Document:

EXHIBIT 10.2

CONVERTIBLE
SECURED PROMISSORY NOTE

 

 

 

$1,500,000

September 18, 2017

 

 

San Diego, California

 

FOR VALUE RECEIVED, Envision Solar International, Inc., a
Nevada corporation (“Borrower”), hereby promises to pay to the order of SFE VCF,
LLC, a California limited liability company (“Lender”) at P.O. Box 5005
PMB 134, Rancho Santa Fe, CA 92067, pursuant to the terms of this convertible secured promissory note (the “Note”),
the principal sum of One Million Five Hundred Thousand Dollars U.S. ($1,500,000) plus simple interest at the floating rate per
annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 400
basis points (the “Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during
the term of this Note to reflect any changes in the 12 month LIBOR rate as quoted at 1:00 pm Eastern Time in New York, New York
on that day, or if that day is not a business day, on the next business day thereafter. Interest will only accrue on outstanding
principal. Accrued unpaid interest is payable monthly on the first calendar day of each month for interest accrued during the previous
month, with all outstanding principal and accrued unpaid interest payable in full on or before three hundred and sixty-four (364)
days after the date of this Note first above written (the “Maturity Date”), to the extent not converted into Borrower’s
equity securities pursuant to Paragraph 5 of this Note.

 

1.       Loan.
On the date of this Note first above written, Borrower will borrow from Lender and Lender will lend to Borrower an amount equal
to One Million Five Hundred Thousand Dollars ($1,500,000) in cash (the “Loan Amount”). Payments on this Note will be
credited first to any reimbursable costs under Paragraph 9 of this Note, then to accrued but unpaid interest, and then to outstanding
principal. The Lender will keep the record of all repayments on this Note.

 

2.       Security.
This Note is secured by a perfected recorded first priority security interest in all of the Borrower’s assets (the “Collateral”)
as set forth in that certain Security Agreement by and between Borrower and Lender, dated September 14, 2017 (the “Security
Agreement”). Upon full payment of this Note, as provided elsewhere in this Note, the Lender shall immediately execute all
documents and take all actions necessary or appropriate in order to release the security interest of this Note in the Collateral.
While the Collateral is pledged as security for this Note, the Lender may foreclose on the Collateral in the event of a default
by the Borrower under this Note, subject to senior liens, if any, and the conditions in Paragraph 3 of this Note. The Borrower
shall have no right to have any portion of the Collateral released from the security interest until the Note is repaid in full
and no more Advances will be made on it.

 

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3.       Default.
Any of the following shall constitute a default by Borrower hereunder:

 

		(a)	The failure of Borrower to make any payment of principal or interest required hereunder within
five (5) business days of the due date for such payment, as it may properly be extended pursuant to the terms of this Note; or

 

		(b)	The failure of Borrower to fully perform any other material covenants and agreements under this
Note and continuance of such failure for a period of ten (10) business days after written notice of the default by Lender to the
Borrower.

 

Upon the occurrence of
a default hereunder, Lender may, at its option, declare immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such declaration pursuant to this Note. In the event of a default
by Borrower under Paragraph 3(a) of this Note, commencing on the first day of the default and continuing thereafter until the default
is cured, interest will accrue on unpaid outstanding principal at the rate equal to 500 basis points over the Interest Rate on
this Note.

 

4.       Right
of Prepayment. In the event that the Borrower repays outstanding principal on the Note before the Maturity Date, Borrower will
pay a prepayment penalty in cash to Lender equal to the amount of interest that would have accrued on the Note at the Interest
Rate during the period from the date of the repayment until the Maturity Date.

 

5.       Conversion.
Lender will have the right at any time until the Maturity Date, provided Lender gives Borrower written notice of Lender’s
election to convert prior to any prepayment of this Note by the Borrower with respect to converting that portion of this Note covered
by the prepayment, to convert all or any portion of the outstanding principal and accrued interest (the “Conversion Amount”),
into such number of fully paid and nonassessable shares of the Borrower’s common stock as is determined by dividing the Conversion
Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Borrower’s common
stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during
the five (5) consecutive trading days immediately prior to the date of Lender’s written notice of its election to convert.

 

6.       Additional
Consideration. As additional consideration for the loan made by the Lender to the Borrower as evidenced by this Note, the Borrower
hereby agrees to issue to Lender common stock purchase warrants exercisable for a period of three years from the date of issuance
with an exercise price equal to $0.15 per share. The number of warrants issuable to Lender pursuant to this Paragraph 6 of the
Note will equal 25% of the Loan Amount divided by fifteen cents ($0.15). The warrants will be issued to the Lender within five
(5) business days after the date of this Note first above written.

 

7.       Use
of Proceeds. Borrower covenants to use the proceeds of the Note exclusively to pay-off the entire outstanding amount of that
certain loan and security agreement that Borrower has with Silicon Valley Bank, dated October 30, 2015.

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8.       Note
is Nonrecourse. In the event that Borrower defaults on this Note, Lender shall look solely to the assets of the Borrower for
payment on this Note, and none of the shareholders, officers, directors or affiliates of the Borrower shall have any personal liability
for payment hereunder.

 

9.       Costs
of Collections. Lender shall be entitled to collect reasonable attorney's fees and costs from Borrower, as well as other costs
and expenses reasonably incurred, in curing any default or attempting collection of any payment due on this Note.

 

10.       Repayment
Options. Payments of outstanding principal and interest on this Note may be made in cash, subject to the following: (a) the
Borrower may request in writing delivered to the Lender from time to time that a monthly payment be made by adding the amount due
to the outstanding principal of this Note, and the Lender may in its sole discretion approve or deny such request, and (b) Lender
may elect in its sole discretion by written notice to the Borrower delivered at least one (1) business day before the due date,
to have any payment of interest or principal on this Note paid in cash or in shares of the common stock of the Borrower, using
a price per share equal to the greater of (x) $0.15, or (y) 75% of the Volume Weighted Average Price of the Borrower’s common
stock that is quoted on a public securities trading market (if more than one, the one with the highest trading volume), during
the five (5) consecutive trading days immediately prior to the due date for the payment.

 

11.       Payment.
This Note shall be payable in lawful money of the United States.

 

12.       Place
of Payment. All payments on this Note are to be made or given to Lender at the address provided to Borrower or to such other
place as Lender may from time to time direct by written notice to Borrower.

 

13.       Waiver.
Borrower, for itself and its successors, transfers and assigns, waives presentment, dishonor, protest, notice of protest, demand
for payment and dishonor in nonpayment of this Note, bringing of suit or diligence of taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and properties securing payment hereunder.

 

14.       Severability.
If any provision of this Note or the application thereof to any persons or entities or circumstances shall, to any extent, be invalid
or unenforceable, the remainder of this Note shall not be deemed affected thereby and every provision of this Note shall be valid
and enforceable to the fullest extent permitted by law.

 

15.       No
Partner. Lender shall not become or be deemed to be a partner or joint venturer with Borrower by reason of any provision of
this Note. Nothing herein shall constitute Borrower and Lender as partners or joint venturers or require Lender to participate
in or be responsible or liable for any costs, liabilities, expenses or losses of Borrower.

 

16.       Governing
Law and Venue. This Note shall be governed by and construed solely in accordance with the laws of the State of California without
giving effect to applicable

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conflict of laws provisions. Borrower and Lender
agree that the sole jurisdiction and venue for any litigation arising out of the Note involving Borrower or Lender shall be in
the appropriate federal or state court located in San Diego County, California.

 

17.       No
Waiver. The failure to exercise any rights herein shall not constitute a waiver of the right to exercise the same or any other
right at any subsequent time in respect of the same event or any other event.

 

18.       Entire
Agreement. This Note contains the entire understanding and agreement between the parties with respect to the subject matter
herein and may not be altered or amended except by the written agreement of the parties.

 

19.       Management
Rights. During any time when this Note is outstanding, or when the Lender holds any stock, or any warrants to acquire stock
where the combination of both could result in the Lender owning stock with a current value of one million dollars or greater, in
the Borrower, Lender shall have the following rights:

 

a.       Lender
shall be entitled to consult with and advise management of the Borrower on significant business issues, including management’s
proposed annual operating plans, and management will meet with Lender regularly during each year at the Borrower’s facilities
at mutually agreeable times for such consultation and advice and to review progress in achieving said plans.

 

b.       Lender
may examine the books and records of the Borrower and inspect its facilities and may request information at reasonable times and
intervals concerning the general status of the Borrower’s financial condition and operations, provided that access to highly
confidential proprietary information and facilities need not be provided.

 

c.       The
Borrower shall, concurrently with delivery to the board of directors, give a representative of Lender copies of all notices, minutes,
consents and other material that the Borrower provides to its directors, except that the representative may be excluded from access
to any material or meeting or portion thereof if the board of directors determines in good faith, upon advice of counsel, that
such exclusion is reasonably necessary to preserve the attorney-client privilege, to protect highly confidential proprietary information,
or for other similar reasons.  Upon reasonable notice and at a scheduled meeting of the board or such other time, if any,
as the board may determine in its sole discretion, such representative may address the board with respect to Lender’s concerns
regarding significant business issues facing the Borrower.

 

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IN WITNESS WHEREOF,
Borrower has executed this Note as of the date first hereinabove written.

 

 

BORROWER:

 

Envision Solar International,
Inc.

a Nevada corporation

 

 

By: /s/ Desmond Wheatley

Desmond Wheatley, Chief
Executive Officer

 

 

 

		LENDER:	SFE VCF, LLC

a California
limited liability company

 

 

By: /s/ Lender

[ ]EXHIBIT 10.3

 

SECURITY AGREEMENT - PURCHASE ORDER FINANCING

 

 

THIS SECURITY AGREEMENT
(this “Agreement”) is made and entered into this 18th day of September 2017, by and between SFE
VCF, LLC, a California limited liability company (the “Secured Party”) and Envision Solar International, Inc.,
a Nevada corporation (“Debtor”).

 

RECITALS

 

A.       Debtor
has become obligated to make payment of certain monies to the Secured Party pursuant to a written Revolving Convertible Promissory
Note of even date herewith (the “Note”).

 

B.       As
an express condition of Secured Party’s accepting the Note, Secured Party requires that the Debtor grant the Secured Party
a security interest in all of Debtor’s purchase orders and all proceeds from those purchase orders, as more fully described
in Section 1 to this Agreement.

 

WHEREFORE, the parties
do hereby agree as follows:

 

1.       Grant
of Security Interest.

 

As security for the payment
of all amounts payable under the aforesaid Note, Debtor hereby grants to Secured Party a second priority, recorded, perfected security
interest in the following assets of the Debtor (the “Collateral”):

 

“All of Debtor’s now owned
or hereafter existing or acquired cash, cash equivalents, marketable securities, purchase orders, accounts receivable, general
intangibles, tangible assets, equipment, furniture, fixtures, inventory, goods, instruments, personal property, and chattel paper,
together with all proceeds derived from such assets.”

 

Said security interest
in the Collateral is hereby granted upon the terms, covenants and agreements set forth in this Agreement.

 

2.       Representations
as to Ownership.

 

Debtor hereby represents
that it has not sold, transferred or otherwise disposed of, or agreed to sell, transfer or otherwise dispose of the Collateral
or any part thereof or any interest therein except in the ordinary course of business. Debtor further represents that it has not
encumbered, or agreed to encumber, the Collateral or any part thereof or any interest therein, except in the ordinary course of
business or in accordance with that certain Convertible Secured Promissory Note by and between Debtor and Secured Party, dated
of even date herewith.

 

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3.       Covenants
of Debtor.

 

Debtor hereby covenants and agrees with Secured
Party that, during the term hereof:

 

(a)       Debtor
shall not sell, transfer or otherwise dispose of the Collateral or any part thereof, or agree to sell, transfer or otherwise dispose
of the Collateral or any part thereof, or any interest therein, without the prior written consent of Secured Party, except in the
ordinary course of business;

 

(b)       Debtor
shall not encumber, or agree to encumber, the Collateral, or any part thereof or any interest therein, by a prior security interest
without the prior written consent of Secured Party, except in the ordinary course of business;

 

(c)       Debtor
shall not permit or suffer any lien to hereafter attach to, or be levied upon, the Collateral or any party thereof or any interest
therein, under legal process and to continue unextinguished for a period of more than ninety (90) days unless, within such ninety
(90) day period, an appropriate bond satisfactory to Secured Party is given to stay the effect of such lien, except in the ordinary
course of business;

 

(d)       Until
all obligations secured hereby are paid in full, Debtor shall defend the Collateral against the claims and demands of all persons
arising out of matters occurring after the delivery hereof, other than matters which are the obligations of Secured Party, and
promptly pay, when due, all taxes and assessments upon the Collateral; and

 

(e)       Debtor
will execute and Lender will properly record a UCC-1 Financing Statement (which Lender may do without Debtor’s signature),
and such other documents, and do such other acts and things, as the Secured Party may reasonably require from time to time to establish
and maintain a valid perfected recorded security interest in the Collateral.

 

4.       Default.

 

(a)       An
Event of Default shall be deemed to have occurred hereunder if Debtor defaults under any of its payment obligations to the Secured
Party in the Note, or shall materially breach any term of the Note or this Agreement.

 

(b)       Upon
the occurrence of an Event of Default hereunder, Secured Party may, at its option:

 

(i)       Declare
all obligations secured hereby immediately due and payable; and

 

(ii)       
Proceed forthwith with foreclosure of its security interests in the Collateral in the manner provided by law, and may cause the
Collateral to be sold, upon due notice, at the election of Secured Party, at either public or private sale, for cash or upon terms,
at such price or prices, and in such manner in all respects as Secured Party may deem proper, and at such sale Secured Party may
purchase the whole or any part of the Collateral. From the proceeds of any such sale Secured Party shall first pay all costs and
expenses (including reasonable expenses for attorneys’ fees), and shall apply the balance of such proceeds to accrued unpaid

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interest and then to principal on the Note.

 

(iii)       Secured
Party may seek all other remedies available to it at law or in equity under California law, including without limitation the California
uniform commercial code.

 

5.       Appointment
of Secured Party as Attorney-in-Fact.

 

Debtor hereby appoints
Secured Party as Debtor’s Attorney-in-Fact to do the following in the Event of Default by the Debtor:

 

(a)       Receive,
take, endorse, assign and deliver in Secured Party’s name or Debtor’s name any and all checks, notes, drafts and other
instruments relating to the Collateral;

 

(b)       Take
or bring in the name of Debtor or Secured Party all steps, actions and suits deemed by Secured Party necessary or desirable to
effect collection of the Collateral;

 

(c)       Settle,
compromise or release in whole or in part, any amounts due Debtor from his account debtors;

 

(d)       Extend
the time for payment of any sums due to Debtor by Debtor’s account debtors; and

 

(e)       Do
all things necessary or appropriate to carry out this Agreement.

 

This power, being coupled
with interest, is irrevocable so long as Debtor has any obligation to the Secured Party under the Note. Secured Party shall be
further permitted access to all of Debtor’s books and records relating to the Collateral during normal working hours, on
such notice as Secured Party may deem appropriate.

 

6.       Release
of Security Interest.

 

Upon performance of all
obligations secured hereby, the security interests herein granted shall terminate and Secured Party shall execute such instruments
and perform such acts as may be reasonably requested by Debtor in connection with the release and termination of such security
interest.

 

7.       No
Waiver.

 

No waiver by Secured Party
of any default hereunder shall operate as a waiver of any other default hereunder or of the same default on a future occasion.
All rights and remedies of Secured Party hereunder, or under any other instrument securing any of the obligations secured hereby,
shall be cumulative to the full extent permitted by law.

 

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8.       Notices.

 

All notices, demands, requests
or other communications required or permitted to be given or made under this Security Agreement shall be in writing and shall be
deemed to have been duly given or served if sent by United States registered or certified mail, postage prepaid, addressed to the
party intended, or by personal delivery, at its address set forth below (or such other address as it may designate by notice given
to the other party in manner aforesaid) to wit:

 

Secured Party:

 

SFE
VCF, LLC

P.O.
Box 5005 PMB 134 

Rancho
Santa Fe, CA 92067

Telephone: _________

Email Address: ________________

Attention:

 

Debtor:

 

Envision Solar International, Inc.

5660 Eastgate Drive

San Diego, California 92126

Telephone No.: (858) 799-4583

Email Address: desmond.wheatley@envisionsolar.com

Attention: Desmond Wheatley, Chief
Executive Officer

 

In the case of a mailed
notice, the registration slip or certificate slip, and not the return slip, shall be conclusive evidence of the mailing of any
such notice, and such notice shall be deemed to have been given three (3) days after such mailing.

 

9.       Miscellaneous.

 

(a)       Applicable
Law. This Agreement shall, in all respects, be governed by the laws of the State of California.

 

(b)       Severability.
Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any
conflict between any provision contained herein and any present or future statute, law, ordinance or regulation, the latter shall
prevail, and the provision of this Agreement which is affected shall be curtailed and limited only to the extent necessary to bring
it within the requirements of the law.

 

(c)       Further
Assurances. Each of the parties hereto shall execute and deliver, and acknowledge as appropriate any and all additional papers,
documents and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance
of their obligations hereunder to carry out the intent of the parties hereto, including without limitation the execution and recording
of a UCC-1 Financing Statement in a form satisfactory to Secured Party and its counsel.

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(d)       Modification
or Amendments. No amendment, change or modification of this Agreement shall be valid, unless in writing and signed by all of
the parties to this Agreement.

 

(e)       Successors
and Assigns. Except as otherwise expressly provided herein, no party may assign or transfer its rights or obligations hereunder
without the written consent of all parties to this Agreement. If properly assigned and transferred, all of the terms and provision
contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives,
successor and assigns.

 

(f)       Entire
Agreement. This Agreement constitutes the entire understanding and agreement of the parties with respect to its subject matter
and any and all prior agreements, understandings and representations with respect to its subject matter are hereby terminated and
cancelled in their entirety and are of no further force or effect. No party shall be entitled to rely on any statement, representation
or agreement not herein stated.

 

(g)       Interpretation.
The covenants of good faith and fair dealing are incorporated herein by this reference. This Agreement shall, whenever possible,
be given a reasonable practical and workable interpretation so as to affect the general intentions of the parties. Neither party
shall be entitled to any advantages due to another party’s preparation of this Agreement.

 

(h)       Captions.
The captions appearing at the commencement of the paragraph hereof are descriptive only and for convenience in reference. Should
there be any conflict between any such caption and the paragraph at the head of which it appears, the section and not such caption
shall control and govern in the construction of this Agreement.

 

(i)       Parties
in Interest. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by
reason of the Agreement on any persons other than the parties and, where applicable, their respective owners, partners, shareholders,
directors, officers, employees, servants, representatives, agents heirs, executors, administrators, successors and/or assigns.
Nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third person to any party
to this Agreement.

 

(j)       Exhibits.
All exhibits attached hereto are hereby incorporated by this reference.

 

(k)       Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the
parties have executed this Security Agreement on the date first hereinabove set forth.

 

 

Secured
Party:

 

SFE VCF,
LLC,

A California limited liability company

 

 

 

 

By: /s/ Lender

 

 

 

Its: 

 

 

 

 

DEBTOR:

 

Envision Solar International, Inc.

 

 

 

By: /s/ Desmond Wheatley

Desmond Wheatley, Chief
Executive Officer

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