UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange
Act of 1934
Date of Report:
(Date of earliest event reported)
March 10, 2017
Saleen Automotive, Inc.
(Exact name of registrant as specified in charter)
Nevada
(State or other Jurisdiction of Incorporation)
|
333-176388 (Commission |
45-2808694 (IRS Employer Identification No.) |
2375 Wardlow Road
Corona, CA 92882
(Address of Principal Executive Offices and zip code)
(800) 888-8945
(Registrant’s
telephone
number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On March 10, 2017, we entered into an amendment (the “Amendment”) to the Binding Letter of Intent (the “LOI”) that we entered into with SM Funding Group, Inc. (“SM Funding”) on October 21, 2015.
Under the Amendment, SM Funding or its nominees will initially purchase $285,000 of our Series A Preferred Stock (“Series A Stock”), which will convert into our Common Stock at a price of $0.0003 per share on the terms set forth in the Certificate of Designation designating the Series A Stock. Pursuant to the Amendment, SM Funding has also agreed to purchase or cause other parties to purchase an additional $1.5 million of Series A Stock. SM Funding previously advanced us approximately $2.5 million under a 12% Senior Secured Convertible Note.
The Amendment also provides the following additional terms, among others:
| ● | We have agreed to use our best efforts to (i) increase our authorized shares of Common Stock to enable us to issue additional shares of Common Stock constituting 60% of our fully-diluted outstanding shares of common stock currently outstanding, and (ii) effect a reverse stock split of our Common Stock. | |
| ● | SM Funding and other holders of our convertible indebtedness have each agreed to exchange at least $600,000 of such indebtedness for shares of Series A Stock promptly following the execution of the Amendment, and thereafter to exchange not less than 80% of their indebtedness for Series A Stock following the recapitalization described above. | |
| ● | We have agreed to issue warrants to (i) an affiliate of SM Funding, to purchase 8% of our Common Stock on a fully-diluted basis, at any time prior to December 31, 2018, for a purchase price of $10,000, (ii) Steve Saleen, to purchase 5% of our Common Stock on a fully-diluted basis, at any time prior to December 31, 2018, for a purchase price of $10,000, and (iii) Joseph J. Bianco, to purchase 2.5% of our Common Stock on a fully-diluted basis, at any time prior to December 31, 2018, for a purchase price of $40,000. | |
| ● | We agreed to appoint Joseph J. Bianco to our Board of Directors. |
The foregoing summary does not purport to be complete, and is subject to and qualified in its entirety by reference to the text of the Amendment and form of Certificate of Designation for the Series A Stock, which have been filed as exhibits to this Current Report on Form 8-K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 15, 2017, we accepted the resignation of Joe Amato as a director of the Company.
On March 15, 2017, the Board appointed Joseph J. Bianco to serve as a director of the Company. As noted above, Mr. Bianco was appointed to the Board pursuant to the Amendment, under which we also agreed to issue him a warrant to purchase 2.5% of our Common Stock on a fully-diluted basis, as described above. Other than as set forth in preceding sentence, there are no arrangements or understandings with Mr. Bianco pursuant to which he was appointed as a director, or any related party transactions between the Company and Mr. Bianco that are subject to disclosure under Item 404(a) of Regulation S-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| 4.1 | Form of Certificate of Designation of the Series A Preferred Stock of the Registrant. | |
| 10.1 | Letter Agreement Amending Binding Letter of Intent, dated as of March 1, 2017 and entered into March 10, 2017, among the Registrant, SM Funding Group, Inc., W-Net Fund I, LP and Steve Saleen |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SALEEN AUTOMOTIVE, INC. | ||
| Date: March 20, 2017 | By: | /s/ Steve Saleen |
| Steve Saleen | ||
| Chief Executive Officer | ||
CERTIFICATE OF DESIGNATION OF THE
SERIES A PREFERRED STOCK
OF
SALEEN AUTOMOTIVE, INC.
Pursuant to Section 78.1995 of the
Nevada Revised Statutes
RESOLVED, that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Articles of Incorporation, as amended (the “Articles of Incorporation”), and in accordance with the provisions of Section 78.1955 of the Nevada Revised Statutes, the Board of Directors hereby fixes the powers, designation, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the Series A Preferred Stock; and
RESOLVED FURTHER, that the Corporation is authorized to issue Series A Preferred Stock on the following terms and with the provisions herein set forth:
1. Designation and Number of Shares. Of the 1,000,000 shares of preferred stock, $0.001 par value per share (“Preferred Stock”), authorized pursuant to Article VIII of the Articles of Incorporation, 500,000 shares are hereby designated as Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”).
2. Liquidation Preference.
(a) Upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary (each, a “Liquidation Event”), before any distribution or payment shall be made to the holders of Corporation’s common stock, par value $0.001 per share (“Common Stock”), the holders of Series A Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution (or the consideration received by the Corporation or its stockholders in an Acquisition) for each share of Series A Preferred Stock held by them, an amount per share of Series A Preferred Stock equal to $8.00 (the “Original Issue Price”), subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock, plus all accrued and unpaid dividends on the Series A Preferred Stock. If, upon any such Liquidation Event, the assets of the Corporation shall be insufficient to make payment in full to all holders of Series A Preferred Stock of the liquidation preference set forth in this Section 2(a), then such assets (or consideration) shall be distributed among the holders of Series A Preferred Stock at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.
(b) After the payment of the full liquidation preference of the Series A Preferred Stock as set forth in Section 2(a) above, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock.
(c) Notwithstanding the foregoing, upon any Liquidation Event, each holder of Series A Preferred Stock shall be entitled to receive, for each share of each series of Series A Preferred Stock then held, out of the proceeds available for distribution, the greater of (i) the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares in a Liquidation Event pursuant to Section 2(a) (without giving effect to this Section 2(c)) or (ii) the amount of cash, securities or other property to which such holder would be entitled to receive in a Liquidation Event with respect to such shares if such shares had been converted to Common Stock immediately prior to such Liquidation Event.
3. Redemption. The Series A Preferred Stock does not have any redemption rights.
4. Dividends. Holders of Series A Preferred Stock, in preference to the holders of Common Stock, shall be entitled to receive, but only out of funds that are legally available therefor, cash dividends at the rate of twelve percent (12%) of the Original Issue Price per annum on each outstanding share of Series A Preferred Stock. Such dividends shall accrue from day to day commencing on the date of original issuance of such shares, whether or not earned or declared by the Board of Directors (the “Board”), whether or not there are profits, surplus or other funds legally available for the payment of dividends and shall be cumulative to the extent not actually paid.
5. Mandatory Conversion.
(a) Conversion. On the earliest date which the Corporation has (i) filed an amendment (“Amendment”) to its Articles of Incorporation with the Secretary of State of the State of Nevada effecting an increase in the authorized shares of the Corporation’s Common Stock so that the Corporation has a sufficient number of authorized and unissued shares of Common Stock so as to permit the conversion of all outstanding shares of the Series A Preferred Stock into Common Stock (the “Increased Authorization”), (ii) effected a reverse stock split of the Common Stock so that the number of shares of Common Stock that would be outstanding following the conversion into Common Stock of all outstanding shares of the Series A Preferred Stock and all other shares of preferred stock of the Corporation, would be less than 100 million (the “Reverse Split”), (iii) filed with the Securities and Exchange Commission (“SEC”) and mailed to the Corporation’s shareholders all information statements, forms and schedules required under applicable law to effect the Increased Authorization and Reverse Split, as applicable, and (iv) become current in its reporting obligations with the SEC under the Securities Exchange Act of 1934, as amended, then immediately upon the occurrence of all such events, all of the outstanding shares of Series A Preferred Stock together with any accrued and unpaid dividends thereon will immediately and automatically convert into shares of Common Stock without any notice or action required on the part of the Corporation or the holder (each a “Mandatory Conversion”). The holders of a majority of the outstanding shares of Series A Preferred Stock may waive any one or more of the events specified in clauses (i) through (iv) of the preceding sentence so that any such event shall be deemed to have occurred for the purpose of determining whether a Mandatory Conversion has occurred. At the consummation of a Mandatory Conversion, the holders of Series A Preferred Stock will be entitled to receive Common Stock at the conversion rate equal to the quotient obtained by dividing the Original Issue Price of the Series A Preferred Stock, plus all accrued dividends thereon, by $0.0003 (the “Conversion Rate”).
(b) Obligation. The Corporation agrees that it shall in good faith, at such time as determined by the Corporation’s Board of Directors, take any and all such corporate action as may, in the opinion of its counsel, be necessary to effect the Reverse Split and/or Increased Authorization, and to expeditiously effect the conversion of all outstanding shares of the Series A Preferred Stock to shares of Common Stock, including, without limitation, using commercially reasonable efforts to obtain the requisite stockholder approval of any necessary amendment to the Articles of Incorporation to achieve the foregoing.
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(c) Conversion Procedure. The Corporation shall use commercially reasonable efforts to issue or cause its transfer agent to issue the Common Stock issuable upon a Mandatory Conversion as soon as practicable after such Mandatory Conversion. The Corporation shall bear the cost associated with the issuance of the Common Stock issuable upon a Mandatory Conversion. The Common Stock issuable upon a Mandatory Conversion shall be issued with a restrictive legend indicating that it was issued in a transaction which is exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), and that it cannot be transferred unless it is so registered, or an exemption from registration is available, in the opinion of counsel to the Corporation. The Common Stock issuable upon a Mandatory Conversion shall be issued in the same name as the person who is the holder of the Series A Preferred Stock unless, in the opinion of counsel to the Corporation, a change of name and such transfer can be made in compliance with applicable securities laws. The person in whose name the certificates of Common Stock are so recorded and other securities issuable upon a Mandatory Conversion shall be treated as a common stockholder of the Corporation at the close of business on the date of such Mandatory Conversion. The certificates representing the Series A Preferred Stock converted in a Mandatory Conversion shall be cancelled, on the date of such Mandatory Conversion.
6. Adjustments to Conversion Rate and Reorganization. The Conversion Rate for the number of shares of Common Stock into which the Series A Preferred Stock shall be converted on a Mandatory Conversion shall be subject to adjustment from time to time as hereinafter set forth:
(a) Stock Dividends, Recapitalization, Reclassification, Split-Ups. If, prior to the date of the Mandatory Conversion, the number of outstanding shares of Common Stock is increased by a stock dividend on the Common Stock payable in shares of Common Stock or by a split-up, recapitalization or reclassification of shares of Common Stock or other similar event, then, on the effective date thereof, the Conversion Rate will be adjusted so that the number of shares of Common Stock issuable on the Mandatory Conversion shall be increased in proportion to such increase in outstanding shares of Common Stock.
(b) Aggregation of Shares. If prior to or on the date of the Mandatory Conversion, the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of shares of Common Stock or other similar event (including the Reverse Split), then, upon the effective date thereof, the Conversion Rate will be adjusted so that the number of shares of Common Stock issuable on the Mandatory Conversion of the Series A Preferred Stock shall be decreased in proportion to such decrease in outstanding shares of Common Stock.
(c) Change Resulting from Reorganization or Change in Par Value, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock which solely affects the par value of the shares of Common Stock, or in the case of any merger or consolidation of the Corporation with or into another corporation (other than a consolidation or merger in which the Corporation is the continuing corporation and which does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Corporation as an entirety or substantially as an entirety in connection with which the Corporation is dissolved, the holders of Series A Preferred Stock shall have the right thereafter (until the Mandatory Conversion or its equivalent of all outstanding shares of Series A Preferred Stock) to receive upon the conversion of the Series A Preferred Stock the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or other transfer, by a holder of the number of shares of Common Stock into which the Series A Preferred Stock is convertible immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock, then such adjustment also shall be made.
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(d) Successive Changes. The provisions of this Section shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.
7. Voting Rights. The holders of record of shares of Series A Preferred Stock shall be entitled to the following voting rights:
(a) Those voting rights required by applicable law; and
(b) The right to vote together with the holders of the Common Stock, as a single class, upon all matters submitted to holders of Common Stock for a vote. On such matters, each share of Series A Preferred Stock will carry a number of votes equal to the number of shares of Common Stock issuable based on the then applicable Conversion Rate.
(c) Whenever holders of Series A Preferred Stock are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken and signed by the holders of the outstanding shares of Series A Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all such shares entitled to vote thereon were present and voted. Each share of the Series A Preferred Stock shall entitle the holder thereof to one vote on all matters to be voted on by the holders of the Series A Preferred Stock as a separate class, as set forth in this Section 7(c).
8. No Impairment. The Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this section and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of Series A Preferred Stock against impairment.
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9. No Fractional Shares and Certificate as to Adjustments. No fractional shares shall be issued upon the conversion of any share or shares of the Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. The number of shares issuable upon conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.
10. Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or any other right, the Corporation shall mail to each holder of Series A Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.
11. Notices. Any notice required by the provisions of this Certificate of Designation to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation.
12. Return of Status as Authorized Shares. Upon a Mandatory Conversion or any other repurchase, redemption or extinguishment of the Series A Preferred Stock, the shares converted, repurchases, redeemed or extinguished will be automatically returned to the status of authorized and unissued shares of Preferred Stock, available for future designation and issuance pursuant to the terms of the Articles of Incorporation.
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SALEEN AUTOMOTIVE, INC.
2375 Wardlow Road
Corona, California 92882
March 1, 2017 (the “Effective Date”)
David Bergstein
SM Funding Group, Inc.
c/o Cyrano Group, Inc.
10866 Wilshire Blvd., Suite 500
Los Angeles, CA 90024
Re: Amendment to Binding Letter of Intent and 12% Senior Secured Convertible Note (the “Amendment”).
David:
Reference is made to (i) that certain 12.0% Senior Secured Convertible Note (the “Note”), dated December 2, 2015 as of October 12, 2015, in the original principal amount of up to $2,000,000, issued by Saleen Automotive, Inc. (“Saleen”) to SM Funding Group, Inc. (“SMF”), and (ii) the Binding Letter of Intent (the “LOI” and, together with the Note, the “SMF Financing Documents”), entered into on or about October 21, 2015, among SMF, Saleen, Steven Saleen and W-Net Funding I, L.P (“W-Net”) together referred to as the “Parties”.
An additional investment of $500,000 in Saleen will be made by SMF (or their nominees) pursuant to either advances under the Note or by the purchase of Saleen “Series A Preferred Shares”, the terms of which are attached hereto as Exhibit A (the “Series A Preferred Terms”). That Parties acknowledge that $215,000 of the $500,000 has already been received by Saleen and advanced by SMF pursuant to the Note. The balance of $285,000, which will be applied to acquire Series A Preferred Shares, must be wired by SMF to Saleen within 5 business day of the mutual execution of this Amendment. The Parties agree (evidenced by their signature below) to extend the Maturity Date under the Note to May 31, 2017.
The parties hereby further agree as follows:
| 1. | Saleen shall use its best efforts to file a Schedule 14C Information Statement (the “Information Statement”) with the Securities and Exchange Commission (“SEC”), no later than March 31, 2017 (the “Filing Date”), with respect to the approval by its shareholders of an increase in its authorized shares common stock, so that Saleen will have a sufficient number of authorized and unissued shares of Common Stock to enable it to issue shares of common stock constituting 60% of its fully-diluted outstanding shares of common stock and preferred shares, if any, after giving effect to such issuance (the “Recapitalization”). Saleen shall thereafter use its best efforts to effect the Recapitalization and a reverse stock split of its common stock (“Reverse Split”) as soon as practicable, but in any event not later than May 15, 2017 (the “Recap Date”). If the Information Statement has not been filed with the SEC by the Filing Date (other than as a result of the failure of SMF to comply with its obligations under Section 2 below) or the Reverse Split and Recapitalization are not effected as of the Recap Date, interest on the Note shall increase from 12% to 15% per annum, which shall thereafter be paid in accord with the terms of the Note. Attached hereto as Schedule I and a made a part hereof is a true and correct Capitalization Table given (i) as of this date and (ii) on a basis which fully reflects the Reverse Split and the Recapitalization. |
| 2. | The amount owing to SMF, including accrued and unpaid interest is listed in Exhibit B (the “SMF Indebtedness”). | |
| 3. | The amount owing to W-Net and all other debt holders, including accrued and unpaid interest is listed in Exhibit C (the “Other Indebtedness”). Together the SMF Indebtedness and the Other Indebtedness are referred to as “Indebtedness.” Parties holding the Indebtedness are referred to as “Holders”. | |
| 4. | Promptly following the execution of this Amendment, SMF and W-Net shall each exchange a portion of their respective Indebtedness into a face amount of at least $600,000 of the Series A Preferred Shares (consistent with Schedule I), and (ii) vote such shares of preferred stock in favor of the Recapitalization. | |
| 5. | The Parties agree that any SMF Indebtedness actually exchanged for Series A Preferred shares will be exchanged on the basis on a dollar of Series A Preferred Shares for each dollar of SMF Indebtedness (the “SMF Exchange Rate”) and the Other Indebtedness will be exchanged on the basis of one dollar of Series A Preferred shares for each two dollars of Other Indebtedness (the “Other Indebtedness Exchange Rate”). In addition to the Series A Preferred Shares received by Holders as a result of an exchange, each Holder shall additionally receive the number of Saleen Common Shares (“Common Stock”) which are equal to 1 share of Common Stock for each 5 shares of Common Stock that the Series A Preferred shareholders are convertible into pursuant to the Conversion Rate (as that term is defined in Exhibit A.) | |
| 6. | Any of the SMF Indebtedness or the Other Indebtedness may be exchanged according to paragraph 5 above at any time at the election of the Holders, so long as there remains available Series A Preferred shares which are authorized pursuant to the terms reference in Exhibit A. Promptly following the compliance by Saleen of the requirements listed in paragraph 5(a) of Exhibit A, each of the Holders will convert no less than 80% of their respective Indebtedness into either the Series A Preferred shares, Series B Preferred shares (as defined below), or Common Stock (as the Parties may hereinafter agree). Notwithstanding the foregoing, the Holders will use their best efforts to convert all of their respective Indebtedness into one or more classes of Saleen Stock. | |
| 7. | All amounts owing to Cyrano Group Inc, up through and including February 28, 2017 as provided for under the heading of “Consulting” in the LOI shall be converted into Preferred A shares. | |
| 8. | Saleen agrees that it shall not authorize any other class of securities or issue any additional securities of existing classes without the approval of a majority of the Series A Preferred shareholders. Notwithstanding this, the Parties agree that within 30 days hereof, the Parties will explore and if necessary authorize a separate class of preferred shares (the “Series Preferred B”), the terms of which shall be agreed upon by the Parties, and which class is anticipated to accommodate the additional note exchanges (as described in Paragraphs 5 and 6 above) and as well additionally provide for shares that will be offered to further finance Saleen beyond the Series A Preferred class. The terms of the Series B Preferred class are anticipated to be similar to those of the Series A Preferred, except that the Mandatory Conversion requirements as defined in Paragraph 5(a) of Exhibit A will provide an additional 3 months of time prior to the time that Mandatory Conversion will be required. |
| 9. | Notwithstanding anything contained in the Series A Preferred Terms, Saleen shall take all steps necessary to register the underlying common shares into which the Series A Preferred Shares are convertible into within 6 months of the Effective Date. | |
| 10. | The “Exclusivity Period” under the LOI shall continue from the date hereof until September 30, 2017. During such period, Saleen shall (i) conduct its operations in the ordinary course of business, (ii) use its best efforts to preserve the value of its business, assets and goodwill, (iii) enter into no related party transactions with any related party without the prior written consent of SMF which may be declined in its sole discretion, (iv) not conduct any discussions with Swift Maneuvers, LLC or any other third party with respect to a financing of Saleen, and (v) promptly shall refer all third parties interested in providing capital to Saleen to SMF. Except as may be indicated on Schedule II, since September 30, 2016 and the date of this letter there have been no (a) sales or other dispositions of assets outside of the ordinary course of business affairs, (b) liens, financing statements or other charges placed upon the assets or business of Saleen by any regulatory authority or other third party, and (c) no material commitments or undertakings outside of the ordinary course, whether or not reduced to writing. | |
| 11. | Between the Effective Date and 45 days following Saleen’s compliance with Paragraph 1 of this Amendment, SMF shall subscribe or cause third parties to subscribe to no less than $1.5 Million of the Series A Preferred Shares. | |
| 12. | In regards to the SMF Indebtedness, Saleen shall provide 3 Black Label Mustangs, or the equivalent to or as directed by SMF. | |
| 13. | Saleen shall execute the Cyrano engagement agreement, a copy of which is attached hereto as Exhibit D (the “Cyrano Agreement”) which shall provide, inter alia, that monthly consulting fees to Cyrano may, at Saleen’s option, be paid half in stock, and half in cash. | |
| 14. | Neither SMF nor Saleen waive any existing rights they may have under the SMF Financing Documents. | |
| 15. | Within five business days following the date hereof, Saleen shall cause Joseph Bianco to be appointed to its Board of Directors. | |
| 16. | Saleen shall take whatever steps are necessary to bring the “Parts” business back into Saleen by no later than July 1, 2017. | |
| 17. | The Parties agree to grant Cyrano Group, Inc. a warrant which provides that Cyrano shall be able to acquire 8% of Saleen’s Common Stock, on a fully diluted basis at any time prior to December 31, 2018, for the sum of $10,000. The Parties agree to grant Steve Saleen a warrant which provides that Steve Saleen shall be able to acquire 5% of Saleen’s Common Stock, on a fully diluted basis at any time prior to December 31, 2018, for the sum of $10,000. The Parties also agree to issue to JJ Bianco or his designee a warrant to acquire 2.5% of Saleen’s Common Stock on a fully diluted basis any time prior to December 31, 2018, for the sum of $4,000. Saleen shall draft the warrants, which shall be executed by the respective counterparties within 2 weeks of the Effective date. |
| 18. | Attached hereto as Schedule 1 is a summary, on a fully diluted basis, of the capitalization of Saleen assuming |
| a. | The conversion of all SMF Indebtedness, including the 10% bonus shares identified in the LOI, including its exhibits. | |
| b. | The conversion of all W-Net Indebtedness. | |
| c. | The Cyrano Conversion. | |
| d. | The Steve Saleen and JJ Bianco Warrants. | |
| e. | The Cyrano Group Warrant. | |
| f. | The sum of a total of $2.5 Million of Preferred A shares. | |
| g. | Anticipated remaining public float. |
| 19. | The parties shall cooperate in good faith to effect the transactions contemplated hereby in a timely manner. | |
| 20. | All prior agreements between Saleen and SMF, as amended hereby, are hereby affirmed and extended until the later of any date specified in such prior agreements and May 31, 2017. |
| Sincerely yours, | ||
| SALEEN AUTOMOTIVE, INC. | ||
| By: | /s/ Steve Saleen | |
| Steve Saleen, Chief Executive Officer | ||
| AGREED & ACKNOWLEDGED | ||
| this 3rd day of March, 2017: | ||
| SM FUNDING GROUP, INC. | ||
| By: | /s/ David Bergstein | |
| David Bergstein, Chief Executive Officer | ||
| W-NET FUND I, LP | ||
| By: | /s/ David Weiner | |
| David Weiner, General Partner | ||
| Cyrano Group, Inc. | ||
| By: | ||
| David Bergstein, Chief Executive Officer | ||
| STEVE SALEEN, Individually | |
| /s/ Steve Saleen |
SCHEDULE
I
Capitalization Table
SCHEDULE
II
Material Changes
None
EXHIBIT
A
Form of Certificate of Designation
[Attached]
EXHIBIT
B
SMF Indebtedness
[Attached]
EXHIBIT
C
Other Indebtedness
[Attached]
EXHIBIT
D
Consulting Agreement
To Be Provided Post-Closing