SECURITY AGREEMENT

 

This SECURITY AGREEMENT, entered into on December 2, 2015, as of October 12,
2015 (this “Agreement”), is among Saleen Automotive, Inc., a Nevada corporation
(the “Company”), all of the Subsidiaries of the Company (such Subsidiaries, the
“Guarantors”, and together with the Company, the “Debtors”), and SM Funding
Group, Inc., a Delaware corporation (the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Securities Purchase Agreement dated on or
about the date hereof between the Company and the Secured Party (the “Purchase
Agreement”), the Secured Party has agreed to extend loans to the Company
evidenced by the Company’s 12.0% Senior Secured Convertible Note (the “Note”);

 

WHEREAS, pursuant to that certain Subsidiary Guarantee, dated as of the date
hereof (“Guarantee”), the Guarantors have jointly and severally agreed to
guarantee and act as surety for payment of such Note;

 

WHEREAS, the Company’s obligations under the Note are senior to other
obligations of the Company pursuant to that certain Subordination Agreement,
dated October 21, 2015, among W-Net Fund I, L.P., other holders of Company’s
secured debt, the Company and the Secured Party; and

 

WHEREAS, in order to induce the Secured Party to extend the loans evidenced by
the Note, each Debtor has agreed to execute and deliver to the Secured Party
this Agreement and to grant the Secured Party a security interest in certain
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company’s obligations under the Note and other Transaction
Documents and the Guarantors’ obligations under the Guarantee.

 

NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Certain Definitions. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1. Terms used but not otherwise
defined in this Agreement that are defined in Article 9 of the UCC (such as
“account”, “chattel paper”, “commercial tort claim”, “deposit account”,
“document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.

 

(a) “Collateral” means the collateral in which the Secured Party are granted a
security interest by this Agreement and which shall include the following
personal property of the Debtors, whether presently owned or existing or
hereafter acquired or coming into existence, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property
at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Securities (as
defined below):

 

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(i) All goods, including without limitation (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor’s businesses and all improvements thereto; and (B)
all inventory;

 

(ii) All contract rights and other general intangibles, including without
limitation, all partnership interests, membership interests, stock or other
securities, rights under any of the Organizational Documents, agreements related
to the Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by
any Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, and income tax refunds;

 

(iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;

 

(iv) All documents, letter-of-credit rights, instruments and chattel paper;

 

(v) All commercial tort claims;

 

(vi) All deposit accounts and all cash (whether or not deposited in such deposit
accounts);

 

(vii) All investment property;

 

(viii) All supporting obligations;

 

(ix) All files, records, books of account, business papers, and computer
programs, including without limitation and all files, records, books, ledger
cards, correspondence, computer programs, tapes, disks, digital storage media
and related data processing software that at any time evidence or contain
information relating to any of the Collateral set forth in clauses (i)-(viii)
above or are otherwise necessary or helpful in the collection thereof or
realization thereupon; and

 

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(x) the products, profits and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(ix) above, and all payments under insurance (whether or
not the Secured Party is the loss payee thereof) or under any indemnity,
warranty or guaranty, payable by reason or loss or damage to, or otherwise with
respect to, any of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

Without limiting the generality of the foregoing, the “Collateral” shall include
all investment property and general intangibles respecting ownership and/or
other equity interests in each Guarantor, including, without limitation, the
shares of capital stock and the other equity interests listed on Schedule E
hereto (as the same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other equity interests of
any other direct or indirect subsidiary of any Debtor obtained in the future,
and, in each case, all certificates representing such shares and/or equity
interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable or
distributed in respect of, or exchanged for, any of the foregoing and all rights
arising under or in connection with the Pledged Securities, including, but not
limited to, all dividends, interest and cash.

 

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited
by applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.

 

(b) “Intellectual Property” means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including without limitation all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

 

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(c) “Obligations” means all of the liabilities and obligations (primary,
secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing to, of any
Debtor to the Secured Party either under this Agreement, the Note, the
Guarantee, the other Transaction Documents and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or
therewith, whether now or hereafter existing, voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from any of the
Secured Party as a preference, fraudulent transfer or otherwise as such
obligations may be amended, supplemented, converted, extended or modified from
time to time. Without limiting the generality of the foregoing, the term
“Obligations” shall include, without limitation: (i) principal of and interest
on the Note and the loans extended pursuant thereto; (ii) any and all other
fees, indemnities, costs, obligations and liabilities of the Debtors from time
to time under or in connection with this Agreement, the Note, the Guarantee, the
other Transaction Documents and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith; and
(iii) all amounts (including but not limited to post-petition interest) in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving any
Debtor.

 

(d) “Organizational Documents” means with respect to any Debtor, the documents
by which such Debtor was organized (such as articles of incorporation,
certificate of limited partnership or articles of organization, and including,
without limitation, any certificates of designation for preferred stock or other
forms of preferred equity) and which relate to the internal governance of such
Debtor (such as bylaws, a partnership agreement or an operating, limited
liability or members agreement).

 

(e) “Pledged Securities” shall have the meaning ascribed to such term in Section
3(f).

 

(f) “Transaction Documents” shall have the meaning ascribed to such term in the
Purchase Agreement.

 

(g) “UCC” means the Uniform Commercial Code of the State of California and/or
any other applicable law of any state or states which has jurisdiction with
respect to all, or any portion of, the Collateral or this Agreement from time to
time. It is the intent of the parties that defined terms in the UCC should be
construed in their broadest sense so that the term “Collateral” will be
construed in its broadest sense. Accordingly if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.

 

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2. Grant of Security Interest in Collateral. As an inducement for the Secured
Party to extend the loans as evidenced by the Note and to secure the complete
and timely payment, performance and discharge in full, as the case may be, of
all of the Obligations, each Debtor hereby unconditionally and irrevocably
pledges, grants and hypothecates to the Secured Party, subject to Permitted
Liens (as defined in the Note), a security interest in and to, a lien upon and a
right of set-off against all of their respective right, title and interest of
whatsoever kind and nature in and to, the Collateral (a “Security Interest” and,
collectively, the “Security Interests”).

 

3. Representations, Warranties, Covenants and Agreements of the Debtors. Except
as set forth in disclosure schedules delivered to the Secured Party concurrently
herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be
deemed a part hereof, each Debtor represents and warrants to, and covenants and
agrees with, the Secured Party as follows:

 

(a) Each Debtor has the requisite corporate, partnership, limited liability
company or other power and authority to enter into this Agreement and otherwise
to carry out its obligations hereunder. The execution, delivery and performance
by each Debtor of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of such Debtor and no
further action is required by such Debtor. This Agreement has been duly executed
by each Debtor. This Agreement constitutes the legal, valid and binding
obligation of each Debtor, enforceable against each Debtor in accordance with
its terms.

 

(b) The Debtors have no place of business or offices where their respective
books of account and records are kept (other than temporarily at the offices of
its attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule A attached hereto.

 

(c) Each Debtor shall at all times maintain its books of account and records
relating to the Collateral at its principal place of business and its Collateral
at the locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless it delivers to
the Secured Party at least 30 days prior to such relocation (i) written notice
of such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that appropriate financing statements under the UCC
and other necessary documents have been filed and recorded and other steps have
been taken to perfect the Security Interests to create in favor of the Secured
Party a valid, perfected and continuing second priority lien in all the
Collateral.

 

(d) This Agreement creates in favor of the Secured Party a valid security
interest in the Collateral securing the payment and performance of the
Obligations. Upon making the filings described in the immediately following
paragraph, all security interests created hereunder in any Collateral which may
be perfected by filing Uniform Commercial Code financing statements shall have
been duly perfected. Except for the execution and delivery of this Agreement,
the filing of the Uniform Commercial Code financing statements referred to in
the immediately following paragraph, the recordation of the Intellectual
Property Security Agreement (as defined below) with the United States Copyright
Office or the United States Patent and Trademark Office with respect to
copyrights, patents and trademarks (and applications relating each of the
foregoing) as described in paragraph 4(jj), the execution and delivery of
deposit account control agreements satisfying the requirements of Section
9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, no
further action is necessary to create or perfect the security interests created
hereunder under the UCC.

 

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(e) Each Debtor hereby authorizes the Secured Party to file one or more
financing statements under the UCC, with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by
it.

 

(f) The capital stock and other equity interests listed on Schedule E hereto
(the “Pledged Securities”) represent all of the capital stock and other equity
interests of the Guarantors, and represent all capital stock and other equity
interests owned, directly or indirectly, by the Company. All of the Pledged
Securities are validly issued, fully paid and nonassessable, and the Company is
the legal and beneficial owner of the Pledged Securities, free and clear of any
lien, security interest or other encumbrance except for the security interests
created by this Agreement and other Permitted Liens.

 

(g) Until this Agreement and the Security Interest hereunder shall be terminated
pursuant to Section 13 hereof, each Debtor shall at all times maintain in favor
of the Secured Party the liens and Security Interests provided for hereunder as
valid and perfected liens and security interests in all the Collateral. Each
Debtor hereby agrees to defend the same against the claims of any and all
persons and entities (other than holders of Permitted Liens). Each Debtor shall
safeguard and protect all Collateral for the account of the Secured Party. At
the request of the Secured Party, each Debtor will sign and deliver to the
Secured Party on behalf of the Secured Party at any time or from time to time
one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Party.

 

(h) No Debtor will transfer, pledge, hypothecate, encumber, license, sell or
otherwise dispose of any of the Collateral (except for licenses granted by a
Debtor in its ordinary course of business and sales of inventory and other
unused or outdated assets by a Debtor in its ordinary course of business)
without the prior written consent of the Secured Party.

 

(i) Each Debtor shall keep and preserve its equipment, inventory and other
tangible Collateral in good condition, repair and order and shall not operate or
locate any such Collateral (or cause to be operated or located) in any area
excluded from insurance coverage.

 

(j) Each Debtor shall promptly, but no later than ten (10) days after obtaining
knowledge thereof, advise the Secured Party, through the Secured Party, in
sufficient detail of any change in the Collateral and of the occurrence of any
event which would have a material adverse effect on the value of the Collateral
or on the Secured Party’s security interest therein.

 

(k) Each Debtor shall promptly execute and deliver to the Secured Party such
further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such
further action as the Secured Party may from time to time reasonably request and
may in its discretion deem necessary to perfect, protect or enforce the Secured
Party’s security interest in the Collateral including, without limitation, if
applicable, the execution and delivery of a separate security agreement with
respect to each Debtor’s Intellectual Property (“Intellectual Property Security
Agreement”) in which the Secured Party has been granted a security interest
hereunder, substantially in a form reasonably acceptable to the Secured Party,
which Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions hereof.

 

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(l) Each Debtor shall permit the Secured Party and its representatives and
agents to inspect the Collateral during normal business hours and upon
reasonable prior notice, and to make copies of records pertaining to the
Collateral as may be reasonably requested by the Secured Party from time to
time.

 

(m) Each Debtor shall take all steps reasonably necessary to diligently pursue
and seek to preserve, enforce and collect any rights, claims, causes of action
and accounts receivable in respect of the Collateral.

 

(n) Each Debtor shall promptly notify the Secured Party in sufficient detail
upon becoming aware of any attachment, garnishment, execution or other legal
process levied against any Collateral and of any other information received by
such Debtor that may materially affect the value of the Collateral, the Security
Interests or the rights and remedies of the Secured Party hereunder.

 

(o) All information heretofore, herein or hereafter supplied to the Secured
Party by or on behalf of any Debtor with respect to the Collateral is and will
be accurate and complete in all material respects as of the date furnished.

 

(p) The Debtors shall at all times preserve and keep in full force and effect
their respective valid existence and good standing and any rights and franchises
material to its business.

 

(q) No Debtor will change its name, type of organization, jurisdiction of
organization, organizational identification number (if it has one), legal or
corporate structure, or identity, or add any new fictitious name unless it
provides at least thirty (30) days prior written notice to the Secured Party of
such change and, at the time of such written notification, such Debtor provides
any financing statements or fixture filings necessary to perfect and continue
the perfection of the Security Interests granted and evidenced by this
Agreement.

 

(r) Except in the ordinary course of business, no Debtor may consign any of its
inventory or sell any of its inventory on bill and hold, sale or return, sale on
approval, or other conditional terms of sale without the consent of the Secured
Party which shall not be unreasonably withheld.

 

(s) No Debtor may relocate its chief executive office to a new location without
providing thirty (30) days’ prior written notification thereof to the Secured
Party and so long as, at the time of such written notification, such Debtor
provides any financing statements or fixture filings necessary to perfect and
continue the perfection of the Security Interests granted and evidenced by this
Agreement.

 

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(t) Each Debtor was organized and remains organized solely under the laws of the
state set forth next to such Debtor’s name in Schedule B attached hereto.

 

(u) (i) The actual name of each Debtor is the name set forth in Schedule B
attached hereto; (ii) no Debtor has any trade names except as set forth on
Schedule C attached hereto; (iii) no Debtor has used any name other than that
stated in the preamble hereto or as set forth on Schedule C for the preceding
five (5) years; and (iv) no entity has merged into any Debtor or been acquired
by any Debtor within the past five (5) years except as set forth on Schedule C.

 

(v) Each Debtor, in its capacity as issuer, hereby agrees to comply with any and
all orders and instructions of the Secured Party regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any
Debtor as contemplated by Section 8-106 (or any successor section) of the UCC.
Further, each Debtor agrees that it shall not enter into a similar agreement (or
one that would confer “control” within the meaning of Article 8 of the UCC) with
any other person or entity.

 

(w) Each Debtor shall cause all tangible chattel paper constituting Collateral
to be delivered to the Secured Party, or, if such delivery is not possible, then
to cause such tangible chattel paper to contain a legend noting that it is
subject to the security interest created by this Agreement. To the extent that
any Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning of Section
9-105 of the UCC (or successor section thereto).

 

(x) If there is any investment property or deposit account included as
Collateral that can be perfected by “control” through an account control
agreement, the applicable Debtor shall, promptly upon written request of the
Secured Party following the occurrence of an Event of Default, cause such an
account control agreement, in form and substance in each case satisfactory to
the Secured Party, to be entered into and delivered to the Secured Party for the
benefit of the Secured Party.

 

(y) To the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall, promptly upon written request of the Secured Party
following the occurrence of an Event of Default, cause the issuer of each
underlying letter of credit to consent to an assignment of the proceeds thereof
to the Secured Party.

 

(z) To the extent that any Collateral is in the possession of any third party,
the applicable Debtor shall join with the Secured Party in notifying such third
party of the Secured Party’s security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance reasonably
satisfactory to the Secured Party.

 

(aa) If any Debtor shall at any time hold or acquire a commercial tort claim,
such Debtor shall promptly notify the Secured Party in a writing signed by such
Debtor of the particulars thereof and grant to the Secured Party in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Secured Party.

 

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(bb) Each Debtor shall immediately provide written notice to the Secured Party
of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected
status of the Security Interests in such accounts and proceeds thereof, shall
execute and deliver to the Secured Party an assignment of claims for such
accounts and cooperate with the Secured Party in taking any other steps
required, in its judgment, under the Federal Assignment of Claims Act or any
similar federal, state or local statute or rule to perfect or continue the
perfected status of the Security Interests in such accounts and proceeds
thereof.

 

(cc) Each Debtor shall cause each subsidiary of such Debtor to immediately
become a party hereto (an “Additional Debtor”), by executing and delivering an
Additional Debtor Joinder in substantially the form of Annex A attached hereto
and comply with the provisions hereof applicable to the Debtors. Concurrent
therewith, the Additional Debtor shall deliver replacement schedules for, or
supplements to all other Schedules to (or referred to in) this Agreement, as
applicable, which replacement schedules shall supersede, or supplements shall
modify, the Schedules then in effect. The Additional Debtor shall also deliver
such authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Party may reasonably request. Upon
delivery of the foregoing to the Secured Party, the Additional Debtor shall be
and become a party to this Agreement with the same rights and obligations as the
Debtors, for all purposes hereof as fully and to the same extent as if it were
an original signatory hereto and shall be deemed to have made the
representations, warranties and covenants set forth herein as of the date of
execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtors” shall be deemed to include each Additional Debtor.

 

(dd) Each Debtor shall vote the Pledged Securities to comply with the covenants
and agreements set forth herein and in the Note.

 

(ee) In the event that, upon an occurrence of an Event of Default, the Secured
Party shall sell all or any of the Pledged Securities to another party or
parties (herein called the “Transferee”) or shall purchase or retain all or any
of the Pledged Securities, each Debtor shall, to the extent applicable: (i)
deliver to the Secured Party or the Transferee, as the case may be, the articles
of incorporation, bylaws, minute books, stock certificate books, corporate
seals, deeds, leases, indentures, agreements, evidences of indebtedness, books
of account, financial records and all other Organizational Documents and records
of the Debtors and their direct and indirect subsidiaries; (ii) use commercially
reasonable efforts to obtain resignations of the persons then serving as
officers and directors of the Debtors and their direct and indirect
subsidiaries, if so requested; and (iii) use its best efforts to obtain any
approvals that are required by any governmental or regulatory body in order to
permit the sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by the Secured Party and allow the
Transferee or the Secured Party to continue the business of the Debtors and
their direct and indirect subsidiaries.

 

(ff) Without limiting the generality of the other obligations of the Debtors
hereunder, each Debtor shall promptly (i) cause to be registered at the United
States Copyright Office all of its material copyrights, (ii) cause the security
interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and
Trademark Office to be duly recorded at the applicable office, and (iii) give
the Secured Party notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.

 

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(gg) Each Debtor will from time to time, at the joint and several expense of the
Debtors, promptly execute and deliver all such further instruments and
documents, and take all such further action as may be necessary or desirable, or
as the Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce their rights and remedies hereunder and
with respect to any Collateral or to otherwise carry out the purposes of this
Agreement.

 

(hh) Schedule D attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names
owned by any of the Debtors as of the date hereof. Schedule D lists all material
licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof. All material patents and
trademarks of the Debtors have been duly recorded at the United States Patent
and Trademark Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.

 

(ii) No Debtor other than the Company will issue (i) any additional shares of
any class of capital stock or other equity interests; or (ii) any securities
convertible either voluntarily by the holder thereof or automatically upon the
occurrence or nonoccurrence of any event or condition into, or any securities
exchangeable for, any such shares, unless, in either case, such shares are
pledged to the Secured Party as Collateral pursuant to this Agreement.

 

(jj) Promptly following the execution of this Agreement, each Debtor shall
deliver or cause to be delivered to the Secured Party any and all certificates
and other instruments representing or evidencing the Pledged Securities,
together with undated stock powers endorsed in blank.

 

4. Effect of Pledge on Certain Rights. If any of the Collateral subject to this
Agreement consists of nonvoting equity or ownership interests (regardless of
class, designation, preference or rights) that may be converted into voting
equity or ownership interests upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of the Secured
Party’s rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.

 

5. Defaults. The following events shall be “Events of Default”:

 

(a) The occurrence of an Event of Default (as defined in the Note) under the
Note;

 

(b) Any representation or warranty of any Debtor in this Agreement shall prove
to have been incorrect in any material respect when made;

 

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(c) The failure by any Debtor to observe or perform any of its obligations
hereunder for five (5) business days after delivery to such Debtor of notice of
such failure by or on behalf of a Secured Party unless such default is capable
of cure but cannot be cured within such time frame and such Debtor is using best
efforts to cure same in a timely fashion; or

 

(d) If any material provision of this Agreement shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or
by any governmental authority having jurisdiction over any Debtor, seeking to
establish the invalidity or unenforceability thereof, or any Debtor shall deny
that any Debtor has any material liability or obligation purported to be created
under this Agreement.

 

6. Duty to Hold in Trust.

 

(a) Upon the occurrence and continuation of any Event of Default, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interests, whether payable pursuant to the Note or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for the
Secured Party and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Party, pro-rata in proportion to their
respective then-currently outstanding principal amount of Note for application
to the satisfaction of the Obligations.

 

(b) If any Debtor shall become entitled to receive or shall receive any
securities or other property (including, without limitation, shares of Pledged
Securities or instruments representing Pledged Securities acquired after the
date hereof, or any options, warrants, rights or other similar property or
certificates representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Party; and (ii) hold the same in trust on behalf of and for the benefit
of the Secured Party.

 

7. Rights and Remedies Upon Default.

 

(a) Upon the occurrence of any Event of Default and at any time thereafter, the
Secured Party shall have the right to exercise all of the remedies conferred
hereunder and under the Note and other Transaction Documents, and the Secured
Party shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Party shall have the following rights and
powers:

 

(i) The Secured Party shall have the right to take possession of the Collateral
and, for that purpose, enter, with the aid and assistance of any person, any
premises where the Collateral, or any part thereof, is or may be placed and
remove the same, and each Debtor shall assemble the Collateral and make it
available to the Secured Party at places which the Secured Party shall
reasonably select, whether at such Debtor’s premises or elsewhere, and make
available to the Secured Party, without rent, all of such Debtor’s respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.

 

11

   

 

(ii) Upon notice to the Debtors by the Secured Party, all rights of each Debtor
to exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of each Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, the Secured Party shall have the right to receive any
interest, cash dividends or other payments on the Collateral and, at the option
of the Secured Party, to exercise in such Purchaser’s discretion all voting
rights pertaining thereto. Without limiting the generality of the foregoing, the
Secured Party shall have the right (but not the obligation) to exercise all
rights with respect to the Collateral as it were the sole and absolute owner
thereof, including without limitation to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.

 

(iii) The Secured Party shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of redemption of a
Debtor, which are hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of any Debtor, which are hereby waived and released.

 

(iv) The Secured Party shall have the right (but not the obligation) to notify
any account debtors and any obligors under instruments or accounts to make
payments directly to the Secured Party, on behalf of the Secured Party, and to
enforce the Debtors’ rights against such account debtors and obligors.

 

(v) The Secured Party may (but is not obligated to) direct any financial
intermediary or any other person or entity holding any investment property to
transfer the same to the Secured Party, on behalf of the Secured Party, or its
designee.

 

(vi) The Secured Party may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured
Party or any designee or any purchaser of any Collateral.

 

12

   

 

(b) The Secured Party shall comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. The
Secured Party may sell the Collateral without giving any warranties and may
specifically disclaim such warranties. If the Secured Party sells any of the
Collateral on credit, the Debtors will only be credited with payments actually
made by the purchaser. In addition, each Debtor waives any and all rights that
it may have to a judicial hearing in advance of the enforcement of any of the
Secured Party’s rights and remedies hereunder, including without limitation the
Secured Party’s right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights and remedies with respect thereto.

 

(c) For the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 7 or elsewhere provided by agreement or applicable
law, each Debtor hereby grants to the Secured Party an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such
Debtor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by such Debtor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.

 

8. Applications of Proceeds. The proceeds of any sale, lease or other
disposition of the Collateral shall be applied first, to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, and the
like (including without limitation any taxes, fees and other costs incurred in
connection therewith) of the Collateral, then to the reasonable attorneys’ fees
and expenses incurred by the Secured Party in enforcing the Secured Party’s
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, then to satisfaction of the Obligations, and then to the payment of
any other amounts required by applicable law. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party are legally entitled, the Debtors
will be liable for the deficiency, and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands
against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due solely to the gross negligence or willful
misconduct of the Secured Party as determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction.

 

9. Securities Law Provision. Each Debtor recognizes that the Secured Party may
be limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the
“Securities Laws”), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public and that the Secured Party has no obligation to delay the sale of
any Pledged Securities for the period of time necessary to register the Pledged
Securities for sale to the public under the Securities Laws. Each Debtor shall
cooperate with the Secured Party in its attempt to satisfy any requirements
under the Securities Laws applicable to the sale of the Pledged Securities by
the Secured Party.

 

13

   

 

10. Costs and Expenses. The Debtors will upon demand pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Party
may incur in connection with (a) the enforcement of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (c) the exercise or enforcement of
any of the rights of the Secured Party under the Note.

 

11. Responsibility for Collateral. The Debtors assume all liabilities and
responsibility in connection with all Collateral, and the Obligations shall in
no way be affected or diminished by reason of the loss, destruction, damage or
theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) the Secured Party does not have
(i) any duty (either before or after an Event of Default) to collect any amounts
in respect of the Collateral or to preserve any rights relating to the
Collateral, or (ii) any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by such Debtor thereunder. The Secured Party shall not have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Secured Party of any payment
relating to any of the Collateral, nor shall the Secured Party be obligated in
any manner to perform any of the obligations of any Debtor under or pursuant to
any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Party in respect of the Collateral or as
to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times.

 

12. Security Interests Absolute. All rights of the Secured Party and all
obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Note, any other Transaction Documents or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change
in the time, manner or place of payment or performance of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Note, any other Transaction Documents or any
other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or amendment
or waiver of or consent to departure from any other collateral for, or any
guarantee, or any other security, for all or any of the Obligations; (d) any
action by the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute
any legal or equitable defense available to a Debtor, or a discharge of all or
any part of the Security Interests granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including without
limitation the running of the statute of limitations or bankruptcy. Each Debtor
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any
transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Party, then, in any such event, each Debtor’s
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured Party to proceed against any other person or entity or to
apply any Collateral which the Secured Party may hold at any time, or to marshal
assets, or to pursue any other remedy. Each Debtor waives any defense arising by
reason of the application of the statute of limitations to any obligation
secured hereby.

 

14

   

 

13. Term of Agreement. This Agreement and the Security Interests shall
terminate, automatically and without any action on the part of the Secured Party
or Secured Party, on the date on which all payments under the Note have been
indefeasibly paid or otherwise discharged in full and all other Obligations have
been paid or discharged. The Secured Party shall, at Debtor’s request and
expense, take any and all action required to discharge any and all security
interests and release to Debtor any and all Collateral in the Secured Party’s
possession or control. The Secured Party hereby agrees that the Debtors shall
have the right, and the Debtors are hereby authorized, to take all necessary
action to cause the termination and release of all security interests granted
hereunder upon termination of this Agreement, including the filing of one or
more UCC termination statements or amendments relating to the Collateral.

 

14. Power of Attorney; Further Assurances.

 

(a) Each Debtor authorizes the Secured Party, and does hereby make, constitute
and appoint the Secured Party and its officers, agents, successors or assigns
with full power of substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Secured Party or such Debtor,
to, after the occurrence and during the continuance of an Event of Default, (i)
endorse any note, checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Secured Party;
(ii) sign and endorse any financing statement pursuant to the UCC or any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) demand, collect,
receive, compromise, settle and sue for monies due in respect of the Collateral;
(v) transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Secured Party,
and at the expense of the Debtors, at any time, or from time to time, execute
and deliver any and all documents and instruments and do all acts and things
which the Secured Party deems necessary to protect, preserve and realize upon
the Collateral and the Security Interests granted therein in order to effect the
intent of this Agreement, the Note and other Transaction Documents all as fully
and effectually as the Debtors might or could do; and each Debtor hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement. The designation set forth herein
shall be deemed to amend and supersede any inconsistent provision in the
Organizational Documents or other documents or agreements to which any Debtor is
subject or to which any Debtor is a party. Without limiting the generality of
the foregoing, after the occurrence and during the continuance of an Event of
Default, the Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any patents,
trademarks, copyrights or other Intellectual Property with the United States
Patent and Trademark Office and the United States Copyright Office.

 

15

   

 

(b) On a continuing basis, each Debtor will make, execute, acknowledge, deliver,
file and record, as the case may be, with the proper filing and recording
agencies in any jurisdiction, all such instruments, and take all such action as
may reasonably be deemed necessary or advisable, or as reasonably requested by
the Secured Party, to perfect the Security Interests granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Party the grant or perfection of a
perfected security interest in all the Collateral under the UCC.

 

(c) Each Debtor hereby irrevocably appoints the Secured Party as such Debtor’s
attorney-in-fact, with full authority in the place and instead of such Debtor
and in the name of such Debtor, from time to time in the Secured Party’s
discretion, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all
such actions taken by the Secured Party. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement.

 

15. Notices. All notices, requests, demands and other communications hereunder
shall be subject to the notice provision of the Purchase Agreement.

 

16. Other Security. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee, endorsement
or property of any other person, firm, corporation or other entity, then the
Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party’s rights and
remedies hereunder.

 

17. Miscellaneous.

 

(a) No course of dealing between the Debtors and the Secured Party, nor any
failure to exercise, nor any delay in exercising, on the part of the Secured
Party, any right, power or privilege hereunder or under the Note shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

 

(b) All of the rights and remedies of the Secured Party with respect to the
Collateral, whether established hereby or by the Note or by any other
agreements, instruments or documents or by law, shall be cumulative and may be
exercised singly or concurrently.

 

(c) This Agreement, together with the exhibits and schedules hereto, contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
this Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Debtors and the Secured
Party or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought.

 

16

   

 

(d) If any term, provision, covenant or restriction of this Agreement is held by
a court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

(e) No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.

 

(f) This Agreement shall be binding upon and inure to the benefit of the parties
and their successors and permitted assigns. The Company and the Guarantors may
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of each Secured Party (other than by merger). Any Secured
Party may assign any or all of its rights under this Agreement to any Person to
whom such Secured Party assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of this Agreement that apply to the “Secured
Party.”

 

(g) Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

 

(h) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of California, without regard
to the principles of conflicts of law thereof. Each Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Note (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the County of Los
Angeles. Each Debtor hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the County of Los Angeles for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court or that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If any party shall commence a proceeding to enforce any
provisions of this Agreement, then the prevailing party in such proceeding shall
be reimbursed by the other party for its reasonable attorney’s fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such proceeding.

 

17

   

 

(i) This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission or e-mail transmission, such
signature shall create a valid binding obligation of the party executing the
same (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature were the original thereof.

 

(j) All Debtors shall be jointly and severally be liable for the obligations of
each Debtor to the Secured Party hereunder.

 

(k) Nothing in this Agreement shall be construed to subject the Secured Party to
liability as a partner or member in or of any Debtor or any of its direct or
indirect subsidiaries, nor shall the Secured Party be deemed to have assumed any
obligations under any partnership agreement or limited liability company
agreement, as applicable, of any such Debtor or any of its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its
right to be substituted for such Debtor as a partner or member, as applicable,
pursuant hereto.

 

(l) To the extent that the grant of the security interest in the Collateral and
the enforcement of the terms hereof require the consent, approval or action of
any partner or member, as applicable, of any Debtor or any direct or indirect
subsidiary of any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.

 

18

   

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.

 

SALEEN AUTOMOTIVE, INC.,

a Nevada corporation

        By: /s/ Steve Saleen   Name: Steve Saleen   Title: Chief Executive
Officer        

SALEEN AUTOMOTIVE, INC.,

a Florida corporation

        By: /s/ Steve Saleen   Name: Steve Saleen   Title: Chief Executive
Officer          

SALEEN SIGNATURE CARS,

a California corporation

        By: /s/ Steve Saleen   Name: Steve Saleen   Title: Chief Executive
Officer        

SALEEN SALES CORPORATION,

a California corporation

        By: /s/ Steve Saleen   Name: Steve Saleen   Title: Chief Executive
Officer  

 

[SIGNATURE PAGE OF SECURED PARTY FOLLOWS]

 

 

   

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.

 

SECURED PARTY:       SM FUNDING GROUP, INC.         By: /s/ David Bergstein  
Name: David Bergstein   Title: CEO  

 

 

   

 

SCHEDULE A

 

Principal Place of Business of Debtors:

 

 

Locations Where Collateral is Located or Stored:

 

 

SCHEDULE B

Legal Names and Organizational Jurisdictions

 

Name Jurisdiction Address

 

 

SCHEDULE C

Names; Mergers and Acquisitions

 

 

SCHEDULE D

Intellectual Property

 

 

SCHEDULE E

 

 

   

 

ANNEX A

to

SECURITY AGREEMENT

 

FORM OF ADDITIONAL DEBTOR JOINDER

 

Security Agreement dated as of October 12, 2015 made by

Saleen Automotive, Inc.

and its subsidiaries party thereto from time to time, as Debtors

to and in favor of

the Secured Party identified therein (the “Security Agreement”)

 

Reference is made to the Security Agreement as defined above; capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in, or by reference in, the Security Agreement.

 

The undersigned hereby agrees that upon delivery of this Additional Debtor
Joinder to the Secured Party referred to above (or the Secured Party on their
behalf), the undersigned shall (a) be an Additional Debtor under the Security
Agreement, (b) have all the rights and obligations of the Debtors under the
Security Agreement as fully and to the same extent as if the undersigned was an
original signatory thereto, and (c) be deemed to have made the representations
and warranties set forth therein as of the date of execution and delivery of
this Additional Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY
INTEREST IN THE COLLATERAL OWNED BY IT AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET
FORTH THEREIN.

 

Attached hereto are supplemental and/or replacement Schedules to the Security
Agreement, as applicable. An executed copy of this Joinder shall be delivered to
the Secured Party (or the Secured Party on their behalf), and the Secured Party
may rely on the matters set forth herein on or after the date hereof. This
Joinder shall not be modified, amended or terminated without the prior written
consent of the Secured Party.

 

IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
the name and on behalf of the undersigned.

 

  [Name of Additional Debtor]         By:     Name:     Title:     Address:  
Dated: