Document:

SUBORDINATION
      AGREEMENT

    

    THIS
      SUBORDINATION AGREEMENT executed effective as of the 13th day of July 2007,
      by
      and between 1041 Partners, LP (“Loan
      Holder”),
      Wachovia Bank, National Association ("Lender"),
      SMF
      Energy Corporation, a Delaware corporation (“SMF”),
      H
& W Petroleum Company, Inc. (“H
      & W”)
      and
      SMF Services, Inc. (“SSI”)
      (SMF,
      H & W and SSI are referred to collectively as “Borrower").

    

    W
      I T N E
      S S E T H:

    

    WHEREAS,
      Loan Holder is the legal owner and holder of an unsecured Promissory Note dated
      July 12, 2007, executed by SMF in favor of Loan Holder (the "Note")(the
      loan evidenced by the Note, together with any present or future unsecured
      indebtedness of Borrower to Loan Holder of every kind and description, direct
      or
      contingent, due or not due, original, renewed or extended and whether now in
      existence or hereafter arising in connection with the Note are referred to
      as
      the "Subordinated
      Debt”);
      and

    

    WHEREAS,
      Lender and Borrower have entered into that certain Loan and Security Agreement
      dated September 26, 2002 and certain other loan documents in connection
      therewith (collectively, the "Loan
      Documents")
      which
      provides to Lender a first priority security interest ("Lender's
      Security Interest")
      in
      certain assets of Borrower whether now owned or hereafter acquired (the
      "Collateral"),
      in
      exchange for prior and continuing loans by Lender to Borrower (the “Loans");
      and

    

    WHEREAS,
      Borrower will materially benefit as a result of Lender making the Loans to
      Borrower; and

    

    WHEREAS,
      Loan Holder is a shareholder of SMF and as such will benefit from Lender
      continuing to extend the Loans to Borrower; and

    

    WHEREAS,
      Loan Holder acknowledges that Lender is willing to continue extending the Loans
      only on the condition that the Subordinated Debt be subordinate and inferior
      to
      the Loans, and to all other indebtedness of Borrower to Lender, whether now
      in
      existence or hereafter created; and

    

    WHEREAS,
      Loan Holder has agreed to subordinate the Note and Subordinated Debt to the
      lien
      and effect of the Loans and Lender's Security Interest and all security
      instruments securing the Loans, and all other indebtedness of Borrower to Lender
      of every kind and description, direct or contingent, due or not due, secured
      or
      unsecured, original, renewed
      or
      extended, whether now in existence or hereafter arising; and

    

    WHEREAS,
      Loan Holders acknowledge that Lender would not continue to extend the Loans
      without the execution of this Agreement by Loan Holder and by any other
      subsequent lenders to Borrower (“Other
      Loan Holders”);
      and

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    NOW,
      THEREFORE, in consideration of, and as an inducement to Lender to continue
      to
      extend the Loans to Borrower, Loan Holder, Lender and Borrower do hereby agree
      as follows:

    

    1. The
      facts
      as set forth above are true and correct and are incorporated herein by
      reference.

    

    2. Loan
      Holder and Borrower do hereby warrant and represent that the Note represents
      the
      only indebtedness currently outstanding which is due and owing from Borrower
      to
      Loan Holder.

    

    3. Loan
      Holder hereby unconditionally subordinates the Note and Subordinated Debt to
      the
      Loans and all other present and future debts and obligations of Borrower to
      Lender, including all obligations of Borrower to Lender of every kind and
      description, direct or contingent, due or not due, secured or unsecured,
      original, renewed or extended, whether now in existence or hereafter arising
      and
      to the lien and effect of Lender's Security Interest in and to the Collateral
      and to all Loan Documents and all other debts and obligations of Borrower to
      Lender.

    

    4. Loan
      Holder and Borrower do hereby warrant, represent and agree that no payment
      (principal, interest or any other payment) shall be made, permitted or accepted
      under the Note or Subordinated Debt (or under any other document or agreement)
      during the term of the Loans, excepting for payments of interest in money or
      shares of stock of Borrower which shall be permitted so long as no Event of
      Default (as defined in the Loan Documents) has occurred and is continuing.
      If
      any payment is made to a Loan Holder in payment of the Note or the Subordinated
      Debt or otherwise, or if any security or proceeds thereof is received on account
      of the Note or the Subordinated Debt contrary to the terms of this Agreement,
      the Borrower agrees that the same shall be and constitute an Event of Default.
      Loan Holder acknowledges that (i) upon the occurrence of an Event of Default,
      Lender shall be entitled to immediately exercise all remedies provided to Lender
      in connection with the Collateral and under the Loan Documents, and (ii)
      following the occurrence of such Event of Default and so long as the same shall
      be continuing, (A) each and every amount paid by or on behalf of any Borrower
      to
      such Loan Holder or items received by such Loan Holder (from any Borrower or
      from an individual or an entity on behalf of any Borrower) from and after such
      occurrence shall be forthwith paid by such Loan Holder to Lender, in precisely
      the form received (except for such Loan Holder's endorsement, where necessary),
      to be credited and applied, in Lender's sole discretion, upon any indebtedness
      (principal and/or interest and/or otherwise as Lender may elect, in its sole
      discretion) then owing to Lender by Borrower and, whether matured or unmatured,
      and, until so delivered, the same shall be held in trust by such Loan Holder
      as
      the property of Lender; and (B) in the event of a failure of a Loan Holder
      to
      endorse any instrument for the payment of monies so received by such Loan Holder
      payable to such Loan Holder's order, Lender, or any officer or employee of
      Lender, is hereby irrevocably constituted and appointed attorney-in-fact
      (coupled with an interest) for Loan Holder and each of them, with full power
      to
      make any such endorsement and with full power of substitution. Notwithstanding
      anything herein to the contrary and in accordance with the terms and conditions
      of the Note or Subordinated Debt, (i) Loan Holder may, at Loan Holder’s
      election, convert all or part of the Note or Subordinated Debt into common
      stock
      of SMF; to the extent permitted by the terms of the Note and (ii) Borrower
      shall
      be entitled, so long as no Event of Default (as defined in the Loan Documents)
      has occurred and is continuing, to repay to Loan Holder in accordance with
      the
      terms of the Note, as the same may be hereinafter amended, the outstanding
      principal balance of the Note and the Subordinated Debt associated therewith
      from the proceeds
      of any issuance or sale by SMF of equity securities after the date hereof (but
      only to the extent of the net proceeds from such issuance or sale), and
      Loan
      Holder may accept and retain any such payment without regard to the provisions
      of this Agreement. 

    

    
      
         

      

      
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    5. Loan
      Holder agrees that it will not exercise any collection rights with respect
      to
      the Note or Subordinated Debt, will not take possession of, sell or dispose
      of,
      or otherwise deal with any Collateral, and will not exercise or enforce any
      right or remedy which may be available to them with respect to the Notes or
      Subordinated Debt upon default of Borrower under the Loans or any other
      indebtedness of Borrower to Lender or under the Subordinated Debt until such
      time as the Loans, as the same may be modified from time to time, including
      all
      principal, interest and other charges associated therewith, has been paid in
      full and no other debts or obligations are due and owing from Borrower to
      Lender. Loan Holder agrees to promptly notify Lender, in writing, by certified
      mail, return receipt requested, of any default by Borrower under the Notes
      or
      Subordinated Debt; and Lender agrees to promptly notify Loan Holder in the
      same
      manner of any Event of Default, but failure of Lender to notify Loan Holder
      shall not negate the Event of Default. If an indenture trustee is appointed
      for
      the Note or Subordinated Debt, then Lender may give notice to the trustee in
      lieu of notice to Loan Holder. 

    

    6. Upon
      any
      distribution of the assets or readjustment of indebtedness of Borrower, whether
      by reason of reorganization, liquidation, dissolution, bankruptcy, receivership,
      assignment for the benefit of creditors, or any other action or proceeding
      involving the readjustment of all or any part of the Subordinated Debt or the
      application of the assets of the Borrower to the payment or liquidation thereof,
      either in whole or in part, Lender shall be entitled to receive payment in
      full
      of any and all indebtedness under the Loans or otherwise then owing to Lender
      by
      Borrower prior to the payment of all or any of the Subordinated
      Debt.

    

    7. Loan
      Holder (severally and not jointly) agrees that Loan Holder shall not transfer,
      assign, encumber, hypothecate or subordinate, at any time while this Agreement
      remains in effect, any right, claim or interest of any kind in or to any of
      its
      Subordinated Debt, either principal or interest or otherwise, unless such
      transfer, encumbrance, hypothecation or subordination is made upon prior written
      notice to Lender, subject to this Subordination Agreement, and the transferee
      or
      recipient has expressly assumed the covenants and obligations contained herein;
      and provided further that there shall promptly be placed on each of the Notes
      a
      legend reciting that the same is subject to this Agreement.

    

    8. Loan
      Holder acknowledges that Lender may, at any time, in its discretion, increase
      or
      decrease the amount of the Loans, renew or extend the time of payment of all
      or
      any portion of the Loans or any other existing or future indebtedness or
      obligations of Borrower to Lender and/or waive or delay in enforcing any rights
      or release any collateral relative thereto at any time(s) and, in reference
      thereto, to modify or amend the Loan Documents and/or make and enter into such
      agreement(s), compromise(s) and other indulgence(s), as Lender may deem proper
      or desirable, without notice to or further assent of all or any of Loan Holders,
      all without in any manner impairing or affecting this Agreement or any of
      Lender's rights hereunder.

    

    
      
         

      

      
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    9. Loan
      Holder hereby agrees that Loan Holder will render to Lender, upon demand, from
      time to time, a statement of the account of such Loan Holder with Borrower.
      Borrower agrees to duly comply with and conform with each and every term of
      this
      Agreement, on its part required to be performed.

    

    10. All
      notices, demands and communications given or made hereunder or pursuant thereto
      shall be in writing and shall be hand delivered, delivered by recognized
      expedited carrier, or mailed by registered or certified mail with postage
      prepaid, addressed in each case as follows and shall be deemed to have been
      given or made when so mailed:

    

    
      	
            	To
              Loan Holder:	
              1041
                Partners, LP

            

    

    992
      Old
      Eagle School Road, Suite 915,

    Wayne,
      PA
      19087

    Attention:
      Kevin Hamilton, General Partner

    

    
      	
            	To
              Lender:	
              Wachovia
                Bank, National Association.

            

    

    110
      East
      Broward Boulevard

    Suite
      20508

    Miami,
      FL
      33301

    Attention:
      Portfolio Manager

    

    
      	
            	To
              Borrower:	
              SMF
                Energy Corporation.

            

    

    200
      West
      Cypress Creek Road

    Suite
      400

    Fort
      Lauderdale, FL 33309

    Attn:
      Richard E. Gathright, President

    

    or
      to
      such other address or to such other person as any party shall designate to
      the
      others for such purposes in the manner hereinabove set forth.

     

    11. The
      parties hereto acknowledge and agree that other creditors of Borrower may become
      parties to this Agreement by accepting one or more promissory notes by Borrower
      in favor of such creditors, which promissory note expressly incorporates by
      reference the terms of this Agreement. Upon the acceptance of any such
      promissory note, and the receipt of a copy of this Agreement, by any such
      creditor, (i) such creditor shall be deemed to have joined this Agreement as
      a
      "Loan Holder" hereunder, (ii) such promissory note shall be deemed a "Note"
      hereunder, the indebtedness evidenced by such Note shall be deemed "Subordinated
      Debt" hereunder, (iii) all of the terms and provisions of this Agreement shall
      apply to such creditor, such Note, such Subordinated Debt and the Collateral,
      (iv) such creditor shall be deemed to have appointed Lender as the creditor’s
      attorney-in-fact (coupled with an interest) solely for the purposes of ensuring
      compliance with Lender’s rights under Section 4 hereof, and (v) this Agreement
      shall be deemed amended to add such creditor as a party hereto. The terms of
      this Agreement shall remain in full force and effect until the Loan and any
      other indebtedness of any Borrower to Lender, or any Replacement Facility (as
      defined below) is indefeasibly paid in full and Lender's commitments to make
      further extensions of credit to any Borrower have been terminated

     

    
      
         

      

      
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    12. This
      Agreement may be signed in multiple counterparts, and each such counterpart
      shall have the same binding force and effect as if it were signed by all parties
      hereto. This Agreement shall be governed by the laws of the State of Delaware.
      The terms of this Agreement cannot be waived, changed or terminated, except
      by a
      written document signed by Lender. This Agreement shall be binding upon the
      undersigned and their successors and assigns and shall inure to the benefit
      of
      and shall be enforceable by Lender, and any participants, successors or assigns
      of Lender. In addition, any person or entity whose loans (a "Replacement
      Facility")
      are
      used to refinance and pay in full the Loan shall be deemed for all purposes
      hereof to be the successor to Lender, and from and after the date of any such
      refinancing and satisfaction in full of the Loan, such persons or entities
      shall
      be deemed a party hereto in the place and stead of Lender, as if such persons
      or
      entities had been original signatories hereto, and all loans, advances,
      liabilities, debit balances, covenants and duties at any time or times owed
      by
      Borrowers to such successor shall be deemed for all purposes hereunder to
      constitute and be the "Loan".

    

    13. WAIVER
      OF JURY TRIAL.
      BORROWER, EACH LOAN HOLDER AND LENDER HEREBY MUTUALLY, KNOWINGLY, WILLINGLY,
      INTENTIONALLY AND VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY AND NO PARTY
      NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF THE PARTIES (ALL
      OF WHOM ARE HEREINAFTER COLLECTIVELY REFERRED TO AS THE "PARTIES") SHALL SEEK
      A
      JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
      PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS
      OR
      ANY INSTRUMENT EVIDENCING, SECURING OR RELATING TO THIS AGREEMENT OR THE LOAN
      DOCUMENTS, THE INDEBTEDNESS OR OTHER OBLIGATIONS REFERRED TO HEREIN OR ANY
      RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS
      REFERRED TO HEREIN OR ANY COURSE OF ACTION, COURSE OF DEALING, STATEMENTS
      (WHETHER VERBAL OR WRITTEN) OR ACTIONS RELATING TO THE LOAN OR TO THIS
      AGREEMENT. THE PARTIES ALSO WAIVE ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH
      A
      JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS
      NOT
      BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY
      THE
      PARTIES. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES A KNOWING
      AND
      VOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO EXCEPTIONS. LENDER HAS IN NO WAY
      AGREED WITH OR REPRESENTED TO ANY LOAN HOLDER OR ANY OTHER PARTY THAT THE
      PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
      INSTANCES.

    
       

      
         

      

      
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    IN
      WITNESS WHEREOF, the undersigned have executed this Subordination Agreement
      as
      of the date first written above.

    

    
      	
              LOAN
                HOLDER:

            	
              1041
                PARTNERS, LP

            
	 	 
	 	 
	 	
              By:
                ______________________________________

            
	 	
              Kevin
                Hamilton, General Partner 

            
	 	 
	 	 
	 	 
	
              LENDER:

            	
              WACHOVIA
                BANK, NATIONAL ASSOCIATION

            
	 	 
	 	 
	 	
              By:
                __________________________________

            
	 	
              Name:
                _______________________________

            
	 	
              Title:
                ________________________________

            
	 	 
	 	 
	 	 
	
              BORROWER:

            	
              SMF
                ENERGY CORPORATION

            
	 	 
	 	 
	 	
              By:
                _____________________________________

            
	 	
              Michael
                S. Shore

            
	 	
              Senior
                Vice President & Chief Financial Officer

            
	 	 
	 	 
	 	 
	 	
              H
                & W PETROLEUM COMPANY, INC.

            
	 	 
	 	 
	 	
              By:
                _____________________________________

            
	 	
              Michael
                S. Shore

            
	 	
              Senior
                Vice President & Chief Financial
                Officer

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    
      	 	
              SMF
                SERVICES, INC.

            
	 	 
	 	 
	 	
              By:
                _____________________________________

            
	 	
              Michael
                S. Shore

            
	 	
              Senior
                Vice President & Chief Financial
                Officer

            

    

    

    
      
         

      

      
        7Exhibit 10.1 - Executive Officer Compensation

                  The Board of Directors of Temecula Valley Bank, upon the
recommendation of the Executive Officer Compensation Committee, approved an
increase of the pay out amount under existing salary continuation plans from
$80,000 to $100,000 per year for the following executive officers:

                  Donald A. Pitcher
                  Martin E. Plourd
                  Thomas M. Shepherd

                  As soon as practical, these changes will be documented in
amendments to existing agreements.

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