Unassociated Document


    


    THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY
COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.

     

    
      	
              Corporation:

            	
              Energy
      and Power Solutions, Inc.

            
	
              Number
      of Shares:

            	
              28,265
      Shares

            
	
              Class
      of Stock:

            	
              Common
      Stock

            
	
              Initial
      Exercise Price:

            	
              $4.29864
      Per Share

            
	 
      	 
      


    

    STOCK
PURCHASE WARRANT

    To
Purchase Shares of Common Stock

    of

    ENERGY
AND POWER SOLUTIONS, INC.

     

    
      	
              Issue
      Date:

            	
              November
      29, 2007

            
	
              Expiration
      Date:

            	
              November
      29, 2012

            
	 
      	 
      


    

    THIS
CERTIFIES that, for value received, Roger K. Marach (the "Warrantholder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time on or prior to November 29, 2007, but not thereafter, to subscribe for
and purchase from Energy and Power Solutions, Inc., a California corporation
(the "Company"), Twenty
Eight Thousand Two Hundred Sixty-Five (28,265) shares of the Company's Common
Stock (the "Shares"). The
exercise price ("Warrant Price") of
Common Stock under this Warrant shall be $4.29864 per share. The Warrant Price
and the number of shares for which the Warrant is exercisable shall be subject
to adjustment as provided herein.

     

    
      	
              1.

            	
              Title to Warrant; Restrictions
      on Transfer. This Warrant or any rights hereunder may not be
      transferred or assigned, in whole or in part, to any person or entity by
      the Warrantholder without the Company's prior written consent, provided,
      however, that the Warrantholder may transfer the Warrant to an affiliate
      of the Warrantholder upon notice to the Company, prior to the expiration
      hereof (a "Permitted Transfer"). Further, any Permitted Transfer of the
      Warrant must comply with the legend set forth on the first page of this
      Warrant and be accompanied by surrender, in person or by duly authorized
      attorney, of this Warrant together with the Assignment Form attached
      hereto as Exhibit A
      properly endorsed.

            


    

     

    
      	
              2.

            	
              Exercise of Warrant. The
      purchase rights represented by this Warrant are exercisable by the
      Warrantholder hereof, in whole or in part, at any time before the close of
      business at the Company's headquarters by the surrender of this Warrant
      and the Subscription Form attached hereto as Exhibit B duly
      executed at the office of the Company, and upon payment of the Warrant
      Price of the Shares thereby purchased (by cash or by check or bank draft
      payable to the order of the Company or by cancellation of indebtedness of
      the Company to the Warrantholder hereof, if any, at the time of exercise
      in an amount equal to the Warrant Price of the Shares thereby purchased,
      or as provided in Section 3 hereof); whereupon the Warrantholder of this
      Warrant shall be entitled to receive a certificate for the number of
      Shares of Common Stock so purchased. The Company agrees that if at the
      time of the surrender of this Warrant for exercise the Warrantholder
      hereof shall be entitled to exercise this Warrant, the Shares so purchased
      shall be deemed to be issued to such Warrantholder as the record owner of
      such Shares as of the close of business on the date on which this Warrant
      shall have been exercised as
aforesaid.

            


    

     

    


    
      
        
           


        

        
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    Certificates
for Shares purchased hereunder shall be delivered to the Warrantholder hereof
within thirty (30) days after the date on which this Warrant shall have been
exercised as aforesaid.

     

    The
Company covenants that all shares of Common Stock which may be issued upon
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and the payment of the Warrant Price for such
Shares, be fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof.

     

    
      	
              3.

            	
              Alternative Exercise. At
      any time, the Warrantholder of record hereof may, at such Warrantholder's
      sole option, in lieu of making payment upon exercise in accordance with
      the provisions of Section 2 above and to the extent permitted by
      applicable statutes and regulations, elect to receive shares of Common
      Stock equal to the value (as determined below) of this Warrant by
      surrender of the Warrant at the principal office of the Company together
      with notice of such election in which event the Company shall issue to
      such Warrantholder that number of shares of Common Stock computed using
      the following formula:

            


    

     

    
      
        	 
      	
                X =
      Y(A-B)

                          A

              


      

    

    


    Where: X
= the number of shares of Common Stock to be issued to such Warrantholder
pursuant to this Section 3.

     

    Y = the
number of shares of Common Stock issuable upon exercise of this Warrant in
accordance with Section 2.

     

    A = the
Fair Market Value of the Common Stock (as defined in accordance with Section 12
below).

     

    B =
Warrant Price (as adjusted pursuant to Section 10 below, if
applicable).

     

    
      	
              4.

            	
              No Fractional Shares or
      Scrip. No fractional shares or scrip representing fractional shares
      shall be issued upon the exercise of this Warrant. With respect to any
      fraction of a share called for upon the exercise of this Warrant, an
      amount equal to such fraction multiplied by the then current Fair Market
      Value of the Common Stock shall be paid in cash to the Warrantholder of
      this Warrant.

            


    

     

    


    
      
        
           


        

        
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              5.

            	
              Charges, Taxes and
      Expenses. Issuance of certificates for shares of Common Stock upon
      the exercise of this Warrant shall be made without charge to the
      Warrantholder hereof for any issue or transfer tax or other incidental
      expense in respect of the issuance of such certificates, all of which
      taxes and expenses shall be paid by the Company, and such certificates
      shall be issued in the name of the Warrantholder of this Warrant or in
      such name or names as may be directed by the Warrantholder of this
      Warrant; provided, however, that in the event certificates for shares of
      Common Stock are to be issued in a name other than the name of the
      Warrantholder of this Warrant, this Warrant when surrendered for exercise
      shall be accompanied by the Assignment Form attached hereto duly executed
      by the Warrantholder hereof; and provided further, that upon any transfer
      involved in the Stock, the Company may require, as a condition thereto,
      the payment of a sum sufficient to reimburse it for any transfer tax
      incidental thereto.

            


    

     

    
      	
              6.

            	
              No Rights as
      Shareholder. This Warrant does not entitle the Warrantholder hereof
      to any voting rights or other rights as a shareholder of the Company prior
      to the exercise thereof.

            


    

     

    
      	
              7.

            	
              Exchange of Warrant.
      This Warrant is exchangeable, upon the surrender hereof by the
      Warrantholder at the above-mentioned office or agency of the Company, for
      a new Warrant of like tenor.

            


    

     

    
      	
              8.

            	
              Loss, Theft, Destruction or
      Mutilation of Warrant. Upon receipt by the Company of evidence
      reasonable satisfactory to it of the loss, theft, destruction, or
      mutilation of this Warrant, and in case of loss, theft, or destruction, of
      indemnity or security reasonably satisfactory to it, and upon
      reimbursement to the Company of all reasonable expenses incidental
      thereto, and upon surrender and cancellation of this Warrant, if
      mutilated, the Company will make and deliver a new Warrant of like tenor,
      in lieu of this Warrant.

            


    

     

    
      	
              9.

            	
              Saturday, Sundays and Holidays,
      Etc. If the last appointed day for the taking of any action or the
      expiration of any right required or granted herein shall be a Saturday or
      a Sunday or a legal holiday, then such action may be taken or such right
      may be exercised on the next succeeding day not a Saturday, Sunday or
      legal holiday.

            


    

     

    
      	
              10.

            	
              Reclassification, Etc.
      In the event of changes in the outstanding Common Stock of the Company by
      reason of stock dividends, split-ups, reverse-split recapitalizations,
      reclassifications, mergers, consolidations, combinations or exchanges of
      shares, separations, reorganizations, liquidations, conversion of all
      outstanding shares of Common Stock into any other class of shares, or the
      like, the number and class of shares available under the Warrant in the
      aggregate and the Warrant Price shall be correspondingly adjusted by the
      Board of Directors of the Company. The adjustment shall be such as will
      give the Warrantholder of the Warrant on exercise for the same aggregate
      Warrant Price the total number, class and kind of shares as he would have
      owned had the Warrant be exercised prior to the event and had he continued
      to hold such Shares until after the event requiring
      adjustment.

            


    

     

    
      	
              11.

            	
              Authorized Shares. 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 Common Stock upon the
      exercise of any purchase rights under this Warrant. 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 shares of
      the Company's Common Stock upon the exercise of the purchase rights under
      this Warrant and the payment of the Warrant Price for such
      Shares.

            


    

     

    


    
      
        
           


        

        
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              12.

            	
              Fair Market Value. The
      "Fair Market Value" of the Company's Common Stock shall be the closing
      price of the Common Stock on the Exercise Date as reported in The Wall
      Street Journal or another nationally recognized publication or service
      that reports such data, if the Common Stock is traded on one or more
      securities exchanges, or if there is no active trading market, the fair
      market value determined by the Company's Board of Directors, taking into
      consideration the cost basis of the securities, recent transactions in
      securities of the Company, developments concerning the Company, any
      business or financial data and projections of the Company then available,
      and such other factor or factors as the Company's Board of Directors may
      reasonably deem relevant, or if the Warrantholder notifies the Company
      that he, she or it objects to the value determined by the Company's Board
      of Directors pursuant to Section 12(c), the fair market value determined
      as follows: the Warrantholder and the Company shall each select an
      independent qualified appraiser. The two appraisers shall promptly select
      a third independent qualified appraiser, who shall be experienced in such
      appraisals. If the two appraisers are unable to select a third appraiser
      within 30 days, the third appraiser shall be selected by the highest
      official of the Orange County Office of the American Arbitration
      Association. The third appraiser shall determine the Fair Market Value
      within thirty (30) days after such appraiser's selection, which shall
      notify the Warrantholder of such determination. The cost and expense of
      any such appraisal shall be borne equally by such Warrantholder and the
      Company.

            


    

     

    
      	
              13.

            	
              Issue Date, Etc. The
      provisions of this Warrant shall be construed and shall be given effect in
      all respect as if it had been issued and delivered by the Company as of
      the date hereof. This Warrant shall be binding upon any successors or
      assigns of the Company. This Warrant is issued in and shall be governed by
      the laws of the State of
California.

            


    

     

    
      	
              14.

            	
              Registration Rights. The
      Shares issuable upon exercise of this Warrant shall be "Registrable
      Securities" or such other definition of securities entitled to
      registration rights pursuant to the Investor Rights Agreement, dated as of
      November 29, 2007, by and among the Company and certain "Investors" named
      therein, and the Warrantholder shall be entitled, subject to the terms and
      conditions of that agreement, to all registration rights granted to
      holders of Registrable Securities thereunder upon signing a counterpart
      signature page thereto and agreeing to become bound by such agreement as
      an "Investor" thereunder.

            


    

     

    
      	
              15.

            	
              Investment Representations and
      Warranties; Restrictions. The Warrantholder hereof represents and
      warrants that Warrantholder is familiar with the Company, the nature of
      its business, its financial prospects and the merits and risks of an
      investment in the Company, and has the capacity to protect Warrantholder's
      interests, as well as that Warrantholder is acquiring this Warrant, and
      the securities into which this Warrant may be exercised for investment for
      Warrantholder's own account and not with a view to resale in connection
      with any distribution. Warrantholder understands that this Warrant, and
      the securities into which this Warrant may be exercised have not been, and
      will not be registered under the Securities Act of 1933, as amended, or
      qualified under applicable state securities laws, by reason of a specific
      exemption from the registration provisions of the Securities Act and such
      state securities laws, the availability of which depends upon, among other
      things, the bona fide nature of the investment intent and representations
      of the Warrantholder as expressed herein. Warrantholder further
      acknowledges that the Common Stock acquired upon exercise of this Warrant
      may have restrictions upon its resale imposed by state and federal
      securities laws, and agrees that any Common Stock acquired upon exercise
      of this Warrant may be transferred only in compliance with the legend set
      forth on the first page of this
Warrant.

            


    

     

    


    
      
        
           


        

        
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              16.

            	
              Notices. Unless
      otherwise provided, any notice required or permitted under this Warrant
      shall be given in writing and shall be deemed effectively given upon
      personal delivery to the party to be notified or three (3) days following
      deposit with the United States Post Office, by registered or certified
      mail, postage prepaid and addressed to the party to be notified (or one
      (1) day following timely deposit with a reputable overnight courier with
      next day delivery instructions), or upon confirmation of receipt by the
      sender of any notice by facsimile transmission, at the address indicated
      below or at such other address as such party may designate by ten (10)
      days' advance written notice to the other
  parties.

            


    

     

    
      	 
      	
              To
      Holder:

            	
              Roger
      K. Marach

              
                7373 N. Scottsdale Road, Suite A-220

                Scottsdale, Arizona 85253

                Facsimile: (602) 224-9731

              

            
	 
      	 
      	 
      
	 
      	
              To
      the Company:

            	
              Energy,
      and Power Solutions, Inc.

              150
      Paularino Ave.

              Costa
      Mesa, CA 92626

              Attn:
      Chief Executive Officer

              Facsimile:
      (714) 957-1087

            


    

    


    
      	
              17.

            	
              Termination. Unless
      previously exercised, this Warrant shall automatically terminate on or
      prior to: (i) the effective date of any liquidation, sale, merger, or
      change of control of the Company in one or more series of related
      transactions (the "Exercise
      Event"); or (ii) within ten (10) days after the effective date of a
      Registration Statement and expiration of any applicable "lock-up" period
      covering the Shares. The Company shall notify the Warrantholder at least
      ten (10) days prior to any Exercise
Event.

            


    

     

    (Remainder
of Page Intentionally Left Blank)

     

    


    
      
        
           


        

        
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    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officers thereunto duly authorized.

     

    
      	 
      	
              ENERGY
      AND POWER SOLUTIONS, INC.

               

              By:           /s/ Peter
      Ludlum___________

              Name:      Peter
      Ludlum

              Its:           Chief
      Financial Officer

            
	 
      	 
      
	 
      	
              WARRANTHOLDER:

               

              /s/ Roger K.
      Marach_______________

              Name:  Roger
      K. Marach

            


    

    


    


    
      
        
           


        

        
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    EXHIBIT
A

     

    TO STOCK
PURCHASE WARRANT

     

    ASSIGNMENT
FORM

     

    FOR VALUE
RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns
and transfers unto the Assignee named below all of the rights of the undersigned
under this Warrant, with respect to the number of Shares of Common Stock set
forth below:

     

    No. of
Shares: ___________________

     

    Name/Address
of Assignee Of Common Stock:

     

    _________________________________

    _________________________________

    _________________________________

     

    and does
hereby irrevocably constitute and appoint as Attorney ________________________
_______________________ to register such transfer on the books of
______________________ _______________________ for the purpose, with full power
of substitution in the premises. If the number of Shares of Common Stock to
which rights are so transferred does not include all of the Shares of Common
Stock issuable as provided in this Warrant, a new Warrant of like tenor and date
for the balance of the Shares issuable thereunder shall be delivered to the
undersigned.

     

    Date:                      ____________________________

     

    Signature:             __________________________________

     

    Witness:               __________________________________

     

    NOTICE:
The signature to this Assignment must correspond with the name as written upon
the face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.

     

    The
signature to this assignment must be guaranteed by a national bank or by a firm
having a membership on the New York Stock Exchange.

     

    


    
      
        
           


        

        
          A-1

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
B

     

    TO STOCK
PURCHASE WARRANT

     

    SUBSCRIPTION
FORM

    (To be
executed only upon exercise of Warrant)

     

    The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
for and purchases ___________ Shares of the Common Stock of Energy and Power
Solutions, Inc.(not more than the number of Shares of Common Stock purchasable
with this Warrant), and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant and requests that
certificates for the Shares of Common Stock hereby purchased be issued in the
name of and delivered to _________________________________ whose address is
__________________________________________________________ and, if such Shares
shall not include all of the Shares issuable as provided in this Warrant, that a
new Warrant of like tenor and date for the balance of the Shares issuable
thereunder be delivered to the undersigned.

     

    By
signing below, the undersigned represents and warrants that the Shares of Common
Stock will be held by it for investment and for its own account and not with a
view to, or for, resale, transfer or distribution, and that it has no present
intention in participating directly or indirectly in a distribution of the
Common Stock.

     

    The
undersigned agrees that it will not directly or indirectly, offer, transfer,
sell, assign, pledge, hypothecate or otherwise dispose of any of the Common
Stock (or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of any of the Common Stock) except in compliance with the Securities Act
of 1933, as amended, any applicable state securities act and the rules and
regulations thereunder.

     

    The
undersigned further represents and warrants that this Subscription Form has been
duly authorized and executed by the undersigned and that the undersigned has
good title to the portion of the Warrant so exercised free and clear of all
encumbrances, claims liens or other charges and that the execution and delivery
by the undersigned of this Subscription Form will not violate any agreement to
which the undersigned is a party or by which its assets or properties may be
bound.

     

    
      	 
      	
              Dated: _______________

            
	 
      	
              _______________________________

              (Signature
      of Registered Owner)

              _______________________________

              (Street
      Address)

              _______________________________

              (City,
      State and Zip Code)

            


    

    


    NOTICE:
If the person to whom the certificate evidencing Shares of Common Stock is not
the registered owner of the Warrant, then the signature to this Subscription
Form must be guaranteed by a national bank or by a firm having a membership on
the New York Stock Exchange.

     

    


    
      
        
           


        

        
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