“Warrant”) covering warrants to purchase [___,000] shares of its Common Stock at $0.01 pershare pursuant to a Warrant Acquisition Agreement of even date. The Warrant is not exercisableunless and until approved by the Company’s shareholders at its annual meeting in 2010 or at aspecial shareholder meeting in 2010 called for that purpose. If shareholders do not approve theWarrant in 2010 at a special or the annual meeting, the Warrant shall terminate. If the Companyreplaces and releases, or simply releases, the Deposit or the Letter of Credit within six (6)months of the date of this Agreement, the number of warrants covered by the Warrant shall reduce toa number of warrants equal to the product of (i) the number of full months elapsed since the dateof this Agreement times (ii) [                    ] [total number of warrants divided by twelve].     (c) The Company shall pay Investor interest on the outstanding principal amount of the Depositor the face amount of the Letter of Credit at the simple interest rate of twelve and one-halfpercent (12.5%) per year quarterly in arrears, beginning on the first day of the calendar quarterfollowing the date of this Agreement, and at maturity.     (d) If Investor has provided a Letter of Credit, as further consideration for the provision ofthe Letter of Credit, the Company agrees to reimburse Investor for any monies that Investor isrequired to pay, and pays, to the Letter of Credit financial institution within three (3) months ofInvestor’s payment to the financial institution, to reimburse the financial institution for anymonies that the financial institution is required to pay, and pays, to the Bonding Company as drawsunder the Letter of Credit.     (e) If Investor has provided a Deposit, as further consideration for the provision of theDeposit, the Company agrees to reimburse Investor for any monies that Investor is required to pay,and pays, to the Bonding Company as draws on the Deposit, within three (3) months of Investor’spayment to the Bonding Company.     (f) The Company shall reimburse Investor for the payment by Investor of any reasonable letterof credit fee that the Letter of Credit financial institution may charge for issuing the Letter ofCredit.     (g) The obligations of the Company under this Agreement shall be secured by the collateralcovered by a Stock Pledge Agreement between the Company and Investor of even date.     (h) Upon (i) an event of default under any Senior Indebtedness, or (ii) any dissolution,winding up, or liquidation of the Company or of its wholly-owned, British subsidiary, CrescentLighting, Ltd. (“ Crescent”), whether or not in a bankruptcy, insolvency, or receivershipproceeding, the Company shall not pay, and the Investor shall not be entitled to receive, any ofthe principal of and interest on the Deposit unless and until the Senior Indebtedness shall havebeen paid or discharged. For purposes of this Section 1(h), “Senior Indebtedness” shall mean theprincipal of and unpaid accrued interest on (x) all indebtedness of the Company and Crescent tobanks, insurance companies, or other financial institutions regularly engaged in the business oflending money, which is money borrowed by the Company or Crescent, whether or not secured, and (y)any such indebtedness or any debentures, notes, or
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other evidence of indebtedness issued in exchange for such Senior Indebtedness or any indebtednessarising from the satisfaction of such Senior Indebtedness by a guarantor.     (i) If a “Liquidity Event” occurs before the full return of the principal amount of theDeposit, or the expiration of the Letter of Credit, at maturity twenty-four (24) months from thedate of this Agreement, as may be extended according to the terms of this Agreement, the Companyshall pay Investor upon the closing of the Liquidity Event an interest premium amount equal to onehundred percent (100%) of the interest on the Deposit or the Letter of Credit then accrued andunpaid under Section 1(c) of this Agreement. As used in this Section 1(i), the term “LiquidityEvent” means (x) the Company shall have merged into or consolidated with another corporation, ormerged another corporation into the Company, on a basis whereby less than fifty percent (50%) ofthe total voting power of the surviving corporation is represented by shares held by formershareholders of the Company prior to that merger or consolidation, or (y) the Company shall sellsubstantially all of its assets, with its assets for this purpose excluding its Fiberstars andUnited States Commercial units.     (j) The Company shall have the right to replace and release, or simply release, the Deposit orthe Letter of Credit to Investor at any time prior to maturity twenty-four (24) months from thedate of this Agreement, as may be extended according to the terms of this Agreement, following atleast thirty (30) days prior written notice to Investor or with the written consent of Investor,and upon the Company’s payment to Investor of twelve (12) months interest at the rate set forth inSection 1(c).     (k) The Company and Investor may extend the term of the Deposit or of the Letter of Credit foran additional twelve (12) months by written agreement no later than eleven (11) months from thedate of this Agreement.     Section 2. **Company’s Representations and Warranties.**The Company makes the followingrepresentations and warranties:     (a) The Company is a corporation duly organized, validly existing and in good standing underthe laws of the State of Delaware.     (b) All corporate action on the part of the Company and its officers, directors andshareholders necessary for the execution, delivery and performance of this Agreement and theWarrant Acquisition Agreement and the authorization, issuance and delivery of the Warrant beingissued pursuant to this Agreement and the Warrant Acquisition Agreement has been taken as of thedate hereof; provided, however, that Investor shall not have the right to exercise the warrantunless and until the shareholders of the Company have approved it in 2010 at their regular annualmeeting or a special meeting held for that purpose.     (c) The Company is not in violation of any applicable statute, rule or regulation adopted,enacted or promulgated by any government or governmental authority the consequence of which wouldhave an adverse effect on consummation of the transactions contemplated by this Agreement inaccordance with its terms or a material adverse effect on the Company’s business or financialcondition.
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     (d) Neither execution and delivery of this Agreement by the Company nor consummation of thetransactions contemplated hereby will (i) violate or conflict with the articles of incorporation orby-laws of the Company, (ii) violate any provisions of law applicable to the Company, or (iii)violate, conflict with or result in a breach of or default under any contract, instrument or otheragreement to which the Company is a party or any governmental or judicial order or decreeapplicable to the Company.     Section 3. **Investor’s Representations and Warranties**. Investor makes the followingrepresentations and warranties:     (a) Investor is a resident of the State of [                    ].     (b) Investor has taken all action that is necessary on its part for the execution, deliveryand performance of this Agreement and the Warrant Acquisition Agreement as of the date hereof.     (c) Investor is not in violation of any applicable statute, rule or regulation adopted,enacted or promulgated by any government or governmental authority the consequence of which wouldhave an adverse effect on consummation of the transactions contemplated by this Agreement inaccordance with its terms or a material adverse effect on Investor’s financial condition.     (d) Neither execution and delivery of this Agreement by Investor nor consummation of thetransactions contemplated hereby will (i) violate any provisions of law applicable to Investor, or(ii) violate, conflict with or result in a breach of or default under any contract, instrument orother agreement to which Investor is a party or any governmental or judicial order or decreeapplicable to Investor.     (e) (i) All documents, records and books of the Company requested by Investor have been madeavailable or delivered to Investor and all questions of Investor relating to this transaction havebeen answered by the Company; (ii) Investor understands that the Warrant and the shares of CommonStock covered by it (the “Shares”) are a speculative investment which involve a high degree of riskof loss by Investor of its investment therein; (iii) it has been offered the opportunity to askquestions of appropriate officers of the Company with respect to its business and affairs, and suchofficers have answered all such questions to its satisfaction; (iv) its purchase of the Warrant isbeing made for Investor’s own account for investment purposes and with no intention of immediatedistribution; (v) Investor has the requisite knowledge and experience in financial and businessmatters to enable it to evaluate the merits and risks of an investment in the Warrant; (vi) it isaware that the Warrant and each of the Shares may be a “restricted security” within the meaning ofsuch term under Rule 144 of the Rules of the SEC (“Rule 144”), that the Warrant and the Shares maybe subject to the resale restrictions of Rule 144 (unless another exemption is available under theSecurities Act of 1933*,*as amended (the “Securities Act”)), and that, if Investor at any time isdeemed to be an affiliate of the Company, the Warrant and the Shares may be subject to theadditional resale restrictions under Rule 144 applicable to affiliates; (vii) it is aware thatuntil the Warrant or the Shares may be registered under the Securities Act, it may be unable toliquidate its investment in them despite a need to do
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so; and (viii) it is aware that the Warrant and the Shares may bear a legend conditioning thetransfer of them upon the receipt of a satisfactory opinion to the effect that any proposedtransfer of them is exempt from registration under the Securities Act, or the like.     (f) Investor is an accredited investor under Rule 501(a) of Regulation D under theSecurities Act of 1933 (the “Act”).     Section 4. **Brokers Commissions**. Investor will indemnify and hold harmless the Company fromthe commission, fee or claim of any person, firm or corporation employed or retained or claiming tobe employed or retained by Investor to bring about, or to represent it in, the transactioncontemplated hereby. The Company will indemnify and hold harmless Investor from the commission,fee or claim of any person, firm or corporation employed or retained by the Company to bring about,or to represent it in, the transaction contemplated hereby.     Section 5. **Amendment and Modification.**The parties hereto may not amend, modify or supplementthis Agreement except by a writing signed by both of the parties hereto.     Section 6. **Binding Effect, No Assignment.**This Agreement shall be binding upon and inure tothe benefit of the parties hereto and their respective successors and permitted assigns. Neitherparty shall be entitled to assign its rights hereunder except upon the other party’s prior writtenconsent; provided, however, (a) that Company may assign this Agreement in connection with a mergeror consolidation involving Company, or a sale of substantially all of Company’s assets, so long asthe purchaser or assignee assumes Company’s obligations under this Agreement, and (b) that Investormay assign this Agreement to a Recipient and in connection with a permitted sale or transfer of theWarrant and the Warrant Acquisition Agreement.     Section 7. **Entire Agreement**. This instrument contains the entire agreement of the partieshereto with respect to the transactions contemplated herein, and supersedes all priorunderstandings and agreements of the parties with respect to the subject matter hereof.     Section 8. **Headings**. The descriptive headings in this Agreement are inserted for convenienceonly and do not constitute a part of this Agreement.     Section 9. **Execution in Counterparts.**This Agreement may be executed in any number ofcounterparts, each of which shall be deemed an original.     Section 10. **Governing Law.**This Agreement shall be governed by and interpreted in accordancewith the laws of the State of Delaware applicable to contracts made and to be performed therein,without regard to the conflicts of law principles thereof. Each of the parties hereto consents tothe jurisdiction of the federal and state courts located in the State of Ohio for any disputehereunder.
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and yearfirst above written.      ENERGY FOCUS, INC.