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: