SUBORDINATION
AGREEMENT


 


THIS
SUBORDINATION AGREEMENT (this “Subordination Agreement”), is entered into as of October    ,
2015, by and among W-Net Fund I L.P., and those other parties named on the signature pages hereto (collectively the “Subordinated
Creditors”); Saleen Automotive, Inc., a Nevada corporation (“Debtor”) and SM Funding Group, Inc.,
a Delaware corporation as senior lender (the “Senior Creditor”).


 


RECITALS


 


A.
Debtor and Senior Creditor will or have entered into a binding Letter of Intent dated as of the date hereof pursuant to which
Senior Creditor has loaned or caused to be loaned funds to Debtor; it is further contemplated that the Debtor will issue senior
convertible promissory notes and preferred shares (or similar securities) to Senior Creditor (collectively, the “Senior
Loans”).


 


B.
It is contemplated that Senior Loans of up to $2,000,000 in principal amount (“Maximum Principal Amount”) will
be made to the Debtor.


 


C.
Debtor is indebted to Subordinated Creditors in the principal amount shown on Schedule I (the “Subordinated Debt”).


 


D.
Senior Creditor requires that Subordinated Creditors and Debtor execute this Agreement as a condition to lending funds to the
Debtor constituting Senior Loans.


 


AGREEMENT


 


NOW,
THEREFORE, in order to induce Senior Creditor to loan funds to the Debtor which shall constitute Senior Loans, and for other good
and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows.


 


Section
1. Interpretation.


 


(a) Definitions.
Unless otherwise expressly provided in this Subordination Agreement, each term set forth in Schedule II, when used in
this Subordination Agreement, shall have the respective meaning given to that term in Schedule II or in the
provision of this Subordination Agreement referenced in Schedule II.


 


(b)
Headings. Headings in this Subordination Agreement are for convenience of reference only and are not part of the substance
hereof.


 


(c)
Plural Terms. All terms defined in this Subordination Agreement in the singular form shall have comparable meanings when
used in the plural form and vice versa.


 


(d)
Other Interpretive Provisions. References in this Subordination Agreement to any document, instrument or agreement (i)
shall include all exhibits, schedules and other attachments thereto, (ii) shall include documents, instruments or agreements issued
or executed in replacement thereof, and (iii) shall mean such document, instrument or agreement, or replacement or predecessor
thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “include”
and “including” and words of similar import when used in this Subordination Agreement shall not be construed to be
limiting or exclusive.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


Section
2. Subordination.


 


(a)
Priorities. Senior Creditor and Subordinated Creditors hereby agree that the Subordinated Debt and Subordinated Debt Payments
are and shall be subordinate to the Senior Debt and all required payments therein, to the extent and in the manner set forth herein,
notwithstanding any applicable law to the contrary and notwithstanding anything to the contrary contained in any loan agreement,
any Subordinated Debt Instrument or any other agreement to the contrary. All of the Senior Debt shall be deemed to have been made
or incurred in reliance upon this Subordination Agreement.


 


(b)
Restricted Actions. Except as otherwise expressly provided in Section 3, until all Senior Debt is indefeasibly paid
in full in cash or converted into securities of the Debtor, (i) Debtor will not make, permit or cause and Subordinated Creditors
will not accept, permit or cause any Subordinated Debt Payment; (ii) Subordinated Creditors will not demand payment on, accelerate
the maturity of, or bring any action for the payment of the Subordinated Debt; institute or join with others in instituting any
Debtor Relief Proceeding against Debtor; interfere with Senior Creditor’s Lien on the Collateral or take any other action
to collect the Subordinated Debt or enforce its rights in connection therewith (provided that Subordinated Creditors may file
a proof of claim in connection with a Debtor Relief Proceeding); and (iii) none of Debtor nor Subordinated Creditors will take
any other action prejudicial to or inconsistent with the priorities and other rights granted to Senior Creditor hereunder.


 


(c)
Turnover. Except for payments permitted to be made to Subordinated Creditors pursuant to Section 3 hereof, if any
cash, cash equivalents, securities or other property should be received by Subordinated Creditors (or by any other Person for
the benefit of Subordinated Creditors) as Subordinated Debt Payments, Subordinated Creditors shall immediately deliver (or cause
to be delivered) the same to Senior Creditor in the form in which received, together with any endorsement, assignment or other
writings necessary for Senior Creditor to realize the value thereof and to apply to the Senior Debt. Until such cash, cash equivalents,
securities and other property received by Subordinated Creditors are so delivered to Senior Creditor (except for payments permitted
to be made to Subordinated Creditors pursuant to Section 3 hereof), the same shall be held by Subordinated Creditors in
trust for the benefit of Senior Creditor and shall not be co-mingled with any other property of Subordinated Creditors.


 


(d)
Obligations of Debtor Unconditional. Subject to Sections 3 and 5 (v), nothing contained in this Subordination
Agreement is intended to or shall impair, as between Debtor and Subordinated Creditors, the obligation of Debtor to pay the Subordinated
Debt as and when due and payable in accordance with its terms, or is intended or shall affect the relative rights of Subordinated
Creditors and creditors of Debtor other than Senior Creditor.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


(e)
Filing Proof of Claim, Forgiveness of Debt. In connection with any Debtor Relief Proceeding, Senior Creditor shall have
the right to (i) file on behalf of Subordinated Creditors all claims or proofs of debt in respect of the Subordinated Debt in
the form required (provided, however, that if a Subordinated Creditor files a claim or proof of claim prior to ten (10) business
days before the expiration of the time, as provided by applicable statute, to file such claims or proofs of claim, then such Subordinated
Creditor shall have the right to file such claims and proofs of claim); (ii) demand, sue for, collect or receive the payments
and distributions in respect of any Subordinated Debt (provided, however, that if a Subordinated Creditors takes any such action
no later than ten (10) business days after Senior Creditor make a written request, instructing Subordinated Creditors to take
such action, then such Subordinated Creditor shall have the right to take any such actions); and (iii) file and prove all claims
therefor and to take all such other action in the name of Subordinated Creditors or otherwise as Senior Creditor may determine
to be necessary or appropriate for the enforcement of the provisions of this Section 2 (provided, however, that if a Subordinated
Creditor takes any such action no later than ten (10) business days after Senior Creditor make a written request, instructing
Subordinated Creditors to take such action, then such Subordinated Creditor shall have the right to take any such actions); (iv)
vote on behalf of each Subordinated Creditor in respect of the Subordinated Debt (provided, however, that if a Subordinated Creditor
shall vote in respect of its interested in the Subordinated Debt as determined and directed by Senior Creditor prior to ten (10)
business days before the expiration of the time to exercise its right to so vote, as provided by applicable statute or by the
applicable bankruptcy court, receiver or trustee, then such Subordinated Creditors shall have the right to so vote). In no event
shall Subordinated Creditors waive, forgive, or cancel any claim relating to the Subordinated Debt which Subordinated Creditors
may now or hereafter have against Debtor.


 


(f)
Legend. Each original Subordinated Debt Instrument, and any other instrument evidencing the Subordinated Debt or any portion
thereof, will be forthwith inscribed with a legend conspicuously indicating that payment thereon is subordinated to the claims
of Senior Creditor pursuant to the terms of this Subordination Agreement, and upon the request of the Senior Creditor, each Subordinated
Creditor will deliver copies of the Subordinated Debt Instruments in its possession to Senior Creditor. Any instrument evidencing
any of the Subordinated Debtor any portion thereof which is hereafter executed will, on the date thereof, be inscribed with the
aforesaid legend, and copies thereof will be delivered to Senior Creditor on the date of its execution or within five (5) business
days thereafter.


 


Section
3. Permitted Actions. Notwithstanding anything to the contrary set forth in any Subordinated Debt Instrument or otherwise
Debtor may pay, and Subordinated Creditors may receive, the Entire Subordinated Debt Instrument Balance, upon the sale of all
or substantially all of the assets or stock of Debtor, provided, however, that, no such amounts may be paid to Subordinated
Creditors unless Senior Creditor has been paid in full all of the Senior Debt prior to the payment to Subordinated Creditors of
the Entire Subordinated Debt Instrument Balance, or each of the following has occurred:


 


(a)
Senior Creditor has waived in writing its requirement that the Senior Debt be paid in full as a result of the occurrence of any
such event;


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


(b)
a recapitalization of Debtor has occurred in the amount of not less than the Entire Subordinated Debt Instrument Balance and upon
terms satisfactory to Senior Creditor;


 


(c)
no Debtor Relief Proceeding or Senior Debt Payment Default shall have commenced and be continuing as of the date of payment of
the Entire Subordinated Debt Instrument Balance;


 


(d)
no other default shall have been declared by Senior Creditor with respect to the Senior Debt in a written notice to Debtor (which
shall not have been waived in writing) as of the date of payment of the Entire Subordinated Debt Instrument Balance; and


 


(e)
ten (10) business days prior to such payment of the Entire Subordinated Debt Instrument Balance, Debtor shall have delivered to
Senior Creditor financial statements for Debtor as of the last day of the immediately preceding calendar month, in form and substance
satisfactory to Senior Creditor, together with a certification of the Chief Financial Officer of Debtor (which certification shall
be true and correct as of the date thereof), confirming each of the matters set forth in clauses (a), (b), (c) and (d) above.


 


Section
4. Representations and Warranties. Each Subordinated Creditorrepresents and warrants to Senior Creditor that (i) the
execution, delivery and performance by such Subordinated Creditor of this Subordination Agreement are within the power of such
Subordinated Creditor and have been duly authorized by all necessary actions on the part of such Subordinated Creditors (ii) this
Subordination Agreement has been duly executed and delivered by such Subordinated Creditor and constitutes a legal, valid and
binding obligation of such Subordinated Creditor, enforceable against such Subordinated Creditor in accordance with its terms;
(iii) the execution, delivery and performance of this Subordination Agreement do not violate any Requirement of Law; (iv) no consent,
approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including
the shareholders of any Person) is required in connection with the execution, delivery and performance of this Subordination Agreement
by such Subordinated Creditor, except such consents, approvals, orders, authorizations, registrations, declarations and filings
that are so required and which have been obtained and are in full force and effect; (v) the Subordinated Debt is owned by such
Subordinated Creditor, free and clear of any Liens, other than inchoate statutory Liens arising under law and not in respect of
overdue monetary obligations; (vi) the copies of the Subordinated Debt Instruments issued to such Subordinated Creditor attached
hereto as Exhibit A are true and complete copies thereof, and such Subordinated Debt Instruments have not been further
amended or supplemented; and (vii) no other Debt for borrowed money is payable by Debtor to Subordinated Creditors, with the exception
of the Debt evidenced by each Subordinated Debt Instrument issued by Debtor in favor of such Subordinated Creditor.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


Section
5. Covenants of Subordinated Creditors. Notwithstanding anything to the contrary herein, in any Subordinated Debt Instrument
or in any other agreement, until the Senior Debt is indefeasibly paid in full in cash or converted into securities of the Debtor,
each Subordinated Creditors hereby agrees (i) to perform all acts that may be reasonably necessary to maintain, preserve and protect
its rights in the Subordinated Debt and the value of such rights; (ii) to procure, execute and deliver to Senior Creditor all
endorsements, assignments and other writings necessary for Senior Creditor to realize the value of any property to which Senior
Creditor is entitled hereunder; (iii) not to surrender or lose possession of (other than to Senior Creditor), sell, encumber,
assign, grant or permit any Lien in (other than inchoate statutory Liens arising under law and not in respect of overdue monetary
obligations) or otherwise transfer to any Person (other than Senior Creditor) any rights of Subordinated Creditors in the Subordinated
Debt or any evidence thereof; (iv) to provide written notice to Senior Creditor of any Subordinated Debt Default; (v) to not amend
or consent to the amendment of the payment provisions of its Subordinated Debt Instruments; and (vi) that Subordinated Creditors
shall not claim any Lien upon any property or assets of Debtor as security for the Subordinated Debt.


 


Section
6. Authorized Actions. Subordinated Creditors authorize Senior Creditor in its discretion, without notice to Subordinated
Creditors, irrespective of any change (including any change in the financial condition of Debtor, Subordinated Creditors, any
guarantor or any other Person) or of any other event or circumstance, and without affecting or impairing in any way the obligations
of Subordinated Creditors or the rights of Senior Creditor hereunder, from time to time to (a) compromise, extend, accelerate
or otherwise change the time for payment or performance of, or otherwise change the terms of, the Senior Debt or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and hold Collateral or other security for the payment
or performance of the Senior Debt and exchange, enforce, waive or release any such Collateral or other security; (c) apply such
Collateral or other security and direct the order or manner of sale thereof; (d) purchase such Collateral or other security at
public or private sale; (e) otherwise exercise any right or remedy it may have against Debtor, any guarantor, any other Person
or any Collateral or other security, including the right to foreclose upon any Collateral by judicial or nonjudicial sale; (f)
settle, compromise with, release or substitute any one or more makers, endorsers or guarantors of the Senior Debt; or (g) assign
any or all of the Senior Debt, this Subordination Agreement, or any related documents, instruments or agreements in whole or in
part.


 


Section
7. Waiver. No right of Senior Creditor to enforce the subordination and other terms and conditions provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to act by Senior Creditor or by any non-compliance
by Debtor with the terms and provisions and covenants herein regardless of any knowledge thereof Senior Creditor may have or otherwise
be charged. Senior Creditor shall not be prejudiced in its right to enforce the subordination and other terms and conditions of
the Subordinated Debt, by any act or failure to act by Debtor or anyone in custody of its assets or property. Without limiting
the generality of the foregoing sentence of this Section 7, Subordinated Creditors waive (a) any right to require Senior
Creditor to (i) proceed against Debtor, any guarantor or any other Person, (ii) proceed against or exhaust any Collateral or other
security, or (iii) pursue any other remedy in Senior Creditor’s power whatsoever; (b) any defense resulting from the absence,
impairment or loss of any right of reimbursement, subrogation, contribution or other right or remedy of Subordinated Creditors
against Debtor, any guarantor, any other Person or any Collateral or other security, whether resulting from an election by the
Senior Creditor to foreclose upon Collateral by nonjudicial sale, or otherwise; (c) any setoff or counterclaim of Debtor or any
defense which results from any disability or other defense of Debtor or the cessation or stay of enforcement from any cause whatsoever
of the liability of Debtor; (d) any right of subrogation, reimbursement or contribution, and right to enforce any remedy which
Senior Creditor now has or may hereafter have against Debtor or any other Person, and any benefit of, and any right to participate
in, any Collateral or other security now or hereafter received by Senior Creditor; (e) all presentments, demands for performance,
notices of nonperformance, protests, notice of dishonor, and notices of acceptance of this Subordination Agreement; (f) any right
to be informed by Senior Creditor of the financial condition of Debtor, any guarantor or any other Person or any change therein
or any other circumstances bearing upon the risk of nonpayment or nonperformance of the Senior Debt. Subordinated Creditors have
the ability and assume the responsibility for keeping informed of the financial condition of Debtor and any guarantors and of
other circumstances affecting such nonpayment and nonperformance risks.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


Section
8. Attorney-in-Fact. Subordinated Creditors hereby irrevocably appoint the Senior Creditor as their attorney-in-fact
and agree that, after the commencement of any Debtor Relief Proceeding, Senior Creditor may perform (but Senior Creditor shall
not be obligated to and shall incur no liability to Subordinated Creditors or Debtor or any other Person for failure so to do)
any act which Subordinated Creditors is obligated by this Subordination Agreement to perform but have not performed in accordance
with this Subordination Agreement, and to exercise such other rights and powers as Subordinated Creditors might exercise with
respect to the Subordinated Debt, including the right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account
of the Subordinated Debt; (b) collect all payments and distributions made in any Debtor Relief Proceeding on account of the Subordinated
Debt and apply the same to the Senior Debt; (c) vote claims relating to the Subordinated Debt in any Debtor Relief Proceeding;
and (d) take any other action in any Debtor Relief Proceeding in connection with the Subordinated Debt.


 


Section
9. Default. If any representation or warranty in this Subordination Agreement or in any instrument evidencing or securing
the Senior Debt proves to have been materially false when made, or, in the event of a material breach by Debtor or Subordinated
Creditors in the performance of any of the terms of this Subordination Agreement or any instrument or agreement evidencing or
securing the Senior Debt, all of the Senior Debt shall, at the option of Senior Creditor, become immediately due and payable without
presentment, demand, protest, or notice of any kind, notwithstanding any time or credit otherwise allowed. At any time Subordinated
Creditors fails to comply with any provision of this Subordination Agreement that is applicable to Subordinated Creditors, Senior
Creditor may demand specific performance of this Subordination Agreement, whether or not Debtor has complied with this Subordination
Agreement, and may exercise any other remedy available at law or equity.


 


Section
10. Miscellaneous.


 


(a)
Notices. Except as otherwise set forth herein, all notices, requests and demands required or permitted to be made hereunder
shall be in writing and sent by certified or registered mail, return receipt requested, or by express courier or delivery service
(provided the same shall provide dated evidence of delivery), or by facsimile, if followed by an original sent by certified mail,
registered mail, express courier or delivery service, shall be deemed given or made five (5) business days after mailing if sent
by mail, one (1) business day after consignment to an express courier or delivery service, and upon sending thereof if sent by
facsimile as provided above, and shall be directed as provided on the signature pages below.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 





	 	With
    a copy (not constituting a notice) to:
	 	Louis
    A. Wharton
	 	Stubbs
    Alderton & Markiles LLP
	 	15260
    Ventura Blvd., 20th Floor
	 	Sherman
    Oaks, California 91403
	 	Tel:
    818-444-4509
	 	Fax:
    818-444-6309
	 	 
	 	Zev
    Bomrind
	 	Fox
    Rothschild LLP
	 	100
    Park Avenue, 15th Floor
	 	New
    York, New York 10017
	 	Tel:
    212-878-7951
	 	Fax:
    212-692-0940
	 	 
	 	Aaron
    A. Grunfeld
	 	Law
    Offices of Aaron A. Grunfeld & Assoc.
	 	11111
    Santa Monica Blvd., Suite 1840
	 	Los
    Angeles, California 90025
	 	 
	 	Tel:
    310-788-7577




 


or,
as to any of the foregoing, at such other address as shall be designated by such party in a written notice to the other party
hereto.


 


(b)
Nonwaiver. No failure or delay on Senior Creditor’s part in exercising any right hereunder shall operate as a waiver
thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof
or of any other right.


 


(c)
Amendments and Waivers. Except as otherwise expressly provided herein, this Subordination Agreement may not be amended
or modified, nor may any of its terms be waived, except by written instruments signed by the party or parties against which enforcement
thereof is sought. Each waiver or consent under any provision hereof shall be effective only in the specific instances for the
purpose for which given.


 


(d)
Assignments. This Subordination Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Debtor may not assign its rights or delegate its duties hereunder without
the prior written consent of Senior Creditor and substantially a majority interest of Subordinated Creditors. Senior Creditor
may assign, through the sale of participation interests or otherwise, all or any part of its interest under this Subordination
Agreement or any related documents upon notice to Subordinated Creditors and an agreement stating that such assignee or participant
shall abide by the terms of this Subordination Agreement. Senior Creditor may disclose this Subordination Agreement and the related
documents to any potential assignee or participant.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


(e)
Entire Agreement. This Subordination Agreement constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, inducements
or conditions, whether express or implied, oral or written.


 


(f)
Counterparts. This Subordination Agreement may be executed in any number of identical counterparts, any set of which signed
by all parties hereto shall be deemed to constitute a complete, executed original for all purposes.


 


(g)
Governing Law: Choice of Forum.


 


(i) California
Law. This Subordination Agreement shall be interpreted and the rights and liabilities of the parties hereto determined
in accordance with the internal laws and not the law of conflicts of the State of California.


 


(ii)
Forum. Any legal action or proceeding with respect to this subordination agreement or any other loan document may be brought
in the courts within the State of California or in any court of the United States within the State of California, and by execution
and delivery of this Subordination Agreement, Debtor, Subordinated Creditors and Senior Creditor’s consent, for itself and
in respect of its property, to the non-exclusive jurisdiction of those courts. Each of Debtor, Subordinated Creditors and Senior
Creditor irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect
of this subordination agreement or any document related hereto.


 


Debtor
and Subordinated Creditors hereby waives personal service of any and all process upon it and consents that all such service of
process may be made by registered mail (return receipt requested) directed to such person at its address set forth on the signature
lines below and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited
in the U.S. mails. Nothing contained herein shall affect the right of Senior Creditor to serve legal process by any other manner
permitted by law.


 


(h)
Further Assurances. From and after the date hereof, the parties shall, on request, cooperate with one another by furnishing
any additional information, executing and delivering any additional documents and instruments, and doing any and all such other
things as may be reasonably required by the parties or their counsel to consummate or otherwise implement the transactions contemplated
by this Subordination Agreement.


 


[Signature
Pages Follow]


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


IN
WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement to be executed as of the day and year first above
written.


 


	SALEEN
    AUTOMOTIVE, INC.:	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


SUBORDINATED
CREDITORS:


 


	EUROPA
    INTERNATIONAL, INC.	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 
	 	 
	KARTIC
    ENTERPRISES, INC.	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


	W-NET
    FUND I, L.P. 	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 
	 	 
	GARDNER
    SYNDICATION MANAGEMENT INC.	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


SENIOR
CREDITOR:


 


	SM
    FUNDING GROUP, INC.	 
	 	 
	By:__________________________________	 
	[Signature]	 
	 	 
	Name:_____________________________	 
	Title:______________________________	 
	 	 
	Mailing Address:	 
	_________________________________	 
	_________________________________	 
	_________________________________	 
	Telephone No.:_____________________	 
	Facsimile No:______________________	 
	Email Address:_____________________	 


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


SCHEDULE
I


 


Existing
Note Holders


 


	 	 	 	 	 	Principal	 	 	Accrd. Int.	 	 	Total	 
	 	 	Maturity	 	 	 	 	 	 	 	 	 	 
	 	 	Date	 	 	Balance	 	 	Balance	 	 	Balance	 
	SECURED	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Europa International	 	 	6/25/2017		 	 	1,162,310	 	 	 	83,395	 	 	 	1,245,705	 
	Kartic Enterprises, Inc.	 	 	6/25/2017		 	 	50,000	 	 	 	3,013	 	 	 	53,013	 
	W-Net Fund I L.P.	 	 	6/25/2017		 	 	750,000	 	 	 	39,489	 	 	 	789,489	 
	Gardner Syndication Mngmnt. Inc	 	 	6/25/2017		 	 	39,410	 	 	 	1,951	 	 	 	41,361	 
	W-Net Fund I L.P.	 	 	1/20/2019		 	 	255,600	 	 	 	3,320	 	 	 	258,920	 
	Europa International	 	 	1/20/2019		 	 	244,292	 	 	 	3,092	 	 	 	247,384	 
	 	 	 	 	 	 	 	2,501,612	 	 	 	134,260	 	 	 	2,635,872	 



 


Other
Notes to Convert upon Closing of Offering


 


	UNSECURED	 	 	 	 	 	 	 	 	 	 	 	 
	W Net Fund I L.P.	 	 	3/27/2017		 	 	700,000	 	 	 	57,482	 	 	 	757,482	 
	Europa International	 	 	3/28/2017		 	 	1,000,000	 	 	 	87,835	 	 	 	1,087,835	 
	W-Net Fund I L.P. (KBM drip)	 	 	OPEN	 	 	 	77,000	 	 	 	101	 	 	 	77,101	 
	 	 	 	 	 	 	 	1,777,000	 	 	 	145,418	 	 	 	1,922,419	 



 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


SCHEDULE
II


Definitions


 


“Collateral”
shall mean any assets of any Debtor or any other Person which is subject to a Lien in favor of Senior Creditor.


 


“Debt”
shall mean, with respect to any Person, all loans, advances and indebtedness for borrowed money, howsoever arising, owed by such
Person of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all principal,
interest, fees, taxes, charges, expenses (including attorneys’ fees) and other amounts payable in connection therewith,
and all obligations and liabilities under guaranties.


 


“Debtor”
shall have the meaning given to that term in the introductory paragraph hereof.


 


“Debtor
Relief Proceeding” shall mean any suit, action, case or other proceeding commenced by, against or for Debtor or its
property seeking the dissolution, liquidation, reorganization or other relief of Debtor or its Debt under any state, federal or
foreign bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a receiver, trustee,
liquidator, custodian or other similar official for Debtor or its property or any general assignment by Debtor for the benefit
of its creditors.


 


“Entire
Subordinated Debt Instrument Balance” shall mean the entire principal amount then payable to Subordinated Creditors,
plus interest accrued thereon in accordance with the applicable Subordinated Debt Instrument.


 


“Lien”
means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and, including, without limitation, a security interest, pledge
or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.


 


“Person”
shall mean any natural person, corporation, partnership, firm, association, governmental authority or any other entity whether
acting in an individual, fiduciary, or other capacity.


 


“Requirements
of Law” shall mean, with respect to any Person, the articles or certificate of incorporation, bylaws, partnership agreement,
trust agreement, operating agreement or other organizational or governing documents of such Person, and any material law, treaty,
rule or regulation, or a final and binding determination, order, judgment or decree of any arbitrator, court or other governmental
authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.


 


“Senior
Creditor” shall have the meaning given to such term in the introductory paragraph hereof.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


“Senior
Debt” shall mean (i) all Debt now or hereafter existing or owed by Debtor to Senior Creditor pursuant to senior secured
promissory notes with a principal amount up to the Maximum Principal Amount, or any instruments or other documents executed by
Debtor with or in favor of Senior Creditor in connection therewith, as such agreements may be amended, supplemented, modified,
extended, restated or replaced, and whether for principal, premium, interest (including all interest accruing after the initiation
of any Debtor Relief Proceeding, whether or not allowed), fees, expenses, indemnities or otherwise; and (ii) all Debt owed by
Debtor to Senior Creditor in connection with any refinancing, refunding, restructuring or replacement of all or any part of the
Senior Debt described in clause (i) (including all such Debt arising after the commencement of any Debtor Relief Proceeding).


 


“Senior
Debt Payment Default” shall mean a default in the payment when due of principal or interest of the Senior Loans.


 


“Senior
Loan” shall have the meaning given to such terms in the Recitals hereto.


 


“Subordinated
Creditors” shall have the meaning given to that term in the introductory paragraph hereof.


 


“Subordinated
Debt” shall mean (i) all Debt now or at any time owed by Debtor to the Subordinated Creditors, or any of them as set
forth on Schedule I, or pursuant to any debt instrument (including all such Debt arising after the commencement of any Debtor
Relief Proceeding); and (ii) all Debt owed by Debtor in connection with any permitted refinancing, refunding, restructuring or
replacement of all or any part of the Debt described in clause (i) (including all such Debt arising after the commencement of
any Debtor Relief Proceeding).


 


“Subordinated
Debt Instrument” shall mean any promissory note or similar instrument evidencing the Subordinated Debt.


 


“Subordinated
Debt Interest Payment” shall mean any Subordinated Debt Payment in respect of the interest payable in respect of the
outstanding principal amount of any indebtedness owed to the Subordinated Creditors, or any of them.


 


“Subordinated
Debt Payment” shall mean any direct or indirect payment, prepayment, reduction or discharge of any of the Subordinated
Debt, whether such payment, prepayment, reduction or discharge is effected by Debtor, any guarantor of Subordinated Debt, any
trustee or receiver for the estate or property of any of the foregoing or any other Person through direct payment, redemption,
purchase, refinancing, setoff, cancellation, issuance of securities, any action on the Subordinated Debt Instrument, transfer
of assets or distribution to creditors in any Debtor Relief Proceeding or otherwise.


 


Subordination
Agreement Saleen SM Funding


 




    	 



    	 



    

 


EXHIBIT
A


Subordinated
Debt Instruments





 





 


Subordination
Agreement Saleen SM Funding