Exhibit 10.8
 
ENVISION SOLAR INTERNATIONAL, INC.
SECURED BRIDGE NOTE

Original Issue Date:  November 12, 2008
    $591,770.83

THIS NOTE is the duly authorized and validly issued Secured Bridge Note of
ENVISION SOLAR INTERNATIONAL, INC., a California corporation (the “Company”),
having its principal place of business at 4225 Executive Square, Suite 1000, San
Diego, CA 92037, designated as its  Secured Bridge Note (this “Note”).

FOR VALUE RECEIVED, the Company promises to pay to GEMINI MASTER FUND, LTD. or
its registered assigns (the “Holder”) the sum of Five-Hundred Ninety-One
Thousand Seven-Hundred Seventy Dollars and Eighty-Three Cents (US$591,770.83) on
the date (the “Maturity Date”) which is the earlier of (a) five (5) months
following the Original Issue Date hereof or (b) the occurrence of any
Fundamental Transaction (as defined below), provided that upon or prior to such
maturity hereof the Holder shall have the right to exchange this Note and the
amount due hereunder in whole or in part for securities being issued in a
Reverse Merger Financing (as defined in the Purchase Agreement) in accordance
with the terms set forth in Section 4.7 of the Purchase Agreement.  (For
clarification, if so elected by the Holder, this Note shall remain outstanding
until and to the extent exchanged pursuant to Section 4.7 of the Purchase
Agreement.)

The Company’s and its Subsidiaries’ obligations under this Note and the other
Transaction Documents are secured by the Collateral (as defined in the Security
Agreement) pursuant to the terms of the Security Documents and the obligations
under this Note are guaranteed by the Company’s Subsidiaries pursuant to the
Subsidiary Guarantee.

This Note is subject to the following additional provisions:

Section 1.    Definitions.  For the purposes hereof, in addition to the terms
defined elsewhere in this Note (a) initially capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the Purchase
Agreement and (b) the following terms shall have the following meanings:

“Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as defined in Rule 1-02(w) of Regulation S-X) thereof
commences a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction relating to the Company or any
Significant Subsidiary thereof; (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that is not
dismissed within 60 days after commencement; (c) the Company or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered; (d) the Company
or any Significant Subsidiary thereof suffers any appointment of any custodian
or the like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such appointment; (e) the
Company or any Significant Subsidiary thereof makes a general assignment for the
benefit of creditors; (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the foregoing.
 
 
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“Business Day” means any day except any Saturday, any Sunday, any day which
shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.

“Event of Default” shall have the meaning set forth in Section 6.

“Fundamental Transaction” means (a) the Company enters into any Reverse Merger
Transaction, (b) the Company effects any merger or consolidation of the Company
with or into another Person, (c) the Company effects any sale of all or
substantially all of its assets in one transaction or a series of related
transactions, (d) an acquisition of effective control (whether through legal or
beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of the Company or its Subsidiaries
comprising a majority of the Company’s assets, (e) any tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which
holders of common stock of the Company are permitted to tender or exchange their
shares for other securities, cash or property, or (f) the Company effects any
reclassification of its common stock or any compulsory share exchange pursuant
to which the common stock is effectively converted into or exchanged for other
securities, cash or property. For purposes hereof the assets of the Company
shall include the assets of the Company together with its Subsidiaries.
 
“Late Fees” shall have the meaning set forth in Section 2.

“Mandatory Default Amount” means the sum of (i) 115% of the outstanding amount
of this Note, plus 100% of accrued and unpaid interest hereon, including all
Late Fees, and (ii) all other amounts, costs, expenses and liquidated damages
due in respect of this Note.

“New York Courts” shall have the meaning set forth in Section 7(d).

“Original Issue Date” means the date of the issuance of this Note, regardless of
any transfers of this Note and regardless of the number of instruments which may
be issued to evidence this Note.

“Permitted Indebtedness” means (a) the indebtedness evidenced by the Note, (b)
the Indebtedness existing on the Closing Date which is set forth on Schedule
3.1(v) attached to the Purchase Agreement, provided that the terms of any such
Indebtedness have not been changed from the terms existing on the Closing Date,
(c) lease obligations and purchase money indebtedness of up to $100,000, in the
aggregate, incurred in connection with the acquisition of capital assets and
lease obligations with respect to newly acquired or leased assets, and (d)
unsecured indebtedness that (i) is expressly subordinate to the Note pursuant to
a written subordination agreement with the Holder that is acceptable to the
Holder in its sole and absolute discretion and (ii) matures at a date later than
the Maturity Date.
 
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“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP; (b) Liens imposed by law which were
incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and
which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien; (c) Liens
incurred in connection with Permitted Indebtedness under clauses (a) and (c)
thereunder, provided that such Liens are not secured by assets of the Company or
its Subsidiaries other than the assets so acquired or leased.
 
“Purchase Agreement” means the Securities Purchase Agreement, dated on or about
the date hereof, among the Company and the original Holder hereof, as amended,
modified or supplemented from time to time in accordance with its terms.

Section 2.                  Interest; Late Fees.

a) Interest Rate.  Interest on the principal amount of this Note (other than
Default Interest and Late Fees, as provided in Section 2(b) below, and the
Mandatory Default Amount, as described in Section 6(b) below and the definition
thereof) shall be fully earned on the Original Issue Date and shall be equal to
(i) 7% per annum of the Subscription Amount for the five (5) month period
immediately following the Original Issue Date hereof plus (ii) (x)15% of such
Subscription Amount and (y) 15% of such 7% interest (as set forth in clause (i)
above).  All such interest shall be capitalized on the Original Issue Date by
being added to the Subscription Amount such that the face amount of the Note
shall be equal to $591,770.83.

b) Default Interest.  All overdue accrued and unpaid amounts to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 20%
per annum or the maximum rate permitted by applicable law (“Late Fees”) which
shall accrue daily from the date such amount is due hereunder through and
including the date of actual payment in full.

c) Calculations.  All interest calculations shall be on the basis of a 360-day
year with 30-day months.
 
 
 
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Section 3.                      Registration of Transfers and Exchanges.
 
 
a) Different Denominations. This Note is exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations, as requested by
the Holder surrendering the same.  No service charge will be payable for such
exchange.
 
 
b) Investment Representations.  This Note has been issued subject to certain
investment representations of the Company and the original Holder set forth in
the Purchase Agreement and may be transferred or exchanged only (i) in
compliance with applicable federal and state securities laws and regulations,
and (ii) in compliance with the Purchase Agreement (including without limitation
Section 4.1 thereof and the requirements set forth therein that such subsequent
Holder make certain additional representations to the Company).

Section 4.                      No Prepayment.  The Company may not prepay this
Note in whole or in part without the prior written consent of the Holder.

Section 5.                      Negative Covenants. As long as any portion of
this Note remains outstanding, unless the Holder shall have otherwise given
prior written consent, the Company shall not, and shall not permit any of its
subsidiaries (whether or not a Subsidiary on the Original Issue Date) to,
directly or indirectly:

a)other than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any Indebtedness of any kind, including but not
limited to, a guarantee, on or with respect to any of its property or assets now
owned or hereafter acquired or any interest therein or any income or profits
therefrom;
 
 
b) other than Permitted Liens, enter into, create, incur, assume or suffer to
exist any Liens of any kind, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
therefrom;

c) amend its charter documents, including without limitation its certificate or
articles of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder;

d) repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a de minimis number of shares of its common stock or any other securities;

e) repay, repurchase or offer to repay, repurchase or otherwise acquire any
Indebtedness (except for the Note in accordance with the terms of the Note),
other than regularly scheduled principal and interest payments as such terms are
in effect as of the Closing Date;
 
 
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f) repay, repurchase or offer to repay, repurchase or otherwise acquire any
Indebtedness to any current or former employees, officers or directors of the
Company or its Subsidiaries or such current or former employees’, officers’ or
directors’ affiliates, including without limitation any loans from or management
fees payable to Robert Noble, Karen Morgan, Bill Adelson, Pam Stevens or their
affiliates;
 
g)pay cash dividends or distributions on any equity securities of the Company;

h) enter into any transaction with any affiliate of the Company or any
Subsidiary, unless such transaction is made on an arm’s-length basis and
expressly approved by a majority of the disinterested directors of the Company
(even if less than a quorum otherwise required for board approval); or

i) enter into any agreement with respect to any of the foregoing.
 
 
Section 6.                      Events of Default.

a) “Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

                     i. any default in the payment of any amount owing to the
Holder on this Note, as and when the same shall become due and payable (whether
on the Maturity Date or by acceleration or otherwise) which default is not cured
within 5 Business Days;
 
 
ii. the Company shall fail to observe or perform any other covenant or agreement
contained in the Note which failure is not cured, if possible to cure, within
the earlier to occur of (A) 5 Business Days after notice of such failure sent by
the Holder or its representative and (B) 10 Business Days after the Company has
become or should have become aware of such failure;

iii. a default or event of default (subject to any grace or cure period provided
in the applicable agreement, document or instrument) shall occur under (A) any
of the Transaction Documents or (B) any other material agreement, lease,
document or instrument to which the Company or any Subsidiary is obligated (and
not covered by clause (vi) below);

iv. any representation or warranty made in this Note, any other Transaction
Document, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder shall be
untrue or incorrect in any material respect as of the date when made or deemed
made;
 
 
 
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v. the Company or any Significant Subsidiary shall be subject to a Bankruptcy
Event;
 
 
vi. the Company or any Subsidiary shall default on any of its obligations under
any mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $75,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;

vii. if any of the Security Documents or any Subsidiary Guarantee ceases to be
in full force and effect (including failure to create a valid and perfected
first priority lien on and security interest in all the Collateral (as defined
in the Security Agreement) and Intellectual Property Rights of the Company and
its Subsidiaries) at any time for any reason;

viii. any material adverse change in the condition, value or operation of a
material portion of the Collateral or Intellectual Property Rights; or

ix. any monetary judgment, writ or similar final process shall be entered or
filed against the Company, any subsidiary or any of their respective property or
other assets for more than $75,000, and such judgment, writ or similar final
process shall remain unvacated, unbonded or unstayed for a period of 45 calendar
days.

b) Remedies Upon Event of Default. If any Event of Default occurs, the
outstanding principal amount of this Note, plus accrued but unpaid interest,
liquidated damages and other amounts owing in respect thereof through the date
of acceleration, shall become, at the Holder’s election, immediately due and
payable in cash at the Mandatory Default Amount.  After the occurrence and
during the continuance of any Event of Default, the interest rate on this Note
shall accrue at an interest rate equal to the lesser of 20% per annum or the
maximum rate permitted under applicable law.  Upon the payment in full of the
Mandatory Default Amount, the Holder shall promptly surrender this Note to or as
directed by the Company.  In connection with such acceleration described herein,
the Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and
without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable
law.  Such acceleration may be rescinded and annulled by the Holder at any time
prior to payment hereunder and the Holder shall have all rights as a holder of
the Note until such time, if any, as the Holder receives full payment pursuant
to this Section 6(b).  No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
 
 
 
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Section 7.                      Miscellaneous.
 
 
a) Notices.  Any and all notices or other communications or deliveries to be
provided by the Holder hereunder shall be in writing and delivered personally,
by facsimile, by email, or sent by a nationally recognized overnight courier
service, addressed to the Company, at the address set forth above, or such other
facsimile number or address or email address as the Company may specify for such
purpose by notice to the Holder delivered in accordance with this Section
7.  Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile or by email prior to 5:30 p.m. (New
York City time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile or
email as set forth above on a day that is not a Business Day or later than 5:30
p.m. (New York City time) on any Business Day, (c) the third Business Day
following the date of mailing, if sent by regular mail, or (d) the Business Day
following the date on which such notice or communication is deposited with a
nationally recognized overnight courier service.  The address for such notices
and communications shall be as set forth on the signature pages attached to the
Purchase Agreement.
 
 
b) Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, liquidated damages and accrued
interest, as applicable, on this Note at the time, place, and rate, and in the
coin or currency, herein prescribed.  This Note is a direct debt obligation of
the Company.
 
 
c) Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, reasonably satisfactory to the Company (with an affidavit by the Holder
confirming such loss, theft or destruction being deemed reasonably
satisfactory).

d) Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflict of laws thereof.  Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”).  Each party hereto
 
 
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hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such New York Courts,
or such New York Courts are improper or inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or 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 Note 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 other
manner permitted by applicable 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 Note or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Note, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorney’s fees and other costs and expenses reasonably incurred in the
investigation, preparation and prosecution of such action or proceeding.
 
e) Waiver.  Any waiver by the Company or the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Note.  The failure of the Company or the Holder to insist upon strict adherence
to any term of this Note on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Note.  Any waiver by the
Company or the Holder must be in writing.
 
f) Severability.  If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances.  If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this indenture, and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impeded the execution of any power herein granted to the
Holder, but will suffer and permit the execution of every such as though no such
law has been enacted.
 
 
 
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g) Next Business Day.  Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

h) Headings.  The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof.

i) Assumption.  Any successor to the Company or any surviving entity in a
Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction,
all of the obligations of the Company under this Note and the other Transaction
Documents pursuant to written agreements in form and substance satisfactory to
the Holder and (ii) issue to the Holder a new Note of such successor entity
evidenced by a written instrument substantially similar in form and substance to
this Note, including without limitation having a principal amount and interest
rate equal to the principal amount and the interest rate of this Note and having
similar ranking to this Note, which shall be satisfactory to the Holder.  The
provisions of this Section 7(i) shall apply similarly and equally to successive
Fundamental Transactions and shall not affect the Holder’s other rights
hereunder or under the other Transaction Documents.

j) Usury.  This Note shall be subject to the anti-usury limitations contained
herein and in the Purchase Agreement.

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.
 
 
ENVISION SOLAR INTERNATIONAL, INC.
 
 
By:
           /s/ Robert Noble
Name:
Robert Noble
Title:
CEO

 

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