Attached files
EXHIBIT 99.1
Second Extension and Amendment Agreement with Gemini Master Fund, Ltd
SECOND EXTENSION AND AMENDMENT AGREEMENT
This Second Extension and Amendment Agreement (this "AGREEMENT"), dated
as of December 23, 2011 and effective as of December 31, 2011, is entered into
by and among Envision Solar International, Inc., a Nevada corporation
("COMPANY"), Envision Solar Construction, Inc., a California corporation
(collectively with any other guarantors of the Notes, the "ENVISION GUARANTORS"
or "GUARANTORS"), and Gemini Master Fund, Ltd., a Cayman Islands corporation
(the "INVESTOR"), and Gemini Strategies, LLC ("COLLATERAL AGENT"). The Company
and the Guarantors are sometimes referred to herein individually as an "ENVISION
ENTITY" and collectively as the "ENVISION ENTITIES". Capitalized terms used
herein, but not otherwise defined, shall have the meanings ascribed to them in
that certain Securities Purchase Agreement, dated as of November 12, 2008,
between the Company and the Investor (the "PURCHASE AGREEMENT"), that certain
Assumption Agreement, dated as of February 12, 2010, between the Company and the
Investor (the "ASSUMPTION AGREEMENT"), that certain Extension and Amendment
Agreement, dated as of December 31, 2011, between the Company and the Investor
(the "FIRST EXTENSION AGREEMENT"), or the Notes or other Transaction Documents,
as applicable.
R E C I T A L S:
WHEREAS, pursuant to the Assumption Agreement, the Company issued to
the Investor that certain Second Amended and Restated Secured Bridge Note in the
original principal amount, as of the issuance date thereof of February 12, 2010,
equal to $811,792.20, which as of December 31, 2010 had an outstanding principal
amount equal to $968,854.86 pursuant to the First Extension Agreement ("ORIGINAL
NOTE");
WHEREAS, on or about March 10, 2010, the Investor loaned to the Company
an additional $75,000, which loan was evidenced by an additional Secured Bridge
Note issued by the Company to the Investor in the amount of $75,000, which as of
December 31, 2010 had an outstanding principal amount equal to $88,717.82
pursuant to the First Extension Agreement ("MARCH 2010 NOTE");
WHEREAS, on or about April 22, 2010, the Investor loaned to the Company
an additional $50,000, which loan was evidenced by an additional Secured Bridge
Note issued by the Company to the Investor in the amount of $50,000, which as of
December 31, 2010 had an outstanding principal amount equal to $58,315.90
pursuant to the First Extension Agreement ("APRIL 2010 NOTE", and together with
the Original Note and the March 2010 Note, the "NOTES");
WHEREAS, the Guarantors have entered into that certain Subsidiary
Guarantee, dated as of November 12, 2008 (the "GUARANTEE"), pursuant to which
each Guarantor has guaranteed the satisfaction of all the obligations of the
Company under the Transaction Documents, including without limitation all of the
Notes;
WHEREAS, during the time periods after the original issuance of the
Transaction Documents but before the signing of this document, Envision Solar
Residential Inc., a California corporation, and Envision Africa, LLC, a Delaware
limited liability company, both of which were guarantors in the Transaction
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Documents, and both of which had no assets or external liabilities, were closed
and are no longer valid entities;
WHEREAS (a) on or about February 12, 2010 the Company and the
Guarantors entered into that certain Security Agreement, (b) on or about
November 12, 2008 the Company's predecessor and the Guarantors entered into that
certain Security Agreement and that certain Intellectual Property Security
Agreement, and (c) on or about December 31, 2010 the Company entered into that
certain Intellectual Property Security Agreement (all such security agreements
collectively, the "SECURITY AGREEMENTS"), pursuant to which the Company and the
Guarantors have each granted a security interest in its assets and properties to
the Investor and the Collateral Agent to secure the satisfaction of all the
obligations of the Envision Entities under the Transaction Documents, including
without limitation all of the Notes;
WHEREAS, the Company will be unable to repay the Notes on the Maturity
Date therefor; and
WHEREAS, the Company desires, and the Investor is willing to accept, an
extension of the Maturity Date under all the Notes pursuant to the terms and
conditions set forth herein;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and subject to the
terms and conditions herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. EXTENSION. The Maturity Date under all the Notes is hereby amended to be
December 31, 2012.
2. PRINCIPAL. The Company, the Guarantors and the Investor hereby acknowledge,
confirm and agree that the principal amount outstanding under each of the Notes
as of December 31, 2010 and December 31, 2011 was and will be as set forth on
Schedule A attached hereto. The Company unconditionally owes such amounts
outstanding under the Notes to the Investor, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
3. INTEREST. The Company, the Guarantors and the Investor hereby acknowledge,
confirm and agree that the interest rate under each note will hereby be reduced
to a per annum interest rate of 10% without any change to the methodology of the
calculation of said interest beyond such interest rate.
4. CONVERSION. The Conversion Price under each of the Original Note and the
March 2010 Note is hereby amended to equal $0.20, subject to adjustment as set
forth in Section 5 of each such Note. The April 2010 Note shall be convertible,
in whole or in part at any time and from time to time, into shares of Common
Stock at the option of the Investor on the same terms and conditions as set
forth in Sections 4 and 5 of the Original Note and the March 2010 Note as if
such Sections were set forth in the April 2010 Note. For clarification, the
Conversion Price under the April 2010 Note shall be equal to $0.20, subject to
adjustment as set forth in such Section 5 incorporated therein by reference, and
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conversion under the April 2010 Note shall be subject to the conversion
limitations set forth in such Section 4(c) incorporated therein by reference.
5. OTHER AGREEMENTS.
5.1. REFERENCES TO NOTES AND TRANSACTION DOCUMENTS. All references in
the Transaction Documents and herein to (i) "Transaction Documents" shall be
deemed to be references to the Transaction Documents (as currently defined in
the Purchase Agreement and as amended by the amendments thereto), this
Agreement, the First Extension Agreement, the Forbearance Agreement, the Casita
Security Agreement, the Security Agreements, the Guarantee, the Notes, the
Assumption Agreement, and the Lock-Up Agreements, (ii) "Note" or "Notes" shall
be deemed to be references to collectively the Notes, as amended (including
without limitation any future Notes issued to the Investor), and (iii) "Security
Agreement" shall be deemed to include without limitation the Security
Agreements.
5.2. DISCLOSURE. If the Company takes the position that the amendments
and transactions contemplated hereby constitute material non-public information
concerning the Company, then the Company shall, within two business days
following the date hereof, file a Form 8-k and/or issue a press release
disclosing the material terms of the transactions contemplated hereby. If the
Company does not so file any Form 8-k or issue any press release, then the
Company hereby represents and warrants that the amendments and transactions
contemplated hereby do not constitute material non-public information concerning
the Company. The Company and the Investor shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby and other press releases to be issued by the Company.
5.3. SECURITY CONTINUED. The Envision Entities' obligations under all
the Transaction Documents, including without limitation this Agreement and the
Notes, shall be secured by all the assets of the Envision Entities pursuant to
the Security Agreements as if this Agreement and the Notes were in effect at the
time of execution of such Security Agreements and referenced therein. The
Envision Entities' shall execute such other agreements, documents and financing
statements reasonably requested by the Investor, which will be filed at the
Company's expense with the applicable jurisdictions and authorities.
5.4. NO NOVATION; RULE 144. The Notes as amended hereby shall not
constitute a novation or satisfaction and accord of the Notes. The Company
hereby acknowledges and agrees that the Notes are merely amended hereby and that
the Investor has not given any consideration to the Company in connection with
such amendments, and this Agreement shall not extinguish or release any Envision
Entity under any Transaction Document or otherwise constitute a novation of its
obligations thereunder. For purposes of Rule 144 promulgated under the
Securities Act, the holding period of the Notes shall not be affected by this
Agreement. The Company agrees to take all actions necessary to issue all shares
of Common Stock issuable upon conversion of the Notes without restriction and
not containing any restrictive legend. The Company agrees not to take any
position contrary to this paragraph.
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6. MISCELLANEOUS.
6.1. EFFECT OF THIS AGREEMENT. Except as modified pursuant hereto, no
other changes or modifications to the Transaction Documents are intended or
implied and in all other respects the Transaction Documents are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Agreement and the original Transaction Documents, the terms of this Agreement
shall control. The Transaction Documents, including without limitation this
Agreement, shall be read and construed as one agreement.
6.2. ACKNOWLEDGMENT AND CONTINUATION OF SECURITY INTERESTS. The
Envision Entities hereby acknowledge, confirm and agree that (a) the Investor
has and shall continue to have valid, enforceable and perfected Liens upon and
security interests in the assets and properties of the Envision Entities
heretofore granted to the Investor pursuant to, and having first priority as set
forth in, the Security Agreements, securing all obligations under the
Transaction Documents, including without limitation all the Notes (as amended
hereby), and (b) the Notes, as amended pursuant to this Agreement, continue to
be guaranteed by the Guarantors pursuant to the Guarantee. The Envision Entities
hereby acknowledge, confirm and agree that the Investor has and shall continue
to have valid and enforceable assignments of the patents, trademarks and other
intellectual property and other assets assigned by the Envision Entities,
including without limitation those listed on the annexes to the Security
Agreements.
6.3. EXPENSES. The Company shall reimburse the Investor for all
expenses (including without limitation legal fees and expenses) incurred or to
be incurred by it in connection with this Agreement.
6.4. FURTHER ASSURANCES. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be reasonably
necessary or desirable to effectuate the provisions and purposes of this
Agreement.
6.5. GOVERNING LAW. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the internal laws of the State of New York without regard to principle of
conflicts of laws, but excluding any rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
New York.
6.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto. Delivery of an executed counterpart of this Agreement by
telefacsimile or .pdf shall have the same force and effect as delivery of an
original executed counterpart of this Agreement.
6.7. NEW YORK CIVIL PROCEDURE LAW AND RULES SECTION 3213. The Notes
shall be deemed an unconditional obligation of each of the Envision Entities for
the payment of money and, without limitation to any other remedies of the
Investor, may be enforced against the Envision Entities by summary proceeding
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pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought. For purposes of
such rule or statute, any other document or agreement to which the Investor and
the Envision Entities are parties or which any Envision Entity delivered to the
Investor, which may be convenient or necessary to determine the Investor's
rights under the Notes or any Envision Entity's obligations to the Investor are
deemed a part of the Notes, whether or not such other document or agreement was
delivered together with the Notes or was executed apart from the Notes.
6.8. GUARANTOR DISSOLUTION. The Company represents and warrants that
Envision Solar Residential Inc., a California corporation, and Envision Africa,
LLC, a Delaware limited liability company, each a former subsidiary of the
Company, have been dissolved and all remaining assets, if any, have been
transferred to the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the day and year first above written.
ENVISION SOLAR INTERNATIONAL, INC., a Nevada corporation
By:_____________________________________________________
Name: Desmond Wheatley
Title: CEO
ENVISION SOLAR CONSTRUCTION, INC., a California corporation
By:________________________________________________________
Name: Desmond Wheatley
Title: CEO
Title: CEO
GEMINI MASTER FUND, LTD.
By: GEMINI STRATEGIES, LLC, as investment manager
By:
_________________________________________________
Name: Steven Winters
Title: Managing Member
GEMINI STRATEGIES, LLC, as Agent
By:
_______________________________________________________
Name: Steven Winters
Title: Managing Member
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SCHEDULE A
---------------------------- ---------- ------------ ----------- --------------------------------------------------------
ORIGINAL
NOTE ISSUANCE INTEREST
NOTE NO. DATE RATE - NEW PRINCIPAL AMOUNT
---------------------------- ---------- ------------ ----------- --------------------------------------------------------
ORIGINAL AS OF 12/31/10 AS OF 12/31/11
---------------------------- ---------- ------------ ----------- ----------------- -------------------- -----------------
SECOND AMENDED AND
RESTATED SECURED BRIDGE
NOTE 2010-1 2/12/10 10% $811,792.20 $968,854.86 $1,090,454.68
---------------------------- ---------- ------------ ----------- ----------------- -------------------- -----------------
SECURED BRIDGE NOTE 2010-2 3/10/10 10% $75,000.00 $88,717.82 $99,852.69
---------------------------- ---------- ------------ ----------- ----------------- -------------------- -----------------
SECURED BRIDGE NOTE 2010-3 4/22/10 10% $50,000.00 $58,315.90 $65,635.06
(FORMERLY NON-CONVERTIBLE)
