2050 MOTORS, INC.

 

SECURITIES PURCHASE AGREEMENT

 

BY AND BETWEEN

 

2050 MOTORS, INC.

 

AND

 

THE INVESTOR

 

EFFECTIVE AS OF AUGUST 26, 2019

 

 

 

 

 

 

SECURITIES PURCHASE AGREEMENT

 

Series B Preferred Stock

 

Securities Purchase Agreement (this “Agreement”), effective as of August 26,
2019, is entered into by and among 2050 Motors, Inc., a California corporation
(the “Company”), and Vikram Grover (the “Investor”). Certain capitalized terms
used in this Agreement are defined in Section 7.1 of this Agreement.

 

RECITALS

 

WHEREAS, the Investor desires to purchase from the Company, and the Company
desires to sell to the Investor, newly-authorized 1% Series B Cumulative
Convertible Preferred Stock, $.0001 par value per share, of the Company (the
“Series B Preferred Stock”) upon the terms and conditions set forth herein (the
“Investment Transaction”); and

 

WHEREAS, the Company has required as a condition and an inducement to its
willingness to enter into this Agreement and to consummate the Investment
Transaction, that the Company and the Investors shall enter into a Stockholders’
Agreement with industry standard definitions, protections, and stockholder
rights and protections (the “Stockholders Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing, and of the mutual
representations, warranties, covenants and agreements contained in this
Agreement and other valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:

 

Section 1. Authorization and Sale of Acquired Shares.

 

1.1 Authorization. The Company shall adopt and file with the Secretary of State
of the State of California as soon as practicable an amended Certificate of
Determination disclosing the issuance of Series B Preferred shares to the
Investor (the “Amended Certificate”).

 

1.2 Purchase and Sale. On the basis of the representations, warranties, and
agreements contained in this Agreement, and subject to the terms and conditions
of this Agreement, the Investor[s] shall purchase from the Company, and the
Company shall sell, issue, and deliver to the Investor 125,000 shares of the
Series B Preferred Stock (such shares of Series B Preferred Stock issued to the
Investor, the “Acquired Shares”), representing 125,000 of the outstanding shares
of Series B Preferred Stock, at a purchase price of $0.20 per share (“Per Share
Price”), or an aggregate of $25,000 (“Aggregate Purchase Price”), payable by the
Investor as set forth in Section 1.3 hereof.

 

1.3 Payment of Purchase Price. At the Closing, the Investor shall pay the
Aggregate Purchase Price to the Company $25,000.00.

 

 

 

 

1.4 Use of Proceeds. The Company shall use the proceeds from the sale of the
Acquired Shares for strategic investments, mergers and acquisitions, and general
corporate purposes.

 

1.5 The Closing. The closing of the purchase and sale of the Acquired Shares
(“Closing”) shall take place at 5:00 a.m., on August 26, 2019.

 

1.6 Deliveries at Closing. At the Closing or as soon as practicable after the
Secretary of State of California approves the Company’s Certificate of
Determination for its newly-created Series B Preferred Shares, (a) the Company
shall deliver to the Investor a certificate or certificates representing the
number of Acquired Shares being purchased by the Investor at the Closing,
registered in the name of the Investor, and (b) the Investor shall pay to the
Company the $50,000.00 of accrued compensation in the manner set forth in
Section 1.3 hereof.

 

Section 2. Representations and Warranties of the Company. Except as set forth in
any required disclosure schedules, dated as of the date of this Agreement and
attached hereto, that have been delivered by the Company to the Investor prior
to the execution and delivery of this Agreement (the “Disclosure Schedule”),
which exceptions shall be deemed to part of the representations and warranties
made hereunder (the Disclosure Schedule shall be arranged in sections
corresponding to the numbered and lettered sections contained in Section 2, and
each such exception set forth in the Disclosure Schedule however shall not be
deemed a disclosure or an exception with respect to any other section or
sections of this Agreement unless reliance of such items to such other section
or sections is specifically referenced to each applicable item in the Disclosure
Schedule), the Company hereby represents and warrants to the Investor as
follows:

 

2.1 Organization, Standing, and Power. The Company is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of California and has the requisite corporate power and authority to own, lease,
operate and otherwise hold its properties and assets and to carry on its
business as it is now being conducted. The Company is duly qualified or licensed
to do business as a corporation and is in good standing in each jurisdiction in
which the character or location of the property owned, leased, operated, or held
by it or the nature of the business transacted by it makes such qualification or
license necessary, except where the failure to be so qualified or licensed would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.

 

2.2 Authority; Due Execution. The Company has all the requisite corporate power
and authority to execute and deliver, and to perform its obligations hereunder
and to consummate the Investment Transaction contemplated by, this Agreement.
The execution, delivery, and performance by the Company of this Agreement and
the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, including the Investment Transaction, have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement and the other Transaction Documents have been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery by the Investor, each will constitute a legal, valid, and
binding obligation of the Company, enforceable against it in accordance with its
terms (except to the extent enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratoriums, or similar Laws affecting
creditors’ rights and remedies generally, (ii) the availability of the equitable
remedy of specific performance and injunctive relief is subject to the
discretion of the court before which any proceedings may be brought, or (iii)
applicable federal and state securities Laws with respect to indemnification
provisions contained in the Stockholders Agreement and Registration Rights
Agreement (the “Bankruptcy and Equity Exceptions”).

 

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2.3 No Conflict or Required Approvals.

 

(a) Except as set forth in the Disclosure Schedule, neither the execution and
delivery of this Agreement or any of the other Transaction Documents, nor the
consummation by the Company of Investment Transaction contemplated hereby, or
compliance with any of the terms or provisions herein by the Company will: (i)
conflict with or violate any provision of the Articles of Incorporation or
Bylaws, of the Company, assuming the filing of the Amended Certificate of
Determination in relation to the consummation of the Investment Transaction,
(ii) conflict with, violate, or constitute or result in a material breach of any
term, condition, or provision of, or constitute a default (with or without due
notice or lapse of time or both) under, or give rise to any right of
termination, modification, cancellation, or acceleration of any obligation or
the loss of any material benefit under, or require a Consent pursuant to any of
the terms, provisions, or conditions of any material loan or credit agreement,
note, mortgage, indenture, deed of trust, lease, sublease, license, sublicense,
agreement, Permit, concession, franchise, security interest, instrument of
indebtedness, plan or other instrument, purchase order, or other agreement or
Contract to which the Company or any of the Company’s Subsidiaries is a party or
by which they are bound or to which their properties or assets are subject,
(iii) result in the imposition of any Lien upon any properties or assets of the
Company, or any of the Company Subsidiaries or in the suspension, revocation,
forfeiture or nonrenewal of any material Permit or license applicable to the
Company or any of the Company’s Subsidiaries, or (iv) conflict with or violate
any judgment, order, writ, injunction, decree of any court, governmental,
regulatory or administrative agency, commission, authority, instrumentality, or
other public body, domestic or foreign (a “Governmental Entity”), or material
Law applicable to the Company, or any of the Company Subsidiaries, or any of
their respective assets or properties; except in the case of clauses (ii),
(iii), or (iv) of this Section 2.3(a), as would not have a Material Adverse
Effect on the Company or its ability to consummate and perform the terms of this
Agreement.

 

(b) Assuming the accuracy of the representations made by the Investor in Section
3 of this Agreement, no notice to, registration, qualification, designation,
declaration of, or filing by the Company with, or the Consent or Permit of, or
any action by any Governmental Entity or any other Person is required on the
part of the Company in connection with the execution and delivery of this
Agreement or the other Transaction Documents, or the consummation the Investment
Transaction, including, without limitation, the offer, issuance, sale, and
delivery of the Acquired Shares, except: (i) the filing of the Amended
Certificate of Determination, which shall be filed on closing or as soon as
practicable, and (ii) the filings as may be required under applicable provisions
of United States federal securities Laws (including, if applicable, pursuant to
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”)), and as may be required under applicable state securities
Laws, each of which will be filed timely within the applicable periods therefor.

 

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2.4 Capitalization.

 

(a) The authorized capital stock of the Company as of the Closing Date, after
giving effect to the filing of the Amended Certificate but prior to giving
effect to the Investment Transaction contemplated hereby, shall consist of: (i)
three billion (3,000,000,000) shares of common stock, par value nil per share
(“Common Stock”), of which 1,654,560,305 shares will be issued and outstanding,
and no shares shall have been reserved for issuance pursuant to outstanding
Options, none of which have been issued under the Equity Incentive Plan, and
(ii) ten million (10,000,000) shares of preferred stock (“Preferred Stock”), of
which (x) three million (3,000,000) shares have been designated as Series A
Preferred Stock, par value $.0001 per share (“Series A Preferred Stock”), three
million (3,000,000) of which will be issued and outstanding, and (y) six million
(6,000,000) shares have been designated as Series B Preferred Stock, par value
$.0001 per share (“Series B Preferred Stock”), 400,000 of which will be issued
and outstanding, and (z) one million (1,000,000) shares shall have been
designated as Series C Preferred Stock, par value $.0001 per share (“Series C
Preferred Stock”), one million (1,000,000) of which will he issued and
outstanding. The Company holds no shares of Common Stock or Preferred Stock as
treasury shares. The rights, privileges, and preferences of the Series B
Preferred Stock are as stated in a Certificate of Determination filed with the
Secretary of State of California.

 

(b) Each share of Series A Preferred Stock is convertible into one (1) share of
Common Stock and has fifty (50) votes on corporate matters, and the outstanding
shares of Series A Preferred Stock is convertible into an aggregate of three
million (3) shares of Common Stock. None of the Series A Preferred Stock issued
by the Company has been converted into shares of Common Stock. The Company has
reserved no shares of Common Stock for issuance upon conversion of all the
outstanding Series A Preferred Stock.

 

(c) Each share of Series B Preferred Stock is convertible into one thousand
(1,000) shares of Common Stock and has one thousand (1,000) votes on corporate
matters, and the outstanding shares of Series B Preferred Stock is convertible
into an aggregate of no shares of Common Stock. None of the Series B Preferred
Stock issued by the Company has been converted into shares of Common Stock. The
Company has reserved no shares of Common Stock for issuance upon conversion of
all the outstanding Series B Preferred Stock.

 

(d) Each share of Series C Preferred Stock is convertible into one (1) share of
Common Stock and has ten thousand (10,000) votes on corporate matters, and the
outstanding shares of Series C Preferred Stock is convertible into an aggregate
of one million (1) shares of Common Stock. None of the Series C Preferred Stock
issued by the Company has been converted into shares of Common Stock. The
Company has reserved no shares of Common Stock for issuance upon conversion of
all the outstanding Series C Preferred Stock.

 

(e) All issued and outstanding shares of Common Stock and Preferred Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
All the issued and outstanding shares of capital stock of the Company have been
offered, sold, and issued by the Company in compliance with all registration or
qualification provisions, or exemptions therefrom, under applicable federal
securities Laws and the blue sky and securities Laws of all other applicable
jurisdictions.

 

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(f) The Company has reserved no shares of Common Stock for issuance to officers,
directors, employees, agents, and consultants pursuant to any Equity Incentive
Plan duly adopted by the Board of Directors and approved by the Company’s
stockholders prior to the date of this Agreement (the “Equity Incentive Plan”).
As of the date of this Agreement, no shares of Common Stock have been issued
pursuant to restricted stock purchase agreements or Options granted under the
Equity Incentive Plan, forty million (20,000,000) shares of Common Stock are
subject to issuance but not currently available for issuance or reserved under
outstanding and unexercised Options issued under warrant agreements for the
Company’s Advisory Board (20,000,000 warrants issued at a strike price of $.01,
50,000,000 authorized) and strategic consultants (10,000,000 warrants issued at
a strike price of $.005) (“Outstanding Options”), and no shares of Common Stock
remain available for issuance pursuant to future grants under the Equity
Incentive Plan. The Company has provided the Investor with a true and complete
copy of the Equity Incentive Plan and all forms of awards and agreements used in
connection therewith.

 

(g) None of the Company’s outstanding Common Stock and Preferred Stock, and none
shares of the Company’s Common Stock underlying outstanding Options, and which
may be issued upon conversion of Preferred Stock, are subject to a right a first
refusal in favor of the Company upon any proposed transfer.

 

2.5 Issuance of Acquired Shares and Conversion Shares. The issuance, sale, and
delivery of the Acquired Shares to the Investor[s] pursuant to the Investment
Transaction and the issuance of shares of Common Stock upon conversion of the
Acquired Shares (the “Conversion Shares”) have been duly authorized by all
necessary corporate action on the part of the Company. The Company has not
reserved any shares of Common Stock for issuance upon conversion of any of the
outstanding Acquired Shares. The Acquired Shares, when issued, sold, and
delivered against payment therefor in accordance with the provisions of this
Agreement, and the Conversion Shares (none of which have been reserved for
issuance), when issued and delivered upon conversion of the Acquired Shares in
accordance with their terms and the Amended Articles, will be duly authorized
and validly issued, fully paid and nonassessable, and the Investor will receive
full ownership of the Acquired Shares and, when converted, the Conversion
Shares, free and clear of any Liens, or preemptive or other similar rights,
except those set forth in the Transaction Documents.

 

2.6 Financial Statements.

 

(a) Neither the Company nor any of the Company’s Subsidiaries has filed any
voluntary petition in bankruptcy or suffered the filing of an involuntary
petition by its creditors, suffered the appointment of a receiver to take
possession of substantially all of its assets, or suffered the attachment or
other judicial seizure of substantially all of its assets, or made an assignment
for the benefit of creditors or admitted in writing its inability to pay its
debts generally as the same become due.

 

2.7 Tax Matters. The Company has duly filed or caused to be filed in a timely
manner (within applicable extension periods) all material Tax Returns and forms
required to be filed by it and no material penalties or other charges are or
will become due with respect to any of Tax Returns as the result of the late
filing thereof. All Tax Returns are true and complete in all material respects.
The Company (i) has paid all Taxes due or claimed to be due by any Taxing
authority in connection with any of the Company’s Tax Returns (without regard to
whether or not such Taxes are shown as due on such Tax Returns), as well as all
other Taxes, assessments, and governmental charges which have become due and
payable, including, without limitation, all Taxes which the Company is obligated
to withhold from amounts owing to employees, creditors, and third parties.

 

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2.8 Permits; No Violations; and Compliance with Laws.

 

(a) The Company (i) is not in conflict with or in violation of any provision of
its Articles of Incorporation or Bylaws, (ii) is not in conflict with or in
violation or breach of, or in default under (with or without due notice or lapse
of time or both) material loan or credit agreement, note, mortgage, indenture,
deed of trust, lease, sublease, license, sublicense, agreement, Permit,
concession, franchise, security interest, instrument of indebtedness, plan or
other instrument, purchase order, or other agreement or Contract to which the
Company or by which it is bound or to which its properties or assets are
subject, (iii) is not in conflict with or in violation of any judgment, order,
writ, or decree of any Governmental Entity to which it the Company is a party or
by which it is bound, or, to the Knowledge of the Company, of any provision of
any Laws of the United States and of all other jurisdictions applicable to the
Company or any of its assets or properties, and any Governmental Entity in
respect of the conduct of its business, and (iv) to the Knowledge of the
Company, has not performed any act, the occurrence of which would result in the
Company’s loss of any right granted under any material license, distribution or
other agreement.

 

2.9 No Litigation. There is not now pending or, to the Knowledge of the Company,
threatened in writing, any litigation, suit, claim, action, or proceeding,
including, without limitation, arbitration proceeding, mediation, or other
alternative dispute resolution proceeding, to which the Company is or will be a
party (or, as applicable, to the Knowledge of the Company, any of its directors,
officers or employees in their capacities as such is or will be a party) or by
which its property or assets will or may be bound or affected in or before or by
any Governmental Entity which: (a) is against the Company or any director,
officer, or employee of the Company, including, without limitation, actions
involving the prior employment of any of the Company’s employees, their services
provided in connection with the Company’s business, or any information or
actions allegedly proprietary to any of their prior employers or their
obligations under any agreement with prior employers, (b) challenges or seeks to
question the validity of the Investment Transaction or prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, (c)
would be reasonably likely to threaten, impede, impair or adversely affect the
obligation of the Company to consummate the transactions contemplated by the
Agreement, or (d) which is reasonably likely to have a Material Adverse Effect
on the Company. In addition to the foregoing, there is no judgment, decree,
writ, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or, to the Knowledge of the Company, against any
of its directors, officers, or employees which would affect the Company. The
Company has not received any written notification of, and to the Knowledge of
the Company, there is no, investigation by any Governmental Entity involving the
Company or any of the Company’s Subsidiaries or any of their respective assets
that would reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole. There is no litigation, suit, claim, action, or proceeding by the Company
pending or which the Company intends to initiate.

 

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2.10 Intellectual Property Rights.

 

(a) The Company is the sole and exclusive owner of, or have a valid license or
otherwise possess valid rights to use all Intellectual Property Rights necessary
provide, produce, use, sell and license the services and products currently
provided, produced, used, sold and licensed by the Company and to conduct the
business of the Company as it is currently conducted, free and clear of all
Liens.

 

(b) To the Knowledge of the Company, the conduct of the business of the Company
as it is currently conducted and the products or services produced, sold or
licensed by or under development by the Company does not infringe,
misappropriate or otherwise violate the Intellectual Property Rights of any
third party, or give rise to any obligations to any Person as a result of
co-authorship, co-inventorship, or an express or implied contract for any use or
transfer. There are no pending or, to the Knowledge of the Company, threatened
any litigation, suit, claim, action, proceeding, hearing, investigation to
demand that challenges the liability, validity, enforceability, or the use or
ownership by the Company of any portion of the Intellectual Property Rights
owned by the Company or, to the Knowledge of the Company, licensed to the
Company. The Company has not received any written notice of any infringement or
misappropriation by, or conflict with, any third party with respect to such
Intellectual Property Rights, and the Company has not received any notice of
claims of infringement or misappropriation of or other conflict with any
Intellectual Property Right of any third party.

 

(c) The Company has valid Licenses for all software used in the conduct of the
business of the Company as it is currently conducted and the Company has not
been the subject of, or have been given notice of, any actual or proposed or
threatened software license audit by the Business Software Alliance or any other
entity, association or Person. None of the software necessary for the business
of the Company is subject to an open source software license (including without
limitation any GNU General Public License, Creative Commons License, or any
similar open source license). Neither execution of this Agreement nor completion
of the transaction contemplated herein will invalidate or violate any License or
other agreement with respect to the Intellectual Property Rights owned or used
by the Company or any confidentiality agreement or non-disclosure agreement or
provision to which the Company is subject.

 

2.11 Employee Matters and Benefit Plans.

 

(a) Employment Matters. The Company is in material compliance with all
applicable Laws relating to the employment and employment practices, including
Laws regarding discrimination, harassment, affirmative action, terms and
conditions of employment, wage and hour requirements (including the proper
classification of, compensation paid to, and related withholding with respect to
employees, leased employees, consultants, and independent contractors), leaves
of absence, equal opportunity, reasonable accommodation of disabilities,
occupational health and safety requirements, collective bargaining, workers’
compensation insurance and the payment of social security and other Taxes. The
Company is not a party to, nor to the Knowledge of the Company is threatened
with, any material litigation, action, suit, or proceeding by any current or
former employee, including without limitation in respect to deferred salary,
benefits or severance.

 

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2.12 Related-Party Transactions. Except as set forth in Section 2.19 of the
Disclosure Schedule:

 

(a) neither the Company nor any Company Subsidiary is indebted, directly or
indirectly, to any directors, officers, employees or stockholders of the Company
or any Company Subsidiary or to the Immediate Family Members of any such Person,
or to any Affiliate of the foregoing, other than amounts payable in connection
with advances of expenses incurred in the ordinary course of business or for
employee benefits made available to all employees. None of the directors,
officers, employees or stockholders of the Company or any Company Subsidiary or
the Immediate Family Members of any such Person are indebted, directly or
indirectly, to the Company or any Company Subsidiary.

 

(b) to the Knowledge of the Company, no employee, officer or director of the
Company or any Company Subsidiary, or Immediate Family Members of such Person,
or any Affiliate of the foregoing has any direct or indirect ownership interest
in any firm or corporation with which the Company or any Company Subsidiary is
affiliated or with which the Company or any Company Subsidiary has a business
relationship or any firm or corporation that competes with the Company or any
Company Subsidiary (other than the ownership of less than 2% of the common
equity of publicly-traded companies that may compete with the Company or any
Company Subsidiary).

 

(c) Other than the following: 1) further investment in Kanab Corp.
(www.kanab.club), a social media Company targeting the global cannabis industry
owned and 50% owned by 2050 Motors and 50% owned by our CEO, Vikram Grover, and
2) a planned investment in ERide Club Corp. (www.erideclub.com), an Internet
platform targeting electric vehicle (“EV”) rentals, sales and services owned and
under development by our Advisory Board Member Aldo Baiocchi, no employee,
officer or director of the Company or any Company Subsidiary, or immediate
family member of such Person, or any Affiliate of the foregoing (i) is directly
or indirectly interested in any material Contract or proposed transaction with
the Company or any Company Subsidiary, other than standard employment
agreements, Options granted under the Equity Incentive Plan approved by the
Board of Directors, and indemnification agreements with officers and directors
of the Company approved by the Board of Directors (all of such approvals
reflected in the written minutes of the Board of Directors previously provided
to the Investor), or (ii) has a material relationship (including, without
limitation, commercial, banking, industrial, legal, accounting, consulting,
charitable or familial relationship) with any customer, service provider,
supplier, licensee or licensor, or joint venture partner of the Company or any
Company Subsidiary.

 

2.13 Environmental Matters.

 

(a) Except as disclosed, or as would not have, individually or in the aggregate,
a Material Adverse Effect on the Company: (i) to the Knowledge of the Company,
no Hazardous Materials have been generated, transported, used, disposed, stored
or treated by the Company or any Company Subsidiary and no Hazardous Materials
have been released, discharged, disposed, transported, placed or otherwise
caused to enter the soil or water in violation with any Environmental Law in,
under, or affecting any current or previously owned or lease real properties of
the Company, or any Participation Facility or any Owned Property of the Company;
(ii) to the Knowledge of the Company, the Company and the operation of its
business, and all of its current and previously owned or operated Participation
Facilities and its Owned Properties are, and have been, in compliance in all
material respects with all applicable Environmental Laws; and (iii) there is no
suit, claim, action, or proceeding pending or, to the Knowledge of the Company,
threatened before any Governmental Entity or other forum in which the Company,
or any current or previously owned or operated Participation Facility or Owned
Property has been or, to the Knowledge of the Company with respect to threatened
proceedings, may be named as a defendant or a potentially responsible party (x)
for alleged noncompliance (including by any predecessor) with any Environmental
Law, or (y) relating to the release into the environment of any Hazardous
Material in violation of applicable Law, whether or not occurring at, on, under,
or involving a site owned, leased, or operated by the Company, or any of its
Participation Facilities or Owned Properties (or the Company in respect of any
Participation Facility or Owned Property).

 

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2.14 Corporate Documents; Minute Book and Records. A copy of the minute books of
the Company, which have been furnished or otherwise made available to the
Investor, contains the minutes of all meetings (or written consents without a
meeting) of the Board of Directors and of the stockholders of the Company since
the Company’s date of incorporation, and accurately reflects (in all material
respects) all actions by the Board of Directors and stockholders with respect to
all transactions referred to in such minutes. The books of account, ledger,
order books, records and documents of the Company, each of which have been
furnished or otherwise made available to the Investor, accurately and completely
reflect all material information relating to the business of the Company, the
nature, acquisition, maintenance and, location and collection of each of, its
assets, and the nature of all transactions giving rise to the obligations or
accounts receivable of the Company.

 

2.15 Full Disclosure. The Company has made available or provided to the Investor
all information reasonably available to the Company that the Investor have
requested in connection with their decision whether to purchase the Acquired
Shares, including certain of the Company’s projections describing the proposed
business plan. No representation or warranty of the Company contained in this
Agreement, the exhibits hereto, any certificate furnished at Closing or in the
other Transaction Documents contain any untrue statement of a material fact nor,
to the Knowledge of the Company, omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.

 

2.16 Certain Business Practices. Neither the Company or any Company Subsidiary
nor, to the Knowledge of the Company, any director, officer, agent or employee
of the Company or any Company Subsidiary acting on behalf of the Company or any
Company Subsidiary has: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity
regarding the business of the Company or any Company Subsidiary, or (b) made,
offered, promised, or authorized any unlawful payment or gift of any money or
anything of value to or for the benefit of foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns,
in each case in violation of the Foreign Corrupt Practices Act of 1977, as
amended (“FCPA”). Neither the Company or any Company Subsidiary nor, to the
Knowledge of the Company, any director, officer, agent or employee of the
Company or any Company Subsidiary have made or authorized any bribe, payoff,
kickback, payment for influence, rebate or other unlawful payment of funds or
received or retained such funds in violation of any Law.

 

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2.17 Real Property Holding Corporation. The Company is not now and has never
been a “United States real property holding corporation” as defined in Section
897(c)(2) of the Code and regulations promulgated thereunder.

 

2.18 Qualified Small Business Stock. As of and immediately following the
Closing, the Company meets and will meet all of the requirements for
qualification as a “qualified small business” set forth in Section 1202(d) of
the Code, including without limitation the following: (i) the Company will be a
domestic C corporation, (ii) the Company’s (and any predecessor’s) aggregate
gross assets, as defined by Section 1202(d)(2) of the Code, at no time between
the date of its incorporation and the Closing, have exceeded U.S. $50 million,
taking into account the assets of any corporations required to be aggregated
with the Company in accordance with Section 1202(d)(3)of the Code, (iii) the
Company has not made any purchases of its own stock described in Section
1202(c)(3)(B) of the Code during the one year period preceding the Closing, and
(iv) the Company is an eligible corporation as defined by Section 1202(e)(4) of
the Code; provided, however, that in no event shall the Company be liable to the
Investor or any other party for damages arising from subsequently proven or
identified error in the Company’s determination with respect to the
applicability or interpretation of Section 1202 of the Code, unless the Company
is grossly negligent or fraudulent in its determination.

 

2.19 Small Business Concern. The Company is a “small business concern” under the
Small Business Investment Act of 1958 (the “Small Business Act”) as defined in
Section 121.301 of Title 13 of the Code of Federal Regulations promulgated
thereunder.

 

2.20 No Investment Company. The Company is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

 

Section 3. Representations and Warranties of the Investor. The Investor,
severally and not jointly, the Investor hereby represents and warrants to the
Company as follows:

 

3.1 Authority; Due Execution.

 

(a) The Investor has all the requisite power and authority to execute and
deliver, and to perform its obligations hereunder and to consummate the
Investment Transaction contemplated by, this Agreement. The execution, delivery,
and performance by each such Entity Investor of this Agreement and the other
Transaction Documents to which they are a party, and the consummation of the
transactions contemplated hereby and thereby, including the Investment
Transaction, have been duly and validly authorized by all necessary action on
the part of the Entity Investor. This Agreement and other Transaction Documents
to which they are a party have been duly executed and delivered by each such
Entity Investor and, assuming valid authorization, execution and delivery hereof
by the Company and each other Investors to this Agreement, each will constitute
a legal, valid and binding obligation of such Equity Investor enforceable
against it in accordance with its terms (except to the extent enforceability may
be limited by the Bankruptcy and Equity Exceptions).

 

(b) The Investor has the full legal capacity to execute and deliver, and to
perform its obligations hereunder and to consummate the Investment Transaction
contemplated by this Agreement. This Agreement and the other Transaction
Documents to which they are a party have been duly executed and delivered by the
Investor and, assuming valid authorization, execution and delivery hereof by the
Company, will constitute a legal, valid and binding obligation of such Investor
enforceable against it in accordance with its terms (except to the extent
enforceability may be limited by the Bankruptcy and Equity Exceptions).

 

10

 

 

3.2 No Conflict or Required Approvals. Neither the execution and delivery of
this Agreement and the other Transaction Documents to which they are a party,
nor the consummation by the Investor of Investment Transaction contemplated
hereby, or compliance with any of the terms or provisions herein by the Investor
will (a) if an Entity Investor, conflict with or violate any provision of, or
require a Consent under such Entity Investor’s organizational, operating, and
governance documents, (b) conflict with, violate, or constitute or result in a
material breach of any term, condition, or provision of, or constitute a default
(with or without due notice or lapse of time or both) under, or require a
Consent pursuant to any of the terms, provisions, or conditions any credit
agreement, note, indenture, lease, or other instrument to which such Investor or
by which any of its properties or assets are subject bound, or (c) conflict with
or violate any judgment, order, writ, injunction, decree of any Governmental
Entity or material Law applicable to such Investor or any of its assets or
properties is subject. No notice, registration, qualification, designation,
declaration, or filing with, or the Consent or Permit of, or any action by any
Governmental Entity is required on the part of an Investor in connection with
the execution and delivery of this Agreement or the other Transaction Documents,
or the consummation the Investment Transaction.

 

3.3 Investment Intent. Such Investor: (a) is the sole and true party in
interest, and is acquiring its respective portion of the Acquired Shares, and
will acquire the Conversion Shares upon conversion of such Acquired Shares,
solely for its own account, not as a nominee or agent, for investment purposes
only, and not with an intent or a view to the sale or distribution of any part
thereof within the meaning of Section 2(a)(11) of the Securities Act, (b) does
not have any present intent of making a Transfer of, granting a participation
in, or otherwise distributing the Acquired Shares or any Conversion Shares
(collectively, the “Securities”) in a manner contrary to the Securities Act or
the securities Laws of any other applicable jurisdiction, (c) does not have any
contract, undertaking, agreement, or arrangement with any Person to Transfer,
grant any participation in, or otherwise distribute any of the Securities to
such Person, and (d) does not presently have any reason to anticipate any change
in circumstances or other particular occasion or event which would cause such
Investor to need to sell the Securities, except in accordance with the terms of
this Agreement and in compliance with all applicable federal and state
securities Laws.

 

3.4 Restricted Securities; Transfer Restrictions.

 

(a) Such Investor affirms that it has been advised and understands that (i) none
of the Securities have been registered under the Securities Act or registered or
qualified under the securities Laws of any other jurisdiction and are being sold
in reliance upon an exemption from registration under such Laws, (ii) such
Investor may not Transfer the Securities unless they are subsequently registered
and qualified under such Laws or, in the opinion of counsel reasonably
satisfactory to the Company, an exemption from such registration and
qualification is available, (iii) if an exemption from registration or
qualification is available, it may be conditioned on various legal, procedural
and other requirements which are outside of the Investor’s control and which the
Company has no obligation and may not be able to satisfy, and (iv) such Investor
is familiar with Rule 144 and Rule 144A as presently in effect and recognizes
that in the future the Company may not satisfy the requirements which would
permit it to sell the Securities pursuant to Rule 144 or Rule 144A promulgated
under the Securities Act.

 

11

 

 

(b) Such Investor understands and acknowledges that only the Company can
register the Securities under applicable securities Laws, and that the Company
has no obligation to register or qualify the Securities under the Securities Act
or the securities Laws of any other jurisdiction except as set forth in the
Registration Rights Agreement.

 

3.5 Knowledge, Experience, and Financial Capability.

 

(a) Such Investor has sufficient knowledge and experience in financial and
business matters and investing in companies similar to the Company so that it is
capable of evaluating the merits and risks of the investment contemplated by
this Agreement and understands and acknowledges that an investment in the
Securities and the Company involves certain risks. Such Investor recognizes that
no public market for the Securities exists and none is expected to develop and,
as result, when considered in relation to the Transfer restrictions identified
in Section 3.5 hereof, that an investment in the Securities may not be liquid
and that such Investor must bear the economic risk of the investment
indefinitely. Such Investor is a sophisticated investor and has carefully
considered and evaluated the risks and benefits of an investment in the
Securities and the Company and such Investor has taken full cognizance of,
understands, and is willing to bear the risks related to the purchase of the
Securities.

 

(b) Such Investor further represents that it has adequate means of providing for
its current needs and possible contingencies, it can afford to bear the economic
risk of holding the Securities for an indefinite period of time, it has no need
for liquidity in its investment in the Securities, and it has the net worth
sufficient to bear the risks of and to sustain a complete loss of such
Investor’s entire investment in the Company. Such Investor has been represented
by counsel and other advisors of its choosing.

 

3.6 Accredited Investor; Not a Bad Actor. Such Investor is: (a) an “accredited
investor” as such term is defined in Rule 501(a) promulgated under the
Securities Act, and (b) is not subject to any “bad actor” disqualification as
set forth in Rule 506(d) of Regulation D or any similar disqualification
provision that could adversely affect the Company’s reliance on any federal or
state securities registration exemption or that could otherwise adversely affect
the offering of the Securities.

 

3.7 Information Disclosed to Investor. Such Investor represents, acknowledges
and confirms that prior to the sale of the Acquired Shares to such Investor
pursuant to this Agreement, such Investor (a) has been given an the opportunity
to ask questions of, and receive answers from, representatives of the Company
concerning Company and the terms and conditions of the sale of the Acquired
Shares by the Company to such Investor and (b) has been given the opportunity to
obtain any additional information which such Investor deemed necessary to verify
the accuracy of the information supplied to it. Such Investor confirms that it
has been furnished with all such requested information and all questions asked
by such Investor have been answered to its full satisfaction. Such Investor
represents that in connection with its purchase of the Securities, it has not
relied on any statement or representation by the Company, or any of its officers
and directors, or any of their attorneys or agents, except as specifically set
forth herein or provided pursuant to this Section 3.8. Such Investor confirms
that it is aware and understands that no federal or state agency has made any
finding or determination as to the fairness of this offering nor has made any
recommendation or endorsement of the Securities. None of the representations or
warranties of the Investor in this Section 3.8 shall limit or modify the
representations and warranties of the Company set forth in Section 2 hereof or
the right of the Investors to rely thereon.

 

12

 

 

3.8 No General Solicitation. Such Investor represents and certifies that such
Investor is not acquiring the Securities as a result of any form of “general
solicitation” or “general advertising” as those terms are used in Rule 502(c) of
Regulation D promulgated under the Securities Act.

 

3.9 Reliance on Investor’s Representations. Such Investor acknowledges and
understands that the representations, warranties, and covenants contained in
this Section 3 of the Agreement are being furnished, in part, and will be relied
on by the Company in determining whether this offering of the Securities is
exempt from registration under the Securities Act and the securities laws of all
other applicable jurisdictions and, accordingly, confirms that all such
statements contained herein are true, complete, and accurate as of the date
hereof, and shall be true, accurate, and complete as of the date that this
Agreement is executed and delivered, and shall survive the Closing. If any
events occur or circumstances exist prior to the issuance of the Acquired Shares
to such Investor which would make any of the representations, warranties,
agreements, or other information of an Investor set forth herein untrue or
inaccurate, such Investor agrees to immediately notify the Company in writing of
such fact specifying which representations, warranties, or covenants are not
true, correct, or accurate, and the reasons therefor.

 

3.10 Investor Source of Funds.

 

(a) Compliance with International Trade Control Laws and OFAC Regulations. Such
Investor represents and warrants that such Investor is not now nor shall it be
at any time hereafter an individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, unincorporated organization, real estate investment trust, government
or any agency or political subdivision thereof, or any other form of entity with
whom a United States citizen, entity organized under the Laws of the United
States or its territories or entity having its principal place of business
within the United States or any of its territories (collectively, a “U.S.
Person”), is prohibited from transacting business of the type contemplated by
this Agreement, whether such prohibition arises under United States Law,
executive orders and lists published by the Office of Foreign Assets Control,
U.S. Department of the Treasury (“OFAC”) (including those executive orders and
lists published by OFAC with respect to Persons that have been designated by
executive order or by the sanction regulations of OFAC as Persons with whom U.S.
Persons may not transact business or must limit their interactions to types
approved by OFAC “Specially Designated Nationals and Blocked Persons”) or
otherwise. Neither such Investor nor any Person who owns an interest in the
Investor, if an Entity (collectively, a “Purchaser Party”), is now nor shall be
at any time hereafter a Person with whom a U.S. Person, including a “financial
institution” as defined in 31 U.S.C. § 5312(a)(2) (“Financial Institution”), is
prohibited from transacting business of the type contemplated by this Agreement,
whether such prohibition arises under United States Law, regulation, executive
orders and lists published by the OFAC (including those executive orders and
lists published by OFAC with respect to Specially Designated Nationals and
Blocked Persons) or otherwise.

 

13

 

 

(b) Investor’s Funds. Such Investor represents and warrants that such Investor
has taken, and shall continue to take hereafter, such measures as are required
by Law to assure that the funds used to pay to the Company any portion of the
Aggregate Purchase Price are derived from: (i) transactions that do not violate
United States Law nor, to the extent such funds originate outside the United
States, do not violate the laws of the jurisdiction in which they originated;
and (ii) permissible sources under United States Law and to the extent such
funds originate outside the United States, under the laws of the jurisdiction in
which they originated.

 

(c) Anti-Money Laundering Laws. Such Investor represents and warrants that
neither such Investor nor any Person providing funds to the Investor: (i) is
under investigation by any governmental authority for, or has been charged with,
or convicted of, money laundering, drug trafficking, terrorist related
activities, any crimes which in the United States would be predicate crimes to
money laundering, or any violation of any Anti Money Laundering Laws; (ii) has
been assessed civil or criminal penalties under any Anti-Money Laundering Laws;
or (iii) has had any of its funds seized or forfeited in any action under any
Anti Money Laundering Laws.

 

3.11 Foreign Investors. If such Investor is not a U.S. Person, such Investor
hereby represents and warrants that it has satisfied the full observance of the
Laws of its jurisdiction in connection with this Agreement and the other
Transaction Documents and the subscription for the Acquired Shares, including,
without limitation, the receipt of any Consents from or actions to be taken by
any Governmental Entity in such jurisdiction required as a condition to the
Investment Transaction and the satisfaction of any other applicable legal
requirements within such jurisdiction for the purchase of the Acquired Shares.
The subscription and payment by the Investors for, and the continued beneficial
ownership of, the Securities will not violate any applicable securities of other
Laws of the Investor’s jurisdiction.

 

3.12 No Litigation. There is not now pending or, to the Knowledge of such
Investor, threatened, any material litigation, suit, claim, action, or
proceeding, including, without limitation, arbitration proceeding, mediation, or
other alternative dispute resolution proceeding, to which such Investor, is or
will be a party or by which its property or assets will or may be bound or
affected which (a) challenges or seeks to question, prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or (b)
would be reasonably likely to threaten, impede, impair or adversely affect the
obligation of such Investor to consummate the transactions contemplated by the
Agreement.

 

Section 4. Additional Agreements.

 

4.1 Transfer Restrictions. The Investor hereby agrees that such Investor will
not, directly or indirectly, Transfer or offer to Transfer any of the
Securities, or any of its interests therein (or solicit any offers to buy,
purchase, or otherwise acquire or take a pledge of the Securities), except in
compliance with this Agreement and the Securities Act, the securities laws of
all other applicable jurisdictions, and the rules and regulations promulgated
thereunder.

 

14

 

 

4.2 Legends. The Investor confers full authority upon the Company to affix, when
issued, appropriate legends relating to applicable Transfer restrictions to the
face of the certificate or certificate representing the Securities or on any
other document representing the Securities, including, without limitation, the
following:

 

(a) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE SECURITIES LAWS OF ALL
OTHER APPLICABLE JURISDICTIONS UNLESS, IN THE OPINION OF COUNSEL TO THE COMPANY,
SUCH REGISTRATION IS NOT REQUIRED.”

 

(b) any legend set forth in, or required by, the Other Transaction Documents and
the securities Laws of any other applicable jurisdiction, if any.

 

4.3 Investor’s Indemnification Agreement. The Investor acknowledges that
understands the meaning and legal consequences of the representations,
warranties and covenants contained in Section 3 of this Agreement, especially as
it relates to the reliance referenced in Section 3.10 hereof, and agrees to
indemnify and hold harmless the Company and its agents, employees, and
representatives from and against any and all losses (including reasonable
attorney’s fees), damage or liabilities due to or arising out of any
misrepresentations, misstatements, or omissions with respect to any of the
representations or warranties, or a breach of any of the covenants or
agreements, contained in this Agreement by the Investor.

 

4.4 Reservation of Conversion Shares. The Company hereby agrees that:

 

(a) As soon as practicable after bringing its SEC reporting current, it will
make best efforts to have authorized and will reserve and keep available, solely
for issuance and delivery to the holder of the Acquired Shares, that number of
shares of its Common Stock (or other securities and property) that may be
required from time to time for issuance and delivery of the upon conversion of
the Acquired Shares.

 

(b) it shall take all necessary steps to ensure that the Conversion Shares, when
issued in accordance with this Agreement, shall be duly and validly issued,
shall be fully paid and nonassessable, free and clear of any Liens of any kind
whatsoever, and free from all preemptive rights of any security holders of the
Company.

 

(c) it shall take all action as may be necessary to assure that such Conversion
Shares (and any other securities and property) may be issued and delivered as
provided herein and as set forth in the Amended Articles without violation of
any applicable Law, or of any requirements, of any domestic securities exchange
or inter dealer quotation system upon which the Common Stock may then be listed;
provided, however, that the Company shall not be required to effect a
registration under federal or state securities Laws.

 

15

 

 

4.5 Information Rights.

 

(a) The Company covenants and agrees with the Investor that for so long as the
Investor continues to own beneficially any shares of Series B Preferred Stock or
associated Conversion Shares (subject to adjustment to reflect stock splits,
stock dividends, and other combinations or subdivisions of the Series B
Preferred Stock or the Common Stock), the Company shall (i) permit such Investor
to visit and inspect the properties of the Company and to discuss the Company’s
business and finances with officers of the Company, in each case during normal
business hours following reasonable notice, which right may be exercised through
any agent or employee of such Investor designated by it or by a certified public
accountant designated by such Investor and (ii) promptly upon request, furnish
to such Investor such other information bearing on the financial condition and
operations of the Company as the Investor may from time to time reasonably
request; provided, however, that in each case the Company shall not be obligated
pursuant to this Section 4.5(a) to provide access to any information that the
Company reasonably and in good faith considers to be a trade secret or
confidential information (unless covered by an enforceable confidentiality
agreement, in form acceptable to the Company) or the disclosure of which would
adversely affect the attorney-client privilege between the Company and its
counsel.

 

(b) The Company covenants and agrees with the Investor that for so long as the
Investor continues to own beneficially or of record any shares of Series B
Preferred Stock or associated Conversion Shares (subject to adjustment to
reflect stock splits, stock dividends, and other combinations or subdivisions of
the Series B Preferred Stock or the Common Stock), the Company shall provide to
such Investor its public SEC filings and any other publicly available
information, including quarterly and annual reports under Forms 10-Q and 10-K.

 

(i) a certificate of compliance at the time of delivery of each monthly and
annual statement, executed by the chief financial officer (or other financial
manager or controller) in the case of monthly statements, stating that such
officer has caused this Agreement and the terms of the Series B Preferred Stock
to be reviewed and has no knowledge of any default by the Company in the
performance or observance of any of the provisions of this Agreement or the
terms of the Series B Preferred Stock or, if such officer has such knowledge,
specifying such default and the nature thereof;

 

(ii) notice of changes that are reasonably likely to have a Material Adverse
Effect promptly after the Company obtains knowledge thereof;

 

(iii) promptly after the Company’s Knowledge thereof, notice of all material any
litigation, suit, claim, action, or proceeding, including, without limitation,
arbitration proceeding, mediation, or other alternative dispute resolution
proceeding, before any Governmental Entity to which the Company is a party;

 

(iv) such other notices, information and data with respect to the Company as the
Company delivers to the holders of its capital stock at the same time it
delivers such items to such holders; and

 

(c) Except as otherwise agreed to by the Company, all information received by
such Investor with respect to the Company pursuant to this Section 4.5 shall be
subject to, the Investor shall be bound by, the terms of confidentiality by and
between the Company and the Investor to be signed under separate cover if
required.

 

4.6 Books and Records. The Company shall keep proper books of record and account
in which true and complete entries will be made of all transactions in
accordance with GAAP applied on a basis consistent with prior periods.

 

16

 

 

4.7 Further Assurances. On or after the Closing, each of the parties shall
execute and deliver, or cause to be executed and delivered, such further
documents, certificates, and instruments and to perform such further acts as may
be reasonably required to issue and convey the Securities to the Investors, all
on terms contained herein, and otherwise to comply with the terms of this
Agreement and consummate the transactions herein provided.

 

Section 5. Conditions to the Obligations of the Purchaser at the Closing. The
obligation of the Investor to purchase the Acquired Shares at the Closing is
subject to the fulfillment, or the waiver by the Investor, of each of the
following conditions on or before the Closing Date.

 

5.1 Accuracy of Representations and Warranties. Each of the representations and
warranties of the Company contained in Section 2 of this Agreement shall be true
and correct in all material respects on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
that date.

 

5.2 Performance. The Company shall have performed and complied in all material
respects with all covenants, agreements and conditions contained in this
Agreement required to be performed or complied with by the Company prior to or
at the Closing.

 

5.3 No Litigation. There shall be no action, suit or proceeding pending, or, to
the Knowledge of the Company, threatened, which (a) seeks to restrain, enjoin,
or prevent the consummation of the transactions contemplated by this Agreement
or the other Transaction Documents, (b) challenges the validity of, or seeks to
recover damages or to obtain other relief in connection with the transactions
contemplated by this Agreement or the other Transaction Documents, (c) affects
adversely the right of the Investor to acquire the Acquired Shares, or (d)
affects adversely the business, assets, properties, operation (financial or
otherwise), or prospects of the Company (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect).

 

5.4 No Material Adverse Change. Since the Balance Sheet Date, there shall have
been no change in the financial condition, results of operations, business,
business prospects, personnel, assets, or liabilities (whether contingent or
absolute, matured or unmatured, known or otherwise) of the Company which has or
may cause a Material Adverse Effect.

 

5.5 Compliance Certificate. The Company shall deliver to the Investor a
certificate, executed by the chief executive officer and chief financial officer
of the Company, dated as of the Closing Date, certifying the fulfillment of the
conditions specified in Section 5.1 through 5.4 of this Agreement.

 

5.6 Qualifications. All material notices, registrations, qualifications,
designations, declarations, or filings with, Consents or Permits of, or any
action by any Governmental Entity of the United States or of any other
jurisdiction that are required prior to the Closing in connection with the
lawful issuance and sale of the Acquired Shares pursuant to this Agreement shall
be duly obtained and effective as of the Closing.

 

5.7 Amended Articles. The Company shall have filed the Amended Certificate of
Determination or relevant documents for this Offering with the Secretary of
State of the State of California (“State Secretary”) on Closing or as soon as
practicable, which shall continue to be in full force and effect as of the
Closing.

 

17

 

 

5.8 Secretary Certificate and Documents. The Company shall have delivered to the
Investor a certificate of the Secretary of the Company, certifying: (a) the
Articles of Incorporation of the Company, as amended and restated by the Amended
Articles, certified by the State Secretary, (b) the Bylaws of the Company as of
the Closing, (c) resolutions or written consents of the Board of Directors of
the Company evidencing the taking of all corporate action necessary to authorize
and approve the execution and delivery of the Transaction Documents, and the
transactions contemplated under the Transaction Documents, including the
consummation of the Investment Transaction, (d) resolutions or written consents
of the stockholders of the Company, if required, approving the Amended Articles,
(e) certificates, as of a recent date, as to the corporate good standing of the
Company issued by the State Secretary, and as to the corporate good standing and
qualification as a foreign corporation of the Company issued by the Secretary of
State of each jurisdiction in which the nature of the business transacted by it
or the character or location of its properties requires such qualification, and
(f) the incumbency of each individual authorized to sign, in the name and on
behalf of the Company, this Agreement and the other Transaction Documents.

 

5.9 Stockholders Agreement. The Company and each stockholder of the Company
listed on a separate stockholders’ agreement shall have executed and delivered
the Stockholders Agreement. As a condition to the Closing, the Stockholders
Agreement must be executed by the number of stockholders of the Company (i)
necessary to amend that certain Stockholders’ Agreement, dated August 26, 2019
and (ii) representing at least 80% of the voting power of the Company following
the Closing.

 

5.10 Stockholder Rights. The Company shall have obtained enforceable waivers or
shall have fully satisfied (including, without limitation, timely notification)
in respect of any rights of first refusal, preemptive rights, and similar rights
directly or indirectly affecting any of its securities.

 

5.11 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Investor, and the Investor shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.

 

Section 6. Condition to the Obligations of the Company. The obligations of the
Company to issue, sell, and deliver the Acquired Shares to the Investor at the
Closing are subject to fulfillment, or the waiver by the Company, of each of the
following conditions on or before the Closing Date:

 

6.1 Accuracy of Representations and Warranties. Each of the representations and
warranties of the Investor contained in Section 3 shall be true in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of that date.

 

18

 

 

6.2 Performance. The Investor shall have performed and complied, in all material
respects, with all covenants, agreements and conditions contained in the
Agreement required to be performed or complied with by the Investor prior to or
at the Closing.

 

6.3 No Litigation. There shall be no action, suit, investigation or proceeding
pending, or to the Knowledge of any of the Investor threatened, which (a) seeks
to restrain, enjoin, or prevent the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents, (b)
challenges the validity of, or seeks to recover damages or to obtain other
relief in connection with the transactions contemplated by this Agreement or the
other Transaction Documents.

 

6.4 Qualifications. All material notices, registrations, qualifications,
designations, declarations, or filings with, Consents or Permits of, or any
action by any Governmental Entity of the United States or of any other
jurisdiction that are required prior to the Closing in connection with the
lawful issuance and sale of the Acquired Shares pursuant to this Agreement shall
be duly obtained and effective as of the Closing.

 

6.5 Stockholders Agreement. The Investor shall have executed and delivered the
Stockholders Agreement.

 

6.6 Registration Rights Agreement. Not applicable.

 

6.7 Payment of Purchase Price. Th Investor shall have paid to the Company the
Aggregate Purchase Price for the Acquired Shares as set forth in Section 1.3 of
this Agreement.

 

Section 7. General Provisions.

 

7.1 Definitions.

 

(a) Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:

 

“Affiliate” means, with respect to any Person, (i) a Person that directly, or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first-mentioned Person, and (ii) an
“associate” as that term is defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934 as in effect on the date of this Agreement. For
purposes of this definition, the term “control” (including the term
“controlling,” “controlled by” and “under common control,” or correlative terms)
means the possession, direct or indirect, of the power to direct the management
and policies of a Person, whether as an officer or director, through the
ownership of voting securities, by contract or otherwise.

 

“Anti-Money Laundering Laws” shall mean Laws and sanctions, state and federal,
criminal and civil, that: (i) limit the use of and/or seek the forfeiture of
proceeds from illegal transactions; (ii) limit commercial transactions with
designated countries or individuals believed to be terrorists, narcotics dealers
or otherwise engaged in activities contrary to the interests of the United
States; (iii) require identification and documentation of the parties with whom
a Financial Institution conducts business; or (iv) are designed to disrupt the
flow of funds to terrorist organizations. Such laws, regulations and sanctions
shall be deemed to include the USA PATRIOT Act of 2001, Pub. L. No. 107-56, the
Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., the Trading with the Enemy Act, 50
U.S.C. App. §§ 1 et seq., the International Emergency Economic Powers Act, 50
U.S.C. §§ 1701 et seq., and the sanction regulations promulgated pursuant
thereto by the OFAC, as well as laws relating to prevention and detection of
money laundering in 18 U.S.C. §§ 1956 and 1957.

 

19

 

 

“Board of Directors” or “Board” means the board of directors of the Company.

 

“Business Day” shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks in the State of California are authorized or required by
Law or executive order to close.

 

“Bylaws” means, unless the context otherwise requires, the bylaws of the
Company, as amended through and in effect on the Closing Date.

 

“Consent” shall mean any consent, order, approval, authorization, clearance,
exemption, exception, waiver, ratification, or similar affirmation by any
Person.

 

“Contract” means any oral or written agreement, contract, debenture, note, bond,
mortgage, license, instrument, franchise or other obligation, commitment,
arrangement or understanding.

 

“Employee Benefit Plan” means employee benefit plan, agreement or arrangement
that is a pension, profit-sharing, post-retirement, supplemental retirement,
vacation, sick leave, disability, death benefit, group insurance,
hospitalization, medical, dental, life, Section 125 of the Code “cafeteria” or
“flexible” benefit, employee loan, education assistance or fringe benefit plan,
whether written or oral, including, without limitation, any “employee benefit
plan” (within the meaning of Section 3(3) of ERISA, inclusive of any “employee
pension benefit plan” as defined in Section 3(2) of ERISA, and any “employee
welfare benefit plan” (as defined in Section 3(1) of ERISA), any “multi-employer
plan” (as defined in Section 3(37) of ERISA), or other Contracts or employee
benefit plan, whether or not subject to ERISA and whether or not funded, to
which Company is a party, for the benefit of any current or former employee,
director, officer, consultant or independent contractor of the Company have any
present or future rights to benefits, or with respect to which Company or any of
its ERISA Affiliates has any current or future liability or which are
maintained, contributed to or sponsored by Company.

 

“Environmental Laws” means all Laws relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state, local,
and foreign agencies with jurisdiction over, and including common law in respect
of, pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability act, as amended, 42 U.S.C.
9601 et seq., the Resource Conservation and Recovery act, as amended, 42 U.S.C.
6901 et seq., and other Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.

 

20

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any Person that is a member of a “controlled group of
corporations” with, or is under “common control” with, or is a member of the
same “affiliated service group” with Seller, as defined in Section 414 of the
Code.

 

“Hazardous Materials” means (i) any hazardous substance, hazardous material,
hazardous waste, regulated substance, or toxic substance (as those terms are
defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil and
(specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of Governmental Entities and any
polychlorinated biphenyls).

 

“Immediate Family Member” means a Person’s spouse, parents, children, siblings,
mothers and fathers-in-law, sons and daughters-in-law, and brothers and
sisters-in-law

 

“Intellectual Property” means all of the following: (i) U.S. and foreign
registered and unregistered trademarks, trade dress, service marks, logos, trade
names, corporate names and all registrations and applications to register the
same jurisdiction, including any extension, modification or renewal of any such
registration or application (the “Trademarks”); (ii) issued U.S. and foreign
patents and pending patent applications, patent disclosures, and any and all
divisions, continuations, continuations in part, continuing prosecution
applications, reissues, reexaminations, and extensions thereof, any counterparts
claiming priority therefrom or from which priority may be claimed, utility
models, patents of importation or confirmation, certificates of invention and
like statutory rights (the “Patents”); (iii) U.S. and foreign registered and
unregistered copyrights (including any work of authorship in which copyright
does or may subsist under the law of any jurisdiction), rights of publicity,
database rights and moral rights in both published works and unpublished works
and all registrations and applications to register the same (the “Copyrights”);
(iv) U.S. and foreign rights in any semiconductor chip product works or “mask
works” as such term is defined in 17 U.S.C. § 901, et seq., and any
registrations or applications therefor (the “Mask Works”); (v) all categories of
trade secrets as defined in the Uniform Trade Secrets Act including, but not
limited to, technology, inventions, and business information and other
confidential information, and rights to limit the use or disclosure thereof by a
Third party, including such rights in inventions, discoveries and ideas, whether
patented, patentable or not in any jurisdiction; know-how, customer lists,
technical information, proprietary information, technologies, processes and
formulae, software, data, plans, drawings and blue prints, whether tangible or
intangible and whether stored, compiled, or memorialized physically,
electronically, photographically or otherwise (the “Trade Secrets”); all
licenses and agreements pursuant to which the Company or any of the Company’s
Subsidiaries has acquired rights in or to any Trademarks, Patents, Copyrights or
Mask Works, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing (the “Licenses”);
(vi) all United States and foreign Internet domain name applications and
registrations, social media identifiers, and advertising keyword rights owned or
used by the Company or any of the Company’s Subsidiaries or otherwise used in
conjunction with the business of the Company or any of the Company’s
Subsidiaries (the “Domains”); and (vii) any similar intellectual property or
proprietary rights similar to any of the foregoing, licenses, immunities,
covenants not to sue and the like relating to the foregoing, and any claims or
causes of action arising out of or related to any infringement, misuse or
misappropriation of any of the foregoing.

 

21

 

 

“Knowledge” means (i) with respect to a Stockholder, the knowledge of the
Shareholder that is obtained or would have been obtained after reasonable
investigation, (ii) with respect to the Company, all matters known or that
should have been known by the chief executive officer, chief financial officer,
and each of the other executive officers of the Company after reasonable
investigation, and (iii) with respect to the Investor, the actual knowledge of
the Investor.

 

“Law” means any code, law, ordinance, regulation, reporting or licensing
requirement, rule, or statute applicable to a Person or its assets, properties,
liabilities, or business, including those promulgated, interpreted, or enforced
by any Governmental Entity.

 

“Liens” shall mean all liens, encumbrances, charges, pledges, claims, security
interests, equities, options, warrants, rights to purchase or acquire, and other
defects in title.

 

“Material Adverse Effect” means any change, effect, event, occurrence, or state
of facts (each, an “Event”) which individually, or together with other changes,
effects, events, occurrences, or states of facts, that has, or would be
reasonably expected to, materially and adversely affect: (a) the Company’s
ability to consummate Investment Transaction without material delay, or (b) the
financial condition, business, properties, assets, operations, results of
operations, or prospects of the Company and its Subsidiaries, taken as a whole[;
provided, however, that none of the following shall be deemed either alone or in
combination to constitute, and none of the following shall be taken into account
in determining whether there has been or would be, a Material Adverse Effect:
(i) any Event resulting from general economic or political conditions or
generally affecting financial, credit, foreign exchange, securities or capital
markets (including changes in interest rates or exchange rates), including any
disruption thereof, in the United States or elsewhere in the world market, (ii)
any Events affecting in the general conditions in the industry of such Person
and its Subsidiaries, taken as a whole, and (iii) any Events resulting from
business conditions in the United States generally or in the geographic regions
in which the Company or its Subsidiaries operate.

 

“Owned Properties” means any property owned, leased, or operated by the Company
or in which the Company holds a security or other interest (including an
interest in a fiduciary capacity) and, when required by the context, this term
also includes the owner or operation of such property, but only with respect to
such property.

 

“Participation Facilities” means any facility or property in which the Company
participates in the management and, where required by the context, said term
means the owner or operator of such facility or property, but only with respect
to such facility or property.

 

“Permitted Liens” means (i) Liens or imperfections of title which are not,
individually or in the aggregate, material in character, amount, or extent and
which do not materially detract from the value or interfere with the
contemplated use of assets subject thereto or affected thereby, (ii) mechanics’,
materialmen’s, carrier’s, warehousemen’s, landlord’s and similar Liens securing
obligations not yet delinquent, and (iii) Liens for current Taxes not yet due
and payable.

 

22

 

 

“Permits” shall mean all permits, licenses, variances, certificates, filings,
franchises, notices, rights, and Consents of and from all Governmental Entities.

 

“Person” shall mean an individual, corporation, general partnership, limited
partnership, joint venture, limited liability company, limited liability
partnership, unincorporated organization, business trust, association,
corporations, or other entity.

 

“Subsidiaries” or “Subsidiary” means all corporations, limited liability
companies, limited partnerships, and other entities in which the entity in
question owns or controls 50% or more of the outstanding equity or voting
securities or interests either directly or through an unbroken chain of entities
as to each of which 50% or more of the outstanding equity or voting securities
or interests are owned directly or indirectly by such entity in question.

 

“Taxes” means all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, stamp, occupation, property,
or other taxes, fees, assessments or other charges imposed by a Governmental
Authority, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, and the term “tax” means any of the
foregoing taxes.

 

“Tax Return” means all reports, estimates, declarations of estimated tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to withholding and other payments to third parties.

 

“Transfer” shall be construed broadly and shall include to mean, in the context
of a transfer of any of the Securities, any sale, assignment, participation,
gift, bequest, distribution, exchange, pledge, hypothecation, placement of a
lien thereon or a grant of a security interest therein or other encumbrances
thereon, judicial attachment, contribution to a trust or other Person, or other
transfer or disposition (voluntarily or involuntarily, by operation of law or
otherwise, and whether as security or otherwise) by a holder of all or a portion
of its Securities or any right or interest therein. For purposes of this
definition, a “Transfer” shall include the sale, assignment, participation,
gift, bequest, distribution, exchange, pledge, hypothecation, placement of a
lien thereon or a grant of a security interest therein or other encumbrances
thereon, judicial attachment, contribution to a trust or other Person, or other
transfer or disposition (voluntarily or involuntarily, by operation of law or
otherwise, and whether as security or otherwise) of a controlling equity
interest in any Person which owns of record any of the Securities.

 

“Transaction Documents” means, collectively, this Agreement, the Amended
Articles, and the Stockholders Agreement.

 

23

 

 

(b) The following terms shall have the meanings ascribed thereto in the Section
set forth opposite such term:

 

Term   Section       Agreement   Preamble Aggregate Purchase Price   1.2 Amended
Articles   1.1 Acquired Shares   1.2 Balance Sheet Date   2.7(a) Bankruptcy and
Equity Exceptions   2.2 Closing   1.5 Closing Date   1.5 Code   2.10 Common
Stock   2.4(a) Company   Preamble Company Assets   2.11 Conversion Shares   2.5
Disclosure Schedule   Section 2 Entity Investor   3.1 Equity Incentive Plan  
2.4(d) Existing Stockholders   Preamble FCPA   2.24 Financial Institution  
3.11(a) Financial Statements   2.7(a) Founders   Preamble GAAP   2.7(b)
Governmental Entity   2.3(a) Investment Transaction   Recitals Investor[s]  
Preamble Non-Competition Agreement   2.18(c) OFAC   3.11(a) Offering Memorandum
  2.23(a) Options   2.4(e) Outstanding Plan Options   2.4(d) Per Share Price  
1.2 PIIA Agreement   2.18(c) Preferred Stock   2.4(a) Purchaser Party   3.11(a)
Registration Rights Agreement   Recitals Securities   3.4 Securities Act  
2.3(b) Series A Preferred Stock   2.4(a) Series B Preferred Stock   Recitals
Small Business Act   2.27 Specially Designated Nationals and Blocked Persons  
3.11(a) State Secretary   5.7 Stockholders Agreement   Recitals U.S. Person  
3.11(a)

 

(c) Any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular. Whenever the words “include,” “includes,” or
“including” are used in this Agreement, they shall be deemed followed by the
words “without limitation.”

 

24

 

 

7.2 Survival of Representations. Unless otherwise set forth in this Agreement,
the representations, warranties, and covenants of the Company and the Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing and shall in no way be affected by
any investigation of the subject matter thereof made by or on behalf of the
Company or the Investor. The representations and warranties in this Agreement
and in any certificate delivered pursuant hereto shall survive the Closing.

 

7.3 Expenses. Except as otherwise provided in this Agreement, whether or not the
transactions contemplated herein are consummated, each party hereto shall bear
and pay its own fees, costs and expenses incident to preparing, entering into
and carrying out this Agreement and to consummating the transactions
contemplated hereby. Notwithstanding the foregoing, the Company agrees to pay
the reasonable fees and expenses of counsel for the Investor.

 

7.4 No Brokers or Finders. The Company, and the Investor (a) each represent and
warrant to the other party hereto that he or it has neither retained a finder or
broker nor is or will be obligated for any finder’s fees or commissions, in
connection with the transactions contemplated by this Agreement, and (b) each
agree that they will indemnify and save the other party harmless from and
against any and all claims, liabilities or obligations with respect to brokerage
or finders’ fees or commissions, or consulting fees in connection with the
transactions contemplated by this Agreement asserted by any Person on the basis
of any statement or representation alleged to have been made by such
indemnifying party.

 

7.5 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable Law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of this Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of this
Agreement shall be enforceable in accordance with its terms.

 

7.6 Entire Agreement. This Agreement, which includes the Disclosure Schedule and
exhibits hereto, together with the other Transaction Documents, constitutes the
entire agreement among the parties hereto with respect the subject matter
hereof, and supersedes all prior arrangements or understandings with respect to
the subject matter hereof between the parties, both written and oral.

 

7.7 Amendment and Modification. Except as otherwise expressly set forth in this
Agreement, subject to the corporation laws of the State of California, any term
of this Agreement may be amended, modified, or terminated and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and (a) the holders of at least 80% of the then-outstanding Series B
Preferred Stock, or (b) for any amendment, modification, termination or waiver
effected prior to the Closing, Investor obligated to purchase 80% of the Series
B Preferred Stock to be issued at such Closing. Any amendment, modification,
termination or waiver effected in accordance with this Section 7.7 shall be
binding upon the Investor, each transferee of the Securities even if they do not
execute such consent, and each future holder of the Securities, and the Company.
No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.

 

25

 

 

7.8 Successors and Assigns. This terms and conditions of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties to this Agreement or
their respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Investor’s rights to purchase the
Acquired Shares shall not be assignable except to its Subsidiaries, parent, or
Affiliates.

 

7.9 Notices. All notices or other communications given or made pursuant to this
Agreement shall be in writing and shall be (a) delivered by registered or
certified mail, return receipt requested, postage prepaid, (b) by expedited mail
or package delivery service guaranteeing next Business Day delivery, (or, for
international deliveries, the earliest Business Day that such delivery service
can guarantee delivery if so requested and paid for), or (c) delivered
personally, by hand, to the Persons at the addresses set forth below (or at such
other address as may be provided hereunder):

 

If to Company:

 

2050 Motors, Inc.

c/o Registered Agents Inc.

1267 Willis St. Suite 200

Redding, CA 96001

 

with a copy to:

 

2050 Motors, Inc.

25 N River Lane Suite 2050

Geneva, IL 60134

 

If to Investors:

 

Vikram Grover

2810 Bristol Dr. Unit 309

Geneva, IL 60532

 

Any notice or other communications to be given or that may be given pursuant to
this Agreement shall be deemed to have been given: (x) three calendar days after
the deposit of such notice or communication in the United States Mail,
registered or certified, return receipt requested, with proper postage affixed
thereto; (y) on the first Business Day after depositing such notice of
communication with Federal Express, Express Mail, or other expedited mail or
package delivery service guaranteeing delivery no later than the next Business
Day if next Business Day delivery service has been requested and paid for (or on
such Business Day as such delivery service has been requested, guaranteed, and
paid for); or (z) upon delivery if hand delivered or telecopied to the
appropriate address and Person as provided hereinabove or to the Person to whose
attention the notice is to be given to the other parties in the manner set forth
in this Section 7.9.

 

26

 

 

7.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to the
choice of law principles thereof that would result in the application of the
Laws of any other jurisdiction.

 

7.11 Jurisdiction; Venue. Any action, litigation, suit or proceeding arising out
of or relating to this Agreement or any transaction contemplated hereby shall be
brought solely in federal or state courts of competent jurisdiction in the
courts of the State of California located in a venue to be mutually determined
by both parties and/or their counsel(s) or, if it has or can acquire
jurisdiction, in the United States District Court for the Central District, and
each of the parties hereto hereby irrevocably consents and submits to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such action, litigation, suit or proceeding and waives any
objection it may now or hereafter have to venue or to convenience of forum,
agrees that all claims in respect of the action, litigation, suit or proceeding
shall be heard and determined only in any such court and agrees not to bring any
action or proceeding arising out of or relating to this Agreement or any
transaction contemplated hereby in any other court. Process in any action or
proceeding referred to in the first sentence of this Section 7.11 may be served
on any party anywhere in the world.

 

7.12 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.12. EACH PARTY HERETO FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT SUCH PARTY KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.

 

7.13 Attorney Fees. If any action at law or in equity (including arbitration) is
necessary to enforce or interpret the terms of any Transaction Document, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and
necessary disbursements in addition to any other relief to which such party may
be entitled.

 

7.14 No Commitment for Additional Financing. The Company acknowledges and agrees
that the Investor has not made any representation, warranty, undertaking,
commitment or agreement to provide or assist the Company in obtaining any
investment, financing or other capital raising activities other than the
purchase of the Acquired Shares pursuant to the terms and conditions of this
Agreement. No obligation, agreement, or obligation to provide or assist the
Company in obtaining any investment, financing or other capital raising
activities will created only by a written definitive agreement executed and
delivered by the Investor and the Company, and any such agreement will be
binding only on those Investors executing such agreement.

 

7.15 Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.

 

7.16 Counterparts; Electronic Signatures. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument. A party may
deliver this Agreement by transmitting a facsimile or other electronic signature
of this Agreement signed by such party (via PDF, TIFF, JPEG or the like) to the
other party, which facsimile or other electronic signature shall be deemed an
original for all purposes.

 

[Remainder of Page Intentionally Blank. Signatures on Next Page.]

 

27

 

 

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its respective officer(s) thereunto duly authorized, all as of
the date first written above.

 

  2050 motors, inc.       By:  [ex10-1_001.jpg]   Name: Vikram Grover   Title:
CEO

 

Signature Page to

Securities Purchase Agreement

Page 1 of 2

 

 

  VIKRAM GROVER       By:  [ex10-1_001.jpg]   Name: Vikram Grover   Title:
Investor

 

Signature Page to

Securities Purchase Agreement

Page 2 of 2