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<SEC-DOCUMENT>0001299933-10-001152.txt : 20100319
<SEC-HEADER>0001299933-10-001152.hdr.sgml : 20100319
<ACCEPTANCE-DATETIME>20100319133031
ACCESSION NUMBER:		0001299933-10-001152
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20100317
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Unregistered Sales of Equity Securities
FILED AS OF DATE:		20100319
DATE AS OF CHANGE:		20100319

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24230
		FILM NUMBER:		10693731

	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>8-K
<SEQUENCE>1
<FILENAME>htm_36820.htm
<DESCRIPTION>LIVE FILING
<TEXT>
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<TITLE> Energy Focus, Inc. (Form: 8-K) </TITLE>
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		UNITED STATES<BR>
	SECURITIES AND EXCHANGE COMMISSION
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<BR>
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	WASHINGTON, D.C. 20549
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	FORM 8-K
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	CURRENT REPORT
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	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
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	Date of Report (Date of Earliest Event Reported):
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	&nbsp;
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	March 17, 2010
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	Energy Focus, Inc.
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<BR>__________________________________________<BR>
	(Exact name of registrant as specified in its charter)
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	Delaware
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	0-24230
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	94-3021850
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_____________________<BR>
	(State or other jurisdiction
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_____________<BR>
	(Commission
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______________<BR>
	(I.R.S. Employer
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	of incorporation)
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	File Number)
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	Identification No.)
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	&nbsp;&nbsp;
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	32000 Aurora Road, Solon, Ohio
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	&nbsp;
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	44139
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_________________________________<BR>
	(Address of principal executive offices)
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	&nbsp;
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___________<BR>
	(Zip Code)
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	Registrant&#146;s telephone number, including area code:
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	&nbsp;
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	440-715-1300
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<P ALIGN="CENTER">
<FONT SIZE="2">
	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
</FONT>
<P ALIGN="CENTER">
<FONT SIZE="2">
	&nbsp;
</FONT>
<!-- CoverPageRegistrant END --><P><FONT SIZE="2">
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:</FONT>
</P>
<P><FONT SIZE="2">
[&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
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<FONT SIZE="2">Top of the Form</FONT>
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<B>
	Item 1.01 Entry into a Material Definitive Agreement.
</B>
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<P ALIGN="LEFT">
<FONT SIZE="2">
On March 17, 2010, Energy Focus, Inc. (the "Company") entered into a purchase agreement with Lincoln Park Capital Fund, LLC, an Illinois limited liability company ("LPC"), whereby LPC has agreed to purchase 350,000 shares of the Company&#x2019;s common stock together with a warrant to purchase an equivalent amount of shares, subject to the registration requirements described below, for total consideration of $375,000.  LPC also agreed to purchase up to an additional 3,650,000 shares of common stock, at the company&#x2019;s option as described below.    <br><br>The Company has agreed in a registration rights agreement with LPC to file a registration statement with the United States Securities & Exchange Commission ("SEC") covering the shares issuable under the purchase agreement.  After the registration statement has been declared effective, LPC shall purchase 350,000 shares of the Company&#x2019;s common stock, together with the warrant to purchase 350,000 shares of common stock, for total consideration of $
375,000.  The warrant shall have a term of five (5) years, an exercise price of $1.20 and may not be exercised until six (6) months after issuance.   There are no penalties or liquidated damages associated with the company&#x2019;s registration obligations. <br><br>Following the effectiveness of the registration statement, LPC has agreed to purchase 3,650,000 shares of the Company&#x2019;s common stock, over a 25 month period, as directed by the Company.  The purchase price of these shares will be based on the market prices of the Company&#x2019;s common stock at the time of the sale without any fixed discount.  The Company may suspend purchases by LPC at any time and may, in its sole discretion, also accelerate or reduce purchases under certain conditions.<br><br>LPC cannot purchase shares of the Company&#x2019;s common stock on any business day that the price of the common stock is below $1.00.  The common stock purchase agreement may be terminated by the Company, at any time, at its discretion without any
 cost to it.  The proceeds to be received by the Company under the agreement will be used for working capital and general corporate purposes.  LPC has agreed not to engage in any shorting or hedging in any manner whatsoever.  Upon entering into the purchase agreement, the Company issued to LPC 120,000 shares of its common stock as consideration for entering into the agreement and shall issue an equivalent amount of shares pro rata as LPC purchases the 3,650,000 shares.<br><br>The foregoing description of the purchase agreement, the registration rights agreement, and the form of warrant are qualified in their entirety by reference to the full text of the purchase agreement, the registration rights agreement, and the form of warrant, a copy of each of which is attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively, and each of which is incorporated herein in its entirety by reference.
</FONT>
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<B>
	Item 3.02 Unregistered Sales of Equity Securities.
</B>
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<FONT SIZE="2">
The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.  LPC is an accredited investor under Regulation D and the issuance of the 120,000 shares is exempt from registration under Section 4(2) of the 1933 Securities Act, and the SEC&#x2019;s Regulation D and Rule 506.
</FONT>
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<B>
	SIGNATURES
</B>
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	Pursuant to the requirements of the Securities Exchange Act of 1934, the
	registrant has duly caused this report to be signed on its behalf by the
	undersigned hereunto duly authorized.
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<FONT SIZE="2">
	Energy Focus, Inc.
</FONT>
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<FONT SIZE="2">
	&nbsp;&nbsp;
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	&nbsp;
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	&nbsp;
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	&nbsp;
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	&nbsp;
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<I>
	March 19, 2010
</I>
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	&nbsp;
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<I>
	By:
</I>
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</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
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<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
<I>
	Joseph G. Kaveski
</I>
<BR>
</FONT>
</TD>
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<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
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	&nbsp;
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<FONT SIZE="2">
	&nbsp;
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	&nbsp;
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	&nbsp;
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	&nbsp;
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	&nbsp;
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<I>
	Name: Joseph G. Kaveski
</I>
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	&nbsp;
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	&nbsp;
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<I>
	Title: Chief Executive Officer
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	Exhibit&nbsp;Index
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<B>
	Exhibit No.
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	&nbsp;
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<B>
	Description
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	10.1
</DIV>
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<FONT SIZE="2">
	&nbsp;
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<TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
<FONT SIZE="2">
Purchase Agreement dated as of March 17, 2010, by and between the Company and Lincoln Park Capital Fund, LLC.
</FONT>
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	10.2
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<FONT SIZE="2">
	&nbsp;
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<FONT SIZE="2">
Registration Rights Agreement dated as of March 17, 2010, by and between the Company and Lincoln Park Capital Fund, LLC.
</FONT>
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	10.3
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<FONT SIZE="2">
	&nbsp;
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<FONT SIZE="2">
Form of Common Stock Purchase Warrant
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit1.htm
<DESCRIPTION>EX-10.1
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<TITLE> EX-10.1 </TITLE>
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<BODY style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt"><FONT style="font-size: 11pt"><B>EXECUTION COPY</B></FONT>



<P align="center" style="font-size: 11pt"><B>PURCHASE AGREEMENT</B>



<P align="left" style="font-size: 11pt; text-indent: 4%"><B>PURCHASE AGREEMENT </B>(the &#147;Agreement&#148;), dated as of March&nbsp;17, 2010, by and between <B>ENERGY FOCUS,
INC.</B>, a Delaware corporation (the &#147;Company&#148;), and <B>LINCOLN PARK CAPITAL FUND, LLC</B>, an Illinois
limited liability company (the &#147;Investor&#148;).


<P align="center" style="font-size: 11pt"><B>WHEREAS:</B>



<P align="left" style="font-size: 11pt">Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to the
Investor, and the Investor wishes to buy from the Company, up to four million shares of the
Company&#146;s common stock, $.0001 par value (the &#147;Common Stock&#148;). The shares of Common Stock to be
purchased hereunder are referred to herein as the &#147;Purchase Shares.&#148;


<P align="left" style="font-size: 11pt">NOW THEREFORE, the Company and the Investor hereby agree as follows:


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>1.&nbsp;CERTAIN DEFINITIONS.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">For purposes of this Agreement, the following terms shall have the following meanings:


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;&#147;Securities Act&#148; means the Securities Act of 1933, as amended.


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;&#147;Exchange Act&#148; means the Securities Exchange Act of 1934, as amended.


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;&#147;Accelerated Purchase Notice&#148; shall mean an irrevocable written notice from the Company to
the Investor directing the Investor to buy such Accelerated Purchase Amount in Purchase Shares as
specified by the Company therein at the applicable Purchase Price on the Purchase Date.


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;&#147;Available Amount&#148; means initially Four Million (4,000,000) Purchase Shares in the
aggregate which amount shall be reduced by the Purchase Amount each time the Investor purchases
shares of Common Stock pursuant to Section&nbsp;2 hereof.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;&#147;Bankruptcy Law&#148; means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;&#147;Business Day&#148; means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time less than the
customary time.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;&#147;Closing Sale Price&#148; means, for any security as of any date, the last closing trade price
for such security on the Principal Market as reported by the Principal Market, or, if the Principal
Market is not the principal securities exchange or trading market for such security, the last
closing trade price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by the Principal Market.


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;&#147;Confidential Information&#148; means any information disclosed by either party to the other
party, either directly or indirectly, in writing, orally or by inspection of tangible objects
(including, without limitation, documents, prototypes, samples, plant and equipment), which is
designated as &#147;Confidential,&#148; &#147;Proprietary&#148; or some similar designation. Information communicated
orally shall be considered Confidential Information if such information is confirmed in writing as
being Confidential Information within ten (10)&nbsp;Business Days after the initial disclosure.
Confidential Information may also include information disclosed to a disclosing party by third
parties. Confidential Information shall not, however, include any information which (i)&nbsp;was
publicly known and made generally available in the public domain prior to the time of disclosure by
the disclosing party; (ii)&nbsp;becomes publicly known and made generally available after disclosure by
the disclosing party to the receiving party through no action or inaction of the receiving party;
(iii)&nbsp;is already in the possession of the receiving party at the time of disclosure by the
disclosing party as shown by the receiving party&#146;s files and records immediately prior to the time
of disclosure; (iv)&nbsp;is obtained by the receiving party from a third party without a breach of such
third party&#146;s obligations of confidentiality; (v)&nbsp;is independently developed by the receiving party
without use of or reference to the disclosing party&#146;s Confidential Information, as shown by
documents and other competent evidence in the receiving party&#146;s possession; or (vi)&nbsp;is required by
law to be disclosed by the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and assistance in
obtaining an order protecting the information from public disclosure.


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;&#147;Custodian&#148; means any receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;&#147;Maturity Date&#148; means the date that is 500 Business Days (25 Monthly Periods) from the
Commencement Date.


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;&#147;Monthly Period&#148; means each successive 20 Business Day period commencing with the
Commencement Date.


<P align="left" style="font-size: 11pt; text-indent: 4%">(j)&nbsp;&#147;Person&#148; means an individual or entity including but not limited to any limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and
a government or any department or agency thereof.


<P align="left" style="font-size: 11pt; text-indent: 4%">(k)&nbsp;&#147;Principal Market&#148; means the Nasdaq Global Market; provided however, that in the event the
Company&#146;s Common Stock is ever listed or traded on the Nasdaq Capital Market, the Nasdaq Global
Select Market, the OTC Bulletin Board, the New York Stock Exchange or the NYSE Amex, then the
&#147;Principal Market&#148; shall mean such other market or exchange on which the Company&#146;s Common Stock is
then listed or traded.


<P align="left" style="font-size: 11pt; text-indent: 4%">(l)&nbsp;&#147;Purchase Amount&#148; means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Investor pursuant to Section&nbsp;2 hereof.


<P align="left" style="font-size: 11pt; text-indent: 4%">(m)&nbsp;&#147;Purchase Date&#148; means with respect to any Accelerated Purchase made hereunder, the
Business Day after receipt by the Investor of a valid Accelerated Purchase Notice or the Business
Day the Investor otherwise is to purchase Purchase Shares pursuant to Section&nbsp;2 hereof.


<P align="left" style="font-size: 11pt; text-indent: 4%">(n)&nbsp;&#147;Purchase Price&#148; means the lower of the (A)&nbsp;the lowest Sale Price of the Common Stock on
the Purchase Date or (B)&nbsp;the arithmetic average of the three (3)&nbsp;lowest Closing Sale Prices for the
Common Stock during the ten (10)&nbsp;consecutive Business Days ending on the Business Day immediately
preceding such Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction).


<P align="left" style="font-size: 11pt; text-indent: 4%">(o)&nbsp;&#147;Sale Price&#148; means any trade price for the shares of Common Stock on the Principal Market
as reported by the Principal Market.


<P align="left" style="font-size: 11pt; text-indent: 4%">(p)&nbsp;&#147;SEC&#148; means the United States Securities and Exchange Commission.


<P align="left" style="font-size: 11pt; text-indent: 4%">(q)&nbsp;&#147;Transfer Agent&#148; means the transfer agent of the Company as set forth in Section
11(f) hereof or such other person who is then serving as the transfer agent for the Company in
respect of the Common Stock.


<P align="left" style="font-size: 11pt; text-indent: 4%">(r)&nbsp;&#147;To the best of the Company&#146;s knowledge&#148; means to the best of the actual
knowledge, after due inquiry, of the Chief Executive Officer, President, or Chief Financial Officer
of the Company.


<P align="left" style="font-size: 11pt; text-indent: 5%"><B>2.&nbsp;PURCHASE OF COMMON STOCK.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">Subject to the terms and conditions set forth in this Agreement, the Company has the right to
sell to the Investor, and the Investor has the obligation to purchase from the Company, Purchase
Shares as follows:


<P align="left" style="font-size: 11pt; text-indent: 5%">(a)&nbsp;<U>Initial Purchase; Commencement of Regular Purchases of Common Stock</U>. Within one
(1)&nbsp;Business Day following the satisfaction of the conditions (the &#147;Commencement&#148;) as set forth in
Sections&nbsp;7 and 8 below (the date of satisfaction of such conditions, the &#147;Commencement Date&#148;), the
Investor shall purchase from the Company 350,000 Purchase Shares (such purchase the &#147;Initial
Purchase&#148; and such Purchase Shares are referred to herein as &#147;Initial Purchase Shares&#148;) and
warrants to purchase 350,000 shares of Common Stock (the &#147;Warrants&#148; and the shares of Common Stock
underlying such Warrants, the &#147;Warrant Shares&#148;) in the form of <U><B>Exhibit&nbsp;F</B></U> attached hereto,
and upon receipt of such Purchase Shares and Warrants pay to the Company as the purchase price for
such Initial Purchase Shares and Warrants, the sum of $375,000, via wire transfer. The Warrants
shall have a term of five (5)&nbsp;years and an exercise price equal to $1.20.


<P align="left" style="font-size: 11pt; text-indent: 5%">Thereafter, upon notice from the Company and subject to the Company&#146;s right to adjust
purchases under Section 2(c) hereof, the Investor shall purchase 20,000 Purchase Shares every five
(5)&nbsp;Business Days (such purchases &#147;Regular Purchases&#148; and the amount so purchased the &#147;Regular
Purchase Amount&#148;) during each Monthly Period until the Maturity Date, at the Purchase Price.


<P align="left" style="font-size: 11pt; text-indent: 5%">(b)&nbsp;<U>Accelerated Purchases</U>. In addition to the Regular Purchases, the Company shall
have the right at any time on or after the Commencement Date to direct the Investor to purchase up
to 10,000 Purchase Shares (such purchases &#147;Accelerated Purchases&#148; and the amount so purchased
&#147;Accelerated Purchase Amount&#148;) at the Purchase Price on the Purchase Date, by delivery to the
Investor of an Accelerated Purchase Notice which notice shall state the Accelerated Purchase
Amount. The Company may direct the Investor to make multiple Accelerated Purchases so long as at
least two (2)&nbsp;Business Days have passed since the most recent Accelerated Purchase was completed.


<P align="left" style="font-size: 11pt; text-indent: 5%">(c)&nbsp;<U>The Company&#146;s Right to Adjust Purchases.</U> The Company may, at any time, give
written notice (a &#147;Purchase Adjustment Notice&#148;) to the Investor (i)&nbsp;suspending purchases of
Purchase Shares by the Investor under this Agreement, or (ii)&nbsp;adjusting the Regular Purchase Amount
to an amount equal to or between 5,000 and 20,000 Purchase Shares as set forth in the Purchase
Adjustment Notice. The Purchase Adjustment Notice shall be effective only for purchases that have a
Purchase Date later than five (5)&nbsp;Business Days after receipt of the Purchase Adjustment Notice by
the Investor. Any purchase by the Investor that has a Purchase Date on or prior to the fifth (5th)
Business Day after receipt by the Investor of a Purchase Adjustment Notice from the Company must be
honored by the Company as otherwise provided herein. Such purchase adjustment shall continue in
effect until delivery by the Company, at its sole discretion, of a new Purchase Adjustment Notice.
So long as a Purchase Adjustment Notice suspends purchases, the Investor shall not be obligated or
have the right to purchase any Purchase Shares from the Company under Section&nbsp;2 of this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 5%">(d)&nbsp;<U> Payment for Purchase Shares.</U> The Investor shall pay to the Company an amount
equal to the Purchase Amount multiplied by the Purchase Price with respect to such Purchase Shares
as full payment for such Purchase Shares via wire transfer of immediately available funds on the
same Business Day that the Investor receives such Purchase Shares if they are received by the
Investor before 11:00&nbsp;a.m. eastern time or if received by the Investor after 11:00&nbsp;a.m. eastern
time, the next Business Day. The Company shall not issue any fraction of a share of Common Stock
upon any purchase. If the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up or down to the nearest
whole share. All payments made under this Agreement shall be made in lawful money of the United
States of America or wire transfer of immediately available funds to such account as the Company
may from time to time designate by written notice in accordance with the provisions of this
Agreement. Whenever any amount expressed to be due by the terms of this Agreement is due on any day
that is not a Business Day, the same shall instead be due on the next succeeding day that is a
Business Day. The parties may otherwise agree on the purchase and sale of Purchase Shares.


<P align="left" style="font-size: 11pt; text-indent: 5%">(e)&nbsp;<U>Purchase Price Floor.</U> The Company and the Investor shall not effect any sales
and purchases under this Agreement on any Purchase Date where the Purchase Price for any purchases
of Purchase Shares would be less than the Floor Price. &#147;Floor Price&#148; means $1.00, which shall be
appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction.


<P align="left" style="font-size: 11pt; text-indent: 5%">(f)&nbsp;<U>Records of Purchases</U>. The Investor and the Company shall each maintain records
showing the remaining Available Amount at any given time and the dates and Purchase Amounts for
each purchase or shall use such other method, reasonably satisfactory to the Investor and the
Company.


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;<U>Taxes.</U> The Company shall pay any and all transfer, stamp or similar taxes that
may be payable with respect to the issuance and delivery of any shares of Common Stock to the
Investor made under this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;<U>Additional Purchases.</U> In conjunction with each Regular Purchase and each
Accelerated Purchase, if any, the Investor shall purchase up to an equivalent amount of shares of
Common Stock as it purchases in connection with each Regular Purchase as such amount may be
adjusted by the Company pursuant to a Purchase Adjustment Notice or Accelerated Purchase
(&#147;Additional Purchase&#148;). The Additional Purchase shall be at the same purchase price as such
Regular or Accelerated Purchase and shall be completed within five (5)&nbsp;Business Days of any
Regular Purchase or Accelerated Purchase.


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;<U>Compliance with Principal Market Rules; Company Rights Agreement</U>. The Company
shall not effect any sale under this Agreement and the Investor shall not have the right or the
obligation to purchase shares of Common Stock under this Agreement to the extent that after giving
effect to such purchase the &#147;Exchange Cap&#148; shall be deemed to be reached. The &#147;Exchange Cap&#148; shall
be deemed to have been reached if, at any time prior to the shareholders of the Company approving
the transaction contemplated by this Agreement, upon a purchase under this Agreement, the Purchase
Shares issuable pursuant to such purchase would, together with all Purchase Shares previously
issued under this Agreement, exceed 4,247,936 shares of Common Stock (19.99% of the 21,250,304
outstanding shares of Common Stock as of the date of this Agreement). The Company may, but shall
be under no obligation to, request its shareholders to approve the transaction contemplated by this
Agreement. The Company shall not be required to issue any Purchase Shares under this Agreement if
such issuance would breach the Company&#146;s obligations under the rules or regulations of the
Principal Market<B>.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">The Company shall not effect any sale under this Agreement and the Investor shall not have the
right or the obligation to purchase shares of Common Stock under this Agreement to the extent that
after giving effect to such purchase the &#147;Rights Agreement Cap&#148; shall be deemed to be reached. The
&#147;Rights Agreement Cap&#148; shall be deemed to have been reached if, at any time prior to the Board of
Directors of the Company modifying the Rights Agreement dated as of October&nbsp;25, 2006 between the
Company and Mellon Investor Services LLC, as Rights Agent, as amended, to preclude the triggering
of rights under the Rights Agreement, upon a purchase under this Agreement, the Purchase Shares
issuable pursuant to such purchase would, together with all Purchase Shares previously issued under
this Agreement and not sold by the Investor, exceed 3,185,421 shares of Common Stock (14.99% of the
21,250,304 outstanding shares of Common Stock as of the purchase date. The Investor shall notify
the Company in writing prior to any purchase of shares of Common Stock under this Agreement to the
extent that after giving effect to such purchase the Rights Agreement Cap shall be deemed to be
reached, based upon the number of outstanding shares of Common Stock reported in the Company&#146;s most
recent Report on Form 10-Q or 10-K.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>3.&nbsp;INVESTOR&#146;S REPRESENTATIONS AND WARRANTIES.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">The Investor represents and warrants to the Company that as of the date hereof and as of the
Commencement Date:


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;<U>Investment Purpose</U>. &nbsp;The Investor is acquiring the Purchase Shares, Warrants and
Warrant Shares (&#147;Securities&#148;) as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of the Securities Act or
any applicable state securities law, has no present intention of distributing any of such
Securities in violation of the Securities Act or any applicable state securities law and has no
direct or indirect arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any applicable state
securities law (this representation and warranty not limiting the Investor&#146;s right to sell the
Securities pursuant to the registration statement described herein or otherwise in compliance with
applicable federal and state securities laws).&nbsp;&nbsp;The Investor is acquiring the Securities hereunder
in the ordinary course of its business.


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;<U>Accredited Investor Status</U>. The Investor is an &#147;accredited investor&#148; as that term
is defined in Rule&nbsp;501(a)(3) of Regulation&nbsp;D.


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;<U>Reliance on Exemptions</U>. The Investor understands that the Securities may be
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and the Investor&#146;s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the Investor to acquire the
Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;<U>Information</U>. The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor (i)&nbsp;is able to bear the economic risk of an
investment in the Securities including a total loss, (ii)&nbsp;has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and risks of the
proposed investment in the Securities and (iii)&nbsp;has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning the financial condition and business of
the Company and others matters related to an investment in the Securities. Neither such inquiries
nor any other due diligence investigations conducted by the Investor or its representatives shall
modify, amend or affect the Investor&#146;s right to rely on the Company&#146;s representations and
warranties contained in Section&nbsp;4 below. The Investor has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;<U>No Governmental Review</U>. The Investor understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;<U>Transfer or Sale</U>. The Investor understands that (i)&nbsp;the Securities may not be
offered for sale, sold, assigned or transferred unless (A)&nbsp;registered pursuant to the Securities
Act or (B)&nbsp;an exemption exists permitting such Securities to be sold, assigned or transferred
without such registration; (ii)&nbsp;any sale of the Securities made in reliance on Rule&nbsp;144 may be made
only in accordance with the terms of Rule&nbsp;144 and further, if Rule&nbsp;144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act)
may require compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;<U>Validity; Enforcement</U>. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Investor and is a valid and binding agreement of the
Investor enforceable against the Investor in accordance with its terms, subject as to
enforceability to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally,
the enforcement of applicable creditors&#146; rights and remedies.


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;<U>Residency</U>. The Investor is a resident of the State of Illinois.


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;<U>No Prior Short Selling</U>. The Investor represents and warrants to the Company that
at no time prior to the date of this Agreement has any of the Investor, its agents, representatives
or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i)
&#147;short sale&#148; (as such term is defined in Section&nbsp;242.200 of Regulation&nbsp;SHO of the Exchange Act) of
the Common Stock or (ii)&nbsp;hedging transaction, which establishes a net short position with respect
to the Common Stock.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>4.&nbsp;REPRESENTATIONS AND WARRANTIES OF THE COMPANY.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">The Company represents and warrants to the Investor that as of the date hereof and as of the
Commencement Date:


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;<U>Organization and Qualification</U>. The Company and each of the Subsidiaries (which
for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns
50% or more of the voting stock or capital stock or other similar equity interests) is an entity
duly incorporated or otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently conducted.&nbsp;&nbsp;Neither
the Company nor any Subsidiary is in violation nor default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter
documents.&nbsp;&nbsp;Each of the Company and the Subsidiaries is duly qualified to conduct 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 have or
reasonably be expected to result in: (i)&nbsp;a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii)&nbsp;a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole, or (iii)&nbsp;a material adverse effect on the Company&#146;s ability to
perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii)&nbsp;or (iii), a &#147;<U>Material Adverse Effect</U>&#148;) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification. The Company has no Subsidiaries except as set
forth on <U>Schedule&nbsp;4(a)</U>.


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;<U>Authorization; Enforcement; Validity</U>. (i)&nbsp;The Company has the requisite corporate
power and authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement and each of the other agreements entered into by the parties on the
Commencement Date and attached hereto as exhibits to this Agreement (collectively, the &#147;Transaction
Documents&#148;), and to issue the Securities in accordance with the terms hereof and thereof, (ii)&nbsp;the
execution and delivery of the Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby, including without limitation, the issuance of the
Commitment Shares and the reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company&#146;s Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or its shareholders,
(iii)&nbsp;this Agreement has been, and each other Transaction Document shall be on the Commencement
Date, duly executed and delivered by the Company and (iv)&nbsp;this Agreement constitutes, and each
other Transaction Document upon its execution on behalf of the Company, shall constitute, the valid
and binding obligations of the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors&#146; rights and remedies. The Board of Directors of
the Company has approved the resolutions (the &#147;Signing Resolutions&#148;) substantially in the form as
set forth as <U>Exhibit&nbsp;C</U> attached hereto to authorize this Agreement and the transactions
contemplated hereby. The Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect. The Company has delivered to the Investor a true and
correct copy of a unanimous written consent adopting the Signing Resolutions executed by all of the
members of the Board of Directors of the Company. No other approvals or consents of the Company&#146;s
Board of Directors and/or shareholders is necessary under applicable laws and the Company&#146;s
Certificate of Incorporation and/or Bylaws to authorize the execution and delivery of this
Agreement or any of the transactions contemplated hereby, including, but not limited to, the
issuance of the Commitment Shares and the issuance of the Purchase Shares.


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;<U>Capitalization</U>. As of the date hereof, the authorized capital stock of the
Company is set forth on <U>Schedule&nbsp;4(c).</U> Except as disclosed in <U>Schedule&nbsp;4(c)</U>, (i)
no shares of the Company&#146;s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii)&nbsp;there are no
outstanding debt securities, (iii)&nbsp;there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or
any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its Subsidiaries, (iv)&nbsp;there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the Securities Act (except the Registration Rights Agreement), (v)
there are no outstanding securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi)&nbsp;there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement and (vii)&nbsp;the Company does not have any
stock appreciation rights or &#147;phantom stock&#148; plans or agreements or any similar plan or agreement.
The Company has furnished to the Investor true and correct copies of the Company&#146;s Certificate of
Incorporation, as amended and as in effect on the date hereof (the &#147;Certificate of Incorporation&#148;),
and the Company&#146;s By-laws, as amended and as in effect on the date hereof (the &#147;By-laws&#148;), and
summaries of the terms of all securities convertible into or exercisable for Common Stock, if any,
and copies of any documents containing the material rights of the holders thereof in respect
thereto.


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;<U>Issuance of Securities</U>. Upon issuance and payment therefor in accordance with the
terms and conditions of this Agreement, the Purchase Shares shall be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock. The Commitment
Shares have been duly authorized and, upon issuance in accordance with the terms hereof, the
Commitment Shares shall be (i)&nbsp;validly issued, fully paid and non-assessable and (ii)&nbsp;free from all
taxes, liens and charges with respect to the issue thereof. 4,000,000 shares of Common Stock have
been duly authorized and reserved for issuance upon purchase under this Agreement as Purchase
Shares. 350,000 shares of Common Stock have been duly authorized and reserved for issuance as
Warrant Shares. 120,000 shares of Common Stock (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split or other similar transaction) have
been duly authorized and reserved for issuance as Additional Commitment Shares in accordance with
this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;<U>No Conflicts</U>. Except as disclosed in <U>Schedule&nbsp;4(e)</U>, the execution,
delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Purchase Shares) will not (i)&nbsp;result in a violation of
the Certificate of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or (ii)&nbsp;conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the rules and regulations
of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected, except in the
case of conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
under clause (ii), which could not reasonably be expected to result in a Material Adverse Effect.
Except as disclosed in <U>Schedule&nbsp;4(e)</U>, neither the Company nor its Subsidiaries is in
violation of any term of or in default under its Certificate of Incorporation, any Certificate of
Designation, Preferences and Rights of any outstanding series of preferred stock of the Company or
By-laws or their organizational charter or by-laws, respectively. Except as disclosed in
<U>Schedule&nbsp;4(e)</U>, neither the Company nor any of its Subsidiaries is in violation of any term
of or is in default under any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company
or its Subsidiaries, except for possible conflicts, defaults, terminations or amendments which
could not reasonably be expected to have a Material Adverse Effect. The business of the Company
and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law,
ordinance, and regulation of any governmental entity, except for possible violations, the sanctions
for which either individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Except as specifically contemplated by this Agreement and as required
under the Securities Act or applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in <U>Schedule&nbsp;4(e)</U>, all consents,
authorizations, orders, filings and registrations which the Company is required to obtain pursuant
to the preceding sentence shall be obtained or effected on or prior to the Commencement Date.
Except as listed in <U>Schedule&nbsp;4(e)</U>, since one year prior to the date hereof, the Company
has not received nor delivered any notices or correspondence from or to the Principal Market. The
Principal Market has not commenced any delisting proceedings against the Company.


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;<U>SEC Documents; Financial Statements</U>. Except as disclosed in <U>Schedule
4(f)</FONT><FONT style="font-size: 10pt"></U>&nbsp;</FONT><FONT style="font-size: 11pt">the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the &#147;SEC Documents&#148;) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC Documents prior to the
expiration of any such extension.&nbsp;&nbsp;As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Documents, 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 the light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Documents 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.&nbsp;&nbsp;Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (&#147;GAAP&#148;), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, 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, immaterial, year-end audit adjustments. Except as listed in <U>Schedule
4(f)</U>, the Company has received no notices or correspondence from the SEC for the one year
preceding the date hereof<B>. </B>The SEC has not commenced any enforcement proceedings against the
Company or any of its subsidiaries.
</FONT>

<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;<U>Absence of Certain Changes</U>. Except as disclosed in <U>Schedule&nbsp;4(g)</U>, since
October&nbsp;1, 2009, there has been no material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries. The Company has
not taken any steps, and does not currently expect to take any steps, to seek protection pursuant
to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings.
The Company is financially solvent and is generally able to pay its debts as they become due<B>.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;<U>Absence of Litigation</U>. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company, the Common Stock or any of the Company&#146;s Subsidiaries or any of the
Company&#146;s or the Company&#146;s Subsidiaries&#146; officers or directors in their capacities as such, which
could reasonably be expected to have a Material Adverse Effect. A description of each action,
suit, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body which, as of the date of this Agreement, is pending or
threatened in writing against or affecting the Company, the Common Stock or any of the Company&#146;s
Subsidiaries or any of the Company&#146;s or the Company&#146;s Subsidiaries&#146; officers or directors in their
capacities as such, is set forth in <U>Schedule&nbsp;4(h)</U>.


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;<U>Acknowledgment Regarding Investor&#146;s Status</U>. The Company acknowledges and agrees
that the Investor is acting solely in the capacity of arm&#146;s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and thereby. The Company further
acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Investor or any of its representatives
or agents in connection with the Transaction Documents and the transactions contemplated hereby and
thereby is merely incidental to the Investor&#146;s purchase of the Securities. The Company further
represents to the Investor that the Company&#146;s decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its representatives and
advisors.


<P align="left" style="font-size: 11pt; text-indent: 4%">(j)&nbsp;<U>No General Solicitation</U>. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation&nbsp;D under the Securities Act) in connection with the
offer or sale of the Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">(k)&nbsp;<U>Intellectual Property Rights</U>. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth on <U>Schedule&nbsp;4(k)</U>, none of the
Company&#146;s material trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights have expired or terminated, or,
by the terms and conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of any material trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on <U>Schedule&nbsp;4(k)</U>,
there is no claim, action or proceeding being made or brought against, or to the Company&#146;s
knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement, which could reasonably be expected to have
a Material Adverse Effect.


<P align="left" style="font-size: 11pt; text-indent: 4%">(l)&nbsp;<U>Environmental Laws</U>. To the best of the Company&#146;s knowledge, the Company and its
Subsidiaries (i)&nbsp;are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (&#147;Environmental Laws&#148;), (ii)
have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii)&nbsp;are in compliance with all
terms and conditions of any such permit, license or approval, except where, in each of the three
foregoing clauses, the failure to so comply could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.


<P align="left" style="font-size: 11pt; text-indent: 4%">(m)&nbsp;<U>Title</U>. The Company and the Subsidiaries have good and marketable title in fee
simple to all real property owned by them and good and marketable title in all personal property
owned by them that is material to the business of the Company and the Subsidiaries, in each case
free and clear of all liens, encumbrances and defects (&#147;Liens&#148;) and , except for Liens as 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 Subsidiaries and Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to
penalties.&nbsp;&nbsp;Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the Company and its
Subsidiaries.</FONT><FONT style="font-size: 10pt"> </FONT><FONT style="font-size: 11pt">Any real property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries.
</FONT>

<P align="left" style="font-size: 11pt; text-indent: 4%">(n)&nbsp;<U>Insurance</U>. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its 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 at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.


<P align="left" style="font-size: 11pt; text-indent: 4%">(o)&nbsp;<U>Regulatory Permits</U>. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.


<P align="left" style="font-size: 11pt; text-indent: 4%">(p)&nbsp;<U>Tax Status</U>. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.


<P align="left" style="font-size: 11pt; text-indent: 4%">(q)&nbsp;<U>Transactions With Affiliates</U>. </FONT><FONT style="font-size: 10pt">&nbsp;</FONT><FONT style="font-size: 11pt">Except as set forth in the SEC
Documents, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently 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, in each case in excess of $100,000 other than for (i)&nbsp;payment of
salary or consulting fees for services rendered, (ii)&nbsp;reimbursement for expenses incurred on behalf
of the Company and (iii)&nbsp;other employee benefits, including stock option agreements under any stock
option plan of the Company.
</FONT>

<P align="left" style="font-size: 11pt; text-indent: 4%">(r)&nbsp;<U>Application of Takeover Protections</U>. The Company and its board of directors have
taken or will take prior to the Commencement Date all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which is or could become
applicable to the Investor as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company&#146;s issuance of the Securities and the Commitment Shares
and the Investor&#146;s ownership of the Securities and the Commitment Shares.


<P align="left" style="font-size: 11pt; text-indent: 4%">(s)&nbsp;</FONT><FONT style="font-size: 10pt">&nbsp;</FONT><FONT style="font-size: 11pt"><U>Disclosure</U>.&nbsp;&nbsp;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 its agents or counsel with
any information that it believes constitutes or might constitute material, non-public information
which is not otherwise disclosed in the Registration Statement or prospectus supplements
thereto.&nbsp;&nbsp;&nbsp;The Company understands and confirms that the Investor will rely on the foregoing
representation in effecting purchases and sales of securities of the Company.&nbsp;&nbsp;All of the
disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its
business and the transactions contemplated hereby, including the disclosure schedules to this
Agreement, is true and correct and does 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. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit 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 and when made, not misleading.&nbsp;&nbsp;The Company acknowledges and agrees that
the Investor 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 hereof.
</FONT>

<P align="left" style="font-size: 11pt; text-indent: 4%">(t)&nbsp;<U>Foreign Corrupt Practices</U>. </FONT><FONT style="font-size: 10pt">&nbsp;</FONT><FONT style="font-size: 11pt">Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the Company, has (i)&nbsp;directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii)&nbsp;made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii)&nbsp;failed to disclose fully any contribution made by
the Company (or made by any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv)&nbsp;violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
</FONT>

<P align="left" style="font-size: 11pt; text-indent: 4%"><B>5.&nbsp;COVENANTS.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;<U>Filing of Form 8-K, Registration Statement, and NASDAQ Notification</U>. The Company
agrees that it shall, within the time required under the Exchange Act file a Report on Form 8-K
disclosing this Agreement and the transaction contemplated hereby. The Company shall also file
within ten (10)&nbsp;Business Days from the date hereof (i)&nbsp;with the SEC a new registration statement
covering only the sale of the Additional Commitment Shares, the Warrant Shares and Purchase Shares
in accordance with the terms of the Registration Rights Agreement between the Company and the
Investor, dated as of the date hereof (&#147;Registration Rights Agreement&#148;), and (ii)&nbsp;with the NASDAQ
Stock Market LLC a Notification: Listing of Additional Shares for the listing of all of the
Purchase Shares and Commitment Shares on the NASDAQ Global Market.


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;<U>Blue Sky</U>. The Company shall take such action, if any, as is reasonably necessary
in order to obtain an exemption for or to qualify (i)&nbsp;the initial sale of the Commitment Shares and
any Purchase Shares to the Investor under this Agreement and (ii)&nbsp;any subsequent resale of the
Commitment Shares and any Purchase Shares by the Investor, in each case, under applicable
securities or &#147;Blue Sky&#148; laws of the states of the United States in such states as is reasonably
requested by the Investor from time to time, and shall provide evidence of any such action so taken
to the Investor.


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;<U>Listing</U>. The Company shall promptly secure the listing of all of the Purchase
Shares and Commitment Shares upon each national securities exchange and automated quotation system,
if any, upon which shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of
all such securities from time to time issuable under the terms of the Transaction Documents. The
Company shall maintain the Common Stock&#146;s authorization for quotation on the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action that would be reasonably
expected to result in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Business Day, provide to the
Investor copies of any notices it receives from the Principal Market regarding the continued
eligibility of the Common Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section.


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;<U>Limitation on Short Sales and Hedging Transactions</U>. The Investor agrees that
beginning on the date of this Agreement and ending on the date of termination of this Agreement as
provided in Section&nbsp;11(k), the Investor and its agents, representatives and affiliates shall not in
any manner whatsoever enter into or effect, directly or indirectly, any (i) &#147;short sale&#148; (as such
term is defined in Section&nbsp;242.200 of Regulation&nbsp;SHO of the Exchange Act) of the Common Stock or
(ii)&nbsp;hedging transaction, which establishes a net short position with respect to the Common Stock.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;<U>Issuance of Commitment Shares</U>. Immediately upon the execution of this Agreement,
the Company shall issue to the Investor as consideration for the Investor entering into this
Agreement 120,000 shares of Common Stock (the &#147;Initial Commitment Shares&#148;). In connection with
each purchase of Purchase Shares hereunder, the Company agrees to issue to the Investor a number of
shares of Common Stock (the &#147;Additional Commitment Shares&#148; and together with the Initial Commitment
Shares, the &#147;Commitment Shares&#148;) equal to the product of (x)&nbsp;120,000 and (y)&nbsp;the Purchase Amount
Fraction. The &#147;Purchase Amount Fraction&#148; shall mean a fraction, the numerator of which is the
Purchase Amount purchased by the Investor with respect to such purchase of Purchase Shares and the
denominator of which is Four Million Purchase Shares (4,000,000). The Additional Commitment Shares
shall be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction. The Initial Commitment Shares shall be issued in certificated
form and shall bear the following restrictive legend:


<P align="left" style="margin-left:4%; margin-right:5%; font-size: 11pt"><B>THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1)&nbsp;RULE 144 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (2)&nbsp;AN OPINION OF HOLDER&#146;S COUNSEL, IN A
CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;<U>Due Diligence</U>. The Investor shall have the right, from time to time as the
Investor may reasonably deem appropriate, to perform reasonable due diligence on the Company during
normal business hours. The Company and its officers and employees shall provide information and
reasonably cooperate with the Investor in connection with any reasonable request by the Investor
related to the Investor&#146;s due diligence of the Company. Each party hereto agrees not to disclose
any Confidential Information of the other party to any third party and shall not use the
Confidential Information for any purpose other than in connection with, or in furtherance of, the
transactions contemplated hereby. Each party hereto acknowledges that the Confidential Information
shall remain the property of the disclosing party and agrees that it shall take all reasonable
measures to protect the secrecy of any Confidential Information disclosed by the other party. The
Company confirms that neither it nor any other Person acting on its behalf shall provide the
Investor or its agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in the Registration
Statement or prospectus supplements thereto.


<P align="left" style="font-size: 11pt; text-indent: 5%">(g)&nbsp;<U>No Variable Rate Transactions.</U> From the date hereof until the Maturity Date, the
Company shall be prohibited from effecting or entering into an agreement to effect any issuance by
the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash
consideration (or a combination of units thereof) involving a Variable Rate Transaction other than
in connection with an Exempt Issuance.&nbsp;&nbsp;&#147;Variable Rate Transaction&#148; means a transaction in which
the Company (i)&nbsp;issues or sells any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive additional shares of Common Stock
either (A)&nbsp;at a conversion price, exercise price or exchange rate or other price that is based upon
and/or varies with the trading prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities, or (B)&nbsp;with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii)&nbsp;enters
into any agreement, including, but not limited to, an equity line of credit, whereby the Company
may sell securities at a future determined price. &#147;<U>Exempt Issuance</U>&#148; means the issuance of
(a)&nbsp;shares of Common Stock or options to employees, officers, directors or vendors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b)&nbsp;securities upon the exercise or exchange
of or conversion of any Securities issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise price, exchange
price or conversion price of such securities, (c)&nbsp;securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of the Company, which
acquisitions or strategic transactions can have a Variable Rate Transaction component,&nbsp;&nbsp;provided
that any such issuance shall only be to a Person (or to the equity holders of a Person) which is,
itself or through its subsidiaries, an operating company or an asset in a business synergistic with
the business of the Company and shall provide to the Company additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in
securities, and (d)&nbsp;common stock purchase warrants, and shares of Common Stock under common stock
purchase warrants, which warrants contain adjustment provisions substantially the same as the
adjustment provisions contained in Section&nbsp;4, &#147;Adjustments&#148;, of the Company&#146;s Common Stock Purchase
Warrants issued in March&nbsp;2008 and in December&nbsp;2009.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>6.&nbsp;TRANSFER AGENT INSTRUCTIONS.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">Immediately upon the execution of this Agreement, the Company shall deliver to the Transfer
Agent a letter in the form as set forth as <U>Exhibit&nbsp;E</U> attached hereto with respect to the
issuance of the Commitment Shares. On the Commencement Date, the Company shall cause any of the
Purchase Shares, Warrant Shares and Additional Commitment Shares, to be issued under this Agreement
to be issued without any restrictive legend unless the Investor expressly consents otherwise. The
Company shall issue irrevocable instructions to the Transfer Agent, and any subsequent transfer
agent, to issue Purchase Shares in the name of the Investor for the Purchase Shares (the
&#147;Irrevocable Transfer Agent Instructions&#148;). The Company warrants to the Investor that no
instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section&nbsp;6,
will be given by the Company to the Transfer Agent with respect to the Purchase Shares and that the
Additional Commitment Shares,<B>, </B>Warrant Shares and the Purchase Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent provided in this
Agreement.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONDITIONS TO THE COMPANY&#146;S RIGHT TO COMMENCE</B></TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%"><B>SALES OF SHARES OF COMMON STOCK.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">The right of the Company hereunder to commence sales of the Purchase Shares is subject to the
satisfaction of each of the following conditions on or before the Commencement Date (the date that
the Company may begin sales):


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;The Investor shall have executed each of the Transaction Documents and delivered the same
to the Company;


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;A registration statement covering the sale of all of the Additional Commitment Shares,
Warrant Shares and Purchase Shares shall have been declared effective under the Securities Act by
the SEC and no stop order with respect to the registration statement shall be pending or threatened
by the SEC; and


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;The Purchase Shares, Warrant Shares and Commitment Shares shall be approved for listing
upon the Principal Market.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONDITIONS TO THE INVESTOR&#146;S OBLIGATION TO MAKE</B></TD>
</TR>

</TABLE>



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%"><B>PURCHASES OF SHARES OF COMMON STOCK.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">The obligation of the Investor to buy Purchase Shares under this Agreement is subject to the
satisfaction of each of the following conditions on or before the Commencement Date (the date that
the Company may begin sales) and once such conditions have been initially satisfied, there shall
not be any ongoing obligation to satisfy such conditions after the Commencement has occurred:


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;The Company shall have executed each of the Transaction Documents and delivered the same
to the Investor;


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;The Company shall have issued to the Investor the Commitment Shares;


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;The Common Stock shall be authorized for quotation on the Principal Market, trading in the
Common Stock shall not have been within the last 365&nbsp;days suspended by the SEC or the Principal
Market and the Purchase Shares, Warrant Shares and Commitment Shares shall be approved for listing
upon the Principal Market;


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;The Investor shall have received the opinions of the Company&#146;s legal counsel dated as of
the Commencement Date substantially in the form of <U><B>Exhibit&nbsp;A</B></U> attached hereto;


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;The representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and warranties is already
qualified as to materiality in Section&nbsp;4 above, in which case, such representations and warranties
shall be true and correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Commencement Date. The Investor shall
have received a certificate, executed by the CEO, President or CFO of the Company, dated as of the
Commencement Date, to the foregoing effect in the form attached hereto as <U><B>Exhibit&nbsp;B</B></U>;


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;The Board of Directors of the Company shall have adopted resolutions in the form attached
hereto as <U><B>Exhibit&nbsp;C</B></U> which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;As of the Commencement Date, the Company shall have reserved out of its authorized and
unissued Common Stock, (A)&nbsp;solely for the purpose of effecting purchases of Purchase Shares
hereunder, 4,000,000 shares of Common Stock, (B)&nbsp;as Warrant Shares, 350,000 shares of Common Stock,
and (C)&nbsp;as Additional Commitment Shares in accordance with Section 5(e) hereof, 120,000 shares of
Common Stock; provided, however, that the Investor and the Company acknowledge and agree that the
Company&#146;s compliance with the requirement of Section 8(f) shall be treated as compliance with the
requirement of this paragraph (g);


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;The Irrevocable Transfer Agent Instructions, in form acceptable to the Investor shall have
been delivered to and acknowledged in writing by the Company and the Company&#146;s Transfer Agent;


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;The Company shall have delivered to the Investor a certificate evidencing the
incorporation and good standing of the Company in the State of Delaware issued by the Secretary of
State of the State of Delaware as of a date within ten (10)&nbsp;Business Days of the Commencement Date;


<P align="left" style="font-size: 11pt; text-indent: 4%">(j)&nbsp;The Company shall have delivered to the Investor a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware within ten (10)
Business Days of the Commencement Date;


<P align="left" style="font-size: 11pt; text-indent: 4%">(k)&nbsp;The Company shall have delivered to the Investor a secretary&#146;s certificate executed by the
Secretary of the Company, dated as of the Commencement Date, in the form attached hereto as
<U><B>Exhibit&nbsp;D</B></U>;


<P align="left" style="font-size: 11pt; text-indent: 4%">(l)&nbsp;A registration statement covering the sale of all of the Additional Commitment Shares,
Warrant Shares and Purchase Shares shall have been declared effective under the Securities Act by
the SEC and no stop order with respect to the registration statement shall be pending or threatened
by the SEC. The Company shall have prepared and delivered to the Investor a final and complete
form of prospectus, dated and current as of the Commencement Date, to be used by the Investor in
connection with any sales of any Additional Commitment Shares, Warrant Shares or any Purchase
Shares, and to be filed by the Company one Business Day after the Commencement Date. The Company
shall have made all filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Commitment Shares, Warrant Shares and Purchase Shares pursuant to
this Agreement in compliance with such laws;


<P align="left" style="font-size: 11pt; text-indent: 4%">(m)&nbsp;No Event of Default has occurred, or any event which, after notice and/or lapse of time,
would become an Event of Default has occurred;


<P align="left" style="font-size: 11pt; text-indent: 4%">(n)&nbsp;On or prior to the Commencement Date, the Company shall take all necessary action, if any,
and such actions as reasonably requested by the Investor, in order to render inapplicable any
control share acquisition, business combination, shareholder rights plan or poison pill (including
any distribution under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which is or could become
applicable to the Investor as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company&#146;s issuance of the Securities and the Commitment Shares
and the Investor&#146;s ownership of the Securities and the Commitment Shares; and


<P align="left" style="font-size: 11pt; text-indent: 4%">(o)&nbsp;The Company shall have provided the Investor with the information requested by the
Investor in connection with its due diligence requests made prior to, or in connection with, the
Commencement, in accordance with the terms of Section 5(f) hereof.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INDEMNIFICATION.</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 11pt">In consideration of the Investor&#146;s execution and delivery of the Transaction Documents and
acquiring the Securities hereunder and in addition to all of the Company&#146;s other obligations under
the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the
Investor and all of its affiliates, shareholders, officers, directors, employees and direct or
indirect investors and any of the foregoing person&#146;s agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this
Agreement) (collectively, the &#147;Indemnitees&#148;) from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys&#146; fees and
disbursements (the &#147;Indemnified Liabilities&#148;), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a)&nbsp;any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b)&nbsp;any breach of any covenant, agreement or obligation of
the Company contained in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, or (c)&nbsp;any cause of action, suit or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, other than with respect to Indemnified Liabilities which directly
and primarily result from the gross negligence or willful misconduct of the Indemnitee. To the
extent that the foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>10.&nbsp;EVENTS OF DEFAULT.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">An &#147;Event of Default&#148; shall be deemed to have occurred at any time as any of the following
events occurs:


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;the effectiveness of a registration statement registering the Purchase Shares, Additional
Commitment Shares or Warrant Shares lapses for any reason (including, without limitation, the
issuance of a stop order) or is unavailable to the Investor for sale of any or all of the Purchase
Shares, Additional Commitment Shares or Warrant Shares (&#147;Registrable Securities&#148;), and such lapse
or unavailability continues for a period of ten (10)&nbsp;consecutive Business Days or for more than an
aggregate of thirty (30)&nbsp;Business Days in any 365-day period;


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;the suspension from trading or failure of the Common Stock to be listed on the Principal
Market for a period of three (3)&nbsp;consecutive Business Days;


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;the delisting of the Company&#146;s Common Stock from the Principal Market, provided, however,
that the Common Stock is not immediately thereafter trading on the New York Stock Exchange, the
Nasdaq Global Select Market, the Nasdaq Capital Market, the NYSE Amex or the OTC Bulletin Board;


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;the failure for any reason by the Transfer Agent to issue Purchase Shares to the Investor
within five (5)&nbsp;Business Days after the applicable Purchase Date which the Investor is entitled to
receive;


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;the Company breaches any representation, warranty, covenant or other term or condition
under any Transaction Document if such breach could have a Material Adverse Effect and except, in
the case of a breach of a covenant which is reasonably curable, only if such breach continues for a
period of at least ten (10)&nbsp;Business Days;


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;if any Person commences a proceeding against the Company pursuant to or within the meaning
of any Bankruptcy Law ;


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;if the Company pursuant to or within the meaning of any Bankruptcy Law; (A)&nbsp;commences a
voluntary case, (B)&nbsp;consents to the entry of an order for relief against it in an involuntary case,
(C)&nbsp;consents to the appointment of a Custodian of it or for all or substantially all of its
property, (D)&nbsp;makes a general assignment for the benefit of its creditors, (E)&nbsp;becomes insolvent,
or (F)&nbsp;is generally unable to pay its debts as the same become due;


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that
(A)&nbsp;is for relief against the Company in an involuntary case, (B)&nbsp;appoints a Custodian of the
Company or for all or substantially all of its property, or (C)&nbsp;orders the liquidation of the
Company or any Subsidiary; or


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;a material adverse change in the business, properties, operations, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole; or


<P align="left" style="font-size: 11pt; text-indent: 4%">(j)&nbsp;if at any time after the Commencement Date, the &#147;Exchange Cap&#148; is reached. The &#147;Exchange
Cap&#148; shall be deemed to be reached at such time if, upon the purchase of Common Stock under this
Agreement, the issuance of such shares of Common Stock would exceed that number of shares of Common
Stock which the Company may issue under this Agreement without breaching the Company&#146;s obligations
under the rules or regulations of the Principal Market.


<P align="left" style="font-size: 11pt">In addition to any other rights and remedies under applicable law and this Agreement, including the
Investor termination rights under Section 11(k) hereof, so long as an Event of Default has occurred
and is continuing, or if any event which, after notice and/or lapse of time, would become an Event
of Default, has occurred and is continuing, or so long as the Purchase Price is below the Floor
Price, the Investor shall not be obligated to purchase any shares of Common Stock under this
Agreement. If pursuant to or within the meaning of any Bankruptcy Law, the Company commences a
voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed
for the Company or for all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of Default as
described in Sections&nbsp;10(f), 10(g) and 10(h) hereof) this Agreement shall automatically terminate
without any liability or payment to the Company without further action or notice by any Person. No
such termination of this Agreement under Section&nbsp;11(k)(i) or 11(k)(iv) shall affect the Company&#146;s
or the Investor&#146;s obligations under this Agreement with respect to pending purchases or Additional
Purchases and the Company and the Investor shall complete their respective obligations with respect
to any pending purchases or Additional Purchases under this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>11.&nbsp;MISCELLANEOUS.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">(a)&nbsp;Dispute Resolution.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(i)&nbsp;Neither party shall institute a proceeding in any court to resolve a dispute
between the parties before that party has sought to resolve the dispute through direct
negotiation with the other party.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(ii)&nbsp;If the dispute is not resolved within two (2)&nbsp;weeks after a demand for direct
negotiation, either party may then seek relief through arbitration in Chicago, Illinois,
administered by the American Arbitration Association under its commercial arbitration rules.
The arbitrator(s) shall decide all questions of arbitrability of the dispute and shall base
the award on applicable laws and judicial precedent and include in such award a statement of
the reasons upon which the award is based. Judgment on the award rendered by the
arbitrator(s) may be entered in any court set forth in Section 11(b) and such judgment shall
be final, binding and non-appealable.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(iii)&nbsp;Nothing herein shall prevent either party from obtaining injunctive relief
without arbitration.


<P align="left" style="font-size: 11pt; text-indent: 4%">(b)&nbsp;<U>Governing Law; Jurisdiction; Jury Trial</U>. The corporate laws of the State of
Delaware shall govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement and the other Transaction Documents shall be governed by the
internal laws of the State of Illinois, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Illinois or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of Illinois. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of Chicago, for the adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such 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. <B>EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.</B>


<P align="left" style="font-size: 11pt; text-indent: 4%">(c)&nbsp;<U>Counterparts</U>. This Agreement may be executed in two or more identical
counterparts, all of which 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;
provided that a facsimile signature or signature delivered by e-mail in a &#147;.pdf&#148; format data file
shall be considered due execution and shall be binding upon the signatory thereto with the same
force and effect as if the signature were an original, not a facsimile signature or a signature in
a &#147;.pdf&#148; format data file .


<P align="left" style="font-size: 11pt; text-indent: 4%">(d)&nbsp;<U>Headings</U>. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(e)&nbsp;<U>Severability</U>. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.


<P align="left" style="font-size: 11pt; text-indent: 4%">(f)&nbsp;<U>Entire Agreement</U>. With the exception of the Mutual Nondisclosure Agreement
between the parties dated as of January&nbsp;19, 2010, this Agreement supersedes all other prior oral or
written agreements between the Investor, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the other Transaction
Documents and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. The Company acknowledges and agrees that is has not
relied on, in any manner whatsoever, any representations or statements, written or oral, other than
as expressly set forth in this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(g)&nbsp;<U>Notices</U>. Any notices, consents or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed to have been
delivered: (i)&nbsp;upon receipt when delivered personally; (ii)&nbsp;upon receipt when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii)&nbsp;one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:



<P align="left" style="margin-left:4%; font-size: 11pt">If to the Company:



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">Energy Focus, Inc.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">32000 Aurora Road



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">Solon, OH 44139



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">Telephone: 440-715-1300



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">Facsimile: 440-715-1314



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%"><FONT style="font-size: 10pt">Attention: Chief Executive Officer
</FONT>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 11pt">With a copy to:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11pt"><BR></FONT></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left"><FONT style="font-size: 11pt">Cowden &#038; Humphrey Co. LPA</FONT><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left"><FONT style="font-size: 11pt">4600 Euclid Avenue, Suite&nbsp;400</FONT><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left"><FONT style="font-size: 11pt">Cleveland, Ohio 44103-3748</FONT><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 11pt">Telephone:<BR>
Facsimile:<BR>
Attention:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11pt">216-241-2880<BR>
216-241-2881<BR>
Gerald W. Cowden, Esq.</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <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"><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">Lincoln Park Capital Fund, LLC<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">440 North Wells, Suite&nbsp;620<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chicago, IL 60654<BR>
Telephone:<BR>
Facsimile:<BR>
Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><BR>
312-822-9300<BR>
312-822-9301<BR>
Josh Scheinfeld/Jonathan Cope</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to the Transfer Agent:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">BNY Mellon Shareowner Services, LLC<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">480 Washington Boulevard, 29<sup>th</sup> Floor<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Telephone:<BR>
Facsimile:<BR>
Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">201-680-3627<BR>
201-680-4606<BR>
Ms.&nbsp;Sandra L. Moore, Vice President</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 11pt">or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3)&nbsp;Business
Days prior to the effectiveness of such change. Written confirmation of receipt (A)&nbsp;given by the
recipient of such notice, consent or other communication, (B)&nbsp;mechanically or electronically
generated by the sender&#146;s facsimile machine containing the time, date, and recipient facsimile
number or (C)&nbsp;provided by a nationally recognized overnight delivery service, shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii)&nbsp;or (iii)&nbsp;above, respectively.


<P align="left" style="font-size: 11pt; text-indent: 4%">(h)&nbsp;<U>Successors and Assigns</U>. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of the
Investor, including by merger or consolidation. The Investor may not assign its rights or
obligations under this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(i)&nbsp;<U>No Third Party Beneficiaries</U>. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.


<P align="left" style="font-size: 11pt; text-indent: 4%">(j)&nbsp;<U>Publicity</U>. The Investor shall have the right to approve before issuance any press
release, SEC filing or any other public disclosure made by or on behalf of the Company whatsoever
with respect to, in any manner, the Investor, its purchases hereunder or any aspect of this
Agreement or the transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of the Investor, to make any press release or other public
disclosure (including any filings with the SEC) with respect to such transactions as is required by
applicable law and regulations so long as the Company and its counsel consult with the Investor in
connection with any such press release or other public disclosure at least two (2)&nbsp;Business Days
prior to its release. The Investor must be provided with a copy thereof at least two (2)&nbsp;Business
Days prior to any release or use by the Company thereof. The Company agrees and acknowledges that
its failure to fully comply with this provision constitutes a material adverse effect on its
ability to perform its obligations under this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(k)&nbsp;<U>Further Assurances</U>. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.


<P align="left" style="font-size: 11pt; text-indent: 4%">(l)&nbsp;<U>Termination</U>. This Agreement may be terminated only as follows:



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(i)&nbsp;By the Investor any time an Event of Default exists without any liability or
payment to the Company. However, if pursuant to or within the meaning of any Bankruptcy
Law, the Company commences a voluntary case or any Person commences a proceeding against the
Company, a Custodian is appointed for the Company or for all or substantially all of its
property, or the Company makes a general assignment for the benefit of its creditors, (any
of which would be an Event of Default as described in Sections&nbsp;10(f), 10(g) and 10(h)
hereof) this Agreement shall automatically terminate without any liability or payment to the
Company without further action or notice by any Person. No such termination of this
Agreement under this Section&nbsp;11(k)(i) shall affect the Company&#146;s or the Investor&#146;s
obligations under this Agreement with respect to pending purchases or Additional Purchases
and the Company and the Investor shall complete their respective obligations with respect to
any pending purchases or Additional Purchases under this Agreement.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(ii)&nbsp;In the event that the Commencement shall not have occurred, the Company shall have
the option to terminate this Agreement for any reason or for no reason without any liability
whatsoever of any party to any other party under this Agreement.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(iii)&nbsp;In the event that the Commencement shall not have occurred on or before May&nbsp;31,
2010, due to the failure to satisfy the conditions set forth in Sections&nbsp;7 and 8 above with
respect to the Commencement, the non-breaching party shall have the option to terminate this
Agreement at the close of business on such date or thereafter without liability of any party
to any other party.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(iv)&nbsp;At any time after the Commencement Date, the Company shall have the option to
terminate this Agreement for any reason or for no reason by delivering notice (a &#147;Company
Termination Notice&#148;) to the Investor electing to terminate this Agreement without any
liability whatsoever of any party to any other party under this Agreement. The Company
Termination Notice shall not be effective until one (1)&nbsp;Business Day after it has been
received by the Investor. No such termination of this Agreement under this Section&nbsp;11(k)(iv)
shall affect the Company&#146;s or the Investor&#146;s obligations under this Agreement with respect
to pending purchases or Additional Purchases and the Company and the Investor shall complete
their respective obligations with respect to any pending purchases or Additional Purchases
under this Agreement.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(v)&nbsp;This Agreement shall automatically terminate on the date that the Company sells and
the Investor purchases the full Available Amount as provided herein, without any action or
notice on the part of any party and without any liability whatsoever of any party to any
other party under this Agreement.



<P align="left" style="margin-left:4%; font-size: 11pt; text-indent: 4%">(vi)&nbsp;If by the Maturity Date for any reason or for no reason the full Available Amount
under this Agreement has not been purchased as provided for in Section&nbsp;2 of this Agreement,
this Agreement shall automatically terminate on the Maturity Date, without any action or
notice on the part of any party and without any liability whatsoever of any party to any
other party under this Agreement.


<P align="left" style="font-size: 11pt">Except as set forth in Sections&nbsp;11(k)(i) (in respect of an Event of Default under Sections&nbsp;10(f),
10(g) and 10(h)) and 11(k)(vi), any termination of this Agreement pursuant to this Section 11(k)
shall be effected by written notice from the Company to the Investor, or the Investor to the
Company, as the case may be, setting forth the basis for the termination hereof. The
representations and warranties of the Company and the Investor contained in Sections&nbsp;3, 4 and 6
hereof, the indemnification provisions set forth in Section&nbsp;9 hereof and the agreements and
covenants set forth in Section&nbsp;11, shall survive the Commencement and any termination of this
Agreement. No termination of this Agreement shall affect the Company&#146;s or the Investor&#146;s rights or
obligations (i)&nbsp;under the Registration Rights Agreement which shall survive any such termination or
(ii)&nbsp;under this Agreement with respect to pending purchases or Additional Purchases and the Company
and the Investor shall complete their respective obligations with respect to any pending purchases
or Additional Purchases under this Agreement.


<P align="left" style="font-size: 11pt; text-indent: 4%">(m)&nbsp;<U>No Financial Advisor, Placement Agent, Broker or Finder</U>. The Company represents
and warrants to the Investor that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated hereby. The Investor represents and
warrants to the Company that it has not engaged any financial advisor, placement agent, broker or
finder in connection with the transactions contemplated hereby. The Company shall be responsible
for the payment of any fees or commissions, if any, of any financial advisor, placement agent,
broker or finder relating to or arising out of the transactions contemplated hereby. The Company
shall pay, and hold the Investor harmless against, any liability, loss or expense (including,
without limitation, attorneys&#146; fees and out of pocket expenses) arising in connection with any such
claim.


<P align="left" style="font-size: 11pt; text-indent: 4%">(n)&nbsp;<U>No Strict Construction</U>. 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.


<P align="left" style="font-size: 11pt; text-indent: 4%">(o)&nbsp;<U>Remedies, Other Obligations, Breaches and Injunctive Relief</U>. The parties&#146;
remedies provided in this Agreement shall be cumulative and in addition to all other remedies
available to them under this Agreement, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy of the parties contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein
shall limit the parties&#146; right to pursue actual damages for any failure by the other party to
comply with the terms of this Agreement. Each party acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the the other party and that the remedy at law
for any such breach may be inadequate. Each party therefore agrees that, in the event of any such
breach or threatened breach, the other party shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss
and without any bond or other security being required.


<P align="left" style="font-size: 11pt; text-indent: 4%">(p)&nbsp;<U>Enforcement Costs</U>. If: (i)&nbsp;this Agreement is placed by a party (the &#147;enforcing
party&#148;) in the hands of an attorney for enforcement or is enforced by the enforcing party through
any legal proceeding; or (ii)&nbsp;an attorney is retained to represent the enforcing party in any
bankruptcy, reorganization, receivership or other proceedings affecting creditors&#146; rights and
involving a claim under this Agreement; or (iii)&nbsp;an attorney is retained to represent the enforcing
party in any other proceedings whatsoever in connection with this Agreement, then the other party
shall pay to the enforcing party, as incurred by the enforcing party, all reasonable costs and
expenses including attorneys&#146; fees incurred in connection therewith, in addition to all other
amounts due hereunder.


<P align="left" style="font-size: 11pt; text-indent: 4%">(q)&nbsp;<U>Failure or Indulgence Not Waiver</U>. No failure or delay in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege.


<P align="center" style="font-size: 11pt"><B>* * * * *</B>




<P align="center" style="font-size: 10pt; display: none">1
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<P align="left" style="font-size: 11pt; text-indent: 4%"><B>IN WITNESS WHEREOF, </B>the Investor and the Company have caused this Purchase Agreement to be
duly executed as of the date first written above.


<P align="left" style="font-size: 11pt"><U><B>THE COMPANY:</B></U>


<P align="left" style="font-size: 11pt"><B>ENERGY FOCUS, INC.</B>


<P align="left" style="font-size: 11pt">By:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Joseph G. Kaveski<BR>
Title: Chief Executive Officer<BR>


<P align="left" style="font-size: 11pt"><U><B>INVESTOR:</B></U>


<P align="left" style="font-size: 11pt"><B>LINCOLN PARK CAPITAL FUND, LLC</B>


<P align="left" style="font-size: 11pt"><BR>
<B>BY: LINCOLN PARK CAPITAL PARTNERS, LLC</B>
<BR>
<B>BY: ROCKLEDGE CAPITAL CORPORATION</B>


<P align="left" style="font-size: 11pt">By:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Josh Scheinfeld<BR>
Title: President<BR>



<P align="center" style="font-size: 10pt; display: none">2




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<P align="right" style="font-size: 10pt"><FONT style="font-size: 11pt"><B>EXECUTION COPY</B></FONT>



<P align="center" style="font-size: 11pt"><B>REGISTRATION RIGHTS AGREEMENT</B>



<P align="left" style="font-size: 11pt; text-indent: 4%"><B>REGISTRATION RIGHTS AGREEMENT </B>(this &#147;<B>Agreement</B>&#148;), dated as of March&nbsp;17, 2010, by and between
<B>ENERGY FOCUS, INC., </B>a Delaware corporation, (the &#147;<B>Company</B>&#148;), and <B>LINCOLN PARK CAPITAL FUND, LLC, </B>an
Illinois limited liability company (together with it permitted assigns, the &#147;<B>Buyer</B>&#148;). Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in
the Purchase Agreement by and between the parties hereto, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the &#147;<B>Purchase Agreement</B>&#148;).


<P align="center" style="font-size: 11pt"><B>WHEREAS:</B>



<P align="left" style="font-size: 11pt; text-indent: 4%">The Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to issue to the Buyer up to Four Million Purchase Shares and to induce the Buyer to
enter into the Purchase Agreement, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the &#147;<B>Securities Act</B>&#148;), and applicable state securities
laws.


<P align="left" style="font-size: 11pt; text-indent: 4%"><B>NOW, THEREFORE, </B>in consideration of the promises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyer hereby agree as follows:


<P align="left" style="font-size: 11pt; text-indent: 4%">1.&nbsp;<U>DEFINITIONS</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">As used in this Agreement, the following terms shall have the following meanings:


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;"<B>Investor</B>&#148; means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section&nbsp;9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section&nbsp;9.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;"<B>Person</B>&#148; means any person or entity including but not limited to any corporation, a limited
liability company, an association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;"<B>Register</B>,&#148; &#147;<B>registered</B>,&#148; and &#147;<B>registration</B>&#148; refer to a registration effected by preparing
and filing one or more registration statements of the Company in compliance with the Securities Act
and pursuant to Rule&nbsp;415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis (&#147;<B>Rule&nbsp;415</B>&#148;), and the declaration or ordering of effectiveness of
such registration statement(s) by the United States Securities and Exchange Commission (the &#147;<B>SEC</B>&#148;).


<P align="left" style="font-size: 11pt; text-indent: 8%">d.&nbsp;"<B>Registrable Securities</B>&#148; means the Purchase Shares which have been, or which may from time
to time be, issued or issuable to the Investor upon purchases of the Available Amount under the
Purchase Agreement (without regard to any limitation or restriction on purchases) the Warrant
Shares issuable upon exercise of the Warrants and the Additional Commitment Shares issued or
issuable to the Investor and any shares of capital stock issued or issuable with respect to the
Purchase Shares, the Additional Commitment Shares and the Warrant Shares or the Purchase Agreement
as a result of any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitation on purchases under the Purchase Agreement.


<P align="left" style="font-size: 11pt; text-indent: 8%">e.&nbsp;"<B>Registration Statement</B>&#148; means the registration statement of the Company covering only the
sale of the Registrable Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">2.&nbsp;<U>REGISTRATION</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;<U>Mandatory Registration.</U> The Company shall use reasonable best efforts to within
twenty (20)&nbsp;Business Days from the date hereof file with the SEC the Registration Statement. The
Registration Statement shall register only the Registrable Securities and no other securities of
the Company. The Investor and its counsel shall have a reasonable opportunity to review and
comment upon such registration statement or amendment to such registration statement and any
related prospectus prior to its filing with the SEC. The Investor shall use its reasonable best
efforts to comment upon such registration statement or amendment to such registration statement and
any related prospectus within five (5)&nbsp;calendar days from the date the Investor receives the final
version of such statement, amendment, or prospectus. Investor shall furnish all information
reasonably requested by the Company for inclusion therein. The Company shall use its best efforts
to have the Registration Statement or amendment declared effective by the SEC at the earliest
possible date. The Company shall use reasonable best efforts to keep the Registration Statement
effective pursuant to Rule&nbsp;415 promulgated under the Securities Act and available for sales of all
of the Registrable Securities at all times until the earlier of (i)&nbsp;the date as of which the
Investor may sell all of the Registrable Securities without restriction pursuant to the last
sentence of Rule&nbsp;144(b)(1)(i) promulgated under the Securities Act (or successor thereto) or (ii)
the date on which (A)&nbsp;the Investor shall have sold all the Registrable Securities and no Available
Amount remains under the Purchase Agreement (the &#147;<B>Registration Period</B>&#148;). The Registration
Statement (including any amendments or supplements thereto and prospectuses contained therein)
shall not contain any 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 in
which they were made, not misleading.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;<U>Rule&nbsp;424 Prospectus</U>. The Company shall, as required by applicable securities
regulations, from time to time file with the SEC, pursuant to Rule&nbsp;424 promulgated under the
Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with
sales of the Registrable Securities under the Registration Statement. The Investor and its counsel
shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing
with the SEC. The Investor shall use its reasonable best efforts to comment upon such prospectus
within one (1)&nbsp;Business Day from the date the Investor receives the final version of such
prospectus.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;<U>Sufficient Number of Shares Registered</U>. In the event the number of shares
available under the Registration Statement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement or file a new registration statement
(a &#148;<B>New Registration Statement</B>&#148;), so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than ten (10)&nbsp;Business Days after the necessity therefor
arises. The Company shall use it reasonable best efforts to cause such amendment and/or New
Registration Statement to become effective as soon as practicable following the filing thereof.


<P align="left" style="font-size: 11pt; text-indent: 4%">3.&nbsp;<U>RELATED OBLIGATIONS</U>.


<P align="left" style="font-size: 11pt; text-indent: 4%">With respect to the Registration Statement and whenever any Registrable Securities are to be
registered pursuant to Section 2(b) including on any New Registration Statement, the Company shall
use its reasonable best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to any registration statement and the prospectus used in connection
with such registration statement, which prospectus is to be filed pursuant to Rule&nbsp;424 promulgated
under the Securities Act, as may be necessary to keep the Registration Statement or any New
Registration Statement effective at all times during the Registration Period, and, during such
period, comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement or any New Registration
Statement until such time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers thereof as set forth
in such registration statement.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;The Company shall permit the Investor to review and comment upon the Registration Statement
or any New Registration Statement and all amendments and supplements thereto at least two (2)
Business Days prior to their filing with the SEC, and not file any document in a form to which
Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon
the Registration Statement or any New Registration Statement and any amendments or supplements
thereto within two (2)&nbsp;Business Days from the date the Investor receives the final version
thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC
or the staff of the SEC to the Company or its representatives relating to the Registration
Statement or any New Registration Statement.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;Upon request of the Investor, the Company shall furnish to the Investor, (i)&nbsp;promptly after
the same is prepared and filed with the SEC, at least one copy of such registration statement and
any amendment(s) thereto, including financial statements and schedules, all documents incorporated
therein by reference and all exhibits, (ii)&nbsp;upon the effectiveness of any registration statement, a
copy of the prospectus included in such registration statement and all amendments and supplements
thereto (or such other number of copies as the Investor may reasonably request) and (iii)&nbsp;such
other documents, including copies of any preliminary or final prospectus, as the Investor may
reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor.


<P align="left" style="font-size: 11pt; text-indent: 8%">d.&nbsp;The Company shall use reasonable best efforts to (i)&nbsp;register and qualify the Registrable
Securities covered by a registration statement under such other securities or &#147;blue sky&#148; laws of
such jurisdictions in the United States as the Investor reasonably requests, (ii)&nbsp;prepare and file
in those jurisdictions, such amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the effectiveness thereof
during the Registration Period, (iii)&nbsp;take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other 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 (x)&nbsp;qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section&nbsp;3(d), (y)&nbsp;subject itself to general
taxation in any such jurisdiction, or (z)&nbsp;file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of
the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the securities or &#147;blue sky&#148;
laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.


<P align="left" style="font-size: 11pt; text-indent: 8%">e.&nbsp;As promptly as practicable after becoming aware of such event or facts, the Company shall
notify the Investor in writing of the happening of any event or existence of such facts as a result
of which the prospectus included in any 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 a supplement or amendment to such registration statement
to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to
the Investor (or such other number of copies as the Investor may reasonably request). The Company
shall also promptly notify the Investor in writing (i)&nbsp;when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a registration statement or any
post-effective amendment has become effective (notification of such effectiveness shall be
delivered to the Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii)&nbsp;of any request by the SEC for amendments or supplements to any registration statement
or related prospectus or related information, and (iii)&nbsp;of the Company&#146;s reasonable determination
that a post-effective amendment to a registration statement would be appropriate.


<P align="left" style="font-size: 11pt; text-indent: 8%">f.&nbsp;The Company shall use its reasonable best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of any registration statement, or the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investor of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such purpose.


<P align="left" style="font-size: 11pt; text-indent: 8%">g.&nbsp;The Company shall (i)&nbsp;cause all the Registrable Securities to be listed on each securities
exchange on which securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii)&nbsp;secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section.


<P align="left" style="font-size: 11pt; text-indent: 8%">h.&nbsp;Upon written request by the Investor for certificated Registrable Securities, the Company
shall cooperate with the Investor to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant
to any registration statement and enable such certificates to be in such denominations or amounts
as the Investor may reasonably request and registered in such names as the Investor may request.


<P align="left" style="font-size: 11pt; text-indent: 8%">i.&nbsp;The Company shall at all times provide a transfer agent and registrar with respect to its
Common Stock.


<P align="left" style="font-size: 11pt; text-indent: 8%">j.&nbsp;If reasonably requested by the Investor, the Company shall (i)&nbsp;immediately incorporate in a
prospectus supplement or post-effective amendment such information as the Investor believes should
be included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being sold,
the purchase price being paid therefor and any other terms of the offering of the Registrable
Securities; (ii)&nbsp;make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii)&nbsp;supplement or make amendments to any registration statement.


<P align="left" style="font-size: 11pt; text-indent: 8%">k.&nbsp;The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by any registration statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.


<P align="left" style="font-size: 11pt; text-indent: 8%">l.&nbsp;Within one (1)&nbsp;Business Day after any registration statement which includes the Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investor) confirmation that such registration statement has been declared effective
by the SEC in the form attached hereto as <U>Exhibit&nbsp;A</U>. Thereafter, if requested by the Buyer
at any time, the Company shall require its counsel to deliver to the Buyer a written confirmation
whether or not the effectiveness of such registration statement has lapsed at any time for any
reason (including, without limitation, the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of the Registrable
Securities.


<P align="left" style="font-size: 11pt; text-indent: 8%">m.&nbsp;The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to any registration statement.


<P align="left" style="font-size: 11pt; text-indent: 4%">4.&nbsp;<U>OBLIGATIONS OF THE INVESTOR</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;The Company shall notify the Investor in writing of the information the Company reasonably
requires from the Investor in connection with any registration statement hereunder. The Investor
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 shall execute
such documents in connection with such registration as the Company may reasonably request.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;The Investor agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any registration statement hereunder.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;The Investor agrees that, upon receipt of any notice from the Company of the happening of
any event or existence of facts of the kind described in Section 3(f) or the first sentence of
3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to
any registration statement(s) covering such Registrable Securities until the Investor&#146;s receipt of
the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e). Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the Investor&#146;s receipt
of a notice from the Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e) and for which the Investor has not yet settled.


<P align="left" style="font-size: 11pt; text-indent: 4%">5.&nbsp;<U>EXPENSES OF REGISTRATION</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">All reasonable expenses, other than sales or brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to Sections&nbsp;2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.


<P align="left" style="font-size: 11pt; text-indent: 4%">6.&nbsp;<U>INDEMNIFICATION</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend the Investor, each Person, if any, who controls the Investor, the members, the
directors, officers, partners, employees, agents, representatives of the Investor and each Person,
if any, who controls the Investor within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the &#147;<B>Exchange Act</B>&#148;) (each, an &#147;<B>Indemnified Person</B>&#148;), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys&#146; fees,
amounts paid in settlement or expenses, joint or several, (collectively, &#147;<B>Claims</B>&#148;) incurred in
investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (&#147;<B>Indemnified Damages</B>&#148;), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i)&nbsp;any untrue statement or alleged untrue statement of a
material fact in the Registration Statement, any New Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other &#147;blue sky&#148; laws of any jurisdiction in which Registrable Securities are
offered (&#147;<B>Blue Sky Filing</B>&#148;), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading, (ii)&nbsp;any untrue
statement or alleged untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii)&nbsp;any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state securities law, or
any rule or regulation thereunder relating to the offer or sale of the Registrable Securities
pursuant to the Registration Statement or any New Registration Statement or (iv)&nbsp;any material
violation by the Company of this Agreement (the matters in the foregoing clauses (i)&nbsp;through (iv)
being, collectively, &#147;<B>Violations</B>&#148;). The Company shall reimburse each Indemnified Person promptly
as such expenses are incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section&nbsp;6(a): (i)&nbsp;shall not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in conformity with information about the
Investor furnished in writing to the Company by such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement, any New Registration Statement or
any such amendment thereof or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c) or Section&nbsp;3(e); (ii)&nbsp;with respect to any superceded
prospectus, shall not inure to the benefit of any such person from whom the person asserting any
such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of
any person controlling such person) if the untrue statement or omission of material fact contained
in the superceded prospectus was corrected in the revised prospectus, as then amended or
supplemented, if such revised prospectus was timely made available by the Company pursuant to
Section 3(c) or Section&nbsp;3(e), and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person,
notwithstanding such advice, used it; (iii)&nbsp;shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c) or Section&nbsp;3(e); and (iv)&nbsp;shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investor pursuant to Section&nbsp;9.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;In connection with the Registration Statement or any New Registration Statement, the
Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section&nbsp;6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement or any New Registration Statement, each
Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange
Act (collectively and together with an Indemnified Person, an &#147;<B>Indemnified Party</B>&#148;), against any
Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based
upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information about the Investor set forth on
<U>Exhibit&nbsp;B</U> attached hereto and furnished to the Company by the Investor expressly for use in
connection with such registration statement; and, subject to Section&nbsp;6(d), the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section&nbsp;7 shall not apply
to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale
of Registrable Securities pursuant to such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to
Section&nbsp;9.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;Promptly after receipt by an Indemnified Person or Indemnified Party under this Section&nbsp;6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section&nbsp;6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing interests between
such Indemnified Person or Indemnified Party and any other party represented by such counsel in
such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party or Indemnified Person which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or proceeding effected
without its written consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified Party under this
Section&nbsp;6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.


<P align="left" style="font-size: 11pt; text-indent: 8%">d.&nbsp;The indemnification required by this Section&nbsp;6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.


<P align="left" style="font-size: 11pt; text-indent: 8%">e.&nbsp;The indemnity agreements contained herein shall be in addition to (i)&nbsp;any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii)&nbsp;any liabilities the indemnifying party may be subject to pursuant to the law.


<P align="left" style="font-size: 11pt; text-indent: 4%">7.&nbsp;<U>CONTRIBUTION</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section&nbsp;6 to the fullest extent permitted by law;
provided, however, that: (i)&nbsp;no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii)&nbsp;contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of such Registrable
Securities.


<P align="left" style="font-size: 11pt; text-indent: 4%">8.&nbsp;<U>REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">With a view to making available to the Investor the benefits of Rule&nbsp;144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration (&#147;<B>Rule&nbsp;144</B>&#148;), the
Company agrees, at the Company&#146;s sole expense, to:


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;make and keep public information available, as those terms are understood and defined in
Rule&nbsp;144;


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;file with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company remains subject to
such requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule&nbsp;144; and


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon
request, (i)&nbsp;a written statement by the Company that it has complied with the reporting and or
disclosure provisions of Rule&nbsp;144, the Securities Act and the Exchange Act, (ii)&nbsp;a copy of the most
recent annual or quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii)&nbsp;such other information as may be reasonably requested to permit the Investor
to sell such securities pursuant to Rule&nbsp;144 without registration.


<P align="left" style="font-size: 11pt; text-indent: 8%">d.&nbsp;take such additional action as is requested by the Investor to enable the Investor to sell
the Registrable Securities pursuant to Rule&nbsp;144, including, without limitation, delivering all such
legal opinions, consents, certificates, resolutions and instructions to the Company&#146;s Transfer
Agent as may be requested from time to time by the Investor and otherwise fully cooperate with
Investor and Investor&#146;s broker to effect such sale of securities pursuant to Rule&nbsp;144.


<P align="left" style="font-size: 11pt; text-indent: 8%">The Company agrees that damages may be an inadequate remedy for any breach of the terms and
provisions of this Section&nbsp;8 and that Investor shall, whether or not it is pursuing any remedies at
law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without
having to post any bond or other security, upon any breach or threatened breach of any such terms
or provisions.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>ASSIGNMENT OF REGISTRATION RIGHTS</U>.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 11pt; text-indent: 8%">The Company shall not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investor. The Investor may not assign its rights under this Agreement
without the written consent of the Company, other than to an affiliate of the Investor controlled
by Jonathan Cope or Josh Scheinfeld.


<P align="left" style="font-size: 11pt; text-indent: 4%">10.&nbsp;<U>AMENDMENT OF REGISTRATION RIGHTS</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor.


<P align="left" style="font-size: 11pt; text-indent: 4%">11.&nbsp;<U>MISCELLANEOUS</U>.


<P align="left" style="font-size: 11pt; text-indent: 8%">a.&nbsp;A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is
deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the registered owner of such Registrable Securities.


<P align="left" style="font-size: 11pt; text-indent: 8%">b.&nbsp;Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have been delivered:
(i)&nbsp;upon receipt, when delivered personally; (ii)&nbsp;upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii)&nbsp;one (1)&nbsp;Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <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"><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Energy Focus, Inc.<BR>
32000 Aurora Road<BR>
Solon, OH 44139<BR>
Telephone:<BR>
Facsimile:<BR>
Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><BR>
<BR>
<BR>
440-715-1300<BR>
440-715-1314<BR>
Chief Executive Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <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"><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">Cowden &#038; Humphrey Co. LPA<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">4600 Euclid Avenue, Suite&nbsp;400<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">Cleveland, Ohio 44103-3728<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Telephone:<BR>
Facsimile:<BR>
Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">216-241-2880<BR>
216-241-2881<BR>
Gerald W. Cowden, Esq.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <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"><BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">Lincoln Park Capital Fund, LLC<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD colspan="3" valign="top" align="left">440 N. Wells, Suite&nbsp;620<BR></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chicago, IL 60654<BR>
Telephone:<BR>
Facsimile:<BR>
Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><BR>
312-822-9300<BR>
312-822-9301<BR>
Josh Scheinfeld/Jonathan Cope</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 11pt">or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3)&nbsp;Business
Days prior to the effectiveness of such change. Written confirmation of receipt (A)&nbsp;given by the
recipient of such notice, consent, waiver or other communication, (B)&nbsp;mechanically or
electronically generated by the sender&#146;s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)&nbsp;provided by a
nationally recognized overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii)&nbsp;or (iii)&nbsp;above, respectively.


<P align="left" style="font-size: 11pt; text-indent: 8%">c.&nbsp;Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.


<P align="left" style="font-size: 11pt; text-indent: 8%">d.&nbsp;The corporate laws of the State of Delaware shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of Illinois, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Illinois or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting the City
of Chicago, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such 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. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
<B>EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.</B>


<P align="left" style="font-size: 11pt; text-indent: 8%">e.&nbsp;With the exception of the Mutual Nondisclosure Agreement between the parties dated as of
January&nbsp;19, 2010, this Agreement, and the Purchase Agreement constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement and the Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter hereof and thereof.


<P align="left" style="font-size: 11pt; text-indent: 8%">f.&nbsp;Subject to the requirements of Section&nbsp;9, this Agreement shall inure to the benefit of and
be binding upon the permitted successors and assigns of each of the parties hereto.


<P align="left" style="font-size: 11pt; text-indent: 8%">g.&nbsp;The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.


<P align="left" style="font-size: 11pt; text-indent: 8%">h.&nbsp;This Agreement may be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement or signature
delivered by e-mail in a &#147;.pdf&#148; format data file.


<P align="left" style="font-size: 11pt; text-indent: 8%">i.&nbsp;Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.


<P align="left" style="font-size: 11pt; text-indent: 8%">j.&nbsp;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.


<P align="left" style="font-size: 11pt; text-indent: 8%">k.&nbsp;This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.


<P align="center" style="font-size: 11pt"><B>* * * * * *</B>




<P align="center" style="font-size: 10pt; display: none">1
<!-- PAGEBREAK -->




<P align="left" style="font-size: 11pt; text-indent: 4%"><B>IN WITNESS WHEREOF, </B>the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.


<P align="left" style="font-size: 11pt"><U><B>THE COMPANY:</B></U>


<P align="left" style="font-size: 11pt"><B>ENERGY FOCUS, INC.</B>


<P align="left" style="font-size: 11pt">By:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Joseph G. Kaveski<BR>
Title: Chief Executive Officer<BR>


<P align="left" style="font-size: 11pt"><U><B>INVESTOR:</B></U>


<P align="left" style="font-size: 11pt"><B>LINCOLN PARK CAPITAL FUND, LLC</B>


<P align="left" style="font-size: 11pt"><BR>
<B>BY: LINCOLN PARK CAPITAL PARTNERS, LLC</B>
<BR>
<B>BY: ROCKLEDGE CAPITAL CORPORATION</B>


<P align="left" style="font-size: 11pt">By:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Josh Scheinfeld<BR>
Title: President<BR>



<P align="center" style="font-size: 10pt; display: none">2




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<TYPE>EX-10.3
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<FILENAME>exhibit3.htm
<DESCRIPTION>EX-10.3
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<TITLE> EX-10.3 </TITLE>
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<P align="center" style="font-size: 10pt"><FONT style="font-size: 10pt">THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,<BR>
AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF THE ACT, THE RULES AND REGULATIONS UNDER THE<BR>
ACT, OR THE PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT OR THE PURCHASE AGREEMENT UNDER WHICH<BR>
THIS WARRANT HAS BEEN ISSUED.</FONT>



<P align="center" style="font-size: 10pt"><B>COMMON STOCK PURCHASE WARRANT</B>



<P align="center" style="font-size: 10pt"><B>&nbsp;ENERGY FOCUS, INC.</B>


&nbsp;
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Warrant Shares: 350,000
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Issuance Date: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Warrant No.&nbsp;2010LPCW-01&nbsp;


<P align="left" style="font-size: 10pt; text-indent: 8%">THIS COMMON STOCK PURCHASE WARRANT (the &#147;<U>Warrant</U>&#148;) certifies that, for value received,
Lincoln Park Capital Fund, LLC (the &#147;<U>Holder</U>&#148;) is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any time on or after
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2010 &#091;6&nbsp;months from the Issuance Date&#093; (the &#147;<U>Initial Exercise Date</U>&#148;) and on or
prior to the close of business on the fifth anniversary of the Initial Exercise Date (the
&#147;<U>Termination Date</U>&#148;) but not thereafter, to subscribe for and purchase from <B>ENERGY FOCUS,
INC.</B>, a Delaware corporation (the &#147;<U>Company</U>&#148;), up to 350,000 shares (the &#147;<U>Warrant
Shares</U>&#148;) of Common Stock.<B>&nbsp;</B>&nbsp;The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section&nbsp;2(b).

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%"><U>Section&nbsp;1</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.&nbsp;&nbsp;Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Purchase Agreement (the
&#147;<U>Purchase Agreement</U>&#148;), dated March&nbsp;17, 2010, among the Company and the Holder.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%"><U>Section&nbsp;2</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise of Warrant</U>.&nbsp;&nbsp;Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of
the Notice of Exercise Form annexed hereto; and, within three (3)&nbsp;Business Days of the date said
Notice of Exercise is delivered to the Company, the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier&#146;s check drawn
on a United States bank or, if available, pursuant to the cashless exercise procedure specified in
Section 2(c) below.&nbsp;&nbsp;Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company until the Holder has purchased all of
the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case,
the Holder shall surrender this Warrant to the Company for cancellation within three (3)&nbsp;Business
Days of the date the final Notice of Exercise is delivered to the Company.&nbsp;&nbsp;Partial exercises of
this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased.&nbsp;Any and each
partial exercise of this Warrant shall be in the minimum amount of 35,000 Warrant Shares. &nbsp;The
Holder and the Company shall maintain records showing the number of Warrant Shares purchased and
the date of such purchases.&nbsp;&nbsp;The Company shall deliver any objection to any Notice of Exercise Form
within 1 Business Day of receipt of such notice.&nbsp;&nbsp;In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of manifest error. <B>The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following the purchase of a portion of the Warrant Shares
hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.</B>


<P align="left" style="font-size: 10pt; text-indent: 1%">&nbsp;&nbsp;


<P align="left" style="font-size: 10pt; text-indent: 4%">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise Price</U>.&nbsp;&nbsp;The exercise price per share of the Common Stock under
this Warrant shall be $1.20, subject to adjustment hereunder (the &#147;<U>Exercise Price</U>&#148;).

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cashless Exercise</U>.&nbsp; <B>If at any time on or after 6&nbsp;months from the Initial
Exercise Date there is not an effective registration statement registering all of the Warrant
Shares or such registration statement is not current (or the prospectus contained therein is not
available for use) for a continuous period of 10&nbsp;days, then t</B>his Warrant may also be exercised, in
whole or in part, at such time by means of a &#147;cashless exercise&#148; in which the Holder shall be
entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained
by dividing &#091;(A-B) (X)&#093; by (A), where:

&nbsp;
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD align="left" valign="top">(A) =
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">the VWAP on the Business Day immediately preceding the date on which<BR>
Holder elects to exercise this Warrant by means of a &#147;cashless<BR>
exercise,&#148; as set forth in the applicable Notice of Exercise;</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">(B) =
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Exercise Price of this Warrant, as adjusted hereunder; and</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 10pt">
    <TD align="left" valign="top">(X) =
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">the number of Warrant Shares that would be issuable upon exercise of<BR>
this Warrant in accordance with the terms of this Warrant if such<BR>
exercise were by means of a cash exercise rather than a cashless<BR>
exercise.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt; text-indent: 4%">&#147;<U>VWAP</U>&#148; means, for any date, the price determined by the first of the following clauses
that applies: (a)&nbsp;if the Common Stock is then listed or quoted on the Principal Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the Principal Market as reported by Bloomberg L.P. (based on a Business Day from 8:30 a.m. (Central
Standard Time to 3:02 p.m. (Central Standard Time), (b)&nbsp; if the OTC Bulletin Board is not a
Principal Market, the volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board, (c)&nbsp;if the Common Stock is not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the &#147;Pink Sheets&#148; published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d)&nbsp;in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.

&nbsp;

<P align="left" style="font-size: 10pt">&nbsp; Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall
be automatically exercised via cashless exercise pursuant to this Section&nbsp;2(c).


<P align="left" style="font-size: 10pt; text-indent: 4%">d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Mechanics of Exercise</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Delivery of Certificates Upon Exercise</U>.&nbsp;&nbsp;Certificates for shares purchased
hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the
Holder&#146;s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent
Commission (&#147;<U>DWAC</U>&#148;) system if the Company is then a participant in such system and either
(A)&nbsp;there is an effective Registration Statement permitting the issuance of the Warrant Shares to
or resale of the Warrant Shares by Holder or (B)&nbsp;this Warrant is being exercised via cashless
exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice
of Exercise by the date that is five (5)&nbsp;Business Days after the latest of (A)&nbsp;the delivery to the
Company of the Notice of Exercise Form, (B)&nbsp;surrender of this Warrant (if required) and (C)&nbsp;payment
of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted)
(such date, the &#147;<U>Warrant Share Delivery Date</U>&#148;).&nbsp;&nbsp;This Warrant shall be deemed to have been
exercised on the first date on which all of the foregoing have been delivered to the Company.&nbsp;&nbsp;The
Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price
(or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any,
pursuant to Section&nbsp;2(d)(vi) prior to the issuance of such shares, having been paid. If the
Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares
subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Business Day (increasing to $20 per Business Day on the fifth Business
Day after such liquidated damages begin to accrue) for each Business Day after such Warrant Share
Delivery Date until such certificates are delivered or Holder rescinds such exercise

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Delivery of New Warrants Upon Exercise</U>.&nbsp;&nbsp;If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rescission Rights</U>.&nbsp;&nbsp;If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant
to Section&nbsp;2(d)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to
rescind such exercise.


<P align="left" style="font-size: 10pt; text-indent: 4%">&nbsp;iv.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise</U>.&nbsp;&nbsp;In addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open market transaction or
otherwise) or the Holder&#146;s brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a &#147;<U>Buy-In</U>&#148;), then the Company shall (A)&nbsp;pay in cash to the Holder the
amount, if any, by which (x)&nbsp;the Holder&#146;s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y)&nbsp;the amount obtained by multiplying (1)
the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2)&nbsp;the price at which the sell order giving rise to such purchase
obligation was executed, and (B)&nbsp;at the option of the Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder.&nbsp;&nbsp;For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (A)&nbsp;of the immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such
loss.&nbsp;&nbsp;Nothing herein shall limit a Holder&#146;s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company&#146;s failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.


<P align="left" style="font-size: 10pt">&nbsp; v. <U>No Fractional Shares or Scrip</U>.&nbsp;&nbsp;No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.&nbsp;&nbsp;As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price or round up to the next whole share.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">vi.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Charges, Taxes and Expenses</U>.&nbsp;&nbsp;Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and expenses shall be
paid by the Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; <U>provided</U>, <U>however</U>, that in the
event certificates for Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment
of a sum sufficient to reimburse it for any transfer tax incidental thereto.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">vii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Closing of Books</U>.&nbsp;&nbsp;The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Holder&#146;s Exercise Limitations</U>.&nbsp;&nbsp;The Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section&nbsp;2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder&#146;s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder&#146;s
Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined
below).&nbsp; For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (i)&nbsp;exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (ii)&nbsp;exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other&nbsp;&nbsp;Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates.&nbsp; Except as set forth in the preceding
sentence, for purposes of this Section&nbsp;2(e), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith.&nbsp;&nbsp;&nbsp;To the extent that
the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the Holder&#146;s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination.&nbsp;&nbsp;&nbsp;In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder.&nbsp;&nbsp;For purposes of this Section&nbsp;2(e), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A)&nbsp;the Company&#146;s most recent periodic or annual report
filed with the Commission, as the case may be, (B)&nbsp;a more recent public announcement by the Company
or (C)&nbsp;a more recent written notice by the Company or the Transfer Agent setting forth the number
of shares of Common Stock outstanding.&nbsp; Upon the written or oral request of a Holder, the Company
shall within two Business Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding.&nbsp; In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.&nbsp;&nbsp;The &#147;<U>Beneficial Ownership Limitation</U>&#148;
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.&nbsp;&nbsp;The
Holder, upon not less than 61&nbsp;days&#146; prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section&nbsp;2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise
of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to
apply.&nbsp;&nbsp;Any such increase or decrease will not be effective until the 61st day after such notice is
delivered to the Company.&nbsp;&nbsp;The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.


<P align="left" style="font-size: 10pt; text-indent: 8%">Notwithstanding anything to the contrary contained herein, unless any shareholder approval of
the this Warrant includes approval under Nasdaq Rule&nbsp;5635(b), the number of Warrant Shares that may
be acquired by the Holder 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 Holder and its affiliates
and any other Persons whose beneficial ownership of Common Stock would be aggregated with the
Holder&#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) as
of the date of the transaction. 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 Holder
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 Transaction.


<P align="left" style="font-size: 10pt; text-indent: 1%">&nbsp;&nbsp;


<P align="left" style="font-size: 10pt; text-indent: 4%"><U>Section&nbsp;3</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain Adjustments</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock Dividends and Splits</U>. If the Company, at any time while this
Warrant is outstanding: (i)&nbsp;pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), (ii)&nbsp;subdivides outstanding
shares of Common Stock into a larger number of shares, (iii)&nbsp;combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv)&nbsp;issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall
be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged.&nbsp;&nbsp;Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Subsequent Rights Offerings</U>.&nbsp;&nbsp;If the Company, at any time while the
Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and
not to the Holders) entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the VWAP on the record date mentioned below, then, the Exercise Price shall be
multiplied by a fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase, and of which the numerator
shall be the number of shares of the Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered (assuming receipt by the Company in full of all consideration
payable upon exercise of such rights, options or warrants) would purchase at such VWAP.&nbsp;&nbsp;Such
adjustment shall be made whenever such rights, options or warrants are issued, and shall become
effective immediately after the record date for the determination of stockholders entitled to
receive such rights, options or warrants.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Pro Rata Distributions</U>.&nbsp;&nbsp;If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences
of its indebtedness or assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security other than the Common Stock, then in each such case the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record date mentioned
above, and of which the numerator shall be such VWAP on such record date less the then per share
fair market value at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as determined by the Board of
Directors in good faith.&nbsp;&nbsp;In either case the adjustments shall be described in a statement provided
to the Holder of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.&nbsp;&nbsp;Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately after the record date
mentioned above.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Fundamental Transaction</U>. If, at any time while this Warrant is
outstanding, (i)&nbsp;the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person, (ii)&nbsp;the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of related transactions,
(iii)&nbsp;any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are permitted to
sell, tender or exchange their shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Stock, (iv)&nbsp;the Company, directly or
indirectly, in one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, (v)&nbsp;the
Company, directly or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a &#147;<U>Fundamental Transaction</U>&#148;), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the
exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the &#147;<U>Alternate Consideration</U>&#148;) receivable as a result of such Fundamental Transaction by a
holder of the number of shares of Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the
exercise of this Warrant).&nbsp;&nbsp;For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate
Consideration.&nbsp;&nbsp;If holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction.&nbsp;&nbsp;Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1)&nbsp;an all cash transaction, (2)&nbsp;a &#147;Rule&nbsp;13e-3 transaction&#148; as
defined in Rule&nbsp;13e-3 under the Exchange Act, or (3)&nbsp;a Fundamental Transaction involving a person
or entity not traded on a national securities exchange, including, but not limited to, the Nasdaq
Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any
Successor Entity (as defined below) shall, at the Holder&#146;s option, exercisable at any time
concurrently with, or within 30&nbsp;days after, the consummation of the Fundamental Transaction,
purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction.&nbsp;&nbsp;&#147;<U>Black Scholes Value</U>&#148; means the value of this Warrant
based on the Black and Scholes Option Pricing Model obtained from the &#147;OV&#148; function on Bloomberg,
L.P. (&#147;<U>Bloomberg</U>&#148;) determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A)&nbsp;a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date, (B)&nbsp;an expected volatility equal
to the greater of 100% and the 100&nbsp;day volatility obtained from the HVT function on Bloomberg as of
the Business Day immediately following the public announcement of the applicable Fundamental
Transaction, (C)&nbsp;the underlying price per share used in such calculation shall be the sum of the
price per share being offered in cash, if any, plus the value of any non-cash consideration, if
any, being offered in such Fundamental Transaction and (D)&nbsp;a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the
Termination Date.&nbsp;&nbsp;The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the &#147;<U>Successor Entity</U>&#148;) to assume in writing all of
the obligations of the Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 3(d) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior
to such Fundamental Transaction and shall, at the option of the holder of this Warrant, deliver to
the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and with an exercise price which applies the exercise price hereunder to such shares
of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such number of
shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of this Warrant and
the other Transaction Documents referring to the &#147;Company&#148; shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Calculations</U>. All calculations under this Section&nbsp;3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section&nbsp;3,
the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.


<P align="left" style="font-size: 10pt; text-indent: 4%">f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Voluntary Adjustment By Company; Nasdaq Limitations</U>. The Company may at
any time during the term of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the Company.
Notwithstanding anything herein to the contrary, the Company agrees not to adjust the Exercise
Price, or the number of shares of Common Stock that may be issued to the Holder of this Warrant, in
any way that would violate Nasdaq Rules.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notice to Holder</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Adjustment to Exercise Price</U>. Whenever the Exercise Price is adjusted pursuant
to any provision of this Section&nbsp;3, the Company shall promptly mail to the Holder a notice setting
forth the Exercise Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. If the Company enters into a Variable Rate Transaction despite the
prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common
Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such
securities may be converted or exercised.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notice to Allow Exercise by Holder</U>. If (A)&nbsp;the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)&nbsp;the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)&nbsp;the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any rights, (D)&nbsp;the
approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property, or
(E)&nbsp;the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the
Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or effective date hereinafter specified, a notice
stating (x)&nbsp;the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of
which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y)&nbsp;the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice.&nbsp;&nbsp;To the
extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file
such notice with the Commission pursuant to a Current Report on Form 8-K.&nbsp;&nbsp;The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth
herein.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%"><U>Section&nbsp;4</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Transfer of Warrant</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Transferability</U>.&nbsp;&nbsp;This Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole but not in part, upon
surrender of this Warrant at the principal office of the Company or its designated agent, together
with a written assignment of this Warrant substantially in the form attached hereto duly executed
by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer.&nbsp;&nbsp;Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant in the name of the assignee or assignees, as applicable, and in
the denomination specified in such instrument of assignment, and this Warrant shall promptly be
cancelled.&nbsp;&nbsp;The Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>New Warrants</U>. All Warrants issued on transfers or exchanges shall be
dated the initial issuance date set forth on the first page of this Warrant and shall be identical
with this Warrant, except as to the number of Warrant Shares issuable pursuant thereto if this
Warrant partially has been exercised.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Warrant Register</U>. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the &#147;<U>Warrant Register</U>&#148;), in the name of
the record Holder hereof from time to time.&nbsp;&nbsp;The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representation by the Holder</U>.&nbsp;&nbsp;The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except pursuant to sales registered or
exempted under the Securities Act.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%"><U>Section&nbsp;5</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No Rights as Stockholder Until Exercise</U>.&nbsp;&nbsp;This Warrant does not entitle
the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to
the exercise hereof as set forth in Section&nbsp;2(d)(i).

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Loss, Theft, Destruction or Mutilation of Warrant</U>. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu
of such Warrant or stock certificate.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Saturdays, Sundays, Holidays, etc</U>.&nbsp;&nbsp;If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be a
Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Authorized Shares</U>.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 8%">The Company covenants that, during the period the Warrant is outstanding, it will reserve from
its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this Warrant.&nbsp;&nbsp;The Company
further covenants that its issuance of this Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.&nbsp;&nbsp;The Company will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common Stock may be
listed.&nbsp;&nbsp;The Company covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">Except and to the extent as waived or consented to by the Holder, 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, issue or sale of securities
or any 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 Holder as set forth in this Warrant against impairment.&nbsp;&nbsp;Without limiting the generality
of the foregoing, the Company will (i)&nbsp;not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value, (ii)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and
(iii)&nbsp;use commercially reasonable 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.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the 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.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Jurisdiction</U>. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Restrictions</U>.&nbsp;&nbsp;The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal securities laws.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Nonwaiver and Expenses</U>.&nbsp;&nbsp;No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder&#146;s rights, powers or remedies.&nbsp;&nbsp;Without limiting any other provision of
this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the Holder, the Company
shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys&#146; fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.



&nbsp;



<P align="left" style="font-size: 10pt; text-indent: 4%">h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.&nbsp;&nbsp;Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Limitation of Liability</U>.&nbsp;&nbsp;No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability of
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.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Remedies</U>.&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 this Warrant.&nbsp;&nbsp;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 this Warrant
and hereby agrees to waive and not to assert the defense in any action for specific performance
that a remedy at law would be adequate.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Successors and Assigns</U>.&nbsp;&nbsp;Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder.&nbsp;&nbsp;The provisions of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.


<P align="left" style="font-size: 10pt">&nbsp; l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Severability</U>.&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 be ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Warrant.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Headings</U>.&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.


<P align="center" style="font-size: 10pt">********************



<P align="center" style="font-size: 10pt"><I>(Signature Pages Follow)</I>


&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 4%">IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the Issuance Date first above indicated.


<P align="left" style="font-size: 10pt"><B>ENERGY FOCUS, INC.</B>


<P align="left" style="font-size: 10pt">By:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Name: Joseph G. Kaveski<BR>
Title: Chief Executive Officer<BR>


<P align="center" style="font-size: 10pt; display: none">1
<!-- PAGEBREAK -->

<P align="center" style="font-size: 10pt"><B>NOTICE OF EXERCISE</B>



<P align="left" style="font-size: 10pt">TO:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ENERGY FOCUS, INC.


<P align="left" style="font-size: 10pt; text-indent: 8%">(1)&nbsp;The undersigned hereby elects to purchase <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 8%">(2)&nbsp;Payment shall take the form of (check applicable box):

&nbsp;

<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> in lawful money of the United States; or

&nbsp;

<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> the cancellation of such number of Warrant Shares as is necessary, in accordance with the
formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

&nbsp;

<P align="left" style="font-size: 10pt; text-indent: 8%">(3)&nbsp;Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

&nbsp;

<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt">The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

&nbsp;

<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt">&#091;SIGNATURE OF HOLDER&#093;


<P align="left" style="font-size: 10pt">Name of Investing Entity: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
<I>Signature of Authorized Signatory of Investing Entity</I>:
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
Name of Authorized Signatory: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
Title of Authorized Signatory: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
Date: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

&nbsp;
&nbsp;


&nbsp;


&nbsp;

<P align="center" style="font-size: 10pt"><B>ASSIGNMENT FORM</B>



<P align="center" style="font-size: 10pt">(To assign the foregoing warrant, execute<BR>
this form and supply required information.<BR>
Do not use this form to exercise the warrant.)



<P align="left" style="font-size: 10pt; text-indent: 8%">FOR VALUE RECEIVED, &#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093; all of or &#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093; shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> whose address is


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt">Dated:&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

&nbsp;

<P align="left" style="font-size: 10pt">Holder&#146;s Signature:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt">Holder&#146;s Address:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="left" style="font-size: 10pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<BR>
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

&nbsp;

<P align="left" style="font-size: 10pt">Signature Guaranteed:&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

&nbsp;

<P align="left" style="font-size: 10pt">NOTE:&nbsp;&nbsp;The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company.&nbsp;&nbsp;Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.



<P align="center" style="font-size: 10pt; display: none">2




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