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<SEC-DOCUMENT>0000950123-10-062167.txt : 20100629
<SEC-HEADER>0000950123-10-062167.hdr.sgml : 20100629
<ACCEPTANCE-DATETIME>20100629144253
ACCESSION NUMBER:		0000950123-10-062167
CONFORMED SUBMISSION TYPE:	S-3
PUBLIC DOCUMENT COUNT:		7
FILED AS OF DATE:		20100629
DATE AS OF CHANGE:		20100629

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ENERGY FOCUS, INC/DE
		CENTRAL INDEX KEY:			0000924168
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC LIGHTING & WIRING EQUIPMENT [3640]
		IRS NUMBER:				943021850
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-167855
		FILM NUMBER:		10922756

	BUSINESS ADDRESS:	
		STREET 1:		32000 AURORA ROAD
		CITY:			SOLON
		STATE:			OH
		ZIP:			44139
		BUSINESS PHONE:		5104900719

	MAIL ADDRESS:	
		STREET 1:		32000 AURORA ROAD
		CITY:			SOLON
		STATE:			OH
		ZIP:			44139

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FIBERSTARS INC /CA/
		DATE OF NAME CHANGE:	19940527
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>l40087sv3.htm
<DESCRIPTION>FORM S-3
<TEXT>
<HTML>
<HEAD>
<TITLE>sv3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">As filed with the Securities and Exchange Commission on June&nbsp;29, 2010
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Registration No.&nbsp;333-<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
</DIV>


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt; margin-top: 3pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM S-3</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>ENERGY FOCUS, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">
(Exact name of registrant as specified in its charter)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>94-3021850</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of <BR>
incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer<BR>
Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>32000 Aurora Road<BR>
Solon, Ohio 44139<BR>
440.715.1300</B></DIV>

<DIV align="center" style="font-size: 10pt">(Address, including zip code, and telephone number, including area code, of registrant&#146;s principal executive offices)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Joseph G. Kaveski<BR>
Chief Executive Officer<BR>
Energy Focus, Inc.<BR>
32000 Aurora Road<BR>
Solon, Ohio 44139<BR>
440.715.1300</B></DIV>

<DIV align="center" style="font-size: 10pt">(Name, address, including zip code, and telephone number, including area code, of agent for service)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Copy to:</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Gerald W. Cowden, Esq.<BR>
Thomas J. Talcott, Esq.<BR>
Cowden &#038; Humphrey Co. LPA<BR>
4600 Euclid Avenue, Suite&nbsp;400<BR>
Cleveland, Ohio 44103-3785<BR>
216.241.2880</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Approximate date of proposed sale to the public: From time to time or at one time after the
effective date of this Registration Statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If the only securities being registered on this form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule&nbsp;415 under the Securities Act of 1933 (&#147;Securities Act&#148;), other than
securities offered only in connection with dividend or reinvestment plans, check the following box.
<FONT style="font-family: Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this form is a post-effective amendment filed pursuant to 462(c) under the Securities Act, check
the following box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective
amendment thereto that shall become effective upon filing with the Commission pursuant to Rule
462(e) under the Securities Act, check the following box. <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this Form is a post-effective amendment to a registration statement filed pursuant to General
Instruction I.D. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box. <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See definition of &#147;large accelerated filer,&#148;
&#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>


<TABLE width="100%" style="FONT-size: 10pt; margin-top: 6pt">
<TR valign="top">
<TD>Large accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT></TD>
<TD align="center">Accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT>&nbsp;</TD>
<TD align="center">Non-accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#254;</FONT><BR>(Do not check if a smaller reporting company)</TD>
<TD align="right">Smaller Reporting Company&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT></TD>


</TR>
</TABLE>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CALCULATION OF REGISTRATION FEE</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1pt">
    <TD width="1%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- VRule -->
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- VRule -->
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- VRule -->
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD><!-- VRule -->
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
</TR><TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="23" style="border-bottom: 3px double #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD nowrap align="left"></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Proposed Maximum</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Proposed Maximum</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD nowrap align="left">Title of Each Class of </TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amount to be</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Offering Price Per</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Aggregate Offering</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amount of</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD nowrap align="left">Securities to be Registered</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Registered(1)</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Share(2)</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Price</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Registration Fee</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
                    <TD style="border-top: 2px solid #000000"><DIV style="margin-left:15px; text-indent:-15px">Common Stock,
$0.0001 par value
per share</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 2px solid #000000">2,654,957</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 2px solid #000000">$</TD>
    <TD align="right" style="border-top: 2px solid #000000">1.28</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 2px solid #000000">$</TD>
    <TD align="right" style="border-top: 2px solid #000000">3,398,344.96</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-top: 2px solid #000000">$</TD>
    <TD align="right" style="border-top: 2px solid #000000">242.30</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="23" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The shares being registered include 2,654,957 shares issued or
issuable to the selling shareholders and such indeterminate
number of additional shares of common stock issuable for no
additional consideration by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected
without the receipt of consideration, which results in an
increase in the number of outstanding shares of our common stock.
In the event of a stock split, stock dividend or similar
transaction involving our common stock, in order to prevent
dilution, the number of shares registered shall be automatically
increased to cover the additional shares in accordance with Rule
416(a) under the Securities Act of 1933.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Estimated solely for the purpose of computing the registration fee in
accordance with Rules 457(c) of the Securities Act based on the
closing price of the shares of common stock of the Registrant reported
on the NASDAQ Global Market on June&nbsp;28, 2010.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Registrant hereby amends this registration statement on the date or dates as may be necessary
to delay its effective date until the Registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall
become effective on a date as the Securities and Exchange Commission, acting pursuant to Section
8(a), may determine.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">









<P style="padding: 5px; border: 3px double #000000; font-size: 10pt; color: #FF0000">
The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and we are not soliciting
offers to buy these securities in any state where the offer or sale is not permitted.


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SUBJECT TO COMPLETION, DATED JULY __, 2010</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROSPECTUS</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ENERGY FOCUS, INC.</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">2,654,957 Shares of Common Stock
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to the sale of up to 2,654,957 shares of our common stock by the
selling shareholders identified in this prospectus. The prices at which the selling shareholders
may sell the shares will be determined by the prevailing market price for the shares or in
negotiated transactions. We will not receive any of the proceeds from the sale of these shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is registered under Section 12(g) of the Securities Exchange Act of 1934 and
quoted on the NASDAQ Global Market under the symbol &#147;EFOI.&#148; On June&nbsp;28, 2010, the last reported
sale price for our common stock as reported on the NASDAQ Global Market was $1.28 per share. The
shares of common stock offered under this prospectus have been approved for listing on the NASDAQ
Global Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">
<DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in our common stock involves certain risks. See &#147;Risk Factors&#148; beginning on page 3
for a discussion of these risks.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined that this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">
<DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">The date of this prospectus is July&nbsp;__, 2010.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Page</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">Prospectus Summary</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">Special Note Regarding Forward-Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">Transactions
and the Offering</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">Selling Shareholders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Plan of Distribution</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">Legal Matters</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Experts</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">Where You Can Find More Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">Information Incorporated By Reference</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">Part II - Information Not Required in Prospectus</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">II-1</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv4w8.htm">EX-4.8</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv5w1.htm">EX-5.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv10w8.htm">EX-10.8</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv10w9.htm">EX-10.9</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv23w1.htm">EX-23.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="l40087exv23w2.htm">EX-23.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
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</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROSPECTUS SUMMARY</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus provides you with a general description of the common stock being offered. You
should read this prospectus, including all documents incorporated herein by reference, together
with additional information described under the heading &#147;Where You Can Find More Information.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registration statement that contains this prospectus, including the exhibits to the
registration statement, contains additional information about us and the securities being offered
under this prospectus. You should read the registration statement and the accompanying exhibits for
further information. The registration statement and exhibits can be read and are available to the
public over the Internet at the SEC&#146;s website at <U>http://www.sec.gov</U> as described under the
heading &#147;Where You Can Find More Information.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Delaware corporation. Our principal executive offices are located at 32000 Aurora
Road, Solon, Ohio 44139. Our telephone number is 440.715.1300. The address of our website is
<U>www.efoi.com</U>. Information on our website is not part of this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design, develop, manufacture, and market energy-efficient lighting products, and we are a
leading provider of turnkey energy-efficient lighting solutions in the governmental and public
sector market, general commercial market, and the pool market. Our lighting technology offers
significant energy savings, heat dissipation and maintenance cost benefits over conventional
lighting for multiple applications.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2009 and early 2010, we completed the initial phase of our new business strategy to
provide turnkey solutions, which use, but are not limited to, our patented and proprietary
technology. Our solutions include light-emitting diode, ceramic metal halide, fiber optic,
high-intensity discharge, and other high energy-efficient lighting technologies. Typical savings
related to our technology approximates 80% in electricity costs, while providing full-spectrum
light closely simulating daylight colors. Our strategy also incorporates continued investment into
the research of new and emerging energy sources including, but not limited to, solar energy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our long-term strategy is to penetrate the $100&nbsp;billion existing building lighting market by
providing turnkey lighting solutions. We will continue to focus on markets where the benefits of
our lighting solutions offerings, combined with our technology, are most compelling. These markets
include: schools, universities, hospitals, office buildings, parking garages, supermarkets,
museums, cold storage facilities, and manufacturing environments.
</DIV>







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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions and the Offering</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Acquisition of SRC. </B>On December&nbsp;31, 2009, we acquired all of the member interests of Stones
River Companies, LLC, a Tennessee limited liability company (&#147;SRC&#148;), from TLC Investments, LLC, a
Tennessee limited liability company (&#147;TLC&#148;), for a combination of cash, debt, an earn-out, and
shares of our common stock. SRC is a lighting retrofit company and an energy systems and solutions
provider located in Nashville, Tennessee. Jami Hall and Robert E. Wilson of Nashville, Tennessee,
own TLC. Mr.&nbsp;Wilson has continued to lead SRC as its Vice President.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consideration that we paid for SRC included a promissory note for $500,000 (the &#147;TLC
Note&#148;) and 1,000,000 shares of common stock (the &#147;TLC Shares&#148;). The principal amount of the
promissory note is due at maturity on June&nbsp;30, 2013 along with accrued interest. TLC may convert
the entire principal amount of the note into 500,000 shares of common stock (the &#147;TLC Note Shares&#148;)
at any time during the period beginning on June&nbsp;30, 2010 and ending on the maturity date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of those common shares and that convertible
promissory note under the Securities Act of 1933, as amended, in reliance upon the exemptions from
the registration requirements of the Act in Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D.
We have agreed to register for resale by TLC the TLC Shares issued as part of the purchase price
and the TLC Note Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Performance Bonding Support for SRC. </B>In order to provide performance bonding for SRC&#146;s
projects, on December&nbsp;30, 2009 we deposited cash collateral with our surety company for a period
not to exceed two years. To reduce the size of our cash collateral based deposit and increase our
liquidity, we have offered a small number of investors an opportunity to replace portions of our
deposit with funds of their own on the following terms: 12.5% interest per year payable by us;
reimbursement by us in the event that the surety company draws on their funds; security interest in
a portion of the shares of capital stock of Crescent Lighting, Ltd., our subsidiary located in
London, England; and a number of warrants to purchase shares of common stock equal to one share for
every $2.00 deposited. The warrants have a five-year term and an exercise price of $0.01 per
share. John M. Davenport, our President and a director, has deposited $250,000 and has received a
warrant for 125,000 shares (the &#147;Davenport Warrant&#148;). The Quercus Trust, Newport Beach,
California, our largest shareholder, has deposited $300,000 and has received a warrant for 150,000
shares (the &#147;Trust Warrant&#148;). David Gelbaum, who was a director at the time, and his spouse are
co-trustees of the Trust. Our shareholders approved our issuance of these warrants to Mr.
Davenport and to the Trust at our Annual Shareholders Meeting held on June&nbsp;16, 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the issuance of those warrants under the Securities Act of 1933, as
amended, in reliance upon the exemptions from the registration requirements of the Act in Section
4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by Mr.
Davenport and to by the Trust the 275,000 shares covered by their warrants.
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Woodstone Energy, LLC. </B>On December&nbsp;31, 2009, we issued to Woodstone Energy, LLC, a Tennessee
limited liability company located in Nashville, Tennessee, a warrant to purchase up to 600,000
shares of our common stock (the &#147;Woodstone Warrant&#148;) at an exercise price of $0.65 per share and
with a term ending on December&nbsp;31, 2014. The Warrant becomes exercisable only if SRC receives from
Woodstone Energy firm contracts or purchase orders for at least $10,000,000 by June&nbsp;30, 2013. The
Warrant vests in two tranches: 400,000 shares when contracts or purchase orders between SRC and
Woodstone reach $10,000,000, and an additional 200,000 shares when contracts or purchase orders
between them reach an additional $5,000,000. No shares have yet vested. Ms.&nbsp;Hall and Mr.&nbsp;Wilson
each hold minority interests in Woodstone Energy and together they own the majority interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of the Warrant under the Securities Act of 1933,
as amended, in reliance upon the exemptions from the registration requirements of the Act in
Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by
Woodstone the 600,000 shares covered by its Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mezzanine Financing. </B>On March&nbsp;30, 2010, we sold to EF Energy Partners LLC, an Ohio limited
liability company (&#147;EF Energy&#148;), a secured subordinated promissory note in the principal face
amount of $1,150,000. We are not associated with EF Energy other than through the note. We
secured the full amount of the note with a pledge of our United States accounts receivable and
selected capital equipment. The principal balance of the note, together with accrued interest, is
due and payable on March&nbsp;30, 2013. As an additional incentive for EF Energy to purchase the note,
we issued to its eight investors five-year warrants (the &#147;Mezzanine Warrants&#148;) to purchase shares
of common stock at a rate of 0.2 warrants per dollar of financing, or 230,000 shares, with an
exercise price of $0.01 per share and an expiration date of March&nbsp;30, 2015.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of those Warrants under the Securities Act of
1933, as amended, in reliance upon the exemptions from the registration requirements of the Act in
Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by the
EF Energy investors the 230,000 shares covered by their Warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Acquisition of Unison. </B>On February&nbsp;1, 2000, we acquired selected assets of Unison Fiber
Optics Systems, LLC, a joint venture between Advanced Lighting Technologies, Inc. (&#147;ADLT&#148;) and Rohm
&#038; Haas Company, for consideration that included the issuance to ADLT of warrants to purchase up to
1,000,000 shares of our common stock at $0.01 per share. On September&nbsp;28, 2004, ADLT transferred
to John M. Davenport, currently our President and a director, warrants for 50,000 of those shares.
Mr.&nbsp;Davenport later engaged in a cashless exercise of those warrants and acquired 49,957 shares
(the &#147;Davenport Shares&#148;). Before joining us in November&nbsp;1999 as Vice President and Chief
Technology Officer, Mr.&nbsp;Davenport served as President of Unison in 1998 and 1999. We have agreed
to register the Davenport Shares.
</DIV>




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</div>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Securities Offered</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common stock outstanding prior
</DIV></TD>
    <TD>&nbsp;</TD>


    <TD colspan="2" align="left" valign="top">22,930,366</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">to this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common stock to be offered
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">2,654,957 shares consisting of:
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">by the selling shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top"><DIV style="margin-left:0px; text-indent:0px">&#149;&nbsp;&nbsp; 1,049,957 TLC and Davenport Shares; and
</div>
</TD>

</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top"><DIV style="margin-left:0px; text-indent:0px">&#149;&nbsp;&nbsp; 1,605,000 shares issuable under the TLC Note
</div>
</TD>




<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap colspan="3" align="left" valign="top"><DIV style="margin-left:15px; text-indent:0px"> and the Davenport, Trust, Woodstone,<br> and Mezzanine Warrants.
</div>
</TD>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common stock outstanding
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">24,535,366 shares
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">after this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Use of Proceeds
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">We will receive no proceeds from the
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">sale of shares of common stock in
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">this offering. If we sell 1,105,000
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">shares of our common stock upon the
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">full exercise of the Davenport,
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">Trust, Woodstone, and Mezzanine
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">Warrants, however, we will receive
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">at least $395,050 in proceeds from
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">those sales. We will use any
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">proceeds that we receive from sales
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">upon exercises of those Warrants to
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">fund our working capital needs and
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">our new business strategy. See &#147;Use
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">of Proceeds.&#148;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NASDAQ Global Market symbol
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">EFOI
</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should carefully consider the risks described below before purchasing our common stock.
Our most significant risks and uncertainties are described below. They are not the only risks that
we face, however. If any of the following risks actually occur, our business, financial condition,
or results or operations could be materially, adversely affected, the price of our common stock
could decline, and you may lose all or part of your investment therein. You should acquire shares
of our common stock only if you can afford to lose your entire investment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Associated with Our Business.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have a history of operating losses and may incur losses in the future.</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have experienced net losses of $11,015,000 and $14,448,000 for the years ended December&nbsp;31,
2009 and 2008, respectively. As of
</DIV>


</div>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;31, 2009, we had an accumulated deficit of $60,343,000.
Although, with the acquisition of SRC management believes that we have addressed many of the legacy issues that have historically burdened our
financial performance, we still face challenges in order to reach profitability. In order for us
to attain profitability and further growth, we will need to successfully address these challenges,
including the continuation of cost reductions throughout our organization, execution of our
marketing and sales plans for our new turnkey energy-efficient lighting solutions business,
continued evaluation and divestiture of non-core business product lines, and continued improvements
in our supply chain performance. Although we are optimistic about reaching profitability, there is
a risk that our business may not be as successful as we envision or that we will never be
profitable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our independent public accounting firm has added an explanatory paragraph to their audit
opinion issued in connection with the financial statements in our 2009 Annual Report on Form 10-K
raising substantial doubt as to our ability to continue as a going concern. This opinion stems
from our historically poor operating performance, the on-going global economic crisis, and our
historical inability to generate sufficient cash flow to meet obligations and sustain operations
without obtaining additional external financing. Although we are optimistic about obtaining the
funding necessary for us to continue as a going concern, by generating sufficient cash flow
internally and/or by obtaining additional external financing, there can be no assurances that this
objective will be successful. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We will require additional financing to sustain our operations currently and in the near future,
and also may require it for the foreseeable future. Without it, we may not be able to continue
operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As indicated in the previous risk factor, we have a history of operating losses and a large
accumulated deficit. We currently do not have sufficient internal financial resources to fund our
operations. We therefore may need additional funds from external sources to continue our
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are currently aggressively pursuing the following external funding sources:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain financing and/or grants available through federal, state, and/or local
governmental agencies,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain financing from various financial institutions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain financing from non-traditional investment capital organizations,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potential sale or divestiture of one or more operating units, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain funding from the sale of our common stock or other equity instruments.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obtaining financing through the above-mentioned mechanisms contains risks, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may not receive additional government stimulus and/or grant money in spite of our
focus on the design, development, and manufacturing of energy-efficient lighting systems,</TD>
</TR>





</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loans or other debt instruments may have terms and/or conditions, such as interest
rates, restrictive covenants, and control or revocation provisions, which are not
acceptable to management or our Board of Directors,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the current global economic crisis combined with our current financial condition may
prevent us from being able to obtain further debt financing,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>financing may not be available for parties interested in pursuing the acquisition of
one or more of our operating units, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>additional equity financing may not be available to us in the current economic
environment and could lead to further dilution of shareholder value for current
shareholders of record.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;17, 2010, we entered into a Purchase Agreement (the &#147;Purchase Agreement&#148;) with
Lincoln Park Capital Fund, LLC (&#147;LPC&#148;), Chicago, Illinois. Under the Agreement, on May&nbsp;31, 2010 we
sold and issued to LPC, and LPC purchased from us, 360,500 shares of our common stock, together
with warrants (&#147;Warrants&#148;) to purchase 350,000 shares at an exercise price of $1.20 per share, for
a total consideration of $375,000. The Warrants have a term of five (5)&nbsp;years, are not exercisable
until December&nbsp;1, 2010, and expire on December&nbsp;1, 2015.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Purchase Agreement, LPC has also agreed to purchase up to an additional 3,650,000
shares of our common stock at our option over approximately 25&nbsp;months. We have the right to direct
LPC to purchase up to 20,000 shares as often as every five (5)&nbsp;business days. We can suspend
purchases or accelerate the number of shares to be purchased at any time. No sales of shares may
occur below $1.00 per share. The purchase prices of the shares will be based on the market prices
of our shares at the time of sale, as computed under the Agreement without any fixed discount. We
may at any time in our sole discretion terminate the Agreement without fee, penalty, or cost upon
five (5)&nbsp;business dates notice.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The extent to which we rely on LPC as a source of funding will depend on a number of factors,
including the prevailing market price of our common stock and the extent to which we are able to
secure working capital from other external sources, such as through the sale of our products. If
obtaining sufficient funding from LPC were to prove unavailable or prohibitively dilutive and if we
are unable to sell enough of our products, we will need to secure another source of funding in
order to satisfy our working capital needs. Even if we sell all 3,650,000 shares to LPC, we may
still need additional capital to fully implement our business, operating and development plans.
Should the financing we require to sustain our working capital needs be unavailable or
prohibitively expensive when we require it, the consequences could be a material adverse effect on
our business, operating results, financial condition and prospects.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Downturns in general economic conditions and construction trends could continue to materially and
adversely affect our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Downturns in general economic and market conditions, both nationally and internationally,
could have a material adverse effect on our
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">business. In most areas, sales of new and existing
homes have slowed and there has been a continued downturn in the housing market, as well as adverse changes in employment levels, job growth, consumer confidence
and interest rates, in addition to an oversupply of commercial and residential buildings for sale.
In our legacy businesses, sales of our lighting products depend significantly upon the level of new
building construction, which are affected by housing market trends, interest rates and the weather.
Sales of our pool and spa lighting products depend substantially upon the level of new pool
construction, which is also affected by housing market and construction trends. In addition, due to
the seasonality of construction, sales of swimming pool and lighting products, and thus our revenue
and income, have tended to be significantly lower in the first quarter of each year. Our future
results of operations may experience substantial fluctuations from period to period as a
consequence of these factors, and such conditions and other factors affecting capital spending may
affect the timing of orders. An economic downturn coupled with a decline in our net sales could
adversely affect our ability to meet our working capital requirements, support our capital
requirements and growth objectives, or could otherwise adversely affect our business financial
condition, and results of operations. As a result, any general or market-specific economic
downturns, particularly those affecting new building construction and renovation, or that cause
end-users to reduce or delay their purchases of lighting products, services, or retrofit
activities, would have a material adverse effect on our business, cash flows, financial condition,
and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We have significant international sales and are subject to risks associated with operating in
international markets.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the years ending December&nbsp;31, 2009 and 2008, net sales of our products outside of the
United States represented approximately 36.5% and 35.6%, respectively, of our total net sales from
continuing operations. We generally provide technical expertise and limited marketing support,
while our independent international distributors generally provide sales staff, local marketing,
and product services. We believe our international distributors are better able to service
international markets due to their understanding of local market conditions and best business
practices. International business operations are subject to inherent risks, including, among
others:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unexpected changes in regulatory requirements, tariffs and other trade barriers or
restrictions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>longer accounts receivable payment cycles and the difficulty of enforcing contracts and
collecting receivables through certain foreign legal systems,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>difficulties in managing and staffing international operations,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potentially adverse tax consequences,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the burdens of compliance with a wide variety of foreign laws,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>import and export license requirements and restrictions of the United States and each
other country in which we operate,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exposure to different legal standards and reduced protection for intellectual property
rights in some countries,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>currency fluctuations and restrictions,</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>political, social and economic instability, including war and the threat of war, acts
of terrorism, pandemics, boycotts, curtailment of trade or other business restrictions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>periodic foreign economic downturns, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sales variability as a result of transacting our foreign sales in United States
dollars.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are unable to respond effectively as new lighting technologies and market trends emerge, our
competitive position and our ability to generate revenue and profits may be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To be successful, we will need to keep pace with rapid changes in light-emitting diode (&#147;LED&#148;)
and fiber optics lighting technology, changing customer requirements, new product introductions by
competitors and evolving industry standards, any of which could render our existing products
obsolete if we fail to respond in a timely manner. Development of new products incorporating
advanced technology is a complex process subject to numerous uncertainties. We have previously
experienced, and could in the future, experience delays in introduction of new products. If
effective new sources of light other than LED and fiber optics are discovered, our current products
and technologies could become less competitive or obsolete. If others develop innovative
proprietary lighting technology that is superior to ours, or if we fail to accurately anticipate
technology and market trends, respond on a timely basis with our own development of new products
and enhancements to existing products, and achieve broad market acceptance of these products and
enhancements, our competitive position may be harmed and we may not achieve sufficient growth in
our net sales to attain or sustain profitability.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are not able to compete effectively against companies with greater resources, our prospects
for future success will be jeopardized.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The lighting industry is highly competitive. In the high performance lighting markets in
which we sell our advanced lighting systems, our products compete with lighting products utilizing
traditional lighting technology provided by many vendors. Additionally, in the advanced lighting
markets in which we have primarily competed to date, competition has largely been fragmented among
a number of small manufacturers. However, some of our competitors, particularly those that offer
traditional lighting products, are larger companies with greater resources to devote to research
and development, manufacturing and marketing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, in the general lighting market, we expect to encounter competition from an even
greater number of companies. Our competitors are expected to include the large, established
companies in the general lighting industry, such as General Electric, Osram Sylvania and Royal
Philips Electronics. Each of these competitors has undertaken initiatives to develop LED
technology. These companies have global marketing capabilities and substantially greater resources
to devote to research and development and other aspects of the development,
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">manufacture and
marketing of LED lighting products than we possess. We may also face competition from traditional lighting fixture companies, such as
Acuity Brands Lighting, Cooper Lighting, Hubbell Lighting, Lithonia Lighting, and Royal Philips
Electronics. The relatively low barriers to entry into the lighting industry and the limited
proprietary nature of many lighting products also permit new competitors to enter the industry
easily.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In each of our markets, we also anticipate the possibility that LED manufacturers, including
those that currently supply us with LEDs, may seek to compete with us. Our competitors&#146; lighting
technologies and products may be more readily accepted by customers than our products.
Additionally, to the extent that competition in our markets intensifies, we may be required to
reduce our prices in order to remain competitive. If we do not compete effectively, or if we
reduce our prices without making commensurate reductions in our costs, our net sales and
profitability, and our future prospects for success, may be harmed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We have made strategic acquisitions in the past and intend to do so in the future, which may
adversely affect our operating results, financial condition, and existing business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to grow through strategic acquisitions in order to transition our company into a
nationwide, turnkey, energy-efficient lighting systems solutions company. On December&nbsp;31, 2009, we
acquired Stones River Companies, LLC (&#147;SRC&#148;), and we anticipate making additional acquisitions in
the future. The success of our acquisition strategy will depend on, among other things:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of suitable candidates,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>competition from other companies for the purchase of available candidates,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to value those candidates accurately and negotiate favorable terms for
those acquisitions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of funds to finance acquisitions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability to establish new informational, operational and financial systems to meet
the needs of our business,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability to achieve anticipated synergies, including with respect to complementary
products or services, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of management resources to oversee the integration and operation of
the acquired businesses.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are not successful in integrating acquired businesses and completing acquisitions in the
future, we may be required to reevaluate our acquisition strategy. We also may incur substantial
expenses and devote significant management time and resources to completing these acquisitions.
Furthermore, acquired businesses may fail to meet our performance expectations. If we do not
achieve the anticipated benefits of an acquisition as rapidly as expected, or at all, investors or
analysts may not perceive the same benefits of the acquisition as we do. If these risks
materialize, our performance and stock price could be materially affected.
</DIV>





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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our inability to successfully integrate businesses we acquire could have adverse consequences on
our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisitions may result in greater administrative burdens and operating costs and, to the
extent financed with debt, additional interest costs. We cannot assure you that we will be able to
manage or integrate acquired companies or businesses successfully. The process of integrating
acquired businesses, including the recent acquisition of SRC, may be disruptive to our business and
may cause an interruption of or a loss of momentum in, our business as a result of the following
factors, among others:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loss of key employees or customers,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>possible inconsistencies in standards, controls, procedures and policies among the
combined companies and the need to implement company-wide financial, accounting,
information and other systems,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure to maintain the quality of services that the companies have historically
provided,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>coordinating sales, distribution, and marketing functions,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the need to coordinate geographically diverse organizations, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the diversion of management&#146;s attention from our day-to-day business as a result of the
need to deal with any disruptions and difficulties and the need to add management
resources to do so.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These disruptions and difficulties, if they occur, may cause us to fail to realize the cost
savings, revenue enhancements and other benefits that we may expect from such acquisitions and may
cause material adverse short- and long-term effects on our operating results and financial
condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are unable to obtain and adequately protect our intellectual property rights, our ability to
commercialize our products could be substantially limited.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consider our technology and processes proprietary. If we are not able to adequately
protect or enforce the proprietary aspects of our technology, competitors may utilize our
proprietary technology and our business, financial condition and results of operations could be
adversely affected. We protect our technology through a combination of patent, copyright,
trademark and trade secret laws, employee and third-party nondisclosure agreements and similar
means. Despite our efforts, other parties may attempt to disclose, obtain or use our technologies.
Our competitors may also be able to independently develop products that are substantially
equivalent or superior to our products or slightly modify our patents. In addition, the laws of
some foreign countries do not protect our proprietary rights as fully as do the laws of the United
States. As a result, we may not be able to protect our proprietary rights adequately in the United
States or abroad.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2009 and March&nbsp;31, 2010, our intellectual property portfolio consisted of
68 and 69, respectively, issued United
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">States and foreign patents, various pending United States
patent applications, and various pending Patent Cooperation Treaty patent applications filed with the World Intellectual Property Organization that serves as
the basis of national patent filings in countries of interest. A total of fifteen applications are
pending. Because our patent position involves complex legal, scientific, and factual questions,
the issuance, scope, validity and enforceability of our patents cannot be predicted with certainty.
Our issued patents may be invalidated or their enforceability challenged, and they may not provide
us with competitive advantages against others with similar products and technology. Furthermore,
others may independently develop similar products or technology or duplicate or design around any
technologies that we have developed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may receive notices that claim we have infringed upon the intellectual property of others.
Even if these claims are not valid, they could subject us to significant costs. We have engaged in
litigation and litigation may be necessary in the future to enforce our intellectual property
rights or to determine the validity and scope of the proprietary rights of others. Litigation may
also be necessary to defend against claims of infringement or invalidity by others. An adverse
outcome in litigation or any similar proceedings could subject us to significant liabilities to
third parties, require us to license disputed rights from others or require us to cease marketing
or using certain products or technologies. We may not be able to obtain any licenses on acceptable
terms, if at all. We also may have to indemnify certain customers if it is determined that we have
infringed upon or misappropriated another party&#146;s intellectual property.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of these results could adversely affect our business, financial condition and results of
operations. In addition, the cost of addressing any intellectual property litigation claim, both
in legal fees and expenses, and the diversion of management resources, regardless of whether the
claim is valid, could be significant and could materially harm our business, financial condition
and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If critical components that we currently purchase from a small number of third-party suppliers
become unavailable or third-party manufacturers otherwise experience delays, we may incur delays in
shipment, which would damage our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on others to manufacture a significant portion of the component parts incorporated
into our products. We purchase our component parts from third-party manufacturers that serve the
advanced lighting systems market and believe that alternative sources of supply are readily
available for most component parts. However, consolidation in the lighting industry could result
in one or more current suppliers being acquired by a competitor, rendering us unable to continue
purchasing necessary amounts of key components at competitive prices.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In an effort to reduce manufacturing costs, we have outsourced the production of certain parts
and components as well as finished goods in our product lines to a number of overseas suppliers.
We expect to outsource all of the production for selected products. While we believe alternative
sources for the production of these products are available, we have selected these particular
manufacturers based on their ability to
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">consistently produce these products per our specifications
ensuring the best quality product at the most cost effective price. We depend on our suppliers to satisfy performance and quality
specifications and to dedicate sufficient production capacity within scheduled delivery times.
Although we maintain contracts with selected suppliers, we may be vulnerable to unanticipated price
increases and product shortages. Accordingly, the loss of all or one of these suppliers or delays
in obtaining shipments could have a material adverse effect on our operations until such time as an
alternative supplier could be found. We may be subject to various import duties applicable to
materials manufactured in foreign countries and, in addition, may be affected by various other
import and export restrictions, as well as other considerations or developments impacting upon
international trade, including economic or political instability, shipping delays, and product
quotas. These international trade factors will, under certain circumstances, have an impact both
on the cost of components, which will, in turn, have an impact on the cost to us of the
manufactured product, and the wholesale and retail prices of its products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If the companies to which we outsource the manufacture of our products fail to meet our
requirements for quality, quantity and timeliness, our revenue and reputation in the marketplace
could be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We outsource a significant portion of the manufacture and assembly of our products and we
expect to outsource all of the production of many of our products. We currently depend on a small
number of contract manufacturers to manufacture our products at plants in various locations
throughout the world, primarily in the United States, Mexico, China, and Taiwan. These
manufacturers supply most of the necessary raw materials and provide all necessary facilities and
labor to manufacture our products. We currently do not have long-term contracts with some of these
manufacturers. If these companies were to terminate their arrangements with us without adequate
notice, or fail to provide the required capacity and quality on a timely basis, we would be unable
to manufacture and ship our lighting products until replacement manufacturing services could be
obtained. To qualify a new contract manufacturer, familiarize it with our products, quality
standards and other requirements, and commence volume production is a costly and time-consuming
process. If it became necessary to do so, we may not be able to establish alternative
manufacturing relationships on acceptable terms.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our reliance on contract manufacturers involves certain additional risks, including the
following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of direct control over production capacity and delivery schedules,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of direct control over quality assurance, manufacturing yields and production
costs,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>risk of loss of inventory while in transit from China, Mexico, India, Japan, and
Taiwan, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>risks associated with international commerce, particularly with China, Mexico, India,
Japan, and Taiwan, including unexpected changes in legal and regulatory requirements,
changes in tariffs and trade policies, risks associated with the protection of
intellectual property and political and economic instability.</TD>
</TR>




</TABLE>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any interruption in our ability to manufacture and distribute products could result in delays
in shipment, lost sales, reductions in revenue and damage to our reputation in the market, all of
which would adversely affect our business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on independent distributors and sales representatives for a substantial portion of our
net sales, and the failure to manage successfully our relationships with these third parties, or
the termination of these relationships, could cause our net sales to decline and harm our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely significantly on indirect sales channels to market and sell our products. Most of our
products are sold through third-party independent distributors and sales representatives. In
addition, these parties provide technical sales support to end-users. Our current agreements
within these sales channels are non-exclusive with regard to lighting products in general, but
exclusive with respect to LED lighting and fiber optic products. We anticipate that any such
agreements we enter into in the future will be on similar terms. Furthermore, our agreements are
generally short-term, and can be cancelled by these sales channels without significant financial
consequence. We cannot control how these sales channels perform and cannot be certain that we or
end-users will be satisfied by their performance. If these distributors and sales representatives
significantly change their terms with us, or change their historical pattern of ordering products
from us, there could be a significant impact on our net sales and profits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our products could contain defects or they may be installed or operated incorrectly, which could
reduce sales of those products or result in claims against us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite product testing, defects have been found and may be found in our existing or future
products. This could result in, among other things, a delay in the recognition or loss of net
sales, loss of market share or failure to achieve market acceptance. These defects could cause us
to incur significant warranty, support and repair costs, divert the attention of our engineering
personnel from our product development efforts and harm our relationship with our customers. The
occurrence of these problems could result in the delay or loss of market acceptance of our lighting
products and would likely harm our business. Some of our products use line voltages (such as 120 or
240 AC), or are designed for installation in environments such as swimming pools and spas, which
involve enhanced risk of electrical shock, injury or death in the event of a short circuit or other
malfunction. Defects, integration issues or other performance problems in our lighting products
could result in personal injury or financial or other damages to end-users or could damage market
acceptance of our products. Our customers and end-users could also seek damages from us for their
losses. A product liability claim brought against us, even if unsuccessful, would likely be time
consuming and costly to defend.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are unable to attract or retain qualified personnel, our business and product development
efforts could be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To a large extent, our future success will depend on the continued contributions of certain
employees, such as our current Chief
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Executive Officer, Chief Financial Officer, Chief Operating Officer, President, and Chief Technical Officer. These and other key
employees would be difficult to replace. Our future success will also depend on our ability to
attract and retain qualified technical, sales, marketing and management personnel, for whom
competition is very intense. The loss of, or failure to attract, hire, and retain, any such
persons could delay product development cycles, disrupt our operations, or otherwise harm our
business or results of operations. We have been successful in hiring experienced energy solutions
salespeople from leading firms in the industry but if these individuals are not successful in
achieving our expectations, and then planned sales may not occur and the anticipated net sales may
not be realized.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>A significant portion of our business is dependent upon the existence of government funding, which
may not be available in the future and could result in a significant reduction in sales and could
cause significant harm to our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over the last three years, approximately 40.7% of our research and development efforts have
been supported directly by government funding. In 2009, approximately 70.5% of our research and
development funding came from government sources and was contracted for short periods, usually one
to two years. Further, a significant portion of net sales generated by SRC are derived from state
government funding and supported by federal government funding. If government funding is reduced
or eliminated, there is no guarantee that we would be able to continue to fund our activities in
these areas at their current levels, if at all. If we are unable to maintain our access to
government funding in these areas, there could be a significant impact on our net sales and
profits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We believe that certification and compliance issues are critical to adoption of our lighting
systems, and failure to obtain such certification or compliance would harm our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to comply with certain legal requirements governing the materials in our
products. Although we are not aware of any efforts to amend any existing legal requirements or
implement new legal requirements in a manner with which we cannot comply, our net sales might be
adversely affected if such an amendment or implementation were to occur.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, although not legally required to do so, we strive to obtain certification for
substantially all our products. In the United States, we seek, and to date have obtained,
certification on substantially all of our products from Underwriters Laboratories or Intertek.
Where appropriate in jurisdictions outside the United States and Europe, we seek to obtain other
similar national or regional certifications for our products. Although we believe that our broad
knowledge and experience with electrical codes and safety standards have facilitated certification
approvals, we cannot ensure that we will be able to obtain any such certifications for our new
products or that, if certification standards are amended, that we will be able to maintain such
certifications for our existing products. Moreover, although we are not aware of any effort to
amend any existing certification standard or implement a new certification standard in a manner
that would render us unable to maintain
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">certification for our existing products or obtain
ratification for new products, our net sales might be adversely affected if such an amendment or implementation were to
occur.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We must comply with regulatory requirements regarding internal control over financial reporting,
corporate governance and public disclosure, which will cause us to incur significant costs and our
failure to comply with these requirements could cause our stock price to decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 requires that we annually evaluate and report on
our systems of internal controls. These rules and regulations have increased our legal and
compliance costs and made certain activities more time-consuming and costly. In the future, there
may be material weaknesses in our internal controls that would be required to be reported in future
Annual Reports on Form 10-K and/or Quarterly Reports on Form 10-Q. A negative reaction by the
equity markets to the reporting of a material weakness could cause our stock price to decline. In
addition, if we acquire a company with weak internal controls, it will take time to improve the
internal controls of the acquired company to a satisfactory level of operating effectiveness. Any
failure to improve an acquired company&#146;s financial systems could result in delays or inaccuracies
in reporting financial information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be subject to legal claims against us or claims by us which could have a significant impact
on our resulting financial performance.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any given time, we may be subject to litigation, the disposition of which may have an
adverse affect upon our business, financial condition, or results of operation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Associated with an Investment in our Common Stock.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The market price of our common stock may be adversely affected by market volatility.</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of our common stock has been and is expected to continue to be highly
volatile. A number of factors may have significant impact on the market price of our stock,
including announcements of technological innovations by us or other companies, regulatory matters,
new or existing products or procedures, concerns about our financial position, operating results,
litigation, government regulation, developments or disputes relating to agreements, patents or
proprietary rights. In addition, potential dilutive effects of future sales of shares of common
stock by shareholders and by the Company, including by LPC, and subsequent sales of common stock by
the holders of warrants and options, could have an adverse effect on the market price of our
shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The sale or our common stock to LPC may cause dilution and the sale of the shares of common stock
acquired by LPC could cause the price of our common stock to decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with entering into the LPC Purchase Agreement, we authorized the sale to LPC of
up to 4,350,000 shares of our common
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">stock and the issuance to LPC of an additional 240,000 shares.
The number of shares ultimately offered for sale by LPC is dependent upon the number of shares purchased or acquired by LPC under the Agreement. The purchase
price for the common stock to be sold and/or issued to LPC pursuant to the Agreement will fluctuate
based on the price of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;31, 2010 we sold and issued 360,500 shares of our common stock to LPC, and on June&nbsp;1,
2010 we issued to LPC a Warrant to purchase 350,000 shares at an exercise price of $1.20 per share,
for a total consideration of $375,000. Earlier, when we entered into the Purchase Agreement we
issued to LPC 120,000 shares. It is anticipated that we will sell or issue to LPC up to 3,759,500
more shares in addition to the Warrant shares over a period of up to 25&nbsp;months from the date of
this prospectus. The Warrant for 350,000 shares issued to LPC has an exercise term of five years,
becomes exercisable on December&nbsp;1, 2010, and expires on December&nbsp;1, 2015. Depending upon market
liquidity at the time, a sale of shares to LPC at any given time could cause the trading price of
our common stock to decline. We can elect to direct purchases in our sole discretion but no sales
may occur if the price of our common stock is below $1.00. Therefore, LPC may ultimately purchase
or receive all, some, or none of the 3,759,500 shares of common stock not yet issued under the
Agreement with LPC in addition to the Warrant Shares. After it has acquired such shares, it may
sell all, some, or none of those shares. Therefore, sales to LPC by us under the Agreement may
result in substantial dilution to the interests of other holders of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sale of a substantial number of shares of our common stock under the LPC Agreement, or
anticipation of such sales, could make it more difficult for us to sell equity or equity-related
securities in the future at a time and at a price that we might otherwise wish to effect sales.
However, we have the right to suspend and therefore control the timing and amount of any sales of
our shares to LPC and the Agreement may be terminated by us at any time at our discretion without
any cost to us.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We have not been in compliance with the continued listing requirements of the NASDAQ Global Market.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time during the fourth quarter of 2009 and early in the first quarter of 2010, we did not meet the NASDAQ Global Market (&#147;NASDAQ&#148;) continued listing requirements that call for the
maintenance of a minimum bid price of our common stock of $1.00 per share and minimum shareholder
equity of $10,000,000. We received formal notices of non-compliance from NASDAQ. Although we
regained compliance with NASDAQ continued listing requirements on those occasions, there has been a
continuing risk that we could again become non-compliant with the listing requirements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this regard, our shareholders equity as of the end of the first quarter fell below the
minimum shareholder equity requirement. On May&nbsp;18, 2010, we received a notification from NASDAQ
that we have fallen out of compliance, that we have until July&nbsp;2, 2010 to submit a plan to regain
compliance, and if our plan is acceptable, an additional
135&nbsp;days to evidence compliance. The NASDAQ notification also
stated that we may apply to transfer trading in our common stock to the NASDAQ Capital Market where the minimum bid price is $1.00 per share and the minimum shareholder equity is $2,500,000 both of which requirements we meet. We are
currently preparing both a remedial plan and a transfer application.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the minimum bid price of our common stock should fall below $1.00 for an extended period of
time in the future, we will be required to take remedial action on it.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We could issue additional common stock apart from the LPC transaction, which might dilute the book
value of our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has the authority, without action or vote of our shareholders, to issue
all or a part of our authorized but unissued shares. Such stock issuances could be made at a price
that reflects a discount or a premium from the then-current trading price of our common stock. In
addition, in order to raise capital or acquire businesses in the future, including future lighting
retrofit businesses, we may need to issue securities or promissory notes that are convertible or
exchangeable for shares of our common stock. These issuances would dilute shareholders&#146; percentage
ownership interest, which would have the effect of reducing influence on matters on which our
shareholders vote, and might dilute the book value of our common stock. Shareholders may incur
additional dilution if holders of stock options, whether currently outstanding or subsequently
granted, exercise those options, or if warrant holders exercise warrants purchasing shares of our
common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may need to request our shareholders to authorize additional shares of common stock in
connection with subsequent equity finance or acquisition transactions.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our shareholders increased our authorized shares of common stock from 30,000,000 to 60,000,000
at our Annual Shareholders Meeting held on June&nbsp;16, 2010. Of the 60,000,000 authorized shares of
common stock, approximately 22,930,366 shares are issued and outstanding as of June&nbsp;29, 2010. An
additional 8,269,196 shares have been reserved for issuance upon exercise of stock options and
warrants outstanding and under our Purchase Agreement with LPC. Although the number of authorized
but unissued common shares is sufficient for our near-term needs, in the long term if we require
additional shares of common stock in connection with a subsequent equity financing or acquisition
transaction, we may be required to call another meeting of our shareholders to authorize additional
shares before undertaking or as a condition to completing an offering or transaction, or forgo the
offering or transaction. We cannot be assured that our shareholders would authorize an increase in
the number of shares of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Shares eligible for future sale may adversely affect the market for our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2009, we had a significant number of convertible or derivative securities
outstanding, including: (i)&nbsp;1,721,000 shares
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of common stock issuable upon exercise of outstanding stock options at a weighted average exercise price of $3.63
per share, and (ii)&nbsp;4,438,000 shares of common stock issuable upon exercise of our outstanding
warrants at a weighted average exercise price of $1.76 per share. If or when these securities are
exercised into shares of our common stock, the number of our shares of common stock outstanding
will increase. Increases in our outstanding shares, and any sales of shares, could have an adverse
affect on the trading activity and market price of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, from time to time, certain of our shareholders may be eligible to sell all, or a
portion of, their shares of common stock by means of ordinary brokerage transactions in the open
market pursuant to Rule&nbsp;144, promulgated under the Securities Act of 1933, or under effective
resale prospectuses. Any substantial sale of our common stock pursuant to Rule&nbsp;144 or any resale
prospectus may have an adverse affect on the market price of our securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>As a &#147;thinly-traded&#148; stock, large sales can place negative pressure on our common stock price.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock, despite certain increases of trading volume from time to time, experiences
periods when it could be considered &#147;thinly-traded.&#148; Financing or acquisition transactions
resulting in a large number of newly issued shares that become immediately tradable, or other
events that cause current shareholders to sell shares, could place negative pressure on the trading
price of our stock. In addition, the lack of a robust secondary market may require a shareholder
who desires to sell a large number of shares to sell those shares in increments over time in order
to mitigate any adverse impact of the sales on the market price of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our executive officers, directors, and affiliates maintain the ability to substantially influence
all matters submitted to shareholders for approval.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As March&nbsp;31, 2010, our executive officers, directors, and affiliates owned shares representing
approximately 32.17% or our outstanding common stock. Our current executive officers, directors,
and affiliates therefore have and will continue to have substantial influence over the outcome of
corporate actions requiring shareholder approval, including the election of directors, a merger,
consolidation, or sale of all or substantially all of our assets, or any other significant
corporate transactions, as well as over our management and affairs. This concentration of
ownership may delay or prevent a change of control of us at a premium price if these shareholders
oppose it, even if it would benefit our other shareholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Provisions in our charter documents and our Rights Agreement may prevent or frustrate attempts by
our shareholders to change our management and hinder efforts to acquire a controlling interest in
us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions of our corporate charter and bylaws, and of our Rights Agreement dated as of
October&nbsp;25, 2006 with Mellon Shareowner
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Services, as amended, may discourage, delay, or prevent a merger, acquisition, or other change in control that shareholders
may consider favorable, including transactions in which you might otherwise receive premium for
your shares. These provisions may also prevent or frustrate attempts by our shareholders to
replace or remove our management. These provisions include:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limitation on the removal of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>advanced notice requirements for shareholder proposals and nominations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the inability of shareholders to act by written consent or to call a special meeting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability of our board of directors to designate the terms of and issue new series
of preferred stock without shareholder approval; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the poison pill contained in our Rights Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Because the risk factors referred to above, as well as other risks not mentioned above, could
cause actual results or outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made. We undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the
date on which such statement is made or reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible for us to predict which ones will arise. In
addition, we cannot assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.</I>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains forward-looking statements within the meaning of Section&nbsp;27A of the
Securities Act of 1933, as amended, and Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements include statements regarding, among other things, (a)&nbsp;our
projected sales and profitability, (b)&nbsp;our growth strategies, (c)&nbsp;anticipated trends in our
industry, (d)&nbsp;our future financing plans, and (e)&nbsp;our anticipated needs for working capital.
Forward-looking statements, which involve assumptions and describe our future plans, strategies,
and expectations, are generally identifiable by use of the words &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;expect,&#148;
&#147;anticipate,&#148; &#147;estimate,&#148; &#147;believe,&#148; &#147;intend,&#148; or &#147;project&#148; or the negative of these words or other
variations on these words or comparable terminology. This information may involve known and
unknown risks, uncertainties, and other factors that may cause our actual results, performance, or
achievements to be materially different from the future results, performance, or achievements
expressed or implied by any forward-looking statements. These statements may be found under
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations&#148; and
&#147;Business&#148; in
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">our 2009 Annual Report on Form 10-K, as well as in this prospectus generally. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under &#147;Risk Factors&#148; and matters described in
this prospectus generally. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this prospectus will in fact occur. In addition
to the information expressly required to be included in this prospectus, we provide such further
material information, if any, as may be necessary to make the required statements, in light of the
circumstances under which they are made, not misleading.
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to shares of our common stock that may be offered and sold from time
to time by the selling shareholders. We will receive no proceeds from the sale of shares of common
stock in this offering. However, we may receive proceeds of up to $395,050 from the sale of up to
1,105,000 shares upon the exercise of the Davenport, Trust, Woodstone, and Mezzanine Warrants. We
will use any proceeds that we receive from the exercise of those Warrants for our working capital
needs and our new business strategy.
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TRANSACTIONS AND THE OFFERING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Acquisition of SRC. </B>On December&nbsp;31, 2009, we acquired all of the member interests of Stones
River Companies, LLC, a Tennessee limited liability company (&#147;SRC&#148;), from TLC Investments, LLC, a
Tennessee limited liability company (&#147;TLC&#148;), for a combination of cash, debt, an earn-out, and
shares of our common stock. SRC is a lighting retrofit company and an energy systems and solutions
provider located in Nashville, Tennessee. Jami Hall and Robert E. Wilson of Nashville, Tennessee,
own TLC. Mr.&nbsp;Wilson has continued to lead SRC as its Vice President.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consideration that we paid for SRC included a promissory note for $500,000 (the &#147;TLC
Note&#148;) and 1,000,000 shares of common stock (the &#147;TLC Shares&#148;). The principal amount of the
promissory note is due at maturity on June&nbsp;30, 2013 along with accrued interest. TLC may convert
the entire principal amount of the note into 500,000 shares of common stock (the &#147;TLC Note Shares&#148;)
at any time during the period beginning on June&nbsp;30, 2010 and ending on the maturity date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of those common shares and that convertible
promissory note under the Securities Act of 1933, as amended, in reliance upon the exemptions from
the registration requirements of the Act in Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D.
We have agreed to register for resale by TLC the TLC Shares issued as part of the purchase price
and the TLC Note Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Performance Bonding Support for SRC. </B>In order to provide performance bonding for SRC&#146;s
projects, on December&nbsp;30, 2009 we
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">deposited cash collateral with our surety company for a period
not to exceed two years. To reduce the size of our cash collateral based deposit and increase its liquidity, we have offered a small number of investors an
opportunity to replace portions of our deposit with funds of their own on the following terms:
12.5% interest per year payable by us; reimbursement by us in the event that the surety company
draws on their funds; security interest in a portion of the shares of capital stock of Crescent
Lighting, Ltd., our subsidiary located in London, England; and a number of warrants to purchase
shares of common stock equal to one share for every $2.00 deposited. The warrants have a five-year
term and an exercise price of $0.01 per share. John M. Davenport, our President and a director,
has deposited $250,000 and has received a warrant for 125,000 shares (the &#147;Davenport Warrant&#148;).
The Quercus Trust, Newport Beach, California, our largest shareholder, has deposited $300,000 and
has received a warrant for 150,000 shares (the &#147;Trust Warrant&#148;). David Gelbaum, who was a director
at the time, and his spouse, are co-trustees of the Trust. Our shareholders have approved our
issuance of these warrants to Mr.&nbsp;Davenport and The Trust at our Annual Shareholders Meeting held
on June&nbsp;16, 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the issuance of those warrants under the Securities Act of 1933, as
amended, in reliance upon the exemptions from the registration requirements of the Act in Section
4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by Mr.
Davenport and to The Trust the 375,000 shares covered by their warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Woodstone Energy, LLC. </B>On December&nbsp;31, 2009, we issued to Woodstone Energy, LLC, a Tennessee
limited liability company located in Nashville, Tennessee, a warrant to purchase up to 600,000
shares of our common stock (the &#147;Woodstone Warrant&#148;) at an exercise price of $0.65 per share and
with a term ending on December&nbsp;31, 2014. The Warrant becomes exercisable only if SRC receives from
Woodstone Energy firm contracts or purchase orders for at least $10,000,000 by June&nbsp;30, 2013. The
Warrant vests in two tranches: 400,000 shares when contracts or purchase orders between SRC and
Woodstone reach $10,000,000, and an additional 200,000 shares when contracts or purchase orders
between them reach an additional $5,000,000. No shares have yet vested. Ms.&nbsp;Hall and Mr.&nbsp;Wilson
each hold a minority interests in Woodstone Energy and together they own the majority interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of the Warrant under the Securities Act of 1933,
as amended, in reliance upon the exemptions from the registration requirements of the Act in
Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by
Woodstone the 600,000 shares covered by its Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mezzanine Financing. </B>On March&nbsp;30, 2010, we sold to EF Energy Partners LLC, an Ohio limited
liability company (&#147;EF Energy&#148;), a secured subordinated promissory note in the principal face
amount of $1,150,000. We are not associated with EF Energy other than through the note. We
secured the full amount of the note with a pledge of our United States accounts receivable and
selected capital equipment. The principal balance of the note, together with accrued interest, is
due and payable on March&nbsp;30, 2013. As an additional incentive for EF Energy to
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">purchase the note,
we issued to its eight investors five-year warrants (the &#147;Mezzanine Warrants&#148;) to purchase shares of common stock at a rate of 0.2
warrants per dollar of financing, or 230,000 shares, with an exercise price of $0.01 per share and
an expiration date of March&nbsp;30, 2015. The investors include The Barrett Family Trust, DKE Webb
LLC, R. Thomas Green, Jr., JKZ Properties, LTD, Marc Martter, Alexander S. Taylor Family Trust,
James M. Wiles, and Larry Wright.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not register the offering and issuance of those Warrants under the Securities Act of
1933, as amended, in reliance upon the exemptions from the registration requirements of the Act in
Section&nbsp;4(2) of the Act and Rule&nbsp;506 of Regulation&nbsp;D. We have agreed to register for resale by the
EF Energy investors the 230,000 shares covered by their Warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Acquisition of Unison. </B>On February&nbsp;1, 2000, we acquired selected assets of Unison Fiber
Optics Systems, LLC, a joint venture between Advanced Lighting Technologies, Inc. (&#147;ADLT&#148;) and Rohm
&#038; Hass Company, for consideration that included the issuance to ADLT of warrants to purchase up to
1,000,000 shares of our common stock at $0.01 per share. On September&nbsp;28, 2004, ADLT transferred
to John M. Davenport, currently our President and a director, warrants for 50,000 of those shares.
Mr.&nbsp;Davenport later engaged in a cashless exercise of those warrants and acquired 49,957 shares
(the &#147;Davenport Shares&#148;). Before joining us in November&nbsp;1999 as Vice President and Chief
Technology Officer, Mr.&nbsp;Davenport served as President of Unison in 1998 and 1999. We have agreed
to register the Davenport Shares.
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>THE SELLING SHAREHOLDERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have registered the above outstanding TLC and Davenport Shares and the shares issuable
under the above TLC Note and under the above Trust, Woodstone, Mezzanine, and Davenport Warrants to
permit the selling shareholders to resell them in the manner contemplated under the &#147;Plan of
Distribution&#148; below. We have not registered for resale any warrants themselves. When we refer to
&#147;selling shareholders&#148; in this prospectus, we mean the persons listed in the table below, and the
pledgees, donees, transferees, successors, and others who later come to hold any of the selling
shareholders&#146; interests in shares of our common stock other than through a public sale.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares offered by this prospectus may be offered from time to time by the selling
shareholders. They may sell some, all or none of their shares. We do not know how long the
selling shareholders will hold the shares before selling them. We currently have no agreements,
arrangements or understandings with the selling shareholders regarding the sale of any of the
shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the name and address of each selling shareholder, the number of
shares owned by each selling shareholder before this offering, the number of outstanding shares and
shares underlying a convertible promissory note and warrants that may be offered under this
prospectus, and the number of shares of our common stock owned by the selling shareholders after
this offering is completed. The
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">number of shares in the column &#147;Number of Shares Being Offered&#148;
represents all of the shares that a selling shareholder may offer under this prospectus. The number of shares in the column &#147;Shares
Owned after the Offering&#148; assumes the sale of all of the shares offered by the selling shareholder
under this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ownership of shares reported in the table below is based upon information provided by each
selling shareholder and SEC Form&nbsp;4s, SEC Schedules 13D and 13G, and other public documents filed
with the Securities and Exchange Commission. Unless otherwise noted, none of the share amounts set
forth below represents more than 1% of our outstanding common stock as of June&nbsp;29, 2010. The
percentages of shares owned before the offering are based on 22,930,366 shares of our common stock
outstanding as of June&nbsp;29, 2010. The percentage of shares owned after the offering are based on
24,535,366 shares, which number is equal to the sum of (i)&nbsp;the number of shares outstanding before
the offering and (ii)&nbsp;the 1,605,000 shares issuable under the TLC Note and the Davenport, Trust,
Woodstone, and Mezzanine Warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the selling shareholders has, or within the past three years has had, any position,
office or other material relationship with us, except that John M. Davenport is our President and a
director, Robert E. Wilson, who is an owner of TLC and Woodstone, heads SRC, and the Trust is an
affiliate and our largest shareholder. David Gelbaum, who is a co-trustee of the Trust, served as a
director from February&nbsp;2009 through February&nbsp;2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the information provided to us by the selling shareholders, none of them is, or is
affiliated with, a broker-dealer. Each of the selling shareholders has represented to us that he,
she, or it had no agreements or understanding, directly or indirectly, with any person to
distribute the securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders may have sold or transferred, in transactions exempt from the
registration requirements of the Securities Act, some or all of their shares since the date on
which the information in the table is presented. Information about the selling shareholders may
change over time.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Shares Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Shares Owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>Before Offering (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>Shares Being Offered</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>after Offering (1)(2)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Warrant/</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>Name and Address</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Note Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>TLC Shares and Note:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">TLC Investments, LLC<BR>
1244 Gallatin Pike South<BR>
Madison, Tennessee 37115</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,500,000</TD>
    <TD nowrap valign="top">(3)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6.54</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,000,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">500,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Trust Warrant:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">The Quercus Trust<BR>
2309 Santiago Drive<BR>
Newport Beach, CA 92660</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6,364,205</TD>
    <TD nowrap valign="top">(4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27.75</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">150,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6,364,055</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25.94</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Woodstone Warrant:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Woodstone Energy, LLC<BR>
1244 Gallatin Pike South<BR>
Madison, Tennessee 37115</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">(3)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">600,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Mezzanine Warrants(5):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">The Barrett Family Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">DKE Webb LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">R. Thomas Green, Jr.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">JKZ Properties, LTD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Marc Martter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Alexander S. Taylor Family Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">James M. Wiles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Larry Wright</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Davenport Shares and Warrant:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">John M. Davenport<BR>
32000 Aurora Road<BR>
Solon, Ohio 44139</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">667,849</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.91</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49,957</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">125,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">492,892</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.01</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Selling Shareholder Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8,762,054</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">38.21</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,049,957</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,605,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6,856,947</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27.95</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Represents less than 1%</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Lists all shares beneficially owned, including shares covered by options and warrants.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Assumes the sale of all of the shares offered by this prospectus.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Does not include 150,000 shares that Robert E. Wilson holds under a stock option. Mr.&nbsp;Wilson
leads SRC as its Vice President. Mr.&nbsp;Wilson holds ownership interests in TLC and Woodstone.
TLC and Woodstone disclaim beneficial ownership of the shares owned by each other and of Mr.
Wilson&#146;s option shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Does not include 25,000 shares that David Gelbaum owns beneficially as a result of his
service as a director from February&nbsp;2009 through February&nbsp;2010. Mr.&nbsp;Gelbaum is a co-trustee
of the Trust. The Trust disclaims beneficial ownership of his shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>The address for each of the Mezzanine investors is 2171 Mogadore Road, Kent, Ohio 44240.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PLAN OF DISTRIBUTION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders, which term includes donees, pledgees, transferees or other
successors-in-interest selling shares of common stock or interests in shares of common stock
received after the date of this prospectus from a selling shareholder as a gift, pledge,
partnership a limited liability company distribution or other transfer, may, from time to time,
sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on which the shares are
traded or in private transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders may use any one or more of the following methods when disposing of
shares or interests therein:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ordinary brokerage transactions and transactions in which the broker- dealer
solicits purchasers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>block trades in which the broker-dealer will attempt to sell the shares as agent,
but may position and resell a portion of the block as principal to facilitate the
transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>purchases by a broker-dealer as principal and resale by the broker-dealer for its
account;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an exchange distribution in accordance with the rules of the applicable exchange;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>privately negotiated transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>short sales effected after the date the registration statement of which this
prospectus is a part is declared effective by the SEC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>through the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>broker-dealers may agree with the selling shareholders to sell a specified number
of such shares at a stipulated price per share; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a combination of any such methods of sale.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders may, from time to time, pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule&nbsp;424(b)(3) or other applicable provision of the
Securities Act of 1933 amending the list of selling shareholders to include the pledgee, transferee
or other successors-in-interest as selling shareholders under this prospectus. The selling
shareholders also may transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors-in-interest will be the selling beneficial owners for
purposes of this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the sale of our common stock or interests therein, the selling shareholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The selling shareholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling shareholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate proceeds to the selling shareholders from the sale of the common stock offered
by them will be the purchase price of the common stock less discounts or commissions, if any. Each
of the selling shareholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering. Upon any exercise
of the warrants by payment of cash, however, we will receive the exercise price of the warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule&nbsp;144 under the Securities Act, provided that they meet the
criteria and conform to the requirements of that rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders and any underwriters, broker-dealers or agents that participate in
the sale of the common stock or interests therein may be &#147;underwriters&#148; within the meaning of
Section&nbsp;2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling shareholders who are &#147;underwriters&#148; within the meaning of Section&nbsp;2(11) of the Securities
Act will be subject to the prospectus delivery requirements of the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent required, the shares of our common stock to be sold, the names of the selling
shareholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to comply with the securities laws of some states, if applicable, the common stock
may be sold in these jurisdictions only through registered or licensed brokers or dealers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have advised the selling shareholders that the anti-manipulation rules of Regulation&nbsp;M
under the Exchange Act may apply to sales of shares in the market and to the activities of the
selling shareholders and their affiliates. In addition, to the extent applicable we will make
copies of this prospectus (as it may be supplemented or amended from time to time) available to the
selling shareholders for the purpose of satisfying the prospectus delivery requirements of the
Securities Act. The selling shareholders may agree to indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to indemnify the selling shareholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus. The selling shareholders may agree to indemnify any agent,
dealer, or broker-dealer that participates in transactions involving sales of the shares if
liabilities are imposed on that person by the Securities Act. In the opinion of the SEC,
indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will bear all expenses of the registration of the shares of common stock covered by this
prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Once sold under the shelf registration statement of which this prospectus is a part, the
shares of common stock will be freely tradable in the hands of persons other than our affiliates.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LEGAL MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the common stock offered in this prospectus has been passed upon for us by
Cowden &#038; Humphrey Co. LPA, 4600 Euclid Avenue, Suite&nbsp;400, Cleveland, Ohio 44103-3748.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXPERTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements, as of and for the years ended December&nbsp;31, 2009 incorporated by
reference in this prospectus and Registration Statement have been audited by Plante &#038; Moran, PLLC,
an independent registered public accounting firm, as stated in their report incorporated herein by
reference, and are incorporated in reliance upon such report and upon the authority of such firm as
experts in accounting and auditing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements and schedule as of December&nbsp;31, 2008 and for the years ended December
31, 2008 and 2007, before the effects of the retrospective adjustments for the discontinued
operations discussed in Note 4 and the retrospective adjustments for the change in the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">composition
of reportable segments discussed in Note 13 (not separately incorporated by reference in this prospectus and elsewhere in the registration
statement), have been audited by Grant Thornton LLP, independent registered public accountants, as
indicated in their report with respect thereto and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus is part of a registration statement on Form S-3 that we filed with the SEC.
This prospectus does not contain all of the information included in the registration statement. For
further information about us and our securities, you should refer to the registration statement and
the exhibits filed with the registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the information requirements of the Securities Exchange Act of 1934 and file
annual, quarterly and current reports, proxy statements and other information with the SEC. You can
read our SEC filings, including the registration statement, over the internet at the SEC&#146;s website
at <U>www.sec.gov</U> or through our website at <U>www.efoi.com</U>. Information contained on our
website is not considered to be a part of, nor incorporated by reference in, this prospectus. You
may also read and copy any document we file with the SEC at its Public Reference Room at 100 F
Street, NE, Washington, D.C. 20549.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may also obtain copies of the documents at prescribed rates by writing to the Public
Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference Room.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INFORMATION INCORPORATED BY REFERENCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC allows us to &#147;incorporate by reference&#148; the information that we file with it, which
means that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be an important part of this prospectus.
Later information that we file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below, any filings that we make with
the SEC under Sections&nbsp;13(a), 13(c), 14, or 15(d) of the Security Exchange Act of 1934 after the
date of the initial registration statement and prior to the effectiveness of the registration
statement, and any future filing we make with the SEC under Sections&nbsp;13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering. The documents that we
incorporate by reference are:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our annual report on Form 10-K for our fiscal year ended December&nbsp;31,
2009, SEC File No.&nbsp;000-24230.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our quarterly report on Form 10-Q for our fiscal quarter ended March
31, 2010, SEC File No.&nbsp;000-24230.</TD>
</TR>


</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our current reports on Form 8-K, SEC File No.&nbsp;000-24230, filed with
the SEC on January&nbsp;5, 2010, January&nbsp;7, 2010, January&nbsp;28, 2012, March
3, 2010, March&nbsp;19, 2010, April&nbsp;7, 2010, and June&nbsp;22, 2010.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our definitive proxy statement on Schedule&nbsp;14A for our annual meeting
of shareholders, SEC File No.&nbsp;000-24230, filed with the SEC on April
30, 2010.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A description of our Common Stock, Preferred Stock, and Series&nbsp;A
Participating Preferred Stock Purchase Rights contained in our current
report on Form 8-K, SEC File No.&nbsp;000-24230, and any amendment or
report filed for the purpose of updating that description filed
subsequent to the date of this prospectus and prior to the termination
of this offering.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may request a copy of these filings, at no cost, by writing or telephoning us at the
following address: Energy Focus, Inc., 32000 Aurora Road, Solon, Ohio 44139; telephone number
440.715.1300.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information incorporated by reference or provided in this
prospectus or any supplement. We have not authorized anyone else to provide you with different
information. We will not make offers to sell these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any supplement is
accurate as of any date other that the date on the front of those documents.
</DIV>






<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>





<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ENERGY FOCUS, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>2,654,957 Shares of Common Stock</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">PROSPECTUS
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">July&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2010
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>


























<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="112"></A>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the costs and expenses payable by us in connection with the
preparation and filing of this registration statement. All amounts are estimates subject to future
contingencies except the SEC registration statement filing fee.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SEC Filing Fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">242.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounting Fees and Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal Fees and Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Printing and Engraving Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer Agent and Registrar Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Miscellaneous</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,242.30</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>General Corporation Law</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are incorporated under the laws of the State of Delaware. Section&nbsp;145 (&#147;Section&nbsp;145&#148;) of
the General Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (the &#147;General Corporation Law&#148;), among other things, provides that a Delaware corporation
may indemnify any persons who were, are or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by reason of the fact
that such person is or was an officer, director, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including attorneys&#146; fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation&#146;s best interests and, with
respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct
was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to
be made, a party to any threatened, pending or completed action or suit by or in the right of the
corporation by reasons of the fact that such person was a director, officer, employee or agent of
such corporation or enterprise. The indemnity may include expenses (including attorneys&#146; fees)
actually and reasonably incurred by such person in connection with the defense or settlement of
such action or suit, provided such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation&#146;s best interests, provided that no
indemnification is permitted without judicial approval if the officer,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">director, employee or agent is adjudged to be liable to the corporation. Where an officer,
director, employee or agent is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;145 further authorizes a corporation to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another
corporation or enterprise, against any liability asserted against him and incurred by him in any
such capacity, arising out of his status as such, whether or not the corporation would otherwise
have the power to indemnify him under Section&nbsp;145.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;102 of the General Corporation Law permits a corporation to eliminate the personal
liability of directors of a corporation to the corporation or its stockholders for monetary damages
for a breach of fiduciary duty as a director, except where the director breached his duty of
loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a
law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware
corporate law or obtained an improper personal benefit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Certificate of Incorporation and Bylaws</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;XI and Article&nbsp;XII of our certificate of incorporation (the &#147;Certificate&#148;) provides
that the liability of our officers and directors shall be eliminated or limited to the fullest
extent authorized or permitted by the General Corporation law. Under the General Corporation Law,
the directors have a fiduciary duty to us which is not eliminated by these provisions of the
Certificate and, in appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available to us. These provisions also do not affect the
directors&#146; responsibilities under any other laws, such as the federal securities laws or state or
federal environmental laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;VI of our bylaws provides that we shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action, suit or
proceedings, whether civil, criminal, administrative or investigative (other than an action by us
or in our right), by reason of the fact that such person is or was a director or officer of us, or
is or was a director or officer of us serving at our request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys&#146; fees), judgments, fines and amounts paid in settlement actually and
reasonable incurred by such person in connection with such action, suit or proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;VI of our bylaws further provides that in the event a director or officer has to bring
suit against us for indemnification and is successful, we will pay such director&#146;s or officer&#146;s
expenses of prosecuting such claim; that indemnification provided for by the bylaws shall
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not be
deemed exclusive of any other rights to which the indemnified party may be entitled; and that we may purchase and maintain insurance on behalf of a director or officer
against any liability asserted such officer or director and incurred by such officer or director in
such capacity, whether or not we would have the power to indemnify such director or office against
such expense or liability under the General Corporation Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At present, there is no pending litigation or proceeding involving any director, officer,
employee or agent as to which indemnification will be required or permitted under our Certificate
of bylaws. We are not aware of any threatened litigation or proceeding that may result in a claim
for indemnification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into indemnification agreements with certain of our officers, directors and
key employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liability Insurance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and officers are covered under directors&#146; and officers&#146; liability insurance
policies maintained by us, insuring such persons against various liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Undertaking</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to &#147;Undertakings&#148; below, for our undertakings in this registration statement
with respect to indemnification of liabilities arising under the Securities Act of 1933.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16. EXHIBITS.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description of Documents</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Common Stock Certificate (incorporated by reference to
Exhibit&nbsp;4.1 to the Registrant&#146;s Current Report on Form&nbsp;8-K filed
on November&nbsp;27, 2006).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rights Agreement dated as of October&nbsp;25, 2006 between the
Registrant and Mellon Investor Services, LLC, as Rights Agent
(incorporated by reference to Exhibit&nbsp;4.2 to the Registrant&#146;s
Current Report on Form&nbsp;8-K filed on November&nbsp;27, 2006).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;1 to Rights Agreement between the Registrant and
Mellon Investor Services, LLC, as Rights Agent, dated as of March
12, 2008 (incorporated by reference to Exhibit&nbsp;3.1 to the
Registrant&#146;s Current Report on Form&nbsp;8-K filed on March&nbsp;19, 2009).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description of Documents</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment No.&nbsp;2 to the Rights Agreement between the Registrant and
Mellon Investor Services, LLC, as Rights Agent, dated as of
December&nbsp;31, 2009 (incorporated by reference to Exhibit&nbsp;4.7 to the
Registrant&#146;s Annual Report on Form&nbsp;10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock Purchase Warrant No.&nbsp;2009SRCW-01 for the purchase of
600,000 shares of common stock dated December&nbsp;31, 2009 in the name
of Woodstone Energy, LLC (incorporated by reference to Exhibit&nbsp;4.8
to the Registrant&#146;s Annual Report on Form&nbsp;10-K filed on March&nbsp;31,
2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Common Stock Purchase Warrant for the purchase of shares
of common stock dated as of December&nbsp;29, 2009 (incorporated by
reference to Exhibit&nbsp;4.9 to the Registrant&#146;s Annual Report on Form
10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Common Stock Purchase Warrant for the purchase of shares
of common stock dated March&nbsp;30, 2010 (incorporated by reference to
Exhibit&nbsp;4.11 to the Registrant&#146;s Annual Report on Form&nbsp;10-K filed
on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock Purchase Warrant No.&nbsp;2009SRCW-03 for the purchase of
150,000 shares of common stock dated as of December&nbsp;29, 2009 in
the name of The Quercus Trust.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Cowden &#038; Humphrey Co. LPC, including the consent of the
firm, regarding the legality of the securities being offered.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Member Interest Purchase Agreement among the Registrant and TLC
Investments, LLC, Jamie Hall, and Robert E. Wilson dated December
31, 2009 (incorporated by reference to Exhibit&nbsp;10.40 to the
Registrant&#146;s Annual Report on Form&nbsp;10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Convertible Promissory Note from the Registrant to TLC
Investments, LLC, Jamie Hall and Robert E. Wilson dated December
31, 2009 (incorporated by reference to Exhibit&nbsp;10.41 to the
Registrant&#146;s Annual Report on Form&nbsp;10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Warrant Acquisition Agreement between the Registrant and Woodstone
Energy, LLC dated December&nbsp;31, 2009 (incorporated by reference to
Exhibit&nbsp;10.42 to the Registrant&#146;s Annual Report on Form&nbsp;10-K filed
on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Bonding Support Agreement dated as of December&nbsp;29, 2009
(incorporated by reference to Exhibit&nbsp;10.43 to the Registrant&#146;s
Annual Report on Form&nbsp;10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-4<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description of Documents</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Warrant Acquisition Agreement for bonding support dated as
of December&nbsp;29, 2009 (incorporated by reference to Exhibit&nbsp;10.44
to the Registrant&#146;s Annual Report on Form&nbsp;10-K filed on March&nbsp;31,
2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Note Purchase Agreement between the Registrant and EF Energy
Partners LLC dated March&nbsp;30, 2010 (incorporated by reference to
Exhibit&nbsp;10.48 to the Registrant&#146;s Annual Report on Form&nbsp;10-K filed
on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Warrant Acquisition Agreement among the Registrant and the
investors named therein dated March&nbsp;30, 2010 (incorporated by
reference to Exhibit&nbsp;10.50 to the Registrant&#146;s Annual Report on
Form&nbsp;10-K filed on March&nbsp;31, 2010).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bonding Support Agreement between the Registrant and The Quercus
Trust effective as of December&nbsp;29, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Warrant Acquisition Agreement between the Registrant and The
Quercus Trust effective as of December&nbsp;29, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Plante &#038; Moran, PLLC, Independent Registered Public
Accounting Firm.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Grant Thornton, LLP, Independent Registered Public
Accounting Firm.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Cowden &#038; Humphrey Co. LPA (included in Exhibit&nbsp;5.1).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">24.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Powers of Attorney (included on signature pages to this
Registration Statement).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. UNDERTAKINGS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a. The undersigned registrant hereby undertakes:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(i)&nbsp;To include any prospectus required by Section&nbsp;10(a)(3) of the Securities Act of 1933;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(ii)&nbsp;To reflect in the prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or high end of
the estimated maximum
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->II-5<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule&nbsp;424(b) if, in the aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the &#147;Calculation of
Registration Fee&#148; table in the effective registration statement; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(iii)&nbsp;To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in the registration statement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Provided however, that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do
not apply if the registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement, or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial <I>bona fide </I>offering thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(i)&nbsp;If the registrant is relying on Rule&nbsp;430B:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(A)&nbsp;Each prospectus filed by the registrant pursuant to Rule&nbsp;424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(B)&nbsp;Each prospectus required to be filed pursuant to Rule&nbsp;424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule&nbsp;430B relating to an
offering made pursuant to Rule&nbsp;415(a)(1)(i), (vii), or (x)&nbsp;for the purpose of
providing the information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described in
the prospectus. As provided in Rule&nbsp;430B, for liability purposes of the issuer and
any person that is at that
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->II-6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">date an underwriter, such date shall be deemed to be a
new effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was part
of the registration statement or made in any such document immediately prior to
such effective date; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(ii)&nbsp;If the registrant is subject to Rule&nbsp;430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule&nbsp;430B or other than prospectuses filed in reliance on Rule&nbsp;430A,
shall be deemed to be part of and included in the registration statement as of the date it
is first used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement or made in
a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(i)&nbsp;Any preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule&nbsp;424;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(ii)&nbsp;Any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(iii)&nbsp;The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->II-7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(iv)&nbsp;Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;To file an application for the purpose of determining the eligibility of the trustee to act
under subsection (a)&nbsp;of Section&nbsp;310 of the Trust Indenture Act in accordance with the rules and
regulation s prescribed by the SEC under Section&nbsp;305(b)(2) of the Trust Indenture Act.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">b. The undersigned registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant&#146;s annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan&#146;s annual report pursuant to section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">c. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and
has caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Solon, State of Ohio, on the 29th day of June, 2010.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">

ENERGY FOCUS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Joseph G. Kaveski
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Joseph G. Kaveski&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>POWER OF ATTORNEY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Joseph G. Kaveski, Nicholas G. Berchtold, and John M. Davenport, and each of them, his
true and lawful attorneys-in-fact and agents, each with full power of substitution and
re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this registration statement, and to
file the same, with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the date indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Date</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Joseph G. Kaveski
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
Joseph G. Kaveski
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Chief Executive Officer and
Director<BR>
<I>(Principal Executive Officer)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Joseph M. Davenport
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
John M. Davenport
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Nicholas G. Berchtold
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
Nicholas G. Berchtold
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President Finance and
Chief Financial Officer<BR>
<I>(Principal Financial Officer
and Principal Accounting
Officer)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ David Anthony<BR>
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
David Anthony
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ J. James Finnerty
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
J. James Finnerty
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Michael A. Kasper
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
Michael A. Kasper
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ R. Louis Schneeberger
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
R. Louis Schneeberger
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Paul von Paumgartten<BR>
<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
Paul von Paumgartten
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">June&nbsp;29, 2010</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Energy Focus, Inc.<BR>
Form&nbsp;S-3<BR>
Index to Exhibits

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description of Documents</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock Purchase Warrant No.&nbsp;2009SRCW-03 for the purchase of
150,000 shares of common stock dated as of December&nbsp;29, 2009 in
the name of The Quercus Trust.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Cowden &#038; Humphrey Co. LPC, including the consent of the
firm, regarding the legality of the securities being offered.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bonding Support Agreement between the Registrant and The Quercus
Trust effective as of December&nbsp;29, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Warrant Acquisition Agreement between the Registrant and The
Quercus Trust effective as of December&nbsp;29, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Plante &#038; Moran, PLLC, Independent Registered Public
Accounting Firm.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Grant Thornton, LLP, Independent Registered Public
Accounting Firm.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->II-10<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.8
<SEQUENCE>2
<FILENAME>l40087exv4w8.htm
<DESCRIPTION>EX-4.8
<TEXT>
<HTML>
<HEAD>
<TITLE>exv4w8</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;4.8
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS COMMON STOCK
PURCHASE WARRANT.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Number of Shares of Common Stock: 150,000
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Warrant No.&nbsp;2009SRCW-03
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>COMMON STOCK PURCHASE WARRANT</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">To Purchase Common Stock of<BR>
<FONT style="FONT-variant: SMALL-CAPS">Energy Focus, Inc.</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="FONT-variant: SMALL-CAPS">This Is To Certify That The Quercus Trust</FONT>, or registered assign (the &#147;Holder&#148;), is
entitled, at any time from the Issuance Date (as hereinafter defined) to the Expiration Date (as
hereinafter defined), except as provided herein, to purchase from Energy Focus, Inc., a Delaware
corporation (the &#147;<B>Company</B>&#148;), one hundred fifty thousand (150,000) shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), in whole or in part, including
fractional parts, at a purchase price of equal to $0.01 (subject to adjustment as provided herein,
the &#147;<B>Exercise Price</B>&#148;), all on the terms and conditions and pursuant to the provisions hereinafter
set forth.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant is issued pursuant to, and the Holder is entitled to the benefits of, that
certain Warrant Acquisition Agreement of even date by and between the Company and the investor
party thereto (the &#147;<B>Securities Purchase Agreement</B>&#148;) and that certain Bonding Support Agreement of
even date by and between the Company and the investor party thereto (the &#147;<B>Bonding Support
Agreement</B>&#148;). Capitalized terms used herein without definition are used with the definitions
assigned thereto in such Securities Purchase Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1. DEFINITIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this Common Stock Purchase Warrant (this &#147;<B>Warrant</B>&#148;), the following terms shall have
the respective meanings set forth below:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Business Day</B>&#148; shall mean any day that is not a Saturday or Sunday or a day on which banks in
New York City, New York are required or permitted to be closed in the City of New York.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Issuance Date</B>&#148; shall mean December&nbsp;29, 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Commission</B>&#148; shall mean the Securities and Exchange Commission or any other federal agency
then administering the Securities Act and other federal securities laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Stock</B>&#148; shall mean (except where the context otherwise indicates) the Common Stock, par
value $0.0001 per share, of the
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company as constituted on the Issuance Date, and any capital stock into which such Common Stock may thereafter be changed, and shall
also include (i)&nbsp;capital stock of the Company of any other class (regardless of how denominated)
issued to the holders of shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company and which is not
subject to redemption and (ii)&nbsp;shares of common stock of any successor or acquiring Company
received by or distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section&nbsp;4.5.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Convertible Securities</B>&#148; shall mean options, evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Exchange Act</B>&#148; shall mean the Securities Exchange Act of 1934, as amended, or any successor
federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect from time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Exercise Period</B>&#148; shall mean the period during which this Warrant is exercisable pursuant to
Section&nbsp;2.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Expiration Date</B>&#148; shall mean the fifth anniversary hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Fundamental Corporate Change</B>&#148; shall have the meaning set forth in Section&nbsp;4.5.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Holder</B>&#148; shall mean the Person in whose name the Warrant or Warrant Shares set forth herein is
registered on the books of the Company maintained for such purpose.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Market Price</B>&#148; shall mean, on any date of determination, (i)&nbsp;the closing price of a share of
Common Stock on such day as reported on the principal Trading Market on which the Common Stock is
listed or traded, or (ii)&nbsp;if the Common Stock is not listed on a Trading Market, the closing bid
price for a share of Common Stock on such day in the over-the-counter market, as reported by the
OTC Bulletin Board, or (iii)&nbsp;if the Common Stock is not then listed or quoted on the OTC Bulletin
Board, the closing bid price for a share of Common Stock on such day in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting prices).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Other Property</B>&#148; shall have the meaning set forth in Section&nbsp;4.5.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Person</B>&#148; shall mean any individual, sole proprietorship, partnership, joint venture, trust,
incorporated organization, association, Company, institution, public benefit Company, entity or
government (whether federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Securities Act</B>&#148; shall mean the Securities Act of 1933, as amended, or any successor federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading Day&#148; </B>means (i)&nbsp;a day on which the Common Stock is traded on a Trading Market, or (ii)
if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)&nbsp;if the Common Stock is
not then quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices); <I>provided</I>, that in the
event that the Common Stock is not listed or quoted as set forth in (i), (ii)&nbsp;and (iii)&nbsp;hereof,
then the term &#147;Trading Day&#148; shall mean a Business Day.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading Market&#148; </B>means whichever of the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market, or the Nasdaq Bulletin Board on which the Common Stock is listed or
quoted for trading on the date in question.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Transfer</B>&#148; shall mean any disposition of any Warrant or Warrant Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Warrant Shares</B>&#148; shall mean the shares of Common Stock issued or issuable to the Holder of
this Warrant upon the exercise thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Warrants</B>&#148; shall mean this Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, any thereof. All Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of shares of Common Stock for which
they may be exercised.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2. EXERCISE OF WARRANT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 Manner of Exercise</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From the Issuance Date and until 5:00 p.m., Eastern Standard Time, on the Expiration Date, the
Holder may exercise this Warrant, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable hereunder, subject to the further restriction in the next paragraph and
in Section&nbsp;2.6.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to exercise this Warrant, in whole or in part, the Holder shall surrender this
Warrant to the Company at its principal office at 32000 Aurora Road, Solon, Ohio 44139, or at the
office or agency designated by the Company pursuant to Section&nbsp;12, together with a written notice
of the Holder&#146;s election to exercise this Warrant, which notice shall specify the number of shares
of Common Stock to be purchased, and shall be accompanied by payment of the Exercise Price in cash
or wire transfer or cashier&#146;s check drawn on a United States bank. Such notice shall be
substantially in the form of the subscription form appearing at the end of this Warrant as Exhibit
A, duly executed by the Holder or his agent or attorney. Upon receipt of the items referred to
above, the Company shall, as promptly as practicable, execute or cause to be executed and deliver
or cause to be delivered to the Holder a certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of
any fraction of a share, as hereinafter provided. The stock certificate or certificates so
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">delivered shall be, to the extent possible, in such denomination or denominations as the Holder shall request in the notice and shall be registered in the name of
the Holder or, subject to Section&nbsp;9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed
to have been issued, and the Holder or any other Person so designated to be named therein shall be
deemed to have become the holder of record of such shares for all purposes, as of the date the
notice, together with the cash or check or wire transfer of funds and this Warrant is received by
the Company as described above and all taxes required to be paid by the Holder, if any, pursuant to
Section&nbsp;2.2 prior to the issuance of such shares have been paid, provided that if the Warrant is
exercised in connection with a merger, reorganization or other Fundamental Corporate Change, such
exercise may be made conditional upon the consummation of such event. If this Warrant shall have
been exercised in part, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.
Notwithstanding any provision herein to the contrary, the Company shall not be required to register
shares in the name of any Person who acquired this Warrant (or part hereof) or any Warrant Shares
otherwise than in accordance with this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 Payment of Taxes and Charges</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All shares of Common Stock issuable upon the exercise of this Warrant pursuant to the terms
hereof shall be validly issued, fully paid and nonassessable, freely tradable and without any
preemptive rights. The Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issuance or delivery thereof, unless
such tax or charge is a tax on income imposed by law upon the Holder in connection with the
issuance of the Common Stock to a person other than the Holder, in which case such taxes or charges
shall be paid by the Holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.3 Fractional Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall not be required to issue a fractional share of Common Stock upon exercise of
any Warrant. As to any fraction of a share which the Holder would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Market Price per share of Common Stock as of the date
of exercise of the Warrant giving rise to such fraction of a share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 Cashless Exercise During Event</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding any other provision contained herein to the contrary, from and after the
six-month anniversary of the Closing Date, whenever an Event has occurred and is continuing and at
any time after the expiration of the Effectiveness Period, the Holder may elect to receive, without
the payment by the Holder of the aggregate Exercise Price in respect of the shares of Common Stock
to be acquired, shares of Common Stock of equal value to the value of this Warrant, or any
specified portion hereof, by the surrender of this Warrant (or such portion of this Warrant being
so exercised) together with a subscription form in the form attached hereto as Exhibit&nbsp;A, with
appropriate modification to
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reflect such cashless exercise, duly executed, to the Company. Thereupon, the Company shall issue to the Holder such number of fully paid, validly
issued and nonassessable shares of Common Stock as is computed using the following formula:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X
= <U>Y (A - B)</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 11%; margin-top: 1pt">
A</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;where
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X = the number of shares of Common Stock to which the Holder is entitled upon such cashless
exercise;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Y = the total number of shares of Common Stock covered by this Warrant for which the Holder
has surrendered purchase rights at such time for cashless exercise (including both shares to be
issued to the Holder and shares as to which the purchase rights are to be canceled as payment
therefor);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A = the Market Price of one share of Common Stock as at the date the net issue election is
made; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B = the Warrant Price in effect under this Warrant at the time the net issue election is made.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.5 Buy-In</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time when a Registration Statement is in effect or required to be in effect with
respect to the Warrant Shares, as provided for by the Securities Purchase Agreement, (a)&nbsp;a
certificate representing the Warrant Shares is not delivered to the Holder within three (3)
Business Days of the due exercise of this Warrant by the Holder and (b)&nbsp;prior to the time such
certificate is received by the Holder, the Holder, or any third party on behalf of the Holder or
for the Holder&#146;s account, purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of shares represented by such certificate
(a <B>&#147;Buy-In&#148;</B>), then the Company shall pay in cash to the Holder (for costs incurred either directly
by such Holder or on behalf of a third party) the amount by which the total purchase price paid for
Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceeds the
proceeds received by such Holder as a result of the sale to which such Buy-In relates. The Holder
shall provide the Company written notice indicating the amounts payable to the Holder in respect of
the Buy-In.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.6 Agreement not to Exercise Rights; Reduction in Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;This Warrant is not exercisable unless and until approved by the Company&#146;s shareholders
at its annual meeting in 2010 or at a special shareholder meeting in 2010 called for that purpose.
If shareholders do not approve this Warrant in 2010 at a special or the annual meeting, this
Warrant shall terminate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Holder agrees that the Holder will not exercise this Warrant, without first having
received written notice from the Company that the Securities Purchase Agreement and this Warrant
have been approved by the Company&#146;s Board of Directors or a committee of the Board, and by the
Company&#146;s shareholders in 2010 at a special or the annual meeting.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If the Company replaces and releases, or simply releases, the Deposit or the Letter of
Credit covered by the Bonding Support Agreement by June&nbsp;30, 2010, the number of shares covered by
this Warrant shall reduce to a number of shares equal to the product of (i)&nbsp;the number of full
months elapsed in 2010 times (ii)&nbsp;12,500.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3. TRANSFER, DIVISION AND COMBINATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 Transfer</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to compliance with Section&nbsp;9, transfer of this Warrant and all rights hereunder, in
whole or in part, shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company referred to in
Section&nbsp;2.1 or the office or agency designated by the Company pursuant to Section&nbsp;12, together with
a written assignment of this Warrant substantially in the form of Exhibit&nbsp;B hereto duly executed by
the Holder or his agent or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Section&nbsp;9, execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be canceled. A Warrant, if properly assigned in compliance with Section&nbsp;9, may be
exercised by a new Holder for the purchase of shares of Common Stock without having a new warrant
issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 Division and Combination</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section&nbsp;9, this Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed by the
Holder or his agent or attorney. Subject to compliance with Sections&nbsp;3.1 and 9, as to any transfer
which may be involved in such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.3 Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall prepare, issue and deliver at its own expense (other than transfer taxes)
the new Warrant or Warrants under this Section&nbsp;3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.4 Maintenance of Books</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees to maintain, at its aforesaid office or agency, books for the registration
and the registration of transfers of the Warrants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4. ADJUSTMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares of Common Stock for which this Warrant is exercisable, or the price at
which such shares may be purchased upon
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section&nbsp;4. The Company shall give the
Holder notice of any event described below which requires an adjustment pursuant to this Section&nbsp;4
at the time of such event.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 Stock Dividends, Subdivisions and Combinations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time the Company shall:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;declare or pay to the holders of its Common Stock a dividend payable in, or other
distribution of, shares of Common Stock or in Convertible Securities;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;subdivide its outstanding shares of Common Stock into a larger number of shares of Common
Stock; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;combine its outstanding shares of Common Stock into a smaller number of shares of Common
Stock;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">then (i)&nbsp;the number of shares of Common Stock for which this Warrant is exercisable immediately
after the occurrence of any such event shall be adjusted to equal the number of shares of Common
Stock which a record holder of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be entitled to receive
after the occurrence of such event, and (ii)&nbsp;the then-current Exercise Price shall be adjusted to
equal (A)&nbsp;the then-current Exercise Price multiplied by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to the adjustment divided by (B)&nbsp;the number of
shares for which this Warrant is exercisable immediately after such adjustment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 Certain Other Distributions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time the Company shall declare or pay to the holders of its Common Stock any
dividend or other distribution of:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;cash;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;any evidences of its indebtedness, any shares of its stock or any other securities or
property of any nature whatsoever (other than cash, Convertible Securities or additional shares of
Common Stock); any warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of its stock or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or additional shares of Common Stock);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;then, upon exercise of this Warrant, the Holder shall be entitled to receive such dividend or
distribution as if the Holder had exercised this Warrant prior to the date of such dividend or
distribution. A reclassification of the Common Stock (other than a change in par value, or from
par value to no par value or from no par value to par value) into shares of Common Stock and shares
of any other class of stock shall be deemed a distribution by the Company to the holders of its
Common Stock of such shares of such other class of stock within the meaning of
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">this Section&nbsp;4.2
and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of the outstanding
shares of Common Stock within the meaning of Section&nbsp;4.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.3 Dilutive Issuances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time after the Issuance Date the Company shall issue or sell shares of Common Stock
or Convertible Securities (other than (i)&nbsp;securities issued or issuable in Exempt Issuances or (ii)
shares of Common Stock issued as a result of a dividend or other distribution on the Common Stock
payable in Common Stock or (iii)&nbsp;a subdivision of outstanding shares of Common Stock), without
consideration or for a consideration per share less than $0.01, the Exercise Price shall be reduced
to a price (calculated to the nearest cent) (i)&nbsp;determined in accordance with the following
formula:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Exercise Price = <U>P1 Q1 &#043; P2 Q2</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 23%; margin-top: 1pt">Q1 &#043; Q2
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;where:
</DIV>

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="94%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">P1 =
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Applicable Exercise Price in effect
immediately prior to such new issue or sale.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q1 =
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Number of shares of Common Stock outstanding
plus the number of shares of Common Stock issuable upon conversion or
exercise of Convertible Securities outstanding immediately prior to
such new issue or sale.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">P2 =
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">100% of the weighted average price per share
of Common Stock received or deemed by the Company upon such new issue
or sale.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Q2 =
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Number of shares of Common Stock issued or
sold, or deemed to have been issued, in the subject transaction.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this Section&nbsp;4.3, upon the sale or issuance of Convertible Securities, the
maximum number of shares of Common Stock issuable upon the exercise, conversion or exchange of such
Convertible Securities (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) shall be deemed to be
issued as of the time of such issue or sale and the consideration deemed received for such shares
of Common Stock shall be the consideration actually received by the Company for the issue of such
Convertible Securities plus the minimum additional consideration to be received by the Company upon
the full exercise, conversion or exchange of such Convertible Securities. Insofar as any
consideration received, or to be received, by the Company consists of property other than cash,
such consideration shall be computed at the fair value thereof at the time of such issue or sale,
as determined in good faith by the Board.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.4 Other Provisions Applicable to Adjustments under this Section</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following provisions shall be applicable to the making of adjustments of the number of
shares of Common Stock for which this Warrant is exercisable and the current Exercise Price
provided for in this Section&nbsp;4:
</DIV>





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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<B>When Adjustments to be Made. </B>The adjustments required by this Section&nbsp;4 shall be made
whenever and as often as any specified event requiring an adjustment shall occur. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the close of business on
the date of its occurrence.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<B>Fractional Interests. </B>In computing adjustments under this Section&nbsp;4, fractional
interests in Common Stock shall be taken into account to the nearest 1/10th of a share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)<B>&nbsp;When Adjustment not Required. </B>If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or distribution or
subscription or purchase rights and shall, thereafter and before the distribution to the holders
thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be rescinded and annulled.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.5 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or
merge with or into another Person (where the Company is not the survivor or where there is a change
in or distribution with respect to the Common Stock of the Company), or sell, convey, transfer or
otherwise dispose of all or substantially all its property, assets or business to another Person,
or effectuate a transaction or series of related transactions in which more than 50% of the voting
power of the Company is disposed of (each, a &#147;<B>Fundamental Corporate Change</B>&#148;) and, pursuant to the
terms of such Fundamental Corporate Change, shares of common stock of the successor or acquiring
Company, or any cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring Company (&#147;<B>Other Property</B>&#148;), are to be received by or
distributed to the holders of Common Stock, then the Holder shall have the right thereafter to
receive, upon exercise of the Warrant, such number of shares of common stock of the successor or
acquiring Company or of the Company, if it is the surviving Company, and Other Property as is
receivable upon or as a result of such Fundamental Corporate Change by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental
Corporate Change. In case of any such Fundamental Corporate Change, this Warrant shall expire and
be of no further force and effect on the closing date of such Fundamental Corporate Change and, in
lieu of any other rights of the Holder hereunder, the Holder shall have the right to receive, with
within five Business Days of the closing of such Fundamental Corporate Change, cash in an amount
equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date
of such Fundamental Corporate Change. In the event the Company and the Holder are unable to agree
on the Black Scholes Value, the parties shall submit the matter to a mutually agreeable accounting
firm of regional or national stature for the purpose of making a binding determination of the Black
Scholes Value.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.6 Other Action Affecting Common Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In case at any time or from time to time the Company shall take any action in respect of its
Common Stock, other than any action described in this Section&nbsp;4, or any other event occurs, which
would have a materially adverse effect upon the rights of the Holder, the number of shares of
Common Stock and/or the purchase price thereof shall be adjusted in such manner as may be equitable
in the circumstances, as determined in good faith by the Board of Directors of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.7 Nasdaq Limitation; Par Value Limitation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(</B>a) Notwithstanding any other provision in Sections&nbsp;4.3 or 4.6 to the contrary, if a
reduction in the Exercise Price pursuant to Sections&nbsp;4.3 or 4.6 would require the Company to obtain
stockholder approval of the transactions contemplated by the Purchase Agreement pursuant to Nasdaq
Rule&nbsp;5635 and such stockholder approval has not been obtained, (i)&nbsp;the Exercise Price shall be
reduced under Section&nbsp;4.3, or may be reduced under Section&nbsp;4.6, to the maximum extent that would
not require stockholder approval under such Rule, and (ii)&nbsp;the Company shall under Section&nbsp;4.3, or
may under Section&nbsp;4.6, use its commercially reasonable efforts to obtain such stockholder approval
as soon as reasonably practicable, including by calling a special meeting of stockholders to vote
on such Exercise Price adjustment. This provision shall not restrict the number of shares of
Common Stock which a Warrantholder may receive or beneficially own in order to determine the amount
of securities or other consideration that such Holder may receive in the event of a Fundamental
Corporate Change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding anything herein to the contrary, the Company agrees not to enter into
any transaction which, by reason of any adjustment hereunder, would cause the Exercise Price to be
less than the par value per share of Common Stock<B>.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Notwithstanding anything herein to the contrary, the Company agrees not to adjust the
number of its shares of Common Stock that may be issued to the Holder of the Warrant as a result of
any change to the Warrant pursuant to this Section&nbsp;4 in any way that would violate Nasdaq Rules.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5. NOTICES TO THE HOLDER</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.1 Notice of Adjustments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever the number of shares of Common Stock for which this Warrant is exercisable, or
whenever the price at which a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section&nbsp;4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of Directors of the Company
determined the fair value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to in Section&nbsp;4.2),
specifying the number of shares of Common Stock for which this Warrant is exercisable and (if such
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">adjustment was made pursuant to Section&nbsp;4.2 or 4.5) describing the number and kind of any other shares of stock or Other Property for which this Warrant is
exercisable, and any change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed copy of such certificate to be
delivered to the Holder in accordance with Section&nbsp;14.2. The Company shall keep, along with the
transfer register maintained in accordance with Section&nbsp;3.4, copies of all such certificates and
cause the same to be available for inspection at said office during normal business hours by the
Holder or any prospective purchaser of a Warrant designated by the Holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.2 Notice of Corporate Action</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;the Company shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another Company; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">then, in any one or more of such cases, the Company shall give to Holder (i)&nbsp;at least 10&nbsp;days&#146;
prior written notice of the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up, and (ii)&nbsp;in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10
days&#146; prior written notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause also shall specify (i)&nbsp;the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and the amount and character
thereof, and (ii)&nbsp;the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other property deliverable upon
such reorganization, reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if
addressed to the Holder at the last address of the Holder appearing on the books of the Company and
delivered in accordance with Section&nbsp;14.2.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6. NO IMPAIRMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holder against impairment. Without limiting
the generality of the foregoing, the Company will (a)&nbsp;not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon
such exercise immediately prior to such increase in par value, (b)&nbsp;take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and (c)&nbsp;use its best
efforts to obtain all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the request of the Holder, the Company will at any time during the period this Warrant is
outstanding acknowledge in writing, in form satisfactory to the Holder, the continuing validity of
this Warrant and the obligations of the Company hereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7. RESERVATION AND AUTHORIZATION OF COMMON STOCK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From and after the Issuance Date, the Company shall at all times reserve and keep available
for issuance upon the exercise of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable and not subject to preemptive rights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before taking any action which would cause an adjustment reducing the then-current Exercise
Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the
Warrants, the Company shall take any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Exercise Price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before taking any action which would result in an adjustment in the number of shares of Common
Stock for which this Warrant is exercisable or in the then-current Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of all dividends or other distributions by the Company to the holders of its
Common Stock with respect to which any
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provision of Section&nbsp;4 refers to the taking of record of such holders, the Company will in each case take such a record and will take such
record as of the close of business on a Business Day. The Company will not at any time, except
upon dissolution, liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9. RESTRICTIONS ON TRANSFERABILITY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Warrants and the Warrant Shares shall not be transferred, hypothecated or assigned before
satisfaction of the conditions specified in the legend affixed to the first page of this Warrant,
which conditions are intended, in part, to ensure compliance with the provisions of the Securities
Act with respect to the Transfer of any Warrant or any Warrant Shares. The Holder, by acceptance
of this Warrant, agrees to be bound by the provisions of this Section&nbsp;9.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10. LIMITATIONS ON EXERCISE.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary contained herein, unless the shareholder approval
referred to in Section&nbsp;2.6 includes approval under Nasdaq Rule&nbsp;5635(b), the number of Warrant
Shares that may be acquired by the Warrantholder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such
Warrantholder and its Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Warrantholder&#146;s for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), does not exceed 19.9% of the total number of
issued and outstanding shares of Common Stock (including for such purpose the shares of Common
Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. This provision shall not restrict the number of shares of Common Stock which a
Warrantholder may receive or beneficially own in order to determine the amount of securities or
other consideration that such Holder may receive in the event of a Fundamental Corporate Change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11. LOSS OR MUTILATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon receipt by the Company from the Holder of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity
reasonably satisfactory to it (it being understood that the written agreement of the Holder shall
be sufficient indemnity), and in case of mutilation upon surrender and cancellation hereof, the
Company will execute and deliver in lieu hereof a new Warrant of like tenor to the Holder;
<I>provided, </I>in the case of mutilation no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12. OFFICE OF THE COMPANY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As long as any of the Warrants remain outstanding, the Company shall maintain an office or
agency (which may be the principal
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">executive offices of the Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as
provided in this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13. LIMITATION OF LIABILITY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No provision hereof, in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of the Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or by creditors of
the Company. Nothing in the foregoing shall be construed in any manner to limit or deny the
liability of a Holder in any other capacity, including, without limitation, as a director of the
Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14. MISCELLANEOUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.1 Nonwaiver</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No course of dealing or any delay or failure to exercise any right hereunder on the part of
the Holder shall operate as a waiver of such right or otherwise prejudice the Holder&#146;s rights,
powers or remedies. No waiver by the Holder of any right hereunder on any one occasion shall
operate as a waiver of such right on any other occasion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.2 Notice Generally</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as may be otherwise provided herein, any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a)&nbsp;the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified in this Section prior to
6:30 p.m. eastern time on a Business Day, (b)&nbsp;the next Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Business Day or later than 6:30 p.m. eastern time on any
Business Day, (c)&nbsp;the Business Day following the date of transmission, if sent by a nationally
recognized overnight courier service, or (d)&nbsp;upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall be the same as
provided in the Securities Purchase Agreement; or such other address as may be designated in
writing hereafter, in the same manner, by such addressee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.3 Remedies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Holder in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights under Section&nbsp;2 of this
Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of Section&nbsp;2 of this Warrant and hereby
agrees to waive the defense in any action for specific performance that a remedy at law would be
adequate.
</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.4 Successors and Assigns</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of Sections&nbsp;3.1 and 9, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company and the successors
and assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and, with respect to Section&nbsp;9 hereof, the holders of
Warrant Shares, and shall be enforceable by any such holder or the holder of Warrant Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.5 Amendment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant may be modified or amended or the provisions hereof waived with the written
consent of the Company and the Holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.6 Severability</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall only be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.7 Headings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The headings used in this Warrant are for the convenience of reference only and shall not, for
any purpose, be deemed a part of this Warrant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.8 Governing Law</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant shall be governed by the laws of the State of Delaware, without regard to the
provisions thereof relating to conflicts of law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>14.9 Disputes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the securities or other property deliverable upon exercise of this Warrant, the
Company shall promptly issue and deliver to the Holder the securities or other properties that are
not in dispute.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">
&#091;Signature appears on following page.&#093;
</DIV>






<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="FONT-variant: SMALL-CAPS">In Witness Whereof</FONT>, the Company has caused this Warrant to be duly executed by the
undersigned, thereunto duly authorized, as of the date written below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dated: December&nbsp;29, 2009
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><FONT style="FONT-variant: SMALL-CAPS">Energy Focus, Inc.</FONT><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Joseph G. Kaveski
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Joseph G. Kaveski&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
Quercus Common Stock Purchase Warrant
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT A</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SUBSCRIPTION FORM</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&#091;To be executed only upon exercise of Warrant&#093;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the
purchase of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
shares of Common Stock of Energy Focus, Inc. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><br><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">whose address is
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><br><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares
of Common Stock issuable hereunder be delivered to the undersigned.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Name of Registered Owner)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Signature of Registered Owner)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Street Address)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(City) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (State) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Zip Code)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Notice:</B> The signature on this subscription must
correspond with the name as written upon the face
of the within Warrant in every particular,
without alteration or enlargement or any change
whatsoever.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>






<P align="center" style="font-size: 10pt"><!-- Folio -->A-1<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT B</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ASSIGNMENT FORM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="FONT-variant: SMALL-CAPS">For Value Received </FONT>the undersigned registered owner of this Warrant hereby sells,
assigns and transfers unto the Assignee named below all of the rights of the undersigned under this
Warrant, with respect to the number of shares of Common Stock set forth below:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">No. of Shares of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Name and Address of Assignee</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Common Stock</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and does hereby irrevocably constitute and appoint
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><br><DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">attorney-in-fact to register such transfer on the books of Energy Focus, Inc. maintained for the
purpose, with full power of substitution in the premises.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Name of Registered Owner)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Signature of Registered Owner)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Notice:</B> The signature on this assignment must
correspond with the name as written upon the face
of the within Warrant in every particular,
without alteration or enlargement or any change
whatsoever.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->B-1<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>3
<FILENAME>l40087exv5w1.htm
<DESCRIPTION>EX-5.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv5w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;5.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Cowden &#038; Humphrey Co. LPA<BR>
4600 Euclid Avenue<BR>
Cleveland, Ohio 44103-3758
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">June&nbsp;29, 2010
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Energy Focus, Inc.<BR>
32000 Aurora Road<BR>
Solon, Ohio 44139

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have acted as counsel to Energy Focus, Inc., a Delaware corporation (the &#147;Company&#148;), in
connection with the preparation and filing of its registration statement on Form S-3 (the
&#147;Registration Statement&#148;) under the Securities Act of 1933, as amended, the Securities Act,
relating to the registration of 2,654,957 shares of Common Stock, par value of $0.0001 per share,
of the Company. All of the shares of Common Stock are to be offered and sold by the selling
shareholders named in the prospectus which is a part of the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We, as counsel to the Company, have examined such corporate records, certificates, and other
documents, and such questions of law, as we have considered necessary or appropriate for the
purposes of this opinion. We have relied as to certain matters on information obtained from public
officials, officers of the Company, and other sources believed by us to be responsible. Based upon
the foregoing, we are of the opinion that the shares of Common Stock to be offered and sold by the
Selling Shareholders to the extent currently outstanding, have been duly authorized and legally
issued and are fully paid and non-assessable, and to the extent issuable upon exercise of certain
warrants held by the Selling Shareholders, when issued in accordance with the exercise provisions
of the such warrants, will be duly authorized and legally issued and fully paid and non-assessable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing opinion is limited to the Federal laws of the United States and the General
Corporation Law of the State of Delaware. We are expressing no opinion as to the effect of the
laws of any other jurisdiction.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 0px solid #000000" align="left">/s/ Cowden &#038; Humphrey Co. LPA
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><br>Cowden &#038; Humphrey Co. LPA&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>4
<FILENAME>l40087exv10w8.htm
<DESCRIPTION>EX-10.8
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w8</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.8</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>BONDING SUPPORT AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS BONDING SUPPORT AGREEMENT (this &#147;Agreement&#148;) is made as of June&nbsp;21, 2010, with an
effective date of December&nbsp;29, 2009 by and between Energy Focus, Inc., a Delaware corporation (the
&#147;Company&#148;), and The Quercus Trust, a trust formed under the laws of the State of California
(&#147;Investor&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Recitals</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Company is in the process of acquiring or has acquired all of the member interests of
Stones River Companies, LLC, a Tennessee limited liability company (&#147;SRC&#148;). SRC is in the turnkey
lighting retrofit business. In the regular course of its business, SRC must routinely provide
performance bonds to secure the payment and performance of its obligations on its projects. As
part of the acquisition of the member interests of SRC, the Company must provide extended surety
capacity (the &#147;Bond&#148;) by The Hanover Insurance Company through its agent, the Oswald Companies
(collectively, the &#147;Bonding Company&#148;), of $5,000,000.00 single/$10,000,000.00 aggregate coverage,
to secure the obligations of SRC on its projects. The Company has requested Investor&#146;s assistance
in supporting the Bond and Investor is willing to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;As collateral for the Bond, Investor is willing to provide an irrevocable,
twenty-four-month, cash collateral deposit (the &#147;Deposit&#148;) or financial institution letter of
credit (the &#147;Letter of Credit&#148;) in the amount of $300,000.00 on terms reasonably acceptable to (i)
the Bonding Company, (ii)&nbsp;the Company, and (iii)&nbsp;Investor (collectively, the &#147;Relevant Parties&#148;).
In order to induce Investor to provide the Deposit or the Letter of Credit, the Company is willing
(i)&nbsp;to issue to Investor or its designee (the &#147;Recipient&#148;) 150,000 five-year warrants exercisable
at $0.01 per share to permit the Recipient to purchase 150,000 shares of the Company&#146;s Common
Stock, and (ii)&nbsp;to provide to Investor the other consideration and covenants set forth below. The
Company&#146;s shares of Common Stock are listed for trading on the Nasdaq Global Market.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In consideration of the mutual promises and covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1. <B>Terms of the Transaction. </B>(a)&nbsp;As collateral for the issuance of the Bond by the
Bonding Company, Investor has provided an irrevocable, twenty-four-month Deposit in the minimum
amount of $300,000.00 on terms reasonably acceptable to the various parties to the Bond agreements
(the &#147;Relevant Parties&#148;). The Bonding Company shall hold the Deposit in a segregated account, in
the name of the Investor, and earmarked for bond support for the Company. In the alternative, the
Investor may provide an irrevocable, twenty-four-month Letter of Credit in favor of the Bonding
Company, in the same amount, on the Bonding Company&#146;s form, and at a financial institution
reasonably acceptable to the Relevant Parties to serve as collateral for the Bond.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;As consideration for the provision of the Deposit or the Letter of Credit, the Company
shall issue to the Recipient a five-year Common Stock Purchase Warrant (the &#147;Warrant&#148;) covering
warrants to purchase 150,000 shares of its Common Stock at $0.01 per share pursuant to a Warrant
Acquisition Agreement of even date. The Warrant is not exercisable unless and until approved by
the Company&#146;s shareholders at its annual meeting in 2010 or at a special shareholder meeting in
2010 called for that purpose. If shareholders do not approve the Warrant in 2010 at a special or
the annual meeting, the Warrant shall terminate. If the Company replaces and releases, or simply
releases, the Deposit or the Letter of Credit within six (6)&nbsp;months of the date of this Agreement,
the number of warrants covered by the Warrant shall reduce to a number of warrants equal to the
product of (i)&nbsp;the number of full months elapsed since the date of this Agreement times (ii)
12,500.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall pay Investor interest on the outstanding principal amount of the Deposit
or the face amount of the Letter of Credit at the simple interest rate of ten percent (10.0%) per
year quarterly in arrears, beginning on the first day of the calendar quarter following the date of
this Agreement, and at maturity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;If Investor has provided a Letter of Credit, as further consideration for the provision of
the Letter of Credit, the Company agrees to promptly reimburse Investor for any monies that
Investor is required to pay, and pays, to the Letter of Credit financial institution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;If Investor has provided a Deposit, as further consideration for the provision of the
Deposit, the Company agrees to promptly reimburse Investor for any monies that Investor is required
to pay, and pays, to the Bonding Company as draws on the Deposit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;The Company shall promptly reimburse Investor for the payment by Investor of any
reasonable letter of credit fee that the Letter of Credit financial institution may charge for
issuing the Letter of Credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;The obligations of the Company under this Agreement shall be secured by the collateral
covered by a Stock Pledge Agreement between the Company and Investor of even date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;Upon any dissolution, winding up, or liquidation of the Company in a bankruptcy,
insolvency, or receivership proceeding, the Company shall not pay, and the Investor shall not be
entitled to receive, any of the principal of and interest on the Deposit unless and until the
Senior Indebtedness shall have been paid or discharged (provided that the foregoing shall not be
required to prohibit Investor from taking action to enforce its rights prior to the liquidation of
the Company or initiation of bankruptcy proceedings, nor to enforce its securities interest under
the Stock Pledge Agreement at any time). For purposes of this Section&nbsp;1(h), &#147;Senior Indebtedness&#148;
shall mean the principal of and unpaid accrued interest on (x)&nbsp;all indebtedness of the Company and
its wholly-owned, British subsidiary, Crescent Lighting, Ltd. (&#147; Crescent&#148;) to banks, insurance
companies, or other financial institutions regularly engaged in the business of lending money,
which is money borrowed by the Company or Crescent, whether or not secured, and (y)&nbsp;any such
indebtedness or any debentures, notes, or other evidence of indebtedness issued
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in exchange for such Senior Indebtedness or any indebtedness arising from the satisfaction of such
Senior Indebtedness by a guarantor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;If a &#147;Liquidity Event&#148; occurs before the full return of the principal amount of the
Deposit, or the expiration of the Letter of Credit, at maturity twenty-four (24)&nbsp;months from the
date of this Agreement, as may be extended according to the terms of this Agreement, the Company
shall pay Investor upon the closing of the Liquidity Event an interest premium amount equal to one
hundred percent (100%) of the interest on the Deposit or the Letter of Credit then accrued and
unpaid under Section 1(c) of this Agreement. As used in this Section&nbsp;1(i), the term &#147;Liquidity
Event&#148; means (x)&nbsp;the Company shall have merged into or consolidated with another corporation, or
merged another corporation into the Company, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is represented by shares held by former
shareholders of the Company prior to that merger or consolidation, or (y)&nbsp;the Company shall sell
substantially all of its assets, with its assets for this purpose excluding its Fiberstars and
United States Commercial units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;The Company shall have the right to replace and release, or simply release, the Deposit or
the Letter of Credit to Investor at any time prior to maturity twenty-four (24)&nbsp;months from the
date of this Agreement, as may be extended according to the terms of this Agreement, following at
least thirty (30)&nbsp;days prior written notice to Investor or with the written consent of Investor,
and upon the Company&#146;s payment to Investor of twelve (12)&nbsp;months interest at the rate set forth in
Section&nbsp;1(c).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;The Company and Investor may extend the term of the Deposit or of the Letter of Credit for
an additional twelve (12)&nbsp;months by written agreement no later than eleven (11)&nbsp;months from the
date of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2. <B>Company&#146;s Representations and Warranties. </B>The Company makes the following
representations and warranties:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;All corporate action on the part of the Company and its officers, directors and
shareholders necessary for the execution, delivery and performance of this Agreement and the
Warrant Acquisition Agreement and the authorization, issuance and delivery of the Warrant being
issued pursuant to this Agreement and the Warrant Acquisition Agreement has been taken as of the
date hereof; provided, however, that Investor shall not have the right to exercise the warrant
unless and until the shareholders of the Company have approved it in 2010 at their regular annual
meeting or a special meeting held for that purpose.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company is not in violation of any applicable statute, rule or regulation adopted,
enacted or promulgated by any government or governmental authority the consequence of which would
have an adverse effect on consummation of the transactions contemplated by this Agreement in
accordance with its terms or a material adverse effect on the Company&#146;s business or financial
condition.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Neither execution and delivery of this Agreement by the Company nor consummation of the
transactions contemplated hereby will (i)&nbsp;violate or conflict with the articles of incorporation or
by-laws of the Company, (ii)&nbsp;violate any provisions of law applicable to the Company, or (iii)
violate, conflict with or result in a breach of or default under any contract, instrument or other
agreement to which the Company is a party or any governmental or judicial order or decree
applicable to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3. <B>Investor&#146;s Representations and Warranties</B>. Investor makes the following
representations and warranties:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Investor is a resident of the State of California.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Investor has taken all action that is necessary on its part for the execution, delivery
and performance of this Agreement and the Warrant Acquisition Agreement as of the date hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Investor is not in violation of any applicable statute, rule or regulation adopted,
enacted or promulgated by any government or governmental authority the consequence of which would
have an adverse effect on consummation of the transactions contemplated by this Agreement in
accordance with its terms or a material adverse effect on Investor&#146;s financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Neither execution and delivery of this Agreement by Investor nor consummation of the
transactions contemplated hereby will (i)&nbsp;violate any provisions of law applicable to Investor, or
(ii)&nbsp;violate, conflict with or result in a breach of or default under any contract, instrument or
other agreement to which Investor is a party or any governmental or judicial order or decree
applicable to Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;(i)&nbsp;All documents, records and books of the Company requested by Investor have been made
available or delivered to Investor and all questions of Investor relating to this transaction have
been answered by the Company; (ii)&nbsp;Investor understands that the Warrant and the shares of Common
Stock covered by it (the &#147;Shares&#148;) are a speculative investment which involve a high degree of risk
of loss by Investor of its investment therein; (iii)&nbsp;it has been offered the opportunity to ask
questions of appropriate officers of the Company with respect to its business and affairs, and such
officers have answered all such questions to its satisfaction; (iv)&nbsp;its purchase of the Warrant is
being made for Investor&#146;s own account for investment purposes and with no intention of immediate
distribution; (v)&nbsp;Investor has the requisite knowledge and experience in financial and business
matters to enable it to evaluate the merits and risks of an investment in the Warrant; (vi)&nbsp;it is
aware that the Warrant and each of the Shares may be a &#147;restricted security&#148; within the meaning of
such term under Rule&nbsp;144 of the Rules of the SEC (&#147;Rule&nbsp;144&#148;), that the Warrant and the Shares may
be subject to the resale restrictions of Rule&nbsp;144 (unless another exemption is available under the
Securities Act of 1933<I>, </I>as amended (the &#147;Securities Act&#148;)), and that, if Investor at any time is
deemed to be an affiliate of the Company, the Warrant and the Shares may be subject to the
additional resale restrictions under Rule&nbsp;144 applicable to affiliates; (vii)&nbsp;it is aware that
until the Warrant or
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Shares may be registered under the Securities Act, it may be unable to
liquidate its investment in them despite a need to do so; and (viii)&nbsp;it is aware that the Warrant and the Shares may bear a legend conditioning the
transfer of them upon the receipt of a satisfactory opinion to the effect that any proposed
transfer of them is exempt from registration under the Securities Act, or the like.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Investor is an accredited investor under Rule 501(a) of Regulation&nbsp;D under the
Securities Act of 1933 (the &#147;Act&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4. <B>Brokers Commissions</B>. Investor will indemnify and hold harmless the Company from
the commission, fee or claim of any person, firm or corporation employed or retained or claiming to
be employed or retained by Investor to bring about, or to represent it in, the transaction
contemplated hereby. The Company will indemnify and hold harmless Investor from the commission,
fee or claim of any person, firm or corporation employed or retained by the Company to bring about,
or to represent it in, the transaction contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5. <B>Amendment and Modification. </B>The parties hereto may not amend, modify or supplement
this Agreement except by a writing signed by both of the parties hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6. <B>Binding Effect, No Assignment. </B>This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns. Neither
party shall be entitled to assign its rights hereunder except upon the other party&#146;s prior written
consent; provided, however, (a)&nbsp;that Company may assign this Agreement in connection with a merger
or consolidation involving Company, or a sale of substantially all of Company&#146;s assets, so long as
the purchaser or assignee assumes Company&#146;s obligations under this Agreement, and (b)&nbsp;that Investor
may assign this Agreement to a Recipient and in connection with a permitted sale or transfer of the
Warrant and the Warrant Acquisition Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7. <B>Entire Agreement</B>. This instrument contains the entire agreement of the parties
hereto with respect to the transactions contemplated herein, and supersedes all prior
understandings and agreements of the parties with respect to the subject matter hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8. <B>Headings</B>. The descriptive headings in this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9. <B>Execution in Counterparts. </B>This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10. <B>Governing Law. </B>This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware applicable to contracts made and to be performed therein,
without regard to the conflicts of law principles thereof. Each of the parties hereto consents to
the jurisdiction of the federal and state courts located in the State of Ohio for any dispute
hereunder.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">ENERGY FOCUS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Joseph G. Kaveski
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Joseph G. Kaveski&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">INVESTOR:<BR>
<BR>
THE QUERCUS TRUST<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ David Gelbaum
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">David Gelbaum&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Co-Trustee&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Bonding Support Agreement
</DIV>



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<DESCRIPTION>EX-10.9
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.9</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="FONT-variant: SMALL-CAPS"><B>WARRANT ACQUISITION AGREEMENT</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant Acquisition Agreement (this &#147;<B>Agreement</B>&#148;) is made as of June&nbsp;21, 2010, with an
effective date of December&nbsp;29, 2009, by and between Energy Focus, Inc., a Delaware corporation (the
&#147;<B>Company</B>&#148;), and The Quercus Trust (the &#147;<B>Investor</B>&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RECITALS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section&nbsp;4(2) of the Securities Act (as defined below) and Rule&nbsp;506 promulgated thereunder, the
Company desires to issue to the Investor and the Investor desires to acquire from the Company,
certain warrants of the Company, as more fully described in this Agreement; this Agreement is
entered into pursuant to that certain Bonding Support Agreement of even date between the Company
and the Investor (the &#147;Bonding Support Agreement&#148;); capitalized terms used herein without
definition are used with the definitions assigned thereto in that Bonding Support Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Investor agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 1</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>DEFINITIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.1. <U><B>Definitions</B></U>. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in
this Section&nbsp;1.1:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Action&#148; </B>means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened in writing against
or affecting the Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Affiliate&#148; </B>means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule&nbsp;144.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Board&#148; </B>means the Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Business Day&#148; </B>means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the City of New York are authorized or required
by law or other governmental action to close.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Claim&#148; </B>has the meaning set forth in Section&nbsp;4.6(c).
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Closing&#148; </B>means the closing of the acquisition and issuance of a Warrant pursuant to Article
2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Closing Date&#148; </B>means the Business Day immediately following the date on which all of the
conditions set forth in Sections&nbsp;6.1 and 6.2 hereof are satisfied, or such other date as the
parties may agree.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Commission&#148; </B>means the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Common Stock&#148; </B>means the common stock of the Company, par value $0.001 per share, and any
securities into which such common stock may hereafter be reclassified.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Common Stock Equivalents&#148; </B>means any securities of the Company or any Subsidiary which entitle
the holder thereof to acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Company Counsel&#148; </B>means Cowden &#038; Humphrey Co. LPA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Company Deliverables&#148; </B>has the meaning set forth in Section&nbsp;2.4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Effective Date&#148; </B>means the date that any Registration Statement filed pursuant to Article&nbsp;4 is
first declared effective by the Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Effectiveness Period&#148; </B>has the meaning set forth in Section&nbsp;4.1(b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Environmental Law&#148; </B>has the meaning set forth in Section&nbsp;3.1(x).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;ERISA&#148; </B>means the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;ERISA Affiliate&#148; </B>means any trade or business, whether or not incorporated, that together with
the Company would be deemed to be a single employer for purposes of Section&nbsp;4001 of ERISA or
Sections&nbsp;414(b), (c), (m), (n)&nbsp;or (o)&nbsp;of the Internal Revenue Code of 1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Evaluation Date&#148; </B>has the meaning set forth in Section&nbsp;3.1(r).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Exchange Act&#148; </B>means the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Exempt Issuance&#148; </B>means the issuance by the Company (a)&nbsp;to employees, officers, directors of,
and consultants to, the Company of shares of Common Stock or options for the purchase of shares of
Common Stock pursuant to stock option or long-term incentive plans approved by the Board, (b)&nbsp;of
shares of Common Stock upon the exercise of Warrants issued hereunder, (c)&nbsp;of shares of Common
Stock upon conversion of
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shares of Series&nbsp;A Preferred Stock, (d)&nbsp;of shares of Common Stock upon
exercise of Prior Warrants or conversion of Prior Convertible Securities, (e)&nbsp;of securities issued pursuant to acquisitions, licensing
agreements, or other strategic transactions, (f)&nbsp;of securities issued in connection with equipment
leases, real property leases, loans, credit lines, guaranties or similar transactions approved by
the Board, (g)&nbsp;of securities issued in connection with join ventures or similar strategic
relationships approved by the Board, (h)&nbsp;of securities in a merger, or (i)&nbsp;of securities in a
public offering registered under the Securities Act; provided that in the case of securities issued
pursuant clauses (e), (f), (g)&nbsp;and (h), the purpose of such issuance may not be primarily to obtain
cash financing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Filing Date&#148; </B>means the date that is six months after the Closing Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Financial Statements&#148; </B>has the meaning set forth in Section&nbsp;3.1(h).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;GAAP&#148; </B>means generally accepted accounting principles as in effect as of the date hereof in
the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Governmental Authority&#148; </B>has the meaning set forth in Section&nbsp;3.1(e).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Hazardous Substance&#148; </B>has the meaning set forth in Section&nbsp;3.1(x).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Indemnified Party&#148; </B>has the meaning set forth in Section&nbsp;4.6(c).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Indemnified Person&#148; </B>has the meaning set forth in Section&nbsp;4.6(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Indemnifying Party&#148; </B>has the meaning set forth in Section&nbsp;4.6(c).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Intellectual Property Rights&#148; </B>has the meaning set forth in Section&nbsp;3.1(o).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Lien&#148; </B>means any lien, charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Material Adverse Effect&#148; </B>means any of (i)&nbsp;a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii)&nbsp;a material and adverse effect on the
results of operations, assets, prospects, business or condition (financial or otherwise) of the
Company and the Subsidiary, taken as a whole, or (iii)&nbsp;a material impairment of the Company&#146;s
ability to perform on a timely basis its obligations under any Transaction Document.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;OFAC&#148; </B>has the meaning set forth in Section&nbsp;3.1(aa).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Person&#148; </B>means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Post-Effective Amendment&#148; </B>means a post-effective amendment to the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Post-Effective Amendment Filing Deadline&#148; </B>means the seventh Business Day after the
Registration Statement ceases to be effective
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">pursuant to applicable securities laws due to the passage of time or the occurrence of an event requiring the Company to file a Post-Effective
Amendment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Proceeding&#148; </B>means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Prospectus&#148; </B>has the meaning set forth in Section&nbsp;4.3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Registrable Securities&#148; </B>means the Warrant Shares issuable to the Investor; provided, however,
that the Investor shall not be required to exercise the Warrant in order to have the Shares covered
by it included in any Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Registration Period&#148; </B>means the period commencing on the date hereof and ending on the date on
which all of the Registrable Securities may be sold to the public without registration and without
volume or manner restrictions under the Securities Act in reliance on Rule&nbsp;144.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Registration Statement&#148; </B>means a registration statement filed on the appropriate Form with,
and declared effective by, the Commission under the Securities Act and covering the resale by the
Investor of the Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Requested Information&#148; </B>has the meaning set forth in Section&nbsp;4.3(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Required Effectiveness Date&#148; </B>means the earlier of (i)&nbsp;the date that is eight months after the
Closing Date without SEC review or eleven months in the event of an SEC review process, or, in the
case of the registration of Cut Back Shares (as defined in Section&nbsp;4.1(a)), eleven months after the
Restriction Termination Date or (ii)&nbsp;five Business Days after receipt by the Company from the
Commission of notice of &#147;no review&#148; of the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Rule&nbsp;144&#148; </B>means Rule&nbsp;144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;SEC Reports&#148; </B>has the meaning set forth in Section&nbsp;3.1(h).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Securities&#148; </B>means the Warrant and the Warrant Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Securities Act&#148; </B>means the Securities Act of 1933, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Shares&#148; </B>means the shares of Common Stock issuable to the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Subsidiary&#148; </B>means any &#147;significant subsidiary&#148; as defined in Rule&nbsp;1-02(w) of Regulation&nbsp;S X
promulgated by the Commission under the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading Day&#148; </B>means (i)&nbsp;a day on which the Common Stock is traded on a Trading Market, or (ii)
if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)&nbsp;if
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Common Stock is
not then listed or quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set
forth in (i), (ii)&nbsp;and (iii)&nbsp;hereof, then Trading Day shall mean a Business Day.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading Market&#148; </B>means whichever of the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market, or the Nasdaq Over-the-Counter Market on which the Common Stock is
listed or traded on the date in question.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Transaction Documents&#148; </B>means this Agreement, the Warrant and any other documents or
agreements executed in connection with the transactions contemplated hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Warrant&#148; </B>means the Common Stock Purchase Warrant, in the form of <U>Exhibit&nbsp;A</U>, which is
issuable to the Investor at the Closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Warrant Shares&#148; </B>means the shares of Common Stock issuable upon exercise of the Warrants.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 2</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ISSUE AND SALE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.1. <U><B>Issuance of Securities at the Closing</B></U>. Upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with applicable law, the Company
agrees to issue to the Investor, and the Investor agrees to accept from the Company, a Warrant in
the form of <U>Exhibit&nbsp;A</U> to purchase 150,000 shares of Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.2. <U><B>Consideration</B></U>. As consideration for the issuance of the Warrant being
acquired at the Closing, the Investor shall on the Closing Date take all actions required of it.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.3. <U><B>Delivery of Warrant</B></U>. At the Closing, the Company shall take all actions
required of it to (i)&nbsp;issue to the Investor the Warrant and (ii)&nbsp;execute and deliver to the
transfer agent for the Common Stock irrevocable instructions to issue to the Investor the Warrant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.4. <U><B>Additional Closing Deliveries</B></U>. At the Closing, the Company shall deliver
or cause to be delivered to the Investor the following (the &#147;<B>Company Deliverables</B>&#148;):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Irrevocable instructions to the Company&#146;s transfer agent as to the reservation and
issuance of the Warrant Shares; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;A good standing certificate of the Company issued by the Secretary of State of the State
of Delaware dated as of a recent date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.5. <U><B>Representations and Warranties of the Company</B></U>. The Company hereby makes
the following representations and warranties to the Investor:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Subsidiaries</B></U>. The Company has no direct or indirect Subsidiaries other than as
disclosed to Investor.
</DIV>





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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Organization and Qualification</B></U>. Each of the Company and each Subsidiary is duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and each Subsidiary is duly qualified to conduct its respective
business and is in good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, and no proceedings have been instituted in any such jurisdiction revoking, limiting
or curtailing, or seeking to revoke, such power and authority or qualification.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>Authorization; Enforcement</B></U>. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each
of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the Company
and no further corporate action is required by the Company in connection therewith&#091;; provided,
however, that Investor shall not have the right to exercise the Warrant unless and until the
shareholders of the Company have approved this Agreement and the Warrant in 2010 at their regular
annual meeting or a special meeting held for that purpose&#093;. Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors&#146; rights and remedies or by other equitable
principles of general application.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U><B>No Conflicts</B></U>. The execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated thereby do not
and will not (i)&nbsp;conflict with or violate any provision of the Company&#146;s or any Subsidiary&#146;s
certificate or articles of incorporation, bylaws or other organizational or charter documents, or
(ii)&nbsp;conflict with, or constitute a breach or default (or an event that with notice or lapse of
time or both would become a breach or default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, or
result in the imposition of any Lien upon any of the material properties or assets of the Company
or of any Subsidiary pursuant to, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii)&nbsp;result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subsidiary is bound or affected; except in the case
of each of clauses (ii)&nbsp;and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U><B>Filings, Consents and Approvals</B></U>. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority (a &#147;<B>Governmental
Authority</B>&#148;) or other Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents and the consummation of the transactions contemplated thereby,
other than (i)&nbsp;the filing of a Notice of Sale of Securities on Form&nbsp;D with the Commission under
Regulation&nbsp;D of the Securities Act, (ii)&nbsp;filings required under applicable state securities laws,
(iii)&nbsp;the filing with the Commission of one or more Registration Statements in accordance with the
requirements of Article&nbsp;4 of this Agreement, and (iv)&nbsp;the submission to the NASDAQ Stock Market LLC
of a Notification: Listing of Additional Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U><B>Issuance of the Securities</B></U>. The Company has reserved and set aside from its duly
authorized capital stock a sufficient number of shares of Common Stock to satisfy in full the
Company&#146;s obligations to issue the Warrant Shares upon exercise of the Warrants. The Warrant
Shares are duly authorized and, when issued and paid for upon exercise of the Warrants in
accordance with their terms, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens, other than Liens created by the Investor and those imposed by applicable
securities laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U><B>Capitalization</B></U>. The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock and no shares of Preferred Stock, par value $.0001, of which no shares have
been designated Series&nbsp;A Preferred Stock and no shares are undesignated. As of the close of
business on December&nbsp;31, 2009, 21,077,859 shares of Common Stock were issued and outstanding, all
of which are validly issued, fully-paid and non-assessable. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except pursuant to outstanding options
granted to directors, officers, employees, and consultants of the Company, to outstanding warrants
to purchase Common Stock, and to the reservation of shares for sale under the Company&#146;s Stock
Purchase Plan, or as a result of transactions in Securities as contemplated by this Agreement and
the Member Interest Purchase Agreement dated as of December&nbsp;31, 2009 relating to the acquisition of
Stones River Companies, LLC, there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents. The issue and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other than the Investor)
and will not result in a right of any holder of Company securities to adjust the exercise or
conversion price under such securities. No further approval or authorization of any stockholder,
the Board of Directors of the Company or any other Person is required for the issuance and sale of
the Securities. There are no stockholders agreements, voting
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">agreements or other similar
agreements with respect to the Company&#146;s capital stock to which the Company is a party or, to the
knowledge of the Company, between or
among any of the Company&#146;s stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U><B>SEC Reports; Financial Statements</B></U>. The Company has filed all reports required to
be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the twelve months preceding the date hereof (the foregoing materials, being
collectively referred to herein as the &#147;<B>SEC Reports</B>&#148;). As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The financial statements
of the Company (the &#147;<B>Financial Statements</B>&#148;) included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission
with respect thereto as in effect at the time of filing. Such Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis during the periods involved, except
as may be otherwise specified in such Financial Statements or the notes thereto, and fairly present
in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal year-end audit adjustments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U><B>Material Changes</B></U>. Except as set forth in the Financial Statements, (i)&nbsp;there has
been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii)&nbsp;the Company has not incurred any liabilities or
obligations (contingent or otherwise) other than (A)&nbsp;trade payables, accrued expenses and other
liabilities incurred in the ordinary course of business consistent with past practice incurred
since the date of the most recent Financial Statements and (B)&nbsp;liabilities incurred in the ordinary
course of business not required to be reflected in the Financial Statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii)&nbsp;the Company has not altered its
method of accounting or the identity of its auditors, (iv)&nbsp;the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or purchased, redeemed or
made any agreements to purchase or redeem any shares of its capital stock, and (v)&nbsp;the Company has
not issued any equity securities to any officer, director or Affiliate, except pursuant to existing
Company stock option plans or the Company Stock Options. The Company does not have pending before
the Commission any request for confidential treatment of information. The Company maintains and
will continue to maintain a standard system of accounting established and administered in
accordance with GAAP.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <U><B>Litigation and Investigations</B></U>. There is no Action which (i)&nbsp;challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof (in his
capacity as such), is the subject of any pending Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of fiduciary duty, except as
specifically disclosed in the SEC Reports. To the
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">knowledge of the Company, there is not pending
any investigation by the Commission involving the Company or any current or former
director or officer of the Company (in his or her capacity as such). The Commission has not
issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. There are no
outstanding comments by the staff of the Commission on any filing by the Company or any Subsidiary
under the Exchange Act or the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <U><B>Labor Relations</B></U>. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <U><B>Compliance</B></U>. Neither the Company nor any Subsidiary (i)&nbsp;is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii)&nbsp;is in violation of any order of any court, arbitrator or governmental body,
or (iii)&nbsp;is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <U><B>Regulatory Permits</B></U>. The Company and the Subsidiary possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
such permits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <U><B>Title to Assets</B></U>. The Company and the Subsidiary have good and marketable title in
fee simple to all real property owned by them that is material to their respective businesses and
good and marketable title in all personal property owned by them that is material to their
respective businesses, in each case free and clear of all Liens, except for Liens that do not
materially affect the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiary. All real property and
facilities held under lease by the Company and the Subsidiary are held by them under leases of
which the Company and the Subsidiary are in material compliance, except as could not, individually
or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <U><B>Patents and Trademarks</B></U>. The Company and the Subsidiary have, or have valid rights
to use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and which the failure
to so have could, individually or in the
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">aggregate, have or reasonably be expected to result in a
Material Adverse Effect (collectively, the &#147;<B>Intellectual Property
Rights</B>&#148;). No claims or Actions have been made or filed by any Person against the Company to
the effect that Intellectual Property Rights used by the Company or any Subsidiary violate or
infringe upon the rights of such claimant. To the knowledge of the Company, after commercially
reasonable investigation, all of the Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property Rights or by the
Company of the Intellectual Property Rights of any other Person.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <U><B>Insurance</B></U>. The Company and the Subsidiary are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as the Company believes
are prudent and customary in the businesses in which the Company and the Subsidiary are engaged.
The Company has no reason to believe that it will not be able to renew its and the Subsidiary&#146;s
existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business on terms consistent with the market
for the Company&#146;s and such Subsidiaries&#146; respective lines of business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <U><B>Transactions With Affiliates and Employees</B></U>. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director,
trustee or partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <U><B>Sarbanes-Oxley; Internal Accounting Controls</B></U>. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 (including the rules and
regulations of the Commission adopted thereunder) which are applicable to it as of the Closing
Date. The Company&#146;s certifying officers have evaluated the effectiveness of the Company&#146;s
disclosure controls and procedures as of the filing date of the most recently filed periodic report
under the Exchange Act (such date, the &#147;<B>Evaluation Date</B>&#148;). The Company presented in its most
recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of
the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the
Company&#146;s internal controls (as such term is defined in Item 307(b) of Regulation&nbsp;S-K under the
Exchange Act), or to the Company&#146;s knowledge, in other factors that could significantly affect the
Company&#146;s internal controls.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <U><B>Certain Fees</B></U>. No brokerage or finder&#146;s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by this Agreement. The
Investor shall have no obligation with respect to any fees or with respect to any claims (other
than such fees or commissions owed by the Investor pursuant to written agreements executed by the
Investor which fees or commissions shall be the sole responsibility of the
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investor) made by or on
behalf of any Persons for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <U><B>Certain Registration Matters</B></U>. Assuming the accuracy of the Investor&#146;s
representations and warranties set forth in Section&nbsp;3.2(b)-(e), no registration under the
Securities Act is required for the offer and sale of the Securities by the Company to the Investor
under the Transaction Documents.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <U><B>Investment Company</B></U>. The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an &#147;investment company&#148; within the meaning
of the Investment Company Act of 1940, as amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <U><B>No Additional Agreements</B></U>. The Company does not have any agreement or understanding
with the Investor with respect to the transactions contemplated by the Transaction Documents other
than as specified in the Transaction Documents.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <U><B>Full Disclosure</B></U>. The SEC Reports and the Company&#146;s representations and warranties
set forth in this Agreement, taken together, are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under which they were
made, not misleading. Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it nor any other
Person acting on its behalf has provided the Investor or Investor&#146;s agents or counsel with any
information that it believes constitutes or might constitute material, non-public information. The
Company understands and confirms that the Investor will rely on the foregoing representation in
effecting transactions in securities of the Company. The Company acknowledges and agrees that the
Investor does not make or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section&nbsp;2.6 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <U><B>Environmental Matters</B></U>. To the Company&#146;s knowledge: (i)&nbsp;the Company and its
Subsidiary have complied with all applicable Environmental Laws, except for such noncompliance as
could not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect; (ii)&nbsp;after commercially reasonable investigation, the properties currently owned or
operated by Company (including soils, groundwater, surface water, buildings or other structures)
are not contaminated with any Hazardous Substances; (iii)&nbsp;after commercially reasonable
investigation, the properties formerly owned or operated by Company or its Subsidiary were not
contaminated with Hazardous Substances during the period of ownership or operation by Company and
its Subsidiary; (iv)&nbsp;Company and its Subsidiary are not subject to any material liability for any
Hazardous Substance disposal or contamination on any third party property; (v)&nbsp;Company and its
Subsidiary have not received any written notice, demand, letter, claim or request for information
alleging that Company and its Subsidiary may be in violation of or liable under any Environmental
Law; and (vi)&nbsp;Company and its Subsidiary are not subject to any orders, decrees, injunctions or
other arrangements with any Governmental Authority or subject to any indemnity or other agreement
with any third party relating to liability under any Environmental Law or relating to Hazardous
Substances which could, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this Agreement, the term &#147;<B>Environmental Law</B>&#148; means any federal, state, local or
foreign law, regulation, order, decree, permit, authorization, opinion, common law
or agency requirement relating to: (A)&nbsp;the protection, investigation or restoration of the
environment, health and safety, or natural resources; (B)&nbsp;the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance or (C)&nbsp;noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this Agreement, the term &#147;<B>Hazardous Substance</B>&#148; means any substance that is: (i)
listed, classified or regulated pursuant to any Environmental Law; (ii)&nbsp;any petroleum product or
by-product, asbestos-containing material, polychlorinated biphenyls, radioactive materials or
radon; or (iii)&nbsp;any other substance which is the subject of regulatory action by any Governmental
Authority pursuant to any Environmental Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <U><B>Taxes</B></U>. The Company and its Subsidiary have filed all necessary federal, state and
foreign income and franchise tax returns when due (or obtained appropriate extensions for filing)
and have paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been or might be asserted or threatened against it or any Subsidiary which
would have a Material Adverse Effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <U><B>ERISA</B></U>. Neither the Company nor any ERISA Affiliate maintains, contributes to or
has any liability or contingent liability with respect to any employee benefit plan subject to
ERISA.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <U><B>Foreign Assets Control Regulations and Anti-Money Laundering</B></U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U><B>OFAC</B></U>. Neither the issuance of the Warrants and Warrant Shares to the Investor,
nor the use of the respective proceeds thereof, shall cause the Investor to violate the U.S. Bank
Secrecy Act, as amended, and any applicable regulations thereunder or any of the sanctions programs
administered by the U.S. Department of the Treasury&#146;s Office of Foreign Assets Control (&#147;<B>OFAC</B>&#148;) of
the United States Department of Treasury, any regulations promulgated thereunder by OFAC or under
any affiliated or successor governmental or quasi-governmental office, bureau or agency and any
enabling legislation or executive order relating thereto. Without limiting the foregoing, neither
the Company nor the Subsidiary (i)&nbsp;is a person whose property or interests in property are blocked
or subject to blocking pursuant to Section&nbsp;1 of Executive Order
13224 of September&nbsp;23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)&nbsp;engages in any dealings or transactions
prohibited by Section&nbsp;2 of such executive order, or is otherwise associated with any such person in
any manner violative of Section&nbsp;2, or (iii)&nbsp;is a person on the list of Specially Designated
Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC
regulation or executive order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U><B>Patriot Act</B></U>. The Company and the Subsidiary are in compliance, in all material
respects, with the USA PATRIOT Act. No part of the proceeds of the sale of the Warrant Shares
hereunder will be used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <U><B>Acknowledgment Regarding Investor&#146;s Trading Activity</B></U>. Except as expressly set
forth herein, it is understood and acknowledged by the Company that, except to the extent required
by applicable law: (i)&nbsp;the Investor has not been asked by the Company to agree, nor has the
Investor agreed, to desist from purchasing or selling, long and/or short, securities of the
Company, or &#147;derivative&#148; securities based on securities issued by the Company or to hold the
Securities for any specified term; (ii)&nbsp;that past or future open market or other transactions by
the Investor, specifically including, without limitation, short sales or &#147;derivative&#148; transactions,
before or after the closing of this or future private placement transactions, may negatively impact
the market price of the Company&#146;s publicly-traded securities; (iii)&nbsp;that the Investor, and
counter-parties in &#147;derivative&#148; transactions to which the Investor is a party, directly or
indirectly, presently may have a &#147;short&#148; position in the Common Stock; and (iv)&nbsp;that the Investor
shall not be deemed to have any affiliation with or control over any arm&#146;s length counter-party in
any &#147;derivative&#148; transaction. The Company further understands and acknowledges that, to the extent
permitted by applicable law (y)&nbsp;the Investor may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without limitation, during the
periods that the value of the Warrant Shares deliverable with respect to Securities are being
determined, and (z)&nbsp;such hedging activities (if any) could reduce the value of the existing
stockholders&#146; equity interests in the Company at and after the time that the hedging activities are
being conducted. The Company acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction Documents, except to the extent that any such
activities violate the provisions of applicable law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) <U><B>Regulation&nbsp;M Compliance</B></U>. The Company has not, and to its knowledge no one acting
on its behalf has, (i)&nbsp;taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii)&nbsp;sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii)&nbsp;paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) <U><B>Form&nbsp;S-3 Eligibility</B></U>. The Company is eligible to register the resale of the
Warrant Shares for resale by the Investor on Form S-3 promulgated under the Securities Act;
provided, however, that no violation of this Section&nbsp;3.1(dd) shall be deemed to have occurred in
the event that the SEC imposes any restriction on the registration of the Warrant Shares pursuant
to Rule&nbsp;415 as contemplated in Section&nbsp;4.1(a) below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.6. <U><B>Representations and Warranties of the Investor</B></U>. The Investor hereby
represents and warrants to the Company as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Authority</B></U>. This Agreement has been duly executed by the Investor, and when
delivered by the Investor in accordance with terms hereof, will constitute the valid and legally
binding obligation of the Investor, enforceable against Investor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to,
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or affecting generally the enforcement of,
creditors&#146; rights and remedies or by other equitable principles of general application.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Own Account</B></U>. The Investor is acquiring the Securities as principal for
Investor&#146;s own account and not with a view to or for distributing or reselling such Securities
or any part thereof, without prejudice, however, to the Investor&#146;s right at all times to sell or
otherwise dispose of all or any part of such Securities in compliance with applicable federal and
state securities laws. The Investor does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>Investor Status</B></U>. The Investor is an &#147;accredited investor&#148; as defined in Rule
501(a) under the Securities Act. The Investor is not a registered broker-dealer under Section&nbsp;15
of the Exchange Act or associated or affiliated with such a broker-dealer. The Investor has a
principal place of business at the address listed for Investor on the signature pages hereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U><B>Access to Information</B></U>. The Investor acknowledges that the Investor has reviewed
the SEC Reports and has been afforded: (i)&nbsp;the opportunity to ask such questions as the Investor
has deemed necessary of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits and risks of investing in the
Securities; (ii)&nbsp;access to information about the Company and the Subsidiary and their respective
financial condition, results of operations, business, properties, management and prospects
sufficient to enable Investor to evaluate Investor&#146;s investment; and (iii)&nbsp;the opportunity to
obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the
investment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U><B>General Solicitation</B></U>. The Investor is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U><B>Disclosure</B></U>. The Investor acknowledges and agrees that the Company neither makes
nor has made any representations or warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section&nbsp;3.1.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U><B>Regulation&nbsp;M Compliance</B></U>. The Investor has not, and to Investor&#146;s knowledge no one
acting on Investor&#146;s behalf has, (i)&nbsp;taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii)&nbsp;sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii)&nbsp;paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other securities of the Company.
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 3</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>REGISTRATION RIGHTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.1. <U><B>Shelf Registration</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;As promptly as possible, and in any event on or prior to the Filing Date, the Company
shall prepare and file with the Commission a &#147;shelf&#148; Registration Statement
covering the resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule&nbsp;415. If for any reason (including, without limitation, the Commission&#146;s
interpretation of Rule&nbsp;415) the Commission does not permit all of the Registrable Securities to be
included in such Registration Statement, then the Company shall prepare and file with the
Commission one or more separate Registration Statements with respect to any such Registrable
Securities not included with the initial Registration Statements, as soon as allowed under SEC
Regulations and is commercially practicable. The Registration Statement shall be on a Form S-3; in
the event Form S-3 is not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i)&nbsp;register the resale of the Registrable Securities on another
appropriate form in accordance herewith and (ii)&nbsp;attempt to register the Registrable Securities on
Form S-3 as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statements then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared effective by the
Commission. If at any time the SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement is not eligible to be made on a delayed or
continuous basis under the provisions of Rule&nbsp;415 under the 1933 Act or requires the Investor to be
named as an &#147;underwriter&#148;, the Company shall use its commercially reasonable best efforts to
persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary
offering and not an offering &#147;by or on behalf of the issuer&#148; as defined in Rule&nbsp;415 and that the
Investor is not an &#147;underwriter&#148;. The Investor shall have the right to participate or have their
counsel participate in any meetings or discussions with the SEC regarding the SEC&#146;s position and to
comment or have Investor&#146;s counsel comment on any written submission made to the SEC with respect
thereto, and to have such comments relayed to the SEC with the consent of the Company, not to be
unreasonably withheld. No such written submission shall be made to the SEC to which the Investor&#146;s
counsel reasonably objects. In the event that, despite the Company&#146;s commercially reasonable
efforts and compliance with the terms of this Section&nbsp;2(e), the SEC refuses to alter its position,
the Company shall (i)&nbsp;remove from the Registration Statement such portion of the Registrable
Securities (the &#147;<B>Cut Back Shares</B>&#148;) and/or (ii)&nbsp;with the consent of the Investor&#146;s counsel, not to
be unreasonably withheld, agree to such restrictions and limitations on the registration and resale
of the Registrable Securities as the SEC may require to assure the Company&#146;s compliance with the
requirements of Rule&nbsp;415; provided, however, that the Company shall not agree to name the Investor
as an &#147;underwriter&#148; in such Registration Statement without the prior written consent of the
Investor (collectively, the &#147;<B>SEC Restrictions</B>&#148;). No liquidated damages shall accrue on or as to
any Cut Back Shares until such time as the Company is able, using commercially reasonable efforts,
to effect the filing of an additional Registration Statement with respect to the Cut Back Shares in
accordance with any SEC Restrictions (such date, the &#147;<B>Restriction Termination Date</B>&#148;). From and
after the Restriction Termination Date, all of the provisions of this Article&nbsp;4 (including the
liquidated damages provisions) shall again be applicable to the Cut Back
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shares; provided, however,
that for such purposes, references to the Filing Date shall be deemed to be the Restriction
Termination Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall use its best efforts to cause each Registration Statement filed
hereunder to be declared effective by the Commission as promptly as possible after the filing
thereof, but in any event prior to the Required Effectiveness Date, and shall use its best efforts
to keep the Registration Statement continuously effective under the Securities Act until the
earlier of (i)&nbsp;the fifth anniversary of the Effective Date, (ii)&nbsp;the date when all Registrable
Securities covered by such Registration Statement have been sold publicly, or (iii)&nbsp;the date
on which the Registrable Securities are eligible for sale without volume limitation within a
three-month period pursuant to Rule&nbsp;144 or any successor thereto (the &#147;<B>Effectiveness Period</B>&#148;). The
Company shall notify the Investor in writing promptly (and in any event within one Business Day)
after receiving notification from the Commission that the Registration Statement has been declared
effective.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;As promptly as possible, and in any event no later than the Post-Effective Amendment
Filing Deadline, the Company shall prepare and file with the Commission a Post-Effective Amendment.
The Company shall use its best efforts to cause the Post-Effective Amendment to be declared
effective by the Commission as promptly as possible after the filing thereof. The Company shall
notify the Investor in writing promptly (and in any event within one Business Day) after receiving
notification from the Commission that the Post-Effective Amendment has been declared effective.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;If the Company issues to the Investor any Common Stock pursuant to the Transaction
Documents that is not included in the initial Registration Statement, then the Company shall file
an additional Registration Statement covering such number of shares of Common Stock on or prior to
the Filing Date and shall use it best efforts, but in no event later than the Required
Effectiveness Date, to cause such additional Registration Statement to be declared effective by the
Commission.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;The Registration Statement shall not include any securities other than the Registrable
Securities without the prior written consent of the Investor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.2. <U><B>Registration Process</B></U>. In connection with the registration of the
Registrable Securities pursuant to Section&nbsp;4.1, the Company shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Prepare and file with the Commission the Registration Statement and such amendments
(including post effective amendments) to the Registration Statement and supplements to the
prospectus included therein (a &#147;<B>Prospectus</B>&#148;) as the Company may deem necessary or appropriate and
take all lawful action such that the Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, not
misleading and that the Prospectus forming part of the Registration Statement, and any amendment or
supplement thereto, does not at any time during the Registration Period include an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading.;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Comply with the provisions of the Securities Act with respect to the Registrable
Securities covered by the Registration Statement until the end of the Effectiveness Period;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Prior to the filing with the Commission of the Registration Statement (including any
amendments thereto) and the distribution or delivery of any Prospectus (including any supplements
thereto), provide draft copies thereof to the Investor and reflect in such
documents all such comments as the Investor (and Investor&#146;s counsel) reasonably may propose
and furnish to the Investor and Investor&#146;s legal counsel identified to the Company (i)&nbsp;promptly
after the same is prepared and publicly distributed, filed with the Commission, or received by the
Company, one copy of the Registration Statement, each Prospectus, and each amendment or supplement
thereto, and (ii)&nbsp;such number of copies of the Prospectus and all amendments and supplements
thereto and such other documents, as the Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) (i)&nbsp;register or qualify the Registrable Securities covered by the Registration Statement
under such securities or &#147;blue sky&#148; laws of such jurisdictions as the Investor reasonably requests,
(ii)&nbsp;prepare and file in such jurisdictions such amendments (including post effective amendments)
and supplements to such registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period, (iii)&nbsp;take all such other lawful
actions as may be necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv)&nbsp;take all such other lawful actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection therewith or as a condition
thereto to (A)&nbsp;qualify to do business in any jurisdiction where it would not otherwise be required
to qualify, (B)&nbsp;subject itself to general taxation in any such jurisdiction or (C)&nbsp;file a general
consent to service of process in any such jurisdiction;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;As promptly as practicable after becoming aware of such event, notify the Investor of the
occurrence of any event, as a result of which the Prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and promptly prepare an amendment
to the Registration Statement and supplement to the Prospectus to correct such untrue statement or
omission, and deliver a number of copies of such supplement and amendment to the Investor as the
Investor may reasonably request;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;As promptly as practicable after becoming aware of such event, notify the Investor (or, in
the event of an underwritten offering, the managing underwriters) of the issuance by the Commission
of any stop order or other suspension of the effectiveness of the Registration Statement and take
all lawful action to effect the withdrawal, rescission or removal of such stop order or other
suspension;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Take all such other lawful actions reasonably necessary to expedite and facilitate the
disposition by the Investor of his Registrable Securities in accordance with the intended methods
therefor provided in the Prospectus which are customary under the circumstances;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;Make generally available to its security holders as soon as practicable, but in any event
not later than 18&nbsp;months after the Effective Date of the Registration Statement, an earnings
statement of the Company and its Subsidiary complying with Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;In the event of an underwritten offering, promptly include or incorporate
in a Prospectus supplement or post effective amendment to the Registration Statement such
information as the underwriters reasonably agree should be included therein and to which the
Company does not reasonably object and make all required filings of such Prospectus supplement or
post effective amendment as soon as practicable after it is notified of the matters to be included
or incorporated in such Prospectus supplement or post effective amendment;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;Make reasonably available for inspection by the Investor, any underwriter participating in
any disposition pursuant to the Registration Statement, and any attorney, accountant or other agent
retained by the Investor or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its Subsidiary, and cause the
Company&#146;s officers, directors and employees to supply all information reasonably requested by the
Investor or any such underwriter, attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations; provided, however,
that all records, information and documents that are designated in writing by the Company, in good
faith, as confidential, proprietary or containing any nonpublic information shall be kept
confidential by the Investor and any such underwriter, attorney, accountant or agent (pursuant to
an appropriate confidentiality agreement in the case of any such holder or agent), unless such
disclosure is made pursuant to judicial process in a court proceeding (after first giving the
Company an opportunity promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records, information or
documents become available to the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided, further, that, if the foregoing
inspection and information gathering would otherwise disrupt the Company&#146;s conduct of its business,
such inspection and information gathering shall, to the maximum extent possible, be coordinated on
behalf of the Investor and the other parties entitled thereto by one firm of counsel designated by
and on behalf of the majority in interest of the Investor and other parties;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;In connection with any offering, make such representations and warranties to the Investor
and to the underwriters if an underwritten offering, in form, substance and scope as are
customarily made by a company to underwriters in secondary underwritten offerings;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;In connection with any underwritten offering, deliver such documents and certificates as
may be reasonably required by the underwriters;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;Cooperate with the Investor to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to the Registration Statement,
which certificates shall, if required under the terms of this Agreement, be free of all restrictive
legends, and to enable such Registrable Securities to be in such denominations and registered in
such names as the Investor may request and maintain a transfer agent for the Common Stock;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;Use its commercially reasonable efforts to cause all Registrable Securities covered by the
Registration Statement to be listed or qualified for trading on the principal Trading Market, if
any, on which the Common Stock is traded or listed on the Effective Date of the Registration
Statement; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;Unless and to the extent that such Plan of Distribution requires modification due to
inaccuracy due to changes in the plan of distribution of Investor, or due to a change in SEC
regulations, to use the Plan of Distribution attached hereto as <U>Exhibit&nbsp;B</U> in each
Prospectus and Registration Statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.3. <U><B>Obligations and Acknowledgements of the Investor</B></U>. In connection with the
registration of the Registrable Securities, the Investor shall have the following obligations and
hereby make the following acknowledgements:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;It shall be a condition precedent to the obligations of the Company to include the
Registrable Securities in the Registration Statement that the Investor (i)&nbsp;shall furnish to the
Company such information regarding itself, the Registrable Securities held by it and the intended
method of disposition of the Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and (ii)&nbsp;shall execute such documents in
connection with such registration as the Company may reasonably request. At least five Business
Days prior to the first anticipated filing date of a Registration Statement, the Company shall
notify the Investor of the information the Company requires from the Investor (the &#147;<B>Requested
Information</B>&#148;) if the Investor elects to have any of its Registrable Securities included in the
Registration Statement. If at least two Business Days prior to the anticipated filing date the
Company has not received the Requested Information from the Investor, then the Company may file the
Registration Statement without including any Registrable Securities of the Investor and the Company
shall have no further obligations under this Article&nbsp;4 to the Investor after such Registration
Statement has been declared effective. If the Investor notifies the Company and provides the
Company the information required hereby prior to the time the Registration Statement is declared
effective, the Company will file an amendment to the Registration Statement that includes the
Registrable Securities of the Investor; provided, however, that the Company shall not be required
to file such amendment to the Registration Statement at any time less than five Business Days prior
to the Effectiveness Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Investor agrees to cooperate with the Company in connection with the preparation and
filing of a Registration Statement hereunder, unless the Investor has notified the Company in
writing of Investor&#146;s election to exclude all of its Registrable Securities from such Registration
Statement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Investor agrees that, upon receipt of any notice from the Company of the occurrence of
any event of the kind described in Section&nbsp;4.2(e) or 4.2(f), the Investor shall immediately
discontinue Investor&#146;s disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until the Investor&#146;s receipt of the copies of the supplemented
or amended Prospectus contemplated by Section&nbsp;4.2(e) and, if so directed by the Company, the
Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to
the Company a certificate of destruction) all copies in the Investor&#146;s possession (other than one
copy of any
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">documents not filed with the SEC for evidentiary purposes), of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.4. <U><B>Expenses of Registration</B></U>. All expenses (other than underwriting
discounts and commissions and the fees and expenses of the Investor&#146;s counsel) incurred in
connection with registrations, filings or qualifications pursuant to this Article&nbsp;4,
including, without limitation, all registration, listing, and qualifications fees, printing and
engraving fees, accounting fees, and the fees and disbursements of counsel for the Company, shall
be borne by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.5. <U><B>Accountant&#146;s Letter</B></U>. If the Investor proposes to engage in an
underwritten offering, the Company shall deliver to the Investor, at the Company&#146;s expense, a
letter dated as of the effective date of each Registration Statement or Post-Effective Amendment
thereto, from the independent public accountants retained by the Company, addressed to the
underwriters and to the Investor, in form and substance as is customarily given in an underwritten
public offering, provided that such seller has made such representations and furnished such
undertakings as the independent public accountants may reasonably require;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.6. <U><B>Indemnification and Contribution</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Indemnification by the Company</B></U>. The Company shall indemnify and hold harmless the
Investor and each underwriter, if any, which facilitates the disposition of Registrable Securities,
and each of their respective officers and directors and each Person who controls such underwriter
within the meaning of Section&nbsp;15 of the Securities Act or Section&nbsp;20 of the Exchange Act (each such
Person being sometimes hereinafter referred to as an &#147;<B>Indemnified Person</B>&#148;) from and against any
losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may
become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Registration Statement or an omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, not misleading, or arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Prospectus or an omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading; and the Company hereby agrees to reimburse such Indemnified Person for all reasonable
legal and other expenses incurred by them in connection with investigating or defending any such
action or claim as and when such expenses are incurred; provided, however, that the Company shall
not be liable to any such Indemnified Person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (i)&nbsp;an untrue statement or alleged untrue
statement made in, or an omission or alleged omission from, such Registration Statement or
Prospectus in reliance upon and in conformity with written information furnished to the Company by
such Indemnified Person expressly for use therein or (ii)&nbsp;in the case of the occurrence of an event
of the type specified in Section&nbsp;4.2(e), the use by the Indemnified Person of an outdated or
defective Prospectus after the Company has provided to such Indemnified Person an updated
Prospectus correcting the untrue statement or alleged untrue statement or omission or alleged
omission giving rise to such loss, claim, damage or liability.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Indemnification by Investor</B></U>. The Investor agrees, as a consequence of the
inclusion of any of Investor Registrable Securities in a Registration Statement to (i)&nbsp;indemnify
and hold harmless the Company, its directors (including any person who, with his or her consent, is
named in the Registration Statement as a director nominee of the Company), its
officers who sign any Registration Statement and each Person, if any, who controls the Company
within the meaning of either Section&nbsp;15 of the Securities Act or Section&nbsp;20 of the Exchange Act,
against any losses, claims, damages or liabilities to which the Company or such other persons may
become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (A)&nbsp;an untrue statement
or alleged untrue statement of a material fact contained in such Registration Statement or
Prospectus or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein (in light
of the circumstances under which they were made, in the case of the Prospectus), not misleading, in
each case to the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Investor expressly for use therein or (B)&nbsp;the use by
the Investor of an outdated Prospectus from and after receipt by the Investor of a notice pursuant
to Section&nbsp;4.2(e), and (ii)&nbsp;reimburse the Company for any legal or other expenses incurred by the
Company in connection with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Investor shall not be liable under this Section&nbsp;4.6(b) for
any amount in excess of the net proceeds paid to the Investor in respect of Registrable Securities
sold by it.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>Notice of Claims, etc</B></U>. Promptly after receipt by a Person seeking indemnification
pursuant to this Section&nbsp;4.6 (an &#147;<B>Indemnified Party</B>&#148;) of written notice of any investigation,
claim, proceeding or other action in respect of which indemnification is being sought (each, a
&#147;<B>Claim</B>&#148;), the Indemnified Party promptly shall notify the Person against whom indemnification
pursuant to this Section&nbsp;4.6 is being sought (the &#147;<B>Indemnifying Party</B>&#148;) of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the extent that the
Indemnifying Party is materially prejudiced and forfeits substantive rights and defenses by reason
of such failure. In connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to assume the defense
thereof. Notwithstanding the assumption of the defense of any Claim by the Indemnifying Party, the
Indemnified Party shall have the right to employ separate legal counsel and to participate in the
defense of such Claim, and the Indemnifying Party shall bear the reasonable fees, out of pocket
costs and expenses of such separate legal counsel to the Indemnified Party if (and only if): (i)
the Indemnifying Party shall have agreed to pay such fees, costs and expenses, (ii)&nbsp;the Indemnified
Party shall reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially differing interests
between such parties in the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from those available to the
Indemnifying Party (other than that the Indemnified Party is entitled to be indemnified by the
Indemnifying Party), or (iii)&nbsp;the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indemnified Party within a reasonable period of time after notice of
the commencement of such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in the preceding sentence, the fees, costs and expenses of
such legal counsel shall be borne exclusively by the Indemnified Party. Except as provided above,
the Indemnifying Party shall not, in connection with any Claim in the same jurisdiction, be liable
for the fees and
expenses of more than one firm of counsel for the Indemnified Party (together with appropriate
local counsel). The Indemnified Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an unconditional release of the
Indemnifying Party from all liabilities with respect to such Claim or judgment or contain any
admission of wrongdoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U><B>Contribution</B></U>. If the indemnification provided for in this Section&nbsp;4.6 is
unavailable to or insufficient to hold harmless an Indemnified Party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions or alleged statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by such Indemnifying Party or by such Indemnified Party, and
the parties&#146; relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section&nbsp;4.6(d) were determined by pro rata allocation
(even if the Investor or any underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable considerations referred to
in this Section&nbsp;4.6(d). The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U><B>Limitation on Investor&#146;s Obligations</B></U>. Notwithstanding any other provision of this
Section&nbsp;4.6, in no event shall the Investor have any liability under this Section&nbsp;4.6 for any
amounts in excess of the dollar amount of the proceeds actually received by the Investor from the
sale of Registrable Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable Securities are
registered under the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U><B>Other Liabilities</B></U>. The obligations of the parties under this Section&nbsp;4.6 shall be
in addition to any liability which such party may otherwise have to any Indemnified Person and the
obligations of any Indemnified Person under this Section&nbsp;4.6 shall be in addition to any
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">liability
which such Indemnified Person may otherwise have to any other party. The remedies provided in this
Section&nbsp;4.6 are not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.7. <U><B>Rule&nbsp;144</B></U>. With a view to making available to the Investor the benefits
of Rule&nbsp;144 or any successor thereto, until the shares are eligible for sale without volume
limitations, the Company agrees to use its best efforts to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;comply with the provisions of paragraph (c)(1) of Rule&nbsp;144 or any successor thereto; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;file with the Commission in a timely manner all reports and other documents required to
be filed by the Company pursuant to Section&nbsp;13 or 15(d) under the Exchange Act; and, if at any time
it is not required to file such reports but in the past had been required to or did file such
reports, it will, upon the request of the Investor, make available other information as required
by, and so long as necessary to permit sales of, its Registrable Securities pursuant to Rule&nbsp;144 or
any successor thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.8. <U><B>Common Stock Issued Upon Stock Split, etc</B></U>. The provisions of this
Article&nbsp;3 shall apply to any shares of Common Stock or any other securities issued as a dividend or
distribution in respect of the Warrant Shares or the Shares.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 4</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OTHER AGREEMENTS OF THE PARTIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.1. <U><B>Certificates; Legends</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Securities may only be transferred in compliance with state and federal securities
laws. In connection with any transfer of the Securities other than (i)&nbsp;pursuant to an effective
registration statement, (ii)&nbsp;to the Company, or (iii)&nbsp;to an Affiliate of the Investor, the Company
may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act or applicable state securities
laws. In the event of a private transfer of the Securities the Transferee shall be required to
execute a counterpart to this Agreement, agreeing to be bound by (and shall have the benefits of)
the terms hereof other than those set forth in Article&nbsp;2 hereof, and such Transferee shall be
deemed to be an &#147;Investor&#148; for purposes of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The certificate representing the Warrant to be delivered at the Closing and the
certificates evidencing the Warrant Shares to be delivered upon exercise of the Warrant will
contain appropriate legends referring to restrictions on transfer relating to the registration
requirements of the Securities Act and applicable state securities laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In connection with any sale or disposition of the Securities by the Investor pursuant to
Rule&nbsp;144 or pursuant to any other exemption under the 1933 Act such that the purchaser acquires
freely tradable shares and upon compliance by the Investor with the requirements of this
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Agreement,
the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common
Stock (the &#147;<B>Transfer Agent</B>&#148;) to issue replacement certificates representing the Securities sold or
disposed of without restrictive legends. Upon the earlier of (i)&nbsp;registration for resale pursuant
to the Registration Rights Agreement or (ii)&nbsp;the Warrant Shares becoming freely tradable without
restriction pursuant to Rule&nbsp;144 the Company
shall (A)&nbsp;deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall
reissue a certificate representing shares of Common Stock without legends upon receipt by such
Transfer Agent of the legended certificates for such shares, and, in the case of a proposed sale
pursuant to Rule&nbsp;144, a customary representation by the Investor that the conditions required to
freely sell the shares of Common Stock represented thereby without restriction pursuant to Rule&nbsp;144
have been satisfied, and (B)&nbsp;cause its counsel to deliver to the Transfer Agent one or more
opinions to the effect that the removal of such legends in such circumstances may be effected under
the 1933 Act. From and after the earlier of such dates, upon the Investor&#146;s written request, the
Company shall promptly cause certificates evidencing the Investor&#146;s Securities to be replaced with
certificates which do not bear such restrictive legends, and Warrant Shares subsequently issued
upon due exercise of the Warrants shall not bear such restrictive legends, provided the provisions
of either clause (i)&nbsp;or clause (ii)&nbsp;above, as applicable, are satisfied with respect to such
Warrant Shares. When the Company is required to cause an unlegended certificate to replace a
previously issued legended certificate, if: (1)&nbsp;the unlegended certificate is not delivered to the
Investor within three (3)&nbsp;Business Days of submission by the Investor of a legended certificate and
supporting documentation to the Transfer Agent as provided above and (2)&nbsp;prior to the time such
unlegended certificate is received by the Investor, the Investor, or any third party on behalf of
the Investor or for the Investor&#146;s account, purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares represented
by such certificate (a &#147;<B>Buy-In</B>&#148;), then the Company shall pay in cash to the Investor (for costs
incurred either directly by such Purchaser or on behalf of a third party) the amount by which the
total purchase price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceeds the proceeds received by the Investor as a result of the sale to which
such Buy-In relates. The Investor shall provide the Company written notice indicating the amounts
payable to the Investor in respect of the Buy-In.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.2. <U><B>Integration</B></U>. The Company has not and shall not, and shall use its best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section&nbsp;2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the issuance of the Securities to the
Investor, or that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market in a manner that would require stockholder approval of
the sale of the securities to the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.3. <U><B>Securities Laws Disclosure; Publicity</B></U>. By 5:00 p.m. (New York time) on
the Trading Day following the execution of this Agreement, and by 5:00 p.m. (New York time) on the
Trading Day following the Closing Date, the Company shall issue press releases disclosing the
material terms of the transactions contemplated hereby and the Closing, and the Company shall file
Current Reports on Form 8-K disclosing the material terms of the Transaction Documents and the
Closing. In addition, the Company will make such other filings and notices in the manner and time
required by the Commission and the Trading Market on which the Common Stock is listed.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.4. <U><B>Use of Proceeds</B></U>. The Company shall use the net proceeds from the sale of
the Securities hereunder (i)&nbsp;for working capital purposes, (ii)&nbsp;for use in the Company&#146;s business,
or (iii)&nbsp;for investment in new technologies related to the Company&#146;s business
(including without limitation through the acquisition of other companies).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.5. <U><B>Prospectus Delivery Requirements</B></U>. The Investor agrees that the Investor
will not effect any sale, transfer or other disposition of any Securities except pursuant to either
the registration requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from certificates representing Securities
as set forth in Section&nbsp;4.1 is predicated upon the Company&#146;s reliance upon this understanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.6. <U><B>Reservation of Common Stock</B></U>. From and after the Closing Date, the Company
shall reserve and keep available at all times, free of preemptive rights, a sufficient number of
shares of Common Stock for the purpose of enabling the Company to issue the Warrant Shares pursuant
to any exercise of the Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.7. <U><B>Disclosure of Information</B></U>. Except upon the prior written consent of the
Investor, the Company shall not disclose any material non-public information to the Investor or
Investor&#146;s counsel. Any such disclosure shall be made pursuant to an in accordance with a
customary non-disclosure agreement between the Company and the Investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.8. <U><B>Agreement not to Exercise Warrant; Reduction in Shares</B></U><B>. </B>(a)&nbsp;The Warrant
is not exercisable unless and until approved by the Company&#146;s shareholders at its annual meeting in
2010 or at a special shareholder meeting in 2010 called for that purpose. If shareholders do not
approve the Warrant in 2010 at a special or the annual meeting, the Warrant shall terminate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Investor agrees that the Investor will not exercise the Warrant or the right to
assign this Agreement or the Warrant, without first having received written notice from the Company
that this Agreement and the Warrant have been approved by the Company&#146;s Board of Directors or a
committee of the Board, and by the Company&#146;s shareholders in 2010 at a special or the annual
meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If the Company replaces and releases, or simply releases, the Deposit or the Letter of
Credit by June&nbsp;30, 2010, the number of shares covered by the Warrant shall reduce to a number of
shares equal to the product of (i)&nbsp;the number of full months elapsed in 2010 times (ii)&nbsp;12,500.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 5</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDITIONS PRECEDENT TO CLOSING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.1. <U><B>Conditions Precedent to the Obligations of the Investor to Acquire
Securities</B></U>. The obligation of the Investor to acquire Securities is subject to the
satisfaction or waiver by the Investor, at or before the Closing, of each of the following
conditions:
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Representations and Warranties</B></U>. The representations and warranties of the Company
contained herein are true and correct in all material respects as of the date when made and as of
the Closing Date as though made on and as of such Closing Date;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Performance</B></U>. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the Closing;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>No Injunction</B></U>. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U><B>No Adverse Changes</B></U>. Since the date of execution of this Agreement, no event or
series of events shall have occurred that reasonably could have or result in a Material Adverse
Effect;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U><B>Company Deliverables</B></U>. The Company shall have delivered the Company Deliverables in
accordance with Section&nbsp;2.4.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.2. <U><B>Conditions Precedent to the Obligations of the Company to Issue
Securities</B></U>. The obligation of the Company to issue Securities is subject to the satisfaction
or waiver by the Company, at or before the Closing, of each of the following conditions:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Representations and Warranties</B></U>. The representations and warranties of the Investor
contained herein shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though made on and as of such date;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Performance</B></U>. The Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investor at or prior to the Closing;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>No Injunction</B></U>. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 6</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>MISCELLANEOUS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.1. <U><B>Fees and Expenses</B></U>. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of the
Transaction Documents, except that Company shall pay to Investor $750.00 towards Investor&#146;s
expenses.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.2. <U><B>Entire Agreement</B></U>. The Transaction Documents, together with the Exhibits
thereto, contain the entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements, understandings, discussions and representations, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such
documents and exhibits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.3. <U><B>Notices</B></U>. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a)&nbsp;the date of transmission, if such notice or communication is
delivered via facsimile (provided the sender receives a machine-generated confirmation of
successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. on a
Business Day, (b)&nbsp;the next Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section on a day
that is not a Business Day or later than 6:30 p.m. on any Business Day, (c)&nbsp;the Business Day
following the date of transmission, if sent by a nationally recognized overnight courier service,
or (d)&nbsp;upon actual receipt by the party to whom such notice is required to be given. The addresses
for such notices and communications shall be as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="76%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to the Company:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Energy Focus, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">32000 Aurora Road</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Solon, Ohio 44139</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile: 440.519.1038</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Mr.&nbsp;Joseph G. Kaveski, Chief Executive Officer</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">With a copy to:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cowden &#038; Humphrey Co. LPA</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">4600 Euclid Avenue, Suite&nbsp;400</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cleveland, Ohio 44103-3758</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile: 216.241.2881</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Mr.&nbsp;Gerald W. Cowden</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to the Investor:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Quercus Trust</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1835 Newport Blvd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A109-PMB 467</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Costa Mesa, CA 92627</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: David Gelbaum</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile No.: 949-631-6723</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or such other address as may be designated by the Investor or the Company in writing, in the same
manner, by such Person.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.4. <U><B>Amendments; Waivers</B></U>. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the Investor. No waiver of any
default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such right.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.5. <U><B>Termination</B></U>. This Agreement may be terminated prior to the Closing by
written agreement of the Investor and the Company. Upon a termination in accordance with this
Section&nbsp;7.5, the Company and the Investor shall have no further obligation or liability (including
as arising from such termination) to the other, provided that any liabilities arising prior to such
termination shall not be affected by the termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.6. <U><B>Construction</B></U>. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent, and no rules of strict construction will be applied
against any party. This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.7. <U><B>Successors and Assigns</B></U>. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors, and permitted assigns. Neither party may assign
this Agreement or any rights or obligations hereunder without the prior written consent of the
other party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.8. <U><B>No Third-Party Beneficiaries</B></U>. This Agreement is intended for the benefit
of the parties hereto, and their heirs, representatives, successors, and permitted assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.9. <U><B>Governing Law; Jurisdiction</B></U>. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and of the United States, without
giving effect to the doctrine of conflicts of laws. Each party agrees that all Proceedings
concerning the interpretations, enforcement and of the transactions contemplated by this Agreement
and any other Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state or federal courts
sitting in, or having jurisdiction over, New Castle County in the State of Delaware (the &#147;Delaware
Courts&#148;). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Delaware Courts for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to the enforecement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of any such Delaware
Court, or that such Proceeding has been commenced in an improper or inconvenient foum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
If either party shall commence a Proceeding to enforce any provisions of a Transaction
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Document,
then the prevailing party in such Proceeding shall be reimbursed by the other party for its
reasonable attorneys&#146; fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.10. <U><B>Survival</B></U>. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Securities; provided, however,
that the representations and warranties shall expire one month after the Company files its Annual
Report on Form 10-K for the period ending December&nbsp;31, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.11. <U><B>Execution</B></U>. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof, notwithstanding any
subsequent failure or refusal of the signatory to deliver an original executed in ink.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.12. <U><B>Severability</B></U>. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision that is a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.13. <U><B>Replacement of Securities</B></U>. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefore, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a replacement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.14. <U><B>Remedies</B></U>. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Investor and the Company will
be entitled to specific performance under the Transaction Documents. The parties agree that, except
as expressly set forth herein with respect to liquidated damages, monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signatures appear on following page.&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first indicated
above.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">COMPANY:<BR>
<BR>
ENERGY FOCUS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Joseph G. Kaveski
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Joseph G. Kaveski&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">INVESTOR:<BR>
<BR>
THE QUERCUS TRUST<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ David Gelbaum
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">David Gelbaum&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Co-Trustee&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Warrant Acquisition Agreement
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXHIBIT A</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Form of Warrant</B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->A-1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXHIBIT B</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Plan of Distribution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders, which as used herein includes donees, pledgees, transferees or other
successors-in-interest selling shares of common stock or interests in shares of common stock
received after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders may use any one or more of the following methods when disposing of
shares or interests therein:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>block trades in which the broker-dealer will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>purchases by a broker-dealer as principal and resale by the broker-dealer for its account;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an exchange distribution in accordance with the rules of the applicable exchange;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>privately negotiated transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>short sales effected after the date the registration statement of which this Prospectus is a
part is declared effective by the SEC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>through the writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>broker-dealers may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per share; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a combination of any such methods of sale.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders may, from time to time, pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->B-1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">selling
stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the sale of our common stock or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate proceeds to the selling stockholders from the sale of the common stock offered
by them will be the purchase price of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly
or through agents. We will not receive any of the proceeds from this offering. Upon any exercise
of the warrants by payment of cash, however, we will receive the exercise price of the warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule&nbsp;144 under the Securities Act of 1933, provided that they meet
the criteria and conform to the requirements of that rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders and any underwriters, broker-dealers or agents that participate in
the sale of the common stock or interests therein may be &#147;underwriters&#148; within the meaning of
Section&nbsp;2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are &#147;underwriters&#148; within the meaning of Section&nbsp;2(11) of the Securities
Act will be subject to the prospectus delivery requirements of the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent required, the shares of our common stock to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to comply with the securities laws of some states, if applicable, the common stock
may be sold in these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification requirements is available and
is complied with.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->B-2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have advised the selling stockholders that the anti-manipulation rules of Regulation&nbsp;M
under the Exchange Act may apply to sales of shares in the market and to the activities of the
selling stockholders and their affiliates. In addition, to the extent applicable we will make
copies of this prospectus (as it may be supplemented or amended from time to time) available to the
selling stockholders for the purpose of satisfying the prospectus delivery requirements of the
Securities Act. The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities, including liabilities
arising under the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to the registration of the
shares offered by this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed with the selling stockholders to keep the registration statement of which this
prospectus constitutes a part effective until the earlier of (1)&nbsp;such time as all of the shares
covered by this prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2)&nbsp;the date on which the shares may be sold without restriction pursuant
to Rule&nbsp;144 of the Securities Act.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->B-3<!-- /Folio -->
</DIV>



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<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>6
<FILENAME>l40087exv23w1.htm
<DESCRIPTION>EX-23.1
<TEXT>
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<TITLE>exv23w1</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;23.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have issued our report dated March&nbsp;31, 2010, with respect to the consolidated financial
statements (which report expressed an unqualified opinion and contains an explanatory paragraph
relating to substantial doubt about Energy Focus, Inc.&#146;s ability to continue as a going concern) in
the Annual Report of Energy Focus, Inc. on Form 10-K for the year ended December&nbsp;31, 2009. We
consent to the use of the aforementioned reports in the Registration Statement and Prospectus, and
to the use of our name as it appears under the caption &#147;Experts.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 18pt">/s/ Plante &#038; Moran, PLLC
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cleveland, Ohio<BR>
June&nbsp;29, 2010

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>7
<FILENAME>l40087exv23w2.htm
<DESCRIPTION>EX-23.2
<TEXT>
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<HEAD>
<TITLE>exv23w2</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;23.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have issued our report, before the effects of the retrospective adjustments for the
discontinued operations discussed in Note 4 and the retrospective adjustments for the change in the
composition of reportable segments discussed in Note 13,dated March&nbsp;30, 2009 with respect to the
consolidated financial statements of Energy Focus, Inc., appearing in the 2009 Annual Report of
Energy Focus, Inc. to its shareholders and with respect to the schedule included in the Annual
Report on Form 10-K for the years ended December&nbsp;31, 2008 and 2007 which are incorporated by
reference in this Registration Statement(the 2008 and 2007 financial statements before the effects
of the adjustments discussed in Note 4 and Note 13 are not separately incorporated by reference or
included elsewhere in this registration statement). We consent to the incorporation by reference
in the Registration Statement of the aforementioned reports and to the use of our name as it
appears under the caption &#147;Experts.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt">/s/ Grant Thornton LLP
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cleveland, Ohio<BR>
June&nbsp;29, 2010

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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