10) days thereafter deliver to the
Purchaser the certificates representing each of their Shares duly endorsed to
Purchaser or with stock powers attached and duly executed to Purchaser which
Purchaser shall hold in trust until Purchaser’s delivery to each of the Capital
Stockholders of his respective number of the Company’s shares of common stock as
payment of the purchase price.

       

      (b)           Shares
of common stock of the Purchaser, par value $0.01 per share, to be delivered in
payment upon exercise of the Options (“Purchaser Stock”) will be
determined based on the volume weighted average price of the Purchaser’s common
stock on the Nasdaq during the 20 trading day sessions ending on the day that is
five days preceding the date of the Exercise Notice. Provided Purchaser has
timely received the Capital Stockholders’ duly endorsed certificates and duly
executed stock powers for all Shares, Purchaser shall deliver to each of the
Capital Stockholders his respective number of shares of the Purchaser Stock
within thirty (30) days after the date of the Exercise Notice.  All
certificates representing Purchaser Stock to be delivered in accordance with
this subparagraph shall contain thereon legends providing that the Purchaser
Stock may only be sold or otherwise transferred in compliance with the
Securities Act, and further providing that 25% of the number of shares of such
Purchaser Stock may not be offered, sold, pledged or otherwise transferred on or
before expiration of each of the following time periods: ninety (90) days
following the date of issuance of such certificates, 180 days following the date
of issuance of such certificates, 270 days following the date of issuance of
such certificates and one year following the date of issuance of such
certificates. Purchaser shall, upon expiration of the foregoing applicable time
periods, facilitate removal of such legends as well as the legend described in
Section 2.13 upon satisfaction of the requirements set forth in such
legend.

      

      1.4.           Defined Terms Used in this
Agreement.  In addition to the terms defined above, the
following terms used in this Agreement shall be construed to have the meanings
set forth or referenced below.

      

      “Affiliate” means with respect
to any person or entity (a “Person”) any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with such Person, including, without limitation, any partner, officer, director,
or member of such Person and any venture capital fund now or hereafter existing
which is controlled by or under common control with one or more general partners
or shares the same management company with such Person.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Code” means the Internal
Revenue Code of 1986, as amended.

      

      “Common Stock” means the shares
of the Company’s Common Stock, $0.001 par value per share.

      

      “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

      

      “Material Adverse Effect” means
a material adverse effect on the business, assets (including intangible assets),
liabilities, financial condition, property, prospects or
results of operations of the Company.

      

      “Options” means all of the
options to purchase shares of Capital Stock granted by the Capital Stockholders
to the Purchaser under Section
1.

       

      “Preferred Stock” means the
shares of the Company’s Preferred Stock, $0.001 par value per
share.

       

      “Preferred Stockholders” means
those persons who hold shares of the Company’s Preferred Stock and who are
described on Exhibit
A.

       

      “Purchaser” means the Purchaser
who is a party to this Agreement.

       

      ”Purchaser Stock” means the
shares of Purchaser’s common stock, par value $0.01 per share, to be given by
Purchaser as consideration under Section
1.3.

       

      “Rights Agreement” means the
Amended and Restated Investors Rights Agreement by and among the Company, the
Purchaser and the Stockholders, dated as of the date hereof, in the form of
Exhibit B
attached to this Agreement.

       

      “Securities Act” means the
Securities Act of 1933, as amended.

       

      “Shares” means the shares of
Capital Stock of the Company subject to the options granted to Purchaser under
this Agreement.

       

      “Stock” shall mean all of the
shares of the Company’s Common Stock and Capital Stock.

       

      “Stockholders” means the
holders of all shares of Common and Capital Stock of the Company as of the date
hereof.

       

      “Stockholders’ Agreement” means
the agreement between the Company, the Purchaser and the Stockholders, dated as
of the date hereof, in the form of Exhibit C attached to
this Agreement.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “Transaction Agreements” means
this Agreement, the Stockholders’ Agreement, the Rights Agreement, the Common
Stock Option Purchase Agreement and any other agreements, instruments or
documents entered into in connection with this Agreement.

       

      1.5           Conversion of Preferred
Stock.  The Preferred Stockholders hereby irrevocably elect to
(i) convert all shares of Preferred Stock held by them to Common Stock in
accordance with Section 4 of Article V of the Amended and Restated Certificate
of Incorporation of the Company effective as of the day immediately preceding
the date of the Exercise Notice and (ii) to receive payment of all accrued but
unpaid dividends on the Preferred Stock held by the Preferred Stockholders in
shares of Preferred Stock which shall be converted in accordance with the
preceding clause (i).

       

      2.           Representations and
Warranties of the Capital
Stockholders.  The Capital
Stockholders, individually and not jointly and severally, hereby represent and
warrant to the Purchaser that the following representations are true and
complete as of the date hereof and will be true and correct as of the date of
exercise of the Options, except as otherwise indicated.

       

      2.1.           Title to Capital
Stock.

       

      (a)           Each
of the Capital Stockholders is the sole record and beneficial owner of the
Shares set forth opposite such Capital Stockholder’s name on Exhibit A hereto,
free and clear of all liens and encumbrances. Except for the Rights Agreement to
which the Preferred Stockholders are parties thereto, such Capital Stockholder
is not a party to any voting trust, proxy or other agreement or understanding
between or among any other stockholders or persons that affects or relates to
the voting or giving of written consent with respect to any outstanding security
of the Company.

       

      (b)           Each
of the Capital Stockholders has not incurred and will not incur, directly or
indirectly, as a result of any action taken or permitted to be taken by or on
behalf of such Capital Stockholder, any liability or obligation to pay any fees
or commissions to any broker, finder or agent in connection with the execution
and performance of the transactions contemplated by this Agreement for which the
Purchaser or the Company could become liable or obligated.

       

      2.2.           Authorization.  All
corporate and other action required to be taken by any of the Capital
Stockholders in order to enter into this Agreement, and to deliver their
certificates representing Capital Stock, has been taken, and no other
proceedings on his, her or its part are necessary to authorize the execution,
delivery or performance of this Agreement and the Transaction
Agreements.  Each of the Capital Stockholders has the full power to
sell, exchange, assign, transfer and deliver its shares of Capital Stock to the
Purchaser, free and clear of any and all liens and encumbrances.  This
Agreement and the other Transaction Agreements, when executed and delivered by
each of the Capital Stockholders, shall constitute valid and legally binding
obligations of each of the Capital Stockholders, enforceable against each of the
Capital Stockholders in accordance with its respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (iii) to the extent the indemnification
provisions contained in the Stockholders’ Agreement may be limited by applicable
federal or state securities laws.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      2.3.           Consents and
Filings.  Assuming the accuracy of the representations made by
the Purchaser in Section 3 of this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of the Capital Stockholders
in connection with the consummation of the transactions contemplated by this
Agreement.

       

      2.4.           Litigation.  There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or, to each of the Capital Stockholder’s knowledge,
currently threatened that questions the validity of this Agreement or the right
of each of the Capital Stockholders to enter into this Agreement, or to
consummate the transactions contemplated by this Agreement.

       

      2.5.           Compliance with Other
Instruments.  The execution, delivery and performance of the
Transaction Agreements and the consummation of the transactions contemplated by
the Transaction Agreements will not result in any violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either (i) a default under any instrument, judgment, order, writ, decree,
contract or agreement to which any of the Capital Stockholders is a party or by
which he, she or it is bound or (ii) an event which results in the creation of
any lien, charge or encumbrance upon the Capital Stock or any property or assets
of any of the Capital Stockholders or the suspension, revocation, forfeiture, or
nonrenewal of any permit or license applicable to any of the Capital
Stockholders.

       

      2.6.           Consents.  All
consents, approvals, releases, filings, terminations and waivers by third
parties necessary to complete the transactions contemplated hereby have been
obtained and delivered to the Purchaser and such consents, approvals, releases,
filings, terminations and waivers have not expired or been
withdrawn.

       

      2.7.           Restricted
Securities.  The Capital Stockholders acknowledge that the
Purchaser Stock when issued will not be registered under the Securities Act and
will be “restricted securities” as that term is defined in Regulation S and Rule
144 under the Securities Act and that the Purchaser Stock must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. The Capital Stockholders
acknowledge that the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of common stock purchased in a private placement
subject to the satisfaction of certain conditions, including, among other
things, the existence of a public market for the common stock, the availability
of certain current public information about Purchaser, the resale occurring not
less than six months after a party has purchased and paid for the security to be
sold, the sale being effected through a “broker’s transaction” or in
transactions directly with a “market maker” and the number of shares of common
stock being sold during any three-month period not exceeding specified
limitations.

       

      2.8.           Investment.  The
Capital Stockholders are acquiring the Purchaser Stock for investment purposes
for their own account and not, in whole or in part, for the account of any other
person and not with a view to distribution or resale, nor with the intention of
selling, transferring or otherwise disposing of all or any part thereof for any
particular price, or at any particular time, or upon the happening of any
particular event or circumstances, except selling, transferring, or disposing
the Purchaser Stock in full compliance with the applicable provisions of the
Securities Act, the rules and regulations promulgated thereunder, and applicable
state securities laws. The Capital Stockholders have not formed any entity for
the purpose of acquiring the Purchaser Stock.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      2.9.           Information.  The
Capital Stockholders have had the opportunity to ask questions of, and receive
answers from Purchaser or any person acting on its behalf concerning Purchaser
and its business and to obtain any additional information, to the extent
possessed by Purchaser (or to the extent it could have been acquired by
Purchaser without unreasonable effort or expense) necessary to verify the
accuracy of the information received by the Capital Stockholders. In connection
therewith, the Capital Stockholders acknowledge that the Capital Stockholders
have had the opportunity to discuss Purchaser’s business, management and
financial affairs with Purchaser’s management or any person acting on its
behalf. The Capital Stockholders have received and reviewed all the information
concerning Purchaser that they desire. Without limiting the generality of the
foregoing, the Capital Stockholders have been furnished with or have had the
opportunity to acquire, and to review: (i) copies of all of Purchaser’s publicly
available documents, and (ii) all information that it desires with respect to
Purchaser’s business, management, financial affairs and prospects. In
determining whether to accept the Purchaser Stock in connection with the
transactions hereunder, the Capital Stockholders have relied solely on the
Capital Stockholders’ own knowledge and understanding of Purchaser and its
business based upon any information furnished to the Capital Stockholders in
writing. The Capital Stockholders understand that no person has been authorized
to give any information or to make any representations which were not furnished
pursuant to this Section and the Capital Stockholders have not relied on any
other representations or information.

       

      2.10.           Advisors. The Capital
Stockholders have carefully considered and have discussed with the Capital
Stockholders’ professional legal, tax, accounting and financial advisors, to the
extent that such Capital Stockholders have deemed necessary, the suitability of
this investment and the transaction agreements contemplated by this Agreement
and for the Capital Stockholders’ particular federal, local and foreign tax and
financial situation and has determined that the acquisition of the Purchaser
Stock and the transactions contemplated by this Agreement are suitable for the
Capital Stockholders. The Capital Stockholders rely solely on such advisors and
not on any statements or representations of Purchaser or any of its agents. The
Capital Stockholders understand that the Capital Stockholders (and not
Purchaser) shall be responsible for the Capital Stockholders’ own tax liability
that may arise as a result of this investment or the transactions contemplated
by this Agreement.

       

      2.11.           Risk of Ownership of
Purchaser Stock.  The Capital Stockholders acknowledge that
ownership of Purchaser Stock is speculative and involves a high degree of risk
and that the Capital Stockholders can bear the economic risk of ownership of the
Purchaser Stock, including a total loss of their investment.

       

      2.12.           No Governmental
Recommendation.  The Capital Stockholders acknowledge that no
federal, state or foreign agency has recommended or endorsed the Capital
Stockholders’ acquisition of Purchaser Stock.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      2.13.           Legends.  The
Capital Stockholders acknowledge that all certificates representing Purchaser
Stock and any and all securities issued in replacement thereof or in exchange
therefor shall bear the legends described in Section 1.3(b) and the following
legend or one substantially similar thereto, which such Capital Stockholders
have read and understand:

       

      “THE
SECURITIES REPRESENTED HEREBY WERE ORIGINALLY ISSUED WITHOUT REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND MAY BE
OFFERED, SOLD, PLEDGE OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C)
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS, PROVIDED
IN SUCH LATTER CASE THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE FURNISHES TO
ACORN ENERGY, INC. AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT
REASONABLY SATISFACTORY TO ACORN ENERGY, INC. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
1933 ACT.

       

      UNTIL
TWELVE MONTHS AFTER THE DATE OF THIS CERTIFICATE, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN OTHER RESTRICTIONS ON
TRANSFER.”

       

      2.14.           Stop-Transfer.
Because of the restrictions imposed on resale, the Capital Stockholders
acknowledge that Purchaser shall have the right to note stop-transfer
instructions in its stock transfer records, and that Purchaser intends to do so.
Any sales, transfers, or any other dispositions of the Purchaser Stock by the
Capital Stockholders, if any, will be in compliance with the Securities
Act.

       

      2.15.           Investment
Experience. The Capital Stockholders acknowledge that the Capital
Stockholders have such knowledge and experience in financial and business
matters that the Capital Stockholders are capable of evaluating the merits and
risks of an investment in the Purchaser Stock and of making an informed
investment decision.

       

      2.16.           No Advertisement or General
Solicitation. The Capital Stockholders represent that the Capital
Stockholders are not acquiring the Purchaser Stock as a result of any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over the Internet, television
or radio or presented at any seminar or meeting.

       

      2.17.           Read and Understood this
Agreement.  The Capital Stockholders have carefully read and
understand this Agreement.

       

      2.18.           Representations and
Warranties.  No representations or warranties have been made to
the Capital Stockholders or any officer, employee, agent, affiliate or
subsidiary of the Purchaser other than the representations of Purchaser
contained herein, and in acquiring the Purchaser Stock the Capital Stockholders
are not relying upon any representations other than those contained in this
Agreement.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      2.19.           No Reliance upon Purchaser’s
or Company’s Counsel. The Capital Stockholders are not being represented
by counsel to Purchaser or the Company and have been advised to obtain
independent legal advice regarding an investment in the Purchaser
Stock.

       

      3.           Representations and
Warranties of the Purchaser.  The Purchaser hereby represents
and warrants to the Capital Stockholders that:

       

      3.1.           Authorization.  The
Purchaser has full power and authority to enter into the Transaction
Agreements.  The Transaction Agreements to which the Purchaser is a
party, when executed and delivered by the Purchaser, will constitute valid and
legally binding obligations of the Purchaser, enforceable in accordance with
their terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Stockholders’ Agreement may be
limited by applicable federal or state securities laws.

       

      3.2.           Compliance with Other
Instruments.  The execution and delivery of this Agreement by
the Purchaser, and the performance by the Purchaser of its obligations
hereunder, will not conflict, or result in any violation of, or default under,
any provision of any certificate of incorporation, bylaws or other governing
instrument applicable to the Purchaser, or any agreement or other instrument to
which the Purchaser is a party or by which the Purchaser or any of its
properties are bound, or any permit, franchise, judgment, decree, order, rule or
regulation applicable to the Purchaser or the Purchaser’s business or
properties.

       

      3.3.           Purchase Entirely for Own
Account.  This Agreement is made with the Purchaser in reliance
upon the Purchaser’s representation to the Capital Stockholders, which by the
Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the
Options and Shares to be acquired by the Purchaser will be acquired for
investment for the Purchaser’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same.  By executing this Agreement, the
Purchaser further represents that the Purchaser does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares. The Purchaser has not been formed for the specific
purpose of acquiring the Options and Shares.

       

      3.4.           Disclosure of
Information.  The Purchaser has had an opportunity to discuss
the Company’s business, management, financial affairs and the terms and
conditions of the offering of the Options and Shares with the Company’s
management. Except as set forth in the Transaction Agreements, no
representations or warranties, whether written or oral, have been made to the
Purchaser by the Capital Stockholders.  The foregoing, however, does
not limit or modify the representations and warranties of the Capital
Stockholders in Section 2 of this
Agreement or the right of the Purchaser to rely thereon.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      3.5.           Restricted
Securities.  The Purchaser understands that the Options and
Shares have not been, and will not be, registered under the Securities Act, by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser’s representations as
expressed herein.  The Purchaser understands that the Options and
Shares are “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser must hold
the Options and
Shares indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available.  The
Purchaser acknowledges that the Capital Stockholders have no obligation to
register or qualify the Options and Shares for resale.  The Purchaser
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Options and
Shares, and on requirements relating to the Company which are outside of the
Purchaser’s control, and which the Company is under no obligation and may not be able to
satisfy.

       

      3.6.           No Public
Market.  The Purchaser understands that no public market now
exists for the Options and Shares, and that the Capital Stockholders have made
no assurances that a public market will ever exist for the Options and
Shares.

       

      3.7.           Suitability of
Investment.  The Purchaser has such knowledge and experience in
financial, business and tax matters that the Purchaser is capable of evaluating
the merits and risks relating to the Purchaser’s investment in the Options and
Shares and making an investment decision with respect to the
Company.  The Purchaser acknowledges that it has had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with its own legal counsel.  The Purchaser is not relying on any
statements or representations of the Company or any of its agents for legal
advice with respect to this investment or the transactions contemplated by this
Agreement other than as set forth in the Transaction Agreements.

       

      3.8.           Legends.  The
Purchaser understands that the Shares and any securities issued in respect of or
exchange for the Shares, may bear one or all of the following
legends:

       

      (a)           “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT, UNLESS SUCH TRANSFER SHALL (I) CONSTITUTE A ROUTINE SALE UNDER RULE 144 OF
THE ACT OR (II) BE OF SHARES THAT ARE ELIGIBLE FOR RESALE UNDER RULE 144(B)(1)
OF THE ACT.”

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      (b)           Any
legend set forth in, or required by, the other Transaction
Agreements.

       

      (c)           Any
legend required by the securities laws of any state to the extent such laws are
applicable to the Shares represented by the certificate so
legended.

       

      3.9.           Accredited
Investor.  The Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.

       

      3.10.                      Foreign
Investors.  If the Purchaser is not a United States person (as
defined by Section 7701(a)(30) of the Code), such Purchaser hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for
the  Options and Shares or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and
(iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale, or transfer of the Options
and Shares. Such Purchaser’s subscription and payment for and continued
beneficial ownership of the Options and Shares, will not violate any applicable
securities or other laws of the Purchaser’s jurisdiction.

       

      3.11.                      Residence.  The
office or offices of the Purchaser in which its principal place of business is
located at the address or addresses of the Purchaser set forth in Section
6.5.

       

      4.           Covenants of the
Capital
Stockholders.

       

      4.1.           Stockholders’ Agreement and
Rights Agreement.  As of the date hereof, the Capital
Stockholders shall have executed and delivered the Stockholders’ Agreement and
the Rights Agreement.

       

      4.2.           Notices to
Purchaser.  Prior to the exercise by Purchaser of the Options
or termination of all Options, as the case may be, the Capital Stockholders
shall give prompt written notice to the Purchaser of: (a) any breach or default
by the Capital Stockholders of the representations, warranties, covenants or
agreements hereunder or under any document or instrument contemplated hereby;
(b) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; or (c) any notice or other
communication from any governmental authority in connection with the
transactions contemplated by this Agreement.

       

      4.3.           Exclusivity.  From
the date hereof to the exercise by Purchaser of the Options or termination of
all Options, as the case may be, the Capital Stockholders shall not, nor shall
they authorize or permit any officer, director or employee of or any investment
banker, broker, attorney, accountant, or other representative retained by the
Capital Stockholders or the Company to, solicit, initiate or encourage
(including by way of furnishing information) submission of any proposal or offer
from any person which constitutes, or may reasonably be expected to lead to, a
Financing Proposal.  As used herein, a “Financing Proposal” shall mean
any proposal for a merger or other business combination involving the Company,
or any proposal or offer to acquire in any manner an equity interest in or a
material portion of the assets of the Company (other than sales in the ordinary
course of business consistent with past practice), to extend indebtedness to the
Company or to acquire any of the Options or the Shares.  If any of the
Capital Stockholders receives a Financing Proposal during such period of time,
such Capital Stockholder shall notify the Purchaser immediately and shall
provide to the Purchaser a copy of any written documentation of such Financing
Proposal.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      5.           Survival Period;
Indemnification.

       

      5.1.           Survival of Representations,
Warranties and Covenants.  Unless otherwise set forth in this
Agreement, the representations and warranties of the Capital Stockholders and
the Purchaser contained in or made pursuant to this Agreement  (x)
shall survive the execution and delivery of this Agreement until one year after
the date of issuance by the Company of the certificates referenced in Section
1.3(6) or the earlier expiration of all the Options, except that the
representations and warranties in Sections 2.1, 2.2 and 2.3 shall survive the
exercise of the Options indefinitely, and (y) shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchaser or the Capital Stockholders and shall bind the parties’ successors and
assigns (including, without limitation, any successor by way of acquisition,
merger or otherwise), whether so expressed or not.  This Section 5
shall survive the exercise of all Options, and the covenants contained in this
Agreement shall survive for the periods contemplated by their terms but in any
event until one year after the date of issuance by the Company of the
certificates referenced in Section 1.3(6).

       

      5.2.           Indemnification.  The
Capital Stockholders, individually and not jointly and severally, and the
Purchaser shall, with respect to the representations, warranties and agreements
made by them herein, indemnify, pay, defend and hold the Capital Stockholders or
the Purchaser, as the case may be, and each of the Capital Stockholders or the
Purchaser’s officers, directors, partners, employees and agents and their
respective Affiliates, as the case may be, (the “Indemnitees”) harmless against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding (collectively, “Losses”), whether or not such
Indemnitees shall be designated a party thereto, which may be (a) imposed on
such Indemnitee, or (b) incurred by such Indemnitee, as a result of (i) the
violation or breach of any representation, warranty or covenant of the Capital
Stockholders or the Purchaser, as the case may be, under this Agreement, the
Rights Agreement or the Stockholders’ Agreement; or (ii) actions or omissions by
any agent, representative or employee of the Capital Stockholders or the
Purchaser, as the case may be.

       

      5.3.           Limitations on
Indemnification.  The Capital Stockholders or the Purchaser, as
the case may be, shall not have liability under Section 5.2 until the aggregate
amount of Losses of the Indemnitees exceeds $25,000, in which case the
Indemnitees shall be entitled to Losses in an amount up to the aggregate of the
purchase price paid by Purchaser under this Agreement.

       

      6.           Miscellaneous.

       

      6.1.           Transfer; Successors and
Assigns.  The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  The Capital Stockholders may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Purchaser.  Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      6.2.           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
its principles of conflicts of laws.

       

      6.3.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Agreement may also be executed and delivered by
facsimile signature and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

       

      6.4.           Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

       

      6.5.           Notices.  All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given:  (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day, (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent to the
respective parties at their address as set forth below, or to such e-mail
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Section 6.5. For
purposes of notice under this Agreement, the Capital Stockholders hereby appoint
the Company as its agent to receive and transmit notices and the Company hereby
accepts such appointment.

       

      If notice
is given to Purchaser, it shall be sent to:

       

      Acorn
Energy, Inc.

      4 W.
Rockland Road

      P.O. Box
9

      Montchanin,
Delaware 19710

      Attn:  President
& CEO

      

      A copy
shall also be sent to:

       

      Acorn
Energy, Inc.

      11701 Mt.
Holly Road

      Charlotte,
NC 28214

      Attn:  General
Counsel

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      If notice
is given to the Capital Stockholders or the Company, it shall be sent to the
address set forth below:

       

      US Sensor
Systems Inc.

      19835
Nordhoff St., Suite B

      Northridge,
CA 91324

      Attn:  President

      

      A copy shall also be sent
to:

      

      Reed
Smith LLP

      1901
Avenue of the Stars, Suite 700

      Los
Angeles, CA 90067-6078

      Attn:
Deborah Gunny, Esq.

      

      and

      

      Aaronson
& Aaronson

      16133
Ventura Blvd., Suite 675

      Encino,
CA 91436

      Attn:  Arthur
Aaronson, Esq.

      

      6.6.           No Finder’s
Fees.  Each party represents that it neither is nor will be
obligated for any finder’s fee, commission or other compensation in connection
with this transaction.  The Purchaser agrees to indemnify and to hold
harmless the Capital Stockholders from any liability for any commission or
compensation in the nature of a finder’s fee arising out of this transaction
(and the costs and expenses of defending against such liability or asserted
liability) for which the Purchaser or any of its officers, employees, or
representatives is responsible.  The Capital Stockholders, jointly and
severally, agree to indemnify and hold harmless the Purchaser from any liability
for any commission or compensation in the nature of a finder’s or broker’s
fee arising out of this transaction (and the costs and expenses of defending
against such liability or asserted liability) for which the Capital Stockholders
or any of their officers, employees or representatives
is responsible.

       

      6.7.           Amendments and
Waivers.  Any term of this Agreement may be amended, terminated
or waived only with the written consent of the Company, the Capital
Stockholders   and the Purchaser.  Any amendment or
waiver effected in accordance with this Section 6.7
shall be binding upon the Company, the Purchaser, the Capital Stockholders and
each transferee of the Options and Shares, each future holder of all such
securities and the Company.  In the event a nonmaterial provision of
this Agreement is required to be amended by the Purchaser after the date hereof,
the Company and the Capital Stockholders will not unreasonably withhold their
consent to such amendment.

       

      6.8.           Severability.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      6.9.           Delays or
Omissions.  No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such
writing.  All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not
alternative.

       

      6.10.         Entire
Agreement.  This Agreement (including the Exhibits hereto, if
any), and the other Transaction Agreements constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.

       

      6.11.         Publicity.  The
Capital Stockholders may not disclose the existence of this Agreement or its
terms other than to their respective lenders, accountants or legal counsel
without the Purchaser’s prior written consent which Purchaser may withhold in
its sole discretion.

       

      6.12.         Right to Conduct
Activities.  The Capital Stockholders acknowledge and agree
that (i) the Purchaser and its respective partners, affiliates and affiliates of
its partners engage in a wide variety of activities and have investments in many
other companies, some of which may be competitive with the business of the
Company; (ii) subject to any fiduciary obligations of the Purchaser’s designees
to the Company’s Board of Directors, except as waived by the Company pursuant to
this Section, it is critical that the Purchaser be permitted to continue to
develop its current and future business and investment activities without any
restriction arising from an investment by the Purchaser in the Company, the
right of the Purchaser to designate directors of the Company or any other
relationship, contractual or otherwise, between the Purchaser, on the one hand,
and the Company or any of its affiliates, on the other hand; and (iii) from time
to time, in connection with the foregoing activities of the Purchaser
(collectively, the “Activities”), the Purchaser may have information that may be
useful to the Company or its other stockholders (which information may or may
not be known by the member or members of the Company’s Board of Directors
designated by the Purchaser), and neither the Purchaser nor any director so
designated shall have any duty to disclose any information known to such person
or entity to the Company or any of its other stockholders. In addition, the
Purchaser shall not be liable for any claim arising out of, or based upon, (i)
the investment by the Purchaser in any entity competitive to the Company or any
of the Capital Stockholders, (ii) actions taken by any officer, director,
stockholder or other representative of the Purchaser to assist any such
competitive company, whether or not such action was taken as a board member of
such competitive company, or otherwise, and whether or not such action has a
detrimental effect on the Company, unless such claim arises directly from the
Purchaser’s misuse of confidential information in material breach of Section 3.4 of the
Stockholders’ Agreement.

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      The
parties have executed this Capital Stock Option Purchase Agreement as of the
date first written above.

       

      
        
          
            
              
                
                  
                    
                      	 
      	
                              PURCHASER:

                            
	 
      	 
      	 
      	 
      
	 
      	
                              ACORN
      ENERGY, INC.

                            
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              /s/ John A. Moore

                            	 
      
	 
      	
                              Name:

                            	
                              John
      A. Moore

                            
	 
      	
                              Title:

                            	
                              President
      &
CEO

                            

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      	 
      	
                                                                              CAPITAL
      STOCKHOLDERS:

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Philip W. Colburn

                                                                            	 
      
	 
      	
                                                                              Philip
      W. Colburn,

                                                                            
	 
      	
                                                                              Trustee
      of the Philip W. Colburn Trust dtd 7/25/97

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Michael Schwartz

                                                                            	 
      
	 
      	
                                                                              Michael
      Schwartz,

                                                                            
	 
      	
                                                                              Trustee
      of the Sarah Kalter Trust of 2004

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Jeffery Paul

                                                                            	 
      
	 
      	
                                                                              Jeffery
      Paul,

                                                                            
	 
      	
                                                                              Trustee
      of The Paul Family Trust dtd 12/15/97

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              CKSW
      Partners

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              By:

                                                                            	
                                                                              /s/ Stephen Whang

                                                                            	 
      
	 
      	
                                                                              Name:

                                                                            	
                                                                              Stephen Whang

                                                                            	 
      
	 
      	
                                                                              Title:

                                                                            	
                                                                              General Partner

                                                                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              LWL
      Investment Group LLC

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              By:

                                                                            	
                                                                               /s/ Stephen Whang

                                                                            	 
      
	 
      	
                                                                              Name:

                                                                            	
                                                                              Stephen Whang

                                                                            	 
      
	 
      	
                                                                              Title:

                                                                            	
                                                                              Manager

                                                                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Sukhbir Pannu

                                                                            	 
      
	 
      	
                                                                              Sukhbir
      Pannu

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Kevin Ryu

                                                                            	 
      
	 
      	
                                                                              Kevin
      Ryu

                                                                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                                              /s/ Stephen Whang

                                                                            	 
      
	 
      	
                                                                              Stephen
      Whang

                                                                            

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  With
      respect to Sections 1.2, 1.3(a) and 6.5 only:

                                
	 
      	
                                   

                                  COMPANY:

                                   

                                
	 
      	
                                  US
      SENSOR SYSTEMS INC.

                                
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  /s/ James Andersen

                                	 
      
	 
      	
                                  Name:

                                	
                                  James
      Andersen

                                
	 
      	
                                  Title:

                                	
                                  President
      and Chief Executive
Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]