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Execution Version

SECURITIES PURCHASE AGREEMENT

            THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of
the 7th day of May, 2014 by and between Echo Automotive, Inc., a Nevada
corporation (the “Company”), and 31 Group, LLC, a New York limited liability
company (the “Investor”).

            WHEREAS, the Company and the Investor are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
1933 Act (without limiting any other such exemption which may apply to the
transactions contemplated by this Agreement);

            WHEREAS, the Company has authorized the issuance of (i) a senior
convertible note, in the original principal amount of $624,000, in the form
attached hereto as Exhibit A (the “Note”), which Note shall be convertible into
shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”), in accordance with the terms of the Note, and (ii) a warrant to acquire
up 4,500,000 additional shares of Common Stock, in the form attached hereto as
Exhibit B (the “Warrant”);

            WHEREAS, Investor wishes to purchase, and the Company wishes to sell
at the Closing (as defined below), upon the terms and conditions stated in this
Agreement, (i) the Note (and the Common Stock issuable upon conversion thereof,
collectively, the “Conversion Shares”) and (ii) the Warrant (and the Common
Stock issuable upon exercise thereof, collectively, the “Warrant Shares”).

            WHEREAS, the Note, the Conversion Shares, the Warrant and the
Warrant Shares are collectively referred to herein as the “Securities” and the
offering contemplated hereby is referred to herein as the “Offering”;

            WHEREAS, the parties have agreed that the obligation to repay the
Note shall be an unsecured obligation of the Company; and

            WHEREAS, at the Closing, the parties hereto shall execute and
deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
C (the “Registration Rights Agreement”), pursuant to which the Company has
agreed to provide certain registration rights with respect to the Registrable
Securities (as defined in the Registration Rights Agreement), under the 1933 Act
and the rules and regulations promulgated thereunder, and applicable state
securities laws.

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises and the mutual agreements, representations and warranties, provisions
and covenants contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:

            1.          Purchase and Sale of Note and Warrant.

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                          1.1 Purchase and Sale of Note and Warrant. Subject to
the satisfaction (or, where legally permissible, the waiver) of the conditions
set forth in Section 4.1, the Company shall issue and sell to the Investor, and
the Investor shall purchase from the Company on the Closing Date (as defined
below), the Note and the Warrant (the “Closing”).

                          1.2 Form of Payment. On the Closing Date, (i) the
Investor shall pay the Purchase Price (as defined below) (less the amounts
withheld pursuant to Section 12.12) to the Company for the Note and the Warrant
to be issued and sold to the Investor at the Closing, by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions and (ii) immediately following the Company’s receipt of such
amount, the Company shall deliver to the Investor (x) the Note and (y) the
Warrant, in each case, duly executed on behalf of the Company and registered in
the name of the Investor or its designee.

            2.          Purchase Price. The purchase price for the Note and the
Warrant to be purchased by the Investor (the “Purchase Price”) shall be
$400,000. The Note will be issued with an original issue discount of
approximately 35.89% .

            3.          Closing Date. The date and time of the Closing (the
“Closing Date”) shall be 10:00 a.m. (New York City time), on the first (1st)
Trading Day (as defined below) (and including the date hereof if a Trading Day)
on which the conditions to the Closing set forth in Section 4.1 below are
satisfied or waived. The Closing shall occur at the offices of Greenberg
Traurig, LLP, MetLife Building, 200 Park Avenue, New York, NY 10166.

            4.          Closing Conditions; Certain Covenants.

                          4.1 Conditions to the Closing.

                          (a) Conditions of the Company to the Closing. The
obligation of the Company to sell and issue the Note and the Warrant to the
Investor at the Closing is subject to the fulfillment, to the Company’s
reasonable satisfaction, prior to or at the Closing, of each of the following
conditions:

                          (i) Representations and Warranties. The
representations and warranties of the Investor contained in this Agreement (x)
that are not qualified by “materiality” shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing Date with the same force and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (y) that are
qualified by “materiality” shall have been true and correct when made and shall
be true and correct as of the Closing Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties shall be
true and correct as of such other date.

                          (ii) Registration Rights Agreement. The Investor shall
have duly executed and delivered the Registration Rights Agreement to the
Company.

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                          (iii) No Injunction. No statute, regulation, order,
decree, writ, ruling or injunction shall have been enacted, entered,
promulgated, threatened or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by the
Transaction Documents.

                          (b) Conditions to the Investor to the Closing. The
obligation of the Investor to purchase the Note and the Warrant to be issued to
the Investor at the Closing is subject to the satisfaction, or (where legally
permissible) the waiver by the Investor, on the Closing Date, of each of the
following conditions:

                          (i) Representations and Warranties. The
representations and warranties of the Company contained in this Agreement (x)
that are not qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct in all material respects as of such other
date and (y) that are qualified by “materiality” or “Material Adverse Effect”
shall have been true and correct when made and shall be true and correct as of
the Closing Date with the same force and effect as if made on such dates, except
to the extent such representations and warranties are as of another date, in
which case, such representations and warranties shall be true and correct as of
such other date.

                          (ii) Performance of the Company. The Company shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Company shall have delivered to the
Investor on the Closing Date a written certification by an executive officer of
the Company to the foregoing substantially in the form attached hereto as
Exhibit D.

                          (iii) No Suspension of Trading in or Notice of
Delisting of Common Stock. Trading in the Common Stock shall not have been
suspended by the Commission, the Trading Market or the FINRA (except for any
suspension of trading of less than fourteen (14) days, which suspension shall be
terminated prior to the Closing Notice Date), the Company shall not have
received any final and non-appealable notice that the listing or quotation of
the Common Stock on the Trading Market shall be terminated on a date certain
(unless, prior to such date certain, the Common Stock is listed or quoted on any
other Trading Market), trading in securities generally as reported on the
Trading Market shall not have been suspended or limited, nor shall a banking
moratorium have been declared either by the U.S. or New York State authorities
(except for any suspension, limitation or moratorium which shall be terminated
prior to the Closing Notice Date), there shall not have been imposed any
suspension of electronic trading or settlement services by the Depository Trust
Company (“DTC”) with respect to the Common Stock that is continuing, the Company
shall not have received any notice from DTC to the effect that a suspension of
electronic trading or settlement services by DTC with respect to the Common
Stock is being imposed or is contemplated (unless, prior to such suspension, DTC
shall have notified the Company in writing that DTC has determined not to impose
any such suspension).

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                          (iv) Compliance with Laws. The Company shall have
complied with all applicable federal, state and local governmental laws, rules,
regulations and ordinances in connection with the execution, delivery and
performance of this Agreement and the other Transaction Documents (as defined
below) to which it is a party and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the Company
shall have obtained all permits and qualifications required by any applicable
state securities or “Blue Sky” laws for the offer and sale of the Securities by
the Company to the Investor).

                          (v) No Injunction. No statute, regulation, order,
decree, writ, ruling or injunction shall have been enacted, entered,
promulgated, threatened or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by the
Transaction Documents.

                          (vi) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any
governmental authority shall have been commenced or threatened, against the
Company or any Subsidiary, or any of the officers, directors or affiliates of
the Company or any Subsidiary, seeking to restrain, prevent or change the
transactions contemplated by the Transaction Documents, or seeking material
damages in connection with such transactions.

                          (vii) Listing of Securities. All of the Conversion
Shares and Warrant Shares that may be issued pursuant to the Note and Warrant,
respectively, shall have been approved for listing or quotation on the Trading
Market as of the Closing Date, in each case, without regard to any limitations
on conversion or exercise set forth in the Note or Warrant, respectively,
subject only to notice of issuance.

                          (viii) No Material Adverse Effect. No condition,
occurrence, state of facts or event constituting a Material Adverse Effect shall
have occurred and be continuing.

                          (ix) Opinion of Counsel. On the Closing Date, the
Investor shall have received an opinion from outside counsel to the Company,
dated the Closing Date, in the form mutually agreed to by the parties hereto
prior to the date hereof.

                          (x) Note and Warrant. At the Closing, the Company
shall have tendered to the Investor the Note and Warrant.

                          (xi) Registration Rights Agreement. The Company shall
have duly executed and delivered the Registration Rights Agreement to the
Investor.

                          (xii) Current Public Information. All reports,
schedules, registrations, forms, statements, information and other documents
required to have been filed by the Company with the Commission pursuant to the
reporting requirements of the 1934 Act, including all material required to have
been filed pursuant to Section 13(a) or 15(d) of the 1934 Act, shall have been
filed with the Commission under the 1934 Act.

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                          4.2 Reserved.

                          4.3 Securities Law Disclosure; Publicity. The Company
shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately
following the Closing Date, issue a press release in form and substance
reasonably acceptable to the Investor disclosing the material terms of the
transactions contemplated hereby (the “Press Release”) and (b) issue a Current
Report on Form 8-K (the “Current Report”) disclosing the material terms of the
transactions contemplated hereby, and including the Transaction Documents as
exhibits thereto, within the time required by the 1934 Act. From and after the
issuance of the Press Release, the Company represents to the Investor that the
Company shall have publicly disclosed all material, non-public information
delivered to the Investor as of such time by the Company or any of its
subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. The Company shall afford the Investor and its counsel with a
reasonable opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Investor or its counsel on, any
press release, Commission filing or any other public disclosure made by or on
behalf of the Company relating to the Investor, its purchases hereunder or any
aspect of the Transaction Documents or the transactions contemplated thereby,
prior to the issuance, filing or public disclosure thereof, and the Company
shall not issue, file or publicly disclose any such information to which the
Investor shall object. For the avoidance of doubt, the Company shall not be
required to submit for review any such disclosure contained in periodic reports
filed with the Commission under the Exchange Act if it shall have previously
provided the same disclosure for review in connection with a previous filing.

                          4.4 Legends. The Securities may only be disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or Rule 144 (as defined below), to the Company or to an affiliate of
the Investor or in connection with a pledge, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the 1933 Act. The Investor understands that the certificate or other
instrument representing the Note and the Warrant and the stock certificates
representing the Conversion Shares and the Warrant Shares, respectively, except
as set forth below, shall bear any legends as required by applicable state
securities or “Blue Sky” laws in addition to a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

            [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE][EXERCISABLE] HAVE BEEN] [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 MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE
COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

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                          The Company shall use its reasonable best efforts to
cause its transfer agent to remove the legend set forth above and to issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, or to issue to such holder by electronic delivery at the applicable
balance account at DTC, unless otherwise required by state securities or “blue
sky” laws, at such time as (i) such Securities are registered for resale under
the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such
holder provides the Company with an opinion of counsel, in a form generally
acceptable to the Company’s legal counsel and the Transfer Agent, to the effect
that such sale, assignment or transfer of the Securities may be made without
registration under the 1933 Act, (ii) if the holding period (as determined under
Rule 144) for such Securities is at least six months, but less than one year,
such holder provides the Company and its legal counsel with reasonable assurance
in writing that the Securities are being sold, assigned or transferred pursuant
to Rule 144 or Rule 144A or (iii) if the holding period (as determined under
Rule 144) for such Securities is at least one year, such holder provides the
Company and its legal counsel with reasonable assurance in writing that the
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A. In furtherance of the foregoing, the Company agrees that, following the
Effective Date or at such time as such legend is not required pursuant to this
Section 4.4, the Company shall, no later than three Trading Days following the
delivery by the Investor to the Company or the Transfer Agent of a certificate
representing Conversion Shares or Warrant Shares issued with a restrictive
legend (such third Trading Day, the “Legend Removal Date”), either: (A) issue
and deliver (or cause to be issued and delivered) to the Investor a certificate
representing such Conversion Shares or Warrant Shares, as applicable, that is
free from all restrictive and other legends or (B) cause the Transfer Agent to
credit the Investor’s or its designee’s account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Conversion Shares or Warrant Shares, as applicable,
represented by the certificate so delivered by the Investor. If the Company
fails on or prior to the Legend Removal Date to either (i) issue and deliver (or
cause to be issued and delivered) to the Investor a certificate representing the
Conversion Shares or Warrant Shares, as applicable, that is free from all
restrictive and other legends or (ii) cause the Transfer Agent to credit the
balance account of the Investor or its designee at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of the Conversion Shares or Warrant Shares, as
applicable, represented by the certificate delivered by the Investor pursuant
hereto (a “Delivery Failure”), and if on or after the Legend Removal Date the
Investor purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Investor of shares of Common
Stock that the Investor anticipated receiving from the Company without any
restrictive legend, then the Company shall, within three Trading Days after the
Investor’s request, pay cash to the Investor in an amount equal to the
Investor’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased, at which point the Company’s obligation
to deliver a certificate or credit the Investor’s or its designee’s account at
DTC for such shares of Common Stock shall terminate and such shares shall be
cancelled(the “Buy-In Remedy”). For the avoidance of doubt, with respect to any
given Delivery Failure, the Investor shall be entitled, at the election of the
Investor, to recovery either pursuant to this Buy-In Remedy or Section 3(c)(ii)
of the Note, but not both.

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                          4.5 No Short Sales. So long as the Note remains
outstanding, neither the Investor nor any of its affiliates nor any entity
managed or controlled by the Investor (collectively, the “Restricted Persons”
and each of the foregoing is referred to herein as a “Restricted Person”) shall,
directly or indirectly, engage in any Short Sales involving the Company’s
securities. Notwithstanding the foregoing, it is expressly understood and agreed
that nothing contained herein shall (without implication that the contrary would
otherwise be true) prohibit any Restricted Person from: (1) selling “long” (as
defined under Rule 200 promulgated under Regulation SHO) the Securities; or (2)
selling a number of shares of Common Stock equal to the number of Conversion
Shares and/or Warrant Shares, as applicable, that such Restricted Person is
entitled to receive under a pending Conversion Notice (as defined in the Note)
and/or Exercise Notice (as defined in the Warrant) but has not yet taken
possession of so long as such Restricted Person delivers the Conversion Shares
purchased pursuant to such Conversion Notice and/or the Warrant Shares purchased
pursuant to such Exercise Notice, as applicable, to the purchaser thereof;
provided, however, such Restricted Person shall not be required to so deliver
any such Conversion Shares subject to such Conversion Notice or the Warrant
Shares purchased pursuant to such Exercise Notice, as applicable, if the Company
fails for any reason to deliver such Conversion Shares to the Investor on the
applicable settlement date upon the terms and subject to the provisions of the
Note and/or such Warrant Shares to the Investor on the applicable settlement
date upon the terms and subject to the provisions of the Warrant, as applicable.

            5.          Representations and Warranties of the Company. Except as
set forth in the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the corresponding section of
the Disclosure Schedules, the Company hereby makes the following representations
and warranties to the Investors as of the Closing Date:

                          5.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a Material Adverse Effect.

                          5.2 Capitalization and Voting Rights. The authorized
capital stock of the Company and the shares thereof issued and outstanding were
as set forth in the Public Reports as of the dates reflected therein. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Except as set forth in the Public Reports,
this Agreement and the Registration Rights Agreement, there are no agreements or
arrangements under which the Company is obligated to register the sale of any
securities under the Securities Act. Except as set forth in the Public Reports,
no shares of Common Stock are entitled to preemptive rights and there are no
outstanding debt securities and no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, any shares of
capital stock of the Company other than those issued or granted in the ordinary
course of business pursuant to the Company’s equity incentive and/or
compensatory plans or arrangements. Except for customary transfer restrictions
contained in agreements entered into by the Company to sell restricted
securities or as set forth in the Public Reports, the Company is not a party to,
and it has no knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company. Except as set forth in the
Public Reports, the offer and sale of all capital stock, convertible or
exchangeable securities, rights, warrants or options of the Company issued prior
to the Closing Date complied with all applicable federal and state securities
laws, and no stockholder has any right of rescission or damages or any “put” or
similar right with respect thereto that would have a Material Adverse Effect.
Except as set forth in the Public Reports, there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the Note, the Warrant, this Agreement or the Registration Rights
Agreement or the consummation of the transactions described herein or therein.

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                          5.3 Authorization; Enforcement. All corporate action
on the part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement, the Note, the
Warrant and the Registration Rights Agreement (the “Transaction Documents”) and
the performance of all obligations of the Company hereunder and thereunder, and
the authorization (or reservation for issuance), sale and issuance of the Note
and the Warrant, and the Common Stock into which the Note and the Warrant are
convertible or exercisable, as applicable, have been taken on or prior to the
date hereof. Each of the Transaction Documents has been duly executed by the
Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

                          5.4 Valid Issuance of the Conversion Shares and
Warrant Shares; Reservation of Shares. Each of the Note and Warrant has been
duly authorized and, when issued and paid for in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws. Upon
conversion in accordance with the Note or exercise in accordance with the
Warrant (as the case may be), the Conversion Shares and the Warrant Shares,
respectively, when issued and delivered in accordance with the terms of this
Agreement and the Note or the Warrant, as applicable, for the consideration
expressed herein and therein, will be duly and validly issued, fully paid and
non-assessable, free and clear of all Liens imposed by the Company, other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws. The Company has reserved from its duly authorized
capital stock a sufficient number of shares of Common Stock for issuance of the
Conversion Shares as required by Section 8 of the Note and Warrant Shares as
required by Section 1(g) of the Warrant.

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                          5.5 Offering. Subject to the truth and accuracy of the
Investor’s representations set forth in Section 6 of this Agreement, the offer
and issuance of the Securities as contemplated by this Agreement are exempt from
the registration requirements of the Securities Act of 1933, as amended (the
“1933 Act”), and the qualification or registration requirements of state
securities laws or other applicable blue sky laws. Neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemptions.

                          5.6 Public Reports. The Company is current in its
filing obligations under the 1934 Act, including without limitation as to its
filings of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K (collectively, the “Public Reports”). The Public
Reports do not contain any untrue statement of a material fact or omit to state
any fact necessary to make any statement therein not misleading. The financial
statements included within the Public Reports for the fiscal year ended December
31, 2013 and for each quarterly period thereafter (the “Financial Statements”)
have been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods indicated and with
each other, except that unaudited Financial Statements may not contain all
footnote required by generally accepted accounting principles. The Financial
Statements fairly present, in all material respects, the financial condition and
operating results of the Company as of the dates, and for the periods, indicated
therein, subject in the case of unaudited Financial Statements to normal
year-end audit adjustments.

                          5.7 Compliance With Laws. The Company has not violated
any law or any governmental regulation or requirement which violation has had or
would reasonably be expected to have a Material Adverse Effect on its business
and the Company has not received written notice of any such violation.

                          5.8 Violations. The consummation of the transactions
contemplated by the Transaction Documents and all other documents and
instruments required to be delivered in connection therewith will not result in
or constitute any of the following: (a) a violation of any provision of the
articles of incorporation, bylaws or other governing documents of the Company;
(b) a violation of any provisions of any applicable law or of any writ or decree
of any court or governmental instrumentality; (c) a default or an event that,
with notice or lapse of time or both, would be a default, breach, or violation
of a lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which the Company is a party or by which the Company or its
property is bound; (d) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of the Company; or (e) the creation or imposition of any lien, pledge, option,
security agreement, equity, claim, charge, encumbrance or other restriction or
limitation on the capital stock or on any of the properties or assets of the
Company.

                          5.9 Consents; Waivers. No consent, waiver, approval or
authority of any nature, or other formal action, by any Person, firm or
corporation, or any agency, bureau or department of any government or any
subdivision thereof, not already obtained, is required in connection with the
execution and delivery of the Transaction Documents by the Company or the
consummation by the Company of the transactions provided for herein and therein.

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                          5.10 Sarbanes-Oxley Act. The Company is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of
the date hereof.

                          5.11 Absence of Litigation. 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, threatened against or affecting the Company, the
Common Stock or any of the Company’s officers or directors in their capacities
as such.

                          5.12 Material Changes; Undisclosed Events, Liabilities
or Developments. Since the date of the latest audited financial statements
included within the Public Reports, except as specifically disclosed in a
subsequent Public Report filed prior to the date hereof: (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement, no event, liability, fact, circumstance, occurrence or development
has occurred or exists or is reasonably expected to occur or exist with respect
to the Company or its Subsidiaries or their respective businesses, properties,
operations, assets or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is made.

                          5.13 Intellectual Property. The Company has, or has
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the Public Reports as necessary or required for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and
the Company has not received a notice (written or otherwise) that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement. The Company has not received, since the date of the
latest audited financial statements included within the Public Reports, a
written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as
could not have or reasonably be expected to not have a Material Adverse Effect.
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company has taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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                          5.14 Registration Rights. Other than the Investor or
as set forth in the Public Reports, no Person has any right to cause the Company
to effect the registration under the 1933 Act of any securities of the Company.

                          5.15 Disclosure. 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. The Company understands and confirms that the Investor
will rely on the foregoing representation in effecting transactions in
securities of the Company. All of the disclosure furnished by or on behalf of
the Company to the Investor regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct in all material
respects 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. The
Company acknowledges and agrees that the Investor does not make nor has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 6 hereof.

                          5.16 No Integrated Offering. Assuming the accuracy of
the Investor’s representations and warranties set forth in Section 6, neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of (i) the 1933 Act which would require the registration of
any such securities under the 1933 Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

                          5.17 Seniority. As of the Closing Date, no
Indebtedness or other claim against the Company is senior to the Note in right
of payment, whether with respect to interest or upon liquidation or dissolution,
or otherwise, other than indebtedness secured by purchase money security
interests (which is senior only as to underlying assets covered thereby) and
capital lease obligations (which is senior only as to the property covered
thereby).

                          5.18 Bankruptcy Status; Indebtedness. The Company has
no current intention or expectation to file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year
from the Closing Date. Schedule 5.18 sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness (as defined below) of the Company
or any Subsidiary, or for which the Company or any Subsidiary has commitments.
For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money or amounts owed in excess of $100,000 (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. The Company is not in default with respect
to any Indebtedness, except the convertible notes set forth in Schedule 5.18.

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                          5.19 Regulation M Compliance. The Company has not, and
to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company.

                          5.20 No Disqualification Events. None of the Company,
any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby,
any beneficial owner of 20% or more of the Company's outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the 1933 Act) connected with the Company in
any capacity at the time of sale (each, an “Issuer Covered Person”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event.

            6.          Representations and Warranties of the Investor. The
Investor hereby represents, warrants and covenants that:

                          6.1 Authorization. The Investor has full power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby and has taken all action
necessary to authorize the execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby.

                          6.2 No Public Sale or Distribution. The Investor is
(i) acquiring the Note and the Warrant, and (ii) upon conversion of the Note
will acquire the Conversion Shares and (iii) upon exercise of the Warrant will
acquire the Warrant Shares for its own account, not as a nominee or agent, and
not with a view towards, or for resale in connection with, the public sale or
distribution of any part thereof, except pursuant to sales registered or
exempted under the 1933 Act. The Investor is acquiring the Securities hereunder
in the ordinary course of its business. The Investor does not presently have any
contract, agreement, undertaking, arrangement or understanding, directly or
indirectly, with any Person to sell, transfer, pledge, assign or otherwise
distribute any of the Securities.

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                          6.3 Accredited Investor Status; Investment Experience.
The Investor is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D. The Investor can bear the economic risk of its investment in
the Securities, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Securities.

                          6.4 Reliance on Exemptions. The Investor understands
that the Securities are being 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’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.

                          6.5 Information. The Investor and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Investor. The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by the Investor or its advisors, if any, or its representatives shall
modify, amend or affect the Investor’s right to rely on the Company’s
representations and warranties contained herein. The Investor understands that
its investment in the Securities involves a high degree of risk. 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. The Investor is relying solely on its own accounting, legal and tax
advisors, and not on any statements of the Company or any of its agents or
representatives, for such accounting, legal and tax advice with respect to its
acquisition of the Securities and the transactions contemplated by this
Agreement.

                          6.6 No Governmental Review. 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.

                          6.7 Validity; Enforcement; No Conflicts. This
Agreement and each Transaction Document to which the Investor is a party have
been duly and validly authorized, executed and delivered on behalf of the
Investor and shall constitute the legal, valid and binding obligations of the
Investor enforceable against the Investor in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies. The execution,
delivery and performance by the Investor of this Agreement and each Transaction
Document to which the Investor is a party and the consummation by the Investor
of the transactions contemplated hereby and thereby will not (i) result in a
violation of the organizational documents of the Investor or (ii) 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 Investor is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities or “Blue Sky” laws) applicable to the Investor, except in the
case of clause (ii) above, for such conflicts, defaults or rights which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Investor to perform its obligations
hereunder.

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                          6.8 Organization and Standing. The Investor is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of New York.

                          6.9 Brokers or Finders. The Investor represents and
warrants, to the best of its knowledge, that no finder, broker, agent, financial
advisor or other intermediary, nor any purchaser representative or any
broker-dealer acting as a broker, is entitled to any compensation in connection
with the transactions contemplated by this Agreement or the transactions
contemplated hereby.

                          6.10 Ability to Perform. There are no actions, suits,
proceedings or investigations pending against Investor or Investor’s assets
before any court or governmental agency (nor is there any threat thereof) which
would impair in any way Investor’s ability to enter into and fully perform its
commitments and obligations under this Agreement or the transactions
contemplated hereby.

            7.          Use of Proceeds. The Investor acknowledges that the
Company will use the proceeds received from the purchase of the Note and Warrant
for, among other things, (i) costs and expenses relating to the sale of the Note
and Warrant to the Investor and (ii) general working capital purposes.

            8.          Rule 144 Availability; Public Information. At all times
during the period commencing on the six (6) month anniversary of the Closing
Date and ending at such time that all of the Securities can be sold without the
requirement to be in compliance with Rule 144(c)(1) under the 1933 Act and
otherwise without restriction or limitation pursuant to Rule 144 under the 1933
Act, the Company shall use its reasonable best efforts to ensure the
availability of Rule 144 under the 1933 Act to the Investor with regard to the
Conversion Shares and the Warrant Shares (assuming a cashless exercise of the
Warrant), including compliance with Rule 144(c)(1) under the 1933 Act. If, (i)
at any time during the period commencing from the six (6) month anniversary of
the Closing Date and ending on the first anniversary of the Closing Date, the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) under the 1933 Act (a “Public Information
Failure”), or (ii) the Company shall fail to take such action as is reasonably
requested by the Investor to enable the Investor to sell the Conversion Shares
and the Warrant Shares (assuming a cashless exercise of the Warrant) pursuant to
Rule 144 under the 1933 Act (including, without limitation, delivering all such
legal opinions, consents, certificates, resolutions and instructions to the
Company’s transfer agent as may be reasonably requested from time to time by the
Investor and otherwise fully cooperate with Investor and Investor’s broker to
effect such sale of securities pursuant to Rule 144 under the 1933 Act) (a
“Process Failure”), then, in either case, in addition to the Investor’s other
available remedies, the Company shall pay to a Investor, in cash, as liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the aggregate Purchase Price of the Investor’s Securities on the day of a Public
Information Failure or Process Failure, as applicable, and on every thirtieth
(30th) day (pro rated for periods totaling less than thirty days) thereafter
until (a) in the case of a Process Failure, the date such Process Failure is
cured, or (b) in the case of a Public Information Failure, the earlier of (1)
the date such Public Information Failure is cured and (b) such time that such
public information is no longer required for the Investor to transfer the
Conversion Shares or the Warrant Shares (assuming a cashless exercise of the
Warrant) pursuant to Rule 144 under the 1933 Act. The payments to which the
Investor shall be entitled pursuant to this Section 8 are referred to herein as
“Rule 144 Failure Payments.” Rule 144 Failure Payments shall be paid on the
earlier of (i) the last day of the calendar month during which such Rule 144
Failure Payments are incurred and (ii) the third (3rd) Trading Day after the
event or failure giving rise to the Rule 144 Failure Payments is cured.

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            9.          Indemnification. In consideration of the Investor’s
execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless the Investor and each holder of any Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) 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’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or any Subsidiary in any of the Transaction Documents, (b) any breach of
any covenant, agreement or obligation of the Company or any Subsidiary contained
in any of the Transaction Documents or (c) any cause of action, suit or claim
brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company or any Subsidiary)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of any of the Transaction Documents, (ii) any transaction financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Securities, or (iii) the status of the Investor or holder
of the Securities as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents. 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. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 9 shall be the same as those set forth
in Section 6 of the Registration Rights Agreement.

            10.        Participation Rights. During the period commencing on the
date hereof and ending 180 calendar days after the date hereof, neither the
Company nor any of its Subsidiaries shall, directly or indirectly, effect any
Subsequent Financing (as defined below) unless the Company shall have first
complied with this Section 10.

                          10.1 At least two (2) Trading Days prior to any
proposed or intended Subsequent Financing, the Company shall deliver to the
Investor a written notice of its proposal or intention to effect a Subsequent
Financing (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain
any information (including, without limitation, material, non-public
information) other than: either (A) (i) a statement that the Company proposes or
intends to effect a Subsequent Financing, (ii) a statement that the statement in
clause (i) above does not constitute material, non-public information and (iii)
a statement informing the Investor that it is entitled to receive an Offer
Notice (as defined below) with respect to such Subsequent Financing upon its
written request or (B) if the existence of such Subsequent Financing is, as of
the date of such Pre-Notice, material, non-public information, a statement that
the Investor is entitled to receive material, non-public information. Upon the
written request of the Investor within two (2) Trading Days after the Company’s
delivery to the Investor of such Pre-Notice, and only upon a written request by
the Investor, the Company shall promptly, but no later than one (1) Trading Day
after such request, deliver to the Investor an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange (the
“Offer”) of the securities being offered (the “Offered Securities”) in a
Subsequent Financing, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the aggregate number or amount of the
Offered Securities to be issued, sold or exchanged, (y) identify the Persons (if
known) to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (z) offer to issue and sell to or exchange with the
Investor in accordance with the terms of the Offer all of the Offered
Securities.

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                          10.2 To accept an Offer, in whole or in part, the
Investor must deliver a written notice to the Company prior to the end of the
second (2nd) Business Day after the Investor’s receipt of the Offer Notice (the
“Offer Period”), setting forth the portion of the Offered Securities that the
Investor elects to purchase (in either case, the “Notice of Acceptance”).
Notwithstanding the foregoing, if the Company desires to modify or amend the
terms and conditions of the Offer prior to the expiration of the Offer Period,
the Company may deliver to the Investor a new Offer Notice and the Offer Period
shall expire on the third (3rd) Business Day after the Investor’s receipt of
such new Offer Notice.

                          10.3 The Company shall have five (5) Business Days
from the expiration of the Offer Period above (i) to offer, issue, sell or
exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Investor (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Financing Agreement”),
but only to the offerees described in the Offer Notice (if so described therein)
and only upon terms and conditions (including, without limitation, unit prices
and interest rates) that are not more favorable to the acquiring Person or
Persons or less favorable to the Company than those set forth in the Offer
Notice and (ii) to publicly announce (a) the execution of such Subsequent
Financing Agreement, and (b) either (x) the consummation of the transactions
contemplated by such Subsequent Financing Agreement or (y) the termination of
such Subsequent Financing Agreement, which shall be filed with the SEC on a
Current Report on Form 8-K with such Subsequent Financing Agreement and any
documents contemplated therein filed as exhibits thereto.

                          10.4 In the event the Company shall propose to sell
less than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 10.3 above), then the Investor may, at its sole
option and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that the Investor
elected to purchase pursuant to Section 10.2 above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to the Investor pursuant to this Section 10
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that the Investor so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Investor in accordance with Section 10.1 above.

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                          10.5 Upon the closing of the issuance, sale or
exchange of all or less than all of the Refused Securities, the Investor shall
acquire from the Company, and the Company shall issue to the Investor, the
number or amount of Offered Securities specified in its Notice of Acceptance.
The purchase by the Investor of any Offered Securities is subject in all cases
to the preparation, execution and delivery by the Company and the Investor of a
separate purchase agreement relating to such Offered Securities reasonably
satisfactory in form and substance to the Investor and its counsel.

                          10.6 Any Offered Securities not acquired by the
Investor or other Persons in accordance with this Section 10 may not be issued,
sold or exchanged until they are again offered to the Investor under the
procedures specified in this Agreement.

                          10.7 The Company and the Investor agree that if the
Investor elects to participate in the Offer, neither the Subsequent Financing
Agreement with respect to such Offer nor any other transaction documents related
thereto (collectively, the “Subsequent Financing Documents”) shall include any
term or provision whereby the Investor shall be required to agree to any
restrictions on trading as to any securities of the Company or be required to
consent to any amendment to or termination of, or grant any waiver, release or
the like under or in connection with, any agreement previously entered into with
the Company or any instrument received from the Company.

                          10.8 Notwithstanding anything to the contrary in this
Section 10 and unless otherwise agreed to by the Investor, the Company shall
either confirm in writing to the Investor that the transaction with respect to
the Subsequent Financing has been abandoned or shall publicly disclose its
intention to issue the Offered Securities, in either case, in such a manner such
that the Investor will not be in possession of any material, non-public
information, by the fifth (5th) Business Day following delivery of the Offer
Notice. If by such fifth (5th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by the Investor,
such transaction shall be deemed to have been abandoned and the Investor shall
not be in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries. Should the Company decide to pursue such
transaction with respect to the Offered Securities, the Company shall provide
the Investor with another Offer Notice and the Investor will again have the
right of participation set forth in this Section 10. The Company shall not be
permitted to deliver more than one Offer Notice to the Investor in any sixty
(60) day period, except as expressly contemplated by the last sentence of
Section 10.2.

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                          10.9 The restrictions contained in this Section 10
shall not apply in connection with the issuance of any Excluded Securities (as
defined below).

                          10.10 For purposes of this Section 10, the following
definitions shall apply:

                          (a)        “Approved Stock Plan” means any employee
benefit plan which has been approved by the board of directors of the Company
prior to or subsequent to the date hereof pursuant to which shares of Common
Stock and standard options to purchase Common Stock may be issued to any
employee, officer, consultant or director for services provided to the Company
in their capacity as such.

                          (b)        “Convertible Securities” means any capital
stock or other security of the Company or any of its Subsidiaries that is at any
time and under any circumstances directly or indirectly convertible into,
exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any capital stock or other security of the Company (including,
without limitation, Common Stock) or any of its Subsidiaries.

                          (c)        “Excluded Securities” means (A) shares of
Common Stock or standard options to purchase Common Stock to directors, officers
or employees of the Company in their capacity as such pursuant to an Approved
Stock Plan (as defined below), provided that (1) all such issuances (taking into
account the shares of Common Stock issuable upon exercise of such options) after
the date hereof pursuant to this clause (A) do not, in the aggregate, exceed
more than 5% of the Common Stock issued and outstanding immediately prior to the
date hereof and (2) the exercise price of any such options is not lowered, none
of such options are amended to increase the number of shares issuable thereunder
and none of the terms or conditions of any such options are otherwise materially
changed in any manner that adversely affects the Investor; (B) shares of Common
Stock issued upon the conversion or exercise of Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (A) above) issued prior to the date
hereof, provided that the conversion price of any such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (A) above) is not lowered, none
of such Convertible Securities (other than standard options to purchase Common
Stock issued pursuant to an Approved Stock Plan that are covered by clause (A)
above) are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (A) above) are otherwise materially changed in
any manner that adversely affects the Investor; (C) the Securities and (D)
shares of Common Stock or Convertible Securities issued or issuable in
connection with strategic alliances, acquisitions, mergers, and strategic
partnerships, provided, that (1) the primary purpose of such issuance is not to
raise capital, (2) the purchasers or acquirers of the securities in such
issuance does not include any affiliate of the Company or any of its
Subsidiaries and solely consists of either (x) the actual participants in such
strategic alliance or strategic partnership, (y) the actual owners of such
assets or securities acquired in such acquisition or merger or (z) the
stockholders, partners or members of the foregoing Persons, (3) the number or
amount of securities issued to such Person by the Company shall not be
disproportionate to such Person’s actual participation in such strategic
alliance or strategic partnership or ownership of such assets or securities to
be acquired by the Company, as applicable.

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                          (d)        “Subsequent Financing” means any, direct or
indirect, issuance, offer, sale, grant of any option or right to purchase, or
otherwise disposition of (or announcement of any issuance, offer, sale, grant of
any option or right to purchase or other disposition of) any equity or debt
security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405
promulgated under the 1933 Act), any Convertible Securities, any debt, any
preferred stock or any purchase rights) of the Company or any of its
Subsidiaries, including, without limitation, pursuant to Section 3(a)(9) or
Section 3(a)(10) of the 1933 Act, or the direct or indirect issuance by the
Company or any of its Subsidiaries of any Indebtedness.

            11.        Exclusivity. From and after the date hereof through and
including the date that is 90 days after the date hereof, and regardless of
whether the Investor or its affiliates then hold any debt or equity securities
of the Company, neither the Company nor any of its affiliates or subsidiaries,
nor any of its or their respective officers, employees, directors, agents or
other representatives, will (a) solicit, initiate, encourage or accept any other
inquiries, proposals or offers from any Person (other than the Investor)
relating to any transaction whereby the Company directly or indirectly issues
equity or debt securities of the Company to a party in exchange for outstanding
equity or debt securities, claims or property interests, or partly in such
exchange and partly for cash, in one or more transactions carried out pursuant
to Section 3(a)(9) or Section 3(a)(10) of the Securities Act (any such
transaction, an “Exchange Transaction”), (b) enter into, effect, alter, amend,
announce or recommend to its shareholders any Exchange Transaction with any
Person (other than the Investor), or (c) participate in any discussions,
conversations, negotiations or other communications with any Person (other than
the Investor) regarding any Exchange Transaction, or furnish to any Person
(other than the Investor) any information with respect to any Exchange
Transaction, or otherwise cooperate in any way, assist or participate in,
facilitate or encourage any effort or attempt by any Person (other than the
Investor) to seek an Exchange Transaction involving the Company or any of its
subsidiaries. The Company, its affiliates and subsidiaries, and each of its and
their respective officers, employees, directors, agents or other representatives
shall immediately cease and cause to be terminated all existing discussions,
conversations, negotiations and other communications with any Persons (other
than the Investor) with respect to any of the foregoing. The Company shall
promptly (and in no event later than 24 hours after receipt) notify (which
notice shall be provided orally and in writing and shall identify the Person
making the inquiry, request, proposal or offer and set forth the material terms
thereof) the Investor after receipt of any inquiry, request, proposal or offer
relating to any Exchange Transaction, and shall promptly (and in no event later
than 24 hours after receipt) provide copies to the Investor of any written
inquiries, requests, proposals or offers relating thereto. The Company agrees
that it and its affiliates and subsidiaries, and each of its and their
respective officers, employees, directors, agents or other representatives
subsidiaries will not enter into any agreement with any Person subsequent to the
date hereof which prohibits the Company from providing any information to the
Investor in accordance with this provision. As used in this Agreement, “Person”
means any individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.

            12.        Miscellaneous

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                          12.1 Successors and Assigns. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of the Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

                          12.2 Governing Law; Jurisdiction; Jury Trial. All
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. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Chicago, Illinois, 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. 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 WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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

                          12.4 Notices. All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next Trading Day, (c) five (5) Trading Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to (a) in the case of the Company, to Echo
Automotive, Inc., 16000 North 80th Street, Suite E, Scottsdale, Arizona 85260,
Telephone Number: (480) 682-5445, Attention: Patrick van den Bossche, or (b) in
the case of the Investor, to 31 Group, LLC, c/o Magna Group, 5 Hanover Square,
New York, NY 10004, Telephone Number: (347) 491-4240, Fax: (646) 737-9948,
Attention: Marc Manuel, with a copy (which shall not constitute notice) to
Greenberg Traurig, LLP, The MetLife Building, 200 Park Avenue, New York, New
York 10166, Telephone Number (212) 801-9200, Fax: (212) 801-6400, Attention:
Anthony J. Marsico, Esq.

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                          12.5 Finder’s Fees. Each party represents that it
neither is nor will be obligated for any finders’ fee or commission in
connection with this transaction. The Company shall indemnify and hold harmless
each Investor from any liability for any commission or compensation in the
nature of a finders’ fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.

                          12.6 Amendments and Waivers. No provision of this
Agreement may be amended other than by a written instrument signed by both
parties hereto. No provision of this Agreement may be waived other than in a
written instrument signed by the party against whom enforcement of such waiver
is sought. 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
exercises thereof or of any other right, power or privilege.

                          12.7 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

                          12.8 Entire Agreement. This Agreement and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein.

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

                          12.10 Interpretation. Unless the context of this
Agreement clearly requires otherwise, (a) references to the plural include the
singular, the singular the plural, the part the whole, (b) references to any
gender include all genders, (c) “including” has the inclusive meaning frequently
identified with the phrase “but not limited to” and (d) references to
“hereunder” or “herein” relate to this Agreement.

                          12.11 Remedies. In addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, the Investor and the Company will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary damages may not
be adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

                          12.12 Fees and Expenses. Each party shall bear its own
fees and expenses related to the transactions contemplated by the Transaction
Documents; provided, however, that (i) $50,000 (less $5,000 heretofore paid by
the Company to the Investor) shall be withheld by the Investor from the Purchase
Price at the Closing as a non-accountable and non-refundable document
preparation fee (the “Document Preparation Fee”) in connection with the
preparation, negotiation, execution and delivery of the Transaction Documents
and legal due diligence of the Company, and shall be paid directly to the
Investor’s counsel on the Closing Date by wire transfer of immediately available
funds. For the avoidance of doubt, the Document Preparation Fee (and any portion
thereof) shall be non-refundable when paid. The Company shall pay all transfer
agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any conversion
or exercise notice delivered by a Investor), stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the Investor.

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            13.        Additional Defined Terms. In addition to the terms
defined elsewhere in this Agreement, the Note or the Warrant the following terms
have the meanings set forth in this Section 11:

                          13.1 “1934 Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

                          13.2 “Commission” means the United States Securities
and Exchange Commission.

                          13.3 “Common Stock Equivalents” means any securities
of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any Convertible
Security, Option or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

                          13.4 “Effective Date” means the date that the Initial
Registration Statement (as defined in the Registration Rights Agreement) filed
pursuant to the Registration Rights Agreement has been declared effective by the
Commission.

                          13.5 “Liens” means a lien, charge pledge, security
interest, encumbrance, right of first refusal, preemptive right or other
restriction.

                          13.6 “Material Adverse Effect” means (i) a material
adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) 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) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.

                          13.7 “Registrable Securities” shall have the meaning
set forth in the Registration Rights Agreement.

                          13.8 “Short Sales” shall mean “short sales” as defined
in Rule 200 promulgated under Regulation SHO under the 1934 Act.

                          13.9 “Subsidiary” shall mean any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other Subsidiaries.

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                          13.10 “Trading Day” means any day on which the Common
Stock is traded on the Trading Market, provided that “Trading Day” shall not
include any day on which the Common Stock is scheduled to trade on the Trading
Market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on the Trading Market (or if the
Trading Market does not designate in advance the closing time of trading on the
Trading Market, then during the hour ending at 4:00:00 p.m., New York City time)
unless such day is otherwise designated as a Trading Day in writing by the
Investor.

                          13.11 “Trading Market” means any of the following
markets or exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the OTC Bulletin Board, The NASDAQ Global Market, The
NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock
Exchange, NYSE Arca, the NYSE MKT, or the OTCQX Marketplace or the OTCQB
Marketplace operated by OTC Markets Group Inc. (or any successor to any of the
foregoing).

[SIGNATURES ON THE FOLLOWING PAGE]

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            IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date provided above.

THE COMPANY

ECHO AUTOMOTIVE, INC.

  By:   _________________________________________            Name:          
 Title:

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            IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date provided above.

THE INVESTOR:

31 GROUP, LLC

  By:   _________________________________            Name:            Title:

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