ECHO AUTOMOTIVE, INC., 10-KA 


Exhibit
10.19 


PROPOSED FINANCING


OF


ECHO AUTOMOTIVE, INC.


By reading the information contained within
this document, the recipient agrees with Echo Automotive, Inc. (the “Company”)
to maintain in confidence such information, together with any other non-public
information regarding the Company obtained from the Company or its agents
during the course of the proposed financing. The Company has caused these
materials to be delivered to you in reliance upon such agreement and upon Rules
promulgated under Regulation FD by the Securities and Exchange Commission.


THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, OFFERED TO SALE, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT RELATING TO THE
SECURITIES WHICH IS EFFECTIVE UNDER THE SECURITIES ACT, (ii) A NON-US PERSON IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE)
OF REGULATION S UNDER THE SECURITIES ACT, (iii) RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OR (iv) AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS IS AVAILABLE.


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CONFIDENTIAL


SUMMARY OF OFFERING


          This Confidential Summary of Offering is not intended
to be contractually binding, other than the section entitled “Confidential
Information” and is subject in all respects (other than with respect to such
section) to the execution of the Securities Purchase Agreement.


	
  

 	
  

 
	
 Issuer:

 	
 Echo Automotive, Inc., a Nevada corporation (the “Company”).

 
	
  

 	
  

 
	
 Securities Offered:

 	
 Up to 1,000,000 units (“Units”) of the Company, each Unit consisting
 of one (1) share of the Company’s common stock, $0.001 par value (the
 “Shares”), and warrants in the form attached to the Securities Purchase
 Agreement as Exhibit A (the “Warrants”) exercisable to purchase one
 (1) share of common stock of the Company at an exercise price equal to the
 lower of (i) $0.75 per share or (ii) the preceding ten (10) day
 volume-weighted volume average price per share of Company common stock prior
 to the exercise date, (the “Warrant Shares”), as detailed in the Warrants and
 in accordance with the terms and conditions set forth in Annex I (the
 “Offering”). The Offering, subject to authorization from the Board of
 Directors of the Company, will be completed on a best efforts basis and is
 subject to adjustment by the Company.

 
	
  

 	
  

 
	
 Purchase Price:

 	
 $0.50 per Unit. 

 
	
  

 	
  

 
	
 Closing Date:

 	
 The Company and each Investor shall execute
 a Securities Purchase Agreement in substantially the form set forth herein.
 The closing of the Offering shall occur continuously as subscriptions and
 proceeds are received, and certificates representing the Shares shall be
 issued to each Investor and funds paid to the Company (each a “Closing
 Date”). However, the final Closing Date shall be no later than June 30, 2013.

 
	
  

 	
  

 
	
 Use of Proceeds

 	
 For general working capital.

 
	
  

 	
  

 
	
 Investor Qualifications:

 	
 Investor must be an “accredited investor” as defined in Regulation D
 of the Securities Act of 1933, as amended (the “Securities Act”), or Investor
 must be a non-”U.S. Person” as defined in Regulation S of the Securities
 Act, and must represent and warrant to the Company that it is acquiring the
 Units for investment with no present intention of distributing any of the
 Units. The Securities Purchase Agreement contains other appropriate
 representations and warranties of Investor to the Company.

 
	
  

 	
  

 
	
 Securities Certificates:

 	
 Certificates evidencing the Shares which are delivered to Investor
 within seven days of each closing, will bear a restrictive legend stating
 that such securities have been sold pursuant to the Securities Purchase
 Agreement and that the shares may not be resold except as permitted under the
 Securities Act pursuant to a registration statement that has been declared
 effective or an exemption therefrom, and may be resold subject to certain
 limitations and procedures agreed to in the Securities Purchase Agreement.

 



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 Warrants:

 	
 Warrants may be exercisable for a period of 18 months after the date
of grant and will be issued in the form attached as Exhibit A to the
Securities Purchase Agreement and Warrant Shares shall be delivered to
Investor within seven days of each exercise. 

 
	
  

 	
  

 
	
 Risk Factors:

 	
 The securities offered hereby involve a high degree of risk. Investor
must read the disclosure relating to the risks affecting the Company as set
forth in Annex II of the Securities Purchase Agreement, in addition to
documents filed by the Company with the SEC under the Securities Exchange Act
of 1934, as amended. 

 
	
  

 	
  

 
	
 Registration Rights:

 	
 The Company will file, at its sole expense,
 for the benefit of the Investor a registration statement for the resale of
 the Warrant Shares, within 45 days of the date of the final Closing Date, and
 cause the registration statement to be declared effective on a reasonable
 best effort basis.

 
	
  

 	
  

 
	
 OTC Market Symbol:

 	
 ECAU

 
	
  

 	
  

 
	
 Confidential Information:

 	
 The recipient of this Confidential Summary of Offering and the
 materials attached hereto agrees with the Company to maintain in confidence
 this disclosed information, together with any other non-public information
 regarding the Company obtained from the Company, or its agents during the
 course of the proposed Offering. The Company has caused these materials to be
 delivered to Investor in reliance upon such agreement and upon Rules
 promulgated by the SEC pursuant to Regulation FD.

 
	
  

 	
  

 
	
 Transfer Agent:

 	
 Action Stock
 Transfer Corp.

 2469 E. Fort Union Blvd, Ste. 214

 Salt Lake City, UT 84121

 



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INSTRUCTION SHEET FOR INVESTOR


(to be read in conjunction with the entire
Securities Purchase Agreement)


	
  

 	
  

 
	
 A.

 	
 Complete the following items in the Securities Purchase Agreement:

 
	
  

 	
  

 
	
  

 	
           1.           Provide
 the information regarding the Investor requested on the Signature Page to the
 Securities Purchase Agreement. Please submit a separate Securities Purchase
 Agreement for each individual person/entity
 that will hold the Units. The Securities Purchase Agreement must be executed
 by an individual authorized to bind the Investor. Please also complete an
 Accredited Investor Questionnaire enclosed herein if you are a citizen,
 resident or entity formed in the United States.

 
	
  

 	
  

 	
  

 
	
  

 	
           2.
           Return the
 signed Securities Purchase Agreement and the Accredited Investor
 Questionnaire (if applicable) by fax and send the original signed Securities
 Purchase Agreement and Accredited Investor Questionnaire (if applicable) by
 overnight mail to:

 






	
  

 	
  

 
	
  

 	
 Greenberg
 Traurig, LLP 

 Attention: Mark Lee 

 1201 K Street, Suite 1100 

 Sacramento, CA 95814, U.S.A. 

 Tel: (916) 442-1111 

 Facsimile: (916) 448-1709

 






	
  

 	
  

 
	
 B.

 	
 Funds for
 the purchase of Units should be sent via wire transfer or certified check to
 the Company.

 



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SECURITIES PURCHASE AGREEMENT

(Signature Page)


ECHO
AUTOMOTIVE, INC.

15029 N. 74TH STREET

SCOTTSDALE, AZ 85260


Ladies &
Gentlemen:


          The
undersigned (the “Investor”), hereby confirms its agreement with you as
follows:


          1.          This
Securities Purchase Agreement, including the Terms and Conditions set forth in Annex I(the “Terms and Conditions”), the Risk Factors set forth in Annex II(the “Risk Factors”), and exhibits, which are all attached hereto
and incorporated herein by reference as if fully set forth herein (the
“Agreement”), is made as of the date set forth below between Echo Automotive,
Inc., a Nevada corporation (the “Company”), and the Investor.


          2.          The
Company has authorized the sale and issuance of up to 1,000,000 Units of the
Company securities to certain Investors in a private placement (the
“Offering”). Each Unit each consists of one (1) share of the Company’s common
stock, $0.001 par value (the “Shares”), and warrants in the form attached
hereto as Exhibit A (the “Warrants”) exercisable to purchase one (1) share of common stock of the
Company at an exercise price equal to the lower of: (i) $0.75 per share or (ii)
the ten (10) day volume-weighted volume average price per share of Company
common stock immediately preceding the exercise date, exercisable over eighteen
(18) months (the “Warrant Shares”) and in accordance with the terms set forth
in the Warrants.


          3.          Pursuant
to the Terms and Conditions, the Company and the Investor agree that the
Investor will purchase from the Company and the Company will issue and sell to
the Investor 200,000 Units, for a purchase price of $0.50 per Unit, for an
aggregate purchase price of $100,000 consisting of 200,000 Shares and 200,000
     Warrants to purchase shares of common stock of the Company. Unless otherwise
requested by the Investor, certificates representing the Common Stock purchased
by the Investor will be registered in the Investor’s name and address as set
forth below.


          Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Date: March 7, 2013

 	
  

 	
 

 



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ANNEX I


TERMS AND CONDITIONS FOR PURCHASE OF UNITS


Investment in the
Company involves a high degree of risk. Investor should carefully consider the
risk factors set forth in Annex II in addition to the other
information set forth in this Annex I before purchasing securities of the
Company.


          1.          Authorization
and Sale of the Units. Subject to these Terms and Conditions, the Company
has authorized the sale of up to 1,000,000 units (“Units”) of the Company at
$0.50 per Unit, each consisting of one (1) share of the Company’s common stock,
$0.001 par value (the “Shares”), and a warrant (the “Warrants”) exercisable to
purchase one (1) share of common stock of the Company at an exercise price
equal to the lower of: (i) $0.75 per share or (ii) the ten (10) day
volume-weighted volume average price per share of Company common stock
immediately preceding the exercise date, exercisable over an eighteen (18)
month period (the “Warrant Shares”) and in accordance with the terms set forth
in the Warrants (the “Shares” and “Warrants,” collectively, a “Unit”). The
Company reserves the right to increase or decrease this number. All references
to currency in this Securities Purchase Agreement shall refer to the lawful
currency of the United States of America.


          2.          Agreement
to Sell and Purchase the Units.


                      2.1          At
the Closing (as defined in Section 3 of this Annex I), the Company will sell to
the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Units, if applicable, set
forth in Section 3 of the Signature Page to the Securities Purchase Agreement
at the purchase price set forth thereon. 


                      2.2          The
Company may enter into the same form of Securities Purchase Agreement
(“Agreement”), including these Terms and Conditions, with other Investors and
expects to complete sales of subsequent Units to other Investors.


          3.          Delivery
of the Shares and Warrants at Closing. The completion of the purchase and
sale of the Units (the “Closing”) shall occur at the offices of the Company
upon receipt of cleared funds and fully executed documents for the purchase of
the Units on each date set by the Company, provided that a final closing shall
occur no later than June 30, 2013 which date may be extended at the sole
discretion of the Company. Within seven (7) days after each Closing, the
Company shall deliver to the Investor one or more stock certificates representing
the number of Shares and a Warrant representing the number of shares of common
stock as set forth in Section 3 of the Signature Page to the Securities
Purchase Agreement, each such certificate, certificates or warrant to be
registered in the name of the Investor, as set forth in Section 3 of the
Signature Page to the Securities Purchase Agreement.


          The
Company’s obligation to issue the Shares and Warrants to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of a certified or official bank check
or wire transfer of funds in the full amount of the purchase price for the
Units being purchased hereunder as set forth in Section 3 of Signature Page to
the Securities Purchase Agreement; and (b) the accuracy of the representations
and warranties made by the Investor and the fulfillment of those undertakings
of the Investor to be fulfilled prior to the Closing.


          The
Investor’s obligation to purchase the Units shall be subject to the following
conditions, any one or more of which may be waived by the Investor: (1) the
representations and warranties of the Company set forth herein shall be true
and correct as of the Closing Date in all material respects and (2) the
Investor shall have received such documents as such Investor shall reasonably
have requested in connection with its due diligence.


          4.          Representations.
Warranties and Covenants of the Company. The Company hereby represents and
warrants to, and covenants with, the Investor, as follows:


                       4.1          Organization.
The Company is duly organized and validly existing in good standing under the
laws of the jurisdiction of its organization. The Company has full power and
authority to own, operate


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and occupy its properties and to conduct its business as presently
contemplated and is registered or qualified to do business and in good standing
in each jurisdiction in which the nature of the business conducted by it or the
location of the properties owned or leased by it requires such qualification
and where the failure to be so qualified would have a material adverse effect
upon the condition (financial or otherwise), earnings, business, properties or
operations of the Company (a “Material Adverse Effect”), and no proceeding has
been instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.


                     4.2          Due
Authorization and Valid Issuance. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreement,
and the Agreement has been duly authorized and validly executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with their terms, except
as rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). No further approval or authorization of
any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Units. The Shares and the shares of Common
Stock of the Company issuable upon exercise of the Warrants being purchased by
the Investor hereunder will, upon issuance and payment therefore pursuant to
the terms hereof, be duly authorized, validly issued, fully-paid and
nonassessable.


                     4.3          Non-Contravention.
The execution and delivery of the Agreement, the issuance and sale of the Units
under the Agreement, the fulfillment of the terms of the Agreement and the
consummation of the transactions contemplated thereby will not (A) conflict
with or constitute a violation of, or default under, (i) any material bond,
debenture, note or other evidence of indebtedness, lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which it or its properties are
bound, (ii) the charter, by-laws or other organizational documents of the
Company, or (iii) any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority applicable to the
Company or its properties, except in the case of clauses (i) and (iii) for any
such conflicts, violations or defaults which are not reasonably likely to have
a Material Adverse Effect or (B) result in the creation or imposition of any
lien, encumbrance, claim, security interest or restriction whatsoever upon any
of the material properties or assets of the Company or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in
any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which any of them is bound or
to which any of the material property or assets of the Company is subject.


                     4.4          Capitalization.
As of the Closing Date, there were 75,000,000 shares of the Company’s common
stock issued and outstanding. Except as contemplated by documents filed by the
Company with the Securities and Exchange Commission (the “SEC”) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), since such
date through the date hereof (the “Exchange Act Documents”), there are no other
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
unissued shares of capital stock or other equity interest in the Company or any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Company is a party or of which the Company has knowledge and relating
to the issuance or sale of any capital stock of the Company, any such
convertible or exchangeable securities or any such rights, warrants or options.


                     4.5          Legal
Proceedings. There is no material legal or governmental proceeding pending
or, to the knowledge of the Company, threatened to which the Company is or may
be a party or of which the business or property of the Company is subject that
is not disclosed in the Exchange Act Documents.


                     4.6          No
Violations. The Company is not in violation of its charter, bylaws, or
other organizational document, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company, which violation, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect,
or is in default (and there exists no condition which, with the passage of time
or otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of 


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trust or any other material agreement or instrument to which the
Company is a party or by which the Company is bound or by which the properties
of the Company are bound, which would be reasonably likely to have a Material
Adverse Effect.


                                 4.7          Registration
Rights. Within forty five (45) days after the Closing, the Company shall
use reasonable best efforts to file a registration statement on Form S-l or
equivalent form (the “Registration Statement”) with respect to all of the
Warrant Shares and cause such Registration Statement to become effective. All
expenses (other than underwriting discounts and commissions and the fees and
expenses of Investor’s counsel) incurred in connection with registrations,
filings or qualifications pursuant to this Section 4.7, including, without
limitation, all registration, listing, and qualifications fees, printing and
engraving fees, accounting fees, and the fees and disbursements of counsel for
the Company, shall be borne by the Company.


                     5.          Representations.
Warranties and Covenants of the Investor.


                                 5.1          The
Investor represents and warrants to, and covenants with, the Company that: (i)
the Investor is an “accredited investor” as defined in Rule 501 of Regulation D
under the Securities Act and that the Investor is knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect to
investments in shares presenting an investment decision like that involved in
the purchase of the Units, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an
informed decision to purchase the Units; (ii) the Investor has carefully read
and fully understands the risks involved with an investment in the Company
including, without limitation, the risks identified on Annex II. attached
hereto, (iii) the Investor is acquiring the number of Units set forth in
Section 3 of the Signature Page to the Securities Purchase Agreement in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Units or any arrangement
or understanding with any other persons regarding the distribution of such
Units; (iv) the Investor will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Units except in compliance
with the Securities Act, applicable state securities laws and the respective
rules and regulations promulgated thereunder; (v) all of the representations
made by the Investor are true, correct and complete as of the date hereof and
will be true, correct and complete as of the Closing Date; and (vi) the
Investor has, in connection with its decision to purchase the number of Units
set forth in Section 3 of the Signature Page to the Securities Purchase
Agreement, relied only upon the Exchange Act Documents and the representations
and warranties of the Company contained herein. There are no suits, pending
litigation, or claims against the undersigned that could materially affect the
net worth of the Investor.


                                 5.2          The
Investor acknowledges that it has had access to the Exchange Act Documents and
has carefully reviewed the same. The Investor further acknowledges that the
Company has made available to it the opportunity to ask questions of and
receive answers from the Company’s officers and directors concerning the terms
and conditions of this Agreement and the business and financial condition of
the Company, and the Investor has received to its satisfaction, such
information about the business and financial condition of the Company and the
terms and conditions of the Agreement as it has requested. The Investor has
carefully considered the potential risks relating to the Company and a purchase
of the Units, and fully understands that the Units are speculative investments,
which involve a high degree of risk of loss of the Investor’s entire
investment. Among others, the undersigned has carefully considered each of the
risks identified under the caption “Risk Factors” in the Exchange Act Documents
and Annex II.


                                 5.3          The
Investor acknowledges, represents and agrees that no action has been or will be
taken in any jurisdiction outside the United States by the Company that would
permit an offering of the Units, or possession or distribution of offering
materials in connection with the issuance of the Units, in any jurisdiction
outside the United States where legal action by the Company for that purpose is
required. Investor will comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers Units,
Shares, Warrants or Warrant Shares or has in its possession or distributes any
offering material, in all cases at its own expense.


                                 5.4          The
Investor hereby covenants with the Company not to make any sale of the Units,
Shares, Warrants or Warrant Shares without complying with the provisions of
this Agreement, and the Investor 


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acknowledges that the certificates evidencing the Shares will be
imprinted with a legend that prohibits their transfer except in accordance
therewith. The overall commitment of the Investor to investments, which are not
readily marketable, is not excessive in view of the Investor’s net worth and
financial circumstances, and any purchase of the Units will not cause such
commitment to become excessive. The Investor is able to bear the economic risk
of an investment in the Units.


                                 5.5          The
Investor further represents and warrants to, and covenants with, the Company
that (i) the Investor has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).


                                 5.6          Investor
will not use any of the restricted Shares or Warrant Shares acquired pursuant
to this Agreement to cover any short position in the Common Stock of the
Company if doing so would be in violation of applicable securities laws.


                                 5.7          The
Investor understands that nothing in the Exchange Act Documents, this Agreement
or any other materials presented to the Investor in connection with the
purchase and sale of the Units constitutes legal, tax or investment advice. The
Investor has consulted such legal, tax and investment advisors, as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Units.


                                 5.8          The
Investor understands that the issuance of the Units to the Investor has not
been registered under the Securities Act in reliance upon one or more specific
exemptions therefrom, including Regulation D and/or Regulation S, which
exemption depends upon, among other things, the accuracy of the Investor’s
representations made in this Agreement. The Investor understands that the Units
must be held indefinitely unless subsequently registered under the Securities
Act and qualified under applicable state securities laws, or unless an
exemption from such registration and qualification requirements is otherwise
available. Other than as set forth in Section 4.7 with respect to the Warrant
Shares, the Investor acknowledges that the Company has no obligation to
register or qualify the Units or underlying Shares for resale. The Investor
acknowledges that the Company will refuse to register any transfer of Units,
Shares or Warrant Shares that is not made in accordance with the provisions of
Regulation S, registered pursuant to the Securities Act or otherwise exempt
from such registration. The Investor further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of
sale, the holding period for the Shares or Warrant Shares, and requirements
relating to the Company which are outside of the Investor’s control, and which
the Company is under no obligation and may not be able to satisfy. The Investor
has been independently advised as to the applicable holding period imposed in
respect of the Shares by securities legislation in the jurisdiction in which
the undersigned resides and confirms that no representation has been made
respecting the applicable holding periods for the Shares or Warrant Shares in
such jurisdiction and it is aware of the risks and other characteristics of the
Units and of the fact that the undersigned may not resell the Units, Shares or
Warrant Shares except in accordance with applicable securities legislation and
regulatory policy.


                                 5.9          A
copy of the Company’s annual report on Form 10-K, its quarterly reports on Form
10-Q, current reports on Form 8-K and information statements are available on
the SEC’s website at www.sec.gov. 


                                 5.10          For
purposes of compliance with the Regulation S exemption for the offer and sale
of the Units (defined in this Section 5.10 to include the underlying Shares and
Warrant Shares) to non-U.S. Persons, if the Investor is not a “U.S. Person,” as
such term is defined in Rule 902(k) of Regulation S,1 the Investor
represents and 


	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 
	
 1 

 	
 Regulation S
 provides in part as follows:

 
	
  

 	
  

 
	
  

 	
 1.
“U.S. person” means: (i) any natural person resident in the United
States; (ii) any partnership or corporation organized or incorporated under the
laws of the United States; (iii) any estate of which any executor or
administrator is a U.S. person; (iv) any trust of which any trustee is a U.S.
person; (v) any agency or branch of a foreign entity located in the United
States; (vi) any non-

 


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warrants that the Investor is a person or entity that is outside the
United States, and further represents and warrants as follows:


                              (a)          The
Investor is not acting and purchasing (or proposes to purchase) the Units on
behalf of any other persons, entities or accounts and is not acquiring the
Units for the account or benefit of a U.S. Person. The Investor represents and
warrants that the Investor is not a “U.S. Person” (as defined in Rule 902(k)
under the Securities Act) and was located outside the United States at the time
any offer to buy the Units was made and at the time the buy offer was
originated by the undersigned.


                              (b)          If
the Investor is a legal entity, it has not been formed specifically for the
purpose of investing in the Company.


                              (c)          The
Investor hereby represents that he, she or it has satisfied and fully observed
the laws of the jurisdiction in which he, she or it is located or domiciled, in
connection with the acquisition of the Units, including (i) the legal
requirements of the Investor’s jurisdiction for the acquisition of the Units, (ii) any foreign exchange restrictions applicable to such acquisition, (iii)
any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, which may be relevant to the
holding, redemption, sale, or transfer of the Units; and further, the Investor
agrees to continue to comply with such laws as long as he, she or it shall hold
the Units.


                              (d)          To
the knowledge of the Investor, without having made any independent investigation,
neither the Company nor any person acting for the Company, has conducted any
“directed selling efforts” in the United States as the term “directed selling
efforts” is defined in Rule 902 of Regulation S, which, in general, means any
activity undertaken for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the marketing in the United States for any of
the Units being offered. Such activity includes, without limitation, the
mailing of printed material to investors residing in the United States, the
holding of promotional seminars in the United States, and the placement of
advertisements with radio or television stations broadcasting in the United
States or in publications with a general circulation in the United States,
which discuss the offering of the Units. To the knowledge of the Investor, the
Units were not offered to the undersigned through, and the undersigned is not
aware of, any form of general solicitation or general advertising, including
without limitation, (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.


                              (e)          The
Investor will offer, sell or otherwise transfer the Units, only (A) pursuant to
a registration statement that has been declared effective under the Securities
Act, (B) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S in a transaction meeting the requirements of


	
  

 






	
  

 	
  

 
	
  

 	
 discretionary account or similar account (other than an estate or
 trust) held by a dealer or other fiduciary for the benefit or account of a
 U.S. person; (vii) any discretionary account or similar account (other than
 an estate or trust) held by a dealer or other fiduciary organized,
 incorporated, or (if an individual) resident in the United States; and (viii)
 any partnership or corporation if: (A) organized or incorporated under the
 laws of any foreign jurisdiction; and (B) formed by a U.S. person principally
 for the purpose of investing in securities not registered under the
 Securities Act of 1933, as amended, unless it is organized or incorporated,
 and owned, by accredited investors (as defined in Rule 501(a)) who are not
 natural persons, estates or trusts.


 
	
  

 	
  

 
	
 .

 	
 2.     The following are not “U.S. persons”:
 (i) any discretionary account or similar account (other than an estate or
 trust) held for the benefit or account of a non-U.S. person by a dealer or
 other professional fiduciary organized, incorporated, or (if an individual)
 resident in the United States; (ii) any estate of which any professional
 fiduciary acting as executor or administrator is a U.S. person if: (A) an
 executor or administrator of the estate who is not a U.S. person has sole or
 shared investment discretion with respect to the assets of the estate; and
 (B) the estate is governed by foreign law; (iii) any trust of which any
 professional fiduciary acting as trustee is a U.S. person, if a trustee who
 is not a U.S. person has sole or shared investment discretion with respect to
 the trust assets, and no beneficiary of the trust (and no settlor if the
 trust is revocable) is a U.S. person; (iv) an employee benefit plan
 established and administered in accordance with the law of a country other
 than the United States and customary practices and documentation of such
 country; (v) any agency or branch of a U.S. person located outside the United
 States if: (A) the agency or branch operates for valid business reasons; and
 (B) the agency or branch is engaged in the business of insurance or banking
 and is subject to substantive insurance or banking regulation, respectively,
 in the jurisdiction where located; and (vi) the International Monetary Fund,
 the International Bank for Reconstruction and Development, the Inter-American
 Development Bank, the Asian Development Bank, the African Development Bank,
 the United Nations, and their agencies, affiliates and pension plans, and any
 other similar international organizations, their agencies, affiliates and
 pension plans.

 


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Rule 904 (or
other applicable Rule) under the Securities Act, or (C) pursuant to another
available exemption from the registration requirements of the Securities Act,
subject to the Company’s right prior to any offer, sale or transfer pursuant to
clauses (B) or (C) to require the delivery of an opinion of counsel,
certificates or other information reasonably satisfactory to the Company for
the purpose of determining the availability of an exemption.


                    (f)          The
Investor will not engage in hedging transactions involving the Units unless
such transactions are in compliance with the Securities Act.


                    (g)          The
Investor represents and warrants that the undersigned is not a citizen of the
United States and is not, and has no present intention of becoming, a resident
of the United States (defined as being any natural person physically present
within the United States for at least 183 days in a 12-month consecutive period
or any entity who maintained an office in the United States at any time during
a 12-month consecutive period). The Investor understands that the Company may
rely upon the representations and warranty of this paragraph as a basis for an
exemption from registration of the Units under the Securities Act of 1933, as
amended, and the provisions of relevant state securities laws.


                    5.11        The Investor is not a “disqualified
organization.” “Disqualified organization” means (i) the federal government of
the United States; (ii) any state or political subdivision of the United
States; (iii) any foreign government; (iv) any international organization; (v)
any agency or instrumentality of any of the organizations listed in clauses
(i), (ii), (iii) or (iv) above; (vi) any other tax exempt organization, other
than a farmer’s cooperative described in Section 521 of the Code that is exempt
from both income taxation and from taxation under the unrelated business
taxable income provisions of the Code; or (vii) any rural electrical or
telephone cooperative.


                    5.12        The
Investor represents that neither it nor, to the Investor’s knowledge, any
person or entity controlling, controlled by or under common control with the
Investor, nor any person or entity having a beneficial interest in the
Investor, nor any other person or entity on whose behalf the undersigned is
acting (i) is a person or entity listed in the annex to Executive Order No.
13224 (2001) issued by the President of the United States (Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism); (ii) is named on the List of
Specially Designated Nationals and Blocked Persons maintained by the U.S. Office
of Foreign Assets Control (OFAC); (iii) is a non-U.S. shell bank or is
providing banking services indirectly to a non-U.S. shell bank; (iv) is a
senior non-U.S. political figure or an immediate family member or close
associate of such figure; or (v) is otherwise prohibited from investing in the
Company pursuant to applicable U.S. anti-money laundering, antiterrorist and
asset control laws, regulations, rules or orders (categories (i) through (v)
collectively, a “Prohibited Investor”). The Investor agrees to provide the
Company, promptly upon request, all information that the Company reasonably
deems necessary or appropriate to comply with applicable U.S. anti-money
laundering, antiterrorist and asset control laws, regulations, rules and
orders. The Investor consents to the disclosure to U.S. regulators and law
enforcement authorities by the Company and its affiliates and agents of such
information about the Investor as the Company reasonably deems necessary or
appropriate to comply with applicable U.S. anti-money laundering, antiterrorist
and asset control laws, regulations, rules and orders. If the Investor is a
financial institution that is subject to the PATRIOT Act, Public Law No. 107-56
(Oct. 26, 2001) (the “Patriot Act”), the Investor represents that the Investor
has met all of its respective obligations under the Patriot Act. The Investor
acknowledges that if, following the investment in the Company by the Investor,
the Company reasonably believes that the Investor is a Prohibited Investor or
is otherwise engaged in suspicious activity or refuses to provide promptly
information that the Company requests, the Company has the right or may be
obligated to prohibit additional investments, segregate the assets constituting
the investment in accordance with applicable regulations or immediately require
Investor to transfer the Units, Shares, Warrants or Warrant Shares. The
Investor further acknowledges that the Investor will not have any claim against
the Company or any of its affiliates or agents for any form of damages as a
result of any of the foregoing actions.


                    5.13        The
Investor hereby covenants that upon written request by the Company to the
Investor to exercise the Warrant (the “Exercise Notice”) at any time after forty
five (45) days from the effectiveness of the Registration Statement, the
Investor shall immediately exercise all of the unexercised portion of the
Warrant at the exercise price set forth in the Warrant. In the event the
Investor fails to exercise all of the unexercised portion of the Warrant in
full within three (3) business days of receipt of the Exercise Notice, then in
addition to any and all other legal remedies and rights the Company may have,
the Company has the option, in its sole discretion, to provide 


442307133







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written notice to the Investor to assign and transfer the Warrant to a
third party for no consideration, and the Investor hereby agrees to execute
such further documents and do any and all such further things as may be
necessary to implement, carry out and effectuate the transfer and assignment of
the Warrant to such third party.


          6.          Notices.
All notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within the United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if delivered from outside the
United States, by International Federal Express or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express, two business days after so mailed, (iv) if
delivered by facsimile, upon electronic confirmation of receipt and shall be
delivered as addressed as follows:


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 if to the
 Company, to:

 	
 Echo
 Automotive, Inc. 

 15029 N. 74th Street

 Scottsdale, AZ 85260

 Attn:     Chief Executive Officer

 Phone:  (855) 324-7288

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 with a copy
 to:

 	
 Greenberg Traurig LLP

 1201 K Street, Suite 1100

 Sacramento, CA 95814

 Attn:     Mark C Lee

 Phone:  (916) 442-1111

 Fax:      (916) 448-1709

 


                       (c)
if to the Investor, at its address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in
writing.


          7.          Changes.
This Agreement may not be modified or amended except pursuant to an instrument
in writing signed by the Company and the Investor.


          8.          Headings.
The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.


          9.          Severability.
In case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.


          10.        Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Nevada, without giving effect to the
principles of conflicts of law.


          11.        Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.


          12.        Rule
144. The Company covenants that it will timely file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required
to file such reports, it will, upon the request of the Investor holding Shares
and Warrant Shares purchased hereunder made after the first anniversary of the
Closing Date, make publicly available such information as necessary to permit
sales pursuant to Rule 144 under the Securities Act), and it will take such
further action as the Investor may reasonably request, all to the extent
required from time to time to enable such Investor to sell Shares or Warrant
Shares purchased hereunder without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of the Investor, the


442307133







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Company will deliver to such holder a written statement as to whether
it has complied with such information and requirements.


          13.          Confidential
Information. The Investor represents to the Company that, at all times
during the Company’s offering of the Units, the Investor has maintained in
confidence all non-public information regarding the Company received by the
Investor from the Company or its agents, and covenants that it will continue to
maintain in confidence such information and shall not use such information for
any purpose other than to evaluate the purchase of the Units until such
information (a) becomes generally publicly available other than through a
violation of this provision by the Investor or its agents or (b) is required to
be disclosed in legal proceedings (such as by deposition, interrogatory,
request for documents, subpoena, civil investigation demand, filing with any
governmental authority or similar process), provided, however, that before
making any use or disclosure in reliance on this subparagraph (b) the Investor
shall give the Company at least fifteen (15) days prior written notice (or such
shorter period as required by law) specifying the circumstances giving rise
thereto and will furnish only that portion of the non-public information which
is legally required and will exercise its best efforts to obtain reliable
assurance that confidential treatment will be accorded any non-public
information so furnished.


442307133







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ANNEX
II


RISK FACTORS


The risks described below are the ones the
Company believes are the most important for the Investor to consider, although
these risks are not the only ones that the Company faces. If events anticipated
by any of the following risks actually occur, the Company’s business, operating
results or financial condition could suffer and the trading price of the
Company’s common stock could decline.


Risks
Related to Our Business and Industry


We have incurred
losses in prior periods and may incur losses in the future.


We cannot be assured that we can achieve or sustain profitability on a
quarterly or annual basis in the future. Our operations are subject to the
risks and competition inherent in the establishment of a business enterprise.
There can be no assurance that future operations will be profitable. We may not
achieve our business objectives and the failure to achieve such goals would
have an adverse impact on us.


Our future is
dependent upon our ability to obtain financing. If we do not obtain such
financing, we may have to cease our activities and investors could lose their
entire investment.


There is no assurance that we will operate profitably or generate
positive cash flow in the future. We will require additional financing in order
to proceed with the manufacture and distribution of our products, including our
Echo Drive technology. We will also require additional financing to pay the
fees and expenses necessary to become and operate as a public company. We will
also need more funds if the costs of the development and operation of our
existing technologies are greater than we have anticipated. We will also
require additional financing to sustain our business operations if we are not
successful in earning revenues. We may not be able to obtain financing on
commercially reasonable terms or terms that are acceptable to us when it is
required. Our future is dependent upon our ability to obtain financing. If we
do not obtain such financing, our business could fail and investors could lose
their entire investment.


Because we may never
earn revenues from our operations, our business may fail and investors may lose
all of their investment in our Company.


We have no history of revenues from operations. We have yet to generate
positive earnings and there can be no assurance that we will ever operate
profitably. Our company has a limited operating history. If our business plan
is not successful and we are not able to operate profitably, then our stock may
become worthless and investors may lose all of their investment in our company.


Prior to obtaining customers and distribution for our products, we
anticipate that we will incur increased operating expenses without realizing
any revenues. We therefore expect to incur significant losses into the
foreseeable future. We recognize that if we are unable to generate significant
revenues from the sale of our products in the future, we will not be able to
earn profits or continue operations. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and we can
provide no assurance that we will generate any revenues or ever achieve
profitability. If we are unsuccessful in addressing these risks, our business
will fail and investors may lose all of their investment in our company.


Our limited
operating history and recent change in business direction makes evaluating our
business and future prospects difficult, and may increase the risk of your
investment.


We have a very limited operating history on which investors can base an
evaluation of our business, operating results and prospects. Of even greater
significance is that fact that we have no operating history with respect to
augmenting existing power trains with highly efficient electrical energy
delivered by electric motors powered by our modular plug-in battery modules.


442307133







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While the basic technology has been verified, we only recently have
begun the commercialization of the complete plug-in hybrid electric vehicle
(PHEV) system in preparation for our initial conversion of a vehicle. This
limits our ability to accurately forecast the cost of the conversions or to
determine a precise date on which the commercial platform for vehicle
conversions will be widely released.


We are currently evaluating, qualifying and selecting our suppliers for
the hybrid conversion system. However, we may not be able to engage suppliers
for the remaining components in a timely manner, at an acceptable price or in
the necessary quantities. In addition, we may also need to do extensive testing
to ensure that the conversions are in compliance with applicable National
Highway Traffic Safety Administration (NHTSA) safety regulations and United
States Environmental Protection Agency (EPA) regulations prior to full
distribution to our licensees. Our plan to complete the initial
commercialization of the hybrid conversion system is dependent upon the timely
availability of funds, upon our finalizing the engineering, component procurement,
build out and testing in a timely manner. Any significant delays would
materially adversely affect our business, prospects, financial condition and
operating results. Consequently, it is difficult to predict our future revenues
and appropriately budget for our expenses, and we have limited insight into
trends that may emerge and affect our business. In the event that actual
results differ from our estimates or we adjust our estimates in future periods,
our operating results and financial position could be materially affected. If
the markets for hybrid electric conversions and/or electric motors and
generators does not develop as we expect or develops more slowly than we
expect, our business, prospects, financial condition and operating results will
be harmed.


Decreases in the
price of oil, gasoline and diesel fuel may influence the conversions to plug-in
hybrid electric vehicles include, which may slow the growth of our business and
negatively impact our financial results.


The market for plug-in hybrid electric vehicle conversions is
relatively new, rapidly evolving, characterized by rapidly changing
technologies, evolving government regulation, and changing consumer demands and
behaviors. Prices for oil, gasoline and diesel fuel can be very volatile.
Increases in the price of fuels will likely raise interest in plug-in hybrid
conversions. Decreases in the price of fuels will likely reduce interest in
conversions and reduced interest could slow the growth of our business.


Our growth depends
in part on environmental regulations and programs mandating the use of vehicles
that get better gas mileage and generate fewer emissions and any modification
or repeal of these regulations may adversely impact our business.


Enabling commercial customers to meet environmental regulations and
programs in the United States that promote or mandate the use of vehicles that
get better gas mileage and generate fewer emissions is an integral part of our
business plan. Industry participants with a vested interest in gasoline and
diesel invest significant time and money in efforts to influence environmental
regulations in ways that delay or repeal requirements for cleaner vehicle
emissions. Furthermore, the economic recession may result in the delay,
amendment or waiver of environmental regulations due to the perception that
they impose increased costs on the transportation industry or the general
public that cannot be absorbed in a shrinking economy. The delay, repeal or
modification of federal or state regulations or programs that encourage the use
of more efficient and/or cleaner vehicles could slow our growth and adversely
affect our business.


Some aspects of our
business will depend in part on the availability of federal, state and local
rebates and tax credits for hybrid electric vehicles, and as such, a reduction
in these incentives would increase the cost of conversions for our customers
and could significantly reduce our revenue.


Hybrid conversions for the general public will depend in part on tax
credits, rebates and similar federal, state and local government incentives
that promote hybrid electric vehicles. We anticipate that fleet owners will be
less reliant on incentives. As for other products we create, there should be no
reliance at all. Nonetheless, any reduction, elimination or discriminatory
application of federal, state and local government incentives and other
economic subsidies or tax credits because of policy changes, the reduced need
for such subsidies or incentives due to the perceived success of the hybrid conversions,
fiscal tightening or other reasons may have a direct or indirect material
adverse effect on our business, financial condition, and operating results.


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We may experience
significant delays in the design and implementation of our technology into the
motors of the companies with which we may have research and development
agreements with, which could harm our business and prospects.


Any delay in the financing, design, and implementation of our
technology into the motor of the companies with which we may have research and
development agreements could materially damage our brand, business, prospects,
financial condition and operating results. Motor manufacturers often experience
delays in the design, manufacture and commercial release of new product lines.


If we are unable to
adequately control the costs associated with operating our business, including
our costs of sales and materials, our business, financial condition, operating
results and prospects will suffer.


If we are unable to maintain a sufficiently low level of costs for
designing, marketing, selling and distributing our conversion system relative
to their selling prices, our operating results, gross margins, business and
prospects could be materially and adversely impacted. We have made, and will be
required to continue to make, significant investments for the design and sales
of our system and technologies. There can be no assurances that our costs of
producing and delivering our system and technologies will be less than the revenue
we generate from sales, licenses and/or royalties or that we will achieve our
expected gross margins.


We may be required to incur substantial marketing costs and expenses to
promote our systems and technologies, even though our marketing expenses to date
have been relatively limited. If we are unable to keep our operating costs
aligned with the level of revenues we generate, our operating results, business
and prospects will be harmed. Many of the factors that impact our operating
costs are beyond our control. For example, the costs of our components could
increase due to shortages as global demand for these products increases.
Indeed, if the popularity of hybrid conversions exceeds current expectations
without significant expansion in battery production capacity and advancements
in battery technology, shortages could occur which would result in increased
costs to us.


We will be dependent
on our suppliers, some of which are single or limited source suppliers, and the
inability of these suppliers to continue to deliver, or their refusal to
deliver, necessary components at prices and volumes acceptable to us would have
a material adverse effect on our business, prospects and operating results.


We are currently and continually evaluating, qualifying and selecting
suppliers for our conversion system. We will source globally from a number of
suppliers, some of whom may be single source suppliers for these components.
While we obtain components from multiple sources whenever possible, it may not
always be possible to avoid purchasing from a single source. To date, we have
not qualified alternative sources for any of our single sourced components.


While we believe that we may be able to establish alternate supply
relationships and can obtain or engineer replacements for our single source
components, we may be unable to do so in the short term or at all at prices or
costs that are favorable to us. In particular, while we believe that we will be
able to secure alternate sources of supply for almost all of our single-sourced
components in a relatively short time frame, qualifying alternate suppliers or
developing our own replacements for certain highly customized components may be
time consuming and costly.


The supply chain will expose us to potential sources of delivery
failure or component shortages. If we experience significant increased demand,
or need to replace our existing suppliers, there can be no assurance that
additional supplies of component parts will be available when required on terms
that are favorable to us, at all, or that any supplier would allocate
sufficient supplies to us in order to meet our requirements or fill our orders
in a timely manner. The loss of any single or limited source supplier or the
disruption in the supply of components from these suppliers could lead to
delays to our customers, which could hurt our relationships with our customers
and also materially adversely affect our business, prospects and operating
results.


Changes in our supply chain may result in increased cost and delay. A
failure by our suppliers to provide the necessary components could prevent us
from fulfilling customer orders in a timely fashion which could result in
negative publicity, damage our brand and have a material adverse effect on our
business, prospects, financial condition and operating results.


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The use of plug-in
hybrid electric vehicles in vehicle components or electric motors may not
become sufficiently accepted for us to expand our business.


To expand our conversion business, we must license new fleet, dealer
and service center customers. We cannot guarantee that we will be able to
develop these customers or that they will sign our license contracts. Whether
we will be able to expand our customer base will depend on a number of factors,
including the level of acceptance of plug-in hybrid electric vehicles by fleet
owners and the general public. A failure to expand our customer base could have
a material adverse effect on our business, prospects, financial condition and
operating results.


If there are
advances in other alternative vehicle fuels or technologies, or if there are
improvements in gasoline or diesel engines, demand for hybrid electric
conversions and/or our other products may decline and our business may suffer.


Technological advances in the production, delivery and use of
alternative fuels that are, or are perceived to be, cleaner, more
cost-effective than our traditional fuel/electric combination have the
potential to slow adoption of plug-in hybrid electric vehicles. Hydrogen, compressed
natural gas and other alternative fuels in experimental or developmental stages
may eventually offer a cleaner, more cost-effective alternative to our gasoline
or diesel and electric combination. Equally, any significant improvements in
the fuel economy or efficiency of the internal combustion engine may slow
conversions to plug-in hybrid vehicles and, consequently, would have a
detrimental effect on our business and operations.


While we are not aware of any pending innovations in or introductions of
new heat reduction or heat transfer technologies, that does not mean none are
in the offing. We have no control of what our competitors are doing nor
awareness of their plans until such information is released for general
consumption. The introduction of any new technology that offers better or
equivalent results at a lower price would have a detrimental effect on our
business and operations.


Our research and
commercialization efforts may not be sufficient to adapt to changes in electric
vehicle technology.


As technologies change, we plan to upgrade or adapt our conversion
system in order to continue to provide vehicles with the latest technology, in
particular battery technology. However, our conversions may not compete
effectively with alternative vehicles if we are not able to source and
integrate the latest technology into our conversion system. For example, we do
not manufacture battery cells and that makes us dependent upon other suppliers
of battery cell technology for our battery packs.


Any failure to keep up with advances in electric or internal combustion
vehicle technology would result in a decline in our competitive position which
would materially and adversely affect our business, prospects, operating
results and financial condition.


The cyclical nature
of business cycles can adversely affect our business.


Our business is directly related to general economic conditions which
can be cyclical. It also depends on other factors, such as corporate and
consumer confidence and preferences. A significant increase in global sales of
electric or hybrid vehicles could have a direct impact on our earnings and cash
flows by lowering the need to convert existing vehicles to plug-in hybrids.
Equally, a significant decrease in the global sales of electric motors and
generators could have a direct impact on our earnings and cash flows. The
realization of either situation would also have an adverse effect on our
business, results of operations and financial condition.


A prolonged economic
downturn or economic uncertainty could adversely affect our business and cause
us to require additional sources of financing, which may not be available.


Our sensitivity to economic cycles and any related fluctuation in the
businesses of our fleet customers, electric motor manufacturers or income of
the general public may have a material adverse effect on our financial
condition, results of operations or cash flows. If global economic conditions
deteriorate or economic uncertainty increases, our 


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customers and potential customers may experience lowered incomes or
deterioration of their businesses, which may result in the delay or
cancellation of plans to convert their vehicles, reduced license sales or
reduced royalties from sales by licensees. As a consequence, our cash flow
could be adversely impacted.


Any changes in
business credit availability or cost of borrowing could adversely affect our
business.


Declines in the availability of business credit and increases in
corporate borrowing costs could negatively impact the number of conversions
performed and the number of electric motors manufactured. Substantial declines
in the number of conversions by our customers could have a material adverse
effect on our business, results of operations and financial condition. In addition,
the disruption in the capital markets that began in 2008 has reduced the
availability of debt financing to support the conversion of existing vehicles
into plug-in hybrids. If our potential customers are unable to access credit to
convert their vehicles, it would impair our ability to grow our business.


Our future business
depends in large part on our ability to execute our plans to market and license
our conversion system.


Failure to obtain reliable sources of component supply, that will
enable us to meet the quality, price, engineering, design and production
standards, as well as the production volumes required to successfully mass
market our conversion system could negatively affect our Company’s revenues and
business operations.


Even if we are successful in developing a high volume conversion
platform and reliable sources of component supply, we do not know whether we
will be able to do so in a manner that avoids significant delays and cost
overruns, including factors beyond our control such as problems with suppliers
and vendors, or shipping schedules that meet our customers’ conversion
requirements. Any failure to develop such capabilities within our projected
costs and timelines could have a material adverse effect on our business,
prospects, operating results and financial condition.


We may incur
material losses and costs as a result of warranty claims and product liability
actions that may be brought against us.


We face an inherent business risk of exposure to product liability in
the event that our hybrid conversions or other products fail to perform as
expected and, in the case of product liability, failure of our products results
in bodily injury and/or property damage. Our customers have expectations of
proper performance and reliability of our hybrid conversions and any other
products that we may supply. If flaws in the design of our products were to
occur, we could experience a rate of failure in our hybrid conversions or other
products that could result in significant charges for product re-work or
replacement costs. Although we will engage in extensive quality programs and
processes, these may not be sufficient to avoid conversion or product failures,
which could cause us to:


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ●

 	
 lose revenue;

 
	
  

 	
  

 	
 ●

 	
 incur increased costs such as costs associated with customer support;

 
	
  

 	
  

 	
 ●

 	
 experience delays, cancellations or rescheduling of conversions or
 orders for our products;

 
	
  

 	
  

 	
 ●

 	
 experience increased product returns or discounts; or

 
	
  

 	
  

 	
 ●

 	
 damage our reputation;

 


all of which could negatively affect our financial condition and
results of operations. If any of our hybrid conversions or other products are
or are alleged to be defective, we may be required to participate in a recall
involving such conversions or products. A recall claim brought against us, or a
product liability claim brought against us in excess of our available
insurance, may have a material adverse effect on our business.


If we are unable to
enforce our intellectual property rights or if our intellectual property rights
become obsolete, our competitive position could be adversely impacted.


We utilize a variety of intellectual property rights in our products.
We view our portfolio of process and design technologies as one of our competitive
strengths and we use it as part of our efforts to differentiate our product
offerings. We may not be able to successfully preserve these intellectual
property rights in the future and these rights could be invalidated,
circumvented, challenged or infringed upon. In addition, the laws of some
foreign


442307133







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countries in which our products may be sold do not protect intellectual
property rights to the same extent as the laws of the United States. If we are
unable to protect and maintain our intellectual property rights, or if there
are any successful intellectual property challenges or infringement proceedings
against us, our ability to differentiate our product offerings could diminish.
In addition, if our intellectual property rights or work processes become
obsolete, we may not be able to differentiate our product offerings and some of
our competitors may be able to offer more attractive products to our customers.
As a result, our business and financial performance could be materially and adversely
affected.


Developments or
assertions by us or against us relating to intellectual property rights could
materially impact our business.


We expect to own or license significant intellectual property,
including patents, and intend to be involved in numerous licensing
arrangements. Our intellectual property should play an important role in
maintaining our competitive position in a number of the markets we intend to
serve. We will attempt to protect proprietary and intellectual property rights
to our products and conversion system through available patent laws and
licensing and distribution arrangements with reputable domestic and
international companies. Despite these precautions, patent laws afford only
limited practical protection in certain countries.


Litigation may also be necessary in the future to enforce our
intellectual property rights or to determine the validity and scope of the
proprietary rights of others or to defend against claims of invalidity. Such
litigation could result in substantial costs and the diversion of resources. As
we create or adopt new technology, we will also face an inherent risk of
exposure to the claims of others that we have allegedly violated their
intellectual property rights.


We cannot assure that we will not experience any intellectual property
claim losses in the future or that we will not incur significant costs to
defend such claims nor can we assure that infringement or invalidity claims
will not materially adversely affect our business, results of operations and
financial condition. Regardless of the validity or the success of the assertion
of these claims, we could incur significant costs and diversion of resources in
enforcing our intellectual property rights or in defending against such claims,
which could have a material adverse effect on our business, results of
operations and financial condition.


Any such imposition of a liability that is not covered by insurance, is
in excess of insurance coverage or is not covered by an indemnification could
have a material adverse effect on our business, results of operations and
financial condition.


Liability or alleged liability could harm our business by damaging our
reputation, requiring us to incur expensive legal costs in defense, exposing us
to awards of damages and costs and diverting management’s attention away from
our business operations. Any such liability could severely impact our business
operations and/or revenues. If any claims or actions are asserted against us,
we may seek to settle such claim by obtaining a license from the plaintiff
covering the disputed intellectual property rights. We cannot provide any
assurances, however, that under such circumstances a license, or any other form
of settlement, would be available on reasonable terms or at all.


We may incur
material losses, additional costs or even interruption of business operations
as a result of fines or sanctions brought by government regulators.


We will likely be subject to various U.S. federal, state and local, and
non-U. S. environmental, transportation and safety laws and regulations, such
as requirements for aftermarket fuel conversion certification by the
Environmental Protection Agency or separate requirements for after market fuel
conversion certification by California and other states. We cannot assure you
that we will be at all times in complete compliance with such laws, regulations
and permits. If we violate or fail to comply with these laws, regulations or
certifications, we could be fined or otherwise sanctioned by regulators.


We may face risks
from doing business internationally.


We may license, sell or distribute products outside the U.S., and
derive revenues from these sources. Consequently, our revenues and results of
operations will be vulnerable to currency fluctuations. We will report our
revenues and results of operations in U.S. dollars, but a significant portion
of our revenues could be earned outside of the


442307133







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U.S. We cannot accurately predict the impact of future exchange rate
fluctuations on revenues and operating margins. Such fluctuations could have a
material adverse effect on our business, results of operations and financial
condition. Our business will also be subject to other risks inherent in the
international marketplace, many of which are beyond our control. These risks
include:


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ●

 	
 laws and
 policies affecting trade, investment and taxes, including laws and policies
 relating to the repatriation of funds and withholding taxes, and changes in
 these laws;

 
	
  

 	
  

 	
 ●

 	
 changes in
 local regulatory requirements, including restrictions on conversions;

 
	
  

 	
  

 	
 ●

 	
 differing
 cultural tastes and attitudes;

 
	
  

 	
  

 	
 ●

 	
 differing
 degrees of protection for intellectual property;

 
	
  

 	
  

 	
 ●

 	
 financial
 instability;

 
	
  

 	
  

 	
 ●

 	
 the
 instability of foreign economies and governments;

 
	
  

 	
  

 	
 ●

 	
 war and acts
 of terrorism.

 



Any of the
foregoing could have a material adverse effect on our business, financial
condition and results of operations.


Our long-term growth
depends upon technological innovation and commercialization.


Our ability to deliver our long-term growth strategy depends in part on
the commercialization of new technology. A central aspect of our growth
strategy is to improve our products and services through innovation, to obtain
technologically advanced products through internal research and development and/or
acquisitions, to protect proprietary technology from unauthorized use and to
expand the markets for new technology by leveraging our infrastructure. Our
success will depend on our ability to commercialize the technology that we have
acquired and demonstrate the enhanced value our technology brings to our
customers’ operations. Our major technological advances include, but are not
limited to, those related to the design of technology to reduce overall fuel
expenses in commercial fleet vehicles by augmenting existing power trains with
highly efficient electrical energy delivered by electric motors powered by our
modular plug-in battery modules. We cannot be assured of the successful
commercialization of, and above-average growth from, our new products and services,
as well as legal protection of our intellectual property rights. Any failure in
the commercialization of our technology could adversely affect our business and
results of operations.


Risks Relating to our Securities and our
Status as a Public Company


The relative lack of
public company experience of our management team may put us at a competitive
disadvantage.


Our management team lacks public company experience and is generally
unfamiliar with the requirements of the United States securities laws and U.S.
Generally Accepted Accounting Principles, which could impair our ability to
comply with legal and regulatory requirements such as those imposed by
Sarbanes-Oxley Act of 2002. The individuals who now constitute our senior
management team have never had responsibility for managing a publicly traded
company. Such responsibilities include complying with federal securities laws
and making required disclosures on a timely basis. Our senior management may
not be able to implement programs and policies in an effective and timely
manner that adequately responds to such increased legal, regulatory compliance
and reporting requirements. Our failure to comply with all applicable
requirements could lead to the imposition of fines and penalties and distract
our management from attending to the growth of our business.


Shares of our common
stock that have not been registered under the Securities Act of 1933, as
amended, regardless of whether such shares are restricted or unrestricted, are
subject to resale restrictions imposed by Rule 144, including those set forth
in Rule 144(i) which apply to a “shell company.” In addition, any shares of our
common stock that are held by affiliates, including any received in a
registered offering, will be subject to the resale restrictions of Rule 144(i).


Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule
144”), a “shell company” is defined as a company that has no or nominal
operations; and, either no or nominal assets ;assets consisting solely of cash
and cash equivalents; or assets consisting of any amount of cash and cash
equivalents and nominal other assets. As such, 


442307133







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we may be deemed a “shell company” pursuant to Rule 144 prior to the
Exchange, and as such, sales of our securities pursuant to Rule 144 are not
able to be made until a period of at least twelve months has elapsed from the
date on which our Current Report on Form 8-K is filed with the Commission
reflecting our status as a non-”shell company.” Therefore, any restricted
securities we sell in the future or issue to consultants or employees, in
consideration for services rendered or for any other purpose will have no
liquidity until and unless such securities are registered with the Commission
and/or until a year after the date of the filing of our Current Report on Form
8-K and we have otherwise complied with the other requirements of Rule 144. As
a result, it may be harder for us to fund our operations and pay our employees
and consultants with our securities instead of cash. Furthermore, it will be
harder for us to raise funding through the sale of debt or equity securities
unless we agree to register such securities with the Commission, which could
cause us to expend additional resources in the future. Our previous status as a
“shell company” could prevent us from raising additional funds, engaging
employees and consultants, and using our securities to pay for any acquisitions
(although none are currently planned), which could cause the value of our
securities, if any, to decline in value or become worthless. Lastly, any shares
held by affiliates, including shares received in any registered offering, will
be subject to the resale restrictions of Rule 144(i).


We will be required
to incur significant costs and require significant management resources to
evaluate our internal control over financial reporting as required under
Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse
result from such evaluation may have an adverse effect on our stock price.


As a smaller reporting company as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, we are required to evaluate our
internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include
an internal control report with the Annual Report on Form 10-K. This report
must include management’s assessment of the effectiveness of our internal
control over financial reporting as of the end of the fiscal year. This report
must also include disclosure of any material weaknesses in internal control
over financial reporting that we have identified. Failure to comply, or any
adverse results from such evaluation could result in a loss of investor
confidence in our financial reports and have an adverse effect on the trading
price of our equity securities. Management believes that its internal controls
and procedures are currently not effective to detect the inappropriate
application of U.S. GAAP rules. Management realize there are deficiencies in
the design or operation of our internal control that adversely affect our
internal controls which management considers to be material weaknesses
including those described below:


	
  

 	
  

 	
  

 
	
  

 	
 i)

 	
 As of
 December 31, 2011, the Company did not have a separate audit committee.

 
	
  

 	
  

 	
  

 
	
  

 	
 ii)

 	
 Due to the
 significant number and magnitude of out-of-period adjustments identified
 during the year-end closing process, management has concluded that the
 controls over the period-end financial reporting process were not operating
 effectively. A material weakness in the period-end financial reporting
 process could result in us not being able to meet our regulatory filing
 deadlines and, if not remediated, has the potential to cause a material
 misstatement or to miss a filing deadline in the future. Management override
 of existing controls is possible given the small size of the organization and
 lack of personnel.

 
	
  

 	
  

 	
  

 
	
  

 	
 iii)

 	
 There is no
 system in place to review and monitor internal control over financial
 reporting. The Company maintains an insufficient complement of personnel to
 carry out ongoing monitoring responsibilities and ensure effective internal control
 over financial reporting

 


Achieving continued compliance with Section 404 may require us to incur
significant costs and expend significant time and management resources. We
cannot assure you that we will be able to fully comply with Section 404 or that
we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at
fiscal year end. As a result, investors could lose confidence in our reported
financial information, which could have an adverse effect on the trading price
of our securities, as well as subject us to civil or criminal investigations
and penalties. In addition, our independent registered public accounting firm
may not agree with our management’s assessment or conclude that our internal
control over financial reporting is operating effectively.


If we lose our key
management personnel, we may not be able to successfully manage our business or
achieve our objectives, and such loss could adversely affect our business,
future operations and financial condition.


442307133 







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Our future success depends in large part upon the leadership and
performance of our executive management team and key consultants. If we lose
the services of one or more of our executive officers or key consultants, or if
one or more of them decides to join a competitor or otherwise compete directly
or indirectly with us, we may not be able to successfully manage our business
or achieve our business objectives. We do not have “Key-Man” life insurance
policies on our key executives. If we lose the services of any of our key
consultants, we may not be able to replace them with similarly qualified
personnel, which could harm our business. The loss of our key executives or our
inability to attract and retain additional highly skilled employees may
adversely affect our business, future operations, and financial condition.


The elimination of
monetary liability against our directors, officers and employees under Nevada
law and the existence of indemnification rights to our directors, officers and
employees may result in substantial expenditures by our company and may
discourage lawsuits against our directors, officers and employees.


Our Articles of Incorporation contain a provision permitting us to eliminate
the personal liability of our directors to our company and shareholders for
damages for breach of fiduciary duty as a director or officer to the extent
provided by Nevada law. The foregoing indemnification obligations could result
in the Company incurring substantial expenditures to cover the cost of
settlement or damage awards against directors and officers, which we may be
unable to recoup. These provisions and resultant costs may also discourage our
company from bringing a lawsuit against directors and officers for breaches of
their fiduciary duties, and may similarly discourage the filing of derivative
litigation by our shareholders against our directors and officers even though
such actions, if successful, might otherwise benefit our company and
shareholders.


Our stock is
categorized as a penny stock. Trading of our stock may be restricted by the
SEC’s penny stock regulations which may limit a shareholder’s ability to buy
and sell our stock.


Our stock is categorized as a penny stock. The SEC has adopted Rule
15g-9 which generally defines “penny stock” to be any equity security that has
a market price (as defined) less than US$ 5.00 per share or an exercise price
of less than US$ 5.00 per share, subject to certain exceptions. Our securities
are covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and accredited investors. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document in a form
prepared by the SEC which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer’s account. The bid and offer quotations, and
the broker-dealer and salesperson compensation information, must be given to
the customer orally or in writing prior to effecting the transaction and must
be given to the customer in writing before or with the customer’s confirmation.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from these rules, the broker-dealer must make
a special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the
transaction. These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for the stock that is subject
to these penny stock rules. Consequently, these penny stock rules may affect
the ability of broker-dealers to trade our securities. We believe that the
penny stock rules discourage investor interest in and limit the marketability
of our common stock.


FINRA sales practice
requirements may also limit a shareholder’s ability to buy and sell our stock.


In addition to the “penny stock” rules described above, FINRA has
adopted rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer’s financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the market for
our shares.



442307133 







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To date, we have not
paid any cash dividends and no cash dividends will be paid in the foreseeable
future.


We do not anticipate paying cash dividends on our common stock in the
foreseeable future and we may not have sufficient funds legally available to
pay dividends. Even if the funds are legally available for distribution, we may
nevertheless decide not to pay any dividends. We presently intend to retain all
earnings for our operations.


A limited public
trading market exists for our common stock, which makes it more difficult for
our stockholders to sell their common stock in the public markets.  


Our common shares are currently traded under the symbol “ECAU,” but
currently with low or no volume, based on quotations on the “Over-the-Counter
Bulletin Board,” meaning that the number of persons interested in purchasing
our common shares at or near bid prices at any given time may be relatively
small or non-existent. This situation is attributable to a number of factors,
including the fact that we are a small company which is still relatively
unknown to stock analysts, stock brokers, institutional investors, and others
in the investment community that generate or influence sales volume, and that
even if we came to the attention of such persons, they tend to be risk-averse
and would be reluctant to follow an unproven company such as ours or purchase
or recommend the purchase of our shares until such time as we became more
viable. Additionally, many brokerage firms may not be willing to effect
transactions in the securities. As a consequence, there may be periods of
several days or more when trading activity in our shares is minimal or
nonexistent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on share price. We cannot give you any assurance that a
broader or more active public trading market for our common stock will develop
or be sustained, or that trading levels will be sustained.


Shareholders should be aware that, according to SEC Release No.
34-29093, the market for “penny stocks” has suffered in recent years from
patterns of fraud and abuse. Such patterns include (1) control of the market
for the security by one or a few broker-dealers that are often related to the promoter
or issuer; (2) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (3) boiler room practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential
and markups by selling broker-dealers; and (5) the wholesale dumping of the
same securities by promoters and broker-dealers after prices have been
manipulated to a desired level, along with the resulting inevitable collapse of
those prices and with consequent investor losses. Our management is aware of
the abuses that have occurred historically in the penny stock market. Although
we do not expect to be in a position to dictate the behavior of the market or
of broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from
being established with respect to our securities. The occurrence of these
patterns or practices could increase the future volatility of our share price.


If we issue
additional shares in the future, it will result in the dilution of our existing
shareholders.


Our articles of incorporation authorize the issuance of up to
650,000,000 shares of common stock with a par value of $0.001 per share. Our
Board of Directors may choose to issue some or all of such shares to acquire
one or more companies or properties and to fund our overhead and general
operating requirements. The issuance of any such shares may reduce the book
value per share and may contribute to a reduction in the market price of the
outstanding shares of our common stock. If we issue any such additional shares,
such issuance will reduce the proportionate ownership and voting power of all
current shareholders. Further, such issuance may result in a change of control
of our corporation.


We may not qualify
to meet listing standards to list our stock on an exchange.


The SEC approved listing standards for companies using reverse
acquisitions to list on an exchange may limit our ability to become listed on
an exchange. We would be considered a reverse acquisition company (i.e., an
operating company that becomes an Exchange Act reporting company by combining
with a shell Exchange Act reporting company) that cannot apply to list on NYSE,
NYSE Amex or Nasdaq until our stock has traded for at least one year on the
U.S. OTC market, a regulated foreign exchange or another U.S. national
securities market following the filing with the SEC or other regulatory
authority of all required information about the merger, including audited
financial 


442307133 







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statements. We would be required to maintain a minimum $4 share price
($2 or $3 for Amex) for at least thirty (30) of the sixty (60) trading days before
our application and the exchange’s decision to list. We would be required to
have timely filed all required reports with the SEC (or other regulatory
authority), including at least one annual report with audited financials for a
full fiscal year commencing after filing of the above information. Although
there is an exception for a firm underwritten IPO with proceeds of at least $40
million, we do not anticipate being in a position to conduct an IPO in the
foreseeable future. To the extent that we cannot qualify for a listing on an
exchange, our ability to raise capital will be diminished.


We have not retained
independent professionals for Investors.


We have not retained any independent professionals to review or comment
on the Offering or otherwise protect the interests of the Investors hereunder.
Although the Company has retained its own counsel, such firms have not made any
independent examination of any factual matters represented by management
herein, and purchasers of the securities offered hereby should not rely on such
firms so retained with respect to any matters herein described. Potential
investors are encouraged to review all applicable documents with their advisors
and conduct such due diligence regarding their potential investment in the Company
as they deep appropriate.


Filing requirements
applicable to certain investors.


Investors that acquire five percent (5%) or more of the our common
stock may be required to file reports with the SEC disclosing such investor’s
beneficial share ownership of our common stock. To the extent such requirements
apply to an investor, such investor will also be required to file certain
reports with the SEC reflecting any material changes of beneficial ownership.
We will not file any such reports on behalf of any investor.


THE FOREGOING RISK FACTORS DO NOT PURPORT TO
BE A COMPLETE EXPLANATION OF ALL OF THE RISKS INVOLVED IN PURCHASING THE UNITS
OFFERED HEREIN. POTENTIAL INVESTORS SHOULD READ THIS MEMORANDUM IN ITS ENTIRETY
AND REVIEW THE COMPANY’S EXCHANGE ACT DOCUMENTS BEFORE DETERMINING WHETHER TO
PURCHASE THE UNITS.


442307133 







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EXHIBIT A


FORM OF WARRANT


442307133 






     


	



    	 



    
 



	
  

 	
  

 	
  

 	
  

 
	
  

 	
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
 SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS
 OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
 AND RESALE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
 UNLESS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT
 TO REGISTRATION OR EXEMPTION THEREFROM AND THE ISSUER OF THESE SECURITIES HAS
 BEEN PROVIDED WITH AN OPINION OF LEGAL COUNSEL TO THE HOLDER IN FORM AND
 SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES TO THE EFFECT THAT
 SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
 REGISTRATION UNDER SUCH LAWS.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 Date of
 Issuance: March 7, 2013

 	
 Number of Shares 200,000

 	
  

 
	
  

 	
 Warrant
 No.                    03-07-2013-1

 	
 (subject to adjustment)

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ECHO AUTOMOTIVE, INC. 

 A NEVADA CORPORATION

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Warrant

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           Echo
Automotive, Inc., a Nevada corporation (the “Company”), for value received,
hereby certifies that NEWMARKET TRADERS LTD (the “Initial Holder”), or its
registered assigns (the Initial Holder or such registered assigns shall be
referred to as the “Registered Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company at any time on or after the
Exercise Date and on or before the Expiration Date, up to 200,000      shares (the “Warrant Shares”) of the Company’s common
stock, $0.001 par value per share (“Common Stock”), at a purchase price equal
to the lower of: (i) $0.75 per share or (ii) the trailing ten (10) day
volume-weighted volume average price (“VWAP”) per share of Company
common stock prior to the Exercise Date (the “Purchase Price”).
The number of shares of Warrant Shares and the Purchase Price may be adjusted
from time to time pursuant to the provisions of this Warrant. As used herein,
“Exercise Date” means any date after the date hereof and prior to the
Expiration Date on which the Registered Holder elects by written notice to
the Company to exercise this Warrant. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           For the
 purposes of this Warrant, “VWAP” is calculated, for any date, based
 upon the price and volume quotes over the previous ten (10) trading days
 prior to the Exercise Date per share of the Company’s common stock by the
 first of the following clauses that applies: (i) if the Common Stock is then
 listed or quoted on a U.S. securities exchange, the daily volume-weighted
 average price of the Common Stock for such date (or the nearest preceding
 date) on said exchange on which the Common Stock is then listed or quoted,
 (ii) if the OTC Bulletin Board is a trading market, the volume-weighted
 average price of the Common Stock for such date (or the nearest preceding
 date) on the OTC Bulletin Board, (iii) if the Common Stock is not then listed
 or quoted for trading on the OTC Bulletin Board and if prices for the Common
 Stock are then reported in the “Pink Sheets” published by Pink OTC Markets,
 Inc. (or a similar organization or agency succeeding to its functions of
 reporting prices), the bid price per share of the Common Stock so reported,
 or (iv) in all other cases, the fair market value of a share of Common Stock
 as determined by an independent appraiser selected in good faith by the
 Registered Holder reasonably acceptable to the Company, the fees and expenses
 of which shall be paid by the Registered Holder.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           This
 Warrant is issued pursuant to that Securities Purchase Agreement, dated as of
 March 7, 2013, by and among the Company and the Initial Holder (the “Purchase
 Agreement”).

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           1.       Exercise.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (a)          Manner
of Exercise. This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase/exercise form
appended hereto as Exhibit A duly executed by such Registered Holder or by
such Registered Holder’s duly authorized attorney, at the principal office  

 	
  

 
	
  

 	
  

 	
  

 	
  

 



442307133 







    	1



    	 



    
 




	
  

 	
  

 	
  

 
	
  

 	
 of the Company, or at such other office or agency as the Company may
 designate in writing, accompanied by payment in full of the Purchase Price
 payable in respect of the number of shares of Warrant Shares purchased upon
 such exercise. The Purchase Price may be paid by cash, check, or wire
 transfer.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (b)          Effective
 Time of Exercise. Each exercise of this Warrant shall be deemed to have
 been effected immediately prior to the close of business on the day on which
 this Warrant shall have been surrendered to the Company as provided in
 Section 1(a) above. At such time, the person or persons in whose name or
 names any certificates for Warrant Shares shall be issuable upon such
 exercise as provided in Section 1(c) below shall be deemed to have become the
 holder or holders of record of the Warrant Shares represented by such
 certificates.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (c)          Delivery
 to Holder. As soon as practicable after the exercise of this Warrant, in
 whole or in part, and in any event within ten (10) days thereafter, the
 Company at its expense will cause to be issued in the name of, and delivered
 to, the Registered Holder, or as such Holder (upon payment by such Holder of
 any applicable transfer taxes) may direct:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                                   (i)          a
 certificate or certificates for the number of shares of Warrant Shares to
 which such Registered Holder shall be entitled, and

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                                   (ii)          in
 case such exercise is in part only, a new warrant or warrants (dated the date
 hereof) of like tenor, calling in the aggregate on the face or faces thereof
 for the number of shares of Warrant Shares equal (without giving effect to
 any adjustment therein) to the number of such shares called for on the face
 of this Warrant minus the number of such shares purchased by the Registered
 Holder upon such exercise as provided in Section 1(a) above.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (d)          Call
Right. Upon written request by the Company to the Registered Holder to
exercise the unexercised portion of this Warrant (the “Exercise Notice”) at
any time after forty five (45) days from the effectiveness of the
Registration Statement (as defined in the Purchase Agreement) and prior to the
Termination Date, the Registered Holder shall immediately exercise all of the
unexercised portion of this Warrant at the Exercise Price. In the event the
Registered Holder fails to exercise all of the unexercised portion of this
Warrant in full within three (3) business days of receipt of the Exercise
Notice, then in addition to any and all other legal remedies and rights the
Company may have, the Company has the option, in its sole discretion, to
provide written notice to the Registered Holder to assign and transfer this
Warrant to a third party for no consideration, and the Registered Holder
hereby agrees to execute such further documents and do any and all such
further things as may be necessary to implement, carry out and effectuate the
transfer and assignment of this Warrant to such third party. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           2.       Adjustments.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (a)          Stock
 Splits and Dividends. If outstanding shares of the Company’s Common Stock
 shall be subdivided into a greater number of shares or a dividend in Common
 Stock shall be paid in respect of Common Stock, then the Purchase Price in
 effect immediately prior to such subdivision or at the record date of such
 dividend shall simultaneously with the effectiveness of such subdivision or immediately
 after the record date of such dividend be proportionately reduced. If
 outstanding shares of Common Stock shall be combined into a smaller number of
 shares, then the Purchase Price in effect immediately prior to such
 combination shall, simultaneously with the effectiveness of such combination,
 be proportionately increased. When any adjustment is required to be made in
 the Purchase Price, the number of shares of Warrant Shares purchasable upon
 the exercise of this Warrant shall be changed to the number determined by
 dividing (i) an amount equal to the number of shares issuable upon the
 exercise of this Warrant immediately prior to such adjustment, multiplied by
 the Purchase Price in effect immediately prior to such adjustment, by (ii)
 the Purchase Price in effect immediately after such adjustment.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (b)          Reclassification.
 Etc. In case of any reclassification or change of the outstanding
 securities of the Company or of any reorganization of the Company (or any
 other corporation the stock or securities of which are at the time receivable
 upon the exercise of this Warrant) or any similar corporate reorganization on
 or after the date hereof, then and in each such case the Registered Holder,
 upon the exercise hereof at any time after the consummation of such
 reclassification, change, reorganization, merger or conveyance, shall be
 entitled to receive, in lieu of the stock or other securities and property
 receivable upon the exercise hereof prior to such consummation, the stock or
 other securities or property to which such holder would have been entitled
 upon such consummation if such 

 	
  

 
	
  

 	
  

 	
  

 



442307133 







    	2



    	 



    
 





	
  

 	
  

 	
  

 
	
  

 	
 holder had exercised this Warrant immediately prior thereto, all
 subject to further adjustment as provided in this Section 2; and in each such
 case, the terms of this Section 2 shall be applicable to the shares of stock
 or other securities properly receivable upon the exercise of this Warrant
 after such consummation.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (c)          Adjustment
 Certificate. When any adjustment is required to be made in the Warrant
 Shares or the Purchase Price pursuant to this Section 2, the Company shall
 promptly mail to the Registered Holder a certificate setting forth (i) a
 brief statement of the facts requiring such adjustment, (ii) the Purchase
 Price after such adjustment and (iii) the kind and amount of stock or other
 securities or property into which this Warrant shall be exercisable after
 such adjustment.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           3.       Transfers.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (a)          Unregistered
Security. This Warrant and the Warrant Shares have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and may
not be sold, pledged, distributed, offered for sale, transferred or otherwise
disposed of in the absence of (i) an effective registration statement under
the Securities Act as to this Warrant or such Warrant Shares and registration
or qualification of this Warrant or such Warrant Shares under any applicable
U.S. federal or state securities law then in effect, or (ii) an opinion of
counsel, reasonably satisfactory to the Company, that such registration or
qualification is not required. Each certificate or other instrument for
Warrant Shares issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (b)          Transferability.
Subject to the provisions of Section 3(a) hereof and subject to the Company’s
approval, this Warrant and all rights hereunder are transferable, in whole or
in part, upon surrender of the Warrant with a properly executed assignment
(in the form of Exhibit B hereto) at the principal office of the Company.  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (c)          Warrant
Register. The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Until any transfer of
this Warrant is made in the warrant register, the Company may treat the
Registered Holder as the absolute owner hereof for all purposes; provided,
however, that if this Warrant is properly assigned in blank, the Company may
(but shall not be required to) treat the bearer hereof as the absolute owner
hereof for all purposes, notwithstanding any notice to the contrary. Any
Registered Holder may change such Registered Holder’s address as shown on the
warrant register by written notice to the Company requesting such change.  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           4.       No
 Impairment. The Company will not, by amendment of its charter or through
 reorganization, consolidation, merger, dissolution, sale of assets or any
 other voluntary action, avoid or seek to avoid the observance or performance
 of any of the terms of this Warrant, but will (subject to Section 11 below)
 at all times in good faith assist in the carrying out of all such terms and
 in the taking of all such action as may be necessary or appropriate in order
 to protect the rights of the Registered Holder against impairment.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           5.       Termination.
This Warrant (and the right to purchase securities upon exercise hereof)
shall terminate eighteen (18) months from the date of issuance of this
Warrant (the “Expiration Date”). 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           6.       Notices
 of Certain Transactions. In the event:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (a)          the
 Company shall take a record of the holders of its Common Stock (or other
 stock or securities at the time deliverable upon the exercise of this
 Warrant) for the purpose of entitling or enabling them to receive any
 dividend or other distribution, or to receive any right to subscribe for or
 purchase any shares of stock of any class or any other securities, or to
 receive any other right, to subscribe for or purchase any shares of stock of
 any class or any other securities, or to receive any other right, or

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (b)          of
 any capital reorganization of the Company, any reclassification of the
 capital stock of the Company, or any consolidation or merger of the Company
 with or into another corporation, or

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                     (c)          of
 the voluntary or involuntary dissolution, liquidation or winding-up of the
 Company, 

 	
  

 
	
  

 	
  

 	
  

 



442307133 







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 then, and in each such case, the Company will mail or cause to be
 mailed to the Registered Holder a notice specifying, as the case may be, (i)
 the date on which a record is to be taken for the purpose of such dividend,
 distribution or right, and stating the amount and character of such dividend,
 distribution or right, or (ii) the effective date on which such
 reclassification, reorganization, consolidation, merger, dissolution,
 liquidation or winding-up is to take place, and the time, if any is to be
 fixed, as of which the holders of record of Warrant Shares shall be entitled
 to exchange their shares of Warrant Shares (or such other stock or
 securities) for securities or other property deliverable upon such
 reclassification, reorganization, consolidation, merger, dissolution,
 liquidation or winding-up. Such notice shall be mailed at least ten (10) days
 prior to the record date or effective date for the event specified in such
 notice.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           7.          Reservation
 of Stock. The Company will at all times reserve and keep available out of
 its authorized but unissued stock, solely for the issuance and delivery upon
 the exercise of this Warrant and other similar Warrants, such number of its
 duly authorized shares of Common Stock as from time to time shall be issuable
 upon the exercise of this Warrant and other similar Warrants. All of the
 shares of Common Stock issuable upon exercise of this Warrant and other similar
 Warrants, when issued and delivered in accordance with the terms hereof and
 thereof, will be duly authorized, validly issued, fully paid and
 non-assessable, subject to no lien or other encumbrance other than
 restrictions on transfer arising under applicable securities laws and
 restrictions imposed by Section 3 hereof.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           8.          Exchange
 of Warrants. Upon the surrender by the Registered Holder of any Warrant
 or Warrants, properly endorsed, to the Company at the principal office of the
 Company, the Company will, subject to the provisions of Section 3 hereof,
 issue and deliver to or upon the order of such Holder, at the Company’s
 expense, a new Warrant or Warrants of like tenor, in the name of such
 Registered Holder or as such Registered Holder (upon payment by such
 Registered Holder of any applicable transfer taxes) may direct, calling in
 the aggregate on the face or faces thereof for the number of shares of Common
 Stock called for on the face or faces of the Warrant or Warrants so surrendered.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           9.          Replacement
 of Warrants. Upon receipt of evidence reasonably satisfactory to the
 Company of the loss, theft, destruction or mutilation of this Warrant and (in
 the case of loss, theft or destruction) upon delivery of an indemnity
 agreement (with surety if reasonably required) in an amount reasonably
 satisfactory to the Company, or (in the case of mutilation) upon surrender
 and cancellation of this Warrant, the Company will issue, in lieu thereof, a
 new Warrant of like tenor.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           10.        Notices.
 Any notice required or permitted by this Warrant shall be in writing and
 shall be deemed sufficient upon receipt, when delivered personally or by
 courier, overnight delivery service or confirmed facsimile, or forty-eight
 (48) hours after being deposited in the regular mail as certified or
 registered mail (airmail if sent internationally) with postage prepaid,
 addressed (a) if to the Registered Holder, to the address of the Registered
 Holder most recently furnished in writing to the Company and (b) if to the
 Company, to the address set forth below or subsequently modified by written
 notice to the Registered Holder.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           11.        No
 Rights as Stockholder. Until the exercise of this Warrant, the Registered
 Holder shall not have or exercise any rights by virtue hereof as a
 stockholder of the Company.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           12.        Representations
 of Registered Holder. By acceptance of this Warrant, the Registered
 Holder hereby represents and acknowledges to the Company that:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                        (a)          this
Warrant and the Warrant Shares are “restricted securities” as such term is
used in the rules and regulations under the Securities Act and that such
securities have not been and will not be registered under the Securities Act
or any state securities law, and that such securities must be held
indefinitely unless registration is effected or transfer can be made pursuant
to appropriate exemptions; 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                        (b)          the
 Registered Holder has read, and fully understands, the terms of this Warrant
 set forth on its face and the attachments hereto, including the restrictions
 on transfer contained herein;

 	
  

 
	
  

 	
  

 	
  

 



442307133 






    	4



    	 



    
 





	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
                       (c)          the
 Registered Holder is purchasing for investment for its own account and not
 with a view to or for sale in connection with any distribution of this
 Warrant and the Warrant Shares and it has no intention of selling such
 securities in a public distribution in violation of the federal securities
 laws or any applicable state securities laws; provided that nothing contained
 herein will prevent the Registered Holder from transferring such securities
 in compliance with the terms of this Warrant and the applicable federal and
 state securities laws; and

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
                       (d)          the
 Company may affix one or more legends, including a legend in substantially
 the following form (in addition to any other legend(s), if any, required by
 applicable state corporate and/or securities laws) to certificates representing
 Warrant Shares:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  “THE SECURITIES REPRESENTED HEREBY HAVE NOT
 BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
 UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
 RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD,
 TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS PERMITTED UNDER THE ACT AND
 APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION
 THEREFROM AND THE ISSUER OF THESE SECURITIES HAS BEEN PROVIDED WITH AN
 OPINION OF LEGAL COUNSEL TO THE HOLDER IN FORM AND SUBSTANCE SATISFACTORY TO
 THE ISSUER OF THESE SECURITIES TO THE EFFECT THAT SUCH OFFER, SALE, TRANSFER,
 PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS.”

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           13.        No
 Fractional Shares. No fractional shares will be issued in connection with
 any exercise hereunder. In lieu of any fractional shares which would
 otherwise be issuable, the Company shall pay cash equal to the product of
 such fraction multiplied by the fair market value of one such share on the
 date of exercise, as determined in good faith by the Company’s Board of
 Directors.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           14.        Amendment
 or Waiver. Any term of this Warrant may be amended or waived upon written
 consent of the Company and the Registered Holder.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           15.        Headings.
 The headings in this Warrant are for purposes of reference only and shall not
 limit or otherwise affect the meaning of any provision of this Warrant.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           16.        Governing
 Law. This Warrant shall be governed, construed and interpreted in
 accordance with the laws of the State of Nevada, without giving effect to
 principles of conflicts of law.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 [Remainder of Page Intentionally Left Blank]

 	
  

 
	
  

 	
  

 	
  

 



442307133 







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          IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
delivered by its authorized officer as of the
date first above written.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ECHO AUTOMOTIVE, INC., a Nevada corporation

 
	
  

 	
  

 
	
  

 	
 Signed:

 	
 

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
 Patrick van
 den Bossche

 
	
  

 	
  

 	 

 
	
  

 	
 Title:

 	
 COO,
 Managing Director

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
  

 
	
  

 	
 Address:

 	
 15029 N.
 74th Street
Scottsdale, AZ 85260

 
	
  

 	
  

 	
  

 
	
  

 	
 Phone No.: 

 	
 (855)324-7288

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 INITIAL HOLDER:

 	
  

 	
  

 
	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By: 

 	 	
  

 	
  

 
	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Print Name:

 	
  

 	
  

 	
  

 
	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title:

 	
  

 	
  

 
	
  

 	 

 	
  

 


 [SIGNATURE PAGE TO ECHO AUTOMOTIVE, INC.
WARRANT]



442307133







     


	



    	 



    
 





	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXHIBIT A

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 PURCHASE/EXERCISE FORM

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 To:     ECHO AUTOMOTIVE, INC.

 	
 Dated:______________

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           The
 undersigned, pursuant to the provisions set forth in the attached Warrant No.____hereby irrevocably elects to purchase_______shares of the Common
 Stock covered by such Warrant and herewith makes payment of $_________,
 representing the full purchase price for such shares at the price per share
 provided for in such Warrant.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           The
 undersigned acknowledges that it has reviewed the representations and
 warranties contained in Section 12 of the Warrant and by its signature below
 hereby makes such representations and warranties to the Company as of the
 date hereof.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           The
 undersigned further acknowledges that it has reviewed that certain Securities
 Purchase Agreement, dated as of_________, 2013, among the Company and certain
 holders of the Company’s securities (as amended from time to time) and agrees
 to be bound by such provisions.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Signature:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Name (print): 

 	
  

 	
  

 
	
  

 	
  

 	
  

 	 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Title (if applic.)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Company (if
 applic.):

 	
  

 	
  

 
	
  

 	
  

 	
  

 	 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 




442307133






     


	



    	 



    
 



	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 EXHIBIT B

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 ASSIGNMENT FORM

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           FOR VALUE
 RECEIVED,____________________________________________________________hereby
 sells, assigns and transfers all of the rights of the undersigned under the
 attached Warrant with respect to the number of shares of Common Stock covered
 thereby set forth below, to:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name of Assignee

 	
  

 	
 Address/Fax Number

 	
  

 	
 No. of Shares

 	
  

 
	
  

 	 

 	
  

 	 

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Dated:

 	
  

 	
  

 	
 Signature:

 	
  

 	
  

 
	
  

 	
  

 	 

 	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Witness:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 




442307133