f8k0210ex10viii_envision.htm


    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.

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
 

      “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.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
 

      “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.

       

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
 

      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;


     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    



    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;

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    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.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    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

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

       

      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.

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
 

    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.

    


    *********************

     

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

     

    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

              


      

    

    
 

    


    10