8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

___________________________________________________________________

Date of Report (Date of earliest event reported):  February 10, 2010

Casita Enterprises, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada	333-147104	20-8457250
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7675 Dagget Street Suite 150 San Diego, California	92111
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:    (858) 799-4583    

1093 East Main Street, # 508

El Cajon, California 92021

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

CURRENT REPORT ON FORM 8-K

CASITA ENTERPRISES, INC.

TABLE OF CONTENTS

Item 2.01	Completion of Acquisition or Disposition of Assets	1
	Merger	1
	Description of Our Company	2
	Description of Business	2
	Legal Proceedings	10
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Risk Factors	14
	Security Ownership of Certain Beneficial Owners and Management	20
	Executive Officers and Directors	20
	Executive Compensation	21
	Certain Relationships and Related Transactions	26
Item 3.02	Unregistered Sales of Equity Securities	26
	Description of Capital Stock	27
Item 5.01	Changes in Control of Registrant.	28
Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.	28
Item 5.03	Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.	28
Item 5.06	Change in Shell Company Status.	29
Item 9.01	Financial Statements and Exhibits.	29

Item  2.01       Completion of Acquisition or Disposition of Assets

 Merger

The Merger.  On February 10, 2010, Casita Enterprises, Inc., a Nevada corporation (“Casita”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) by and among Casita, Envision Solar International, Inc., a privately held California corporation (“Envision”), and ESII Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of STG (“Acquisition Sub”). Upon closing of the merger transaction contemplated under the Merger Agreement (the “Merger”), Acquisition Sub was merged with and into Envision, and Envision, as the surviving corporation, became a wholly-owned subsidiary of Casita.

● At the closing of the Merger, each share of Envision’s common stock issued and outstanding immediately prior to the closing of the Merger was converted into the right to receive 9.398 shares of Casita’s common stock (the “Exchange Ratio”), and each option and warrant to purchase Envision’s common stock was converted on the same basis into, respectively, an option or, in the case of consenting warrant holders, warrants to purchase Casita’s common stock. An aggregate of 8,000,000 shares of Casita’s common stock were issued to the holders of Envision’s common stock, and an aggregate of 2,819,340 shares, subject to any adjustments that may be required in order to comply with Sections 409A and 422of the Internal Revenue Code of 1986, as amended (the “Code”), and 51,808 shares of Casita’s common stock were reserved for issuance under such Envision options and warrants, respectively.

● Pursuant to the terms of the Merger Agreement, Casita assumed all of Envision’s obligations under Envision’s outstanding stock options and warrants. Immediately prior to the Merger, Envision had outstanding stock options and warrants to purchase an aggregate of 428,980 and 5,513 shares of its common stock, respectively, which outstanding options and warrants became options and warrants to purchase an aggregate of 4,031,472 shares (subject to any adjustments that may be required in order to comply with Sections 409A and 422of the Code) and 51,808 shares of Casita’s common stock, respectively, after giving effect to the Merger.  In connection with the assumption of Envision’s 2007 Unit Option Plan (the “2007 Plan”), under which 100,000 shares of Envision’s common stock were reserved for issuance as incentive awards to officers, directors, employees and other qualified persons, Casita reserved 939,800 shares (subject to any adjustments that may be required in order to comply with Sections 409A and 422of the Code) of its common stock for issuance under the assumed 2007 Plan. In connection with the assumption of Envision’s 2008 Option Plan (the “2008 Plan”), under which 200,000 shares of Envision’s common stock were reserved for issuance as incentive awards to officers, directors, employees and other qualified persons, Casita reserved 1,879,560 shares (subject to any adjustments that may be required in order to comply with Sections 409A and 422of the Code) of its common stock for issuance under the assumed 2008 Plan. Neither Casita nor Envision had any other options or warrants to purchase shares of capital stock outstanding immediately prior to the closing of the Merger.

●   Upon the closing of the Merger, Jose Cisneros resigned as the sole officer and director of Casita, and simultaneously with the Merger a new board of directors and new officers were appointed for Casita. Casita’s new board of directors consists of Robert Noble and Jay Potter, previously the directors of Envision. In addition, immediately following the Merger, Casita appointed the previous officers of Envision as officers of Casita.

● Immediately following the closing of the Merger, under the terms of an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Conveyance Agreement”), Casita transferred all of its pre-Merger assets and liabilities to its wholly owned subsidiary, Casita Enterprises Holdings, Inc., a Delaware corporation (“SplitCo”). Thereafter, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), Casita transferred all of the outstanding capital stock of SplitCo to Jose Cisneros and four former stockholders of Casita in exchange for certain indemnifications, waivers and releases, along with the cancellation of an aggregate of 5,000,000 shares of Casita’s common stock (the “Split-Off”), leaving 12,000,000 shares of common stock outstanding, of which 4,000,000 were shares held by persons who were stockholders of Casita prior to the Merger.

● Immediately following the Split-Off, the board of directors of Casita, pursuant to Section 78.207 of the Neveda Revised Statutes, approved a 3.25-for-1 forward stock split (the “Stock Split”). Pursuant to the Stock Split, every one (1) share of Casita’s issued and outstanding common stock as presently classified will be reclassified into 3.25 whole post-split shares of the Casita’s common stock. In addition, in connection with the Stock Split, Casita’s authorized common stock was increased from 50,000,000 shares of common stock to 162,500,000 shares of common stock. No fractional shares of the Casita’s common stock will be issued in connection with the Stock Split. Stockholders who are entitled to a fractional post-split share will receive in lieu thereof one (1) whole post-split share. Following the Stock Split, each stockholder’s percentage ownership interest in Casita and proportional voting power remain virtually unchanged except for minor changes that will result from rounding fractional shares into whole shares. The rights and privileges of the holders of Casita’s common stock is substantially unaffected by the Stock Split. All issued and outstanding options, warrants, and convertible securities of Casita immediately prior to the Stock Split have been adjusted for the Stock Split, including the options and warrants assumed by Casita in the Merger listed above.

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● Following the Merger, the Split-Off and the Stock Split, there will be issued and outstanding on a fully diluted basis (assuming the exercisability of the warrants and options described above) and reserved under the 2007 Plan, the 2008 Plan and 2010 Plan, 48,331,426 shares of Casita’s common stock, as follows:

§   the former stockholders of Envision hold 26,000,000 shares of Casita’s common stock

§   the legacy stockholders of Casita hold 13,000,000 shares of Casita’s common s tock

§   there are an aggregate of 9,162,856 shares of Casita’s common stock issued or reserved under the 2007 Plan and 2008 Plan

§   there are 168,376 warrants to purchase shares of Casita’s common stock issued and outstanding

The foregoing description of the Merger and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the (i) Merger Agreement, which is filed as Exhibit 2.1 hereto, (ii) the Conveyance Agreement, which is filed as Exhibit 10.23 hereto, and (iii) the Stock Purchase Agreement, which is filed as Exhibit 10.24 hereto, each of which is incorporated herein by reference.

The shares of Casita’s common stock issued to former holders of Envision’s common stock in connection with the Merger were not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under that section, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements.  Certificates representing these shares contain a legend stating the restrictions applicable to such shares.

Changes to the Business.  Casita intends to carry on Envision’s business as its sole line of business.  Casita has relocated its executive offices to 7675 Dagget Street, Suite 150, San Diego, California 92111 and its telephone number is (858) 799-4583.

Changes to the Board of Directors and Executive Officers.  Upon the closing of the Merger, Jose Cisneros resigned as the sole officer and director of Casita and Robert Noble and Jay Potter were appointed to Casita’s board of directors.  Following the Merger, Robert Noble was appointed as Casita’s chief executive officer, president and chairman of the board, Howard Smith was appointed as chief financial officer and treasurer and Joanna Tan was appointed as executive vice president, chief operating officer and secretary.

All directors hold office for one-year terms until the election and qualification of their successors.  Officers are elected by the board of directors and serve at the discretion of the board.

Accounting Treatment.  The Merger is being accounted for as an acquisition and recapitalization.    Envision is the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that are reflected in the financial statements herein are those of Envision.

Tax Treatment.   Any gain required to be recognized will be subject to regular individual or corporate federal income taxes, as the case may be.

Description of Our Company

 ESII’s predecessor, Envision Solar, LLC, was formed in 2006 as a California limited liability company.  It was converted from a California limited liability company to a California corporation pursuant to a plan of statutory conversion on September 11, 2007.  ESII has three wholly-owned subsidiaries, Envision Solar Construction, Inc., a California corporation (“Envision Construction”), Envision Solar Residential, Inc., a California corporation (“Envision Residential”) and Envision Africa, LLC, a Delaware limited liability company (“Envision Africa”).

Description of Business

As used in this Current Report on Form 8-K, all references to the “Company,” “we,” “our” and “us” for periods prior to the closing of the Merger refer to ESII, and for periods subsequent to the closing of the Merger refer to Casita.

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Overview

We are a solar design and development company that services the sustainable and solar building systems industries.   Our services include solar infrastructure master planning, solar master planning, solar system design and solar system procurement and development management for commercial, industrial, institutional and residential customers. We have also developed solar integrated building systems including Solar Trees, Solar Rows, LifePorts and LifeVillages, and provide a full range of solar project planning, design, engineering and construction management services to support these products.

We were founded in 2006 by a team of sustainable design architects with the aim of broadening the use of solar powered technologies throughout the world, while at the same time capitalizing on its growth in popularity.  In particular, we seek to design and develop:

·   solar parking arrays for applications on parking lots and parking structures

·   integrated tracking technologies and systems for solar parking arrays

·   solar integrated electric vehicle charging systems product packages, and,

·   other solar integrated infrastructure and building systems including modular, light gauge steel based systems  with integrated battery storage capacity, for residential, light-commercial and developing nation applications.

From 2007 through 2009, we completed 18 solar technology projects, including 12 parking lot solar arrays (known as ParkSolar projects) and six residentialscale, cold-formed steel installations (known as LifeSystems, which include LifePorts). In addition, in 2008, we developed an Independent Sustainable Energy Facility (ISEF) product for use by the military, developing nations, and others- marketed as LifeVillage that was based upon our LifeSystems products.

The Industry

Electric power is used to operate businesses, industries, homes, offices and provides the power for our communications, entertainment, transportation and medical needs. As our energy supply and distribution mix changes, we believe that electricity is likely to be used more frequently and pervasively for local transportation (electric vehicles) and space/water heating needs.  According to the U.S. Department of Energy, electricity in 2008 (the last year for which data is available) was generated from the following sources: coal – 23.9%, natural gas – 21.2%, crude oil – 10.5%, nuclear – 8.5% and renewable energy – 9.8%.   “Renewable energy” typically refers to non-traditional energy sources, including solar energy. Due to continuously increasing energy demands, we believe the electric power industry faces the following challenges:

·   Limited Energy Supplies. The primary fuels that have supplied this industry, fossil fuels in the form of oil, coal and natural gas, are limited. Worldwide demand is predicted to increase at a time that industry experts have concluded that supply is limited. Therefore, the increased demand will probably result in increased prices, making it more likely that long-term average costs for electricity will continue to increase.

·   Generation, Transmission and Distribution Infrastructure Costs. Historically, electricity has been generated in centralized power plants transmitted over high voltage lines, and distributed locally through lower voltage transmission lines and transformer equipment. As electricity needs increase, these systems will need to be expanded. Without further investments in this infrastructure, the likelihood of power shortages (“brownouts” and “blackouts”) may increase.

·   Stability of Suppliers. Since many of the major countries who supply fossil fuel are located in unstable regions of the world, purchasing oil and natural gas from these countries may increase the risk of supply shortages and cost increases.

·   Environmental Concerns and Climate Change. Concerns about global warming and greenhouse gas emissions has resulted in the Kyoto Protocol, various states enacting stricter emissions control laws and utilities in several states being required to comply with renewable portfolio standards, which require the purchase of a certain amount of power from renewable sources.

Solar energy is the underlying energy source for renewable fuel sources, including biomass fuels and hydroelectric energy. By extracting energy directly from the sun and converting it into an immediately usable form, either as heat or electricity, intermediate steps are eliminated. We believe, in this sense, solar energy is one of the most direct and unlimited energy sources.

Solar energy can be converted into usable forms of energy either through the photovoltaic, or PV, effect (generating electricity from photons) or by generating heat (solar thermal energy). Solar thermal systems include traditional domestic hot water, or DHW, collectors, swimming pool collectors, and high temperature thermal collectors (used to generate electricity in central generating systems). DHW thermal systems are typically distributed on rooftops so that they generate heat for the building on which they are situated. High temperature thermal collectors typically use concentrating mirror systems and are typically located in remote sites.

According to PV News, California and New Jersey account for approximately 90% of the U.S. residential market. We believe this is largely attributable to the fact that these states currently have the most attractive incentive programs. The California Solar Initiative provides $3.2 billion of incentives toward solar development over 11 years.  In addition, recently approved regulations in New Jersey require solar PV power to provide 2% of New Jersey’s electricity needs by 2020, requiring the installation of 1,500 megawatts of solar electric power. According to DSIRE (the Database of State Incentives for Renewable Energy) at least 18 other states also have some type of incentive program and 20 states provide some type of rebate to customers or installers of solar power systems. We expect that such programs, as well as federal grants, tax rebates and other incentives, all of which are discussed in greater detail below, will continue to drive growth in the solar power market for the near future.

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Anatomy of a Solar Power System

Solar power systems convert the energy in sunlight directly into electrical energy within solar cells based on the photovoltaic effect. Multiple solar cells, which produce direct current, or DC, power, are electrically interconnected into solar panels. A typical 180 watt solar panel may have 72 individual solar cells. Multiple solar panels are electrically wired together. The number of solar panels installed on a building are generally selected to meet that building’s annual electrical usage, or selected to fill available un-shaded roof or ground space. Solar panels are electrically wired to an inverter, which converts the power from DC to alternating current, or AC, power and interconnects with the utility grid.

Solar Electric Cells. Solar electric cells convert light energy into electricity at the atomic level. The conversion efficiency of a solar electric cell is defined as the ratio of the sunlight energy that hits the cell divided by the electrical energy that is produced by the cell. By improving this efficiency, we believe solar electric energy becomes competitive with fossil fuel sources. The earliest solar electric devices converted about 1% - 2% of sunlight energy into electric energy. Current solar electric devices convert 5% - 25% of light energy into electric energy (the overall efficiency for solar panels is lower than solar cells because of the panel frame and gaps between solar cells), and current mass produced panel systems are substantially less expensive than earlier systems. Efforts in the industry are currently being directed towards the development of new solar cell technology to reduce per watt costs and increase area efficiencies.

Solar Panels. Solar electric panels are composed of multiple solar cells, along with the necessary internal wiring, aluminum and glass framework, and external electrical connections. Although panels are usually installed on top of a roof or on an external structure, certain designs include the solar electric cells as part of traditional building materials, such as shingles and rolled out roofing. Solar electric cells integrated with traditional shingles is usually most compatible with masonry roofs and, while it may offset costs for other building materials and be aesthetically appealing, it is generally more expensive than traditional panels.

Inverters. Inverters convert the DC power from solar panels to the AC power used in buildings. Grid-tie inverters synchronize to utility voltage and frequency and only operate when utility power is stable (in the case of a power failure these grid-tie inverters shut down to safeguard utility personnel from possible harm during repairs). Inverters also operate to maximize the power extracted from the solar panels, regulating the voltage and current output of the solar array based on sun intensity.

Monitoring. There are two basic approaches to access information on the performance of a solar power system. We believe that the most accurate and reliable approach is to collect the solar power performance data locally from the inverter with a hard-wired connection and then transmit that data via the internet to a centralized database. Data on the performance of a system can then be accessed from any device with a web browser, including personal computers and cell phones. As an alternative to web-based remote monitoring, most commercial inverters have a digital display on the inverter itself that shows performance data and can also display this data on a nearby personal computer with a hard-wired or wireless connection.

Net Metering. The owner of a grid-connected solar electric system may not only buy, but may also sell, electricity each month. This is because electricity generated by the solar electric system can be used on-site or fed through a meter into the utility grid. Utilities are required to buy power from owners of solar electric systems (and other independent producers of electricity) under the Public Utilities Regulatory Policy Act of 1978. California’s net metering law provides that all utilities must allow customers with solar electric systems rated up to one megawatt to interconnect with the local utility grid and receive retail value for the electricity produced. When a home or business requires more electricity than the solar power array is generating (for example, in the evening), the need is automatically met by power from the utility grid. When a home or business requires less electricity than the solar electric system is generating, the excess is fed (or sold) back to the utility and the electric meter actually spins backwards. Used this way, the utility serves as a backup to the solar electric similar to the way in which batteries serve as a backup in stand-alone systems.

Solar Power Benefits

The direct conversion of light into energy offers the following benefits compared to conventional energy sources:

·   Economic.  Once a solar power system is installed, the cost of generating electricity is fixed over the lifespan of the system. There are no risks that fuel prices will escalate or fuel shortages will develop. In addition, cash paybacks for systems range from 5 to 25 years, depending on the level of state and federal incentives, electric rates, annualized sun intensity and installation costs. Solar power systems at customer sites generally qualify for net metering to offset a customer’s highest electric rate tiers, at the retail, as opposed to the wholesale, electric rate.

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·   Convenience.  Solar power systems can be installed on a wide range of sites, including small residential roofs, the ground, covered parking structures and large industrial buildings. Solar power systems also have few, if any, moving parts and are generally guaranteed to operate for 25 years resulting, we believe, in low maintenance and operating costs and reliability compared to other forms of power generation.

·   Environmental.  We believe solar power systems are one of the most environmentally friendly ways of generating electricity. There are no harmful greenhouse gas emissions, no wasted water, no noise, no waste generation and no particulates. Such benefits continue for the life of the system.

·   Security.  Producing solar power improves energy security both on an international level (by reducing fossil energy purchases from hostile countries) and a local level (by reducing power strains on local electrical transmission and distribution systems).

·   Infrastructure.  Solar power systems can be installed at the site where the power is to be used, thereby reducing electrical transmission and distribution costs. Solar power systems installed and operating at customer sites may also save the cost of construction of additional energy infrastructure including power plants, transmission lines, distribution systems and operating costs.

Our Products and Services

We are active in the solar power industry as a designer and developer of solar power systems on parking lots and parking structures for commercial, institutional and municipal customers.  We provide our customers with a single point of contact for their system design, engineering work, building permit, rebate approval, utility hookup and subsequent maintenance. We concentrate on the design and development of grid-tied solar power systems that are able to take advantage of net metering initiatives.   We entered the residential market in 2008 and commenced design and installation of solar charging stations for plug-in hybrid electric vehicles in 2009.  Our services, which include sustainable infrastructure master planning, solar master planning, solar system design and engineering, solar system procurement and delivery, and solar system project development and turnkey management, are provided by us, together with partner companies such as general contractors, construction managers, solar integrators, architecture firms, planning firms, structural engineers and electrical engineers.

Our Products

Commercial Solar Parking Arrays.OurPark Solar designs and structures address the commercial solar parking lot array market. Commercial parking lots and parking structures provide a tremendous opportunity for solar deployment.  They are ideal locations for the installation of solar power systems because photovoltaic arrays require a large physical area that is free from any obstruction that may cause shading on the photovoltaic panels.  Typical rooftops, in contrast, often have elevator overruns, stair towers, vents, mechanical systems, screens and waterproof membranes that interfere with direct sunlight and create a range of solar and building performance issues.   Solar parking arrays are very attractive to property owners with large parking areas and high electric utility bills because they shade vehicles in an aesthetic manner and create renewable energy for the adjacent facility.  Unlike traditional rooftop-mounted solar arrays, our designs are highly attractive, are visible commitments to environmental responsibility and create added value for each property in the form of covered parking.   We market, design and develop solar parking arrays under the SolarTreeand Solar Grove trademarks.  Prospective customers for solar parking arrays include corporate campuses, commercial office buildings, light industrial facilities, shopping malls, quick service restaurants, municipal and government buildings, schools, colleges, apartment complexes, universities, transit authorities, hospitals and medical clinics, airports, sports arenas, amusement parks, zoos, museums and performing arts centers and military bases.

Our Park Solar products for commercial solar parking lot arrays are custom designed and installed on a project-by-project basis. Projects are acquired through direct sales efforts by our staff and referrals through partner companies including:  independent solar power owners, project developers, solar integrators and building industry providers (i.e., general contractors and construction management firms).  The Park Solar products are designed for re-use and systematized mass-production, but are currently fabricated for specific projects and erected and installed by general contractors.  Because we outsource the fabrication of our engineered structures, we do not hold any inventory.

Electric Vehicle and Hybrid Electric Vehicle Charging Stations.  Our electric vehicle and hybrid electric vehicle charging station product, CleanCharge, is an integrated “solar to smart-grid electric vehicle charging system” comprised of a Solar Tree and an electric vehicle charging infrastructure system. CleanCharge provides electricity to electric vehicles and plug-in hybrid electric vehicles and is typically installed in conjunction with ParkSolar projects.  The solar charging stations will include a parking shade structure, solar PV modules, inverters, battery back-ups and other technologies.

 In April 2009, Bright Automotive unveiled its IDEA electric vehicle in Washington, D.C. and we designed and built a CleanCharge prototype for the event. To date, we have installed two CleanCharge stations for Dell, Inc. in Round Rock, Texas and one for McDonalds in San Diego, California.

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Residential Scale Solar Infrastructure Integrated Building Systems.  Our LifeSystems product line of modular solar structures for residential and light commercial markets offers kit-build, free-standing structures. The modular structure kits include light-gauge steel framing, a complete standing seam metal roof, photovoltaic modules, inverter equipment, and all fasteners and screws.  Options for cladding, windows, doors, and wall inserts are available to customize the final product.   Potential customers for LifeSystems include existing or new construction single family home residential developments, and existing or new construction multi-family housing complexes.  These products are not currently available in wide scale distribution, although we have recently completed pilot projects.  Future plans for wide scale distribution will rely on securing third party licensing and partnering agreements.

Independent Sustainable Energy Facilities. Our LifeVillage products offer rapid and widespread deployment of safe, system-built, solar-integrated buildings that provide shelter and clean energy.   By creating their own clean energy, they have the potential to provide purified water, modern communications facilities and equipment and transmission capabilities for cell phones, internet, radio and television. Each LifeVillage is a grouping of LifePorts in a self-contained configuration to deliver clean, reliable energy, water and other services. We have conceptualized and developed a comprehensive, integrated, turn-key model to construct independent sustainable energy facilities, which model comprises of component integration and packaging for national and international delivery, on-site structure fabrication and construction and reliable, scalable battery storage systems.

Our LifeVillage products are not currently in wide scale distribution. Future plans for wide scale distribution will rely primarily on distribution agreements with entities in overseas markets, defense contractors, global construction and other building industry companies. Potential uses for LifeVillage products include:

·   refugee facilities, hospitals, clinics and housing;

·   mass housing;

·   communications companies;

·   banks;

·   commercial offices;

·   retail, housing, hospitality and healthcare;

·   military, police, postal, education and other government agencies; and

· electricity, gas, water, power plants and co-generation facilities

Products Under Development

We have several product initiatives under development:

·   Solar Tree-in-a-box - we are developing a flat pack box, called a Solar Tree-in-a-box to commercialize the Solar Trees, allowing for wider distribution geographically and economies of scale for greater volume. This product is part of our initiative called “Drive to Grid Parity,” which recognizes that if parking lot solar arrays can be fully installed at a price point of $5 per watt DC, we can enter markets with much favorable economics.

·   EnvisionTrak- a single axis tracking Solar Tree which has the ability to track the sun throughout the day, significantly increasing the output of the photovoltaic system.

·   ComposiTree- a Solar Tree constructed of resin based, fiber-reinforced pultrusions, which will be approximately one-quarter the weight of current Solar Trees constructed of steel.

Services

We believe that there is a growing need worldwide for our high-level, comprehensive solar and sustainable infrastructure master planning capabilities, with projects that include site-specific solar master plans as well as large-scale “solar city” master planning projects. In addition to typical planning considerations of fresh and waste water, energy, building, transportation and other infrastructure components, we integrate all viable renewable energy options and other environmental/sustainable components into our plans.

Markets for our services include local, state and federal/national governments, corporations and institutions.  Planning and design services can be provided for corporate campuses, commercial office buildings, light industrial facilities, shopping malls, municipal and government buildings, schools, colleges, apartment complexes, universities, transit authorities, hospitals and medical clinics, airports, sports arenas, amusement parks, zoos, museums and performing arts centers, military bases, new construction single family home residential developments and existing or new construction multi-family housing complexes.

Sustainable Infrastructure Master Planning. We have the capability to provide sustainable infrastructure master planning (SIMP) services to governments, corporate organizations, and institutions including but not limited to the following areas: solar, wind, geothermal, biomass, anaerobic digestion and other sustainable/renewable energy sources. SIMP involves evaluation of the entire range of sustainability options available to a government, corporate organization or institution and making recommendations through a comprehensive plan. SIMP includes development of an integrated overall project sustainability strategy, consideration and assembly of governmental, academic, non-governmental and private sector co-participants and review and consideration of sustainable design, technology, infrastructure and “best practices” including but not limited to solar, wind, geothermal, biomass, anaerobic digestion and other sustainable/renewable energy sources. As part of the planning process, we develop the project design guidelines, produce the building and structure concept design, define the project scheduling, participate in the development and review of all cost estimates and budgeting, coordinate US Green Building Council’s Leadership in Energy and Environmental Design (LEED) analyses, and assess relevant technologies, qualifications and capabilities of manufacturers, contractors and service providers. We also represent our clients in the planning and support of entitlement and approvals as well as participation in the review of environmental impact reports.

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Solar Master Planning.  We have the capability to provide solar master planning services to governments, corporate organizations, and institutions including but not limited to the following areas: rooftop, ground-mount, BIPV (Building Integrated Photovoltaic) and Solar Integrated Infrastructure and Building Systems (SIIBS). Examples of SIIBSinclude elevated solar parking lot arrays (Solar Tree and Solar Row), residential systems (LifeSystems) and Life Village.  Solar master planning services involve evaluation of the entire range of solar energy options available to a government, corporate organization or institution and making recommendations through a comprehensive plan.  As part of the planning process, we develop an integrated overall project solar strategy, provide solar site recommendations, analyze the four major types of solar installation:  rooftop, ground-mount, BIPV and SIIBS, calculate solar system sizes, annual energy output and cost estimates, assess solar technology including solar-thermal and solar-photovoltaic and evaluate the qualifications and capabilities of solar manufacturers and service providers.   In addition, we develop the project solar design guidelines and performance standards, plan and support entitlement processing and approvals, define the project scheduling and participate in the development and review of all cost estimates and budgeting.

Solar System Design and Engineering.  We have the capability to provide solar system design services to governments, corporate organizations and institutions.  Examples of solar system designs include photovoltaic rooftop systems, photovoltaic ground mount systems, BIPV systems and solar integrated infrastructure building systems (SIIBS).

This service entails site- specific analysis, preliminary drawing, financial analysis and calculation of system size and annual power output. Following completion of this analysis, we design a solar system and present it to the client and provide the client with a concept design, schematic design, design development, landscape design and with civil, geotechnical, structural and electrical engineering analysis. The industrial design phase includes the design of the solar system structure, racking system and tracking if applicable.

Solar System Procurement and Delivery.  This service entails the fabrication and delivery of solar infrastructure integrated building systems (SIIBS).

Solar System Project Development and Turnkey Management.  This service includes all of the deliverables provided with our solar system design and engineering and solar system procurement and delivery services, and project management.

Future Services

Additional services we may offer in the future include solar system operations and maintenance and systems monitoring and data acquisition, which entails assisting customers in the selection of system monitoring equipment and coordinating the installation of the monitoring system.

Competition

The solar power design and integration industry is in its early stages of development and is highly fragmented.  Competitors in our market include: SPG Solar, SunPower, Solar Power Inc., Borrego Solar, Akeena Solar, and Baja Construction. A number of these competitors are significantly larger and have substantially greater resources than we do and are able to achieve greater economies of scale and lower cost structures than us and may, therefore, be able to provide their products to customers at lower prices than we are able to. Moreover, we cannot be certain that our competitors will not develop the expertise, experience and resources to offer products that are superior in both price and quality to our products. Similarly, we cannot be certain that we will be able to maintain or enhance our competitive position within our industry, maintain our customer base at current levels or increase our customer base.  In addition to the foregoing, we also face competition from installers and integrators of solar systems, photovoltaic module manufacturers, independent solar power owners, renewable energy developers, solar architects, architectural firms and construction firms.

Strategy

Our strategy is to build upon our foundation of solar architecture and industrial design, long-term experience in the building and construction industry with technology innovation, advanced product development and engineering. We currently derive our revenues from various services, including: sustainable infrastructure master planning, solar master planning, design/engineering services, project development, project management, construction services, system integration, operations and maintenance. Our long-term revenue model is to commercialize all of our designs for easy, standardized, drop-ship customer delivery worldwide.

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Customers

Our customer base is varied. Our Park Solar customers include: McBride Electric for a project with Dell Inc.,  Conengy for a project with Centocor Inc., Borrego Solar for a project with the University of California -San Diego,  Macerich/TFO Architects for a project at Santa Monica Place,  Sun Edison for a project with the California State University-Bakersfield and AMSolar for a project with a McDonald’s franchisee.  Our solar master plan customers include The Centre for Environmental Planning and Technology in Gujarat, India.

Suppliers

We are not a manufacturer and do not source raw materials.  The main components of the Park Solar products are photovoltaic panels, inverters and the steel structures (such as Solar Trees) that support the photovoltaic panels.   We do not typically purchase the photovoltaic panels or inverters directly.  In most cases, the solar system owner will purchase these components.  The solar system owner is typically either the end user of the Park Solar product or the project developer (e.g. a power purchase agreement provider).   The steel structures that support the photovoltaic panels are typically supplied directly to the general contractors who work on our behalf by steel providers.  Our direct principal suppliers are vendors such as general contractors and structural engineers.

Research and Development

We not only supply and develop solar power systems, but we also seek to develop new technologies and products that will promote the expansion of the industry.  During the fiscal years ended December 31, 2007 and 2008 and the period ended September 30, 2009, we spent $13,785, $127,337, and $0 respectively, on research and development activity, none of which was borne directly by our customers.  

Intellectual Property

Patents

We have been issued U.S. Patent # 0194669 from the U.S. Patent and Trademark Office for EnvisionTrak – a Sun Tracking Solar Panels (i.e a dual-axis tracking Solar Tree).  In addition, we have a patent pending that covers key claims of our LifePort technology (Support System For A Photovoltaic System – Application #11/842,484).

Registered Trademarks

We have registered the trademarks “Solar Tree” for prefabricated metal carport systems composed of photovoltaic modules, electrical inverters and supporting structures for generating electric power from solar radiation and for providing shade for vehicles, “Solar Grove” for multiple carport systems composed of photovoltaic modules, electrical inverters and supporting structures for generating electric power from solar radiation and for providing shade for vehicles and “LifePort” for prefabricated metal buildings.  Previously, under an exclusive licensing agreement with Kyocera Solar that expired December 31, 2008, the Solar Tree and Solar Grove marks could only be used with Kyocera Solar products.  We purchased these marks from Kyocera Solar, Inc. and can use them in connection with any photovoltaic systems supplied by any third party.

Strategic Technology Developments

Other technology initiatives that we are actively developing include the ComposiTree and the Solar Tree-in-a-box. We plan to apply for additional patents for LifeSystems products and the LifeVillage Independent Sustainable Energy Facilities.

Regulatory Matters

Our operations are subject to a variety of national, federal, state and local laws, rules and regulations relating to worker safety, zoning, building and electrical codes, and the use, storage, discharge and disposal of environmentally sensitive materials. Because we purchase and do not manufacture our solar power systems, we do not use, generate, store or discharge toxic, volatile or otherwise hazardous chemicals and wastes. We do not engage in such activities in connection with our research and development activities. We believe that we are in compliance in all material respects with all laws, rules, regulations and requirements that affect our business. Further, we believe that compliance with such laws, rules, regulations and requirements does not impose a material impediment on our ability to conduct business.

We believe that economic and national security issues, technological advances, environmental regulations seeking to limit emissions from the use of fossil fuels, air pollution regulations restricting the release of greenhouse gasses, aging electricity transmission infrastructure and limited and sometimes unreliable supply of fossil fuels, has made reliance on traditional sources of fuel for generating electricity less attractive. Government policies, in the form of both regulation and incentives, have accelerated the adoption of solar technologies by businesses and consumers. For example, in the United States, the 2005 energy bill enacted for three years a 30% investment tax credit for solar which was renewed and extended for an additional eight years in November 2008, and in February 2009 an alternative cash rebate program was approved. In January 2006, California approved the largest solar program in the country’s history that provides for long term subsidies in the form of rebates to encourage use of solar energy where possible.

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Despite the benefits of solar power, there are also certain risks and challenges faced by users of solar power. Solar power is heavily dependent on government subsidies to promote acceptance by mass markets.  We believe that the near-term growth in the solar energy industry depends significantly on the availability and size of these government subsidies and on the ability of the industry to reduce the cost of generating solar electricity.  The market for solar energy products is, and for some time will continue to be, heavily dependent on public policies that support growth of solar energy. There can be no assurances that such policies will continue.  Decreases in the levels of rebates, incentives or other governmental support for solar energy would have an adverse affect on our ability to sell our products.

Government Subsidies and Incentives

Various subsidies and tax incentive programs exist at the federal and state level to encourage the adoption of solar power, including capital cost rebates, performance-based incentives, feed-in tariffs, tax credits and net metering. Capital cost rebates provide funds to a customer based on the cost or size of the customer’s solar power system. Performance-based incentives provide funding to a customer based on the energy produced by the customer’s solar system. Under a feed-in tariff subsidy, the government sets prices that regulated utilities are required to pay for renewable electricity generated by end-users. The prices are set above market rates and may be differentiated based on system size or application. Feed-in tariffs pay customers for solar power system generation based on kilowatt-hours produced, at a rate generally guaranteed for a period of time. The federal government will provide grants equal to 30% of the cost of commercial solar power systems placed in service in 2009 and 2010, and solar power systems that are not placed into service prior to December 31, 2010 qualify for the grants so long as construction begins prior to December 31, 2010 and they are placed into service by December 31, 2017.Tax credits reduce a customer’s taxes at the time the taxes are due. There is currently a 30% federal tax credit for residential and commercial solar power systems. Commercial customers can elect either a 30% cash payment from the federal grant program or the traditional tax credit. Effective from the beginning of 2009, the $2,000 cap on the federal tax credit for residential solar power systems has been removed, and that credit is now uncapped.  Several states currently offer state tax credits as well.  Under net metering, a customer can generate more energy than the customer uses, during which periods the electricity meter will spin backwards. During these periods, the customer “lends” electricity to the grid, retrieving an equal amount of power at a later time. Net metering programs used in several states enable end-users to sell excess solar electricity to their local utility in exchange for a credit against their utility bills. Net metering programs are usually combined with rebates, and do not provide cash payments if delivered solar electricity exceeds their utility bills.  In addition, several states have adopted renewable portfolio standards, or RPS, which mandate that a certain portion of electricity delivered to a customer come from a list of eligible renewable energy resources.  Under a RPS the government requires regulated utilities to supply a portion of their total electricity generation in the form of electricity from renewable sources. Some programs further specify that a portion of the renewable energy quota must be from solar generated electricity.

Building Codes

We are required to obtain building permits and comply with local ordinances and building and electrical codes for each project, the cost of which is included in our estimated costs for each proposal.

Employees

As of January 30, 2010, we had a total of five full time employees, two of whom are consultants. Our employees are not party to any collective bargaining agreement. We believe our relations with our employees are good.

Property

We lease approximately 4,200 square feet of office space in San Diego pursuant to a lease that shall expire in 2013.  This facility serves as our corporate headquarters.

In connection with our entry into this lease, we issued to our landlord and real estate broker a 10% convertible note in the amount of $100,000, which shall become due on December 18, 2010 and is subordinated in right of payment to the prior payment in full of all of our existing and future senior indebtedness. The holders of the note may, at their option, convert all or a portion of the outstanding principal amount and unpaid accrued interest as of the date of conversion into shares of our common stock equal to one share for each $0.33 of outstanding principal and unpaid accrued interest. In the event that we receive more than $1,000,000 in a financing or a series of financings (whether related or unrelated) prior to the maturity date of the note, 25% of the proceeds from any such financing in excess of $1,000,000 shall be used to pay down the note. Any funds provided to us by Gemini Master Fund, Ltd. (“Gemini”) or any person or entity that co-invests with Gemini shall not be credited towards the $1,000,000 threshold.

Our rents for the periods following the maturity date of the note are set forth below:

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Period	Rent
December 19, 2010 through December 18, 2011	$8,418.00 per month
December 19, 2011 through December 18, 2012	$8,670.54per month
December 19, 2012 through December 18, 2013	$8,930.66 per month

Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.  As of February 10, 2010, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations except for the following suits, all filed in the Superior Court of California, County of San Diego:

We are party to a wrongful termination suit filed in August 2009 by one of our former employees.  The employee was an “at-will” employee under California employment law and claims that he was promised a job as in-house counsel, which never materialized. The plaintiff is seeking general and special damages and punitive damages.  We  successfully demurred to the plaintiff’s complaint. The plaintiff amended his complaint, we answered it and we are now in the discovery stage.  We deny any liability under this claim.

We are party to a lawsuit filed in the Superior Court of California, County of San Diego in July 2009. The plaintiff alleges, among other things, that we misrepresented the number of installation contracts we had entered into in order to induce it to invest in our 2008 private placement and enter into projects with us. The lawsuit seeks to recover $250,000 in investments made in the private placement and approximately $166,000 plus interest at 10% from April 1, 2009 in monies owed for project work in 2008 and 2009. We are currently responding to the plaintiff’s discovery demands. We deny any liability under this claim.

We were sued by our former landlord in May 2009 for, among other things, unpaid rent and damages. We vacated the premises on December 20, 2009 and the landlord repossessed the premises on January 1, 2010. We are attempting to settle this suit.

On February 4, 2010, we were sued by a former vendor for, among other things, breach of contract, fraud and unjust enrichment for approximately $140,000. The plaintiff alleges that we failed to pay it for steel columns and associated labor it provided to us in connection with one of our projects. We are reviewing the claim and have had no further communications with the plaintiff.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Forward-Looking Statements

Statements in this Current Report on Form 8-K and other written reports made from time to time by us that are not historical facts constitute so-called “forward-looking statements,” all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. Forward-looking statements are likely to address our growth strategy, financial results and product and development programs, among other things. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. Such risks and uncertainties include but are not limited to those outlined in the section entitled “Risk Factors” and other risks detailed from time to time in our filings with the SEC or otherwise. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate.  It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis.  We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report.  Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.  We do not assume any obligation to update any forward-looking statement.  As a result, investors should not place undue reliance on these forward-looking statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the other sections of this Report, including “Risk Factors,” “Description of Business” and the Financial Statements attached hereto pursuant to Item 9.01 and the related exhibits.  The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Report.  See “Forward-Looking Statements.” Our actual results may differ materially.

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Recent Events

Prior to February 10, 2010, we were a “shell company”, as defined by the Securities and Exchange Commission, without material assets or activities. On February 10, 2010, we completed a merger, pursuant to which a wholly owned subsidiary of ours merged with and into Envision, with Envision being the surviving corporation and becoming our wholly owned subsidiary. In connection with this merger, we discontinued our former business and succeeded to the business of Envision as our sole line of business. The merger is being accounted for as a recapitalization, with Envision deemed to be the accounting acquirer and Casita the acquired company. Accordingly, Envision’s historical financial statements for periods prior to the merger have become those of the registrant (Casita) retroactively restated for, and giving effect to, the number of shares received in the merger. The accumulated earnings of Envision were also carried forward after the acquisition. Operations reported for periods prior to the merger are those of Envision.

Overview

We are a solar design and development company that services the sustainable and solar building systems industries.   We have developed solar parking arrays on parking lots and parking structures and solar integrated building systems and provide services including solar infrastructure master planning, solar master planning, solar system design and solar system procurement and management for commercial, industrial, institutional and residential customers.

Critical Accounting Policies

Use of Estimates.  The preparation of financial statements in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances. Significant estimates in these financial statements include useful lives and impairment of long-lived assets, realization of certain tax benefits, collectability of accounts receivable and construction progress billing under the completed contract method of revenue recognition.  Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial statements and actual results could differ from the estimates and assumptions.

Revenue Recognition. Revenues are computed on the “completed contract method” of accounting in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production Type Contracts, whereby revenues are recognized when the contract is complete. However, in the event a loss on a contract is foreseen, we will recognize the loss as it is incurred. Payments received in advance of the performance of services or of the delivery of goods are deferred as liabilities until the services are performed or the goods are delivered. We include shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

Additionally, we follow the guidance of EITF Issue 01-9, Accounting for Consideration Given by a Vendor to a Customer and EITF Issue 02-16, Accounting By a Customer (Including a Reseller) for Certain Considerations Received from Vendors.  Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales.

Stock Based Compensation.  At inception, we adopted SFAS 123(R), Share Based Payment and Related Interpretations (“SFAS 123(R)”). SFAS 123(R) requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.  We estimate the fair value of each stock option at the grant date by using the Black-Scholes option pricing model.

Changes in Accounting Principles.  No significant changes in accounting principles were adopted during fiscal 2007 and 2008, or during the first nine months ended September 30, 2009.

Fair Value Measurements.  SFAS 157, Fair Value Measurements (“SFAS 157”) is effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for non-financial assets and liabilities in fiscal years beginning after November 15, 2008. We adopted SFAS 157 for financial assets and liabilities in fiscal 2008 with no material impact to our financial statements. We are currently evaluating the potential impact of the application of SFAS 157 on our nonfinancial assets and liabilities.

SFAS 157 applies to all assets and liabilities that are being measured and reported on a fair value basis. SFAS 157 requires new disclosure requirements that establish a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosure requirements pertaining to fair value measurements. SFAS 157 enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

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Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities that are subject to SFAS 157. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.

Fair Value of Financial Instruments.  Fair value represents our best estimate based on a range of methodologies and assumptions. Advances to companies controlled by shareholders and the advances from ultimate shareholders are presumed to have a fair value measured by the cash proceeds exchanged at issuance in accordance with APB-21, Interest on Receivables and Payables.

Unrecognized Tax Benefits.  On January 1, 2007, we adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”) which is an interpretation of SFAS 109, Accounting for Income Taxes (“SFAS 109”). FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS 109. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Prior to January 1, 2007 and the implementation of FIN 48, we recorded tax contingencies when the exposure item became probable and reasonably estimable, in accordance with SFAS 5, Accounting for Contingencies. The adoption of FIN 48 has not had a material effect on our financial position or results of operations for the years ended December 31, 2008 and 2007 or the nine months ended September 30, 2009.

We do not expect our unrecognized tax benefits to change significantly over the next twelve months.

Classification of Interest and Penalties.  Additionally, FIN 48 requires that we accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws.  Our policy to include interest and penalties related to unrecognized tax benefits within the provision for income taxes did not change as a result of adopting FIN 48.

Results of Operations

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Revenue.   For the nine months ended September 30, 2009, our revenue was $715,522, compared to $973,018 for the same period in 2008, representing a decrease of 26%.  This decline in revenue was primarily attributable to our current and potential customers’ inability to obtain financing for solar projects as a result of recent market conditions.  In particular, revenue received from subcontracting out installation and electrical work was $46,704 for the nine months ended September 30, 2009, compared to $240,167 for the same period in 2008, a decrease of 81% and Envision Construction’s revenue was $431,538 for the nine months ended September 30, 2009 compared to $727,851 for the same period in 2008, a decrease of 41%.  The decrease in our revenue was offset by an increase in architectural design fee income of $224,173 compared to $0 for the same period in 2008.

Gross Profit.  For the nine months ended September 30, 2009, our gross profit was $349,106, compared to a gross loss of $337,954 for the same period in 2008, representing an increase of 197%. This increase in our gross profit resulted primarily from the lower costs of raw materials and favorable pricing terms in our contracts.

Operating Expenses.  Excluding stock based compensation, total operating expense was $1,100,640 for the nine months ended September 30, 2009, compared to $3,707,491 for the same period in 2008, a decrease of 71%.  This reduction was primarily caused by lower operating expenses, employee-related costs, marketing expenses and travel expenses.  Employee-related costs decreased from $1,099,509 to $564,507, marketing expenses decreased from $168,536 to $33,777, travel expenses decreased from  $252,396 to $41,920 and consulting expenses decreased from  $401,640 to $71,986.  These reductions were offset by an increase in bad debt expense of $72,101.

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Provision for Income Taxes.  Our income taxes for the nine months ended September 30, 2009 were $3,219, compared to $8,408 compared to the same period in 2008, a decrease of 62%.  We did not incur any federal tax liability in 2009 and 2008 because we incurred operating losses in those years.  However, we were obligated to pay certain state and local income taxes associated with our  operations in the State of California.

Net Earnings.  We generated net losses of approximately $3,558,000 for the nine months ended September 30, 2009 compared to approximately $8,356,000 for the same period in 2008, a decrease of 12.5%.Approximately $2,449,000 of the 2009 loss is attributable to non-cash charges associated with stock related compensation.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

Revenue.  Total revenue increased from $52,661 in 2007 to $2,418,391 in 2008, an increase of 4,492%.  The increase in revenue during 2008 was primarily attributable to the rapid growth in solar installations as customers rushed to complete solar project installations prior to the expected expiration of federal tax credits for solar projects.  We were awarded 5  major contracts which required substantial project completion by December 31, 2008.  These projects accounted for approximately $2,100,000 of our total revenue in 2008.

Gross Margin.  Our gross loss increased from approximately $95,086 in 2007 to $477,073 in 2008, an increase of 402%, because we completed our backlog of contracts that required substantial project completion by December 31, 2008.  The increase in gross loss in 2008 was primarily attributable to an unexpected increase in the cost of steel between the dates we were awarded the contracts and the dates we procured the steel for the projects covered by the contracts and our use of sub-contractors, whom we paid an aggregate amount of $1,448,627 in 2008.  We did not use sub-contractors in 2007.

Operating Expenses.  Operating expenses increased from approximately $3,186,706 in 2007 to approximately $9,076,473 in 2008, an increase of 230%.  Most of the increase was due to an increase in stock related compensation charges from $1,831,553 in 2007 to $4,363,912 in 2008 in connection with the issue of  incentive options to our employees and consultants.  Overhead costs related to workforce growth also caused operating expenses to increase because salaries and related payroll costs increased as we hired additional individuals to meet expected future demand.  However, many of our contracts were voided by our customers because they were not able to secure financing to pay for solar installations and the expected demand did not materialize. The canceled contracts were not accompanied by a concurrent commensurate decrease in operating expenses as we did not immediately reduce salaries and related payroll costs.

Intangible Asset Impairment.  In January 2008, we entered into an asset purchase agreement with Generating Assets, LLC, a Delaware limited liability (“Generating Assets”), pursuant to which we acquired the assets and assumed the liabilities of Generating Assets.  In particular, we acquired all rights, titles and interests to all of Generating Assets’ intellectual property, including the name “Generating Assets, LLC”, transferable or assignable licenses, certain contracts and the right to negotiate final agreements with certain third parties.  In exchange for these rights, we assumed all obligations under the assigned contracts, certain predetermined operating liabilities, paid a cash fee of $9,000, issued 10,000 shares of our common stock valued at $10.00 per share and issued an option to purchase 168,980 shares of our common stock for a total consideration of approximately $1,267,000.  We subsequently determined that these assets were impaired and took a charge of approximately $1,358,000 to adjust the carry value of the assets.  This charge is included in our operating expenses for the fiscal year ended December 31, 2008.

Provision for Income Taxes. Our income taxes increased from $800 in 2007 to $9,420 in 2008, an increase of 1,176%.  Because we incurred operating losses in both years, we did not incur any federal tax liability.  However, we were obligated to pay certain state and local income taxes associated with our operations in the State of California.

Net Loss.  Our net loss increased from approximately $3,283,000 in 2007 to $9,595,000 in 2008, an increase of 292%, due to factors mentioned in our discussion of operating expenses set forth above.  Of this loss, approximately $5,722,000 in 2008 was attributable to non-cash charges associated with stock related compensation and the asset impairment charge to earnings with respect to the acquisition of Generating Assets.

Liquidity and Capital Resources

General.  At September 30, 2009, we had cash and cash equivalents of approximately $20,000. We have historically met our cash needs through a combination of cash flows from operating activities and proceeds from private placements of our securities. Our cash requirements are generally for operating activities. We believe that our cash balance at the time of the Merger should be sufficient to finance our cash requirements for expected operational activities, capital improvements, and partial repayment of debt through the next 4 months.

Our operating activities generated a deficit cash flow of approximately $98,000 for the nine month period ended September 30, 2009, and we used cash in operations of approximately $2,248,000 during the same period in the prior year. The principal elements of cash flow from operations for the nine months ended September 30, 2009 included a  net  loss of $3,557,679, bad debt expense of $72,101, depreciation expense of $45,398,  stock-based compensation expense of $2,449,000 and decreased investment in operating working capital elements of approximately $563,000.

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Cash generated in our financing activities was $115,504 for the nine months ended September 30, 2009, compared to cash generated of approximately $2,325,000 during the comparable period in 2008.  This decrease was primarily attributed to an operating loss from operations.

Cash used in investing activities during the nine months ended September 30, 2009 was approximately $0 for additions to property and equipment, compared to $181,403 during the same period in 2008.  This decrease was primarily attributable to a reduction in capital expenditures.

As of September 30, 2009, current liabilities exceeded current assets by 31 times. Current assets decreased from $247,544 at December 31, 2008 to $74,118 at September 30, 2009 while current liabilities increased to $2,288,000 at September 30, 2009 from $1,798,000 during the same period in 2008. As a result, our working capital increased from a deficit of $1,550,307 at December 31, 2008 to a deficit of $2,213,573 at September 30, 2009.

Factors That May Affect Future Operations

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the solar industry and the markets for our products. Our operating results could also be impacted by a continued weakening of the U.S. economy as well as the general availability of credit to our customers who are dependent upon obtaining bank loans to finance solar projects. We predominately sell to customers in the commercial and state government  markets.  Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets.

Off Balance Sheet Transactions and Related Matters

 We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements

Accounting for Noncontrolling Interests in Consolidated Financial Statements.  In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”), an amendment of ARB 51, Consolidated Financial Statements, which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as non-controlling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS 160 is effective for us beginning January 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. We do not believe that adoption of SFAS 160 will have an impact on our consolidated financial statements.

In May 2009, FASB issued an accounting standard that became part of ASC Topic 855, Subsequent Events (“ASC Topic 855”).  ASC Topic 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC Topic 855 sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  ASC Topic 855 is effective for interim or annual financial periods ending after June 15, 2009.  The adoption of ASC Topic 855 did not have a material effect on our financial statements.

In June 2009, FASB issued an accounting standard whereby the FASB Accounting Standards Codification (the “Codification”) will be the single source of authoritative nongovernmental U.S. GAAP.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  ASC Topic 105, Generally Accepted Accounting Principles (“ASC 105”) is effective for interim and annual periods ending after September 15, 2009.  All existing accounting standards are superseded as described in ASC Topic 105.  All other accounting literature not included in the Codification is non-authoritative.  The Codification is not expected to have a significant impact on our financial statements.

Risk Factors

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals.  If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected.  In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

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Risks Related to Our Business

We have sustained recurring losses since inception and expect to incur additional losses in the foreseeable future.

We were formed on June 12, 2006 and have reported annual net losses since inception. For our fiscal years ended December 31, 2008 and December 31, 2007, we experienced losses of approximately  $9,600,000 and $3,283,000, respectively. We also sustained a loss of approximately $3,558,000 for the period ended September 30, 2009.  As of December 31, 2008, we had an accumulated deficit of approximately $13,200,000 which increased to approximately $16,700,000 as of the period ended September 30, 2009. In addition, we expect to incur additional losses in the foreseeable future, and there can be no assurance that we will ever achieve profitability. Our future viability, profitability and growth depend upon our ability to successfully operate and expand our operations. There can be no assurance that any of our efforts will prove successful or that we will not continue to incur operating losses in the future.

We do not have substantial cash resources and if we cannot raise additional funds or generate more revenues, we will not be able to pay our vendors and will probably not be able to continue as a going concern.

As of February 10, 2010, our available cash balance was approximately $5,500. We will need to raise additional funds to pay outstanding vendor invoices and execute our business plan.  Our future cash flows depend on our ability to enter into, and be paid under, contracts for the construction of solar energy projects and our ability to sell our debt and equity securities on terms satisfactory to us.  There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

We may be required to pursue sources of additional capital through various means, including joint venture projects and debt or equity financings. Future financings through equity investments will be dilutive to existing stockholders.  Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other convertible securities, which will have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations.

Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, both generally and specifically in the renewable energy industry, and the fact that we have not been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

We have a limited operating history, and it may be difficult for potential investors to evaluate our business.

We began operations in June 2006. Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. Since our formation, we have generated only limited revenues. Our revenues were approximately $2,418,000 and approximately $53,000 for the years ended December 31, 2008 and December 31, 2007, respectively. Our revenues for the period ended September 30, 2009 were approximately $716,000compared to approximately $973,000 for the same period in 2008. As an early stage company, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a relatively new business. Investors should evaluate an investment in us in light of the uncertainties encountered by such companies in a competitive environment. Our business is dependent upon the implementation of our business plan, as well as the ability of our clients to enter into agreements with third parties for, among other things, the supply of photovoltaic and solar-thermal systems, on commercially favorable terms, as well as the availability and timing of financing from third parties for each project. There can be no assurance that our efforts will be successful or that we will be able to attain profitability.

We face intense competition, and many of our competitors have substantially greater resources than we do.

We operate in a highly competitive environment that is characterized by price fluctuations, supply shortages and rapid technological change. We compete with major international and domestic companies. Our major competitors include SPG Solar, Borrego Solar, Inc. and REC Solar, Inc. as well as numerous other regional players, and other companies similar to us primarily located in our operating markets. Our competitors often have greater market recognition and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel and other resources than we do. Many of our competitors are developing and are currently producing products based on new solar power technologies that may ultimately have costs similar to, or lower than, our projected costs. Many of our current and potential competitors have longer operating histories, greater name recognition, access to larger customer bases and significantly greater financial, sales and marketing, manufacturing, distribution, technical and other resources than we do. As a result, they may be able to respond more quickly to changing customer demands or to devote greater resources to the development, promotion and sales of products than we can.

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Some of our competitors own, partner with, have longer term or stronger relationships with solar cell providers which could result in them being able to obtain solar panels on a more favorable basis than we can. It is possible that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share, which would harm our business. If we fail to compete successfully, our business would suffer and we may lose or be unable to gain market share.

We may in the future compete for potential customers with solar and heating, ventilation and air conditioning system installers and service providers, electricians, utilities and other providers of solar power equipment or electric power. Competition in the solar power services industry may increase in the future, partly due to low barriers to entry. In addition, we may face competition from other alternative energy resources now in existence or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel.

There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.

Our profitability depends, in part, on our success and brand recognition and we could lose our competitive advantage if we are not able to protect our trademarks and patents against infringement, and any related litigation could be time-consuming and costly.

We believe our brand has gained substantial recognition by customers in certain geographic areas. We have registered the “Solar Tree”, “Solar Grove” and “LifePort” trademarks with the United States Patent and Trademark Office. Use of our trademarks or similar trademarks by competitors in geographic areas in which we have not yet operated could adversely affect our ability to use or gain protection for our brand in those markets, which could weaken our brand and harm our business and competitive position. In addition, any litigation relating to protecting our trademarks and patents against infringement could be time consuming and costly.

The success of our business depends on the continuing contributions of Robert Noble and other key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel.

We rely heavily on the services of Robert Noble, the chairman of the board of directors and our chief executive officer, as well as several other management personnel. Loss of the services of any such individuals would adversely impact our operations. In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors and that our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. We do not currently maintain any “key man” life insurance with respect to any of such individuals.

If we are unable to attract, train and retain highly qualified personnel, the quality of our services may decline and we may not successfully execute our internal growth strategies.

Our success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including technical personnel. Qualified technical employees periodically are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements. While we currently have available technical expertise sufficient for the requirements of our business, expansion of our business could require us to employ additional highly skilled technical personnel. We expect competition for such personnel to increase as the market for solar power systems expands.

There can be no assurance that we will be able to attract and retain sufficient numbers of highly skilled technical employees in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.

We are exposed to risks associated with the ongoing financial crisis and weakening global economy, which increase the uncertainty of project financing for commercial solar installations and the risk of non-payment from both commercial and residential customers.

The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to slowdowns in the solar industry, which slowdowns may worsen if these economic conditions are prolonged or deteriorate further. The market for installation of solar power systems depends largely on commercial and consumer capital spending. Economic uncertainty exacerbates negative trends in these areas of spending, and may cause our customers to push out, cancel, or refrain from placing orders, which may reduce our net sales. Difficulties in obtaining capital and deteriorating market conditions may also lead to the inability of some customers to obtain affordable financing, including traditional project financing and tax-incentive based financing and home equity based financing, resulting in lower sales to potential customers with liquidity issues, and may lead to an increase of incidents where our customers are unwilling or unable to pay for systems they purchase, and additional bad debt expense for us. Further, these conditions and uncertainty about future economic conditions make it challenging for us to obtain equity and debt financing to meet our working capital requirements to support our business, forecast our operating results, make business decisions, and identify the risks that may affect our business, financial condition and results of operations. If we are unable to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, our business, financial condition or results of operations may be materially and adversely affected.

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Risks Relating to Our Industry

We have experienced technological changes in our industry. Newtechnologies may prove inappropriate and result in liability to us or may notgain market acceptance by our customers.

The solar power industry (and the alternative energy industry, in general) is subject to technological change. Our future success will depend on our ability to appropriately respond to changing technologies and changes in function of products and quality. If we adopt products and technologies that are not attractive to consumers, we may not be successful in capturing or retaining a significant share of our market. In addition, some new technologies are relatively untested and unperfected and may not perform as expected or as desired, in which event our adoption of such products or technologies may cause us to lose money.

A drop in the retail price of conventional energy or non-solar alternativeenergy sources may negatively impact our profitability.

We believe that a customer’s decision to purchase or install solar power capabilities is primarily driven by the cost and return on investment resulting from solar power systems. Fluctuations in economic and market conditions that impact the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil fuels, could cause the demand for solar power systems to decline, which would have a negative impact on our profitability. Changes in utility electric rates or net metering policies could also have a negative effect on our business.

Existing regulations, and changes to such regulations, may presenttechnical, regulatory and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products.

Installation of solar power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering and other rules and regulations. We attempt to keep up-to-date about these requirements on a national, state, and local level, and must design systems to comply with varying standards. Certain cities may have ordinances that prevent or increase the cost of installation of our solar power systems. In addition, new government regulations or utility policies pertaining to solar power systems are unpredictable and may result in significant additional expenses or delays and, as a result, could cause a significant reduction in demand for solar energy systems and our services. For example, there currently exist metering caps in certain jurisdictions which effectively limit the aggregate amount of power that may be sold by solar power generators into the power grid.

Our business depends on the availability of rebates, tax credits and otherfinancial incentives; reduction, elimination or uncertainty of which would reduce the demand for our services.

Many states, including California and New Jersey, offer substantial incentives to offset the cost of solar power systems. These systems can take many forms, including direct rebates, state tax credits, system performance payments and Renewable Energy Credits (RECs). Moreover, the federal government currently offers a 30% tax credit for the installation of solar power systems. Effective 2009, the federal tax credit is 30% (uncapped) for residences. The federal government also currently offers commercial customers the option to elect a 30% grant in lieu of the 30% tax credit if they begin construction on the system before December 31, 2010, and the system is put into service by December 31, 2017. Businesses may also elect to accelerate the depreciation on their system over five years. Uncertainty about the introduction of, reduction in or elimination of such incentives or delays or interruptions in the implementation of favorable federal or state laws could substantially increase the cost of our systems to our customers, resulting in significant reductions in demand for our services, which would negatively impact our sales.

Our business strategy depends on the widespread adoption of solar power technology.

The market for solar power products is emerging and rapidly evolving, and its future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we would be unable to generate enough revenues to achieve and sustain profitability and positive cash flow. The factors influencing the widespread adoption of solar power technology include but are not limited to:

• cost-effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;

• performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

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• success of other alternative distributed generation technologies such as fuel cells, wind power, tidal power and micro turbines;

• fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels;

• continued deregulation of the electric power industry and broader energy industry; and

• availability of governmental subsidies and incentives.

Risks Relating to Our Organization and Our Common Stock

As of the Merger, we became a consolidated subsidiary of a company that is subject to the reporting requirements of federal securities laws, which can be expensive and may divert resources from other projects, thus impairing our ability to grow.

As a result of the Merger, we became a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).  The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Merger) and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we remained privately held and did not consummate the Merger.

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud.  Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act.  We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.  Effective internal control is necessary for us to provide reliable financial reports and prevent fraud.  If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.  In addition, if we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current and may adversely affect any market for, and the liquidity of, our common stock.

Public company compliance may make it more difficult for us to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies.  As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly.  As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.  As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

Because we became public by means of a merger, we may not be able to attract the attention of major brokerage firms.

There may be risks associated with us becoming public through a merger.  Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock.  No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our post-Merger company.

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

● changes in our industry;

● competitive pricing pressures;

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● our ability to obtain working capital financing;

●  additions or departures of key personnel;

● limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

● sales of our common stock;

● our ability to execute our business plan;

● operating results that fall below expectations;

● loss of any strategic relationship;

● regulatory developments;

● economic and other external factors; and

● period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.  These market fluctuations may also materially and adversely affect the market price of our common stock.

We may not pay dividends in the future.  Any return on investment may be limited to the value of our common stock.

We do not anticipate paying cash dividends in the foreseeable future.  The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.  If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

To date there has not been a liquid trading market for our common stock.  We cannot predict how liquid the market for our common stock might become.  As soon as is practicable, we anticipate applying for listing of our common stock on either the NYSE Amex Equities, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange.  We currently do not satisfy the initial listing standards for any of these exchanges, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange.  Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remains quoted on the OTC Bulletin Board or is suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

Furthermore, for companies whose securities are quoted on the OTC Bulletin Board, it is more difficult (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies and (iii) to obtain needed capital.

Our common stock is currently a “penny stock,” which may make it more difficult for our investors to sell their shares.

Our common stock is currently and may continue in the future to be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. Since our securities are subject to the penny stock rules, investors may find it more difficult to dispose of our securities.

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Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall.  The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.  

Robert Noble, our chief executive officer and chairman of our board of directors, beneficially owns a substantial portion of our outstanding common stock, which enables him to influence many significant corporate actions and in certain circumstances may prevent a change in control that would otherwise be beneficial to our stockholders.

Robert Noble beneficially owns approximately 25.4%of our outstanding shares of common stock. As such, he has a substantial impact on matters requiring the vote of the stockholders, including the election of our directors and most of our corporate actions. This control could delay, defer, or prevent others from initiating a potential merger, takeover or other change in our control, even if these actions would benefit our stockholders and us. This control could adversely affect the voting and other rights of our other stockholders and could depress the market price of our common stock.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of February 10, 2010 regarding the beneficial ownership of our common stock, taking into account the consummation of the Merger, by (i) each person or entity who, to our knowledge, beneficially owns more than 5% of our common stock; (ii) each executive officer and named officer; (iii) each director; and (iv) all of our officers and directors as a group.  Unless otherwise indicated in the footnotes to the following table, each of the stockholders named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned. Except as otherwise indicated, the address of each of the stockholders listed below is: c/o 7675 Dagget Street, Suite 150, San Diego, California 92111.

Name of Beneficial Owner	Number of Shares Beneficially Owned(1)	Percentage Beneficially Owned(1)(2)
Robert Noble	17,752,269(3)	39%
Jay Potter	392,968(4)	0.9%
Howard Smith	366,514(5)	0.8%
Joanna Tan	671,943(6)	1.5%
All officers and directors as a group (4 persons)	19,183,694	41.6%

________________

(1)   Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of February 10, 2010. Shares issuable pursuant to the exercise of stock options and warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person.

(2)   Based on 39,000,000 shares of our common stock outstanding immediately following the Merger.

(3)   Includes 6,027,632 shares of common stock issuable upon the exercise of options. On February 10, 2010, Mr. Noble entered into an agreement with us, pursuant to which Mr. Noble agreed to cancel these options upon the issuance to Mr. Noble of a new option to purchase an aggregate of 9,162,856 shares of common stock at an exercise price of $0.33 per share, which option shall vest immediately upon our achievement of cumulative gross revenues of either (i) $15,000,000 during the fiscal year ended December 31, 2010 or (ii) $30,000,000 prior to December 31, 2014.

(4)   Includes 308,006 shares of common stock and 84,962 stock purchase warrants held by Nexcore Capital, Inc.  Mr. Potter is the chairman and president of Nexcore Capital, Inc.

(5)   Includes366,514 shares of common stock issuable upon exercise of options.

(6)   Includes 671,943 shares of common stock issuable upon exercise of options.

Executive Officers and Directors

The following persons became our executive officers and directors on February 10, 2010, upon effectiveness of the Merger, and hold the positions set forth opposite their respective names.

Name	Age	Position
Robert Noble	57	Chief Executive Officer, President and Chairman of the Board of Directors
Howard Smith	53	Chief Financial Officer
Joanna Tan	42	Executive Vice President and Chief Operating Officer
Jay Potter	41	Director

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Our directors hold office until the earlier of their death, resignation or removal by stockholders or until their successors have been qualified.  Our officers are elected annually by, and serve at the pleasure of, our board of directors.

Biographies

Directors and Officers

Robert Noble has served as our chief executive officer, president and chairman of the board of directors since 2006.  Prior to founding Envision, Mr. Noble served as the chief executive officer of Tucker Sandler Architects, an architecture firm located in San Diego, California, from 2000 through 2007.  Mr. Noble has served as the chairman of Noble Environmental Technologies, Inc., a materials company, since 1998, Ecoinvestment Network, a California company, since 2007, Envision Regenerative Health, a  California company, since 2008 and the Noble Group, Inc., a California company, since 2007. Mr. Noble is an accomplished architect, environmental designer, industrial designer and environmental technology entrepreneur. Mr. Noble and his work have won numerous awards, including awards from Popular Science Magazine (Best of What’s New), Entrepreneur Magazine (Innovator of the Year, Environmental Category), National Public Radio (E-chievement Environmental Award), the Urban Land Institute (San Diego Smart Growth Award, Innovation Category) and The American Institute of Architects – San Diego Chapter (Energy Efficiency Award).  He received his undergraduate degree in architecture from the University of California – Berkeley, and his Master of Architecture from Harvard University Graduate School of Design. Mr. Noble also completed graduate work at Cambridge University and Harvard Business School.

Howard Smith has served as our chief financial officer since September 2009.  Mr. Smith has served as a partner and leader of the clean tech practice group of Tatum, LLC, an executive services firm, since March 2009 and as a partner and founder of Chartworth, a strategy and management consulting firm, since 2003.  From 2005 through 2007 he served as the chief financial officer of GT Solar International, an international manufacturer of PV capital equipment. Mr. Smith has also served as a director of Price Waterhouse Coopers and as a consultant at Booz-Allen & Hamilton.  Mr. Smith holds a BA in Economics and Government from the College of William and Mary, a Master of Public Administration from George Washington University, and an MBA from The Fuqua School of Business at Duke University. 

Joanna Tan has served as our executive vice president and chief operating officer since February 2009.  Prior to joining Envision, Ms. Tan served as a vice president – commercial insurance group of the American International Group, Inc. from 2003 through 2008.  Ms. Tan has also worked at J.P. Morgan Asia Pacific in the areas of project finance, mergers and acquisitions and credit research.  Ms. Tan received her undergraduate degree in government from Cornell University and also holds an MBA and a Masters in International Affairs from Columbia University.  

Jay Potter has served as our director since 2007.  Mr. Potter has been active in the financial and energy industries for over 20 years and has successfully participated, directed or placed over two hundred million dollars of capital in start-up and early stage companies.  Mr. Potter is an entrepreneur and understands the needs of early stage and start-up companies. He takes an active role in the development of the funded companies and to that end has participated as advisor, director and officer to defend shareholder positions.  In 2006, Mr. Potter served as the interim chief executive officer of EAU Technologies Inc. (Symbol: EAUI:OB), a publicly traded company specializing in non-toxic sanitation and disinfectant technologies.  He founded an early stage venture fund in GreenCore Capital, Inc. and serves as the company’s chairman and chief executive officer.  He has served as chairman, president and chief executive officer of Nexcore Capital, Inc. and its financial service affiliates since co-founding the company in 1996. Mr. Potter serves as the chairman of Sterling Energy Resources, Inc. (symbol: SGER:PK), a public oil and gas company involved in the acquisition, exploration and development of oil and natural gas from its numerous leases.  Sterling Energy Resoueces, Inc. filed for bankruptcy in 2009.  Mr. Potter serves as a director of EAU Technologies, Envision, and Noble Environmental Technologies among others.

There are no family relationships among any of our directors and executive officers.

Executive Compensation

Summary Compensation Table

The table below sets forth, for our last two fiscal years, the compensation earned by (i) Robert Noble, our chief executive officer, president and chairman, (ii) Howard Smith, our chief financial officer, (iii) Joanna Tan, our executive vice president,  chief operating officer and secretary, (iv) Karen Morgan, our former president and the former president of Envision Energy, Inc. (“Envision Energy”), a dissolved subsidiary of ESII, and (v) Pamela Stevens, our former executive vice president, Commercial Development Group.

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Name and Principal Position	Year	Salary		Deferred Comp		Bonus		Stock Awards		Option Awards ($)(1)		All Other Compensation		Total
		($)		($)		($)		($)				($)		($)
Robert Noble Chief Executive Officer ,	2009		69,500				-		-		286,492		-		468,492
President and Chairman	2008		204,000		112,500		25,000				1,868,100				2,097,100
Howard Smith(2)	2009		20,000								431,880				451,880
Chief Financial Officer	2008		--		--		--		--		--		--		--
Joanna Tan (5)
Executive VP and	2009		13,750		55,000		-		-		643,321		-		712,071
Chief Operating Officer	2008		--		--		--		--		--		--		--
Karen Morgan(3)
Former President and	2009		--				--		--		--		--		--
Former President of Envision Energy	2008		120,000		-		40,000				1,141,104				1,301,104
Pamela Stevens(4)
Former Executive Vice President,	2009		--				--		--		--		--		--
Commercial Development Group	2008		95,327		--		--		--		343,303		--		438,630
Bill Adelson (6)	2009		33,438		100,938		--				303,379				437,755
Former President	2008		118,125		16,875		10,000				799,949				944,949

(1) The amounts in this column reflect the dollar amounts recognized for financial statement reporting purposes with respect to the years ended December 31, 2009 and 2008, in accordance with SFAS 123(R).  For a description of SFAS 123(R) and the assumptions used in determining the value of the options, see the notes to the financial statements included as Exhibit 99.1 to this Current Report on Form 8-K.

(2) Mr. Smith is a consultant whose compensation is paid by Tatum, LLC.  As of February 10, 2010, we were obligated to pay Tatum Mr. Smith’s salary compensation.

(3)   Ms. Morgan was terminated as our president and as president of Envision Energy on November 30, 2008.

(4)   Ms. Stevens resignedas our executive vice president and chief operating officer on December 5, 2008.

(5) Ms. Tan received options in lieu of salary for the first six months of her employment in 2009. After the sixth month, she was eligible to begin earning a salary in August 2009.

(6) Mr. Adelson resigned as president of Envision on October 30, 2009.

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Agreements with Executive Officers

Robert Noble

 On June 15, 2007 Envision Solar, LLC, our predecessor, entered into an employment agreement with Robert Noble to serve as its chief executive officer and president.  Pursuant to his employment agreement, Mr. Noble is entitled to receive an annual base salary of $120,000, a monthly allowance of $1,200 to cover automobile expenses and options to purchase 135,000 units of Envision LLC, which, following our statutory conversion from a California limited liability company into a California corporation, were converted into options to purchase  4,123,285 shares of our common stock.  In the event that Mr. Noble’s employment with us is terminated for any reason, Mr. Noble shall be entitled to receive his then current salary accrued through the effective date of termination plus accrued but unused vacation time.  Mr. Noble’s employment agreement has no specified termination date.

On February 10, 2010, we entered into a letter agreement with Robert Noble, pursuant to which Mr. Noble agreed to terminate all of his options under Envision’s 2007 Unit Option Plan and 2008 Equity Incentive Plan upon the issuance to Mr. Noble of a new option to purchase an aggregate of 9,162,856 shares of common stock at an exercise price of $0.33 per share, which option shall vest immediately upon our achievement of cumulative gross revenues of either (i) $15,000,000 during the fiscal year ended December 31, 2010 or (ii) $30,000,000 prior to December 31, 2014.

Howard Smith

On September 1, 2009 we entered into an interim service agreement with Tatum, LLC (“Tatum”), an executive services firm, pursuant to which Mr. Smith, a Tatum employee, performs services for us as our chief financial officer and we pay Tatum for Mr. Smith’s services.  Tatum compensates Mr. Smith directly for his services.  We have agreed to pay Tatum a fee of $20,000 per month, $5,000 which shall be payable in cash and the remaining $15,000 shall be payable in stock options. We shall issue Tatum that number of stock options with an exercise price equal to the fair market value as calculated according to the formula below:

number of options = A x 2, where:

A = amount of consulting fees payable in options divided by the fair market value per share (at the time the fees are earned)

As of February 10, 2010, we were obligated to pay Tatum Mr. Smith’s salary compensation.

Joanna Tan

On February 2, 2009, we entered into an employment agreement with Joanna Tan to serve as our executive vice president and chief operating officer.   Pursuant to her employment agreement, Ms. Tan is entitled to receive an annual base salary of $165,000.  For the initial six month period of her employment, or until we secure financing of at least $500,000, we have agreed to issue to Ms. Tan options with a fair market value strike price in lieu of her salary calculated according to the formula below:

number of options = A x 2, where:

A = amount of salary forgiven divided by the fair market value per share (at the time the salary is earned)

Ms. Tan was granted options to purchase 13,750 shares of common stock of Envision at $10.00 per share for work performed between February 2009 and July 2009, which options have a ten year term and vested immediately upon grant.  As a result of the Merger and the Stock Split, this option was converted into an option to purchase 293,975shares of our common stock at an exercise price of $.33 per share.  Ms. Tan was granted an additional option to purchase 8,250 shares of common stock of Envision at $10.00per share for work performed between August 2009 and December 2009, with a ten year term that vested immediately upon grant.  As a result of the Merger and the Stock Split, was connected into an option to purchase 251,978 shares of our common stock at an exercise price of $.33 per share.

In the event that Ms. Tan’s employment with us is terminated for any reason, Ms. Tan shall be entitled to receive her then current salary accrued (subject to the calculations set forth above) through the effective date of termination plus accrued but unused vacation time.  Ms. Tan’s employment agreement has no specified termination date.

Karen Morgan

Ms. Morgan, our former president and the former president of Envision Energy, which we dissolved October 31, 2008, was terminated from these positions on November 30, 2008.  Ms. Morgan began serving as our president and as the president of Envision Energy pursuant to an employment agreement effective October 1, 2007.  Pursuant to the agreement, Ms. Morgan was entitled to receive an annual base salary of $120,000, a monthly allowance of $1,500 to cover automobile expenses and options to purchase 763,571 shares of common stock of Envision.  The agreement also provided that our board of directors could, at its discretion, issue her a bonus of $50,000.

Ms. Morgan was granted 4,358,465 options at prices ranging between $.33 and $1.31 per share.  Such options were subject to annual cliff vesting with a term of 10 years.

Pamela Stevens

 Ms. Stevens, our former executive vice president, commercial development group, resigned from this position on December 5, 2008.  Ms. Stevens began serving as our executive vice president, commercial development group, pursuant to an employment agreement dated April 7, 2008.  Pursuant to the agreement, Ms. Stevens was entitled to receive an annual base salary of $120,000, a monthly allowance of $1,250 to cover automobile expenses and options to purchase 1,466,057 shares of our common stock.

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Ms. Stevens was granted 1,466,057 options at prices ranging between $.33 and $1.31 per share.  Such options were subject to annual cliff vesting with a term of 10 years.

William Adelson

 Mr. Adelson, our former president, resigned from this position on October 30, 2009.  Mr. Adelson began serving as our executive vice president and chief operating officer, pursuant to an employment agreement dated June 15, 2007.  Pursuant to the agreement, Mr. Adelson was entitled to receive an annual base salary of $80,000, a monthly allowance of $800 to cover automobile expenses and options to purchase 3,481,885 shares of common stock of Envision.

Outstanding Equity Awards at Fiscal Year-End

The following table shows information concerning unexercised options outstanding as of December 31, 2009 for each of our named executive officers.   

Name	Number of securities underlying unexercised options (#) exercisable	Number of securities underlying unexercised  options (#) unexercisable	Option exercise price ($)	Option expiration date ($)
Robert Noble	4,123,285	4,123,285	$0.33	May 14, 2017
	1,527,143	1,527,143	$1.31	July 21, 2018
	17,196	17,196	$1.31	February 11, 2018
Howard Smith	366,514	366,514	$0.33	September 30, 2019
Joanna Tan	167,986	167,986	$0.33	March 31, 2019
	251,979	251,979	$0.33	June 30, 2019
	125,989	125,989	$0.33	September 30, 2019
	125,989	125,989	$0.33	December 31, 2019
Karen Morgan	2,822,160	2,822,160	$0.33	December 31, 2017
	604,748	604,748	$0.65	December 31, 2017
	916,286	916,286	$1.31	December 31, 2008
	11,454	11,454	$1.31	February 11, 2018
	3,818	3,818	$1.31	October 12, 2018
Pamela Stevens	1,466,057	1,466,057	$1.31	January 5, 2009
	3,818	3,818	$1.31	January 5, 2009
William Adelson	3,481,885	3,481,885	$0.33	September 30, 2009
	610,857	610,857	$1.31	September 30, 2009
	11,454	11,454	$1.31	February 11, 2018
	15,271	15,271	$1.31	October 12, 2018

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2007 Unit Option Plan

In July, 2007, Envision LLC adopted the 2007 Plan, pursuant to which 100,000 units of Envision LLC were reserved for issuance as awards to employees, members of Envision LLC’s board of managers, consultants and other service providers.  The purpose of the 2007 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in Envision LLC’s development and financial success. Upon our statutory conversion into a California corporation in September 2007, each option to purchase units issued under the 2007 Plan was converted into the right to purchase shares of our common stock on a one to one ratio.  The 2007 Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors. 9,315,552 awards, on a post-Merger basis, have been granted to date under the 2007 Plan.

2008 Stock Option Plan

On December 16, 2008, we adopted the 2008 Plan, pursuant to which 200,000 shares of Envision common stock were reserved for issuance as awards to employees, directors, consultants and other service providers. The purpose of the 2008 Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success. Under the 2008 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code and non-qualified stock options.   The incentive stock options may only be granted to employees.  Nonstatutory stock options may be granted to employees, directors and consultants.  The 2008 Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors. 3,786,733 awards, on a post-Merger basis, have been granted to date under the 2008 Plan.

2010 Equity Incentive Plan

In order to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial success, we intend to adopt a new equity incentive plan (the “2010 Plan”), pursuant to which 15,000,000 shares of our common stock will be reserved for issuance as awards to employees, directors, consultants and other service providers. In addition, all awards under Envision’s 2007  Plan and 2008 Plan will be assumed under the 2010 Plan.

Director Compensation

During the fiscal years ended December 31, 2009 and 2008, our directors did not receive any compensation from us for their services in such capacity and we do not foresee paying our directors any compensation for their services in such capacity in the future.

Directors’ and Officers’ Liability Insurance

We plan to secure directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions shortly after the date of the Merger.   Such insurance will also insure us against losses which we may incur in indemnifying our officers and directors.

 Code of Ethics

We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.

Board Committees

We expect our board of directors, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt charters relative to each such committee.  We intend to appoint such persons to committees of the board of directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we elect to seek a listing on a national securities exchange.

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Certain Relationships and Related Transactions

In 2007 Envision LLC issued 238,875 units to Robert Noble as payment in full for $238,875 owed by it to him in connection with an accounts receivable he purchased from one of its vendors.

Jay Potter, our director, is the control person of Nexcore Capital, Inc., Envision’s selling agent in two private placement transactions in November 2007 and February 2008. See Item 3.02 for details of these private placements.

In June 2008, Envision issued a note in the amount of $18,700 to William Adelson, a former officer, as reimbursement for cash advances he made to Envision.  The note bears interest at 5% and is due and payable with accrued interest on or before May 31, 2009. The note was not paid at maturity and the balance was included in the $34,246 principal balance of a new note executed in October 2009 and due December 31, 2009. Mr. Adelson resigned in November 2009.  As of February 2010 this note was in default for payment of principal and interest.

Item  3.02        Unregistered Sales of Equity Securities

In November 2007 Envision LLC sold 199,848 units at a purchase price of $10.00 per unit for an aggregate offering price of $1,998,480 (the “2007 Private Placement”).  In connection with the 2007 Private Placement, Nexcore Capital, Inc. received a fee of $310,272 and we issued to Nexcore Capital, Inc. 19,985 shares of our common stock, which were issued in reliance on the exemption from registration afforded by Section 4(2). These securities were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In 2007, Envision issued an aggregate of 49,994 shares of our common stock to employees and consultants as compensation for services provided to us.  These securities were not registered under the Securities Act, or the securities laws of any state, and were issued in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In 2007, Envision issued 250 shares of our common stock to an individual as compensation for services provided to us.  These securities were not registered under the Securities Act, or the securities laws of any state, and were issued in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In January 2008, pursuant to an agreement with a former law firm, Envision agreed to issue to the law firm a warrant to purchase 801 shares of Envision common stock for an exercise price of $0.01 per share. Following the Merger and Stock Split, this warrant was converted into a warrant to purchase 24,465 shares of our common stock at an exercise price of $.01.  The warrant expires January 1, 2015. These securities were not registered under the Securities Act, or the securities laws of any state, and were issued in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

InDecember2008 Envision sold 67,311 shares of common stock at a purchase price of $40.00 per share for an aggregate offering price of $2,692,444 (the “2008 Private Placement”). In connection with the 2008 Private Placement, Nexcore Capital, Inc. and Financial West Group, Inc. received an aggregate fee of $296,169a five-year warrant to purchase 4,712 shares for a purchase price of $40 per share. These securities were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In November 2008 Envision issued a five-month $591,771 promissory note to an investor (the "holder") as bridge financing prior to an anticipated equity. Under the terms of the note, $101,771 of prepaid interest was included in the note balance of which $10,000 was a loan fee. The note bears interest at the rate of 7%  per annum on the $500,000 net subscription amount, plus a 15% fee on the subscription amount, plus 15% of the 7% per annum interest (effective interest of approximately 49%) with a default rate of 20% per annum. The note was due April 11, 2009 and is secured by substantially all of Envision’s assets and the assts of its subsidiaries and is unconditionally guaranteed by all of its subsidiaries.  Under the terms of the note, the outstanding principal and interest can be converted into equity at a 10% discount from any reverse merger financing in the event Envision entered into a “reverse merger” with a publicly traded corporation.  Additionally, promptly following the consummation of a reverse merger transaction, Envision had agreed to issue the holder such number of shares of public company common stock such that following the reverse merger the lender shall own 0.3125% of our fully-diluted number of outstanding shares of common stock of the public company.

              The note came due in May 2009 and Envision was unable to fulfill its obligations. In April 2009, Envision entered into a forbearance agreement with the holder, which extended the due date to December 31, 2009. Under the terms of the forbearance agreement, the interest rate increased to 15% and Envision issued 10,000 shares of its common stock to the holder in consideration of this agreement. Interest only payments were to start being due monthly in arrears in the first calendar month after Envision raises $100,000 from all capital raising transactions.

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In October 2009, Envision entered into an agreement with the holder pursuant to which it amended the note to increase the interest rate to 20% retroactive to April 11, 2009 through October 30, 2009, adjust the per annum interest to 12% starting November 1, 2009 (default rate of 20%), extend the maturity to December 31, 2010 and add a conversion feature to allow conversion at the holder’s option to shares of our common stock at $.33 per share.  The $591,771 note was amended to add accrued interest of $65,423 to the principal balance resulting in a new principal balance of $657,194.  Additionally, a new second note was issued for $125,000. This new note has the  same terms of the amended note.  Interest under both notes is due on the first business day of each calendar quarter starting January 4, 2010, and we have the option to add such interest to the note principal balance effectively making the interest due at note maturity. Both notes contain price protection features such that if we sell equity or convert existing instruments to common stock at a price less than the $.33 per share conversion price, the conversion price will be adjusted downward to the sale price.  Furthermore, if we issue new rights, warrants, options or other common stock equivalents at an exercise price less than the $.33 per share conversion price, then the conversion price shall be adjusted downward to a new price based on a stipulated formula.  The holder may not convert the debt if it results in the holder beneficially holding more than 9.9% of our common stock. 

Each of the above securities were issued to the holder in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In October 2009, Envision issued a 10% convertible promissory note for $102,236, which includes the total $100,000 principal advanced plus $2,236 of accrued interest.  This note is due December 31, 2010.  This note is convertible into shares of our common stock at $.33 per share. This note was not registered under the Securities Act, or the securities laws of any state, and was issued in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

In December 2010, Envision issued a $100,000 note with a 10% interest rate to its landlord and real estate broker.  This note is subordinated in right of payment to the prior payment in full of all of its existing and future senior indebtedness.  The holders of the note may, at their option, convert all or a portion of the outstanding principal amount and unpaid accrued interest as of the date of conversion into shares of our common stock equal to one share for each $0.33 of outstanding principal and unpaid accrued  interest. In the event that we receive more than $1,000,000 in a financing or a series of financings (whether related or unrelated) prior to the maturity date of the note, 25% of the proceeds from any such financing in excess of $1,000,000 shall be used to pay down the note.  Any funds provided to us by certain entities shall not be credited towards the $1,000,000 threshold. This note was not registered under the Securities Act, or the securities laws of any state, and was issued in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving a public offering.

Information set forth in Item 2.01 of this Current Report on Form 8-K with respect to the issuance of unregistered equity securities in connection with the Merger is incorporated by reference into this Item 3.02.

Description of Capital Stock

Authorized Capital Stock

We have authorized 162,500,000 shares of capital stock, par value $0.001 per share, of which allare shares of common stock no other classes of stock are authorized.  

Capital Stock Issued and Outstanding

After giving effect to the Merger, the Split-Off, the Stock Split, we have issued and outstanding securities on a fully diluted basis as follows:

●     39,000,000 shares of common stock;

●     7,074,654 options; and

●     168,376 warrants.

Common Stock

The holders of our common stock are entitled to one vote per share. Our Articles of Incorporation do not provide for cumulative voting. The holders of our common stock are entitled to receive such dividends, if any, as may be declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth.   The holders of our common stock have no preemptive, subscription, redemption or conversion rights.

Warrants

Pursuant to an agreement with a former law firm, we agreed to issue to the law firm a warrant to purchase 801 shares of Envision common stock for an exercise price of $0.01 per share.  Following the Merger and Stock Split, this warrant was converted into a warrant to purchase 24,465 shares of our common stock at an exercise price of $0.01.  The warrant expires January 1, 2015.

Pursuant to a selling agreement with Nexcore Capital, Inc., in connection with our 2008 Private Placement, we agreed to issue to Nexcore Capital, Inc. and Financial West Group five-year warrants to purchase an aggregate of 4,712 shares of Envision common stock.  Following the Merger and Stock Split, these were converted into warrants to purchase 143,918 shares of our common stock.

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Dividend Policy

We currently intend to use all available funds to develop our business and do not anticipate that we will pay dividends in the future.  We can give no assurances that we will ever have excess funds available to pay dividends.

Indemnification of Directors and Officers

Under our Articles of Incorporation, no director or officer will be held personally liable to us or our shareholders for damages of breach of fiduciary duty as a director or officer unless such breach involves intentional misconduct, fraud, a knowing violation of law, or a payment of dividends in violation of the law.Under our Bylaws, directors and officers will be indemnified to the fullest extent allowed by the law against all damages and expenses suffered by a director or officer being party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative. This same indemnification is provided pursuant to Nevada Revised Statutes, Chapter 78.

The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making the company responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

Any repeal or modification of these provisions approved by our stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer of ours existing as of the time of such repeal or modification.

Anti-Takeover Effect of Certain By-Law Provisions

Our Amended Articles of Incorporation and Bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or tender offers or delaying or preventing a change of control of our company. These provisions are as follows:

●             they provide that special meetings of stockholders may be called only by our chairman, our secretary or by a resolution adopted by a majority of our board of directors; and

●             they do not include a provision for cumulative voting in the election of directors. Under cumulative voting, a minority stockholder holding a sufficient number of shares may be able to ensure the election of one or more directors. The absence of cumulative voting may have the effect of limiting the ability of minority stockholders to effect changes in our board of directors.

Trading Information

Our common stock is currently approved for quotation on the OTC Bulletin Board maintained by the Financial Industry Regulatory Authority, Inc. under the symbol CSTA and there is no active trading market for our stock.   We intend to notify the OTC Bulletin Board of our upcoming name change and will obtain a new symbol.  As soon as practicable, and assuming we satisfy all necessary initial listing requirements, we intend to apply to have our common stock listed for trading on the NYSE Amex Equities or The Nasdaq Stock Market, although we cannot be certain that any of these applications will be approved.

Transfer Agent

The transfer agent for our common stock is Island Stock Transfer.

Item  5.01   Changes in Control of Registrant.

Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item  5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Our sole officer and director immediately prior to the Merger resigned from all positions with us as of February 10, 2010, effective upon the closing of the Merger.  Pursuant to the terms of the Merger, our new directors and officers are as set forth therein.  Reference is made to the disclosure set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

Item  5.03   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

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Item  5.06   Change in Shell Company Status.

Following the consummation of the Merger described in Item 2.01 of this Current Report on Form 8-K, we believe that we are not a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.

Item  9.01   Financial Statements and Exhibits.

(a)       Financial Statements of Businesses Acquired.  In accordance with Item 9.01(a), Envision’s audited financial statements for the fiscal years ended December 31, 2008 and 2007 are filed in this Current Report on Form 8-K as Exhibit 99.1 and Envision’s unaudited financial statements for the nine months ended September 30, 2009 are filed in this Current Report on Form 8-K as Exhibit 99.2.

(b)       Pro Forma Financial Information.  In accordance with Item 9.01(b), our pro forma financial statements are filed in this Current Report on Form 8-K as Exhibit 99.3.

(c)       Exhibits.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

Exhibit No.	Description
2.1	Agreement of Merger and Plan of Reorganization, dated February 10, 2010, by and among Casita Enterprises, Inc., ESII Acquisition Corp. and Envision Solar International, Inc.
3.1	Articles of Incorporation (Incorporated herein by reference from Exhibit 3.1 to our Registration Statement on Form SB-2 filed with the SEC on November 2, 2007)
3.2	Bylaws (Incorporated herein by reference from Exhibit 3.2 t o our Registration Statement on Form SB-2 filed with the SEC on November 2, 2007)
10.1	Selling Agreement, dated as of January 17, 2007,  by and between Envision Solar, LLC and Nexcore Capital, Inc.
10.2	2007 Unit Option Plan of Envision Solar, LLC, dated as of July 2007
10.3	Asset Purchase Agreement, dated as of January, 2008, by and among Envision Solar International, Inc. and Generating Assets, LLC
10.4	Warrant, dated as of January 11, 2008, issued to Squire, Sanders & Dempsey L.L.P.
10.5	Selling Agreement., dated as of February 11, 2008, by and between Envision Solar International, Inc. and Nexcore Capital, Inc
10.6	Promissory Note, dated June 1, 2008, issued to William Adelson
10.7	Securities Purchase Agreement, dated as of November 12, 2008, by and between Envision Solar International, Inc. and Gemini Master Fund, Ltd.
10.8	Secured Bridge Note, dated November 12, 2008, issued to Gemini Master Fund, Ltd.
10.9	Security Agreement, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.10	Intellectual Property Security Agreement, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.11	Subsidiary Guarantee, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC and Gemini Strategies, LLC
10.12	Forbearance Agreement, dated as of April 11, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC and Gemini Master Fund, Ltd.
10.13	Agreement, dated as of July 6, 2009, by and between Envision Solar International, Inc. and Team Solar, Inc.

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10.14	Sustainable Strategy, Planning and Solar Advisory Services Agreement, dated as of October 1, 2009, between Envision Solar International, Inc. and Centre for Environmental Planning and Technology
10.15	Subordination Agreement, dated as of October 1, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Jon Evey, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.16	Consulting Services Agreement, dated as of October 23, 2008, by and between Envision Solar International, Inc. and Chevron Energy Solutions Company
10.17	Master Consulting Services Agreement, dated as of October 23, 2008, by and between Envision Solar International, Inc. and Chevron Energy Solutions Company
10.18	Amendment Agreement, dated as of October 30, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.19	Lock-up Agreement, dated as of October 30, 2009, by and between Envision Solar International, Inc. and Robert Noble
10.20	Lease dated as of December 17, 2009 by and between Pegasus KM, LLC and Envision Solar International, Inc.
10.21	10% Subordinated Convertible Promissory Note, dated December 17, 2009, issued to Mark Mandell, William Griffith and Pegasus Enterprises, LP
10.22	Amended and Restated 10% Subordinated Convertible Promissory Note, dated as of December 31, 2010, issued to John Evey
10.23	Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, dated as of February 10, 2010, by and between Casita Enterprises, Inc. and Casita Enterprises Holdings, Inc.
10.24	Stock Purchase Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc. and Jose Cisneros, Marco Martinez, Paco Sanchez, Don Miguel and Lydia Marcos
10.25	Employment Agreement, dated June 15, 2007 by and between Envision Solar International, Inc. and Robert Noble
10.26	Assignment of Employment Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Robert Noble
10.27	Employment Agreement, dated February 2, 2009 by and between Envision Solar International, Inc. and Joanna Tan
10.28	Assignment of Employment Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Joanna Tan
10.29	Interim Services Agreement, dated September, 2009 by and between Envision Solar International, Inc. and Tatum, LLC
10.30	Assignment of Employment Interim Services Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Tatum, LLC
99.1	Envision Solar International, Inc. and Subsidiaries financial statements for the fiscal years ended December 31, 2008 and 2007
99.1	Envision Solar International, Inc. and Subsidiaries unaudited financial statements for the three and nine months ended September 30, 2009 and 2008
99.3	Pro forma unaudited consolidated financial statements as of September 30, 2009

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  February 12, 2010

CASITA ENTERPRISES, INC.
By:	/s/ Robert Noble
	Robert Noble
	Chief Executive Officer

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INDEX TO EXHIBITS

Exhibit No.	Description
2.1	Agreement of Merger and Plan of Reorganization, dated February 10, 2010, by and among Casita Enterprises, Inc., ESII Acquisition Corp. and Envision Solar International, Inc.
3.1	Articles of Incorporation (Incorporated herein by reference from Exhibit 3.1 to our Registration Statement on Form SB-2 filed with the SEC on November 2, 2007)
3.2	Bylaws (Incorporated herein by reference from Exhibit 3.2 t o our Registration Statement on Form SB-2 filed with the SEC on November 2, 2007)
10.1	Selling Agreement, dated as of January 17, 2007,  by and between Envision Solar, LLC and Nexcore Capital, Inc.
10.2	2007 Unit Option Plan of Envision Solar, LLC, dated as of July 2007
10.3	Asset Purchase Agreement, dated as of January, 2008, by and among Envision Solar International, Inc. and Generating Assets, LLC
10.4	Warrant, dated as of January 11, 2008, issued to Squire, Sanders & Dempsey L.L.P.
10.5	Selling Agreement., dated as of February 11, 2008, by and between Envision Solar International, Inc. and Nexcore Capital, Inc
10.6	Promissory Note, dated June 1, 2008, issued to William Adelson
10.7	Securities Purchase Agreement, dated as of November 12, 2008, by and between Envision Solar International, Inc. and Gemini Master Fund, Ltd.
10.8	Secured Bridge Note, dated November 12, 2008, issued to Gemini Master Fund, Ltd.
10.9	Security Agreement, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.10	Intellectual Property Security Agreement, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.11	Subsidiary Guarantee, dated as of November 12, 2008, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC and Gemini Strategies, LLC
10.12	Forbearance Agreement, dated as of April 11, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC and Gemini Master Fund, Ltd.
10.13	Agreement, dated as of July 6, 2009, by and between Envision Solar International, Inc. and Team Solar, Inc.

10.14	Sustainable Strategy, Planning and Solar Advisory Services Agreement, dated as of October 1, 2009, between Envision Solar International, Inc. and Centre for Environmental Planning and Technology
10.15	Subordination Agreement, dated as of October 1, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Jon Evey, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.16	Consulting Services Agreement, dated as of October 23, 2008, by and between Envision Solar International, Inc. and Chevron Energy Solutions Company
10.17	Master Consulting Services Agreement, dated as of October 23, 2008, by and between Envision Solar International, Inc. and Chevron Energy Solutions Company
10.18	Amendment Agreement, dated as of October 30, 2009, by and among Envision Solar International, Inc., Envision Solar Construction, Inc., Envision Solar Residential, Inc., Envision Africa, LLC, Gemini Master Fund, Ltd. and Gemini Strategies, LLC
10.19	Lock-up Agreement, dated as of October 30, 2009, by and between Envision Solar International, Inc. and Robert Noble
10.20	Lease dated as of December 17, 2009 by and between Pegasus KM, LLC and Envision Solar International, Inc.
10.21	10% Subordinated Convertible Promissory Note, dated December 17, 2009, issued to Mark Mandell, William Griffith and Pegasus Enterprises, LP
10.22	Amended and Restated 10% Subordinated Convertible Promissory Note, dated as of December 31, 2010, issued to John Evey
10.23	Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, dated as of February 10, 2010, by and between Casita Enterprises, Inc. and Casita Enterprises Holdings, Inc.
10.24	Stock Purchase Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc. and Jose Cisneros, Marco Martinez, Paco Sanchez, Don Miguel and Lydia Marcos
10.25	Employment Agreement, dated June 15, 2007 by and between Envision Solar International, Inc. and Robert Noble
10.26	Assignment of Employment Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Robert Noble
10.27	Employment Agreement, dated February 2, 2009 by and between Envision Solar International, Inc. and Joanna Tan
10.28	Assignment of Employment Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Joanna Tan
10.29	Interim Services Agreement, dated September, 2009 by and between Envision Solar International, Inc. and Tatum, LLC
10.30	Assignment of Employment Interim Services Agreement, dated February 10, 2010, by and between Casita Enterprises, Inc., Envision Solar International, Inc. and Tatum, LLC
99.1	Envision Solar International, Inc. and Subsidiaries financial statements for the fiscal years ended December 31, 2008 and 2007
99.1	Envision Solar International, Inc. and Subsidiaries unaudited financial statements for the three and nine months ended September 30, 2009 and 2008
99.3	Pro forma unaudited consolidated financial statements as of September 30, 2009

EX-2.1

Exibit 2.1

_____________________________________________________

AGREEMENT OF MERGER AND

PLAN OF REORGANIZATION

_____________________________________________________

BY AND AMONG

CASITA ENTERPRISES, INC.,

ESII ACQUISITION CORP.

and

ENVISION SOLAR INTERNATIONAL, INC.

Dated as of February 10, 2010

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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this “Agreement”) is made and entered into on February 10, 2010, by and among CASITA ENTERPRISES, INC., a Nevada corporation (“Parent”), ESII ACQUISITION CORP., a Delaware corporation (“Acquisition Corp.”), which is a wholly-owned subsidiary of Parent, and ENVISION SOLAR INTERNATIONAL, INC., a California corporation (the “Company”).

W I T N E S S E T H :

WHEREAS, the Board of Directors of each of Acquisition Corp., Parent and the Company has each determined that it is fair to and in the best interests of their respective corporations and stockholders for Acquisition Corp. to be merged with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of each of Parent, Acquisition Corp. and the Company has approved the Merger in accordance with the Nevada Revised Statutes (the “NRS”), the General Corporation Law of the State of Delaware (the “DGCL”) and the Corporations Code of the State of California (the “CCC ”), and upon the terms and subject to the conditions set forth herein, in the Delaware Certificate of Merger attached as Exhibit A hereto (the “DE-Certificate of Merger”) and the California Agreement of Merger attached as Exhibit B hereto (the “CA-Agreement of Merger”);

WHEREAS, the requisite stockholders of the Company have approved by written consent pursuant to Section 603(a) of the CCC this Agreement, the DE-Certificate of Merger, the CA-Agreement of Merger and the transactions contemplated and described hereby and thereby, including, without limitation, the Merger, and Parent, as the sole stockholder of Acquisition Corp., has approved by written consent pursuant to Section 78.320 of the NRS this Agreement, the DE-Certificate of Merger, the CA-Agreement of Merger and the transactions contemplated and described hereby and thereby, including, without limitation, the Merger;

WHEREAS, the parties hereto intend that the Merger contemplated herein shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), by reason of Section 368(a)(2)(E) of the Code.

NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

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ARTICLE I.

THE MERGER

Section 1.01Merger.  Subject to the terms and conditions of this Agreement, the DE-Certificate of Merger and the CA-Agreement of Merger, Acquisition Corp. shall be merged with and into the Company in accordance with Section 252 of the DGCL and Section 1108 of the CCC. At the Effective Time (as defined below), the separate legal existence of Acquisition Corp. shall cease, and the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and shall continue its corporate existence under the laws of the State of California under the name “Envision Solar International, Inc.”

Section 1.02Effective Time.  The Merger shall become effective upon the filing of (a) the DE-Certificate of Merger with the Secretary of State of the State of Delaware in accordance with Section 252 of the DGCL and (b) the CA-Agreement of Merger with the Secretary of State of the State of California in accordance with Section 1103 of the CCC. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the “Effective Time.”

Section 1.03Closing. The closing of the Merger (the “Closing”) shall occur concurrently with the Effective Time (the “Closing Date”). The Closing shall occur at the offices of the Company. At the Closing, all of the documents, certificates, agreements, opinions and instruments referenced in Article VII will be executed and delivered as described therein. At the Effective Time, all actions to be taken at the Closing shall be deemed to be taken simultaneously.

Section 1.04Certificate of Incorporation, By-laws, Directors and Officers.

(a)The Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, attached as Exhibit C hereto, shall be the Certificate of Incorporation of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable law and such Certificate of Incorporation.

(b)The By-laws of the Company, as in effect immediately prior to the Effective Time, attached as Exhibit D hereto, shall be the By-laws of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable law, the Certificate of Incorporation of the Surviving Corporation and such By-laws.

(c)The directors and officers listed in Exhibit E hereto shall be the directors and officers of the Surviving Corporation and Parent, and each shall hold his respective office or offices from and after the Effective Time until his successor shall have been elected and shall have qualified in accordance with applicable law, or as otherwise provided in the Certificate of Incorporation or By-laws of the Surviving Corporation or the Certificate of Incorporation or By-laws of Parent, as the case may be.

Section 1.05Assets and Liabilities. At the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties of each of Acquisition Corp. and the Company (collectively, the “Constituent Corporations”); and all the rights, privileges, powers and franchises of each of the Constituent Corporations, and all property, real, personal and mixed, and all debts due to any of the Constituent Corporations on whatever account, as well as all other things in action or belonging to each of the Constituent Corporations, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectively the property of the Surviving Corporation as they were of the several and respective Constituent Corporations, and the title to any real estate vested by deed or otherwise in either of such Constituent Corporations shall not revert or be in any way impaired by the Merger; but all rights of creditors and all liens upon any property of any of the Constituent Corporations shall be preserved unimpaired, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

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Section 1.06Manner and Basis of Converting Shares.

(a)At the Effective Time:

(i)each share of common stock, par value $0.001 per share, of Acquisition Corp. that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive one (1) share of common stock, no par value per share, of the Surviving Corporation, so that at the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation;

(ii)the shares of common stock, no par value per share, of the Company (the “Company Common Stock”) owned by the stockholders of the Company, each of which is listed on Schedule 1.06(a)(ii) (other than shares of Company Common Stock as to which appraisal rights are perfected pursuant to the applicable provisions of the CCC and not withdrawn or otherwise forfeited) (the “Stockholders”), shall, by virtue of the Merger and without any action on the part of the Stockholders, be converted into the right to receive the number of shares of common stock, par value $0.001 per share of the Parent (the “Parent Common Stock”) specified in Schedule 1.06(a)(ii) for each of the Stockholders, which shall be equal to9.398 shares of Parent Common Stock for each share of Company Common Stock with fractional shares of Parent Common Stock rounded to the nearest whole share; and

(iii)each share of Company Common Stock held in the treasury of the Company immediately prior to the Effective Time shall be cancelled in the Merger and cease to exist.

(b)After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time.

Section 1.07Surrender and Exchange of Certificates. Promptly after the Effective Time and upon (a) surrender of a certificate or certificates representing shares of Company Common Stock that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form reasonably acceptable to counsel for Parent stating that such Stockholder has lost its certificate or certificates or that such have been destroyed and (b) delivery of a Letter of Transmittal (as described in Article IV hereof), Parent shall issue to each record holder of Company Common Stock surrendering such certificate, certificates or affidavit and Letter of Transmittal, a certificate or certificates registered in the name of such Stockholder representing the number of shares of Parent Common Stock that such Stockholder shall be entitled to receive as set forth in Section 1.06(a)(ii) hereof. Until the certificate, certificates or affidavit is or are surrendered together with the Letter of Transmittal as contemplated by this Section 1.07 and Article IV hereof, each certificate or affidavit that immediately prior to the Effective Time represented any outstanding shares of Company Common Stock shall be deemed at and after the Effective Time to represent only the right to receive upon surrender as aforesaid the Parent Common Stock specified in Schedule 1.06 hereof for the holder thereof or to perfect any rights of appraisal that such holder may have pursuant to the applicable provisions of the CCC .

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Section 1.08Parent Common Stock.  Parent agrees that it will cause the Parent Common Stock into which  the Company Common Stock is converted at the Effective Time pursuant to Section 1.06(a)(ii) to be available for such purposes. Parent further covenants that immediately following the Effective Time, Parent will effect cancellations of its outstanding shares of Parent Common Stock and that there will be no more than 4,000,000 shares of Parent Common Stock issued and outstanding, and that no other common or preferred stock or equity securities or any options, warrants, rights or other agreements or instruments convertible, exchangeable or exercisable into common or preferred stock or other equity securities shall be issued or outstanding, except as described herein.

Section 1.09Stock Options. At the Effective Time, each outstanding purchase right under the 2007 Unit Option Plan of Envision Solar, LLC, (the “2007 Plan”), as amended to date and with any addendums thereto, and under the Envision Solar International, Inc. 2008 Stock Option Plan (the “2008 Plan”), as amended to date and any addendums thereto (each, a “Company Option”) shall be assumed by Parent in such manner that Parent is a corporation “issuing or assuming a stock option in a transaction to which Section 424(a) applies” within the meaning of the Code, and shall be converted into a right to purchase Parent Common Stock in accordance with this Section 1.09. Each Company Option so converted shall continue to have, and be subject to, the same terms and conditions (including vesting schedule) as set forth in the 2007 Plan or 2008 Plan, as applicable, and any agreements thereunder immediately prior to the Effective Time, except that, as of the Effective Time, (i) each Company Option shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of shares that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by 9.398 (the “Option Exchange Ratio”), rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Option Exchange Ratio, rounded up to the nearest whole cent, subject to any adjustments that may be required in order to comply with Sections 409A and 422of the Code.

Section 1.10Warrants. At the Effective Time, each outstanding warrant to purchase shares of Company Common Stock (each, a “Company Warrant”) shall be assumed by Parent, and shall be converted into a right to purchase Parent Common Stock in accordance with this Section 1.10. Each Company Warrant so converted shall continue to have, and be subject to, the same terms and conditions as set forth in each Company Warrant immediately prior to the Effective Time, except that, as of the Effective Time, (i) each Company Warrant shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of shares that were issuable upon exercise of such Company Warrant immediately prior to the Effective Time multiplied by 9.398 (the “Warrant Exchange Ratio”), rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such Company Warrant so converted shall be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Warrant was exercisable immediately prior to the Effective Time by the Warrant Exchange Ratio, rounded up to the nearest whole cent.

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Section 1.11Operation of Surviving Corporation.  The Company acknowledges that upon the effectiveness of the Merger, and the material compliance by Parent and Acquisition Corp. with their respective duties and obligations hereunder, Parent shall have the absolute and unqualified right to deal with the assets and business of the Surviving Corporation as its own property without limitation on the disposition or use of such assets or the conduct of such business.

Section 1.12Further Assurances.  From time to time, from and after the Effective Time, as and when reasonably requested by Parent, the proper officers and directors of the Company as of the Effective Time shall, for and on behalf and in the name of the Company or otherwise, execute and deliver all such deeds, bills of sale, assignments and other instruments and shall take or cause to be taken such further actions as Parent, Acquisition Corp. or their respective successors or assigns reasonably may deem necessary or desirable in order to confirm or record or otherwise transfer to the Surviving Corporation title to and possession of all of the properties, rights, privileges, powers, franchises and immunities of the Company or otherwise to carry out fully the provisions and purposes of this Agreement, the DE-Certificate of Merger and the CA-Agreement of Merger.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Acquisition Corp. as follows. Notwithstanding anything to the contrary contained herein, disclosure of items in the draft Current Report on Form 8-K of Parent with respect to the Merger, and all exhibits thereto, a copy of which is attached hereto as Exhibit F (collectively, the “Disclosures”) shall be deemed to be disclosure of such items for all purposes under this Agreement, including, without limitation, for all applicable representations and warranties of the Company:

Section 2.01Organization, Standing, Subsidiaries, Etc.

(a)The Company is a corporation duly organized and existing in good standing under the laws of the State of California and has all requisite power and authority (corporate and other) to carry on its business, to own or lease its properties and assets, to enter into this Agreement, the DE-Certificate of Merger and the CA-Agreement of Merger and to carry out the terms hereof and thereof. Copies of the Certificate of Incorporation and By-laws of the Company that have been delivered to Parent and Acquisition Corp. prior to the execution of this Agreement are true and complete and have not since been amended or repealed.

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(b)Except as set forth on Schedule 2.01(b), the Company has no subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business.

Section 2.02Qualification.  The Company is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of the Company taken as a whole (the “Condition of the Company”).

Section 2.03Capitalization of the Company.  The authorized capital stock of the Company consists of 10,000,000 shares of Company Common Stock, of which there are 831,263 shares of Company Common Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person, corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (each, a “Person”). The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or “Blue Sky” law. Except as set forth on Schedule 2.03 hereto, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. For purposes of this Agreement, “Equity Security” shall mean any stock or similar security of an issuer or any security (whether stock or Indebtedness for Borrowed Money (as defined below)) convertible, with or without consideration, into any stock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Section 2.04Indebtedness.  The Company has no Indebtedness for Borrowed Money, except as otherwise set forth in this Agreement or disclosed on the Balance Sheets (as defined below). For purposes of this Agreement, “Indebtedness for Borrowed Money” shall mean (a) all Indebtedness in respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of the Company, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money or (c) all such Indebtedness guaranteed by the Company or for which the Company is otherwise contingently liable. Furthermore, for purposes of this Agreement, “Indebtedness” shall mean any obligation of the Company which, under generally accepted accounting principles in the United Stated (“GAAP”), is required to be shown on the balance sheet of the Company as a liability. Any obligation secured by a mortgage, pledge, security interest, encumbrance, lien or charge of any kind (a “Lien”), shall be deemed to be Indebtedness, even though such obligation is not assumed by the Company.

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Section 2.05Company Stockholders.  Schedule 1.06 hereto contains a true and complete list of the names of the record owners of all of the outstanding shares of Company Common Stock and other Equity Securities of the Company, together with the number of securities held or to which such Person has rights to acquire. To the knowledge of the Company, there is no voting trust, agreement or arrangement among any of the beneficial holders of Company Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Company Common Stock.

Section 2.06Corporate Acts and Proceedings.  The execution, delivery and performance of this Agreement, the DE-Certificate of Merger and the CA-Agreement of Merger (together, the “Merger Documents”) have been duly authorized by the Board of Directors of the Company and have been approved by the requisite vote of the Stockholders, and all of the corporate acts and other proceedings required for the due and valid authorization, execution, delivery and performance of the Merger Documents and the consummation of the Merger have been validly and appropriately taken, except for the filings referred to in Section 1.02.

Section 2.07Governmental Consents.  All material consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of the Company required in connection with the consummation of the Merger shall have been obtained prior to, and be effective as of, the Closing.

Section 2.08Compliance with Laws and Instruments.  The business, products and operations of the Company have been and are being conducted in compliance in all material respects with all applicable laws, rules and regulations, except for such violations thereof for which the penalties, in the aggregate, would not have a material adverse effect on the Condition of the Company. The execution, delivery and performance by the Company of the Merger Documents and the consummation by the Company of the transactions contemplated by this Agreement: (a) will not cause the Company to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Certificate of Incorporation or By-laws of the Company, (b) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, except as would not have a material adverse effect on the Condition of the Company and (c) will not result in the creation or imposition of any Lien upon any property or asset of the Company. The Company is not in violation of, or (with or without notice or lapse of time, or both) in default under, any term or provision of its Certificate of Incorporation or By-laws or of any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or, except as would not materially and adversely affect the Condition of the Company, any other material agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected.

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Section 2.09Binding Obligations.  The Merger Documents constitute the legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their respective terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

Section 2.10Broker’s and Finder’s Fees.  No Person has, or as a result of the transactions contemplated or described herein will have, any right or valid claim against the Company, Parent, Acquisition Corp. or any Stockholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

Section 2.11Financial Statements.  Parent has previously been provided with the Company’s audited balance sheets (the “Balance Sheets”) as of December 31, 2007 and December 31, 2008 (the “Balance Sheet Date”) and the audited statements of operations and accumulated deficits and cash flows for the years ended December 31, 2007 and December 31, 2008. Such financial statements are collectively referred to as the “Financial Statements”. Such financial statements (a) are in accordance with the books and records of the Company, (b) present fairly in all material respects the financial condition of the Company at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified and (c) have been prepared in accordance with GAAP applied on a basis consistent with prior accounting periods.

Section 2.12Absence of Undisclosed Liabilities. The Company has no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in the Balance Sheets, (b) to the extent set forth on or reserved against in the Balance Sheets or the notes to the Financial Statements, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since the Balance Sheet Date, none of which (individually or in the aggregate) has had or will have a material adverse effect on the Condition of the Company and (d) by the specific terms of any written agreement, document or arrangement identified in the Disclosures.

Section 2.13Changes.  Except as disclosed on Schedule 2.13, since the Balance Sheet Date, the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Merger and related transactions and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheets and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value,

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(f) suffered any physical damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the Condition of the Company, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the Condition of the Company other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) has been materially adverse, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Balance Sheets or its statement of income for the period ended on the Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $50,000 in the aggregate, or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

Section 2.14Assets and Contracts.

(a)Schedule 2.14(a) contains a true and complete list of all real property leased by the Company and of all tangible personal property owned or leased by the Company having a cost or fair market value of greater than $250,000. All the real property listed in Schedule 2.14(a) is leased by the Company under valid leases enforceable in accordance with their terms, and there is not, under any such lease, any existing default or event of default or event which with notice or lapse of time, or both, would constitute a default by the Company, and the Company has not received any notice or claim of any such default by the Company. The Company does not own any real property.

(b)Except as expressly set forth in this Agreement, the Financial Statements or the notes thereto, or as disclosed in Schedule 2.14(b) hereto, the Company is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Company. Except as disclosed in Schedule 2.14(b) hereto, the Company is not a party to any written or oral (i) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (ii) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (iii) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Company to any Lien or evidencing any Indebtedness, (iv) guaranty of any

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Indebtedness, (v) other than as set forth in Schedule 2.14(a) hereto, lease or agreement under which the Company is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $250,000 per year, (vi) agreement granting any preemptive right, right of first refusal or similar right to any Person, (vii) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of the Company or any present or former officer, director or stockholder of the Company, (viii) agreement obligating the Company to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (ix) covenant not to compete or other material restriction on its ability to conduct a business or engage in any other activity, (x) agreement to register securities under the Securities Act or (xi) collective bargaining agreement. Except as disclosed in Schedule 2.14(b), none of the agreements, contracts, leases, instruments or other documents or arrangements listed in Schedules 2.14(a) and 2.14(b) requires the consent of any of the parties thereto other than the Company to permit the contract, agreement, lease, instrument or other document or arrangement to remain effective following consummation of the Merger and the transactions contemplated hereby. For purposes of this Agreement, an “Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

(c)The Company has made available to Parent and Acquisition Corp. true and complete copies of all agreements and other documents and a description of all applicable oral agreements disclosed or referred to in Schedules 2.14(a) and 2.14(b), as well as any additional agreements or documents, requested by Parent or Acquisition Corp. The Company has in all material respects performed all obligations required to be performed by it to date and is not in default in any material respect under any of the contracts, agreements, leases, documents, commitments or other arrangements to which it is a party or by which it or any of its property is otherwise bound or affected.

Section 2.15Employees.  The Company has complied in all material respects with all laws relating to the employment of labor, and the Company has encountered no material labor union difficulties. Other than pursuant to ordinary arrangements of employment compensation, the Company is not under any obligation or liability to any officer, director or employee of the Company.

Section 2.16Tax Returns and Audits.

(a)All required federal, state and local Tax Returns (as defined below) of the Company have been accurately prepared and duly and timely filed, and all federal, state and local Taxes (as defined below) required to be paid with respect to the periods covered by such returns have been paid. The Company is not and has not been delinquent in the payment of any Tax. The Company has not had a Tax deficiency proposed or assessed against it and has not executed a waiver of any statute of limitations on the assessment or collection of any Tax. None of the Company’s federal income tax returns has been audited by any governmental authority; and none of the Company’s state or local income or franchise tax returns has been audited by any governmental authority. The reserves for Taxes reflected on the Balance Sheets are and will be sufficient for the payment of all unpaid Taxes payable by the Company as of the Balance Sheet Date. Since the Balance Sheet Date, the Company has made adequate provisions on its books of account for all Taxes with respect to its business, properties and operations for such period.

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The Company has withheld or collected from each payment made to each of its employees the amount of all taxes (including, but not limited to, federal, state and local income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper Tax receiving officers or authorized depositaries. There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Company now pending, and the Company has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns. The Company is not obligated to make a payment, nor is it a party to any agreement that under certain circumstances could obligate it to make a payment that would not be deductible under Section 280G of the Code. The Company has not agreed, nor is it required, to make any adjustments under Section 481(a) of the Code (or any similar provision of state, local and foreign law), whether by reason of a change in accounting method or otherwise, for any Tax period for which the applicable statute of limitations has not yet expired. The Company (i) is not a party to, nor is it bound by or obligated under, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, whether written or unwritten (collectively, “Tax Sharing Agreements”), and (ii) does not have any potential liability or obligation to any Person as a result of, or pursuant to, any such Tax Sharing Agreements.

(b)For purposes of this Agreement, the following terms shall have the meanings provided below:

(i)“Tax” or “Taxes” shall mean (A) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States (federal, state or local) or other applicable jurisdiction; (B) any liability for the payment of any amounts described in clause (A) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Regulation Section 1.1502-6; and (C) any liability for the payments of any amounts as a result of being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (A) or (B).

(ii)“Tax Return” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065) required to be supplied to a Tax authority relating to Taxes.

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Section 2.17Patents and Other Intangible Assets.

(a)The Company (i) owns or has the right to use, free and clear of all Liens, claims and restrictions, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary for the conduct of its business as now conducted or proposed to be conducted without infringing upon or otherwise acting adversely to the right or claimed right of any Person under or with respect to any of the foregoing and (ii) is not obligated or under any liability to make any payments by way of royalties, fees or otherwise to any owner or licensor of, or other claimant to, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business or otherwise.

(b)To the knowledge of the Company, the Company owns and has the unrestricted right to use all trade secrets, if any, including know-how, negative know-how, formulas, patterns, programs, devices, methods, techniques, inventions, designs, processes, computer programs and technical data and all information that derives independent economic value, actual or potential, from not being generally known or known by competitors (collectively, “Intellectual Property”) required for or incident to the development, operation and sale of all products and services sold by the Company, free and clear of any right, Lien or claim of others; provided, however, that the possibility exists that other Persons, completely independently of the Company or its employees or agents, could have developed Intellectual Property similar or identical to that of the Company. The Company is not aware of any such development of substantially identical trade secrets or technical information by others. All Intellectual Property can and will be transferred by the Company to the Surviving Corporation as a result of the Merger and without the consent of any person or entity other than the Company.

Section 2.18Employee Benefit Plans; ERISA.

(a)Except as disclosed on Schedule 2.18 hereto, there are no “employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs of every type other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Company, whether written or unwritten and whether or not funded. The plans listed on Schedule 2.18 hereto are hereinafter referred to as the “Employee Benefit Plans.”

(b)All current and prior material documents, including all amendments thereto, with respect to each Employee Benefit Plan have been made available to Parent and Acquisition Corp. or their advisors.

(c)To the knowledge of the Company, all Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.

(d)There are no pending claims or lawsuits that have been asserted or instituted against any Employee Benefit Plan, the assets of any of the trusts or funds under the Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with respect to the operation of such plan, nor does the Company have any knowledge of any incident, transaction, occurrence or circumstance that might reasonably be expected to form the basis of any such claim or lawsuit.

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(e)There is no pending or, to the knowledge of the Company, contemplated investigation, or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Employee Benefit Plan and the Company has no knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.

(f)No actual or, to the knowledge of the Company, contingent liability exists with respect to the funding of any Employee Benefit Plan or for any other expense or obligation of any Employee Benefit Plan, except as disclosed on the financial statements of the Company, and no contingent liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

(g)No events have occurred or are expected to occur with respect to any Employee Benefit Plan that would cause a material change in the costs of providing benefits under such Employee Benefit Plan or would cause a material change in the cost of providing for other liabilities of such Employee Benefit Plan.

Section 2.19Title to Property and Encumbrances.  The Company has good, valid and indefeasible marketable title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases that are in full force and effect and which are not in default) free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as do not, individually or in the aggregate, materially detract from the value of the property or assets or materially impair the use made thereof by the Company in its business. Without limiting the generality of the foregoing, the Company has good and indefeasible title to all of its properties and assets reflected in the Balance Sheets, except for property disposed of in the usual and ordinary course of business since the Balance Sheet Date and for property held under valid and subsisting leases that are in full force and effect and that are not in default. For purposes of this Agreement, “Permitted Liens” shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’, laborers’ and materialmens’ and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings and (c) Liens incidental to the conduct of the business of the Company that were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use made thereof by the Company in its business.

Section 2.20Condition of Properties.  All facilities, machinery, equipment, fixtures and other properties owned, leased or used by the Company are in reasonably good operating condition and repair, subject to ordinary wear and tear, and are adequate and sufficient for the Company’s business.

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Section 2.21Insurance Coverage.  There is in full force and effect one or more policies of insurance issued by insurers of recognized responsibility, insuring the Company and its properties, products and business against such losses and risks, and in such amounts, as are customary for corporations of established reputation engaged in the same or similar business and similarly situated. The Company has not been refused any insurance coverage sought or applied for, and the Company has no reason to believe that it will be unable to renew its existing insurance coverage as and when the same shall expire upon terms at least as favorable to those currently in effect, other than possible increases in premiums that do not result from any act or omission of the Company. No suit, proceeding or action or, to the best current actual knowledge of the Company, threat of suit, proceeding or action has been asserted or made against the Company within the last five years due to alleged bodily injury, disease, medical condition, death or property damage arising out of the function or malfunction of a product, procedure or service designed, manufactured, sold or distributed by the Company.

Section 2.22Litigation.  Except as disclosed in Schedule 2.22, there is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or its properties, assets or business, and after reasonable investigation, the Company is not aware of any incident, transaction, occurrence or circumstance that might reasonably be expected to result in or form the basis for any such action, suit, arbitration or other proceeding. The Company is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

Section 2.23Licenses.  The Company possesses from all appropriate governmental authorities all licenses, permits, authorizations, approvals, franchises and rights necessary for the Company to engage in the business currently conducted by it, all of which are in full force and effect.

Section 2.24Interested Party Transactions.  Except as disclosed in Schedule 2.24, no officer, director or stockholder of the Company or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Company has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Company or (ii) purchases from or sells or furnishes to the Company any goods or services, or (b) a beneficial interest in any contract or agreement to which the Company is a party or by which it may be bound or affected.

Section 2.25Environmental Matters.

(a)To the knowledge of the Company, the Company has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials (as defined below) on any real property on which it now has or previously had any leasehold or ownership interest, except in compliance with all applicable Environmental Laws (as defined below).

(b)To the knowledge of the Company, the historical and present operations of the business of the Company are in compliance with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have a material adverse effect on the Condition of the Company.

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(c)There are no material pending or, to the knowledge of the Company, threatened, demands, claims, information requests or notices of noncompliance or violation against or to the Company relating to any Environmental Law; and, to the knowledge of the Company, there are no conditions or occurrences on any of the real property used by the Company in connection with its business that would reasonably be expected to lead to any such demands, claims or notices against or to the Company, except such as have not had, and would not reasonably be expected to have, a material adverse effect on the Condition of the Company.

(d)To the knowledge of the Company, (i) the Company has not sent or disposed of, otherwise had taken or transported, arranged for the taking or disposal of (on behalf of itself, a customer or any other party) or in any other manner participated or been involved in the taking of or disposal or release of a Hazardous Material to or at a site that is contaminated by any Hazardous Material or that, pursuant to any Environmental Law, (A) has been placed on the “National Priorities List”, the “CERCLIS” list, or any similar state or federal list, or (B) is subject to or the source of a claim, an administrative order or other request to take “removal”, “remedial”, “corrective” or any other “response” action, as defined in any Environmental Law, or to pay for the costs of any such action at the site; (ii) the Company is not involved in (and has no basis to reasonably expect to be involved in) any suit or proceeding and has not received (and has no basis to reasonably expect to receive) any notice, request for information or other communication from any governmental authority or other third party with respect to a release or threatened release of any Hazardous Material or a violation or alleged violation of any Environmental Law, and has not received (and has no basis to reasonably expect to receive) notice of any claims from any Person relating to property damage, natural resource damage or to personal injuries from exposure to any Hazardous Material; and (iii) the Company has timely filed every report required to be filed, acquired all necessary certificates, approvals and permits, and generated and maintained all required data, documentation and records under all Environmental Laws, in all such instances except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Condition of the Company.

(e)For purposes of this Agreement, the following terms shall have the meanings provided below:

(i)“Environmental Laws” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601, et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136, et seq. and comparable state statutes dealing with the registration, labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801, et seq.; as any of the above statutes have been amended as of the date hereof, all rules, regulations and policies promulgated pursuant to any of the above statutes, and any other foreign, federal, state or local law, statute, ordinance, rule, regulation or policy governing environmental matters, as the same have been amended as of the date hereof.

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(ii)“Hazardous Material” shall mean any substance or material meeting any one or more of the following criteria: (a) it is or contains a substance designated as or meeting the characteristics of a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under any Environmental Law; (b) its presence at some quantity requires investigation, notification or remediation under any Environmental Law; or (c) it contains, without limiting the foregoing, asbestos, polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived substances or waste, pesticides, herbicides, crude oil or any fraction thereof, nuclear fuel, natural gas or synthetic gas.

Section 2.26Questionable Payments.  Neither the Company nor any director, officer or, to the knowledge of the Company, agent, employee or other Person associated with or acting on behalf of the Company, has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

Section 2.27Obligations to or by Stockholders.  Except as set forth on Schedule 2.27, the Company has no liability or obligation or commitment to any Stockholder or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any Stockholder, nor does any Stockholder or any such Affiliate or associate have any liability, obligation or commitment to the Company.

Section 2.28Duty to Make Inquiry.  To the extent that any of the representations or warranties in this Article II are qualified by “knowledge” or “belief,” the Company represents and warrants that it has made due and reasonable inquiry and investigation concerning the matters to which such representations and warranties relate, including, but not limited to, diligent inquiry of its directors, officers and key personnel.

Section 2.29Disclosure.  There is no fact relating to the Company that the Company has not disclosed to Parent and Acquisition Corp. in writing that has had or is currently having a material and adverse effect or, insofar as the Company can now foresee, will materially and adversely affect the Condition of the Company. No representation or warranty by the Company herein and no information disclosed in the schedules or exhibits hereto by the Company contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

ARTICLE III.  

REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.

Parent and Acquisition Corp. represent and warrant to the Company as follows. Notwithstanding anything to the contrary contained herein, disclosure of items in the Parent SEC Documents (as defined below) shall be deemed to be disclosure of such items for all purposes under this Agreement, including, without limitation, for all applicable representations and warranties of Parent and Acquisition Corp.:

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Section 3.01Organization and Standing.  Parent is a corporation duly organized and existing in good standing under the laws of the State of Nevada. Acquisition Corp. is a corporation duly organized and existing in good standing under the laws of the State of Delaware. Parent and Acquisition Corp. have heretofore delivered to the Company complete and correct copies of their respective Articles of Incorporation or Certificates of Incorporation, as applicable, and By-laws as now in effect. Parent and Acquisition Corp. have full corporate power and authority to carry on their respective businesses as they are now being conducted and as now proposed to be conducted and to own or lease their respective properties and assets. Neither Parent nor Acquisition Corp. has any subsidiaries (except Parent’s ownership of Acquisition Corp.) or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business. Parent owns all of the issued and outstanding capital stock of Acquisition Corp. free and clear of all Liens, and Acquisition Corp. has no outstanding options, warrants or rights to purchase capital stock or other securities of Acquisition Corp., other than the capital stock owned by Parent. Unless the context otherwise requires, all references in this Article III to “Parent” shall be treated as being a reference to Parent and Acquisition Corp. taken together as one enterprise.

Section 3.02Qualification.  Parent is duly qualified to conduct business as a foreign corporation and are in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the condition, properties, assets, liabilities or business operations of Parent (the “Condition of the Parent”).

Section 3.03Corporate Authority.  Each of Parent and/or Acquisition Corp. (as the case may be) has full corporate power and authority to enter into the Merger Documents and the other agreements to be made pursuant to the Merger Documents, and to carry out the transactions contemplated hereby and thereby. All corporate acts and proceedings required for the authorization, execution, delivery and performance of the Merger Documents and such other agreements and documents by Parent and/or Acquisition Corp. (as the case may be) have been duly and validly taken or will have been so taken prior to the Closing. Each of the Merger Documents constitutes a legal, valid and binding obligation of Parent and/or Acquisition Corp. (as the case may be), each is enforceable against it and/or them in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by general principles of equity.

Section 3.04Broker’s and Finder’s Fees.  No Person is entitled by reason of any act or omission of Parent or Acquisition Corp. to any broker’s or finder’s fees, commission or other similar compensation with respect to the execution and delivery of the Merger Documents, or with respect to the consummation of the transactions contemplated thereby, except as set forth in the Disclosures.

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Section 3.05Capitalization.

(a)The authorized capital stock of Parent consists of 50,000,000 shares of Parent Common Stock, of which 9,000,000 shares are issued and outstanding. Parent has no outstanding options, rights or commitments to issue shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp., and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Parent Common Stock or any other Equity Security of Parent or Acquisition Corp. There is no voting trust, agreement or arrangement among any of the beneficial holders of Parent Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Parent Common Stock.

(b)The authorized capital stock of Acquisition Corp. consists of 3,000 shares of common stock, par value $.001 per share (the “Acquisition Corp. Common Stock”), of which 1,000 shares are issued and outstanding. All of the outstanding Acquisition Corp. Common Stock is owned by Parent. All outstanding shares of the capital stock of Acquisition Corp. are validly issued and outstanding, fully paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any Person. Acquisition Corp. has no outstanding options, rights or commitments to issue shares of Acquisition Corp. Common Stock or any other Equity Security of Acquisition Corp., and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Acquisition Corp. Common Stock or any other Equity Security of Acquisition Corp.

Section 3.06Acquisition Corp.  Acquisition Corp. is a wholly-owned Delaware subsidiary of Parent that was formed specifically for the purpose of the Merger and that has not conducted any business or acquired any property, and will not conduct any business or acquire any property prior to the Closing Date, except in preparation for and otherwise in connection with the transactions contemplated by the Merger Documents and the other agreements to be made pursuant to or in connection with the Merger Documents.

Section 3.07Validity of Shares.  The shares of Parent Common Stock to be issued at the Closing pursuant to Section 1.06(a)(ii) hereof, when issued and delivered in accordance with the terms hereof and of the other Documents, shall be duly and validly issued, fully paid and non-assessable. Based in part on the representations and warranties of the Stockholders as contemplated by Article IV hereof and assuming the accuracy thereof, the issuance of the Parent Common Stock upon consummation of the Merger pursuant to Section 1.06(a)(ii) will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state “Blue Sky” or securities laws. SEC Reporting and Compliance.

(a)Parent filed a registration statement on Form SB-2 under the Securities Act, which became effective on or about December 11, 2007. Since that date, Parent has timely filed with the U.S. Securities and Exchange Commission (the “Commission”) all registration statements, proxy statements, information statements and reports required to be filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Parent has not filed with the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.

(b)Parent has made available to the Company true and complete copies of the registration statements, information statements and other reports (collectively, the “Parent SEC Documents”) filed by Parent with the Commission. None of the Parent SEC Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein not misleading.

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(c)Prior to and until the Closing, Parent will provide to the Company copies of any and all amendments or supplements to the Parent SEC Documents filed with the Commission and all subsequent registration statements and reports filed by Parent subsequent to the filing of the Parent SEC Documents with the Commission and any and all subsequent information statements, proxy statements, reports or notices filed by Parent with the Commission or delivered to the stockholders of Parent.

(d)Parent is not an investment company within the meaning of Section 3 of the Investment Company Act of 1940, as amended.

(e)The shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin Board under the symbol “CSTA.OB” and Parent is in compliance in all material respects with all rules and regulations of the OTC Bulletin Board applicable to it and the Parent Common Stock.

(f)Between the date hereof and the Closing Date, Parent shall continue to satisfy the filing requirements of the Exchange Act and all other requirements of applicable securities laws and of the OTC Bulletin Board.

(g)The Parent SEC Documents include all certifications and statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), and each of such certifications and statements contain no qualifications or exceptions to the matters certified therein other than a knowledge qualification, permitted under such provision, and have not been modified or withdrawn and neither Parent nor any of its officers has received any notice from the Commission questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications or statements.

(h)Parent has otherwise complied with the Securities Act, Exchange Act and all other applicable federal and state securities laws.

Section 3.08Financial Statements.  The balance sheets and statements of operations, stockholders’ equity and cash flows contained in the Parent SEC Documents (the “Parent Financial Statements”) (a) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (b) are in accordance with the books and records of Parent and (c) present fairly in all material respects the financial condition of Parent at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. The financial statements included in Parent’s SB-2 were audited by Madsen & Associates CPA’s, Inc., Parent’s independent registered public accounting firm

Section 3.09Governmental Consents.  All material consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent or Acquisition Corp. required in connection with the consummation of the Merger shall have been obtained prior to, and be effective as of, the Closing.

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Section 3.10Compliance with Laws and Other Instruments.  The execution, delivery and performance by Parent and/or Acquisition Corp. of the Merger Documents and the other agreements to be made by Parent or Acquisition Corp. pursuant to or in connection with the Merger Documents and the consummation by Parent and/or Acquisition Corp. of the transactions contemplated by the Merger Documents will not cause Parent and/or Acquisition Corp. to violate or contravene (a) any provision of law, (b) any rule or regulation of any agency or government, (c) any order, judgment or decree of any court or (d) any provision of their respective charters or By-laws as amended and in effect on and as of the Closing Date and will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under any material indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or contract to which Parent or Acquisition Corp. is a party or by which Parent and/or Acquisition Corp. or any of their respective properties is bound.

Section 3.11No General Solicitation.  In issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone acting on its behalf has offered to sell the Parent Common Stock by any form of general solicitation or advertising.

Section 3.12Absence of Undisclosed Liabilities.  Neither Parent nor Acquisition Corp. has any material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or reserved against in the balance sheet of Parent in the most recent Parent SEC Document filed by Parent (the “Parent Balance Sheet”) or the notes to the Parent Financial Statements, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since the date of the Parent Balance Sheet (the “Parent Balance Sheet Date”), none of which (individually or in the aggregate) materially and adversely affects the Condition of Parent and (d) by the specific terms of any written agreement, document or arrangement attached as an exhibit to the Parent SEC Documents.

Section 3.13Changes.  Since the Parent Balance Sheet Date, except as disclosed in the Parent SEC Documents, Parent has not (a) incurred any debts, obligations or liabilities, absolute, accrued or, to Parent’s knowledge, contingent, whether due or to become due, except for current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Parent Balance Sheet and current liabilities incurred since the Parent Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) that could reasonably be expected to have a material adverse effect on the Condition of the Parent, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any

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profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced any change in, or condition affecting, the Condition of the Parent other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a material adverse effect on the Condition of the Parent, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (o) suffered any material loss not reflected in the Parent Balance Sheet or its statement of income for the year ended on the Parent Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $5,000 in the aggregate or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

Section 3.14Tax Returns and Audits.  All required federal, state and local Tax Returns of Parent have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a material adverse effect upon the Condition of the Parent. Parent is not and has not been delinquent in the payment of any Tax. Parent has not had a Tax deficiency assessed against it. None of Parent’s federal income, state and local income and franchise tax returns has been audited by any governmental authority. The reserves for Taxes reflected on the Parent Balance Sheet are sufficient for the payment of all unpaid Taxes payable by Parent with respect to the period ended on the Parent Balance Sheet Date. There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of Parent now pending, and Parent has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.

Section 3.15Employee Benefit Plans; ERISA.

(a)Except as disclosed in the Parent SEC Documents, there are no “employee benefit plans” (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by Parent. Any plans listed in the Parent SEC Documents are hereinafter referred to as the “Parent Employee Benefit Plans.”

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(b)Any current and prior material documents, including all amendments thereto, with respect to each Parent Employee Benefit Plan have been given to the Company or its advisors.

(c)All Parent Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.

(d)There are no pending, or to the knowledge of Parent, threatened, claims or lawsuits which have been asserted or instituted against any Parent Employee Benefit Plan, the assets of any of the trusts or funds under the Parent Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Parent Employee Benefit Plans or against any fiduciary of a Parent Employee Benefit Plan with respect to the operation of such plan.

(e)There is no pending, or to the knowledge of Parent, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Parent Employee Benefit Plan.

(f)No actual or, to the knowledge of Parent, contingent liability exists with respect to the funding of any Parent Employee Benefit Plan or for any other expense or obligation of any Parent Employee Benefit Plan, except as disclosed on the financial statements of Parent or the Parent SEC Documents, and to the knowledge of Parent, no contingent liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

Section 3.16Litigation.  There is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of Parent, threatened against or affecting Parent or Acquisition Corp. or any of their respective properties, assets or businesses. To the knowledge of Parent, neither Parent nor Acquisition Corp. is in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

Section 3.17Licenses.  Parent possesses from all appropriate governmental authorities all licenses, permits, authorizations, approvals, franchises and rights necessary for the Company to engage in the business currently conducted by it, all of which are in full force and effect.

Section 3.18Interested Party Transactions.  Except as disclosed in the Parent SEC Documents, no officer, director or stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or of Parent has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by Parent or (ii) purchases from or sells or furnishes to Parent any goods or services, or (b) a beneficial interest in any contract or agreement to which Parent is a party or by which it or any of its assets may be bound or affected.

Section 3.19Questionable Payments.  Neither Parent, Acquisition Corp. nor, to the knowledge of Parent, any director, officer, agent, employee or other Person associated with or acting on behalf of Parent or Acquisition Corp. has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

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Section 3.20Obligations to or by Stockholders.  Except as disclosed in the Parent SEC Documents, Parent has no liability or obligation or commitment to any stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent or any such Affiliate or associate have any liability, obligation or commitment to Parent.

Section 3.21Assets and Contracts.  Except as expressly set forth in this Agreement, the Parent Balance Sheet or the notes thereto, or the Parent SEC Documents, Parent is not a party to any written or oral agreement not made in the ordinary course of business that is material to Parent. Parent does not own any real property. Except as expressly set forth in this Agreement, the Parent Balance Sheet or the notes thereto, or the Parent SEC Documents, Parent is not a party to or otherwise barred by any written or oral (a) agreement with any labor union, (b) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (d) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of Parent or any other Person, (e) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of Parent to any Lien or evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) lease or agreement under which Parent is lessee of or holds or operates any property, real or personal, owned by any other Person, (h) lease or agreement under which Parent is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by Parent, (i) agreement granting any preemptive right, right of first refusal or similar right to any Person, (j) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of Parent or any present or former officer, director or stockholder of Parent, (k) agreement obligating Parent to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (1) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, (m) distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) agreement to register securities under the Securities Act, (o) collective bargaining agreement or (p) agreement or other commitment or arrangement with any Person continuing for a period of more than three months from the Closing Date that involves an expenditure or receipt by Parent in excess of $1,000. Parent maintains no insurance policies or insurance coverage of any kind with respect to Parent, its business, premises, properties, assets, employees and agents. No consent of any bank or other depository is required to maintain any bank account, other deposit relationship or safety deposit box of Parent in effect following the consummation of the Merger and the transactions contemplated hereby.

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Section 3.22Employees.  Other than pursuant to ordinary arrangements of employment compensation, Parent is not under any obligation or liability to any officer, director, employee or Affiliate of Parent.

Section 3.23Disclosure.  There is no fact relating to Parent that Parent has not disclosed to the Company in writing that materially and adversely affects nor, insofar as Parent can now foresee, will materially and adversely affect, the condition (financial or otherwise), properties, assets, liabilities, business operations, results of operations or prospects of Parent. No representation or warranty by Parent herein and no information disclosed in the schedules or exhibits hereto by Parent contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

ARTICLE IV. 

ADDITIONAL REPRESENTATIONS, WARRANTIES AND

COVENANTS OF THE STOCKHOLDERS

Promptly after the Effective Time, Parent shall cause to be mailed to each holder of record of Company Common Stock that was converted pursuant to Section 1.06 hereof into the right to receive Parent Common Stock a letter of transmittal (“Letter of Transmittal”) that shall contain additional representations, warranties and covenants of such Stockholder, including without limitation, that (a) such Stockholder has full right, power and authority to deliver such Company Common Stock and Letter of Transmittal, (b) the delivery of such Company Common Stock will not violate or be in conflict with, result in a breach of or constitute a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or instrument to which such Stockholder is bound or affected, (c) such Stockholder has good, valid and marketable title to all shares of Company Common Stock indicated in such Letter of Transmittal and that such Stockholder is not affected by any voting trust, agreement or arrangement affecting the voting rights of such Company Common Stock, (d) whether such Stockholder is an “accredited investor,” as such term is defined in Regulation D under the Securities Act and that such Stockholder is acquiring Parent Common Stock for investment purposes, and not with a view to selling or otherwise distributing such Parent Common Stock in violation of the Securities Act or the securities laws of any state and (e) such Stockholder has had an opportunity to ask and receive answers to any questions such Stockholder may have had concerning the terms and conditions of the Merger and the Parent Common Stock and has obtained any additional information that such Stockholder has requested. Delivery shall be effected, and risk of loss and title to the Company Common Stock shall pass, only upon delivery to Parent (or an agent of Parent) of (x) certificates evidencing ownership thereof as contemplated by Section 1.07 hereof (or affidavit of lost certificate), and (y) the Letter of Transmittal containing the representations, warranties and covenants contemplated by this Article IV.

ARTICLE V. 

CONDUCT OF BUSINESSES PENDING THE MERGER.

Section 5.01Conduct of Business by the Company Pending the Merger.  Prior to the Effective Time, unless Parent or Acquisition Corp. shall otherwise agree in writing or as otherwise contemplated by this Agreement:

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(a)the business of the Company shall be conducted only in the ordinary course;

(b)the Company shall not (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its Certificate of Incorporation or By-laws except to effectuate the transactions contemplated in the Disclosures or (iii) split, combine or reclassify the outstanding Company Stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to any such stock;

(c)the Company shall not (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire any shares of, Company Common Stock, except to issue shares of Company Common Stock in connection with any matter relating to the Disclosures (ii) acquire or dispose of any fixed assets or acquire or dispose of any other substantial assets other than in the ordinary course of business; (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction other than in the ordinary course of business; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge, consolidate or enter into any other material business combination;

(d)the Company shall use its best efforts to preserve intact the business organization of the Company, to keep available the service of its present officers and key employees, and to preserve the good will of those having business relationships with it;

(e)the Company will not, nor will it authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by it to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below for purposes of this paragraph). The Company will promptly advise Parent orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof. As used in this paragraph, “Acquisition Proposal” shall mean any proposal for a merger or other business combination involving the Company or for the acquisition of a substantial equity interest in it or any material assets of it other than as contemplated by this Agreement. The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any of the foregoing; and

(f)the Company will not enter into any new employment agreements with any of its officers or employees or grant any increases in the compensation or benefits of its officers and employees or amend any employee benefit plan or arrangement.

Section 5.02Conduct of Business by Parent and Acquisition Corp. Pending the Merger. Prior to the Effective Time, unless the Company shall otherwise agree in writing or as otherwise contemplated by this Agreement:

(a)the business of Parent and Acquisition Corp. shall be conducted only in the ordinary course;

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(b)neither Parent nor Acquisition Corp. shall (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its charter or by-laws other than to effectuate the transactions contemplated hereby; or (iii) split, combine or reclassify its capital stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to such stock;

(c)neither Parent nor Acquisition Corp. shall (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire shares of, its capital stock; (ii) acquire or dispose of any assets other than in the ordinary course of business (except for dispositions in connection with Section 5.02(a) hereof); (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction except in the ordinary course of business; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge, consolidate or enter into any other material business contract or enter into any negotiations in connection therewith;

(d)neither Parent nor Acquisition Corp. will, nor will they authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by them to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below for purposes of this paragraph). Parent will promptly advise the Company orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof. As used in this paragraph, “Acquisition Proposal” shall mean any proposal for a merger or other business combination involving Parent or Acquisition Corp. or for the acquisition of a substantial equity interest in either of them or any material assets of either of them other than as contemplated by this Agreement. Parent will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any of the foregoing; and

(e)neither Parent nor Acquisition Corp. will enter into any new employment agreements with any of their officers or employees or grant any increases in the compensation or benefits of their officers and employees.

ARTICLE VI.

ADDITIONAL AGREEMENTS

Section 6.01Access and Information.  The Company, on the one hand, and Parent and Acquisition Corp., on the other hand, shall each afford to the other and to the other’s accountants, counsel and other representatives full access during normal business hours throughout the period prior to the Effective Time to all of its properties, books, contracts, commitments and records (including but not limited to tax returns) and during such period, each shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request, provided that no investigation pursuant to this Section 6.01 shall affect any representations or warranties made herein. Each party shall hold, and shall cause its employees and agents to hold, in confidence all such information (other than such information that (a) is already in such party’s possession or (b) becomes generally

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available to the public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors or (c) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors, provided that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a party hereto or another party until such time as such information is otherwise publicly available; provided, however, that (i) any such information may be disclosed to such party’s directors, officers, employees and representatives of such party’s advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential nature of such information), (ii) any disclosure of such information may be made as to which the party hereto furnishing such information has consented in writing and (iii) any such information may be disclosed pursuant to a judicial, administrative or governmental order or request; provided, further, that the requested party will promptly so notify the other party so that the other party may seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion of such information that is legally required and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the information furnished. If this Agreement is terminated, each party will deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.

Section 6.02Additional Agreements.  Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its commercially reasonable efforts to satisfy the conditions precedent to the obligations of any of the parties hereto, to obtain all necessary waivers, and to lift any injunction or other legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible). In order to obtain any necessary governmental or regulatory action or non-action, waiver, consent, extension or approval, each of Parent, Acquisition Corp. and the Company agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent, Acquisition Corp. and the Company shall take all such necessary action.

Section 6.03Publicity.  No party shall issue any press release or public announcement pertaining to the Merger that has not been agreed upon in advance by Parent and the Company, except as Parent reasonably determines to be necessary in order to comply with the rules of the Commission or of the principal trading exchange or market for the Parent Common Stock, provided, that in such case Parent will use its best efforts to allow the Company to review and reasonably approve any such press release or public announcement prior to its release.

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Section 6.04Appointment of Directors and Officers.  Immediately at the Effective Time, Parent shall accept the resignations of the current officers and directors of Parent, and shall cause the persons listed as directors in Exhibit E hereto to be elected to the Board of Directors of Parent. At the first annual meeting of Parent stockholders and thereafter, the election of members of Parent’s Board of Directors shall be accomplished in accordance with the By-laws of Parent and the rules of the Commission.

Section 6.05Assumption of Agreements.  At the Effective Time, Parent shall affirmatively assume any all liabilities and obligations of the Company with respect to the Merger.

ARTICLE VII. 

CONDITIONS TO PARTIES’ OBLIGATIONS

Section 7.01Conditions to Parent and Acquisition Corp. Obligations.  The obligations of Parent and Acquisition Corp. under the Merger Documents are subject to the fulfillment, at or prior to the Closing, of the following conditions, any of which may be waived in whole or in part by Parent.

(a)The representations and warranties of the Company under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.

(b)The Company shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date.

(c)Except as disclosed in the Financial Statements, there shall not exist on the Closing Date any Default (as defined below) or Event of Default (as defined below) or any event or condition that, with the giving of notice or lapse of time or both, would constitute a Default or Event of Default and, since the Balance Sheet Date, there shall have been no material adverse change in the Condition of the Company. For purposes of this Agreement, “Default” shall mean a default or failure in the due observance or performance of any covenant, condition or agreement on the part of a party to be observed or performed under the terms of the Merger Documents, if such default or failure in performance shall remain un-remedied for five (5) days. Furthermore, for purposes of this Agreement, “Event of Default” shall mean (i) the failure to pay any Indebtedness for Borrowed Money, or any interest or premium thereon, within five (5) days after the same shall become due, whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, (ii) an event of default under any agreement or instrument evidencing or securing or relating to any such Indebtedness or (iii) the failure to perform or observe any material term, covenant, agreement or condition on its part to be performed or observed under any agreement or instrument evidencing or securing or relating to any such Indebtedness when such term, covenant or agreement is required to be performed or observed.

(d)No action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, the Merger Documents or the carrying out of the transactions contemplated by the Merger Documents.

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(e)Parent and Acquisition Corp. shall have received the following:

(i)copies of resolutions of the Board of Directors and the Stockholders, certified by the Secretary of the Company, authorizing and approving the execution, delivery and performance of the Merger Documents and all other documents and instruments to be delivered pursuant thereto;

(ii)a certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute any documents referred to in this Agreement and further certifying that the Articles of Incorporation and By-laws of the Company delivered to Parent and Acquisition Corp. at the time of the execution of this Agreement have been validly adopted and have not been amended or modified;

(iii)evidence as of a recent date of the good standing and corporate existence of the Company issued by the Secretary of State of the State of California and evidence that the Company is qualified to transact business as a foreign corporation and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary; and

(iv)such additional supporting documentation and other information with respect to the transactions contemplated hereby as Parent and Acquisition Corp. may reasonably request.

(f)All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be reasonably satisfactory in form and substance to Parent and Acquisition Corp. The Company shall furnish to Parent and Acquisition Corp. such supporting documentation and evidence of the satisfaction of any or all of the conditions precedent specified in this Section 7.01 as Parent or its counsel may reasonably request.

Section 7.02Conditions to the Company’s Obligations.  The obligations of the Company under the Merger Documents are subject to the fulfillment, at or prior to the Closing, of the following conditions, any of which may be waived in whole or in part by the Company.

(a)The representations and warranties of Parent and Acquisition Corp. under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.

(b)Parent and Acquisition Corp. shall have performed and complied in all material respects with all agreements and conditions required by the Merger Documents to be performed or complied with by them on or before the Closing Date.

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(c)There shall not exist on the Closing Date any Default or Event of Default or any event or condition that, with the giving of notice or lapse of time or both, would constitute a Default or Event of Default and, since the Parent Balance Sheet Date, there shall have been no material adverse change in the Condition of the Parent.

(d)The Company shall have received the following:

(i)copies of resolutions of Parent’s and Acquisition Corp.’s respective boards of directors and the sole stockholder of Acquisition Corp., certified by their respective Secretaries, authorizing and approving, to the extent applicable, the execution, delivery and performance of the Merger Documents and all other documents and instruments to be delivered by them pursuant thereto;

(ii)a certificate of incumbency executed by the respective Secretaries of Parent and Acquisition Corp. certifying the names, titles and signatures of the officers authorized to execute the documents referred to in this Agreement and further certifying that the Certificates of Incorporation and By-laws of Parent and Acquisition Corp. appended thereto have not been amended or modified.

(iii)a certificate, dated the Closing Date, executed by the President and Chief Financial Officer of each of the Parent and Acquisition Corp., certifying that (A) except for the filing of the DE-Certificate of Merger and the CA-Agreement of Merger, all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of the Merger Documents and the consummation of the Merger shall have been duly made or obtained, and all material consents by third parties required for the Merger have been obtained and (B) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, the Merger Documents or the carrying out of the transactions contemplated by any of the Merger Documents;

(iv)a certificate of Island Stock Transfer, Parent’s transfer agent and registrar, certifying, as of the business day prior to the Closing Date, a true and complete list of the names and addresses of the record owners of all of the outstanding shares of Parent Common Stock, together with the number of shares of Parent Common Stock held by each record owner and the total number of shares of Parent Common Stock then outstanding;

(v)the executed resignations of all directors and officers of Parent, with the director resignations to take effect at the Closing Date;

(vi)evidence as of a recent date and within five (5) days of the Effective Date of the good standing and corporate existence of Parent and of Acquisition Corp. issued by the Secretary of State of the state of Nevada and the Secretary of State of the State of Delaware, respectively, and evidence that Parent and Acquisition Corp. are qualified to transact business as foreign corporations and are in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by them or the nature of their activities makes such qualification necessary; and

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(vii)such additional supporting documentation and other information with respect to the transactions contemplated hereby as the Company may reasonably request.

(e)All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be satisfactory in form and substance to the Company. Parent and Acquisition Corp. shall furnish to the Company such supporting documentation and evidence of satisfaction of any or all of the conditions specified in this Section 7.02 as the Company may reasonably request.

(f)No action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, the Merger Documents or the carrying out of the transactions contemplated by the Merger Documents.

ARTICLE VIII.  

INDEMNIFICATION AND RELATED MATTERS

Section 8.01Indemnification by Parent. Parent shall indemnify and hold harmless the Company and the Stockholders (collectively, the “Company Indemnified Parties”), and shall reimburse the Company Indemnified Parties for, any loss, liability, claim, damage, expense (including, but not limited to, costs of investigation and defense and reasonable attorneys’ fees) or diminution of value (collectively, “Damages”) arising from or in connection with (a) any inaccuracy, in any material respect, in any of the representations and warranties of Parent and Acquisition Corp. in this Agreement or in any certificate delivered by Parent and Acquisition Corp. to the Company pursuant to this Agreement, or any actions, omissions or statements of fact inconsistent with any such representation or warranty, (b) any failure by Parent or Acquisition Corp. to perform or comply in any material respect with any covenant or agreement in this Agreement, (c) any claim for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such party with Parent or Acquisition Corp. in connection with any of the transactions contemplated by this Agreement, (d) taxes attributable to any transaction or event occurring on or prior to the Closing, (e) any claim relating to or arising out of any liabilities reflected in the Parent Financial Statement or with respect to accounting fees arising thereafter or (f) any litigation, action, claim, proceeding or investigation by any third party relating to or arising out of the business or operations of Parent, or the actions of Parent or any holder of Parent capital stock prior to the Effective Time.

Indemnification by Company.  After the Effective Date, the Company agrees to defend, indemnify and hold the Parent’s current directors and officers harmless from and against all indemnifiable damages of the Parent’s current directors and officers.  For this purpose, “indemnifiable damages” of the Parent means the aggregate of all expenses, losses, costs, deficiencies, liabilities and damages (including, without limitation, reasonable attorneys’ fees and court costs) incurred or suffered by the Parent or their respective current directors and officers as a result of or in connection with:  (1) any inaccurate representation or warranty made by the Company in or pursuant to this Agreement, (2) any default in the performance of any of the covenants or agreements made by the Company in this Agreement, (3) the operation of business after the Effective Date, or any occurrence, act or omission of the Company or of any shareholder, director, officer, employee, consultant or agent of the Company or Parent which occurs subsequent to the Effective Date, and causes damage to the Parent’s current directors and officers.  The prevailing party in any claim for indemnification shall be entitled to receive reasonable attorneys’ fees and expenses from the non prevailing party. Any Notice of Claims shall follow the identical procedure, as appropriate, as per the Company Indemnified Parties.

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Section 8.02Survival. All representations, warranties, covenants and agreements of Parent and Acquisition Corp. contained in this Agreement or in any certificate delivered pursuant to this Agreement shall survive the Closing for the time period set forth in Section 8.03 notwithstanding any investigation conducted with respect thereto. The representations and warranties of the Company contained in this Agreement or in any certificate delivered pursuant to this Agreement shall not survive the Closing.

Section 8.03Time Limitations. Neither Parent nor Acquisition Corp. shall have any liability (for indemnification or otherwise) with respect to any representation or warranty, or agreement to be performed and complied with prior to the Effective Time, unless on or before the two-year anniversary of the Effective Time (the “Claims Deadline”), Parent is given notice of a claim with respect thereto, in accordance with Section 8.05, specifying the factual basis therefor in reasonable detail to the extent then known by the Company Indemnified Parties.

Section 8.04Limitation on Liability. The obligations of Parent and Acquisition Corp. to the Company Indemnified Parties set forth in Section 8.01 shall be subject to the following limitations:

(a)The aggregate liability of Parent and Acquisition Corp. to the Company Indemnified Parties under this Agreement shall be payable by the issuance of additional shares of Parent Common Stock pursuant to Section 8.06.

(b)Other than claims based on fraud or for specific performance, injunctive or other equitable relief, the indemnity provided in this Article VIII shall be the sole and exclusive remedy of the Company Indemnified Parties against Parent and Acquisition Corp. at law or equity for any matter covered by Section 8.01.

Section 8.05Notice of Claims.

(a)If, at any time on or prior to the Claims Deadline, any of the Company Indemnified Parties shall assert a claim for indemnification pursuant to Section 8.01, such Company Indemnified Party shall submit to Parent a written claim in good faith signed by an authorized officer of the Company or other Company Indemnified Party, as applicable, stating (i) that a Company Indemnified Party incurred or reasonably believes it may incur Damages and the reasonable estimate of the amount of any such Damages; (ii) in reasonable detail, the facts alleged as the basis for such claim and the section or sections of this Agreement alleged as the basis or bases for the claim; and (iii) if the Damages have actually been incurred, the number of additional shares of Parent Common Stock to which the Stockholders are entitled to with respect to such Damages, which shall be determined as provided in Section 8.06 below. If the claim is for Damages which the Company Indemnified Parties reasonably believe may be incurred or are otherwise un-liquidated, the written claim of the applicable Company Indemnified Party shall state the reasonable estimate of such Damages, in which event a claim shall be deemed to have been asserted under this Article VIII in the amount of such estimated Damages, but no distribution of additional shares of Parent Common Stock to the Stockholders pursuant to Section 8.06 below shall be made until such Damages have actually been incurred.

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(b)In the event that any action, suit or proceeding is brought against any Company Indemnified Party with respect to which Parent may have liability under this Article VIII, Parent shall have the right, at its cost and expense, to defend such action, suit or proceeding in the name and on behalf of the Company Indemnified Party; provided, however, that a Company Indemnified Party shall have the right to retain its own counsel, with fees and expenses paid by Parent, if representation of the Company Indemnified Party by counsel retained by Parent would be inappropriate because of actual or potential differing interests between Parent and the Company Indemnified Party. In connection with any action, suit or proceeding subject to Article VIII, Parent and each Company Indemnified Party agree to render to each other such assistance as may reasonably be required in order to ensure proper and adequate defense of such action, suit or proceeding. Parent shall not, without the prior written consent of the applicable Company Indemnified Party, which consent shall not be unreasonably withheld or delayed, settle or compromise any claim or demand if such settlement or compromise does not include an irrevocable and unconditional release of such Company Indemnified Party for any liability arising out of such claim or demand.

Section 8.06Payment of Damages. In the event that the Company Indemnified Parties shall be entitled to indemnification pursuant to this Article VIII for actual Damages incurred by them, Parent shall, within thirty (30) days after the final determination of the amount of such Damages, issue to the Stockholders that number of additional shares of Parent Common Stock in an aggregate amount equal to the quotient obtained by dividing (x) the amount of such Damages by (y) the Fair Market Value per share of the Parent Common Stock as of the date (the “Determination Date”) of the submission of the notice of claim to Parent pursuant to Section 8.05. Such shares of Parent Common Stock shall be issued to the Stockholders pro rata, in proportion to the number of shares of Parent Common Stock issued (or issuable) to the Stockholders at the Effective Time. For purposes of this Section 8.06, “Fair Market Value” shall mean, with respect to a share of Parent Common Stock on any Determination Date, the average of the daily closing prices for the 10 consecutive business days prior to such date. The closing price for each day shall be the last sales price or in case no sale takes place on such day, the average of the closing high bid and low asked prices, in either case (a) as officially quoted on the OTC Bulletin Board, the NASDAQ Stock Market or such other market on which the Parent Common Stock is then listed for trading or quoted, or (b) if, in the reasonable judgment of the Board of Directors of Parent, the OTC Bulletin Board or the NASDAQ Stock Market is no longer the principal United States market for the Parent Common Stock, then as quoted on the principal United States market for the Parent Common Stock as determined by the Board of Directors of Parent, or (c) if, in the reasonable judgment of the Board of Directors of Parent, there exists no principal United States market for the Parent Common Stock, then as reasonably determined in good faith by the Board of Directors of Parent.

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ARTICLE IX. 

TERMINATION PRIOR TO CLOSING

Section 9.01Termination of Agreement.  This Agreement may be terminated at any time prior to the Closing:

(a)by the mutual written consent of the Company, Acquisition Corp. and Parent;

(b)by the Company, if Parent or Acquisition Corp. (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date, or (ii) materially breach any of their representations, warranties or covenants contained herein, which failure or breach is not cured within thirty (30) days after the Company has notified Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant to this paragraph (b);

(c)by Parent and Acquisition Corp. if the Company (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date or (ii) materially breaches any of its representations, warranties or covenants contained herein, which failure or breach is not cured within thirty (30) days after Parent or Acquisition Corp. has notified the Company of its intent to terminate this Agreement pursuant to this paragraph (c);

(d)by either the Company, on the one hand, or Parent and Acquisition Corp., on the other hand, if there shall be any order, writ, injunction or decree of any court or governmental or regulatory agency binding on Parent, Acquisition Corp. or the Company that prohibits or materially restrains any of them from consummating the transactions contemplated hereby, provided that the parties hereto shall have used their best efforts to have any such order, writ, injunction or decree lifted and the same shall not have been lifted within ninety (90) days after entry by any such court or governmental or regulatory agency; or

Section 9.02Termination of Obligations.  Termination of this Agreement pursuant to this Article IX shall terminate all obligations of the parties hereunder, except for the obligations under Sections 6.01, 10.03 and 10.11; provided, however, that termination pursuant to paragraphs (b) or (c) of Section 9.01 shall not relieve the defaulting or breaching party or parties from any liability to the other parties hereto.

ARTICLE X.

MISCELLANEOUS

Section 10.01Notices.  Any notice, request or other communication hereunder shall be given in writing and shall be served either personally, by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:

(a)If to Parent or Acquisition Corp.:

Casita Enterprises, Inc.

1093 East Main Street, Suite 508

El Cajon, CA 92021

Attention: Jose Cisneros

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With a copy to:

Jill Arlene Robbins, P.A.

525 93 Street

Surfside, Florida 33154

Attention: Jill Arlene Robbins

(b)If to the Company:

Envision Solar International, Inc.

7675 Dagget St, Suite 150, San Diego, CA 92111

Attention: Robert Noble

Notices shall be deemed received at the earlier of actual receipt or three (3) business days following mailing. Counsel for a party (or any authorized representative) shall have authority to accept delivery of any notice on behalf of such party.

Section 10.02Entire Agreement.  This Agreement, including the schedules and exhibits attached hereto and other documents referred to herein, contains the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and undertakings between the parties with respect to such subject matter.

Section 10.03Expenses.  Each party shall bear and pay all of the legal, accounting and other expenses incurred by it in connection with the transactions contemplated by this Agreement.

Section 10.04Time.  Time is of the essence in the performance of the parties’ respective obligations herein contained.

Section 10.05Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 10.06Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and heirs; provided, however, that neither party shall directly or indirectly transfer or assign any of its rights hereunder in whole or in part without the written consent of the others, which may be withheld in its sole discretion, and any such transfer or assignment without said consent shall be void.

Section 10.07No Third Parties Benefited.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto, their successors, assigns and heirs, and no other Person shall have any right or action under this Agreement.

Section 10.08Counterparts.  This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts together shall constitute a single agreement.

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Section 10.09Recitals, Schedules and Exhibits.  The Recitals, Schedules and Exhibits to this Agreement are incorporated herein and, by this reference, made a part hereof as if fully set forth herein.

Section 10.10Section Headings and Gender.  The Section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter gender, and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.

Section 10.11Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without regard to principles of conflicts of laws, except that the applicable terms of Section 1 shall be governed by the NRS, DGL and the CCC.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding and effective as of the day and year first above written.

PARENT:

CASITA ENTERPRISES, INC.

By: /s/ Jose Cisneros

Name: Jose Cisneros

Title: President and Chief Executive Officer

ACQUISITION CORP:

ESII ACQUISITION CORP.

By: /s/ Jose Cisneros

Name: Jose Cisneros

Title: President

THE COMPANY:

ENVISION SOLAR INTERNATIONAL, INC.

By: Robert Noble

Name: Robert Noble

Title: Chief Executive Officer

[SIGNATURE PAGE TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION]

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EX-10.1

Exhibit 10.1

Selling Agreement

January 17, 2007

Mr. Robert Noble

Chairman & Chief Executive Officer

Envision Solar, LLC

225 Broadway Avenue, Suite 1700

San Diego, CA 92101

Re:     Common Stock Offering at $10.00 per Share

Gentlemen:

Envision Solar, LLC ("ENVISION" or "the Company") is a California Limited Liability Company formed to provide durable and attractive integrative photovoltaic systems designed to facilitate the worldwide transition to the use of renewable energy. ENVISION desires to raise $2,000,000 through the sale of 200,000 Shares ("The Shares") to Accredited Investors ("Investor") at a price of $10.00 per Share pursuant to Rule 506 of the Securities Act of 1933. Each Investor participating in this Offering is required to purchase a minimum of 5,000 shares; however, ENVISION may choose to accept purchases below the minimum at its discretion. ENVISION hereby confirms as follows its agreement with Nexcore Capital, Inc. ("Nexcore"), a registered member in good standing of the National Association of Securities Dealers ("NASD"), under which Nexcore will act as a non-exclusive agent for ENVISION in connection with the Offering of the Shares.

1. Memorandum.   ENVISION is authorizing the preparation of a private placement memorandum ("Memorandum") relating to the sale of the Shares.

2. Appointment of Agent. On the basis of the representations, warranties and covenants herein contained, and subject to the terms and conditions herein set forth, Nexcore is hereby appointed as a non-exclusive agent of ENVISION to offer and sell the Shares to Accredited Investors. Nexcore covenants to offer and sell Shares on a "best efforts" basis on behalf of ENVISION in accordance with the terms of this Agreement and the Memorandum, and not to misrepresent orally or in writing any of the facts regarding ENVISION, its business, or the Offering. Nexcore covenants to closely supervise all of its representatives in the Offering of the Shares and to comply with all applicable federal and state securities laws and NASD rules and regulations. Nexcore is not responsible for the contents of the Memorandum. Nexcore covenants not to use any written material or oral statements in offering or selling the Shares which are not specifically authorized by ENVISION, provided, that Nexcore is specifically authorized to use the Memorandum. Subject to the performance by ENVISION of its obligations to be performed hereunder, and to the accuracy of all the representations and warranties contained herein, Nexcore hereby accepts such agency and agrees to perform its obligations hereunder.

3. Representations and Warranties of Envision. ENVISION represents, warrants and agrees with Nexcore for Nexcore's benefit that:

(a)           All action required to be taken by ENVISION as a condition to sale of the Shares has been taken.

(b)           ENVISION is duly and validly organized, existing and in good standing as a limited liability company under the laws of the State of California, with full power and authority to conduct its business and proposed business as described in the Memorandum. ENVISION has unencumbered title to all government licenses and permits necessary to conduct its business, and is duly qualified to conduct its business in all jurisdictions in which such qualification is necessary or appropriate.

SeUing\agmt\Envisioa.doc

(c)From the commencement of the Offering period through the Offering Termination Date, as that term is defined in the Memorandum, the Memorandum will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d)This Agreement has been duly and validly authorized, executed and delivered by or on behalf of ENVISION, and constitutes the valid, binding and enforceable agreement of ENVISION.

(e)No federal or state securities agency has issued an order preventing or suspending the Offering or the use of the Memorandum with respect to the sale of the Shares. ENVISION will promptly notify Nexcore upon the issuance of any such order and furnish Nexcore with a copy thereof. The Memorandum and any amendment or supplement thereto will comply and will continue to comply with all applicable requirements of the Securities Act of 1933, as amended (the "Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable federal and state laws and regulations at all times during the term of this Agreement.

(f)No consent, approval, authorization or other order of any governmental authority is required in connection with the execution, delivery or performance by ENVISION of this Agreement.

(g)The execution and delivery of this Agreement will not constitute a breach of, or default under, any instrument by which ENVISION is bound or, to the best of their knowledge, any order, rule or regulation of any court or any governmental body or administrative agency having jurisdiction over ENVISION.

4.Nexcore Representations and Warranties. Nexcore represents and warrants that it is duly and fully licensed under the rules and regulations of the NASD and is capable of performing and satisfying its obligations under this Agreement. Nexcore further represents and warrants that Nexcore's execution and performance of this Agreement will not cause Nexcore to be in default under or to violate any agreement, law, rule, regulation, order or judgment applicable to it.

5.Compensation to Nexcore. In consideration for Nexcore's services hereunder, ENVISION covenants to pay Nexcore a selling commission equal to ten (10%) percent of the total purchase price of Shares sold by representatives who are registered with Nexcore. The selling commission payable to Nexcore will be paid periodically as ENVISION accepts sales of Shares. In those cases where the investor is an institution, and the size of the investment is greater than $500,000 (i.e. exceeds 100,000 shares), ENVISION and Nexcore agree that ENVISION shall pay Nexcore a reduced selling commission of four percent (4%) on these institutional sales.

6. Due Diligence Allowance.In consideration for due diligence expenses incurred by Nexcore in connection with the Offering, ENVISION covenants to pay Nexcore a due diligence fee equal to three percent (3%) of the total purchase price of Shares sold by representatives who are registered with Nexcore. In those cases where the investor is an institution, and the size of the investment is greater than $500,000 (i.e. exceeds 100,000 shares), ENVISION and Nexcore agree that ENVISION shall pay Nexcore a reduced due diligence fee of two percent (2%) on these institutional sales. The due diligence allowance will be paid periodically as ENVISION accepts sales of Shares.

7. Incentive Compensation and Offering Costs.In consideration for other expenses incurred by Nexcore in connection with the Offering, including but not limited to administrative and miscellaneous expenses, Nexcore will also receive from ENVISION a nonaccountable expense reimbursement in cash equal to two percent (2%) of the total purchase price of all Shares sold by representatives who are registered with Nexcore. In addition, as non-cash incentive compensation for Nexcore, ENVISION shall also compensate Nexcore with fully-paid, non-accessible, and assignable common Shares of the Company equal to ten percent (10%) of the total number of Shares sold in this Offering, subject to a maximum of 20,000 Shares, and based upon the 200,000 Shares offered in the Memorandum.

Selling\agrat\Envision.doc

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8. Offering Costs. ENVISION will pay all legal, accounting, printing and other Offering expenses incurred by the Company from its existing general working capital.

9. Covenants of the Company. ENVISION covenants with Nexcore that:

(a)The term of this Agreement will commence on the date first above written and will terminate on the Offering Termination Date of April 30, 2007, as defined in the Memorandum, unless sooner terminated by the written agreement of both parties to this Agreement.

(b)If any event relating to the Company occurs which requires, in the opinion of ENVISION's counsel, an amendment or supplement to the Memorandum in order that the Memorandum will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a subscriber, ENVISION will forthwith prepare the amendment or supplement to the Memorandum and deliver a copy thereof to Nexcore. Furthermore, ENVISION will furnish such information to Nexcore as Nexcore may from time to time reasonably request.

(c)ENVISION will endeavor in good faith to qualify the Shares for offering and sale under, or to establish the exemption of the Offering and sale of the Shares from qualification or registration under, applicable state securities or "blue sky" laws. ENVISION will pay all legal fees and related expenses in connection with qualifying the Shares under said "blue sky" laws.

(d)ENVISION will not offer to sell Shares in any state in which such offer would be unlawful. ENVISION will bear all of the costs and liability incurred by it or Nexcore as a result of the unlawful offer of Shares by the Company in any state, unless Nexcore directly causes such unlawful offer without the participation of ENVISION.

(e)ENVISION covenants to issue financial statements and reports of the Company in accordance with the Memorandum.

(f)Nexcore will have reasonable review and approval rights with respect to the Memorandum and its contents.

(g)ENVISION covenants that Nexcore shall retain the right to offer this opportunity to an entity affiliated with Nexcore, such as, by way of illustration but not of limitation, The Greencore Private Energy Fund, etc.

10.Payment of Expenses and Fees. Except as provided in Sections 5, 6 and 7 of this Agreement, Nexcore and ENVISION will each pay their own expenses incident to the transactions contemplated by this Agreement. ENVISION will bear all of the fees and expenses incurred in printing of the Memorandum.

11.Mutual Non-circumvention. ENVISION and Nexcore covenant not to directly or indirectly circumvent the other parry or its affiliates with respect to any relationships introduced or made known to each party as a direct or indirect result of this Agreement, including but not limited to investors, customers, suppliers, and professionals, without the prior consent of the other party. In the event of a breach of this section by either party, each party will have all injunctive and equitable relief available, as well as all other remedies at law or in equity.

Selling\agmt\Envision.doc

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12.Conditions of Nexcore's Obligations. Nexcore's obligations hereunder are subject to the accuracy of and compliance with the representations and warranties of ENVISION in this Agreement, and to the performance by ENVISION of its obligations hereunder.

13.Conditions of the Obligations of Envision. The obligations of ENVISION hereunder are subject to the accuracy of and the compliance with Nexcore's representations and warranties in this Agreement, and to the performance by Nexcore of its obligations hereunder.

14.Term of Agreement. The term of this Agreement will commence on the date first above written and will terminate on the Offering Termination Date, as that term is defined in the Memorandum.

15.Indemnification.

(a)ENVISION hereby indemnifies and holds Nexcore, Nexcore's affiliates, officers, directors, shareholders, agents, employees, accountants and attorneys, and each of them, harmless from and against all liabilities, claims, damages, losses, costs, attorneys fees and expenses arising directly or indirectly from (a) the conduct of ENVISION's business, (b) the manner and conduct of any offer or sale of securities by persons or entities other than Nexcore which conduct any business with ENVISION, (c) any financial statements or other financial information prepared, provided, published, or disseminated by ENVISION, or (d) the source or manner of solicitation of any prospective Investors referred by ENVISION to Nexcore. In addition, ENVISION hereby indemnifies and holds Nexcore, Nexcore's affiliates, officers, directors, shareholders, agents, employees, consultants and attorneys, and each of them, harmless from and against any loss, expense, claim, damage or liability to which Nexcore or said other parties may become subject under any securities act, common law concept, or otherwise, insofar as such loss, expense, claim, damage or liability or action in respect thereof, arises out of or is based in whole or in part on any untrue statement or alleged untrue statement of any material fact made by ENVISION, any employee of the Company, or in the Memorandum, or the omission thereby of any material fact required to be stated or necessary to make the statement made to a prospective investor not misleading. ENVISION shall promptly reimburse the indemnified parties for any reasonable legal or other expenses incurred by them in connection with any such indemnified action or claim.

(b)ENVISION will not be liable under this indemnity agreement with respect to any claim made against Nexcore or any of said other persons related to Nexcore unless ENVISION is notified in writing of the nature of the claim. ENVISION shall be entitled to participate at its own expense in the defense or, if it so elects within a reasonable time after receipt of such notice, to assume the defense of any such claims, which defense shall be conducted by counsel chosen by it and reasonably satisfactory to Nexcore and the other said person or persons related to Nexcore who are defendants in any suit so brought. In the event that the ENVISION elects to assume the defense of any such suit and retain such counsel, Nexcore or the person or persons who are defendants in the suit shall bear the fees and expenses of any additional counsel thereafter retained by Nexcore or them. ENVISION agrees to promptly notify Nexcore of the assertion of any claim against it or against any person who is a control person of ENVISION in connection with the sale of the Shares.

(c)Nexcore agrees to indemnify and hold harmless ENVISION and its affiliates, officers, directors, shareholders, agents, employees, attorneys and accountants against any and all loss, liability, claim, damage and expense whatsoever directly or indirectly resulting from material violations by Nexcore or its representatives of any of Nexcore's representations, warranties or covenants in this Agreement, or of any applicable law, rule or regulation. In case any action is brought against ENVISION or any of its affiliates under such laws, regulations or rules on account of such material violation of such representations, warranties or covenants, Nexcore shall have the rights and duties given to ENVISION, and ENVISION shall have the rights and duties given to Nexcore, by the provisions of Section 13(b).

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4

16.Representations.  Warranties  and  Agreements  to  Survive  Delivery.     All representations, warranties and agreements shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of Nexcore or any person who controls Nexcore, or by or on behalf of ENVISION or any person who controls ENVISION, for a period of four years after the Offering Termination Date, as that term is defined in the Memorandum.

17.Notices. All communications herein shall be in writing and, if sent to Nexcore, shall be mailed, delivered or telegraphed and confirmed to Nexcore at 10509 Vista Sorrento Parkway, Suite 300, San Diego, CA 92121, attention: Jay S. Potter, President, or, if sent to ENVISION, shall be delivered or telegraphed and confirmed to it at Envision Solar, LLC, 225 Broadway Avenue, Suite 1700, San Diego, California 92101, attention: Robert Noble, Chief Executive Officer.

18.Parties. This Agreement shall inure to the benefit of and be binding upon Nexcore, ENVISION, and their respective successors and assigns.

19.Entire Agreement. This Agreement represents the entire agreement among the parties hereto and may not be amended except by a writing signed by the party against whom enforcement of the provision is sought.

20.Injunctive Relief.

20.1  Damages Inadequate

Each parry acknowledges that it would be impossible to measure in money the damages to the other party if there is a failure to comply with any covenants or provisions of this Agreement, and agrees that in the event of any breach of any covenant or provision, the other party to this Agreement will not have an adequate remedy at law.

20.2           Injunctive Relief

It is therefore agreed that the other party to this Agreement who is entitled to the benefit of the covenants or provisions of this Agreement which have been breached, in addition to any other rights or remedies which they may have, shall be entitled to immediate injunctive relief to enforce such covenants and provisions, and that in the event that any such action or proceeding is brought in equity to enforce them, the defaulting or breaching party will not urge a defense that there is an adequate remedy at law.

21.Waivers. If any party shall at any time waive any rights hereunder resulting from any breach by the other party of any of the provisions of this Agreement, such waiver is not to be construed as a continuing waiver of other breaches of the same or other provisions of this Agreement. Resort to any remedies referred to herein shall not be construed as a waiver of any other rights and remedies to which such party is entitled under this Agreement or otherwise.

22.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, and the venue for any action hereunder shall be in the appropriate forum in the County of San Diego, State of California.

23.Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

24.Attorneys' Fees and Costs. In the event that either parry must resort to legal action in order to enforce the provisions of this Agreement or to defend such action, the prevailing party shall be entitled to receive reimbursement from the nonprevailing party for all reasonable attorneys' fees and all other costs incurred in commencing or defending such action, or in enforcing this Agreement, including but not limited to post judgment costs.

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5

25.Further Acts. The parties to this Agreement hereby agree to execute any other documents and take any further actions which are reasonably necessary or appropriate in order to implement the transactions contemplated by this Agreement.

26.Time of Essence. Time is of the essence in the performance of the obligations under this Agreement.

27.Authorized Signatures. Each party to this Agreement hereby represents that the persons signing below are duly authorized to execute this Agreement on behalf of their respective party.

28.Execution. If the foregoing is in accordance with your understanding of our Agreement, kindly sign and return to us a counterpart hereof, whereupon this Agreement along with all counterparts will become a binding Agreement between Nexcore and ENVISION in accordance with its terms.

Very truly yours,

Nexcore Capital, Inc.
a Delaware corporation
By:
	Jay S. Potter President
	Title

Confirmed and Accepted:

Envision Solar, LLC

a California Limited Liability Compnay

By:	/s/  Robert Noble
	Robert Noble
	Chairman and Chief Executive Officer

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6

EX-10.2

Exhibit 10.2

2007

UNIT OPTION PLAN

OF

ENVISION SOLAR, LLC

A California limited liability company

TABLE OF CONTENTS

ARTICLE 1	Purpose; Definition of Company and Other Terms	1
1.1	Purpose	1
1.2	Definition of Company; Subsidiary	1
1.3	Terminology	1
ARTICLE 2	Units Awards Under the Plan	2
2.1	Type of Awards	2
2.2	Unexercised Units	2
ARTICLE 3	Eligibility	2
ARTICLE 4	Administration	3
4.1	The Board of Managers	3
4.2	Authority of the Board	3
4.3	Effectuation of Plan by Company	3
ARTICLE 5	Grant of Options	4
5.1	Option Agreements	4
5.2	Option Date	4
5.3	Acknowledgments and Warranties in Option Agreements	4
ARTICLE 6	Terms and Conditions for Options	4
6.1	Employment by the Company	4
6.2	Option Price	5
6.3	Price Determination	5
6.4	Exercise of Option; Payment for Units	5
6.5	Term of Options; Option Period	5
6.6	Option Exercise Period	5
6.7	Non-Transferability of Options	5
6.8	Limitations on Exercise; Termination of Employment	6
6.9	Accumulation Rights	6
6.10	Minimum Unit Purchase	6
6.11	Employee Holding Period	6
6.12	Retirement of Employee	6
6.13	Death of Optionee	6
6.14	Disability of Employee	7
6.15	Options of Employee not Exercisable at Termination	7
6.16	Failure of Retired, Deceased or Disabled Optionee to Exercise Option	7
6.17	Repurchase Agreements	7
6.18	Withholding Taxes	7

TABLE OF CONTENTS

(continued)

ARTICLE 7	Time Limit on Granting of Options	7
ARTICLE 8	Adjustments by Reason of Recapitalization, Stock Split-Ups, Etc8	8
8.1	Effect of Options on Company’s Rights	8
8.2	Recapitalization	8
8.3	Reorganization	8
8.4	Price Adjustment	9
ARTICLE 9	Transfer of Control	9
9.1	Definitions	9
9.2	Effect of Transfer of Control on Options	10
ARTICLE 10	Right to Amend, Suspend or Terminate the Plan	10
ARTICLE 11	No Obligation to Exercise Option	10
ARTICLE 12	Modification, Extension and Renewal and Cancellation of Options	10
ARTICLE 13	Compliance With Laws	10
13.1	Securities Laws	10
13.2	Liability of Company; Compliance With Law	11
ARTICLE 14	Provisions in Option Agreements	11
ARTICLE 15	Indemnification of the Board	11
ARTICLE 16	General Provisions	12
16.1	Governing Law	12
16.2	Effective Date of the Plan	12

2007

UNIT OPTION PLAN

OF

ENVISION SOLAR LLC

ARTICLE 1

PURPOSE; DEFINITION OF COMPANY AND OTHER TERMS

1.1Purpose.  The purpose of this Unit Option Plan (“Plan”) is to aid in maintaining and developing management and employees for Envision Solar, LLC, a California limited liability company (the “Company”), intended to advance the long range interests and performance of the Company.  The Plan will afford present and future executives, other employees, and independent contractors an opportunity to secure a unit ownership in the Company through the grant of unit options (as defined herein) which are referred to herein as “Options”.  Executives, employees and independent contractors will thus be encouraged to acquire a permanent stake in the prosperity of the Company.  The Plan will also permit the Company to compete with other organizations offering similar plans in obtaining and retaining the services of executives and other key personnel whom the Company desires to employ.  Since a Plan participant may be required to remain in the services of the Company in order to obtain its full benefits, the Plan is also an inducement to participants to remain with the Company.

1.2Definition of Company; Subsidiary.  The word “Company,” when used in the Plan with reference to employment or where otherwise applicable, shall include a “parent corporation” and/or a “subsidiary corporation” of the Company as those terms are respectively defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

1.3Terminology.  If the context so requires, all personal pronouns used in this Plan, whether used in the masculine, feminine, or neuter gender, shall include all other genders, and the singular shall include the plural, and vice versa.  Titles of sections and subsections are for convenience only, and shall neither limit nor amplify the provisions of the Plan itself, and all references herein to sections or subsections shall refer to the corresponding section or subsection of this Plan, unless specific reference is made to such sections or subsections of another document or instrument. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Operating Agreement of the Company effective as of August 15, 2006 (“Operating Agreement”).

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ARTICLE 2

UNITS  AWARDS UNDER THE PLAN

2.1Type of Awards.  The units to be sold pursuant to the exercise of Options granted under this Plan shall be the membership units of the Company (“Units”).  The total number of Units which may be purchased pursuant to the exercise of Options granted under this Plan shall not, except as provided in Article 8 or upon approval of the members, exceed 100,000 Units.  No reduction in the number of outstanding Units shall affect the validity or enforceability of options granted prior to the reduction.

2.2Unexercised Units.  In the event that an Option granted under the Plan expires, is canceled, or is terminated unexercised as to any Units subject thereto, such Units subject to the unexercised portion of such Option may again be subject to an Option granted under this Plan.

ARTICLE 3

ELIGIBILITY

Options will be granted from time to time under the Plan only to:

3.1   Employees of the Company (including managers and assistant managers), all of whom are referred to herein as “Employees”;

3.2   Members of the Board of Managers of the Company (“Managers”), whether or not employees of the Company; and

3.3   Certain persons or organizations who are independent contractors, who have substantial business contacts with the Company which would give rise to familiarity with the business and financial aspects of the Company, and who render to the Company services of special importance to the Company in the management, operation or development of its business.

Any grantee may hold more than one Option, but only on the terms and subject to the restrictions contained herein.  Such Employees, Managers and independent contractors (collectively referred to herein as “Participants” or “Optionees”) will be selected from time to time during the period when the Plan is in operation by the Board of Managers (the “Board”) which will also determine the number of Units which each Participant shall be entitled to purchase under his Option.

113969.000000/720966.01

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ARTICLE 4

ADMINISTRATION

4.1The Board of Managers.  The Plan shall be administered by the Board elected by the members of the Company as described in the Company Operating Agreement; provided, however, that no Manager of the Board shall vote upon or approve the granting of any Option to such Manager.

4.2Authority of the Board.  Subject to the express provisions of the Plan, the Board shall have the sole authority, in its absolute discretion, to:

4.2.1   Determine and designate from time to time which Employees, Managers, and independent contractors to whom Options to purchase Units shall be granted;

4.2.2   Determine the number of Units to be subject to Options (sometimes “Option Units”) granted hereunder (subject, however, to the limitations specified in Section 2.1 and Article 8), and the time or times when such Options shall be granted;

4.2.3   Determine the option or exercise price of the Option Units (subject, however, to the limitations specified in Section 6.2);

4.2.4   Determine the time or times when each Option becomes exercisable, and the duration of the exercise period (subject to Sections 6.5 and 6.6);

4.2.5   Prescribe, amend and rescind the form or forms of the Option Agreements (as defined in Section 5.1) under the Plan (which shall be consistent with the Plan but need not be identical);

4.2.6   Adopt, amend, and rescind such rules and regulations as in its opinion may be advisable in the administration of the Plan (subject, however, to the limitations specified in Article 10);

4.2.7   Construe and interpret the Plan, the rules and regulations and the Option Agreements under the Plan, and make all other determinations deemed necessary or advisable for the administration of the Plan; and

4.2.8   Place such restrictions on sale or other disposition of the Units purchased upon exercise of an Option as may be determined by the Board.

All decisions, determinations, and interpretations by the Board of the terms of the Plan, and the agreements and other instruments created pursuant to the Plan, made in good faith shall be final, binding, and conclusive on all Optionees for all purposes.

4.3Effectuation of Plan by Company.  The Company shall effect the grant of Options under the Plan to Employees, Managers, and independent contractors of the Company in accordance with the determinations made by the Board, by the execution of agreements with Optionees, and any other necessary instruments in writing, in form approved by the Board and conforming to the provisions of the Plan.  The Board shall, from time to time, authorize and direct the issuance and sale of Units of the Company pursuant to such Options as and when the same may be exercised, in whole or in part, in accordance with their respective terms.

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ARTICLE 5

GRANT OF OPTIONS

5.1Option Agreements.  Upon the Board’s determination to grant an Option to an Optionee, the Board shall promptly advise the Optionee of its action, the number of Units subject to the Option so granted and the price to be paid for the Units upon exercise of the Option.  Within a reasonable period of time from the date of the grant of such Option the Optionee shall enter into an agreement for the grant of such Option in such form as the Board determines which complies with the terms and conditions of this Plan (“Option Agreement”).  In the event action taken by the Board is by written consent of its Managers, the action or approval of the Board shall be deemed to be taken at the time the last executing Manager signs the consent unless such action specifies a later time.

5.2Option Date.  Unless otherwise specified in an Option Agreement, the date of grant or “Option Date” of any Option shall be deemed to be the date on which the grant of such Option shall be approved by the Board or such other date as the Board shall, at the time of such approval, fix as the date of grant thereof.

5.3Acknowledgments and Warranties in Option Agreements.  As a condition to the exercise of the Option, the Optionee may be required in said Option Agreement to acknowledge and agree that:

5.3.1   The Optionee will, from time to time, notify the Company in writing of each disposition (including a sale, exchange, gift, or a transfer of legal title) of Units acquired pursuant to the exercise of an Option made by such Optionee.  Such notification shall be in writing and shall be made within fifteen (15) days after each such disposition is made.

5.3.2   The Optionee and his transferees have no rights as a Unit holder with respect to any Units covered by the Plan until the date of the issuance of a Unit certificate to him for such Units.  No adjustment shall be made for distributions (whether in cash, securities or other property) or other rights for which the record date is prior to the date such Unit certificate is issued, except as provided in Article 8.

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ARTICLE 6

TERMS AND CONDITIONS FOR OPTIONS

6.1Employment by the Company.  Nothing contained in the Plan or in any Option granted pursuant to the Plan shall confer upon any Optionee any right to continue in the employment of the Company, or interfere in any way with the right of the Company to terminate his employment at any time, with or without cause.

6.2Option Price.  Each Option granted pursuant to the Plan shall have a stated exercise or Option price for each Unit subject to the Option, which price shall be not less than the fair market value per Unit on the Option Date, as determined by the Board in good faith.

6.3Price Determination.  In making its Option price determination, the Board may use any reasonable valuation method, taking into consideration prices at which Units of the Company have been recently sold and purchased, and other relevant factors as determined by the Board.

6.4Exercise of Option; Payment for Units. Units may be purchased pursuant to an Option granted under the Plan only upon receipt by the Company of notice in writing from the Optionee of his intention to purchase and upon such other terms as may be required by his Option Agreement.  Upon the date(s) specified for the completion of the purchase of his Units, Optionee, shall pay the Company in United States Dollars the full purchase price of the Units purchased; provided however, that, at the discretion of the Board, the Optionee may allow (i) a delay in payment up to thirty days from the date the Option, or portion thereof, is exercised; (ii) payment, in whole or in part, through the surrender of Option Units then issuable upon exercise of the Option; (iii) payment, in whole or in part, by the delivery by Optionee to the Company of a promissory note in the form approved by the Company; (iv) payment, in whole or in part, through delivery of property of any kind which constitutes good and valuable consideration; or any method of “cashless exercise” permitted by the Board and approved by Company’s counsel.

6.5Term of Options; Option Period.  Each Option granted pursuant to this Plan shall have a term of not more than ten (10) years from the Option Date (the “Option Period”).

6.6Option Exercise Period.  Each Optionee to whom an Option has been granted shall have the right to purchase Units, at any time, or from time to time, during the Option Period in accordance with the vesting schedule and other terms of his Option Agreement.  Each Option Agreement which includes a vesting schedule shall set out the maximum percentage or number of Units which such Optionee may purchase in any installment period.

6.6.1   An Employee Optionee shall be credited with a full year of continuous employment by the Company during the Option Period only on an anniversary date of his Option Date, and only if on such anniversary date he is and has been continuously employed by the Company since the Option Date.

6.6.2   Absence of an Employee Optionee on duly granted leave or due to sickness for a period of not more than ninety (90) days shall not be deemed to be an interruption of the continuity of his employment for purposes of this Plan.

6.7Non-Transferability of Options.  No Option shall be transferable by the Optionee other than by will or, if he dies intestate, by the laws of descent and distribution of the state of his domicile at the time of his death.  All Options shall be exercisable during an Optionee’s lifetime only by such Optionee.

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6.8Limitations on Exercise; Termination of Employment.  Subject to the provisions of this Plan, the exercise of Options may be limited in whole or in part for any period or periods of time as specified in each Option Agreement, and any Option may be exercised to the extent it is exercisable in whole at any time, or in part from time to time, during the Option Period (as defined in Section 6.5); provided, however, that:

6.8.1If the Board determines that the Optionee has committed an act materially adverse to the interests of the Company, all of the Optionee’s rights to purchase Units not yet purchasable pursuant to his Option (i.e. non-vested options) shall cease and terminate as of the date of such act; and

6.8.2Except as provided in Sections 6.12, 6.13 and 6.14 below, no Option granted to an Employee may be exercised more than ninety (90) days after such Optionee’s employment or service with the Company has been terminated for any reason, and within such ninety (90) day period said Optionee may exercise his Option only to the extent the same was exercisable on his date of termination.  If during said ninety (90) day period the Optionee shall die, his executors, administrators, legatees or distributees, shall have an additional period ending six (6) months from the date of death within which to exercise the Option.  The Board shall determine what constitutes termination of employment, including whether an authorized leave of absence, or absence for military or governmental service constitutes termination of employment for purposes of the Plan, which determination shall be final and conclusive.

6.9Accumulation Rights.  Unless otherwise provided in an Option Agreement, to the extent Option Units are not exercised in any installment period, such Option Units shall accumulate and be exercisable in whole or in part in any subsequent installment period.

6.10Minimum Unit Purchase.  Each Option Agreement shall provide that not less than a certain number of Units (e.g., 100 Units) may be purchased at any one time, unless the Units purchased are the total number purchasable at the time.

6.11Employee Holding Period.  Except to the extent specifically waived by the Company in the Option Agreement reflecting an Option granted under this Plan, each Employee to whom an Option is granted under the Plan shall, as consideration therefor and as a condition of its grant, remain in the continuous employ of the Company for at least one year from the date of grant before he may exercise any part of the Option.

6.12Retirement of Employee.  In the event of an Employee’s retirement, such Employee’s Option (if granted to him as an Employee) may be exercised by him at any time within the period ending with the earlier of the expiration date of his Option or ninety (90) days after the date of his retirement, to the extent it was exercisable on the date of his retirement.

6.13Death of Optionee.  Upon the termination of employment by the death of an Optionee, the executor or administrator of his estate, or the person to whom his Option shall have been transferred pursuant to his will or the laws of descent and distribution may, within the period ending with the earlier of the expiration date of his Option or one (1) year from the date of the Optionee’s death, exercise the Employee’s Option to the extent it was exercisable on his date of death.

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6.14Disability of Employee.  In the event of the termination of his employment by the Company due to the Disability (within the meaning of Section 22(e)(3) of the Code) of an Optionee who was granted his Option as an Employee, the disabled Optionee (or a legal representative who is a mere custodian of the Optionee’s property, stands in a fiduciary relationship to such Optionee, and is subject to court supervision) may, within the earlier of the period ending with the expiration date of his Option or one (1) year after the termination of the Optionee’s employment with the Company, exercise said Option to the extent it was exercisable on the date of said termination of employment.

6.15Options of Employee not Exercisable at Termination.  Notwithstanding anything herein to the contrary, no Option granted to an Employee which is not exercisable at the termination of such Participant’s employment with the Company shall thereafter become exercisable, regardless of the reason for such termination.

6.16Failure of Retired, Deceased or Disabled Optionee to Exercise Option.  To the extent that any Option of a retired, deceased, or disabled Optionee, who was granted his Option as an Employee, is not exercised within the limited periods specified in Sections 6.12, 6.13 and 6.15, all further rights to purchase Units pursuant to such Option shall cease and terminate as of the expiration of such period.

6.17Repurchase Agreements.  As a condition precedent to the Optionee’s right to receive any Option granted pursuant to this Plan, the Board may require the Optionee to execute a document containing right of first refusal and/or repurchase provisions providing the Company the right to repurchase Option Units under certain circumstances. All of the Option Units shall be, and are deemed to be, subject to all the restrictions, terms, covenants, and conditions set forth in any such repurchase agreement.

6.18Withholding Taxes.  Whenever Units are to be issued under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, and local withholding tax requirements prior to the delivery of any certificate or certificates for such Units.

ARTICLE 7

TIME LIMIT ON GRANTING OF OPTIONS

No Options may be granted under the Plan subsequent to ten (10) years after the date this Plan became effective (“Expiration Date”).  Any Option outstanding under the Plan at the time of its ter­mination shall remain in effect until it shall have been exercised, or shall have expired or otherwise terminated pursuant to the provisions of this Plan.

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ARTICLE 8

ADJUSTMENTS BY REASON OFRECAPITALIZATION, UNIT SPLITS, ETC

8.1Effect of Options on Company’s Rights.  The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge, or to consolidate, or to dissolve, liquidate, sell, or transfer all or any part of its business or assets.  Except as expressly provided in this Article, an Optionee shall  have no other rights by reason of any subdivision or consolidation of Units or the payment of any distributions or any other increase or decrease in the number of Units or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or equity of another company.  Any issue by the Company of Units or securities convertible into Units shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Units subject to any Option.

8.2Recapitalization.  In the event there are splits, subdivisions, combinations or reclassifications of the Units of the Company subsequent to the effective date of this Plan, the number of Units reserved for issuance pursuant to the Plan, including the Units issuable upon the exercise of outstanding Options, shall be increased or decreased proportionately, as the case may be, to appropriately reflect such event.

8.3Reorganization.

8.3.1In case the Company is merged or consolidated with another corporation and the Company is the surviving entity, each outstanding Option, whether or not then exercisable, shall pertain to and apply to the securities to which a holder of the number the Option Units subject to such Option would have been entitled.

8.3.2Subject to any required action by the Company’s Unit holders, in the case the Company is merged or consolidated with another corporation and the Company is not the surviving entity, or in case the property or Units of the Company are acquired by another corporation, or in case of a separation, reorganization, or liquidation of the Company, the Board, or the board of directors or managers of any corporation assuming the obligations of the Company hereunder, shall, in its sole discretion as to each outstanding Option, either:  (a) make appropriate provision for protection of such Option by the substitution on an equitable basis of appropriate equity of the Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to the equity of the Company, provided only that the excess of the aggregate fair market value of the equity subject to such Option immediately after such substitution over the purchase price thereof is substantially the same as, but in no event more than, the excess of the aggregate fair market value of the Option Units subject to such Option immediately before such substitution over the purchase price thereof; (b) upon written notice to the holder of such Option, provide that such Option must be exercised within a specified period not exceeding sixty (60) days of the date of such notice to the extent such Option is exercisable on the last day of such specified period or it will be terminated; or (c) provide that any or all Options which are not yet exercisable shall be exercisable upon such further terms and conditions as may be prescribed and which are not otherwise inconsistent with the Option Agreement and this Plan.  Any portion of such Option which is not exercisable on the last day of any period specified pursuant to clause (b) in the preceding sentence shall terminate, and any portion of such Option which is not exercised on or before said last day shall terminate on said last day.

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8.4Price Adjustment.  If, after the granting of an Option to any Optionee hereunder, a substitution or an adjustment shall be required to be made under this Article 8 in the number or kind of Units or other securities then subject to such Option, the price per Unit payable by the Optionee for Units or securities which he may thereafter be entitled to purchase under such Option shall be concurrently adjusted so that the aggregate purchase price of all Units or securities not theretofore purchased under such Option will be apportioned ratably and equitably to and among the substituted or adjusted number or kind of Units or other securities.

ARTICLE 9

TRANSFER OF CONTROL

9.1Definitions.                      For the purposes of this Article 9, the following terms shall have the following meanings:

9.1.1An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs with respect to the Company:

(i)	The direct or indirect sale or exchange in a single or series of related transactions by the Unit holders of the Company of more than eighty percent (80%) of the Units of the Company;
(ii)	A merger or consolidation in which the Company is a party;
(iii)	The sale, exchange, or transfer of all or substantially all of the assets of the Company; or
(iv)	A liquidation or dissolution of the Company.

9.1.2A “Transfer of Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, the “Transaction”) wherein the Unit holders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of Units of the Company immediately before the Transaction, direct or indirect beneficial ownership of more than eighty percent (80%) of the total combined voting power of the outstanding Units of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporations(s)”), as the case may be. For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the Units of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

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9.2Effect of Transfer of Control on Options.  In the event of a Transfer of Control, this Option shall terminate. If this Option would otherwise terminate pursuant to the foregoing sentence, Optionee shall have the right, at such time prior to the consummation of the transaction causing such termination as the Company shall designate, to exercise any vested unexercised  portions of this Option.

ARTICLE 10

RIGHT TO AMEND, SUSPEND OR TERMINATE THE PLAN

The Board shall have the right to amend, suspend or terminate the Plan at any time, provided, however, that no such action shall affect or in any way impair the rights of an Optionee under any Option theretofore granted under the Plan without the consent of the Optionee or the transferee of the Option, and provided further that no such action, without approval of the Company’s Unit holders, may: (a) increase the total number of Units which may be sold or transferred pursuant to Options granted under the Plan, except as permitted pursuant to Article 8; (b) change the designation of class of persons eligible to participate in the Plan; (c) decrease the minimum Option price specified in Article 6; (d) extend the maximum term of Options granted hereunder; or (e) extend the term of the Plan.

ARTICLE 11

NO OBLIGATION TO EXERCISE OPTION

The granting of an Option shall impose no obligation on the recipient to exercise such Option.

ARTICLE 12

MODIFICATION, EXTENSION ANDRENEWAL AND CANCELLATION OF OPTIONS

Subject to the terms and conditions and within the limitations of the Plan, the Board may (i) modify, extend or renew outstanding Options granted under the Plan, (ii) accept the surrender or cancellation of outstanding Options (to the extent not theretofore exercised), and (iii) authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised).  Notwithstanding the foregoing, however, no modification of an Option shall, without the consent of the Optionee, alter or impair any rights or obligations under any such Option theretofore granted under the Plan.

ARTICLE 13

COMPLIANCE WITH LAWS

13.1Securities Laws.  Each Option under the Plan shall be granted on such terms and conditions, including investment intent, as are deemed advisable by the Board in order to comply with applicable federal, state, and local securities laws, rules, and regulations.  No Options shall be granted, and no Units shall be sold or issued upon the exercise of any Option, unless and until the issuance, as determined by the Board, complies with any then applicable requirements of the Securities and Exchange Commission, the California Commissioner of Corporations, other regulatory agencies having jurisdiction thereof and any securities exchanges upon which securities of the Company may be listed.

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13.2Liability of Company; Compliance With Law.  The Company and the Managers of the Board shall be relieved from any liability for the non-issuance or non-transfer, or any delay of issuance or transfer, of any Units subject to Options under the Plan which results from the inability of the Company to comply with, or to obtain, or from any delay in obtaining from any regulatory body having jurisdiction, all requisite authority to issue or transfer Units upon exercise of the Options under the Plan, if counsel for the Company deems such authority reasonably necessary for lawful issuance or transfer of any such Units.  Appropriate legends may be placed on the Unit certificates evidencing Units issued upon exercise of Options to reflect such transfer restrictions.

ARTICLE 14

PROVISIONS IN OPTION AGREEMENTS

The Option Agreements authorized under this Plan shall contain such other provisions, including, without limitation, conditions and restrictions upon the exercise of the Option and/or upon the sale or other disposition of the Units purchased upon the exercise of an Option, as the Board shall deem advisable in its absolute discretion (and which may be more restrictive as to the Optionee than those herein); provided, however, that such provisions shall be consistent with the terms and conditions set forth herein.

ARTICLE 15

INDEMNIFICATION OF THE BOARD

In addition to such other rights of indemnification as they may have as Managers of the Board shall be indemnified by the Company against the reasonable expenses, including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in the connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with this Plan or agreements made hereunder, and against all amounts paid by them in settlement thereof or in satisfaction of a judgment therefor, provided such settlement is approved by independent legal counsel selected by the Company, except in relation to matters as to which it shall be adjudged in such action, suit, or proceeding that such Manager is liable for gross negligence or willful misconduct in the performance of his duties; provided further that within sixty (60) days after institution of any such action, suit, or proceeding such Manager shall, in writing, offer the Company the opportunity, at its own expense, to handle and defend the same.

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ARTICLE 16

GENERAL PROVISIONS

16.1Governing Law.This Plan shall be governed by the laws of the State of California.

16.2Effective Date of the Plan.The Plan became effective when approved by the Board.

Approved by the Board of Managers on:  July ___, 2007.

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EX-10.3

Exhibit 10.3

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT ("Agreement") is made effective the ________day of January 2008 ("Effective Date"), between Envision Solar International, Inc., a California corporation ("Buyer"), and Generating Assets, LLC, a Delaware limited liability company ("Seller"). Karen Morgan, an individual ("Morgan"), is a party hereto for the limited purposes of Sections 11.2 and 13.

RECITALS

A.           Seller operates a business engaged in providing solar financing and development (the "Business").

B.           Seller wishes to sell to Buyer and Buyer wishes to purchase from Seller, on the terms and conditions of this Agreement, substantially all of the assets of Seller and the Business.

C.           All terms used in this Agreement with initial upper-case letters which are not defined within the text of the Agreement itself are defined in Section 14.1.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties contained in this Agreement, the parties agree as follows:

AGREEMENT

1.Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, Seller hereby sells, conveys, transfers, assigns and delivers to Buyer, and Buyer purchases from Seller, all of Seller's right, title, benefits and interest in all rights and assets used in the operation of the Business including, without limitation, the rights and assets described in Exhibit A (collectively, the "Assets"), free and clear of all Liens.

2.Non-assumption of Liabilities. Except as provided in Section 2.1, Buyer shall not (i) assume and/or take the Assets subject to any existing liabilities, accounts payable or other contracts or obligations; or (ii) be liable in any manner or way for any of the liabilities, accounts payable, contracts, obligations, claims or demands of or against Seller arising from Seller's ownership of the Assets or operation of the Business. Seller shall indemnify, defend and hold Buyer harmless from and against any of the foregoing.

2.1     Assumed Liabilities. Notwithstanding Section 2, Buyer shall assume and be responsible for the satisfaction of the following obligations and liabilities of Seller:

2.1.1All obligations of Seller under the Assigned Contracts.

2.1.2All obligations pursuant to an Engagement Letter with Squire, Sanders & Dempsey, L.L.P. ("SSD") dated December 4, 2007 attached as Exhibit C (the "SSD Agreement").

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2.1.3The payment obligations referenced in a letter from Morgan to MacKenzie Communications, Inc. ("MacKenzie") dated December 17, 2007, attached as Exhibit D (the "MacKenzie Agreement").

3.Consideration. The consideration payable for the Assets ("Purchase

Consideration") is comprised of the following, which shall be provided at the Closing to certain

third parties as specified below:

3.1The assumption and performance of the obligations specified in the SSD Agreement.

3.2The assumption and performance of the obligations specified in the MacKenzie Agreement.

3.310,000 shares of common stock of Envision ("Envision Shares") issued to the persons specified in Exhibit B, subject to their execution of the Investor Acknowledgement ("Acknowledgement") substantially in the form attached as Exhibit E, to be more specifically allocated as specified in Exhibit B.

3.4139,160 Envision Options at an exercise price of $10 per share with a 10-year term, and 29,820, Envision Options at an exercise price of $20 per share with a 2-year term, issued to the persons specified in Exhibit B, pursuant to the terms of an Option Agreement substantially in the form attached as Exhibit F, to be more specifically allocated as specified in Exhibit B.

3.5           Immediately available funds of $9,000 to Morgan.

3.6           The performance of the obligations specified in the Option Agreement attached as Exhibit G ("Malone Option Agreement").

4.Representations and Warranties of Seller. As an inducement to Buyer to enter into this Agreement, and intending that Buyer shall rely on such representations and warranties in connection with the transactions set forth herein, Seller represents and warrants to Buyer that the following matters in this Article 4 are true and accurate.

4.1Power and Authority. Seller has full power and authority and contractual right and authority to enter into this Agreement and to sell, convey, assign and transfer the Assets, and has taken all corporate action necessary to authorize the execution and delivery of this Agreement, the sale of the Assets in accordance with its terms and the performance of the obligations of Seller hereunder, except as otherwise provided for herein. This Agreement has been duly executed by an authorized representative of Seller, and constitutes the legal, valid and binding obligation of Seller in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws affecting the rights of creditors generally.

4.2Organization. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all necessary powers to carry on the Business as it is now being conducted.

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4.3Title to Assets. Seller has good and assignable title to and interest in the Assets, and the Assets are not encumbered by any Lien, whether accrued, absolute, contingent, or otherwise, and whether due or to become due, which Buyer shall or will succeed to by reason of its purchase of the Assets. Seller shall transfer and assign all of the Assets to Buyer, free and clear of all Liens. Seller has not interfered with, infringed upon, misappropriated or otherwise come into conflict with any rights of third parties in and to any Asset, and has never received any charge, complaint, claim or notice alleging any such interference, infringement, misappropriation or violation.

4.4Intellectual Property.

4.4.1Ownership. Seller owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the Business as currently conducted and as proposed to be conducted. Each item of Intellectual Property owned or used by Seller in the Business immediately prior to the Closing will be owned or available for use by the Buyer on identical terms and conditions subsequent to the Closing. Seller has taken all necessary action to maintain and protect each item of Intellectual Property that Seller owns or uses.

4.4.2No Infringement. Seller has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and there has never been any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Seller must license or refrain from using any Intellectual Property rights of any third party). To the Knowledge of Seller, Buyer will not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Intellectual Property rights of third parties as a result of the continued operation of the Businesses as presently conducted or proposed to be conducted. To the Knowledge of Seller, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of Seller.

4.5Compliance with Laws. The Business had complied with, and is not in violation of, any applicable federal, state or local statutes, laws or regulations.

4.6No Illegal Payments. Neither Seller nor any manager, director, officer, employee or agent of Seller, has (a) directly or indirectly given or agreed to give airy illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other person who was, is or may be in a position to help or hinder Seller (or assist in connection with any actual or proposed transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office which might subject Seller to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (b) established or maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose.

4.7Permits and Licenses. Seller has all permits and licenses, if any, required for the conduct of the Business. Each such permit and license is in full force and effect, and Seller has not engaged in any activity which would cause or permit revocation or suspension of any such permit or license, and no action or proceeding looking to or contemplating the revocation or suspension of any such permit or license is pending or threatened.

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4.8Litigation. There is no suit, action, arbitration, or legal, administrative, or other proceeding, or governmental investigation pending or, to the Knowledge of Seller, threatened, against or affecting the Business or Assets. Seller is not in default in relation to the Business or Assets with respect to any order, writ, injunction, or decree of any federal, state, local, or foreign court, department, agency, or instrumentality.

4.9No Default. The consummation of the transaction contemplated by this Agreement will not result in or constitute any of the following: (i) a default or an event that, with notice or lapse of time or both, would be a default, breach, or violation of any lease, license, promissory note, conditional sales contract, commitment, indenture, mortgage, deed of trust, or other agreement, instrument, or arrangement to which Seller is a party which would prohibit, interfere, or otherwise restrict or encumber the free, unrestricted and unabated transfer of the Assets; or (li) the creation or imposition of any Lien on any of the Assets.

4.10Governmental Consent. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of: Seller is required in connection with the valid execution and delivery of this Agreement, or the consummation of any transaction contemplated hereby.?:

4.11Assigned Contracts. Complete and accurate copies of all Assigned Contracts have been provided to Buyer.

4.11.1Each Assigned Contract is legal, valid and in full force and effect, enforceable in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally and by the availability of equitable remedies. To Seller's Knowledge, no other party to any Assigned Contract has taken the position that any provision of such contract is unenforceable.

4.11.2Seller not breached any Assigned Contract, and, to Seller's Knowledge, no other Person has breached any Assigned Contract.

4.11.3To Seller's Knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, (A) result in a breach of any of the provisions of any Assigned Contract, (B) give any Person the right to declare a default or exercise any remedy under any Assigned Contract, (C) give any Person the right to accelerate the maturity or performance of any Assigned Contract, or (D) give any Person the right to cancel, terminate or modify any Assigned Contract.

4.11.4Seller has not received any notice or other communication regarding any actual or possible breach of any Assigned Contract that has not been resolved. Seller has not received notice of termination or cancellation of or intent to cancel or terminate any Assigned Contract.

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4.11.5Seller has not waived any of its rights under any Assigned Contract.

4.11.6No Person is renegotiating, or has a right pursuant to the terms of any Assigned Contract to renegotiate any amount paid or payable to Seller under any Assigned Contract or any other material term or provision of any Assigned Contract.

4.11.7Each Assigned Contract will continue to be enforceable, and in full force and effect on identical terms immediately following the consummation of the Transactions, and the consummation of the transactions shall not (either alone or upon the occurrence of additional acts or events) result in any payment or payments becoming due from Seller to any Person or give any Person the right to terminate or alter the provisions of such Assigned Contract. The consummation of the transactions contemplated by this Agreement will not affect any of the Assigned Contracts in a manner that could reasonably be expected to be materially adverse to Buyer.

4.12           Negotiation Rights. With respect to the Negotiation Rights specified on Exhibit A:

(a)Seller is currently actively negotiating a final, complete and legally binding agreement with the designated party;

(b)Seller has not received any indication and has no reason to believe that the designated party is unwilling to enter into a final agreement with Seller; and

(c)Seller has provided to Buyer all. documents relating to the negotiations, including all correspondence, copies of emails, term sheets, letters of intent, letter agreements, and proposals.

4.13Performance of Obligations. With respect to the Business, Seller has performed all material obligations required to be performed by it to date, and is not in default under any material contract, agreement, lease, commitment, indenture, mortgage, deed of trust, or other document to which it is a party.

4.14Completeness of Representations. None of the representations and warranties made by Seller in this Agreement contains or will contain any untrue statement of a material fact, or omit any material fact, the omission of which would be misleading.

4.15Survival of Representations. All representations and warranties of Seller, whether oral or written, including any representations and warranties in any written statements or documents delivered or made available to Buyer by Seller, shall survive the closing of the transactions contemplated by this Agreement.

5. Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows:

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5.1   Power and Authority. Buyer has full corporate power and authority and contractual right and authority to enter into this Agreement and to purchase the Assets, and has taken all corporate action necessary to authorize the execution and delivery of this Agreement, the purchase of the Assets in accordance with its terms, and the performance of the obligations of Buyer hereunder. This Agreement has been duly executed by an authorized officer of Buyer, and constitutes the legal, valid and binding obligation of Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency and other laws affecting the rights of creditors generally.

5.2   Completeness of Representations. None of the representations and warranties made by Buyer in this Agreement contains or will contain any untrue statement of a material fact, or omit any material fact, the omission of which would be misleading.

5.3   Survival of Representations. All representations and warranties of Buyer, whether oral or written, including any representations and warranties in any written statements or documents delivered or made available to Seller by Buyer, shall survive the closing of the transactions contemplated by this Agreement.

6.Employees and Compensation. Buyer shall have the right, but not the obligation, to employ any or all of the employees of Seller. Should Buyer employ any of those employees, such employment shall be on such terms as Buyer may establish. All employees shall be paid in full through the Effective Date by Seller, including all amounts for accrued vacation and all other benefits. Seller shall take no action to impede or interfere withjany efforts by Buyer to employ current employees of Seller. Seller and Morgan hereby indemnify and hold Buyer harmless from and against any and all loss or liability in any way connected with (i) amounts due and owing to Seller's employees as of the Effective Date, whether such amounts be for compensation or otherwise; and (ii) any past or current unfair labor practices of Seller as of the Effective Date.

7.Deliveries by Seller. Upon the complete execution of this Agreement, Seller shall deliver to Buyer:

(i)	An executed Assignment of Agreements in the form attached as Exhibit H;
(ii)	the Investor Acknowledgement in the form of Exhibit D executed by each person listed in Exhibit B;
(iii)	the Option Agreement in the form of Exhibit E executed by each person listed in Exhibit B;
(iv)	the Malone Option Agreement in the form of Exhibit G executed by Charlene Malone ("Malone"); and
(v)	such other items required to be delivered by Seller under this Agreement.

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8.Deliveries by Buyer. Upon the complete execution of this Agreement, Buyer shall deliver to Seller or the party specified:

(i)	to SSD, the Warrant to Purchase Common Stock in the form included in Exhibit C, executed by Buyer;
(ii)	the Envision Shares to the persons specified in Exhibit B as receiving Envision Shares;
(iii)	the Option Agreements in the form of Exhibit E executed by Buyer, to the persons specified in Exhibit B;
(iv)	the Purchase Consideration specified in Section 3.5 to Morgan; and
(v)	the Malone Option Agreement executed by Buyer to Malone.

9.Costs and Expenses. Each party shall pay its own costs and expenses incurred by such party in connection with this Agreement and consummating the transactions described herein.

10. Indemnity.

10.1Seller's Indemnity. Seller shall indemnify, defend, and hold harmless Buyer, and its successors, Affiliates, assigns, officers, directors, employees, attorneys and agents, against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, that they or any of them shall incur ;or suffer, which arise, result from, or relate to (i) the use of the Assets or Business operations prior to the Effective Date or (ii) any breach of, or failure by Seller to perform any of its representations, warranties, covenants, or agreements contained in this Agreement.

10.2Buyer's Indemnity. Buyer shall indemnify, defend and hold harmless Seller and its Affiliates, assigns, officers, directors, members, managers, employees, attorneys and agents against, and in respect of, any and all claims, losses, expenses, costs, obligations and liabilities that Seller may incur or suffer by reason of (i) Buyer's operation of the Business following the Effective Date, or (ii) Buyer's breach of or failure to perform any of the warranties, guarantees, commitments or covenants contained in this Agreement.

11. Seller's Obligations.

11.1Change of Name. Seller shall not use or employ in any manner the name "Generating Assets, LLC" or any derivative thereof or name similar thereto, and Seller shall take and cause to be taken all necessary action to cease the public use of such name. Seller shall deliver to Buyer such executed documents as may be required to change Seller's name on that date to another name bearing no similarity to "Generating Assets, LLC" including but not limited to a name change amendment suitable for filing with the Delaware Secretary of State. Seller hereby appoints Buyer as its attorney-in-fact to file all such documents.

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11.2Covenant Not to Compete. Seller and Morgan agree that for a period of five years after the Effective Date, neither they nor any of their Affiliates shall, directly or indirectly, (1) own, manage, operate, join, control or participate in the ownership, management, operation or control of; (2) be employed by; (3) provide consulting, research and development or other services to; or (4) sell products to any business, which engages in the development, marketing or sale of products or services which are competitive with or similar to the Business. In the event that the provisions of this section are found to exceed the limitation provided by applicable law, then such provisions shall be reformed to set forth the maximum limitations permitted. The covenants contained in this section are intended to be an agreement authorized by Section 16601 of the California Business and Professions Code. The competition restrictions contained in this section shall not be deemed or construed to modify, restrict or eliminate any competition restrictions contained in any other agreement between Buyer or any Affiliate and Seller, Morgan, or any of their Affiliates. Seller and Morgan expressly acknowledge that the remedy at law for any breach of the covenants set forth in this section will be inadequate, and that upon any such breach, or threatened breach, Buyer shall be entitled as a matter of right to injunctive relief in any court of competent jurisdiction, in equity or otherwise, and to enforce the specific performance of the obligations of Seller and Morgan under this section without the necessity of proving the actual damage to Buyer or the inadequacy of a legal remedy. The rights conferred upon Buyer by the preceding sentence shall not be exclusive of, but shall be in addition to, any other rights or remedies which Buyer may have at law, in equity or otherwise.

11.3Assistance Regarding Negotiations. Seller shall assist Buyer in its continuation and conclusion of negotiations with the designated parties with respect to the Negotiation Rights conveyed by this Agreement. More specifically, Seller shall-facilitate introductions and meetings between Buyer and such designated parties, shall recommend to the designated parties that they negotiate final agreements with Buyer, and shall otherwise support-Buyer in efforts to successfully conclude such negotiations.

12.Broker's Fees. Each of the parties represents that they have dealt with no broker or finder in connection with any of the transactions contemplated by this Agreement, and, insofar as they know, no broker or other person is entitled to any commission or finder's fees in connection with any of these transactions. Seller and Buyer each agree to indemnify and hold harmless one another against any loss, liability, damage, cost, claim, or expense incurred by reason of any brokerage, commission, or finder's fee alleged to be payable because of any act, omission, or statement of the indemnifying party.

13.Confidential Information, hi connection with the ownership and operation of the Business, Seller and Morgan obtained confidential information relating to the Assets and Assigned Contracts. Seller and Morgan shall treat such information as confidential, preserve the confidentiality thereof, not duplicate or use such information and instruct its employees and all other parties who have had access to such information to keep confidential and not use such information in a way which is detrimental to Buyer in its exercise of its rights and enjoyments of the benefits under the Assigned Contracts. Seller agrees that the foregoing confidentiality covenants are material terms of this Agreement and a condition concurrent to Buyer's obligations under this Agreement.

14. Miscellaneous.

14.1Defined Terms. For the purposes of this Agreement, the following words and expressions shall have the following meanings:

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14.1.1"Affiliate" means any individual, partnership, corporation, trust or other entity or association, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the relevant Person. The term "control," as used in the immediately preceding sentence, means, with respect to a corporation or limited liability company the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

14.1.2"Assigned Contracts" means the agreements listed in Section (e) of Exhibit A.

14.1.3"Intellectual Property" means any patents, patent applications, trademarks, tradenames, service marks, copyrights, and any applications therefore, technology, know-how, trade secrets, inventory, ideas, algorithms, processes, computer software programs or applications, and tangible or intangible proprietary information.

14.1.4"Governmental Authority" means any government or political subdivision or regulatory authority, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision or regulatory authofity, or any federal state, local or foreign court or arbitrator.

14.1.5"Knowledge of Seller" or "Seller's Knowledge" means the knowledge of the managers, members and employees of Seller, including Morgan, who would reasonably be,expected to have such knowledge after due.inquiry, or that such Persons should have known based upon the facts available at the time of determination.

14.1.6"Lien" means any security deed, mortgage, deed to secure debt, deed of trust, lien, pledge, assignment, charge, security interest, title retention agreement, negative pledge, levy, execution, seizure, attachment, garnishment or other encumbrance of any land in respect of such property, whether or not choate, vested or perfected.

14.1.7"Person" means an individual, general partnership, limited partnership, limited liability company, corporation, trust, estate, real estate investment trust association or any other entity.

14.2Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

14.3Modification. This Agreement may be modified or rescinded only by a writing signed by all parties to this Agreement or by their duly authorized agents.

14.4Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the written consent of the other party, except that (1) Buyer may, without the consent of Seller, assign its rights and obligations under this Agreement to an Affiliate, provided that Buyer obtains the Affiliate's written agreement enforceable by Seller to assume and perform, from and after the date of such assignment, the terms, conditions, and provisions imposed by this Agreement upon Buyer, whereupon Buyer shall be relieved of any future liability under this Agreement; and (2) Seller may, without the consent of Buyer, assign the benefits of this Agreement, including its right to payments, but not its obligations.

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14.5Further Conveyances. On and after the Effective Date, and without further consideration or expense to Buyer, Seller shall execute and deliver such further documents of conveyance and transfer, and take such other action as Buyer reasonably requests to effectively convey and transfer to Buyer any of the Assets in accordance with this Agreement, and will assist Buyer in the exercise of its rights as assignee under the Assigned Contracts. Seller also shall deliver or cause to be delivered, at such times and places as reasonably requested by Buyer, such additional documents as Buyer may reasonably request for the purposes of carrying out this Agreement.

14.6No Waiver. No waiver of any right under this Agreement shall be deemed effective unless in writing and signed by the party charged with such waiver, and no waiver of any right arising from any breach or failure to perform shall be deemed to be a waiver of any future such right or of any other right arising under this Agreement.

14.7Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior ■agreements, and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.

14.8Exhibits. All attached exhibits and schedules to which reference is made herein are hereby-incorporated by this reference.

14.9Headings; Construction; Interpretation. Section headings contained in tins Agreement are included for convenience only and form no part of the agreement between the parties. When the context so requires and when used in this Agreement, the singular shall be deemed to include the plural and the plural shall be deemed to include the singular. This Agreement shall not be interpreted against a party by virtue of such party's participation in the drafting of the Agreement or any provisions herein.

14.10Separability. If any provision of this Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be deemed amended to conform to applicable laws so as to be valid and enforceable or, if it cannot be so amended without materially altering the intention of the parties, it shall be stricken and the remainder of this Agreement shall remain in full force and effect.

14.11Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute but one and the same document.

14.12Time of the Essence. Time shall be of the essence for all purposes under this Agreement.

14.13Survival of Representations, Warranties and Agreement.    The representations, warranties, obligations, covenants and agreements of the parties hereto shall in allevents survive the close or termination of this Agreement where same is necessary to effectuate the intention of the parties.                                                                                              . ..

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14.14Binding Effect. This Agreement shall be binding upon and mure to the benefit of Seller and Buyer and their respective representatives and assigns.

14.15Notices. Any notice required or authorized to be given hereunder or any other communications between the parties provided for under the terms of this Agreement shall be in writing (unless otherwise provided) and shall, be served personally, or by reputable express courier sendee or by facsimile transmission addressed to the relevant party at the address stated below or at any other address provided by that party to the other as its address for service. Any notice so given personally shall be deemed to have been served on delivery, any notice so given by express courier service shall be deemed to have been served two (2) business days after the same shall have been delivered to the relevant courier, and any notice so given by facsimile transmission shall be deemed to have been received on dispatch. .In proving such sendee, it shall be sufficient to produce the receipt of a reputable courier company showing the correct address of the addressee or prove that the facsimile transmission was followed by an activity report showing the correct facsimile number of the party on whom notice is served and. the correct number of pages transmitted

If to. Seller, to:	Karen Morgan 16 Baywater Drive Danen, CT 06820 Fax: (203). 656-4375
If to Morgan, to:	Karen Morga 16 Baywater Drive Danen, CT 06820 Fax: (203) 656-4375
If to Buyer, to:	Envision Solar International, Inc. 4225 Executive Square, Suite 480 La Jolla, CA 92037 Attn: Robert L. Noble Fax:(619) 238-1429
With a copy (which shall
not constitute notice) to:	John C. O'Neill, Esq.Procopio, Cory, Hargreaves & Savitch LLP 530 B Street, Suite 2100 San Diego, CA 92101 Fax: (619) 744-5464

or to such other address or to such other person as any party shall designate to the others for such purpose in the manner hereinabove set forth.

14.16Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration in San Diego, California, before a single, neutral arbitrator administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

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14.17Attorneys' Fees. If any action or arbitration is commenced to enforce or interpret any provision of this Agreement, the substantially prevailing party shall be entitled to recover from the other party actual attorneys' fees and costs incurred in connection with such action, in addition to all other proper relief. Attorneys' fees incurred in enforcing any judgment are recoverable as a separate item, and this provision for post-judgment attorneys' fees shall survive any judgment and shall not be deemed merged into the judgment.

14.18Remedies Cumulative. All remedies provided in this Agreement are cumulative and non-exclusive, and shall be in addition to any and all other rights and remedies provided by law or in equity.

14.19Governing Law. This Agreement shall be governed by and construed under the laws of the State of California, without regard to the conflict of laws principles thereof, as the same apply to agreements executed solely by residents of California and wholly to be performed within California.

14.20Tax Consequences. Seller acknowledges that Buyer makes no representations or warranties, and has provided no advice to Seller with respect to the tax consequences to Seller of the transactions contemplated by this Agreement. Seller acknowledges that it has been advised by Buyer to consult its own tax advisor and legal counsel with respect to the tax aspects of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

ENVISION SOLAR INTERNATIONAL, INC.,
a California corporation
By:	/s/  Robert L. Noble
	Name Robert L. Noble
	Chief Executive Officer
GENERATING ASSETS, LLC
a Delware Limited liability company
By:	/s/  Karen Morgan
	Karen Morgan
	Manager
/s/  Karen Morgan
Karen Morgan, an individual

EXHIBITS

A - Assets

B - Allocation of Shares and Options

C - SSD Agreement

D - MacKenzie Agreement

E - Form of Investor Acknowledgement

F - Option Agreement

G - Malone Option Agreement

H - Assignment of Agreements

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EX-10.4

Exhibit 10.4

CONFIDENTIAL

THIS WARRANT AND ALL SHARES OF WARRANT STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.

WARRANT TO PURCHASE COMMON STOCK

OF

ENVISION SOLAR INTERNATIONAL, INC.

Warrant No.___________________________	La Jolla, California
Date of Issuance: January 11_, 2008

THIS CERTIFIES THAT, for value received, Squire, Sanders & Dempsey L.L.P. or its permitted registered assigns (the "Holder"), is entitled, subject to the terms and conditions of this Warrant, at any

time or from time to time after January___________ , 2008 (the "Effective Date"), to purchase from Envision Solar International, Inc., a California corporation (the "Company"), the Number of Shares of Warrant Stock (as defined below) of the Company at an exercise price equal to $0.01 (the "Exercise Price") per share. Furthermore, both the Number of Shares of Warrant Stock purchasable upon exercise of this Warrant and the Exercise Price are subject to adjustment as provided herein. The Warrant Stock shall automatically expire unless previously exercised on January 1, 2015 (the "Termination Date"). Except as otherwise provided herein, all defined terms shall have the meanings ascribed to such terms as set forth in Section 1 hereinbelow.

1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have the following respective meanings:"Change of Control" means (i) the sale, lease, exchange or other transfer, directly or indirectly, of all or substantially all of the assets of Company or its subsidiaries (in one transaction or in a series of related transactions); (ii) the approval by the shareholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; (iii) a merger or consolidation to which the Company is a party if the shareholders of Company immediately prior to the effective date of such merger or consolidation have "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) immediately following the effective date of such merger or consolidation of securities of the surviving entity representing 50% or less of the combined voting power of the surviving entity's then outstanding securities (determined on a fully diluted basis) ordinarily having the right to vote at elections of directors; or (iv) the sale or transfer of outstanding securities by the shareholders of Company to any person if after the sale or transfer such person becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the combined voting power of Company's outstanding securities ordinarily having the right to vote at elections of directors.

"Common Stock" shall mean the Company's common stock.

"Fair Market Value" of a share of Warrant Stock as of a particular date shall mean:

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(a)If traded on a national securities exchange or the Nasdaq National Market, the Fair Market Value shall be deemed to be the average of the closing prices of the shares of the Warrant Stock of the Company on such exchange or market over the five (5) business days ending immediately prior to the applicable date of valuation;

(b)If actively traded over-the-counter, the Fair Market Value shall be deemed to be the average of the closing bid prices over the 30-day period ending immediately prior to the applicable date of valuation; and

(c)If there is no active public market, the Fair Market Value shall be determined by the Board of Directors of the Company in good faith using any reasonable method of valuation, which determination shall be conclusive and binding on all interested parties.

"IPO" shall mean the first firm commitment underwritten public offering of the Company's Common Stock pursuant to an effective registration statement filed with the SEC under the Securities Act.

"Number of Shares of Warrant Stock" and "Number of Shares" shall mean, subject to the terms hereof, the number or quotient equal to $8,006.20 divided by the lesser of (a) the price per share sold by the Company in its next preferred stock, Common Stock or other equity financing of securities after the Date of Issuance of this Warrant, or (b) SI 0.00 per share. Notwithstanding the foregoing, the Number of Shares of Warrant Stock (i) represents the number of shares or securities of Warrant Stock at any time receivable or issuable upon exercise of this Warrant, and (ii) shall be subject to adjustment as set forth in this Warrant.

"Registered Holder" shall mean any Holder in whose name this Warrant is registered upon the books and records maintained by the Company.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Warrant" shall include this Warrant and any warrant delivered in substitution or exchange for this Warrant as provided herein.

"Warrant Stock" shall mean the Common Stock of the Company and any other securities, including any securities into which such Warrant Stock has converted, at any time receivable or issuable upon exercise of this Warrant.

2.[RESERVED].

3.EXERCISE OF WARRANT

3.1 Payment. Subject to compliance with the terms and conditions of this Warrant and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or from time to time after the Effective Date so long as Holder continues to serve as legal counsel to the Company, by the delivery (including, without limitation, delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of Exercise"), duly executed by the Holder, at the principal office of the Company, and as soon as practicable after such date, surrendering

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(a)this Warrant at the principal office of the Company (as listed in Section 14 below), and

(b)payment, (i) in cash (by check) or by wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder; or (lii) by a combination of (i) and (ii), of an amount equal to the product obtained by multiplying the Number of Shares of Warrant Stock being purchased upon such exercise by the then effective Exercise Price (the "Exercise Amount").

3.2 Net Issue Exercise. In lieu of the payment methods set forth in Section 3.1(b) above, if the Fair Market Value of one share of Warrant Stock is greater than the Exercise Price (at the date of calculation set forth below), the Holder may elect to exchange all or some of the Warrant for shares of Warrant Stock equal to the value of the Warrant being exchanged on the date of exchange. If Holder elects to exchange this Warrant as provided in this Section 3.2, the Holder shall tender to the Company, at the principal office of the Company, the Warrant for the amount being exchanged, along with a properly endorsed Notice of Exercise, and the Company shall issue to the Holder the Number of Shares of the Warrant Stock computed using the following formula:

X = Y (A-B)

A

Where X = the Number of Shares of Warrant Stock to be issued to the Holder.

Y = the Number of Shares of Warrant Stock purchasable under the amount of the Warrant being exchanged (as adjusted to the date of such calculation).

A = the Fair Market Value of one share of the Warrant Stock.

B =   Exercise Price (as adjusted to the date of such calculation).

All references herein to an "exercise" of the Wairant shall include an exchange pursuant to this Section 3.2.

3.3 IPO. Upon receipt of a written notice of the Company's intention to raise capital by selling shares of Common Stock in an IPO (the "IPO Notice"), which notice shall be delivered to the Holder at least thirty (30) but not more than sixty (60) days before the anticipated date of the filing with the SEC of the registration statement for such IPO, the Holder shall promptly notify the Company whether the Holder will exercise this Warrant. Notwithstanding whether an IPO Notice has been delivered to the Holder or any other provision of this Warrant to the contrary, this Warrant shall be deemed exercised on the consummation of the IPO; the Fair Market Value will be the price at which one share of Common Stock was sold to the public in the IPO. Ff the Holder has elected to exercise this Warrant pursuant to this Section and the IPO is not consummated, then the Holder's exercise of this Warrant shall not be effective unless the Holder confirms in writing the Holder's intention to go forward with the exercise of this Warrant.

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3.4 "Easy Sale" Exercise. In lieu of the payment methods set forth in Section 3.1(b) above, when permitted by law and applicable regulations (including the rules of Nasdaq and the National Association of Securities Dealers (the "NASD")), the Holder may pay the Exercise Amount through a "same day sale" commitment from the Holder (and if applicable a broker-dealer that is a member of the NASD (an "NASD Dealer")), whereby the Holder will irrevocably elect to exercise this Warrant and to sell at least that Number of Shares of Warrant Stock so purchased to pay the Exercise Amount (and up to all of the shares of Warrant Stock so purchased) and the Holder (or, if applicable, the NASD Dealer) commits upon sale (or, in the case of the NASD Dealer, upon receipt) of such shares of Warrant Stock to forward the Exercise Amount directly to the Company, with any sale proceeds in excess of the Exercise Amount being for the benefit of the Holder.

3.5 Stock Certificates; Fractional Shares. As soon as practicable on or after the date of exercise of this Warrant under Section 3.1, 3.2, 3.3 or 3.4 above, as applicable, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of whole shares of Warrant Stock issuable upon such exercise, together with cash in lieu of any fraction of a share equal to such fraction of the current Fair Market Value of one whole share of Warrant Stock as of the date of exercise of this Warrant. No fractional shares or scrip representing fractional shares shall be issued upon an exercise of this Warrant.

3.6 Partial Exercise; Effective Date of Exercise. In case of any partial exercise of this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares of Warrant Stock purchasable hereunder. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above. The person entitled to receive the shares of Warrant Stock issuable upon exercise of this Warrant shall be treated for all puiposes as the holder of record of such shares as of the close of business on the date the Holder is deemed to have exercised this Warrant.

4.VALID ISSUANCE; TAXES. All shares of Warrant Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and non-assessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof.

5.ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Number of Shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or other securities or property receivable or issuable upon exercise of this Warrant) and the Exercise Price are subject to adjustment upon occurrence of the following events:

5.1 Adjustment for Stock Splits. Stock Subdivisions or Combinations of Shares. If the Company at any time while this Warrant, or any portion hereof, remains outstanding shall split, subdivide or combine the shares of Warrant Stock, as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Number of Shares of Warrant Stock issuable upon exercise of this Warrant shall be proportionately increased and the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision, and likewise, the Number of Shares of Warrant Stock issuable upon exercise of this Warrant shall be proportionately decreased and the Exercise Price proportionately increased in the case of a combination.

5.2 Adjustment for Dividends or Distributions of Stock or Other Securities or Property. In case the Company shall make or issue, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution with respect to the Warrant Stock (or any shares of stock or other securities at the time issuable upon exercise of the Warrant) payable in (a) securities of the Company or (b) assets (excluding cash dividends paid or payable solely out of retained earnings), then, in each such case, the Holder on exercise of this Warrant at any time after the consummation, effective date or record date of such dividend or other distribution, shall receive, in addition to the shares of Warrant Stock (or such other stock or securities) issuable on such exercise prior to such date, and without the payment of additional consideration therefor, the securities or such other assets of the Company to which such Holder would have been entitled upon such date if such Holder had exercised this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period giving effect to all adjustments called for by this Section 5.

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5.3Reclassification. If the Company, by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as a result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefore shall be appropriately adjusted, all subject to further adjustment as provided in this Section 5. No adjustment shall be made pursuant to this Section 5.3 upon any conversion or redemption of the Warrant Stock which is the subject of Section 5.5.

5.4Adjustment for Capita] Reorganization, Merger or Consolidation. If at any time while this Warrant, or any portion hereof, is outstanding and unexpired there shall be a Change of Control, this Warrant shall cease to represent the right to receive Warrant Stock and shall automatically represent the right to receive upon the exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the Number of Shares of stock or other securities or property offered to the Company's holders of Warrant Stock in connection with such Change of Control that a holder of shares of Warrant Stock, deliverable upon exercise of this Warrant would have been entitled to receive in such Change of Control if this Warrant had been exercised immediately before such Change of Control, subject to further adjustment as provided in this Section 5. The foregoing provisions of this Section 5.4 shall similarly apply to successive reorganizations, consolidations, mergers, sales, and transfers to the extent that this Warrant is assigned to or assumed by any successor corporation or entity, whether by operation of law or otherwise, and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder hereof for shares of Warrant Stock in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

5.5Redemption or Termination of Warrant Stock. In case all or any portion of the authorized and outstanding shares of Warrant Stock of the Company are redeemed or converted or reclassified into other securities or property pursuant to the Company's Articles or Certificate of Incorporation or otherwise, or the Warrant Stock otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon exercise hereof at any time after the date on which the Warrant Stock is so redeemed or ceases to exist (the "Warrant Stock Termination Date"), shall receive, subject to the terms of this Warrant, in lieu of the Number of Shares of Warrant Stock that would have been issuable upon such exercise immediately prior to the Warrant Stock Termination Date, the securities or property that would have been received if this Warrant had been exercised in full and the Warrant Stock received thereupon had been simultaneously converted immediately prior to the Warrant Stock Termination Date, all subject to further adjustment as provided in this Warrant. Additionally, the Exercise Price shall be immediately adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise Price of the maximum Number of Shares of Warrant Stock for which this Warrant was exercisable immediately prior to the Warrant Stock Termination Date by (y) the Number of Shares of Warrant Stock of the Company for which this Warrant is exercisable immediately after the Warrant Stock Termination Date, all subject to further adjustment as provided herein.

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6.CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the Exercise Price, or number or type of shares issuable upon exercise of this Warrant, the Chief Financial Officer or Controller of the Company shall compute such adjustment in accordance with the tenns of this Warrant and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of the adjusted Exercise Price. After each such adjustment, the Company shall promptly send (by facsimile and by either first class mail, postage prepaid or overnight delivery) a copy of each such certificate to the Holder.

7.LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

8.RESERVATION OF WARRANT STOCK. The Company hereby covenants that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such Number of Shares of Warrant Stock or other shares of capital stock of the Company as are from time to time issuable upon exercise of this Warrant and, from time to time, will take all steps necessary to amend its Articles or Certificate of Incorporation to provide sufficient reserves of shares of Warrant Stock issuable upon exercise of this Warrant. All such shares shall be duly authorized, and when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except encumbrances or restrictions arising under federal or state securities laws. Issuance of this Warrant shall constitute full authority to the Company's officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Warrant Stock upon the exercise of this Warrant.

9.TRANSFER AND EXCHANGE. Subject to the terms and conditions of this Warrant and compliance with all applicable securities laws, this Warrant and all rights hereunder may be transferred to any parent or subsidiary of the Registered Holder, in whole or in part, on the books of the Company maintained for such purpose at the principal office of the Company referred to above, by the Registered Holder hereof in person, or by duly authorized attorney, upon surrender of this Warrant properly endorsed and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. Upon any permitted partial transfer, the Company will issue and deliver to the Registered Holder a new Warrant or Warrants with respect to the shares of Warrant Stock not so transferred. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that when this Warrant shall have been so endorsed, the person in possession of this Warrant may be treated by the Company, and all other persons dealing with this Warrant, as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, any notice to the contrary notwithstanding; provided, however that until a transfer of this Warrant is duly registered on the books of the Company, the Company may treat the Registered Holder hereof as the owner for all purposes.

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10.RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that, absent an effective registration statement filed with the SEC under the Securities Act, covering the disposition or sale of this Warrant or the Warrant Stock issued or issuable upon exercise hereof, as the case may be, and registration or qualification under applicable state securities laws, such Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants, Warrant Stock, or Common Stock, as the case may be, unless either (i) the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that such registration is not required in connection with such disposition or (ii) the sale of such securities is made pursuant to Rule 144, promulgated pursuant to the Securities Act.

11.COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that any shares of stock purchased upon exercise of this Warrant or acquired upon conversion thereof shall be acquired for investment only and not with a view to, or for sale in connection with, any distribution thereof; that the Holder has had such opportunity as the Holder has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Holder to evaluate the merits and risks of its investment in the Company; that the Holder is able to bear the economic risk of holding such shares of Warrant Stock for an indefinite period; that the Holder understands that shares of Warrant Stock will not be registered under the Securities Act (unless otherwise required pursuant to exercise by the Holder of the registration rights, if any, previously granted to the Holder) and will be "restricted securities" within the meaning of Rule 144 promulgated under the Securities Act and that the exemption from registration under Rule 144 will not be available for at least one year from the date of exercise of this Warrant, subject to any special treatment by the SEC for exercise of this Warrant pursuant to Section 3.3, and even then will not be available unless a public market then exists for the stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and that all stock certificates representing shares of Warrant Stock may have affixed thereto a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.

12.NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

13.REGISTRATION AND OTHER RIGHTS. With regard to all shares of Warrant Stock issuable upon exercise of this Warrant, the Company shall give Holder the opportunity to obtain the same contractual registration rights granted to other investors.

14.NOTICES. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when received if sent by facsimile at the address and number set forth below; (c) five (5) business days after deposit in the U.S. mail first class, postage prepaid, registered or certified mail with return receipt requested and addressed to the other part}' as set forth below; or (d) the next business day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as given below, or designate additional addresses, for purposes of this section by giving the other party written notice of the new address in the manner set forth above.

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To Squire. Sanders & Dempsey L.L.P.:	To the Company:
Attn: Nicholas Unkovic   600 Hansen Way Palo Alto, California 94303 Fax Number: 650-843-8777	Envision Solar International, Inc. 4225 Executive Square, Suite 480 La Jolla, California 92037 Fax Number: 858-799-459 Attn: President

15.TITLES AND HEADINGS. The titles, captions and headings of this Warrant are included for ease of reference only and will be disregarded in interpreting or construing this Warrant. Unless otherwise specifically stated, all references herein to "sections" and "exhibits" will mean "sections" and "exhibits" to this Warrant.

16.LAW GOVERNING. This Warrant shall be governed in all respects by the laws of the State of California, without regard to principles of conflict of laws.

17.NO MPAIRMENT. The Company will not, by amendment of its Articles or Certificate of Incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Registered Holder of this Warrant against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of Warrant Stock above the amount payable therefor upon such exercise, and (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non­assessable shares of Warrant Stock upon exercise of this Warrant.

18.NOTICES OF RECORD DATE. In case: (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant), for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities or to receive any other right; (b) of any consolidation or merger of the Company with or into another corporation, any capital reorganization of the Company, any reclassification of the capital stock of the Company, or any conveyance of all or substantially all of the assets of the Company to another corporation in which holders of the Company's stock are to receive stock, securities or property of another corporation; (c) of any voluntary dissolution, liquidation or winding-up of the Company; or (d) of any redemption or conversion of all outstanding Warrant Stock; then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, or (ii) the date on which such event or transaction is to take place, and the time, if any is to be fixed, as of which the holders of record of Warrant Stock shall be entitled to exchange their shares of Warrant Stock for securities or other property deliverable upon such event or transaction. Such notice shall be delivered at least thirty (30) days prior to the date therein specified.

19.SEVERABILITY. If any paragraph, provision or clause of this Warrant shall be found or be held to be illegal, invalid or unenforceable, the remainder of this Warrant shall be valid and enforceable and the parties shall use good faith to negotiate a substitute, valid and enforceable provision that most nearly effects the parties' intent in entering into this Warrant.

20.COUNTERPARTS. This Warrant may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

21.NO INCONSISTENT AGREEMENTS. The rights granted to the Holder hereunder do not in any way conflict with and are not inconsistent with the rights granted to holders of the Company's securities under any other agreements, except rights that have been waived.

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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the Effective Date.

SQUIRE, SANDERS & DEMPSEY L.L.P.	ENVISION SOLAR INTERNATIONAL, INC.
By: /s/ Nicholas Unkovic	By: /s/ Karen Morgan
Name: Nicholas Unkovic	Name: Karen Morgan
Title:   Partner	Title: President

SIGNATURE PAGE TO PREFERRED STOCK WARRANT

ISSUED BY ENVISION SOLAR INTERNATIONAL, INC.

TO SQUIRE, SANDERS & DEMPSEY L.L.P.

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EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

 ENVISION SOLAR INTERNATIONAL, INC.  WARRANT NO.________________________

The undersigned hereby irrevocably elects to exercise the right of purchase represented by this Warrant Certificate for, and to purchase thereunder, the securities of Envision Solar International, Inc., as provided for therein, and (check the applicable box):

o Tenders herewith payment of the exercise price in full in the form of cash or a certified or official bank check in same-day funds in the amount of $[____________] for [__________] such securities.

o Elects the Net Issue Exercise option pursuant to Section 3.2 of the Warrant, and accordingly requests delivery of a net of [______________] of such securities, according to the following calculation:

x=y(a-b)       ([_____________]) = [__________]) ([__________]) - ([___________])

        A                                                                                            ([____________])                                                       

Where x = the Number of Shares of Warrant Stock to be issued to the Holder.

y = the Number of Shares of Warrant Stock purchasable under the amount of the Warrant being exchanged (as adjusted to the date of such calculation).

A = the Fair Market Value of one share of the Warrant Stock.

b =   Exercise Price (as adjusted to the date of such calculation).

o Elects the Easy Sale Exercise option pursuant to Section 3.4 of the Warrant, and accordingly

requests delivery of a net of [_____________] of such securities.

Please issue a certificate or certificates for such securities in the name of, and pay any cash for any fractional share to:

Signature:  ____________________________________

Name:       [____________________________________]

Address: [_____________________________________]

Date:       [______________________________________]

Note: The above signature should correspond exactly with the name on the first page of this Warrant Certificate or with the name of the assignee appearing in the assignment form below.

If the number of securities designated above shall not be all the shares purchasable under this Warrant, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher whole number of shares.

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EXHIBIT 2

ASSIGNMENT

(To be executed only upon assignment ofWarrant)

ENVISION SOLAR INTERNATIONAL, INC.      WARRANT NO.___________________________        

For value received, [_______________] hereby sells, assigns and transfers unto [_____________________] the Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint [ ________________]attorney, to transfer said Warrant on the books of the withm-named Company with respect to the Number of Shares ofWarrant Stock set forth below, with full power of substitution in the premises:

Name(s) of Assignee(s) Address Warrant Stock

And if said Number of Shares of Warrant Stock shall not be all the Warrant Stock represented by the Warrant, a new Warrant is to be issued in the name of said undersigned for the balance remaining of the Warrant Stock registered by said Warrant.

Signature:     ____________________________                                                       

Name:           [____________________________]      

Address:      [____________________________]   

Date:            [_____________________________]                

Notice: The signature to the foregoing Assignment must correspond to the name as written upon the face of this security in every particular, without alteration or any change whatsoever; signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Securities and Exchange Commission Rule 17Ad-15.

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EX-10.5

Exhibit 10.5

SELLING AGREEMENT

February 11,2008

Mr. Robert Noble

Chief Executive Officer

Envision Solar International, Inc.

4225 Executive Square, Suite 480

LaJolla, CA 92037

Re:    Offering of Shares $40.00 per Share

Gentlemen:

Envision Solar International, Inc. ("ENVISION" or "the Company") is a California corporation formed in 2007 to develop and commercialize carport and other structures with integrative photovoltaic arrays in the United States and internationally. ENVISION desires to raise up to $4,000,000 through the sale of up to 100,000 Shares ("Shares") to Accredited Investors ("Investors") at a price of $40.00 per Share pursuant to Regulation D of the Securities Act of 1933, as amended (the "Offering"). Each Investor participating in this Offering is required to purchase a minimum of 1,000 Shares; however, ENVISION may choose to accept purchases below the minimum at its discretion. ENVISION hereby confirms as follows its agreement with Nexcore Capital, Inc. ("Nexcore"), a registered member in good standing of the Financial Industry Regulatory Association ("FINRA"), formerly the National Association of Securities Dealers, Inc. ("NASD"), under which Nexcore will act as a nonexclusive agent for ENVISION in connection with the Offering.

1.Memorandum. ENVISION has caused the preparation of a private placement memorandum ("Memorandum") relating to the sale of the Shares.

2.Appointment of Agent. On the basis of the representations, warranties and covenants herein contained, and subject to the terms and conditions herein set forth, Nexcore is hereby appointed as a non-exclusive agent (except as provided in Section 3) of ENVISION to offer and sell the Shares to Accredited Investors. Nexcore covenants to offer and sell Shares on a "best efforts" basis on behalf of ENVISION in accordance with the terms of this Agreement and the Memorandum, and not to misrepresent orally or in writing any of the facts regarding ENVISION, its business, or the Offering. Nexcore covenants to closely supervise all of its representatives in the Offering of the Shares and to comply with all applicable federal and state securities laws and NASD rules and regulations. Nexcore is not responsible for the contents of the Memorandum. Nexcore covenants not to use any written material or oral statements in offering or selling the Shares which are not specifically authorized by ENVISION, provided, that Nexcore is specifically authorized to use the Memorandum. Subject to the performance by ENVISION of its obligations to be performed hereunder, and to the accuracy of all the representations and warranties contained herein, Nexcore hereby accepts such agency and agrees to perform its obligations hereunder.

3.Limited Exclusivity. Notwithstanding the non-exclusive nature of the appointment of Nexcore, Nexcore shall have limited exclusivity as provided in this section. During the term of this agreement as specified in Section 10(a), Nexcore shall have the right to act as exclusive agent with respect to $2,500,000 of the Offering. ENVISION shall reserve for exclusive sale by Nexcore (or by other FINRA-licensed entity referred by Nexcore) 62,500 of the Shares for sale by Nexcore during this period.

4.Representations and Warranties of ENVISION.   ENVISION represents, warrants and agrees with Nexcore for Nexcore's benefit that:

(a)All action required to be taken by ENVISION as a condition to sale of the Shares has been taken.

(b)ENVISION is duly and validly organized, existing and in good standing as a corporation under the laws of the State of California, with full power and authority to conduct its business and proposed business as described in the Memorandum. ENVISION has all government licenses and permits necessary to conduct its business, and is duly qualified to conduct its business in all jurisdictions in which such qualification is necessary.

(c)From the commencement of the Offering through the termination or expiration of the Offering, the Memorandum will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d)This Agreement has been duly and validly authorized, executed and delivered by or on behalf of ENVISION, and constitutes the valid, binding and enforceable agreement of ENVISION.

(e)No federal or state securities agency has issued an order preventing or suspending the Offering or the use of the Memorandum with respect to the sale of the Shares. ENVISION will promptly notify Nexcore upon the issuance of any such order and furnish Nexcore with a copy thereof. The Memorandum and any amendment or supplement thereto will comply and will continue to comply with all applicable requirements of the Securities Act of 1933, as amended (the "Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable federal and state laws and regulations at all times during the term of this Agreement.

(f)No consent, approval, authorization or other order of any governmental authority is required in connection with the execution, delivery or performance by ENVISION of this Agreement.

(g)The execution and delivery of this Agreement will not constitute a breach of, or default under, any instrument by which ENVISION is bound or, to the best of their knowledge, any order, rule or regulation of any court or any governmental body or administrative agency having jurisdiction over ENVISION.

[Missing Graphic Reference]

5. Nexcore Representations and Warranties.Nexcore represents and warrants that it is duly and fully licensed under the rules and regulations of the NASD and is capable of performing and satisfying its obligations under this Agreement. Nexcore further represents and warrants that Nexcore's execution and performance of this Agreement will not cause Nexcore to ­be in default under or to violate any agreement, law, rule, regulation, order or judgment applicable to it.

6.Compensation to Nexcore.In consideration for Nexcore's services hereunder, ENVISION covenants to pay Nexcore a selling commission equal to seven percent (7%) of the total purchase price of Shares sold in the Offering by or through Nexcore or by or through other FINRA licensed entities referred by Nexcore. The selling commission payable to Nexcore will be paid periodically as ENVISION accepts subscriptions for the sales of Shares and receives payments therefore. Nexcore shall not be entitled to a selling commission for any Shares not sold by or through Nexcore or by or through other FINRA entities referred by Nexcore, but which are instead sold by ENVISION itself or by a third party not referred by Nexcore.

7.Due Diligence Allowance.In consideration for due diligence expenses incurred by Nexcore in connection with the Offering, ENVISION covenants to pay Nexcore a due diligence fee equal to two (2%) percent of the total purchase price of Shares sold in the Offering by or through Nexcore or by or through other FINRA licensed entities referred by Nexcore, provided, however, that should ENVISION refer prospective investors to Nexcore for potential inclusion in the Offering, Nexcore will not be entitled to a due diligence fee with respect to these referrals. In addition, should any single investor purchase 12,500 or more Shares for a total purchase price of $500,000 or more, Nexcore will not be entitled to a due diligence fee with respect to mat investment.

8.Offering Costs.In consideration for other expenses incurred by Nexcore in connection with the Offering, including but not limited to administrative and miscellaneous expenses, Nexcore will also receive from ENVISION a non-accountable expense reimbursement in cash equal to two (2%) percent of the total purchase price of all Shares sold in the Offering by or through Nexcore or by or through other FINRA licensed entities referred by Nexcore, provided, however, that should ENVISION refer prospective investors to Nexcore for potential inclusion in the offering, Nexcore will not be entitled to an expense reimbursement with respect to those referrals. In addition, should any single investor purchase 12,500 or more Shares for a total purchase price of $500,000 or more, Nexcore will not be entitled to an expense reimbursement with respect to that investment.

In addition, as non-cash incentive compensation for Nexcore, ENVISION shall also compensate Nexcore with non-assessable and assignable Warrants to purchase common stock of the Company at $40.00 (Forty dollars) per share exercisable up to five (5) years after the termination or expiration of the Offering. ENVISION shall compensate Nexcore with the number of Warrants equal to seven percent (7%) of the total number of Shares sold in this Offering by or through Nexcore or by or through another FINRA licensed entity referred by Nexcore, subject to a maximum of 7,000 Warrants. The Warrant shall not include any sales of Shares made by ENVISION itself or by a third party not referred by Nexcore.

Nexcore acknowledges that, concurrently with the Offering, ENVISION is offering for sale convertible promissory notes in an aggregate amount up to $1,000,000. As referred to in mis agreement, the term "Offering" does not include the sale of any such notes. Nexcore understands that ENVISION intends to reduce the amount of the Offering by the aggregate principal amount of any convertible promissory notes sold by ENVISION. Nexcore shall not be compensated with respect to the sale of any such notes, and acknowledges that any reduction of the amount of the Offering as a result of the sale of notes may reduce the compensation otherwise payable to Nexcore pursuant to this agreement.

9.Offering Costs. ENVISION will pay all legal, accounting, printing and other Offering expenses incurred by the Company from its existing general working capital.

10.Covenants of the Company. ENVISION covenants with Nexcore that:

(a)The term of this Agreement will commence on the date first above written and will terminate on the date ("Termination Date") which is 60 days after the date the Memorandum is first provided by Nexcore to a third party, unless sooner terminated or extended by the written agreement of both parties to this Agreement.

(b)If any event relating to the Company occurs which requires, in the opinion of ENVISION's counsel, an amendment or supplement to the Memorandum in order that the Memorandum will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a subscriber, ENVISION will forthwith prepare the amendment or supplement to the Memorandum and deliver a copy thereof to Nexcore. Furthermore, ENVISION will furnish such information to Nexcore as Nexcore may from time to time reasonably request.

(c)ENVISION will endeavor in good faith to qualify the Shares for offering and sale under, or to establish the exemption of the Offering and sale of the Shares from qualification or registration under, applicable state securities or "blue sky" laws. ENVISION will pay all legal fees and related expenses in connection with qualifying the Shares under said "blue sky" laws.

(d)ENVISION will not offer to sell Shares in any state in which such offer would be unlawful. ENVISION will bear all of the costs and liability incurred by it or Nexcore as a result of the unlawful offer of Shares by the Company in any state, unless Nexcore directly causes such unlawful offer without the participation of ENVISION.

(e)ENVISION covenants to issue financial statements and reports of the Company in accordance with the Memorandum.

(f)Nexcore will have reasonable review and approval rights with respect to the Memorandum and its contents.

(g)ENVISION covenants not to terminate the Offering before the Offering Termination Date, as defined in the Memorandum, and Nexcore shall have at least the full Offering period to sell all of the Shares.

(h)           ENVISION covenants that Nexcore shall have the right to obtain the equity or financing for ENVISION from to an entity affiliated with Nexcore, such as, by way of illustration but not of limitation, The Greencore Capital Equity Fund, LLC.

11.Payment of Expenses and Fees. Except as provided in Sections 5, 6 and 7 of this Agreement, Nexcore and ENVISION will each pay their own expenses incident to the transactions contemplated by this Agreement. ENVISION will bear all of the fees and expenses incurred in printing of the Memorandum.

12.Noncircumvention. ENVISION shall not directly or indirectly circumvent Nexcore or any of its affiliates with respect to any relationships introduced or made known to the Company by Nexcore as a direct or indirect result of this Agreement, including but not limited to investors, customers, suppliers, and professionals, without the prior written consent of Nexcore. In the event of a breach of this section by ENVISION, Nexcore will have all injunctive and equitable relief available, as well as all other remedies at law or in equity.

13.Conditions to Nexcore's Obligations. Nexcore's obligations hereunder are subject to the accuracy of and compliance with the representations and warranties of ENVISION in this Agreement, and to the performance by ENVISION of its obligations hereunder.

14.Conditions to the Obligations of ENVISION. The obligations of ENVISION hereunder are subject to the accuracy of and the compliance with Nexcore's representations and warranties in this Agreement, and to the performance by Nexcore of its obligations hereunder.

15.Term of Agreement. The term of this Agreement will commence on the date first above written and will terminate on the Termination Date.

16.  Indemnification.

(a)ENVISION hereby indemnifies and holds Nexcore, Nexcore's affiliates, officers, directors, shareholders, agents, employees, accountants and attorneys, and each of them, harmless from and against all liabilities, claims, damages, losses, costs, attorneys fees and expenses arising directly or indirectly from (a) the conduct of ENVISION's business, (b) the manner and conduct of any offer or sale of securities by persons or entities other than Nexcore which conduct any business with ENVISION, (c) any financial statements or other financial information prepared, provided, published, or disseminated by ENVISION, or (d) the source or manner of solicitation of any prospective Investors referred by ENVISION to Nexcore. In addition, ENVISION hereby indemnifies and holds Nexcore, Nexcore's affiliates, officers, directors, shareholders, agents, employees, consultants and attorneys, and each of them, harmless from and against any loss, expense, claim, damage or liability to which Nexcore or said other parties may become subject under any securities act, common law concept, or otherwise, insofar as such loss, expense, claim, damage or liability or action in respect thereof, arises out of or is based in whole or in part on any untrue statement or alleged untrue statement of any material fact made by ENVISION, any employee of the Company, or in the Memorandum, or the omission thereby of any material fact required to be stated or necessary to make the statement made to a prospective investor not misleading. ENVISION shall promptly reimburse the indemnified parties for any reasonable legal or other expenses incurred by them in connection with any such indemnified action or claim.

(b)ENVISION will not be liable under this indemnity agreement with respect to any claim made against Nexcore or any of said other persons related to Nexcore unless

ENVISION is notified in writing of the nature of the claim. ENVISION shall be entitled to participate at its own expense in the defense or, if it so elects within a reasonable time after receipt of such notice, to assume the defense of any such claims, which defense shall be conducted by counsel chosen by it and reasonably satisfactory to Nexcore and the other said person or persons related to Nexcore who are defendants in any suit so brought. In the event that the ENVISION elects to assume the defense of any such suit and retain such counsel, Nexcore or the person or persons who are defendants in the suit shall bear the fees and expenses of any additional counsel thereafter retained by Nexcore or them. ENVISION agrees to promptly notify Nexcore of the assertion of any claim against it or against any person who is a control person of ENVISION in connection with the sale of the Shares.

(c) Nexcore agrees to indemnify and hold harmless ENVISION and its affiliates, officers, directors, shareholders, agents, employees, attorneys and accountants against any and all loss, liability, claim, damage and expense whatsoever directly or indirectly resulting from material violations by Nexcore or its representatives of any of Nexcore's representations, warranties or covenants in this Agreement, or of any applicable law, rule or regulation. In case any action is brought against ENVISION or any of its affiliates under such laws, regulations or rules on account of such material violation of such representations, warranties or covenants, Nexcore shall have the rights and duties given to ENVISION, and ENVISION shall have the rights and duties given to Nexcore, by the provisions of Section 15(b).

17.Representations, Warranties and Agreements to Survive Delivery.   All

representations, warranties and agreements shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of Nexcore or any person who controls Nexcore, or by or on behalf of ENVISION or any person who controls ENVISION, for a period of four years after the Termination Date.

18.Notices. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given if delivered, faxed, or mailed by first class mail:

If to ENVISION:	Envision Solar International, Inc. 4225 Executive Square, Suite 480 La Jolla,CA 92037 Facsimile:(858) 799-4592 Attn: Robert L. Noble
With a copy (which shall
not constitute notice) to:	John C. O'Neill, Esq. Procopio, Cory, Hargreaves & Savitch LLP 530 B Street, Suite 2100 San Diego, CA 92101-4469 Facsimile: (619) 744-5464

If to Nexcore:	10509 Vista Sorrento Parkway, Suite 300 San Diego, CA 92121
	Facsimile:
	Attn: Jay S. Potter, President

19.Parties. This Agreement shall inure to the benefit of and be binding upon Nexcore, ENVISION, and their respective successors and assigns.

20.Entire Agreement. This Agreement represents the entire agreement among the parties hereto and may not be amended except by a writing signed by the party against whom enforcement of the provision is sought.

21.Injunctive Relief. Each party acknowledges that it would be impossible to measure in money the damages to the other party if there is a failure to comply with any covenants or provisions of this Agreement, and agrees that in the event of any breach of any covenant or provision, the other party to this Agreement will not have an adequate remedy at law. It is therefore agreed that the other party to this Agreement who is entitled to the benefit of the covenants or provisions of this Agreement which have been breached, in addition to any other rights or remedies which they may have, shall be entitled to immediate injunctive relief to enforce such covenants and provisions, and that in the event that any such action or proceeding is brought in equity to enforce them, the defaulting or breaching party will not urge a defense that there is an adequate remedy at law.

22.Waivers. If any party shall at any time waive any rights hereunder resulting from any breach by the other party of any of the provisions of this Agreement, such waiver is not to be construed as a continuing waiver of other breaches of the same or other provisions of this Agreement. Resort to any remedies referred to herein shall not be construed as a waiver of any other rights and remedies to which such party is entitled under this Agreement or otherwise.

23.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, and the venue for any action hereunder shall be in the appropriate forum in the County of San Diego, State of California.

24.Counterparts.This Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

25.Attorneys' Fees and Costs. In the event that either party must resort to legal action in order to enforce the provisions of this Agreement or to defend such action, the prevailing party shall be entitled to receive reimbursement from the nonprevailing party for all reasonable attorneys' fees and all other costs incurred in commencing or defending such action, or in enforcing this Agreement, including but not limited to post-judgment costs.

26. Further Acts. The parties to this Agreement hereby agree to execute any other documents and take any further actions which are reasonably necessary or appropriate in order to implement the transactions contemplated by this Agreement.

27.Time of Essence. Time is of the essence in the performance of the obligations under this Agreement.

28.Authorized Signatures. Each party to tins Agreement hereby represents that the persons signing below are duly authorized to execute this Agreement on behalf of their respective party.

29.Execution. If the foregoing is in accordance with your understanding of our Agreement, kindly sign and return to us a counterpart hereof, whereupon this Agreement along with all counterparts will become a binding Agreement between Nexcore and ENVISION in accordance with its terms.

Very truly yours,

Nexcore Capital Inc.

a Delaware corporation

By:  /s/  Jay S.Potter       

Jay S. Potter

President

Confirmed and Accepted:

Envision Solar International, Inc,

a California Corporation

By:  /s/  Robert L. Noble

 Robert L. Noble

 Chief Executive Officer

EX-10.6

Exhibit 10.6

PROMISSORY NOTE

Borrower Information
Name:	Date:
Envision Solar International, Inc.	6/1/08
Street Address:	Date of Birth:
4225 Executive Square Suite 1000	N/A
City:	Telephone Number:
La Jolla	858.799.4583
State:	Driver's License Number:
California	N/A
Zip Code:	Social Security Number:
92037	N/A

Lender Information
Name:	Telephone Number:
William S. Adelson	760-994-8780
Street Address:
19503 Vista Del Otero
City:	Make Check Payable To:
Ramona	William S. Adelson
State:
California
Zip Code:
92065

Loan Information
Loan Amount & Interest Due:	Loan Period
1/5/2009 $18,380.40  Jan 09 Rent + bank fee	Due on 12/31/09
1/12/2009 $12,860.30  Archicad payoff
1/16/2009 $ 2,053.14  Payroll for J Lindenfeld
6/30/2009 $    136.07  Additional Monthly Interest
7/31/09 $    136.07  Additional Monthly Interest
8/31/09 $    136.07  Additional Monthly Interest
9/30/09 $    136.07  Additional Monthly Interest
10/31/09 $    136.07  Additional Monthly Interest
11/30/09 $    136.07  Additional Monthly Interest
12/31/09 $    136.07  Additional Monthly Interest
Total        $ 34,246.32
Interest Rate:	Payment Schedule:
5%	Payment of $32,246.32 due on 12/31/09

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1.           Promise to Pay. For value received, Envision Solar International, Inc. promises to pay William S. Adelson $32655.86 and interest at the yearly rate of 5% on the unpaid balance as specified below.

2.           Installments.

o  Borrower will pay__________________payments of $__________________each at monthly/yearly/__________________ntervals on the____________ay of the month.

  x Borrower will pay one lump payment of $34,884.30 on 12/31/09.

  o Borrower will pay____________payments of $_______________each at monthly/yearly/________________ntervals with a final balloon payment of__________at the end of the loan term on______________date.

3.Application of Payments. Payments will be applied first to interest and then to principal.

4.      Prepayment. Borrower may prepay all or any part of the principal without penalty.

5.      Loan Acceleration. It borrower is more than______________days late in making any payment. Lender may declare that the entire balance of unpaid principal is due immediately, together with the interest that has accrued.

7.      Security

 o  This is an unsecured note.

 x  Borrower agrees that until the principal and interest owed under this promissory note are paid in full, this note will be secured by a security agreement and Uniform Commercial Code Financing statement giving Lender a

                  security interest in the equipment, fixtures, inventory and accounts receivable of the business known as Envision Solar International, Inc.

 o  Borrower agrees that until the principal and interest owed under this promissory note are paid in full, this note will be secured by the

omortgage__________________________

odeed of trust covering the real estate commonly known as and more fully described as follows:____________________________                                                                                                

8.    Collection Costs. If Lender prevails in a lawsuit to collect on this note, Borrower will pay Lender's costs and

lawyer's fees in an amount the court finds to be reasonable.

The undersigned and all other parties to this note, whether as endorsers, guarantors or sureties, agree to remain fully bound until this note shall be fully paid and waive demand, presentment and protest and all notices hereto and further agree to remain bound notwithstanding any extension, modification, waiver, or other indulgence or discharge or release of any obligor hereunder or exchange, substitution, or release of any collateral granted as security for this note. No modification or indulgence by any holder hereof shall be binding unless in writing; and any indulgence on any one occasion shall not be an indulgence for any other or future occasion. Any modification or change in terms, hereunder granted by any holder hereof, shall be valid and binding upon each of the undersigned, notwithstanding the acknowledgement of any of the undersigned, and each of the undersigned does hereby irrevocably grant to each of the others a power of attorney to enter into any such modification on their behalf. The rights of any holder hereof shall be cumulative and not necessarily successive. This note shall take effect as a sealed instrument and shall be construed, governed and enforced in accordance with the laws of the State of California

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Adelson Note Payable

5%

5/1/2009

Date	Amount		Annual  Interest		# Days		Interest		Total		Description
1/5/2009		18,020.00		901.00		146		360.40		18,380.40	Jan 09 Rent + bank fee
1/12/2009		12,620.00		631.00		139		240.30		12,860.30	Arch icad payoff
1/16/2009		2,015.86		100.79		135		37.28		2,053.14	Payroll for J Lindenfeld
		32,655.86						637.98	$	33,293.84
6/30/2009								136.07
7/31/09								136.07
8/31/09								136.07
9/30/09								136.07
10/31/09								136.07
11/30/09								136.07
12/31/09								136.07
Total Due		32,655.86						1,590.46		34,246.32

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EX-10.7

Exhibit 10.7

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of November 12, 2008 between Envision Solar International, Inc., a California corporation (the “Company”), and Gemini Master Fund, Ltd. (including its successors and assigns, the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), and Regulation D promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1Definitions.  In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Note (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is 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.

“Closing” means the closing of the purchase and sale of the Note pursuant to Section 2.1.

“Closing Date” means the Business Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Note, have been satisfied or waived.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of such other Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

“Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” of any Person means (a) all indebtedness for borrowed money, (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, except for trade payables entered into in the ordinary course of business, (c) all obligations in respect of letters of credit, surety bonds, bankers acceptances or similar instruments (including without limitation all reimbursement or payment obligations with respect thereto), (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including without limitation obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even if the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (f) all monetary obligations under any leasing or similar arrangement which is classified as a “capital lease” under GAAP, and (g) all Contingent Obligations in respect of Indebtedness of others of the kinds referred to in clauses (a) through (f) above.

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

“IP Security Agreement” means the Intellectual Property Security Agreement(s), dated on or about the date hereof, by the Company and certain Subsidiaries in favor of the Purchaser, in the form of Exhibit C attached hereto, securing the obligations of the Company under the Note and other Transaction Documents.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.15.

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“Note” means the Secured Bridge Note issued by the Company to the Purchaser hereunder, in the form of Exhibit A attached hereto and having an original Principal Amount of $591,770.83.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Principal Amount” shall mean $591,770.83.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.2.

“Reverse Merger Transaction” means a transaction in which the Company directly or indirectly (a) merges or consolidates with, or in one or a series of related transaction sells all or substantially all of its and its Subsidiaries’ assets to, an entity that is required, or whose parent is a corporation that is required, to file reports pursuant to Section 13 or 15(d) under the Exchange Act (a “Public Company”) that is required or permitted to be accounted for by the Public Company as a “reverse acquisition” under GAAP, and (b) at or about the time of such transaction described in clause (a), the Company and/or such Public Company sells securities in a capital raising transaction (“Reverse Merger Financing”).

“Securities” shall have the meaning set forth in 3.2(c).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder

“Security Agreement” means the Security Agreement, dated on or about the date hereof, by the Company in favor of the Purchaser, in the form of Exhibit B attached hereto, securing the obligations of the Company and its Subsidiaries under the Note and other Transaction Documents.

“Security Documents” means any and all security agreements, pledge agreements, hypothecation agreements, collateral assignments, mortgages, deeds of trust, control agreements and similar such agreements, executed and delivered by the Company, any of its Subsidiaries and/or any third party in favor of the Purchaser pursuant to the Transaction Documents which secures the Company’s and its Subsidiaries obligations under the Transaction Documents, and other documents executed, delivered and/or filed by the Company, any of its Subsidiaries, any third party and/or the Purchaser as permitted or required under any of the foregoing, including without limitation the Security Agreement and the IP Security Agreement.

3

“Subscription Amount” means $500,000 in United States dollars and in immediately available funds, which is the aggregate amount to be paid for the Note purchased hereunder by the Purchaser.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.  In Section 3.1 hereof, references to the Company shall refer to the Company together with its Subsidiaries, as applicable.

“Subsidiary Guarantee” means the Subsidiary Guarantee, in the form attached hereto as Exhibit D, executed by each Subsidiary in favor of the Purchaser, guaranteeing the Company’s obligations under the Note.

“Transaction Documents” means this Agreement, the Note, the Subsidiary Guarantee, the Security Documents and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

ARTICLE II.

PURCHASE AND SALE

2.1Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, the Note in the principal amount of $591,770.83 for a purchase price equal to the Subscription Amount.  The Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to the Subscription Amount and the Company shall deliver the Note to the Purchaser, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Peter J. Weisman, P.C. located at 767 Third Avenue, 6th Floor, New York, New York 10017, or such other location as the parties shall mutually agree.

2.2Deliveries.

(a)On the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii)legal opinions of counsel to the Company, in substantially the form and substance attached hereto as Exhibit E;

(iii)the Note registered in the name of the Purchaser;

(iv)the Security Documents, including without limitation the Security Agreement and the IP Security Agreement(s) reasonably requested by the Purchaser, duly executed by the Company and each Subsidiary; and

4

(v)the Subsidiary Guarantee, duly executed by each Subsidiary of the Company.

(b)On the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

(i)  this Agreement duly executed by the Purchaser;

(ii)the Subscription Amount by wire transfer to the account as specified in writing by the Company; and

(iii)the Security Documents to which the Purchaser is a party and required by law to be signed by such Party in order to be binding.

2.3Closing Conditions.

(a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i)the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchaser contained herein;

(ii)all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii)the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b)The respective obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

(i)the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein;

(ii)all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii)the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

(iv)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

5

(v)from the date hereof to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, on any national securities exchange or market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Note at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1Representations and Warranties of the Company.  Except as set forth under the corresponding section of the disclosure schedules delivered to the Purchaser concurrently herewith (“Disclosure Schedules”) which Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the following representations and warranties to the Purchaser:

(a)Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).  Except as otherwise set forth on such schedule, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  All Subsidiaries which are designated as “inactive” on such schedule do not have any material assets and do not engage in any operations and shall remain as such unless the Company first notifies the Purchaser and executes and delivers any further Security Documents reasonably requested by the Purchaser.

(b)Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s and any Subsidiary’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.  The Company has furnished to the Purchaser true and correct copies of the Company’s articles of incorporation and by-laws, as each is currently in effect.

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(c)Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary (other than Liens in favor of the Purchaser), or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e)Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing of Form D with the U.S. Securities and Exchange Commission and such filings as are required to be made under applicable state securities laws.

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(f)Issuance of the Note.  The Note is duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

(g)Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g).  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of capital stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of capital stock.  The issuance and sale of the Notes will not obligate the Company to issue shares of capital stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Notes.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(h)Financial Statements.  The financial statements of the Company provided to the Purchaser have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that the financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject to normal, immaterial, year-end audit adjustments.

(i)Material Changes.  Except as set forth on Schedule 3.1(i), since December 31, 2007 (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans.

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(j)Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of breach of fiduciary duty.

(k)Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not, to the knowledge of the Company, subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(l)Compliance.  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

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(m)Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently contemplated, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

(n)Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, as the case may be, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o)Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as currently contemplated and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and, to the knowledge of the Company, there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.The Company has duly and properly filed or caused to be filed with the United States Patent and Trademark Office (the “PTO”) and applicable foreign and international patent authorities all patent applications owned by the Company (the “Company Patent Applications”). To the knowledge of the Company, the Company has complied with the PTO’s duty of candor and disclosure for the Company Patent Applications and has made no material misrepresentation in the Company Patent Applications.  The Company is not aware of any information material to a determination of patentability regarding the Company Patent Applications not called to the attention of the PTO or similar foreign authority.  The Company is not aware of any information not called to the attention of the PTO or similar foreign authority that would preclude the grant of a patent for the Company Patent Applications.  The Company has no knowledge of any information that would preclude the Company from having clear title to the Company Patent Applications.

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(p)Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

(q)Transactions with Affiliates and Employees.  None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $25,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r)Internal Accounting Controls.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(s)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Note, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

(t)Disclosure.  All written disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.

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(u)Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Note hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.

(v)Indebtedness.  Schedule 3.1(v) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company and its Subsidiaries, or for which the Company and its Subsidiaries have commitments, in excess of $25,000.

(w)Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, each of the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid taxes), and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary (except those being contested in good faith).

(x)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the securities by any form of general solicitation or general advertising.

(y)No Integrated Offering or Sale.  Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the sale of the Note to the Purchaser to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions, nor will the Company or any of its Subsidiaries take any action or steps that would cause the sale of the Note to be integrated with other offerings.

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(z)Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(aa)Seniority.  As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Note in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

(bb)Acknowledgment Regarding the Purchaser’s Purchase of the Note.  The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Note.  The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(cc)Accounts Receivable.  All notes and accounts receivable of the Company and its Subsidiaries are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts or an aging of accounts and notes receivable, in each case provided to the Purchaser, as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries.

3.2Representations and Warranties of the Purchaser.  The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

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(a)Organization; Authority.  The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of the Purchaser.  Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)Approvals and Consents. No action, approval, consent or authorization, including, but not limited to, any action, approval, consent or authorization by any governmental or quasi-governmental agency, commission, board, bureau, or instrumentality is necessary or required as to such Purchaser in order to constitute this Agreement as a valid, binding and enforceable obligation of such Purchaser in accordance with its terms.

(c)Own Account. The Purchaser understands that the Note and Common Shares (as defined below) (collectively, “Securities”) are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

(d)Purchaser Status. At the time the Purchaser was offered the Securities, it was, and at the date hereof it is: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(e)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(f)General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

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(g)Available Information.  The Purchaser (i) has been provided an opportunity for a reasonable time prior to the date hereof to obtain additional information concerning the purchase of the Note (the “Offering”), the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense; (ii) has been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, the Company or its representatives concerning the terms and conditions of the Offering and other matters pertaining to an investment in the Securities, or that which was otherwise provided in order for them to evaluate the merits and risks of a purchase of the Securities to the extent the Company possesses such information or can acquire it without unreasonable effort or expense; and (iii) has determined that the Securities are a suitable investment for such Purchaser.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1Transfer Restrictions.

(a)The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of the Securities other than pursuant to an effective registration statement or Rule 144, (i) the Company may, if reasonable, require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act, (ii) as a condition of such transfer, such transferee shall agree in writing to be bound by the terms of this Agreement and shall make in writing the representations and warranties contained in Section 3.2 (c), (d), (e) and (f) of this Agreement, and (iii) any such transfer made which does not comply with this sentence shall be null and void.

(b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the certificates for Common Shares in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

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(c)The Purchaser agrees that it will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(d)Any legend on any certificates for Securities shall be promptly removed following a sale made in accordance with the plan of distribution of a registration statement covering the resale of such Securities being declared effective and compliance with the prospectus delivery requirements or following a sale made in compliance with Rule 144.

4.2Use of Proceeds.  The Company shall use the net proceeds from the sale of the Note hereunder for working capital purposes and shall not use such proceeds for (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any capital stock, (c) the settlement of any outstanding litigation, or (d) making any investments in securities or otherwise purchasing any equity or debt securities, including without limitation purchasing any corporate, governmental, municipal or auction-rate bonds or other debts instruments (whether at auction, in the open market or otherwise), any commercial or chattel paper, or any certificates of deposit, or investing in any money market or mutual funds.

4.3Indemnification of the Purchaser.   Subject to the provisions of this Section 4.3, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company with respect to any of the transactions contemplated by the Transaction Documents (except to the extent such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there

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is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (A) for any settlement by such Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed, or (B) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents.

4.4Security.  The Company’s and any Subsidiaries’ obligations under the Note and other Transaction Documents shall be secured by all the assets of the Company and its Subsidiaries.  As of the Closing, the Purchaser shall be granted a security interest in all the assets of the Company, including without limitation all of the Intellectual Property Rights and the Company’s ownership interests in the Subsidiaries, and in the assets of such Subsidiaries, to be memorialized in the Security Documents. The Company shall execute such other agreements, documents and financing statements reasonably requested by the Purchaser, which will be filed at the Company’s expense with the applicable jurisdictions and authorities.  The Company shall also execute all such documents reasonably necessary in the opinion of the Purchaser to memorialize and further protect the security interests described herein. The Purchaser may appoint a collateral agent to represent it in connection with the security interest being granted to the Purchaser.

4.5Additional Guarantors.   The Company shall cause each of its Subsidiaries formed or acquired on or after the date hereof to execute and deliver to the Purchaser a Subsidiary Guarantee and a Security Agreement in conformity with those executed and delivered at Closing.

4.6Operation of Business. So long as the Note remains outstanding, the Company (together with its Subsidiaries) shall:

(a)Insurance.  Maintain in full force and effect insurance reasonably believed by the Company to be adequate coverage (a) on all assets and activities, covering property loss or damage and loss of income by fire or other hazards or casualty, and (b) against all liabilities, claims and risks for which it is customary for companies similarly situated to the Company to insure, including without limitation applicable product liability insurance, required workmen’s compensation insurance, and other insurance covering injury or damage to persons or property.  The Company shall promptly furnish or cause to be furnished evidence of such insurance to the Purchaser upon request, in form and substance reasonably satisfactory to the Purchaser.

(b)Information on Adverse Changes.  Promptly inform the Purchaser of (i) all material adverse changes in the Company’s financial condition, (ii) all litigation and claims and threatened litigation and claims against the Company or its Subsidiaries, and (iii) any event, occurrence or other matter which has had or could be reasonably expected to result in a Materially Adverse Effect or would have a material adverse effect on the Collateral (as defined in the Security Agreement).

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(c)Books and Records.   Maintain its books and records in accordance with GAAP applied on a consistent basis and permit the Purchaser to examine and audit such books and records at reasonable times upon reasonable notice.

(d)Financial Statements.  Furnish the Purchaser with, as soon as available, but no later than 45 days following the end of each fiscal quarter, the Company’s consolidated balance sheet, income statement, cash flow statement, accounts receivable aging report, and current sales orders, prepared in accordance with GAAP applied on a consistent basis.

(e)Operations.  Substantially maintain its present executive and management personnel, and conduct its business affairs in a reasonable and prudent manner and in compliance with all applicable foreign, federal, state and municipal laws, ordinances, rules and regulations with respect to its properties, charters, businesses and operations except where any such non-compliance would not reasonably be expected to result in a Material Adverse Effect. Without the prior written consent of the Purchaser, the Company shall not (i) engage in any business activities substantially different than those in which the Company is presently engaged, (ii) cease operations, liquidate, merge or consolidate with any other entity (excluding a Reverse Merger Transaction), (iii) pay any dividends on or purchase outstanding shares of capital stock or equity of the Company or its Subsidiaries, or (iv) sell, transfer or dispose of (A) all or substantially all of the Company’s assets on a consolidated basis or (B) any of the Company’s or its Subsidiaries’ material assets.

(f)Assets.  Upon request of the Purchaser, furnish the Purchaser with detailed information concerning each account receivable of the Company and its Subsidiaries, the status of each patent, patent pending and other intellectual property, and the status and terms of each letter of intent or contemplated letter of intent with respect to potential solar installations, designs and/or construction by the Company or its Subsidiaries.

4.7Reverse Merger Transaction.  The Purchaser shall have the right to participate for up to $571,759.26 in any Reverse Merger Financing on the same terms and conditions as all other investors in such Reverse Merger Financing in accordance with terms of this Section 4.7.

(a)At least 10 Business Days prior to the closing of the Reverse Merger Financing, the Company shall deliver to the Purchaser a written notice of its intention to effect a Reverse Merger Financing (“RM Notice”), which RM Notice shall describe in detail the proposed terms of such Reverse Merger Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Reverse Merger Financing is proposed to be effected, including all parties contemplated to participate therein in any capacity, and shall include a term sheet or similar document relating thereto as an attachment and any available drafts of contemplated transaction documentation.

(b)If the Purchaser desires to participate in the Reverse Merger Financing, the Purchaser shall provide written notice to the Company on or prior to the closing of the Reverse Merger Financing specifying its election to participate in the Reverse Merger Financing and the amount of the Purchaser’s participation.  The Purchaser’s participation shall be on the same terms and conditions as all other investors in such Reverse Merger Financing (subject to the exchange right set forth in subsection (d) below).

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(c)If the contemplated terms of any Reverse Merger Financing change in any material respect from those set forth in the RM Notice, the Company may not complete the Reverse Merger Financing unless and until it first provides to the Purchaser another RM Notice containing the currently contemplated terms of the Reverse Merger Financing (and offering the Purchaser the right to participate as set forth herein) at least 10 Business Days prior to the closing of such revised Reverse Merger Financing.

(d)If the Purchaser elects to participate in the Reverse Merger Financing, the Purchaser shall have the right to pay for the securities purchased in the Reverse Merger Financing, and receive an effective 10% discount on the purchase price therefor, by exchanging its Note in the principal amount of $591,770.83 in lieu of cash for securities issued in the Reverse Merger Financing having a purchase price of $571,759.26.  For clarification (i)  upon such exchange the Holder shall surrender the Note to the Company (or Public Company) and the $591,770.83 principal amount thereunder (consisting of 115% of sum of the $500,000 Subscription Amount plus capitalized interest thereon at 7% per annum for 5 months) shall be deemed paid in full, and (ii) the $571,759.26 purchase price in the Reverse Merger Financing represents a 10% discount to the Purchaser based on the assumption that the Note without such agreed 15% premium would have a value of $514,583.33 (consisting of the $500,000 Subscription Amount plus capitalized interest thereon at 7% per annum for 5 months).  If the Purchaser elects to exchange its Note in part, the Note shall be applied against the purchase price of such securities in the Reverse Merger Financing equal to the applicable pro rata portion of $571,759.26 in accordance with the terms hereof.

4.8Stock Issuance.  As additional consideration for the Purchaser purchasing the Note hereunder and making the loans evidenced thereby, upon or promptly following consummation of a Reverse Merger Transaction, the Company shall cause the Public Company to issue such number of shares of common stock (“Common Shares”) of the Public Company to the Purchaser such that following the Reverse Merger Transaction, the Purchaser shall own 0.3125% of the fully-diluted number of outstanding shares of common stock of the Public Company (assuming conversion and exercise of all outstanding options, warrants and convertible securities).  All Common Shares issued pursuant to this paragraph shall be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Public Company.

ARTICLE V.

MISCELLANEOUS

5.1Termination.  This Agreement may be terminated by the Purchaser by written notice to the Company if the Closing has not been consummated on or before November 17, 2008; provided, however, that such termination will not affect the right of any party to sue for any breach by the other party.

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5.2Fees and Expenses.  At the Closing, the Company has agreed to reimburse Gemini Strategies, LLC and/or Gemini Master Fund Ltd. (collectively, “Gemini”) the non-accountable sum of $7,500 for its legal fees and expenses.  Accordingly, in lieu of the foregoing payment, the aggregate amount that Gemini is to pay for the Note at the Closing shall be reduced by $7,500.  In addition, the Company shall reimburse Gemini and the Purchaser for estimated UCC searches and filing fees and fees and expenses of any local or third party patent and trademark counsel engaged by the Purchaser in connection with the security interests granted to the Purchaser, which will be payable on the Closing Date out of funds otherwise deliverable by Gemini for its Subscription Amount hereunder.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  In the event the Closing does not occur for any reason, the Company shall pay Gemini the non-accountable sum of $5,000 for its legal fees and expenses plus reimbursement of out-of-pocket amounts for UCC liens searches, provided that such amount shall affect the Purchaser’s right to sue for damages caused by any breach by the Company.

5.3Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4Notices.  Any and all notices or other communications or deliveries to be provided by under the Transaction Documents shall be in writing and delivered personally, by facsimile, by email, or sent by a nationally recognized overnight courier service, at the address, facsimile number or email address specified on the signature pages hereto for such purpose.  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 at the facsimile number set forth on the signature pages attached hereto, or by email  at the email address set forth on the signature pages attached hereto, 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 hereto.

5.5Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

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5.6Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger).  The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers the Note, provided that such transferee agrees in writing to be bound, with respect to the Note, by the provisions of the Transaction Documents that apply to the “Purchaser.”

5.8No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.3.

5.9Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents 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 conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan 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 any such court, that such suit, action or proceeding is improper or is an 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 Agreement 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 law.   If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10Survival.  The representations and warranties shall survive the Closing and the delivery of the Note for the applicable statue of limitations.

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5.11Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or other document image format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” or other document image format data file signature page were an original thereof.

5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.14Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.15Usury.  To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in order to enforce any right or remedy under any Transaction Document.  Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and,

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without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate.  It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward, unless such application is precluded by applicable law.  If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Purchaser’s election.

5.16Saturdays, Sundays, Holidays, etc.    If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.17Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

5.18Waiver of Jury Trial.  In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

ENVISION SOLAR INTERNATIONAL, INC.
By:    /s/ Robert Noble Name:  Robert Noble Title:    CEO
Address for Notice: 4225 Executive Square, Suite 1000 San Diego, CA 92037	with a copy to: Haynes and Boone, LLP 1221 Avenue of the Americas, 26th Floor New York, New York 10020
Fax: ___________________ Email: _________________ Attn: Robert Noble	Attention: Harvey J. Kesner, Esq. Fax: (212) 918-8989 Email: harvey.kesner@haynesboone.com

GEMINI MASTER FUND, LTD.

By:           GEMINI STRATEGIES, LLC, as investment manager

By:   /s/ Steven Winters________________________________

Name:         Steven Winters

Title:           President

Address for Notice:
c/o Gemini Strategies, LLC 135 Liverpool Drive, Suite C	with copy to Peter J. Weisman, P.C.
Cardiff, CA  92007	767 Third Avenue, 6th Floor
Attn:  Steven Winters	New York, NY  10017
Fax: (858) 509-8808	Fax: (212) 676-5665
Email:  steve@geministrategies.com	Email:  pweisman@pweisman.com

Subscription Amount:    $500,000.00

Principal Amount:           $591,770.83

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EX-10.8

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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EX-10.9

Exhibit 10.9

SECURITY AGREEMENT

            This SECURITY AGREEMENT, dated as of November 12, 2008 (this “Agreement”), is among ENVISION SOLAR INTERNATIONAL, INC., a California corporation (the “Company”), each of the undersigned direct and indirect Subsidiaries of the Company and all other direct and indirect Subsidiaries of the Company (the “Guarantors”, and together with the Company, the “Debtors”), and the holder, signatory hereto, of the Company’s Secured Bridge Note issued or to be issued in the original principal amount of $591,770.83 (the “Note”) pursuant to the Purchase Agreement (as defined below) (“Secured Party”, and together with its endorsees, transferees and assigns, the “Secured Parties”).

W I T N E S S E T H:

            WHEREAS, pursuant to that certain Securities Purchase Agreement dated on or about the date hereof between the Company and the Secured Party (the “Purchase Agreement”), the Secured Party has agreed to extend the loans to the Company evidenced by the Note;

            WHEREAS, pursuant to that certain Subsidiary Guarantee, dated as of the date hereof (“Guarantee”), the Guarantors have jointly and severally agreed to guarantee and act as surety for payment of the Note; and

            WHEREAS, in order to induce the Secured Party to extend the loans evidenced by the Note, each Debtor has agreed to execute and deliver to the Secured Party this Agreement and to grant the Secured Party a security interest in certain property of such Debtor to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Note and other Transaction Documents and the Guarantors’ obligations under the Guarantee;

            NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.  Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings given such terms in Article 9 of the UCC.

(a)“Collateral” means the collateral in which the Secured Parties is granted a security interest by this Agreement and which shall include the following personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including without limitation all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities (as defined below):

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(i)All goods, including without limitation (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;

(ii)All contract rights and other general intangibles, including without limitation, all partnership interests, membership interests, stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by any Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, trademarks, service marks, trade styles, trade names, patents, patent applications, copyrights, and income tax refunds;

(iii) All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each account, including any right of stoppage in transit;

(iv)All documents, letter-of-credit rights, instruments and chattel paper;

(v)All commercial tort claims;

(vi)All deposit accounts and all cash (whether or not deposited in such deposit accounts);

(vii)All investment property;

(viii)All supporting obligations;

(ix)All files, records, books of account, business papers, and computer programs, including without limitation andall files, records, books, ledger cards, correspondence, computer programs, tapes, disks, digital storage  media and related data processing software that at any time evidence or contain information relating to any of the Collateral set forth in clauses (i)-(viii) above or are otherwise necessary or helpful in the collection thereof or realization thereupon; and

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(x)All the products, profits and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above, and all payments under insurance (whether or not the Secured Party is the loss payee thereof) or under any indemnity, warranty or guaranty, payable by reason or loss or damage to, or otherwise with respect to, any of the foregoing Collateral set forth in clauses (i)-(ix) above.

Without limiting the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles respecting ownership and/or other equity interests in each Guarantor, including, without limitation, the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash.

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

(b)“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including without limitation (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including without limitation all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.

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(c)“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

(d)“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties either (i) under this Agreement, the Note, the Guarantee, the other Transaction Documents and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, or (ii) related to any other liabilities or obligations associated with any indebtedness for borrowed money from any Secured Party to any Debtor, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of and interest on the Note and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with this Agreement, the Note, the Guarantee, the other Transaction Documents and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.

(e)“Organizational Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation, certificate of limited partnership or articles of organization, and including without limitation any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

(f)“Pledged Securities” shall have the meaning ascribed to such term in Section 4(i).

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(g)“Transaction Documents” shall have the meaning ascribed to such term in the Purchase Agreement.

(h)“UCC” means the Uniform Commercial Code of the State of New York and/or any other applicable law of any state or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement from time to time.  It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest sense.  Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.

2.Grant of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Note and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a first priority security interest in and to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security Interest” and, collectively, the “Security Interests”).

3.Delivery of Certain Collateral.  Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, together with all Necessary Endorsements, and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary Endorsements.  The Debtors are, contemporaneously with the execution hereof, delivering to the Agent, or have previously delivered to the Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.

4.Representations, Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules delivered to the Secured Party concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Party as follows:

(a)Each Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder.  The execution, delivery and performance by each Debtor of this Agreement and the filings contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required by such Debtor.  This Agreement has been duly executed by each Debtor.  This Agreement constitutes the legal, valid and binding obligation of each Debtor, enforceable against each Debtor in accordance with its terms.

(b)The Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto.  No Debtor owns any real property.  Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

(c)Except for Permitted Liens (as defined in the Note) and except as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral, free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests.  Except as set forth on Schedule B attached hereto, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral.  Except as set forth on Schedule B attached hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).

(d)No written claim has been received that any Collateral or Debtor's use of any Collateral violates the rights of any third party. There has been no adverse decision to any Debtor's claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to any Debtor's right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority.

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(e)Each Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing first priority lien in all the Collateral.

(f)This Agreement creates in favor of the Secured Parties a valid security interest in the Collateral, subject only to Permitted Liens (as defined in the Note) securing the payment and performance of the Obligations.  Upon making the filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected.  Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph, the recordation of the Intellectual Property Security Agreement(s) (as defined below) with the United States Copyright Office or the United States Patent and Trademark Office with respect to copyrights, patents and trademarks

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(and applications relating each of the foregoing) as described in paragraph 4(mm), the execution and delivery of deposit account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no further action is necessary to create, perfect or protect the security interests created hereunder.  Without limiting the generality of the foregoing, except for the execution and delivery of this Agreement by the Secured Party, the filing of said financing statements, the recordation of said Intellectual Property Security Agreement(s), and the execution and delivery of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral, or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.

(g)Each Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it.

(h)The execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule or regulation applicable to any Debtor or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing any Debtor's debt or otherwise) or other understanding to which any Debtor is a party or by which any property or asset of any Debtor is bound or affected.  All required consents (including without limitation from stockholders or creditors of any Debtor) necessary for any Debtor to enter into and perform its obligations hereunder have been obtained.

(i)The capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent all of the capital stock and other equity interests of the Guarantors, and represent all capital stock and other equity interests owned, directly or indirectly, by the Company or any Guarantor.  All of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company is the legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests created by this Agreement and other Permitted Liens (as defined in the Note).

(j)The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held in a securities account or by any financial intermediary.

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(k)Except for Permitted Liens (as defined in the Note), until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof, each Debtor shall at all times maintain in favor of the Secured Parties the liens and Security Interests provided for hereunder as valid and perfected first priority liens and security interests in all the Collateral.  Each Debtor hereby agrees to defend the same against the claims of any and all persons and entities.  Each Debtor shall safeguard and protect all Collateral for the account of the Secured Parties.  At the request of the Agent, each Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein.  Without limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interests hereunder, and each Debtor shall obtain and furnish to the Agent from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.

(l)Except as listed on Schedule I, no Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for licenses granted by a Debtor in its ordinary course of business and sales of inventory and other unused or outdated assets by a Debtor in its ordinary course of business) without the prior written consent of all the Secured Parties.

(m)Each Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

(n)Each Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost thereof.  Each Debtor shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from the insurer of such default.  If no Event of Default (as defined in the Note) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to

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the applicable Debtor; provided, however, that payments received by any Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Agent unless otherwise directed in writing by the Agent.   Copies of such policies or the related certificates, in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the time any new policy of insurance is issued.

(o)Each Debtor shall promptly, but no later than ten (10) days after obtaining knowledge thereof, advise the Secured Parties, through the Agent, in sufficient detail of any materially adverse change in the Collateral and of the occurrence of any event which would have a material adverse effect on the value of the Collateral or on the Secured Parties’ security interest therein.

(p)Each Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the Collateral including without limitation, if applicable, the execution and delivery of a separate security agreement with respect to each Debtor’s Intellectual Property (each an “Intellectual Property Security Agreement”) in which the Secured Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement(s), other than as stated therein, shall be subject to all of the terms and conditions hereof.

(q)Each Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time.

(r)Each Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.

(s)Each Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect the value of the Collateral, the Security Interests or the rights and remedies of the Secured Parties hereunder.

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(t)All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral is and will be accurate and complete in all material respects as of the date furnished.

(u)The Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any rights and franchises material to its business.

(v)No Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

(w)Except in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably withheld.

(x)No Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the Secured Parties and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

(y)Each Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any Debtor does not have one, states that one does not exist.

(z)(i) The actual name of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor has any trade names except as set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than that stated in the preamble hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired by any Debtor within the past five years except as set forth on Schedule E.

(aa)At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit possession by the secured party to perfect the Security Interest created hereby, the applicable Debtor shall deliver such Collateral to the Agent.

(bb)Each Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of the Agent regarding the Pledged Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106 (or any successor section) of the UCC.  Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

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(cc)Each Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement.  To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

(dd)If there is any investment property or deposit account included as Collateral that can be perfected by “control” through an account control agreement, the applicable Debtor shall, promptly upon written request of the Agent following the occurrence of an Event of Default, cause such an account control agreement, in form and substance in each case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.

(ee)To the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall, promptly upon written request of the Agent following the occurrence of an Event of Default, cause the issuer of each underlying letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

(ff)To the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Agent in notifying such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

(gg)If any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Agent.

(hh)Each Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

(ii)Each Debtor shall cause each subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”), by executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions hereof applicable to the Debtors.  Concurrent therewith, the

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Additional Debtor shall deliver replacement schedules for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements shall modify, the Schedules then in effect.  The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions, good standing certificates, incumbency certificates, organizational documents, financing statements and other information and documentation as the Agent may reasonably request.  Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors” shall be deemed to include each Additional Debtor.

(jj)Each Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Note.

(kk)Each Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor.  Each Debtor shall notify each issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer.  Further, except with respect to certificated securities delivered to the Agent, the applicable Debtor shall deliver to the Agent an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered the pledge on its books and records; and (b) at any time directed by the Agent during the continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of any designee of the Agent, will take such steps as may be necessary to effect the transfer, and will comply with all other instructions of the Agent regarding such Pledged Securities without the further consent of the applicable Debtor.

(ll)In the event that, upon an occurrence of an Event of Default, the Agent shall sell all or any of the Pledged Securities to another party or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities, each Debtor shall, to the extent applicable: (i) deliver to the Agent or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by the Agent and allow the Transferee or the Agent to continue the business of the Debtors and their direct and indirect subsidiaries.

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(mm)Without limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates any additional material Intellectual Property.

(nn)Each Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments and documents, and take all such further action as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

(oo)Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain names owned by any of the Debtors as of the date hereof.  Schedule F lists all material licenses in favor of any Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof.  All material patents and trademarks of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded at the United States Copyright Office.

(pp)Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such Collateral.

5.Effect of Pledge on Certain Rights.If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence of certain events (including without limitation upon the transfer of all or any of the other stock or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of the Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.

6.Defaults. The following events shall be “Events of Default”:

(a)The occurrence of an Event of Default (as defined in the Note) under the Note;

(b)Any representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;

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(c)The failure by any Debtor to observe or perform any of its obligations hereunder for five (5) business days after delivery to such Debtor of notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame and such Debtor is using best efforts to cure same in a timely fashion; or

(d)If any material provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any material liability or obligation purported to be created under this Agreement.

7.Duty to Hold in Trust.

(a)Upon the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of the Note for application to the satisfaction of the Obligations.

(b)If any Debtor shall become entitled to receive or shall receive any securities or other property (including without limitation shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise), such Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) deliver any and all certificates or instruments evidencing the same to the Agent on or before the close of business on the fifth business day following the receipt thereof by such Debtor, in the exact form received together with the Necessary Endorsements, to be held by the Agent subject to the terms of this Agreement as Collateral.

8.Rights and Remedies Upon Default.

(a)Upon the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right to exercise all of the remedies conferred hereunder and under the Note and other Transaction Documents, and the Secured Parties, acting through the Agent, shall have all the rights and remedies of a secured party under the UCC.  Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights and powers:

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(i)The Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at such Debtor's premises or elsewhere, and make available to the Agent, without rent, all of such Debtor’s respective premises and facilities for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

(ii)Upon notice to the Debtors by the Agent, all rights of each Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain, shall cease.  Upon such notice, the Agent shall have the right to receive, for the benefit of the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of the Agent, to exercise in such Agent’s discretion all voting rights pertaining thereto.  Without limiting the generality of the foregoing, the Agent shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including without limitation to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.

(iii)The Agent shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption of a Debtor, which are hereby expressly waived.  Upon each such sale, lease, assignment or other transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby waived and released.

(iv)The Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such account debtors and obligors.

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(v)The Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.

(vi)The Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.

(b)The Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.  The Agent may sell the Collateral without giving any warranties and may specifically disclaim such warranties.  If the Agent sells any of the Collateral on credit, the Debtors will only be credited with payments actually made by the purchaser.  In addition, each Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including without limitation the Agent’s right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.

(c)For the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement or applicable law, each Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense following an Event of Default, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

9.Inter Secured Party Rights; Transaction/Applications of Proceeds.

(a)If an Event of Default occurs and any party hereto collects proceeds pursuant to its rights under any Obligations, the Agent shall be immediately notified and such payment shall be shared with all of the other Secured Parties as set forth above. Notwithstanding anything to the contrary contained in the Purchase Agreement or any document executed in connection with the Obligations and irrespective of: (i) the time, order or method of attachment or perfection of the security interests created in favor of Secured Parties; (ii) the time or order of filing or recording of financing statements or other documents filed or recorded to perfect security interests in any Collateral; (iii) anything contained in any filing or agreement to which any Secured Party now or hereafter may be a party; and (iv) the rules for determining perfection or priority under the UCC or any other law governing the relative priorities of secured creditors, each of the Secured Parties acknowledges that (x) all other Secured Parties have a valid security interest in the Collateral and (y) the security interests of the Secured Parties in any Collateral pursuant to any outstanding Obligations shall be pari passu with each other and enforced pursuant to the terms of this Agreement through the Agent.  Each Secured Party, severally and not jointly with the other Secured Parties, shall indemnify, defend, and hold harmless the other Secured Parties against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties, and reasonable professional and attorneys’ fees, including those arising from settlement negotiations, that the other Secured Parties shall incur or suffer, which arise, result from, or relate to a breach of, or failure by such Secured Party to perform under this Agreement.

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(b)The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including without limitation any taxes, fees and other costs incurred in connection therewith) of the Collateral, then to the reasonable attorneys’ fees and expenses incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, then to satisfaction of the Obligations, pro rata among the Secured Parties (based on then-outstanding principal amounts of Note at the time of any such determination), and then to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds.  If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 20% per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency.  To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

10.Securities Law Provision.  Each Debtor recognizes that the Agent may be limited in its ability to effect a sale to the public of all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof.  Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the public and that the Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws.  Each Debtor shall cooperate with the Agent in its attempt to satisfy any requirements under the Securities Laws applicable to the sale of the Pledged Securities by the Agent.

11.Costs and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation any financing statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent.  The Debtors shall also pay all other claims and charges which in the reasonable

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opinion of the Agent are reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein.  The Debtors will also, upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Note.  Until so paid, any fees payable hereunder shall be added to the principal amount of the Note and shall bear interest at the Default Rate.

12.Responsibility for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason.  Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder.  Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled at any time or times.

13.Security Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note, any other Transaction Documents or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Note, any other Transaction Documents or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted hereby.  Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including without limitation the running of the statute of limitations or bankruptcy.  Each Debtor expressly waives presentment,

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protest, notice of protest, demand, notice of nonpayment and demand for performance.  In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof.  Each Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy.  Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

14.Term of Agreement. This Agreement and the Security Interests shall terminate, automatically and without any action on the part of the Agent or Secured Parties, on the date on which all payments under the Note have been indefeasibly paid in full (or exchanged in full for securities issued in connection with a Reverse Merger Financing (as defined in the Purchase Agreement) pursuant to Section 4.7 of the Purchase Agreement) and all other Obligations have been paid or discharged; provided, however, that all indemnities of the parties hereto contained in this Agreement (including without limitation Annex B hereto) shall survive and remain operative and in full force and effect regardless of the termination of this Agreement.  The Agent and Secured Parties shall, at the Debtors’ request and expense, take any and all action required to discharge any and all security interests and release to the Debtors any and all Collateral in the Agent’s or Secured Parties’ possession or control.  The Secured Parties hereby agree that the Debtors shall have the right to take all necessary action to cause the termination and release of all security interests granted hereunder upon termination of this Agreement.

15.Power of Attorney; Further Assurances.

(a)Each Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come into possession of the Agent; (ii) sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) demand, collect, receive, compromise, settle and sue for monies due in respect of the Collateral; (v) transfer any Intellectual Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the expense of the Debtors, at any time, or from time to time, execute and deliver any and all documents and instruments and do all acts and things which the Agent deems necessary to protect, preserve and realize

19

upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement, the Note and other Transaction Documents all as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.  The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which any Debtor is subject or to which any Debtor is a party.  Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.

(b)On a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing and recording agencies in any jurisdiction, including without limitation the jurisdictions indicated on Schedule C attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under the UCC.

(c)Each Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact, with full authority in the place and instead of such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to take any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as “all assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent.  This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement.

16.Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement.

17.Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.

18.Appointment of Agent.  The Secured Parties hereby appoint Gemini Strategies, LLC or its appointed agent to act as their agent (“Gemini” or “Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in writing by the Secured Parties, at which time the Secured Parties shall appoint a new Agent.  The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.

20

19.Miscellaneous.

(a)No course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Parties, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(b)All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Note or by any other agreements, instruments or documents or by law, shall be cumulative and may be exercised singly or concurrently.

(c)This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured Parties or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.

(d)If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(e)No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

21

(f)This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company and the Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other than by merger).  Any Secured Party may assign any or all of its rights under this Agreement to any Person to whom such Secured Party assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of this Agreement that apply to the “Secured Parties.”

(g)Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement.

(h)All questions concerning the construction, validity, enforcement and interpretation of this Agreement 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 conflicts of law thereof.  Each Debtor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such proceeding is improper.  Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such 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 Agreement 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 manner permitted by 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 Agreement or the transactions contemplated hereby.  If any party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such proceeding.

(i)This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement.  In the event that any signature is delivered by facsimile transmission ore-mail transmission, such signature shall create a valid binding obligation of the party executing the same (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature were the original thereof.

22

(j)All Debtors (including without limitation any Additional Debtor joined hereto) shall be jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.

(k)Each Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from any violation of the terms or provisions of this Agreement or the agreements underlying the Obligations or the negligence or willful misconduct of the Indemnitee.  This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in the Note, the Purchase Agreement or any other agreement, instrument or other document executed or delivered in connection herewith or therewith.

(l)Nothing in this Agreement shall be construed to subject the Agent or any Secured Party to liability as a partner or member in or of any Debtor or any of its direct or indirect subsidiaries, nor shall the Agent or any Secured Party be deemed to have assumed any obligations under any partnership agreement or limited liability company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.

(m)To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance with the terms of said documents.

[SIGNATURE PAGES FOLLOW]

23

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.

ENVISION SOLAR INTERNATIONAL, INC., a California corporation

By:/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR CONSTRUCTION, INC., a California corporation

By:/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR RESIDENTIAL, INC., a California corporation

By: /s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION AFRICA, LLC, a Delaware limited liability company

By:/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

[SIGNATURE PAGE OF SECURED PARTY FOLLOWS]

24

[SIGNATURE PAGE OF SECURED PARTY TO ESII SECURITY AGREEMENT]

GEMINI MASTER FUND, LTD.

By: GEMINI STRATEGIES, LLC, as investment manager

By: /s/ Steven Winters

Name:  Steven Winters

Title:  Managing Member

GEMINI STRATEGIES, LLC, as Agent

By: /s/ Steven Winters

Name:  Steven Winters

Title:  Managing Member

25

ANNEX A

to

SECURITY AGREEMENT

FORM OF ADDITIONAL DEBTOR JOINDER

Security Agreement dated as of November ___, 2008 made by

ENVISION SOLAR INTERNATIONAL, INC.

and its subsidiaries party thereto from time to time, as Debtors

to and in favor of

the Secured Parties identified therein (the “Security Agreement”)

           Reference is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in, or by reference in, the Security Agreement.

           The undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above (or the Agent on their behalf), the undersigned shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security Agreement as fully and to the same extent as if the undersigned was an original signatory thereto, and (c) be deemed to have made the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL OWNED BY IT AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.

           Attached hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable.  An executed copy of this Joinder shall be delivered to the Secured Parties (or the Agent on their behalf), and the Secured Parties may rely on the matters set forth herein on or after the date hereof.  This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured Parties.

           IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.

[Name of Additional Debtor]

By: ________________________

Name:

Title:

Address:

Dated:

26

ANNEX B

to

SECURITY AGREEMENT

THE AGENT

                      1.  Appointment.The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits of the Agreement, hereby designate Gemini Strategies, LLC (“Gemini” or “Agent”) as the Agent to act as specified herein and in the Agreement.  Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined in the Note) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.  The Agent may perform any of its duties hereunder by or through its agents or employees.

                      2. Nature of Duties.  The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.  Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.  The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party; and nothing in the Agreement or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.

                      3. Lack of Reliance on the Agent.  Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Company and its subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation and continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii) its own appraisal of the creditworthiness of the Company and its subsidiaries, and of the value of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession before any Obligations are incurred or at any time or times thereafter.  The Agent shall not be responsible to the Debtors or any Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition of the Debtors or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of the Debtors, or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement, the Note or any of the other Transaction Documents.

27

                      4. Certain Rights of the Agent.  The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Secured Parties.  To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and shall be entitled to act or refrain from acting in accordance with the instructions of Secured Parties; if such instructions are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining.  Without limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and the Debtors shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to the foregoing, and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.

                      5.  Reliance.  The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction Documents and its duties thereunder, upon advice of counsel selected by it, and upon all other matters pertaining to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it.  Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.

                      6.  Indemnification.  To the extent that the Agent is not reimbursed and indemnified by the Debtors, the Secured Parties will jointly and severally reimburse and indemnify the Agent from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted solely from the Agent's own gross negligence or willful misconduct.  Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking such action.

28

                      7.  Resignation by the Agent.

(a)           The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents at any time by giving 30 days' prior written notice (as provided in the Agreement) to the Debtors and the Secured Parties.  Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

(b)           Upon any such notice of resignation, the Secured Parties shall appoint a successor Agent hereunder.

(c)           If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above.  If a successor Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead the Debtors and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Debtors on demand.

(d)           Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement.  After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.

                      8.  Rights with respect to Collateral.  Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set forth in this Agreement and the other Transaction Documents.

29

DISCLOSURE SCHEDULES

Schedule A

Principal Place of Business and Location of Collateral

4225 Executive Square, Suite 1000, San Diego, California 92037.

Schedule B

Exceptions

None

Schedule C and D

Legal Names; Organizational and Filing Jurisdictions and Identification Numbers

Name	Entity Type	Jurisdiction	Jurisdiction ID Number (NOT EIN)	Address
Envision Solar International, Inc.	Corporation	California		4225 Executive Square Suite 1000 San Diego, CA 92037
Envision Solar Construction, Inc.	Corporation	California		4225 Executive Square Suite 1000 San Diego, CA 92037
Envision Solar Residential, Inc.	Corporation	California		4225 Executive Square Suite 1000 San Diego, CA 92037
Envision Africa, LLC	Limited Liability Company	Delaware		4225 Executive Square Suite 1000 San Diego, CA 92037

[Note: Company to provide ID #s or state that they don’t exist.]

Schedule E

Other Names; Mergers and Acquisitions

None

30

Schedule F

Intellectual Property

[Note: Does the company have any domain names, such as “envisionsolar.com”?]

Patent Applications

Owner	Short Title	Country	Status	Application Number	Filing Date	Inventors
Envision Solar International, Inc.	Solar Module Racking and Electrical Connection System	USA	Pending	61/035,573	3/11/2008	R. Noble, W. Adelson, M. Colby
Envision Solar International, Inc.	Photovoltaic System and Method	USA	Pending	12/046,113	3/11/2008	R. Noble, N. Zeller, W. Adelson, M. Colby, J. Labrum
Envision Solar International, Inc.	Support System for a Photovoltaic System	USA	Pending	11/842,484	8/21/2007	R. Noble, N. Zeller, W. Adelson
Envision Solar International, Inc.	Sun Tracking Solar Panels	USA	Pending	12/025,192	2/4/2008	R. Noble, W. Adelson,

Trademarks and Trademark Applications

Owner	Trademark	Country	Status	Application/ Serial Number	Filing Date	Issuance Date	Registration  Number
Envision Solar International, Inc.	LifePort	USA	Registered.	77115387	2/24/2007	4/1/2008	3,406,252
Envision Solar International, Inc.	LifeShade	USA	Request for first extension of time to file statement of use has been granted.	77126066	3/8/2008

31

Owner	Trademark	Country	Status	Application/ Serial Number	Filing Date	Issuance Date	Registration  Number
Envision Solar International, Inc.	LifeCanopy	USA	Request for first extension of time to file statement of use has been granted.	77126053	3/8/2007
Envision Solar International, Inc.	LifeCharge	USA	Request for first extension of time to file statement of use has been granted.	77126081	3/8/2007
Envision Solar International, Inc.	Solar Row	USA	Abandoned. Failure to respond or late response.	77126003	3/8/2007
Envision Solar International, Inc.	Solar Canopy	USA	Abandoned. Failure to respond or late response.	77126025	3/8/2007
Envision Solar International, Inc.	SolarOrchard	USA	Abandoned. Failure to respond or late response.	77126175	3/8/2007
Envision Solar International, Inc.	Plant a Solar Tree	USA	Abandoned. Failure to respond or late response.	77172347	5/3/2007
Envision Solar International, Inc.	Green Shade	USA	Abandoned. Failure to respond or late response.	77126161	3/8/2007
Envision Solar International, Inc.	Solar Tree	USA	Request for fourth extension of time to file statement of use granted.	78624896	5/6/2005

32

Owner	Trademark	Country	Status	Application/ Serial Number	Filing Date	Issuance Date	Registration  Number
Envision Solar International, Inc.	Beyond Parking	USA	Abandoned. No statement of use filed after notice of allowance was issued.	77181581	5/15/2007
Envision Solar International, Inc.	Be Cool Park Solar	USA	Abandoned. No statement of use filed after notice of allowance was issued.	77192558	5/29/2007

Material Licenses

Agreement by and between Envision Solar, LLC (a predecessor of the Company) and Kyocera Solar, Inc., dated December 19, 2006 for use of the trademarks “Solar Grove” and “Solar Tree.”

Owner	Trademark	Country	Status	Application/ Serial Number	Filing Date	Issuance Date	Registration  Number
Kyocera Solar, Inc.	SOLAR GROVE	USA	Request for fourth extension of time to file statement of use granted.	78564619	2/10/2005
Kyocera Solar, Inc.	SOLAR  TREE	USA	Request for fourth extension of time to file statement of use granted.	78624896	5/6/2005

Schedule G

Government Account Debtors

None

33

Schedule H

Pledged Securities

All equity interests and debt securities in the entities listed in Schedule C above.

Schedule I

Permitted Licenses and Dispositions

None

 34

EX-10.10

Exhibit 10.10

INTELLECTUAL PROPERTY SECURITY AGREEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”), dated as of November 12, 2008, is made by ENVISION SOLAR INTERNATIONAL, INC.,a California corporation (the “Grantor”), in favor of GEMINI STRATEGIES, LLC, as collateral agent (“Agent”) for the holder of the Secured Bridge Note issued or to be issued in the original principal amount of $591,770.83 (the “Note”) by the Grantor, pursuant to the Purchase Agreement (as defined below) (collectively with its endorsees, transferees and assigns, the “Lender”).

W I T N E S S E T H:

WHEREAS, the Grantor and the Lender are party to that certain Securities Purchase Agreement, dated on or about the date hereof (“Purchase Agreement”), pursuant to which the Grantor issued or is issuing the Note, among other things;

WHEREAS, contemporaneously herewith the Grantor is entering into a Security Agreement (“Security Agreement”), pursuant to which the Grantor has granted a security interest in its assets and properties to secure the satisfaction of the Grantor’s obligations under the Note, among other things; and

WHEREAS, the Grantor is obligated under the Security Agreement to take such further actions as the collateral Agent requests to further perfect the Lender’s security interest granted under the Security Agreement, including without limitation with respect to intellectual property;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees as follows:

DEFINED TERMS.

(a)Certain Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

                “Copyrights” means copyrights and copyright registrations, including without limitation the copyright registrations and recordings listed on Schedule I attached hereto, if any, and (i) all reissues, continuations, extensions or renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, subject to payment to any co-owner of its, his or her share thereof, including without limitation payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of the Grantor’s rights corresponding thereto throughout the world.

“Intellectual Property Licenses” means rights under or interest in any Patent, Trademark, Copyright or other intellectual property under a license agreement, whether verbal or in writing, regardless of whether the Grantor is a licensee or licensor under any such license agreement, including without

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limitation all the intellectual property licenses listed on Schedule I attached hereto, if any, and also including without limitation software license agreements with any other party, and  also including all of the Grantor’s rights corresponding to Grantor’s Intellectual Property Licenses throughout the world.

“Patents” means patents and patent applications, including without limitation the patents and patent applications listed on Schedule I hereto and all continuations, divisionals, provisionals, continuations in part, or reissues of applications related to patents thereon, and (i) all renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, subject to payment to any co-owner or inventor of its, his or her share thereof, including without limitation payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of the Grantor’s rights corresponding thereto throughout the world.

“Trademarks” means trademarks, trade names, trade styles, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, including without limitation the registered trademarks listed on Schedule I hereto, and (i) all renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, subject to payment to any co-owner of its, his or her share thereof, including without limitation payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of the Grantor’s business symbolized by the foregoing and connected therewith, and (v) all of the Grantor’s rights corresponding thereto throughout the world.

(b)Terms Defined in the Purchase Agreement.  Capitalized terms used in this Agreement and not otherwise defined herein have the meanings ascribed to them in the Purchase  Agreement.

2.GRANT OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL.  Grantor hereby grants to the Agent, as collateral agent for the Lender, a continuing and perfected first priority security interest (as set forth in the Security Agreement) in all of Grantor’s right, title and interest in, to and under all of Grantor’s Intellectual Property (as defined in the Security Agreement), including without limitation the following, whether presently existing or hereafter created or acquired (collectively, the “Intellectual Property Collateral”):

(a)all of Grantor’s Patents and Grantor’s rights under all Patent Intellectual Property Licenses to which it is a party, including those patents referred to on Schedule I hereto, including:

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(i)   all registrations and applications in respect of the foregoing, including continuations, divisionals, provisionals, continuations in part, or reissues of applications and patents issuing thereon; and

(ii)   all products and proceeds of the foregoing, including without limitation any claim by Grantor against third parties for past, present or future infringement of any Patent or any Patent licensed under any Intellectual Property License;

(b)all of Grantor’s Trademarks and Grantor’s rights under all Trademark Intellectual Property Licenses to which it is a party, including those trademarks referred to on Schedule I hereto, including:

(i)   all registrations, applications, and renewals in respect of the foregoing;

(ii)   all goodwill of the business connected with the use of, and symbolized by, each Trademark and each Trademark licensed under an Intellectual Property License; and

(iii)   all products and proceeds of the foregoing, including without limitation any claim by Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark or any Trademark licensed under any Intellectual Property License or (ii) injury to the goodwill associated with any Trademark or any Trademark licensed under any Intellectual Property License; and

(c)all of Grantor’s Copyrights and Grantor’s rights under all Copyright Intellectual Property Licenses to which it is a party, including those referred to on Schedule I hereto, including:

(i)   all registrations, applications, and renewals in respect of the foregoing; and

(ii)   all products and proceeds of the foregoing, including without limitation any claim by Grantor against third parties for past, present or future infringement of any Copyright or any Copyright licensed under any Intellectual Property License.

3.SECURITY AGREEMENT.  The security interests granted pursuant to this Agreement are granted in conjunction with the security interests granted to Lender pursuant to the Security Agreement.  Grantor hereby acknowledges and affirms that the rights and remedies of Lender with respect to the security interest in the Intellectual Property Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

4.AUTHORIZATION TO SUPPLEMENT.  If Grantor shall obtain rights to any new Intellectual Property Rights (as defined in the Security Agreement), the provisions of this Agreement shall automatically apply thereto.  Grantor shall give Lender prompt written notice with respect to any such new Intellectual Property Rights.  Grantor represents that Schedule I is substantially accurate and complete but reserves the right from time to time to correct inaccuracies and/or omissions by giving Lender written notice thereof.  Without limiting Grantor’s obligations under this Section 4, Grantor hereby authorizes the Agent and Lender unilaterally to modify this Agreement by amending Schedule I to include any such corrections

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and other modifications and any such new Intellectual Property Rights of Grantor.  Notwithstanding the foregoing, no failure to so modify this Agreement or amend Schedule I shall in any way affect, invalidate or detract from Lender’ continuing security interest in all Intellectual Property Collateral, whether or not listed on Schedule I.

5.COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument.  In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.  Any signatures delivered by a party by facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.

6. GOVERNING LAW; JURISDICTION.  This Agreement shall be governed by and construed under the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City and County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  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 to such party at the address in effect for notices to it under this Agreement 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 manner permitted by law.

7. SUCCESSORS AND ASSIGNS.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.  Lender may assign its rights hereunder in connection with any private sale or transfer of its Note, in which case the term “Lender” shall be deemed to refer to such transferee as though such transferee were an original signatory hereto.  Grantor may not assign its rights or obligations under this Agreement.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the Grantor has caused this Intellectual Property Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

ENVISION SOLAR INTERNATIONAL, INC.

By: /s/ Robert Noble____________________________

Name:  Robert Noble

Title: CEO

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EX-10.11

Exhibit 10.11

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of November 12, 2008 (this “Guarantee”), made by each of the undersigned direct and indirect Subsidiaries of the Company (as defined below) (together with any other entities that may become a party hereto as provided herein, individually and collectively, the “Guarantors”, and together with the Company, the “Debtors”), in favor of Gemini Master Fund, Ltd. (including its successors, transferees and assigns, the “Purchaser”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement (“Purchase Agreement”) dated on or about the date hereof by and between Envision Solar International, Inc., a California corporation (the “Company”), and the Purchaser, the Company has agreed to sell and issue to the Purchaser, and the Purchaser has agreed to purchase from the Company, the Company’s Secured Bridge Note (the “Note”), subject to the terms and conditions set forth therein;

WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Company, and as a condition to the Closing of the transactions contemplated by the Purchase Agreement, and in order to induce the Purchaser to enter into and consummate the transactions contemplated by the Purchase Agreement (including without limitation purchasing the Note and making the loans evidenced thereby), the Company has agreed that the Guarantors would guaranty the Company’s obligations under the Note, Purchase Agreement and other Transaction Documents in accordance with the terms set forth in this Guarantee, the Note, the Purchase Agreement and other Transaction Documents; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the Note;

NOW, THEREFORE, in consideration of the premises and to induce the Purchaser to enter into the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Purchaser as follows:

1.Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement.  The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The following terms shall have the following meanings:

 “Guarantee” means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

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 “Obligations” means, in addition to all other costs and expenses of collection incurred by the Purchaser in enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, of any Debtor to the Purchaser, including without limitation all obligations under the Purchase Agreement, the Note, this Guarantee and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Purchaser as a preference, fraudulent transfer or otherwise, as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include without limitation: (i) principal of, and interest on, the Note and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with the Purchase Agreement, the Note, this Guarantee and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.

    2.Guarantee.

(a)Guarantee.

 (i)The Guarantors hereby, jointly and severally, absolutely, unconditionally and irrevocably, guarantee to the Purchaser and its successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Company when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.  The Guarantors’ liability under this Guarantee shall be unlimited, open and continuous for so long as this Guarantee remains in force.

 (ii)Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the rights of creditors generally (after giving effect to the right of contribution set forth in Section 2(b)).

 (iii)Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchaser hereunder.

 (iv)The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full.

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 (v)No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchaser from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full.

 (vi)Notwithstanding anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of which by the Guarantors is not reasonably possible, the Guarantors shall only be liable for making the Purchaser whole on a monetary basis for the Company's failure to perform such Obligations in accordance with the Transaction Documents.

(b)Right of Contribution.  Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment.  Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2(c).  The provisions of this Section 2(b) shall in no respect limit the obligations and liabilities of any Guarantor to the Purchaser, and each Guarantor shall remain liable to the Purchaser for the full amount guaranteed by such Guarantor hereunder.

(c)No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Purchaser, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchaser against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Purchaser for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Purchaser by the Company on account of the Obligations are paid in full.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations have not been paid in full, such amount shall be held by such Guarantor in trust for the Purchaser, segregated from other funds of such Guarantor, and shall, promptly following receipt by such Guarantor, be turned over to the Purchaser in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Purchaser, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Purchaser may determine.

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(d)Amendments, Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Purchaser may be rescinded by the Purchaser and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Purchaser, and the Purchase Agreement, the Note and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchaser may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Purchaser for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Purchaser shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

(e)Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Purchaser upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and the Purchaser, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives, to the fullest extent permitted by law, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Purchase Agreement, the Note or any other Transaction Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Purchaser, (b) any defense, set-off or counterclaim (other than a defense of payment and performance in full of the Obligations or fraud by the Purchaser) which may at any time be available to or be asserted by the Company or any other Person against the Purchaser, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchaser may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Purchaser to make any such demand, to pursue such other rights or remedies or to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchaser against any Guarantor.  For the purposes hereof, “demand” shall include without limitation the commencement and continuance of any legal proceedings.

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(f)Reinstatement.  The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchaser upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

(g)Payments.  Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchaser without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Purchase Agreement.

3.Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to the Purchaser as of the date hereof:

(a)Organization and Qualification. The Guarantor is an entity, duly organized, validly existing and in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor has no subsidiaries other than those identified as such on the Disclosure Schedules to the Purchase Agreement.  The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect, (y) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor, or (z) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under this Guaranty (a “Material Adverse Effect”).

(b)Authorization; Enforcement.  The Guarantor has the requisite power and authority to enter into and to consummate the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder.  The execution and delivery of this Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Guarantor.  This Guaranty has been duly executed and delivered by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms.

(c)No Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its

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articles or certificate of incorporation or operating agreement or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor is subject (including federal and state securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii) such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect.  The business of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect.

(d)Consents and Approvals.  The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this Guaranty.

(e)Purchase Agreement.  The representations and warranties of the Company set forth in the Purchase Agreement as they relate to the Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to the Purchase Agreement, and the Purchaser shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes of this Section 3, be deemed to be a reference to the Guarantor's knowledge.

(f)Company’s Request.  This Guarantee is executed at the Company’s request and not at the request of the Purchaser.

(g)Obtaining Company Information.  The Guarantor has established adequate means of obtaining from the Company on a continuing basis information regarding the Company’s financial condition.

(h)Solvency.  As of the date hereof and after giving effect to the transactions contemplated hereby (a) the property of the Guarantor, at a fair valuation, will exceed its debt; (b) the capital of the Guarantor will not be unreasonably small to conduct its business; (c) the Guarantor will not have incurred debts, or have intended to incur debts, beyond its ability to pay such debts as they mature; and (d) the present fair salable value of the assets of the Guarantor will be greater than the amount that will be required to pay its probable liabilities (including debts) as they become absolute and matured.  For purposes of this subsection (h), “debt” means any liability on a claim, and “claim” means (i) the right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (ii) the right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured or unsecured.

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4.Covenants.

(a)Actions.  Each Guarantor covenants and agrees with the Purchaser that, from and after the date of this Guarantee until the Obligations shall have been paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

(b)Insurance.  So long as the Note remains outstanding, each Guarantor shall have in full force and effect (a) insurance reasonably believed by such Guarantor to be adequate on all assets and activities, covering property damage and loss of income by fire or other casualty, and (b) insurance reasonably believed to be adequate protection against all liabilities, claims and risks against which it is customary for companies similarly situated as such Guarantor to insure.

(c)Compliance with Laws.  So long as the Note remains outstanding, each Guarantor will use reasonable efforts to comply with all applicable laws, rules, regulations, orders and decrees of all governmental authorities, except to the extent non-compliance (in one instance or in the aggregate) would not have a Material Adverse Effect.

(d)Corporate Existence; Merger and Consolidation.  So long as the Note remains outstanding, each Guarantor shall maintain its corporate existence. Each Guarantor shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, except to the same extent that the Company is so permitted, and in accordance with the same provisions applicable to the Company, in the Purchase Agreement or the Note (with the assumption of obligations applying to the assumption of the obligations under this Guarantee).

(e)Taxes.  Each Guarantor shall pay, and shall cause each of its subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to such Guarantor or the Purchaser.

(f)Stay, Extension and Usury Laws.  Each Guarantor 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 wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Guarantee; and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any right herein granted to the Purchaser, but shall suffer and permit the execution of every such right as though no such law has been enacted.

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(g)Negative Covenants.  So long as any of the Obligations are outstanding, unless the Purchaser shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

 i.other than Permitted Indebtedness (as defined in the Note), enter into, create, incur, assume 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;

 ii.other than Permitted Liens (as defined in the Note), 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;

 iii.amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Purchaser hereunder;

 iv.repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

 v.repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than regularly scheduled principal and interest payments as such terms are in effect as of the Closing Date;

 vi.repay, repurchase or offer to repay, repurchase or otherwise acquire any indebtedness to any current or former employees, officers or directors of such Guarantor or Company or such current or former employees’, officers’ or directors’ affiliates, including without limitation any loans from or management fees payable to any of the foregoing;

 vii.pay cash dividends or distributions on any equity securities of such Guarantor;

 viii.enter into any transaction with any Affiliate of such Guarantor, 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

 ix. enter into any agreement with respect to any of the foregoing; provided, however, that no Guarantor shall be prohibited from undertaking any of the actions described above that the Company is permitted to undertake pursuant to the terms of the Purchase Agreement, Note and any and all other agreements or other documents entered into in connection with the financings contemplated by the Purchase Agreement.

5.Miscellaneous.

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(a)Amendments in Writing.   None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the Purchaser.

(b)Notices.  All notices, requests and demands to or upon the Purchaser or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

(c)No Waiver by Course of Conduct; Cumulative Remedies. The Purchaser shall not by any act (except by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Transaction Documents or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Purchaser any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Purchaser of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchaser would otherwise have on any future occasion.  The rights and remedies provided herein are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

(d)Enforcement Expenses; Indemnification.

 (i)Each Guarantor agrees to pay, or reimburse the Purchaser for, all costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor is a party, including without limitation the reasonable fees and disbursements of counsel to the Purchaser.

 (ii)Each Guarantor agrees to pay, and to save the Purchaser harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee.

 (iii)Each Guarantor agrees to pay, and to save the Purchaser harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.

 (iv)The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement, the Note and the other Transaction Documents.

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(e)Successor and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Purchaser and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Purchaser.

(f)Set-Off.  Each Guarantor hereby irrevocably authorizes the Purchaser at any time and from time to time while an Event of Default under any of the Transaction Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchaser to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchaser may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchaser hereunder and claims of every nature and description of the Purchaser against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchaser may elect, whether or not the Purchaser have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  The Purchaser shall notify such Guarantor promptly of any such set-off and the application made by the Purchaser of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of the Purchaser under this Section are in addition to other rights and remedies (including without limitation other rights of set-off) which the Purchaser may have.

(g)Counterparts.  This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by fax or PDF), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(h)Severability.  Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(i)Section Headings.  The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(j)Integration.  This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Purchaser with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchaser relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

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(k)Governing Law.  This guarantee shall be governed by, and construed and interpreted in accordance with, the law of the state of New York without regard to any principles of conflicts of laws.

(l)Submission to Jurisdictional; Waiver. Each Guarantor hereby irrevocably and unconditionally:

 (i)submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Transaction Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, located in New York County, New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

 (ii)consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 (iii)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at its address referred to in Schedule 1 below or at such other address of which the Purchaser shall have been notified pursuant thereto;

 (iv)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 (v)waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

(m)Acknowledgements.  Each Guarantor hereby acknowledges that:

 (i)it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

 (ii)the Purchaser has no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchaser, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 (iii)no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Purchaser.

(n)Release of Guarantors. Subject to Section 2, each Guarantor will be released from all liability hereunder concurrently with the repayment in full of all amounts owed under the Purchase Agreement, the Note and the other Transaction Documents.

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(o)Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase Agreement) of such Guarantor.

(p)Waiver of Jury Trial.  EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

(q)Security.  The Obligations and Guarantors’ obligations hereunder and under the other Transaction Documents are secured by the assets of the Guarantors pursuant to the terms of the Security Documents.

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

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IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.

ENVISION SOLAR INTERNATIONAL, INC., a California corporation

By:____/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR CONSTRUCTION, INC., a California corporation

By:____/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR RESIDENTIAL, INC., a California corporation

By:____/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

ENVISION AFRICA, LLC, a Delaware limited liability company

By:____/s/ Robert Noble______________________________________

Name:  Robert Noble

Title:    CEO

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EX-10.12

Exhibit 10.12

FORBEARANCE AGREEMENT

 FORBEARANCE AGREEMENT (this “Agreement”), dated as of April 11, 2009, by and between Envision Solar International, Inc., a California corporation (“Borrower”), Envision Solar Construction, Inc., a California corporation, Envision Solar Residential, Inc., a California corporation, and Envision Africa, LLC, a Delaware limited liability company, (collectively, “the Envision Guarantors” or “Guarantors”), and Gemini Master Fund, Ltd. (“Lender”).

W I T N E S S E T H

WHEREAS, Lender, Borrower and the Envision Guarantors have entered into Financing Agreements (as defined below) pursuant to which Lender has made loans to Borrower, including, without limitation, a Secured Bridge Note, dated, November 12, 2008, in the principal amount of $591,770.83 (the “Bridge Note”) and

WHEREAS, Borrower anticipates defaulting on the Bridge Note and has requested that Lender forbear from exercising its rights as a result of such events of default and Lender is willing to agree to forbear from exercising its rights and remedies on the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the foregoing, and the respective agreements, warranties and covenants contained herein, the parties hereto agree, covenant and warrant as follows:

SECTION 1.   DEFINITIONS.

1.1Additional Definitions.  As used herein, the following terms shall have the respective meanings given to them below:

(a) “Collateral Agent” shall mean Gemini Strategies, LLC.

(b) “Financing Agreements” shall mean all agreements, documents and instruments at any time executed and/or delivered in connection with or related to the Bridge Note, including, without limitation, the Securities Purchase Agreement, Security Agreement, and Subsidiary Guarantee, as the same now exist and as has been and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(c)“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including, without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.

(d)“Obligations” shall mean the Bridge Note, including Borrower’s obligations to pay all amounts payable thereunder, including, without limitation, principal, interest, the Mandatory Default Amount (as defined in the Bridge Note), fees, costs, expenses and other charges, and any amendments, modifications, supplements, extensions, renewals, restatements or replacements thereof.

(e) “Security Agreement” shall mean the Security Agreement, dated as of November 12, 2008, by and between Borrower, the Lender, the Collateral Agent, and the Guarantors.

(f) “Termination Date” shall have the meaning given to such term in Section 3.2 hereof.

SECTION 2.   ACKNOWLEDGMENT.

2.1Acknowledgment of Obligations.  Borrower and the Envision Guarantors hereby acknowledge, confirm and agree that as of the close of business on April 12, 2009, Borrower is indebted to Lender in respect of the Bridge Note in the amount of $591,770.83 (the “Note Amount”).  The Note Amount,is unconditionally owing by Borrower to Lender, without offset, defense or counterclaim of any kind, nature or description whatsoever.

2.2Acknowledgment of Security Interests.  Borrower and the Envision Guarantors hereby acknowledge, confirm and agree that Lender has and shall continue to have valid, enforceable and perfected Liens upon and security interests in the assets and properties of Borrower and the Envision Guarantors heretofore granted to Lender pursuant to, and having first priority as set forth in, the Financing Agreements executed prior to the date of this Agreement.

2.3Acknowledgment of Patent and Trademark Assignments.  Borrower and the Envision Guarantors hereby acknowledge, confirm and agree that Lender has and shall continue to have valid and enforceable assignments of the patents, trademarks and other intellectual property and other assets assigned by Borrower and the Envision Guarantors, including without limitation those listed on the annexes to the Security Agreement

2.4Binding Effect of Documents.  Borrower and the Envision Guarantors hereby acknowledge, confirm and agree that: (a) each of the Financing Agreements to which it is a party has been duly executed and delivered to Lender by Borrower or the Envision Guarantors and each is in full force and effect as of the date hereof, (b) the agreements and obligations of Borrower, or the Envision Guarantors contained in such documents and this Agreement constitute the legal, valid and binding obligations of Borrower and the Envision Guarantors, enforceable against it in accordance with their respective terms (subject to bankruptcy, insolvency, creditors rights and general equitable principles), and Borrower, and the Envision Guarantors have no valid defense to the enforcement of such obligations, and (c) Lender is entitled to the rights, remedies and benefits provided for in the Financing Agreements.

SECTION 3.   FORBEARANCE AND CHANGE OF MATERIAL TERMS OF THE BRIDGE NOTE.

3.1Forbearance.

(a)Subject to the terms and conditions of this Agreement, including but not limited to Lender’s receipt of a payment of all remaining amounts outstanding, including interest, fees and expenses and any other amounts owed to the Lender from or on behalf of the Borrower on or before December 31, 2009, Lender agrees to forbear from exercising its rights and remedies under the Financing Agreements, applicable law or otherwise until the earliest to occur of (a) December 31, 2009, (b) the third day following any Fundamental Transaction (as defined in the Bridge Note), and (c) Borrower’s breach of any of the terms and provisions of this Agreement or any Event of Default under and as defined in the Bridge Note (other than pursuant to Section 6(a)(i) thereof) (the “Termination Date”).

(b)Upon the Termination Date, the agreement of Lender to forbear shall automatically and without further action or notice terminate and be of no force and effect, it being understood and agreed that the effect of such termination will be to permit Lender to exercise such rights and remedies immediately, including, but not limited to the foreclosure of all collateral as described in the Financing Agreements; in each case without any further notice, passage of time or forbearance of any kind.

(c)Borrower agrees that all of the Obligations under the Bridge Note shall, if not sooner paid, be absolutely and unconditionally due and payable in full in cash or other immediately available funds by Borrower to Lender on the Termination Date.  No termination of any of the Financing Agreements or any provisions thereof shall relieve or discharge Borrower, or the Envision Guarantors, of their duties, covenants and obligations under the Financing Agreements and this Agreement until all Obligations have been finally paid in full in cash or other immediately available funds.

(d)   If after the date hereof the Company and/or its Subsidiaries in one or more transactions issues any debt or equity securities or otherwise obtains a loan for borrowed money in connection with any capital raising transaction (“Capital Raising Transaction”) in excess of $500,000 in the aggregate for all such transactions, the Company shall repay a portion of the outstanding principal amount, and accrued interest thereon, hereunder at least equal to 25% of the gross proceeds (net of broker’s commissions) received by the Company or such Subsidiary in such transaction(s).  Each such repayment shall be made with one (1) Business Day following the date of receipt by the Company of such proceeds.

(e)  Beginning on April 12, 2009, the Note Amount (together with any capitalized interest thereon pursuant to the terms hereof) owed by Borrower to Lender shall bear interest at a rate of 15% per year.  Such interest shall be payable monthly in arrears beginning on the first business day of each calendar month commencing the first calendar month after which the Borrower raises $100,000 in the aggregate (net of brokers’ commissions) for all Capital Raising Transactions.  Any amounts of accrued interest not paid on the first business day for any calendar month after April 12, 2009 shall be compounded and added to the principal amount then outstanding under the Bridge Note.

(f)  As additional consideration for the Lender agreeing to this Agreement, the Borrower shall issue 10,000 shares of common stock of the Borrower to the Lender.  Such shares of common stock shall be duly and validly issued, fully paid and nonassessable, and free and clear of all Liens and shall be delivered to the Lender within 5 business days after the signing of this Agreement.

3.2No Other Waivers; Reservation of Rights.

(a)Lender has not waived, is not by this Agreement waiving any events of default which may be continuing on the date hereof or any events of default which may occur after the date hereof, and except as expressly set forth in Section 3.1(a) hereof, Lender has not agreed to forbear with respect to any of its rights or remedies concerning any events of default, which may have occurred and are continuing as of the date hereof or which may occur after the date hereof.

SECTION 4.   RELEASE.

4.1Release.

(a)In consideration of the agreements of Lender contained herein and the making of the Bridge Note and other financial accommodations by Lender to Borrower pursuant to the Financing Agreements, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and the Envision Guarantors on behalf of themselves and their respective successors and assigns, hereby, jointly and severally, absolutely, unconditionally and irrevocably release, remise and forever discharge Lender and the Collateral Agent, their successors and assigns, and its present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, managers, members, partners, attorneys, employees, agents and other representatives (Lender, Collateral Agent and all such other parties being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from any and all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages, claims, counterclaims, defenses, rights of set-off, demands, obligations and liabilities whatsoever (indivi­dually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower or Envision Guarantors or any of their respective successors or assigns, as the case may be, may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any nature, cause or thing whatsoever which arises at any time on or prior to the day and date of this Agreement for or on account of, or in relation to, or in any way in connection with any of the Financing Agreements.

(b)Each of Borrower and the Envision Guarantors understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c)Each of Borrower and the Envision Guarantors agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final and unconditional nature of the release set forth above.

4.2Covenant Not to Sue.  Borrower and Envision Guarantors, on behalf of themselves and their respective successors and assigns, hereby jointly and severally, absolutely, unconditionally and irrevo­cably, covenant and agree with each Releasee that they will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by Borrower and Guarantors pursuant to Section 4.1 above.  If Borrower or Guarantors violate the foregoing covenant, Borrower or Guarantors, as applicable, agree to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all  fees and costs incurred by any Releasee as a result of such violation (including reasonable attorney’s fees).

SECTION 5.   REPRESENTATIONS AND WARRANTIES.

Borrower hereby represents, warrants and covenants with and to Lender as follows:

5.1Binding Effect of Documents.  This Agreement and the other Financing Agreements have been duly executed and delivered to Lender by Borrower and the Envision Guarantors and are in full force and effect.  The agreements and obligations of Borrower contained in the Financing Agreements constitute legal, valid and binding obligations of Borrower, enforce­able by Lender against Borrower in accordance with their respective terms, except to the extent that a court of competent jurisdiction refuses to enforce such agreements due to bankruptcy, insolvency, creditors rights, general equitable principles or otherwise.

5.2No Conflict, Etc.  The execution, delivery and performance of this Agreement by Borrower and the Envision Guarantors, does not and will not violate any agreement, instrument or undertaking to which they are a party or by which they are bound, and do not and will not result in, or require, the creation or imposition of any Lien on any of their properties or revenues.

5.3Additional Events of Default.  The parties hereto acknowledge, confirm and agree that the failure of Borrower or the Envision Guarantors to comply with the covenants, conditions and agreements contained herein or in any other agreement, document or instrument at any time executed and/or delivered by Borrower with, to or in favor of Lender shall constitute an event of default under the Financing Agreements.

5.4Subsidiaries.  The Company has no direct or indirect subsidiaries other than the Envision Guarantors

5.5IP.  The Company and its Subsidiaries do not have any trademarks or patents (or filings or applications therefor) except as set forth in the Security Agreement.

SECTION 6.   CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT.

The terms and provisions of Section 3.1 of this Agreement shall only be effective upon the satisfaction of Lender that it has received, in form and substance satisfactory to Lender, an original of this Agreement, duly authorized, executed and delivered by Borrower and the Envision Guarantors and the shares of common stock provided for in Section 3.1(f).

SECTION 7.   PROVISIONS OF GENERAL APPLICATION.

7.1Effect of this Agreement.  Except as modified pursuant hereto, no other changes or modifications to the Financing Agreements are intended or implied and in all other respects the Financing Agreements 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 Financing Agreements, the terms of this Agreement shall control.  The Financing Agreements and this Agreement shall be read and construed as one agreement.

7.2Costs and Expenses.  The Borrower, the Envision Guarantors and the Lender each abso­lutely and unconditionally agree to pay all of their own expenses,  including all fees and disbursements of any counsel in connection with the preparation, negotiation, execution or delivery of this Agreement and any agreements delivered in connection with the transactions contemplated hereby or any of its directors, officers, members, managers, partners, employees, agents or other representatives as a consequence of or in any way in connection with the preparation, negotiation, execution or delivery of this Agreement and any agreements prepared, negotiated, executed or delivered in connection with the transactions contemplated hereby.

7.3Further 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.

7.4Merger.  This Agreement and the documents executed in connection herewith represent the entire expression of the agreement of Borrower, the Envision Guarantors and Lender regarding the matters set forth herein.  No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made, except by a written agreement signed by Borrower, the Envision Guarantors and Lender, except for any extension of the Termination Date which shall only require execution by Lender.

7.5Governing 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 California 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 California.

7.6Binding Effect.  This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns, as the case may be.

7.7Survival of Representations and Warranties.  All representations and warranties made in this Agreement or any other document furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other documents, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them.

7.8Severability.  Any determination that any provision of this Agreement or any application thereof is invalid, illegal or unenforceable in any respect in any instance shall not affect the validity, legality or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provision of this Agreement.

7.9Reviewed by Attorneys.  Borrower and the Envision Guarantors represent and warrant that they (a) understand fully the terms of this Agreement and the consequences of the execution and delivery of this Agreement, (b) have been afforded an oppor­tunity to have this Agreement reviewed by, and to discuss this Agreement and all documents executed in connection herewith with, such attorneys and other persons as Borrower may wish, and (c) have entered into this Agreement and executed and delivered all documents in connection herewith of its own free will and accord and without threat, duress or other coercion of any kind by any person.  The parties hereto acknowledge and agree that neither this Agreement nor the other documents executed pursuant hereto shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement and the other documents executed pursuant hereto or in connection herewith.

7.10Mutual Waiver of Right of Jury Trial.  BORROWER, ENVISION GUARANTORS, AND LENDER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO:  (A) THIS AGREEMENT, OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS REFERRED TO HEREIN; (B) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN THEM; OR (C) ANY CONDUCT, ACTS OR OMISSIONS OF LENDER, ENVISION GUARANTORS OR BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, MANAGERS, MEMBERS, PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS OR AFFILIATES; IN EACH OF THE FOREGOING CASES, WHETHER IN CONTRACT OR TORT OR OTHERWISE.

7.11Counterparts.  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.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, this Agreement is executed and delivered as of the day and year first above written.

	LENDER:
	GEMINI MASTER FUND, LTD.
By:	GEMINI STRATEGIES, LLC,  as investment manager
By:	/s/ Steven Winters
	Title: President

BORROWER:

ENVISION SOLAR INTERNATIONAL, INC.

By: /s/ Robert Noble

Title: CEO

ENVISION GUARANTORS:

ENVISION SOLAR CONSTRUCTION, INC.,

By: /s/ Robert Noble

Title:  CEO

ENVISION SOLAR RESIDENTIAL, INC.

By: /s/ Robert Noble

Title:  CEO

ENVISION AFRICA, LLC

By: /s/ Robert Noble 

Title:  CEO

EX-10.13

Exhibit 10.13

STANDARD SHORT FORM AGREEMENT BETWEEN

PROJECT OWNER AND SYSTEM SUPPLIER

This Agreement is made this 6 day of JULY in the year 2009, by and between the

PROJECT OWNER:	Team Solar, Inc.
	5000 Bailey Loop McCIellan CA 95652

and the SYSTEM SUPPLIER:

ENVISION SOLAR INTERNATIONAL, INC.

4225 Executive Square, Suite

1000 LaJolla, CA 92037

for services in connection with the WORK:

Solar Design & Engineering; PV Support Foundations; PV Support Steel Detailing, Fabrication, & Erection; Prefmished Tapered Metal Beam Wraps; and PV Module Installation.

for the following PROJECT: California State University - Bakersfield

located at the PROJECT SITE: Bakersfield, CA

and for which the PROJECT NUMBER is: CA-08-0041

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1.THE WORK System Supplier shall perform all required design, engineering, construction administration and management services and furnish and install all required material and equipment to complete the scope of work. The System Supplier shall use its best efforts to perform the Work in an expeditious manner consistent the direction of the Project Owner and the Contract Documents applicable to System Supplier's scope of work. System Supplier shall provide all labor, equipment and services necessary to complete the Work, as described in Exhibit A, all of which shall be provided in full accord with the direction of the Project Owner, or when applicable, reasonably inferable from the Contract Documents as being necessary to produce the indicated results. All on-site construction work shall be performed by a licensed California Contractor.

2.CONTRACT PRICE As full compensation for performance by System Supplier of the Work, Project Owner shall pay System Supplier the lump sum price of one million, three hundred thirty six thousand, four hundred eighty four dollars ($1,336,484.00). The lump sum price is hereinafter referred to as the Contract Price, which shall be subject to increase or decrease as provided in this Agreement.

3.EXHIBITS The following Exhibits are incorporated by reference and made part of this Agreement:

l.	Exhibit 'A' -	Contract Documents
2.	Exhibit 'B' -	Scope of Work
3.	Exhibit 'C' -	Progress Schedule, Milestones, & Liquidated Damages
4.	Exhibit 'D' -	Payment Form with Schedule of Values
5.	Exhibit 'E' -	Insurance Requirements
6.	Exhibit 'F' -	Interim and Final Lien Wavers
7.	Exhibit 'G' -	Add Alternates - NOT USED
8.	Exhibit 'H' -	Unit Prices-NOT USED
9.	Exhibit 'T' -	Change Order Form
10.	Exhibit 'T'-	Not Used
11.	Exhibit 'K'-	List of Owner Furnished Material & Equipment
12.	Exhibit 'L'-	Warrantee Requirements

4. SYSTEM SUPPLIER'S RESPONSIBILITIES It is understood and agreed that the System Supplier will provide direction to the designated representative of the System Supplier. The System Supplier shall be responsible for supervision and coordination of the Work, including the construction means, methods, techniques, sequences and procedures utilized, unless the Contract Documents give other specific instructions.

4.1All permits and fees shall be the responsibility of the Project Owner pursuant to this Agreement, except as detailed in Exhibit B.

4.2The Project Owner shall be responsible for all applicable taxes, including the Work provided by System Supplier.

4.3In the event that Project Owner elects to perform work at the Project Site directly or by others retained by Project Owner, System Supplier and Project Owner shall coordinate the activities of all forces at the Project Site and shall agree upon fair and reasonable schedules and operational procedures for Project Site activities. Project Owner shall require each separate contractor to cooperate with System Supplier and assist with the coordination of activities and the review of construction schedules and operations. The Contract Price and Contract Time shall be equitably adjusted, as mutually agreed by the parties, for changes made necessaiy by the coordination of construction activities, and the construction schedule shall be revised accordingly.

4.4In order to facilitate its responsibilities for completion of the Work in accordance with and as reasonably inferable from the Contract Documents, prior to commencing the Work, System Supplier shall examine and compare the drawings and specifications with information furnished by Project Owner; relevant field measurements made by System Supplier; and any visible conditions at the Project Site affecting the Work. Notwithstanding the foregoing, System Supplier shall have no responsibility for the design errors, omissions, or inconsistencies of Project Owner, Project Company or any other 3rd parties for whom System Supplier is not liable.

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4,5 WARRANTY

4.5.1 The Work shall be executed in accordance with the Contract Documents in a workmanlike manner. In the event the System Supplier's Work is modified to include work beyond a time & material basis, the System Supplier warrants that all materials and equipment shall be new, of good quality, in conformance with the Contract Documents, and free from defective workmanship and materials. In such a case, the System Supplier's warranty does not include remedies for defects or damages caused by normal wear and tear during normal usage, use for a purpose for which the Project was not intended, improper or insufficient maintenance, modifications performed by Project Owner or others retained by Project Owner, or abuse. System Suppliers' warranty shall commence upon Final Acceptance of the Work by the Project Owner and continue for a period of 1 year thereafter. No other warranties, express nor implied, are provided by System Supplier; provided, System Supplier hereby assigns to Project Owner all specific written warranties provided by System Suppliers, vendors, and manufacturers and all such specific warranties shall continue as noted therein.

4.6SAFETY As between Project Owner and System Supplier, System Supplier shall have overall responsibility for safety precautions and programs in the performance of the Work by System Supplier and its lower tiers, except that System Supplier's System Suppliers shall also be responsible for the safety of persons or property in the performance of their work, and for compliance with the provisions of applicable laws and regulations. System Supplier shall seek to avoid injury, loss or damage to persons or property by taking reasonable steps to protect its employees and other persons at the Project Site; materials and equipment stored at on-site or off-site locations for use in the Work; and property located at the site and adjacent to Work areas, whether or not the property is part of the Work.

4.7HAZARDOUS MATERIALS A Hazardous Material is any substance or material identified now or in the future as hazardous under any federal, state or local law or regulation, or any other substance or material which may be considered hazardous or otherwise subject to statutory or regulatory requirement governing handling, disposal and/or clean-up. System Supplier shall not be obligated to commence or continue work until any Hazardous Material discovered at the Project Site has been removed, or rendered or determined to be harmless by Project Owner as certified by an independent testing laboratory and approved by the appropriate government agency. If System Supplier incurs additional costs and/or is delayed due to the presence or remediation of Hazardous Material, System Supplier shall be entitled to an equitable adjustment in the Contract Price and/or the Contract Time.

4.8MATERIALS BROUGHT TO THE WORKSITE System Supplier shall be responsible for the proper delivery, handling, application, storage, removal and disposal of all materials and substances brought to the Project Site by System Supplier in accordance with the Contract Documents and used or consumed in the performance of the Work.

4.9SUBMITTALS In the event that the System Supplier's Work is expanded, the System Supplier shall submit to Project Owner for review and approval all shop drawings, samples, product data and similar submittals as may be required by either this Agreement or the Contract Documents. System Supplier shall be responsible to Project Owner for the accuracy and conformity of its submittals to the Contract Documents. System Supplier shall prepare and deliver its submittals to Project Owner in a manner consistent with the Progress Schedule of the Work and in such time and sequence so as not to delay the performance of the Work or the work of Project Owner and others retained by Project Owner. When System Supplier delivers its submittals to Project Owner, System Supplier shall identify in writing for each submittal all changes, deviations or substitutions from either the requirements of this Agreement or the Contract Documents. The approval of any System Supplier submittal shall not be deemed to authorize deviations, substitutions or changes in the requirements of the Contact Documents unless express written approval is obtained from Project Owner specifically authorizing such deviation, substitution or change. Further, Project Owner shall not make any change, deviation or substitution through the submittal process without specifically identifying and authorizing such deviation to System Supplier. Project Owner shall be responsible for review and approval of submittals with reasonable promptness (3 business days) to avoid causing delay. System Supplier shall perform all Work strictly in accordance with approved submittals. Project Owner's approval does not relieve System Supplier from responsibility for Defective Work resulting from errors or omissions of any kind within the approved submittals.

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4.10 SITE CONDITIONS If the conditions at the Project Site are (a) subsurface or other physical conditions which are materially different from those indicated in the Contract Documents, or (b) unusual or unknown physical conditions which are materially different from conditions ordinarily encountered and generally recognized as inherent in Work provided for in the Contract Documents, System Supplier shall stop Work and give written notice of the condition to Project Owner as soon as possible upon recognition of the condition. System Supplier shall not be required to perform any work relating to the unknown condition without the written mutual agreement of the parties. Any change in the Contract Price and/or Contract Time as a result of the unknown condition shall be made by Change Order.

4.11CUTTING, FITTING AND PATCHING System Supplier shall perform cutting, fitting and patching necessary to coordinate the various parts of the Work and to prepare its Work for the work of Project Owner or others retained by Project Owner.

4.12CLEANING UP System Supplier shall regularly remove debris and waste materials at the Project Site resulting from System Supplier's Work. Prior to discontinuing Work in an area, System Supplier shall clean the area and remove all rubbish and its construction equipment, tools, machinery, waste and surplus materials. System Supplier shall minimize and confine dust and debris resulting from construction activities. At the completion of the Work, System Supplier shall remove and dispose in a lawful manner from the Project Site all construction equipment, tools, surplus materials, waste materials (excluding Hazardous Materials) and debris,

5.            PROJECT OWNER'S RESPONSIBILITIES Any information or services to be provided by Project Owner shall be provided in a timely manner (two (2) business days) so as not to delay the Work.

5.1WORKSITE INFORMATION Project Owner shall provide at Project Owner's expense and with reasonable promptness the following;

.1 information describing the physical characteristics of the site, including surveys, site evaluations, legal descriptions, data or drawings depicting existing conditions;

.2 subsurface reports may be provided by Project Owner; it is understood and agreed that such subsurface reports are provided for information only, Project Owner makes no warranty as to the accuracy and reliability of such reports; and

.3 any other information or services requested in writing by System Supplier that are relevant to System Supplier's performance of the Work and under Project Owner's control.

5.2 EVIDENCE OF ABILITY TO PAY Upon written request by the System Supplier the Project Owner shall

provide to System Supplier reasonable evidence of Project Owner's ability to pay System Supplier for the Work

(i.e. tax equity financing, bank financing, other).

6.SUBCONTRACTS Work not performed by System Supplier with its own forces shall be performed by System Suppliers. System Supplier agrees to bind eveiy System Supplier and material supplier (and require every System Supplier to so bind its System Suppliers and material suppliers) to all the provisions of this Agreement and the Contract Documents as they apply to the System Supplier's and material supplier's portions of the Work.

7.CONTRACT TIME

7.1DATE OF COMMENCEMENT Unless otherwise agreed in writing the date of this agreement shall serve as the Date of Commencement of Work, unless, as to those permits which are not the responsibility of System Supplier, Project Owner has not obtained all permits and approvals necessary for System Supplier to commence the Work.

7.2TIME The Contract Time shall be measured from the date of commencement. The Contractor shall achieve Substantial Completion of the entire Work not later than 79 calendar days from the date of commencement of construction, subject to adjustments of this Contract Time as provided in the Contract Documents. This shall also be in accordance with the schedule and required interim milestones as indicated in Exhibit 'C - Progress Schedule, Milestones & Liquidated Damages, attached to this contract.

8.SCHEDULE OF THE WORK: See Exhibit C.

9.DELAYS AND EXTENSIONS OF TIME: If the System Supplier is delayed at any time in the commencement or progress of the Work by an act or neglect of the Project Owner or any 3rd party for whom System Supplier is not responsible (i.e., other than System Supplier's System Suppliers, suppliers, agents, employees), or by changes ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the System Supplier's control, or by delay authorized by the Project Owner, then the Contract Time and Contract Price shall be equitably adjusted. The Project Owners determination of merit and notice to the System Supplier on Claims for extension of time shall not be unreasonably withheld by Project Owner.

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10.          ALLOWANCES: Not Applicable.

11.          CHANGES

11.1System Supplier may request and/or Project Owner may order changes in the Work or the timing or sequencing of performance of the Work that impacts the Contract Price or the Contract Time. All such changes in the Work that affect Contract Time or Contract Price shall be formalized in a Change Order, to be approved by Project Owner.

11.2Project Owner and System Supplier shall negotiate in good faith an appropriate adjustment to the Contract Price and/or the Contract Time and shall conclude these negotiations as expeditiously as possible. Acceptance of the Change Order and any adjustment in the Contract Price and/or Contract Time shall not be unreasonably withheld.

11.3COST OR CREDIT DETERMINATION

11.2.3.1 An increase or decrease in the Contract Price and/or the Contract Time resulting from a change in the Work shall be determined by one or more of the following methods:

.1 unit prices set forth in this Agreement or as subsequently agreed;

.2 a mutually accepted, itemized lump sum;

.3 costs calculated on a basis agreed upon by Project Owner and System Supplier plus a fee (either a lump sum or a fee based on a percentage of cost) to which they agree; or .4 by the method provided below:

11.4It is understood and agreed that only the net amount of any Change Order will be subject to the System Supplier Fee of fifteen (15) percent. System Supplier Fee will be all inclusive of all direct and indirect field overhead and supervision; all corporate overhead; all insurances; all material markups; and all profit.

11.5PERFORMANCE OF CHANGED WORK System Supplier shall not be obligated to perform Changed Work until a Change Order has been executed by Project Owner and System Supplier.

12.          PAYMENT

12.1INITIAL PROGRESS PAYMENT - Upon execution of this Agreement, System Supplier shall submit to Project Owner an application for payment covering initial design costs. Project Owner shall pay the amount otherwise due on any approved payment application, less any amounts as set forth below, no later than seven (7) days after System Supplier has submitted a complete and accurate payment application.

12.2PROGRESS PAYMENTS - System Supplier shall submit to Project Owner and, if directed, a monthly application for payment no later than the 25th day of the calendar month for the preceding thirty (30) days. System Supplier's applications for payment shall be itemized and supported by System Supplier's schedule of values and any other substantiating data as required by this Agreement, Payment applications shall include payment requests on account of properly authorized Change Orders. Project Owner shall pay the amount otherwise due on any approved payment application, less any amounts as set forth below, no later than twenty (20) days after System Supplier has submitted a complete and accurate payment application. Progress Payments will be accelerated should Project Owner require expedited procurement of materials.

12.3RETAINAGE - - For all System Supplier Work not performed on a time & material basis, the Project Owner shall retain five (5) percent of the approved monies due System Supplier until the accepted Substantial Completion of System Supplier's Work, and thereafter only withhold such amount equating to a reasonable estimate of the cost to complete remaining punch-list items.

12.4 FAILURE TO PAY - If the Project Owner does not pay the System Supplier as required herein, then the System Supplier may, upon seven additional days' written notice to the Project Owner, suspend the Work until payment of the amount owing has been received. The Contract Time shall be extended appropriately and the Contract Price shall be increased by the amount of the System Supplier's reasonable costs of shut-down, delay and start-up, plus interest as provided for in the Contract Documents.

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12.5Reserved

12.6FINAL COMPLETION When final completion has been achieved, inclusive of the satisfactory completion of System Supplier's punchlist, and the acceptance of all applicable warrant)', and operation and maintenance documentation, as applicable, the System Supplier shall prepare for Project Owner's acceptance a final report stating that to the best of System Supplier's knowledge, and based on Project Owner's inspections, the Work has reached final completion in accordance with the Contract Documents. Upon achieving this final Completion, The Project Owner shall promptly release for payment all remaining amounts due the System Supplier.

13.          OWNERSHIP OF DOCUMENTS - OWNERSHIP OF ARCHITECTURAL DESIGNS

13.1 PROPERTY OF SYSTEM SUPPLIER. All Design Documents, including, without limitation, and designs, building designs or other depictions underlying or shown in them, shall be deemed the sole and exclusive property of System Supplier and ownership thereof is irrevocably vested in System Supplier, whether or not the Project is constructed.

13.2 INTETLLECTUAL PROPERTY/ASSIGNMENT OF RIGHTS. All Intellectual Property Rights in the Design Documents, including any designs, building designs or other depictions underlying or shown in them are the property of System Supplier. System Supplier shall own all Intellectual Property Rights and any other tangible and/or intangible property rights in or associated with the Design Documents. No transfer and assignment will be effective for the entire duration of such Intellectual Property Rights and other rights thereto and include, but not be limited to, all rights including rights in related plans, specifications, documentation, derivative works and moral rights.

13.3 USE BY PROJECT OWNER. Without limitation to the other provisions of this Section 13, Project Owner shall have the right to use the Design Documents for the construction, use, occupancy or maintenance of the Project, including, without limitation, future additions, alterations, or repairs to the Project.

13.4 SYSTEM SUPPLIER'S WARRANTY. System Supplier represents and warrants that the Design Documents, and the use of the Design Documents in the ordinaiy course, are free of any claim of infringement and will not violate any right of any third party, including any Intellectual Property Right.

13.5 INSPECTION BY PROJECT OWNER. Project Owner shall have the right at any time or times, upon prior written request to System Supplier, to review the status and condition of the Design Documents while in development or during construction and to request that copies thereof be provided to Project Owner, with the cost of such copies reimbursed to System Supplier as a Reimbursable Expense.

14.          INDEMNITY

14.1To the fullest extent permitted by law, System Supplier shall defend, indemnify and hold Project Owner, Project Owner's officers, directors, members, consultants, agents and employees and the Host and Project Company harmless from all claims for bodily injury and property damage, other than to the Work itself and other property insured under Exhibit E, that may arise from the performance of the Work to the extent of the negligence attributed to such acts or omissions by System Supplier, sub-contractors or anyone employed directly or indirectly by any of them or by anyone for whose acts any of them may be liable. System Supplier shall not be required to defend, indemnify or hold harmless Project Owner or Project Company or others retained by Project Owner for any acts, omissions or negligence of Project Owner or Project Company or others retained by any other party.

14.2To the fullest extent permitted by law, Project Owner shall defend, indemnify and hold harmless System Supplier, its officers, directors or members, System Suppliers or anyone employed directly or indirectly by any of them or anyone for whose acts any of them may be liable from all claims for bodily injury and property damage, that may arise from the performance of work by Project Owner or Project Company to the extent of the negligence attributed to such acts or omissions by these parties.

15. MUTUAL WAIVER OF CONSEQUENTIAL DAMAGES Project Owner and System Supplier agree to waive all claims against each other for any consequential damages that may arise out of or relate to this Agreement. Project Owner agrees to waive such damages including but not limited to Project Owner's loss of use of the Project, any rental expenses incurred, loss of income, profit or financing related to the Project, as well as the loss of business, loss of financing, principal office overhead and expenses, loss of profits not related to this Project, or loss of reputation. System Supplier agrees to waive damages including but not limited to loss of business, loss of financing, principal office overhead and expenses, loss of profits not related to this Project, loss of bonding capacity or loss of reputation. This Paragraph shall not be construed to preclude contractual provisions for liquidated damages when such provisions relate to direct damages only. The provisions of this Paragraph shall also apply to the termination of this Agreement and shall survive such termination.

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15.  MUTUAL WAIVER OF CONSEQUENTIAL DAMAGESProject Owner and System Supplier agree to waive all claims against each other for any consequential damages that may arise out of or relate to this Agreement. Project Owner agrees to waive such damages including but not limited to Project Owner's loss of use of the Project, any rental expenses incurred, loss of income, profit or financing related to the Project, as well as the loss of business, loss of financing, principal office overhead and expenses, loss of profits not related to this Project, or loss of reputation. System Supplier agrees to waive damages including but not limited to loss of business, loss of financing, principal office overhead and expenses, loss of profits not related to this Project, loss of bonding capacity or loss of reputation. This Paragraph shall not be construed to preclude contractual provisions for liquidated damages when such provisions relate to direct damages only. The provisions of this Paragraph shall also apply to the termination of this Agreement and shall survive such termination.  

16.          NOTICE TO CURE AND TERMINATION

16.1TERMINATION BY OWNER If, within seven (7) days of receipt of a notice to cure pursuant to Paragraph 16.1, System Supplier fails to commence and satisfactorily continue correction of the default set forth in the notice to cure, Project Owner may notify System Supplier that it intends to terminate this Agreement for default absent appropriate corrective action within fourteen (14) additional days. After the expiration of the additional seven (7) day period, Project Owner may terminate this Agreement by written notice absent appropriate corrective action. Termination for default is in addition to any other remedies available to Project Owner under Paragraph 17. If Project Owner's costs arising out of System Supplier's failure to cure, including the cost of completing the Work and reasonable attorney fees, exceed the unpaid Contract Price, System Supplier shall be liable to Project Owner for such excess costs. If Project Owner's costs are less than the unpaid Contract Price, Project Owner shall pay the difference to System Supplier. In the event Project Owner exercises its rights under this Paragraph, upon the request of System Supplier, Project Owner shall furnish to System Supplier a detailed accounting of the costs incurred by Project Owner.

16.2TERMINATION BY PROJECT OWNER Upon seven (7) days' written notice to Project Owner, System Supplier may terminate this Agreement if the Work:

(a)  has been stopped fr a sixty (60) day period through no fault of System Supplier for any of thefollowing reasons:

.1 under court order or order of other governmental authorities having jurisdiction;

.2 as a result of the declaration of a national emergency or other governmental act during which, through no act or fault of System Supplier, materials are not available; or

(b) If the Project Owner fails within a sixty (60) day period to pay the System Supplier amounts due under the contracts as provided in Section 12.2 and the System Supplier has provided the Project Owner seven (7) days' written notice to Project Owner.

16.3 TERMINATION FOR CONVENIENCE The Project Owner may, at any time, terminate this Agreement for the Project Owner's convenience and without cause. In case of such termination for the Project Owner's convenience, the System Supplier shall be entitled to receive payment for the Subcontract Work executed, and costs incurred by reason of such termination, along with reasonable overhead and profit on the Subcontract Work not performed. Upon receipt of written notice from the Project Owner of such termination for the Project Owner's convenience the System Supplier shall:

.1 cease operations as directed by the Project Owner in the notice;

.2 take actions necessaiy, or as the Project Owner may direct for the protection / preservation of the Work;

.3 except for the Work directed to be performed prior to the e ffective date of termination stated in the notice, terminate all existing Sub-subcontracts and purchase orders and enter into no further Sub-subcontract and/or purchase orders.

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17.  ASSIGNMENT Neither Project Owner nor System Supplier shall assign its interest in this Agreement without the written consent of the other except as to the assignment of proceeds. The terms and conditions of this Agreement shall be binding upon both parties, their partners, successors, assigns and legal representatives. Neither party to this Agreement shall assign the Agreement as a whole without written consent of the other.

18.        GOVERNING LAW This Agreement shall be governed by the law in effect at the location of the Project.

19   JOINT DRAFTING The parties expressly agree that this Agreement was jointly drafted, and that they both had opportunity to negotiate terms and to obtain assistance of counsel in reviewing terms prior to execution. This Agreement shall be construed neither against nor in favor of either party, but shall be construed in a neutral manner.

20   DISPUTE RESOLUTION In the event of a dispute, controversy, or claim arising out of or relating to this Agreement, the System Supplier and Subcontractor ("the Parties") shall confer and attempt to resolve such matter informally. If such dispute or claim cannot be resolved in this manner, then the dispute or claim shall be referred first to the Parties' executive officers for their review and resolution. Claims not resolved by other means shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect. The demand for arbitration shall be filed in writing with the other party to the Contract and with the American Arbitration Association. Any arbitration shall be conducted by a mutually agreed Arbitrator. The award rendered by the arbitrator shall be final and binding on the Parties and shall be deemed enforceable in any court having jurisdiction thereof and of the Parties. The arbitration shall be heard by one arbitrator, who shall have experience in the general subject matter to which the dispute relates, for claims in excess of $250,000 a panel of multiple Arbitrators shall be used. The shall take place in the state where the Work has been performed or in a mutually agreed location. The cost of the arbitration shall be borne equally by the Parties. If either Party becomes involved in arbitration or litigation arising from this Agreement, each Party will be responsible for its own legal and attorney's fees.

PROJECT OWNER:

BY:	/s/ William Morrow	ATTEST:
	William Morrow                 Director, Construction
	PRINT NAME                     PRINT TITLE

SYSTEM SUPPLIER

BY:	/s/ William Adelson	ATTEST:	/s/ Joanna Tan
	William Adelson               President		Joanna Tan                        CFO, COO
	PRINT NAME                   PRINT TITLE

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EXHIBIT A - CONTRACT DOCUMENTS

Project Name:	CSU - Bakersfield - Parking Lot E Canopy
Project Number:	CA-08-0041
Project Location:	9001 Stockdale Hwy Bakersfield CA
Project Description:	Solar design and structural engineering: PV foundation supports; PV support steel detailing, fabrication & erection, PV module Installation.

Sheet	Title	Author	Date
T	Title Page	SunEdison/ Envision	6/26/09
A.l	Site Plan	SunEdison/ Envision	6/26/09
A.2	Demo Plan	SunEdison/ Envision	6/26/09
A.3	Site Elevations	SunEdison/ Envision	6/26/09
A.4	Large Array plans and elevations	SunEdison/ Envision	6/26/09
A.5	Medium Array plans and elevations	SunEdison/ Envision	6/26/09
A.6	Small Array plans and elevations	SunEdison/ Envison	6/26/09
A.7	Reflected Ceiling plans	SunEdison/ Envision	6/26/09
A.8	Reflected Ceiling plans	SunEdison/ Envision	6/26/09
A.9	Sections	SunEdison/ Envision	6/26/09
A.10	Details	SunEdison/ Envision	6/26/09
S.1	Structural notes and plans	Orie's/SunEdison/ Envision	6/26/09
S.2	Structural elevations and details	Orie's/SunEdison/ Envision	6/26/09
S.3	Inverter equipment pad and anchorage	Orie's/SunEdison/ Envision	6/26/09
S.4	Inverter equipment pad details	Orie's/SunEdison/ Envision	6/26/09

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EXHIBIT B - SCOPE OF WORK

A.   General

a. System Supplier shall obtain and maintain all permits and licenses required to perform and complete its work, unless otherwise indicated.

b. System Supplier is responsible for generation of the Construction sets of the Contract Documents. The System Supplier is responsible for reproduction or procurement of any additional sets required to perform the work and shall provide any required sets to Project Owner upon request. All printing costs are a reimbursable expense.

c. System Supplier shall provide to Project Owner all required Shop Drawings, Submittals, Samples, As-Builds, Operating Manuals, overstock materials, and all warranties required by the Contract Documents.

  d.      All Requests for Information must be in writing to and from Project Owner and System Supplier.

e. System Supplier shall provide Daily Work Reports to the Project Owner's Project Superintendent for each day System Supplier is working on site.

f. System Supplier shall provide required Quality Control and Completion documentation and checklists to the Project Owner's Project Superintendent on a regular basis.

  g.     System Supplier shall provide a list of all materials with lead-times over two (2) weeks.

h. Project Owner shall be responsible for all material stocking and storage, which includes Project Owner supplied material and/or equipment.

i. Project Owner shall provide and be responsible for any storage containers and or field office trailers required to complete their work, in locations determined by Project Owner.

   j.      If applicable, System Supplier shall provide quantity survey for Project Owner provided materials.

  k.      System Supplier shall coordinate and install all Project Owner provided items per the Contract Documents, as pertaining to System Supplier's work.

  l.      Parking is the responsibility of System Supplier; coordinated with Project Owner's Project Superintendent.

 m.     Coordinate and manage inspections by the local building department, utility field engineers, project company consultants, all as may be required, in order to obtain all final approvals.

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B.   Safety

A.	All of the System Supplier's work shall comply with all local, State and Federal building codes, laws and regulations.
B.	System Supplier shall adhere to all current safety laws including, but not limited to Local, State, and Federal OSHA regulations, and to Project Owner's safety standards.
C.	Hard hats are required on this project by ALL persons, at ALL times, and in ALL areas.
D.	System Supplier must keep records on site of daily and weekly safety meeting and will provide copies to Project Owner upon request.
E.	System Supplier must keep records onsite of individuals who are trained and qualified to operate equipment on the jobs ite.
F.	System Supplier must contact USA Utility or the appropriate company to identify all underground lines prior to digging. Any disconnections of service will be the responsibility of the System Supplier.
G.	Provide required Certificate of Insurance (with noted Additional Insureds) prior to mobilization on the Project.
H.	System Supplier to have a designated Superintendent on site at all times while installation activities are being conducted so as to be a single point-of-contact for both Project Owner and the Host Company. Superintendent will provide Project Owner with a 24-hour contact person and the individual must be able to communicate in English.
I.	Project Owner is responsible to provide and or install all required safety equipment, rails, protection or other devices and or equipment necessary to complete the work.
J.	Project Owner is responsible for security to protect any materials staged on the ground during non working hours.
K.	The System Supplier shall comply with all security and safety requirements and regulation of the Host Company.
L.	The following Safety Documents will be provided to the Project Owner's Construction for review and approval prior to issuance of a Notice to Proceed.
	a. System Suppliers General Safety Plan
	b. Site Specific Safety Plan
	c. Site Specific Risk Assessment
	d. Site Specific Emergency Action Plan

C.   Design Scope

A.	Furnish all required design documents including but not limited to Drawings, Specifications, Design Manuals, Design Standards, necessary to permit, and construct the Tee Structures, Support Foundations, PV Support Steel and PV Module Installation in compliance with all local, state, and national codes and jurisdictional requirements & regulations.
B.	Due Diligence Documents
	a.	Project Owner shall provide Facility As-Built drawings to System Supplier. System Supplier is responsible for verification and coordination of this information with their design.

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	b.	Provide all Site Evaluation and Preliminary Approval deliverables.
	c.	Notate any host-customer considerations and requirements known prior to design/technical specification.
C.	Provide required preliminary design documents to evaluate initial product and system specifications for review by Project owner and/or the Host Company, provide follow up corrective action items as necessary.
D.		Provide permit submittal ready, approved by licensed PE for each discipline required, prior to permit submittal for final design review.
E.		Comply with all local Utility, AHJ, and National code agencies as appropriate - obtain in writing, any code variances approved by authorized agencies.
F.		Provide updated design drawings, per approved change orders, during construction as appropriate.
G.		Provide As-Built drawings upon completion of system installation, including all, reference drawings, and hard-copies, per the term-out schedule supplied, and as-built drawing checklist (to be supplied by Project Owner).
H.		Provide copies of all Professional Engineering deliverables, including stamps and signatures on all drawings, and calculation packages as applicable.
I.		Provide technical solutions or correspondence to support system term-outs, as it relates to Independent Engineering review, in a prompt manner as to support intended schedule.

D.    Construction Scope

A.	This Contract Agreement includes, but is not limited to, providing all labor, material, tools, equipment and supervision to complete the following scope of work;
		System Supplier shall furnish and Install all required footings, foundations, slabs, and mounting pads including all required layout, excavation, form work, reinforcing, anchor bolts and finishing of concrete necessary. The foundation spoils are to be spread on site and the AC debris shall be stockpiled into a location as determined by the Project Owner to be hauled off site by Project Owner.
		1.	System Supplier shall install in all required footings Conduit supplied by Project Owner.
		2.	System Supplier shall furnish, fabricate, and install all required steel (Tee' structures including all required layout, hardware, welding, Temporary bracing during erection, and all other material or equipment for a complete installation.
		3.	System Supplier shall furnish, fabricate, and install all required steel purlins and other support member to support the installation of PV modules including all required layout, hardware, welding, Temporary bracing during erection, and all other material or equipment for a complete installation.
		4.	Installation of Project Owner provided equipment, as indicated on the provided "List of Owner Supplied Material and Equipment", including but not limited to installation of PV Modules.
		5.	Furnish and Install all required miscellaneous mounting hardware, blocking or other material necessaiy for a complete installation of the work, except where indicated on "List of Owner Supplied Material and Equipment"
		6.	System Supplier shall perform required Painting and galvanizing required, including touchup as required
		7.	System Supplier is to perform all required Saw Cutting and or Core Drilling.

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		8.	System Supplier shall remove light poles noted and deliver to the Campus Facilities Department. The concrete light standards shall be removed to 2" below finish grade. The concrete debris shall be stockpiled into a location as determined by the Project Owner to be hauled off site by Project Owner.
		9.	System Supplier intends to prefabricate the modules for installation on the steel structure. System Supplier shall provide any required work benches and equipment necessaiy to complete the work. System supplier shall allow an electrician access to the work area to pre-wire the panels prior to erection. System Supplier and Project Owner shall coordinate the module delivery and security of the staging area at a later date.
B.	In addition the System Supplier shall be responsible for the following:
		1.	Ail required labor and equipment for offloading and material placement.
		2.	All rigging of materials.
		3.	Unloading, inventory, and storage of all material delivered to project site.
		4.	Any and all personnel lifts and or scaffold.
		5.	All Layout for the System Supplier's work from benchmarks provided by Project Owner.
		6.	System Supplier is responsible for supplying any temporary power and additional task lighting required to perform its work.
		7.	Project Owner shall furnish all required Trash Removal and Dumpsters as required for work, including off haul of asphalt paving
		8.	Maintain all areas free of waste materials, debris, and rubbish. Maintain site in a clean and orderly fashion.
		9.	Supply all required Rental Equipment and any required Small Tools for the performance of its work.
		10.	All required surface preparation.
		11.	Repair of any damaged work existing or new; including but not limited to roof membrane or material, asphalt paving, concrete paving, curb & gutter, or existing buildings.
		12.	System Supplier shall furnish all required warranties to the Project Owner as indicated in the attached Warranty Requirements document, including, but not limited to, all 'workmanship' warranties and assignment to the Owner of all Manufacturer's warranties.
		13.	Project Owner shall furnish and maintain the required Temporary Restroom Facilities at the code required numbers and frequency of maintenance.

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E.    Other Conditions

A.

System Supplier shall not be entitled to any payment for Field Extra Work Orders without the signature of Project Owner's Project Superintendent or Construction Project Manager. The effect of such signature is limited by the terms and conditions of the Contract Agreement.

B.

When grounds exist justifying a back charge against the System Supplier, whether or not due to a default under this Agreement, Project Owner may provide System Supplier written notice to take appropriate corrective action, as determined by Project Owner, within twenty-four (24) hours. If System Supplier fails to commence and satisfactorily continue corrective action to the satisfaction of Project Owner, then System Supplier shall be liable for all costs and expenses resulting there from, including, but not limited to, investigation costs, costs to remedy, mark-up for overhead and profit of fifteen (15%), plus any attorneys' fees incurred by Project Owner.

F.    Exclusions

A.	The Work excludes performance or completion bonds for the city, other government entities or third parties.
B.	The Work excludes all materials testing, field testing, field inspections, and special inspection costs. Such excluded items are to be provided separately by the Project Owner and paid by the Project Owner at no cost to the System Supplier.
C.	The Work excludes providing payment and performance bonds to the Project Owner.
D.	Excludes costs to address architectural treatments for normal shrinkage cracks in concrete construction.
E.	The Work excludes all concrete for Electrical scope of work.
F.	The Work excludes PV module washing provisions and equipment.
G.	The Work excludes well points or dewatering.
H.	The Work excludes installation of any Project Owner furnished items except as indicated on the "List ofOwner furnished Material and Equipment."
I.	The Work excludes all landscaping and re-establishment of existing landscaping.
J.	Owner shall perform any pavement patching required around the foundation bases and light fixture bases removed as a result of the work. Supplier shall provide a concrete base approximately 2" below finish grade to allow a finish paving application by others.

6

EXHIBIT C - PROJECT SCHEDULE

Project Milestones:
Start Construction (drilling foundations)	8/3/2009
School Blackout Period ( no work, all parking
lots clean and available to the campus)	9/7/09 - 9/25/09
Module installation complete (no later than)	10/21/2009
Final Completion	10/27/2009

  

Exhibit 'D' - -      Payment Form

with Schedule of Values

1

CONTINUATION SHEET                                                                    AIA document g 703

AIA Document g702, APPLICATION AND CERTIFICATE FOR PAYMENT, containing Contractor's signed Certification is attached. In tabulation below, amounts are stated to the nearest dollar. Use Column I on Contracts where variable retainage for the line items may apply APPLICATION NUMBER: APPLICATION DATE: PERIOD TO: ARCHITECT' S PROJECT NO:

A	B	C	D	E	F	G		H	I
ITEM	DESCRIPTION OF WORK	SCHEDULED	WORK COMPLETED		MATERIALS	TOTAL	%	BALANCE	RETAINAGE
NO.		VALUE	FROM PREVIOUS	THIS PERIOD	PRESENTLY	COMPLETED	(G+C)	TO FINISH
			APPLICATION		STORED	AND STORED		(C-G)
			(D+E)		(NOT IN	TO DATE
					D OR E)	(D+E+F)
	Design / Engineering
1-330S	Preliminary Design and Engineering	0.00	-	-	-	-	0%	0,00	0.00
1-33DS	Final permit design drawings	0.00					0%	0.00	0,00
	Structure installation
2-050S	Demo existing light poles	0.00	-	-	-	-	0%	0.00	0.00
3-300S	Pier foundations	0.00	-		-	-	0%	0,00	0.00
5-2QQS	Structural Steel Material	0.00
5-200S	Structural Steel - installation	0.00	-	-	-	-	0%	0.00	0,00
16-300S	Module Installation	0.00		-	-	-	0%	0.00	0.00
5-20 OS	Paint structural steel	0.00					0%	0.00	0.00
		0	0	0	0	0		0.00	0

2

CONTINUATION SHEET                                                                    AIA document g 703

AIA Document g702, APPLICATION AND CERTIFICATE FOR PAYMENT, containing Contractor's signed Certification is attached. In tabulation below, amounts are stated to the nearest dollar. Use Column I on Contracts where variable retainage for the line items may apply APPLICATION NUMBER: APPLICATION DATE: PERIOD TO: ARCHITECT' S PROJECT NO:

A	B	C	D	E	F	G		H	I
ITEM NO.	DESCRIPTION OF WORK	SCHEDULED VALUE	WORK COMPLETED		MATERIALS PRESENTLY	TOTAL COMPLETED	% (G+C)	BALANCE TO FINISH	RETAINAGE
			FROM PREVIOUS APPLICATION (D + E)	THIS PERIOD	STORED (NOT IN D OR E)	AND STORED TO DATE (D+E+F)		(C-G)
	CHANGE ORDER #	-	-	-				-	0.00
		-	-	-				-	0.00
		-	-	-				-	0.00
		-	-	-				-	0.00
		-	-	--				-	0.00
		-	-	-				-	0.00
		-	-	-				-	0.00
		-	-	-				-	0.00
		-	-	-
		-	-	-
		-	-	-
		-	-	--
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-
		-	-	-				-	-

3

 

Exhibit 'E' -Insurance

Requirements

1.	Required Coverage.   Subcontractor shall carry and maintain with carriers or self insurance, as a minimum, the following insurance coverage:
	1.1.	Workers Compensation
		Workers Compensation Insurance and Employers Liability Insurance in accordance with the laws of the state of where work may be done with limits for employer's liability in the minimum amount of $100,000
	1.2.	Commercial General Liability coverage with a General Aggregate of $2,000,000 per occurrence,with the following coverage's;

Per Occurrence	$2,000,000
Products & Completed Operations	$1,000,000
Personal Injury & Advertising Injury	$1,000,000
General Aggregate	$2,000,000

1.3. Automotive Liability Insurance covering owned, non-owned and hired automobiles in the minimum limits of:

Bodily Injury	$1,000,000 each person
Bodily Injury	$1,000,000 each occurrence and;
Property Damage	$1,000,000 each occurrence

2.		Policy Endorsements- All insurance coverage required to be maintained by Subcontractor under this Agreement shall:
	2.1.	provide a severability of interests or cross liability clause;
	2.2.	except in the case of worker's compensation insurance and other statutory insurances where it would be inappropriate, name each SunEdison Party, the Host, and others as may be reasonably required by Contractor, as additional insureds; and
	2.3.	to the extent permissible in accordance with the policy, include a waiver of subrogation by the insurers in favor of each Host, each SunEdison Party, SunEd Solar, investor, and each of their respective assignees, affiliates, agents, officers, directors, employees, insurers or policy issuers and a waiver of any right of the insurers to any set-off or counterclaim, whether by endorsement or otherwise, in respect of any type of liability of any of the persons insured under any such policies.
3.	Certificates. Subcontractor shall throughout the Agreement period post certificates and/or memoranda of insurance evidencing the coverage specified in this Exhibit by providing hardcopy certificates to Contractor.
4.	Cancellations.
	4.1.	All policies of insurance to be secured and maintained by Subcontractor hereunder shall provide, by endorsement, that the Contractor Representative and any additional insured where required in writing shall be provided forty-five (45) days' prior written notice of any material policy changes or cancellations (except two (2) days for non-payment of premium) and that no such cancellation or change shall be effective without such notice.
	4.2.	Subcontractor shall immediately notify the Contractor Representative regarding the occurrence of any of the following events: (a) any significant loss covered by a policy required to be maintained by this Exhibit; (b) any significant dispute with an insurer; (c) the early cancellation of any policy; (d) the failure to pay any premium payment; (e) the failure, for any reason, to maintain any policy required to be maintained by this Exhibit; and (f) any significant change in any insurance coverage contracted for by Subcontractor.

1

2

IMPORTANT

If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must bo endorsed, A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorse ment(s).

DISCLAIMER

The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurers), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.

3

4

5

 

Exhibit 'F' -         Interim & fina

Lien Wavers

CONDITIONAL WAIVER AND RELEASE

UPON PROGRESS PAYMENT

California Civil Code Section 3262(d)(1)

Job/Account #_______________                                                     

Upon receipt by the undersigned of a check from  

in the sum of $______________payable to____________________________________„

and when the check has been properly endorsed and has been paid by the bank upon which it is drawn, this document shaii become effective to release any mechanics' lien, stop notice, or bond right the undersigned has on the job of __________________________________________        

located at_________________________________________________________________                                                        

to the following extent:

This release covers a progress payment for labor, services, equipment or material furnished to _______________________________________________________________________________________________________________________

through_______________________only and does not cover any retention retained before or after the release

date or extras furnished before the release date for which payment has not been received or extras or items furnished after the release date. Rights based upon work performed or items furnished under a written change order which has been fully executed by the parties prior to the release date are covered by this release unless specifically reserved by the claimant in this release. This release of any mechanics lien, stop notice, or bond right shall not otherwise affect the contract rights, including rights between parties to the contract based upon a rescission, abandonment, breach of the contract, or the right of the undersigned to recover compensation for furnished labor, services, equipment or material covered by this release if that furnished labor, services, equipment or material was not compensated by the progress payment. Before any recipient of this document relies on it, said recipient should verify evidence of payment to the undersigned.

Date:__________________________                                                                                                                              ___________________________

(company name)

By:___________________________

< font id="TAB2" style="LETTER-SPACING: 9pt">   (signature)

___________________________

< font id="TAB2" style="LETTER-SPACING: 9pt">    (print name)

NOTE: CIVIL CODE 3262 (d)(1) PROVIDES: Where the claimant is required to execute a waiver and release in exchange for, or in order to induce the payment of, a progress payment and the claimant is not, in fact, paid in exchange for the waiver and release or a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release shall follow substantially the form set forth above.

1

UNCONDITIONAL WAIVER AND RELEASE

UPON FINAL PAYMENT

California Civil Code Section 3262(d)(4)

Job/Account #_____________________

The undersigned has been paid in full for all labor, services, equipment or materia! furnished

to:___________________________________________________________________________

on the job of:___________________________________________________________

located at:__________________________________________________________________________

and does hereby waive and release any right to a mechanics lien, stop notice, or any right against a labor and material bond on the job, except for disputed claims for extra work in the amount of

$_________________________________________________________________________________ .

Date:__________________________                                                            ____________________________

                                                                                                                                        (company name)                                                                                           

By:___________________________

          (signature)

___________________________

         (print name)

NOTICE TO PERSONS SIGNING THIS WAIVER: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM.

NOTE: CIVIL CODE 3262(d)(4) PROVIDES: Where the claimant is required to execute a waiver and release in exchange for, or in order to induce payment of, a final payment and the claimant asserts in the waiver that it has, in fact, been paid the final payment, the waiver and release shall follow substantially the form set forth above.

2

 

 9.    Exhibit 'H'-      Unit Prices  

  

Exhibit 'H'-      Unit Prices

NOT  USED

  

  10.    Exhibit T - Change Order   Form

CHANGE	Attachment F - AiA form G701	OWNER	o
ORDER		ARCHITECT	o
		CONTRACTOR	o
AIA DOCUMENT G701		FIELD	o
		OTHER	o

PROJECT:	CHANGE ORDER NUMBER:
	DATE:
	PROJECT NO.:
TO CONTRACTOR:	CONTRACT DATE:
	CONTRACT FOR:

The Contract is changed as follows:

No.	Description	Cost
1.		$	-
2.		$	-
3.		$	-
4.		$	-
5.		$	-
6.		$	-
7.		$	-
8.		$	-
9.		$	-
10.		$	-
	SubTotal	$	-

This change order constitutes full and final resolution on cost and contract time for the above issues. The contractor waves all right to any and all future claims related to the issues addressed herein.

The original (Contract Sum) (Guaranteed maximum Price) was
Net change by previously authorized Change orders
The (Contract Sum) (Guaranteed maximum Price) prior to this Change order was
The (Contract Sum) (Guaranteed maximum price) will be (increased) (decreased) (unchanged) by this Change Order in the amount of
The new (Contract Sum) (Guaranteed maximum Price) including this Change order will be	$                                             -

The Contract Time will be (increased) decreased) (unchanged) by

The date of Substantial Completion as of the date of this Change Order therefore is

NOTE:        This summary does not reflect changes In the Contract Sum, Contract Time or Guaranteed Maximum Price which have been authorized by Construction Change Directive.

ARCHITECT	CONTRACTOR	OWNER
Address	Address	Address
BY	BY	BY
DATE	DATE	DATE

  

Exhibit K - List of Owner Furnished Equipment & Material

Project Name:	CSU - Bakersfield - Parking Lot E Canopy
Project Number	CA-08-0041
Project Location:	9001 Stockdate HwBakersfield CA

Description	Furnished By	Installed By
Yingli YL175 (156) Solar Modules	SunEdison	Contractor

7/6/2009

  

WORKMANSHIP WARRANTY

This Workmanship Warranty is offered [SELLER/CONTRACTOR], a Delaware limited liability company ("Contractor") to [PURCHASER] ("Owner") in regard to the photovoltaic system installed at Owner's premises at [ADDRESS], pursuant to that certain Agreement Between Owner and Contractor dated as of [DATE] (collectively, "Agreement").

1.	WORKMANSHIP WARRANTY
	1.1.	Contractor warrants that the System generally defined within the Agreement will be free from defects in workmanship for the period defined in Section 1.2 of this Warranty.
	1.2.	The term of this Warranty shall be one (1) year starting from [DATE OF COMMERICAL OPERATION] (the "Warranty Period").
	1.3.	Except as provided below, if during the Warranty Period the System becomes inoperable as a result of defects in workmanship to the System, then Contractor will have the relevant System components repaired or replaced as provided below:
		1.3.1.	The following are System components covered by this Warranty: photovoltaic modules, inverter, transformer, and racking structure.
		1.3.2.	Consumable items are not included as System components covered by this Warranty. Consumable items include but are not limited to fuses, batteries, lubricants, and filters.
	1.4.
	1.5.	Contractor's obligations under this warranty are dependent on Owner's compliance with the provisions of Section 3 of this Warranty.
2.
	2.1.	The Warranty is only for the benefit of the original purchaser of the System (i.e., Owner) or its Affiliates.
	2.2.	Contractor may use the services of a subcontractor in supporting this Warranty.
	2.3.	Owner shall at all times provide or arrange reasonable access for Contractor and/or its subcontractors to the System for purposes of supporting this Warranty.
3.
	3.1.	Owner shall be solely responsible for the operation and maintenance of the System in strict compliance with the System Operations and Maintenance Manual.
	3.2.	Contractor shall have no obligations under this Warranty or otherwise should Owner fail to operate and maintain the System in strict compliance with the System Operations and Maintenance Manual.
	3.3.	Contractor's obligations under this Warranty shall be limited solely to defects which are direct and obvious defects in Contractor's workmanship.

Page 1 of 3

  

4.	CLAIMS UNDER WORKMANSHIP WARRANTY
	4.1.	The Owner shall designate an employee to serve as the System Manager. The System Manager is the operator of the System and is required to perform the activities defined in the Operations and Maintenance Manual.
	4.2.	The System manager may request inspection of the System by making a claim under this Warranty. To make a claim, the System Manager must:
		4.2.1.	Identify a fault condition in the System.
		4.2.2.	Conduct preliminary troubleshooting in accordance with the Operations and Maintenance Manual.
		4.2.3.	Contact Contractor's Service Manager or his designee.
		4.2.4.	Perform reasonable troubleshooting of the System requested by the Contractor's Service Manager or his designee.
		4.2.5.	Notify Contractor's Service Manager in writing to the contact information provided below that service is required in response to a claim under this Warranty.
			[FULL contact information]

4.3	Contractor or Contractor's subcontractor will respond to a claim under this Warranty as described below:
	4.3.1.	Contractor will ensure trained maintenance personnel respond within 72 hours following receipt of a service request as specified in 4.2.5.
	4.3.2.	Contractor will repair or replace any faulty System component as provided in 1.3 above in a timely manner, but in no event later than eight (8) weeks from time of such request subject to material availability.
	4.3.3.	If upon inspection of the System, it is determined that (i) the System is operating within applicable specifications or (ii) that the cause of inoperability of the System is excluded or limited under this Warranty, Owner will be liable for any reasonable labor and material expenses incurred by Contractor in connection with the service call.
4.4	When performing any work under this Warranty, Contractor has the right, at its sole discretion, to repair or replace all or part of the System using new, remanufactured or refurbished parts or products provided said "parts" are of equal or greater quality of the part being replaced; provided that, if any defect is due to a design flaw in any part, Contractor shall, at its sole option, repair or replace such part with an acceptable substitute therefore. Any original part that is removed and substituted with a replacement part will become the property of Contractor, and the replacement part will become property of Owner.

Page 2 of 3

  

5.	WORKMANSHIP WARRANTY EXCLUSIONS AND LIMITATIONS
	5.1.	No other warranty to Owner or any other person, whether express, implied or statutory, is made as to the installation, design, description, quality, merchantability, completeness, useful life, future economic viability, or fitness for any particular purpose of the System or any other service provided hereunder or described herein, or as to any other matter, all of which are expressly disclaimed by Contractor.
	5.2.	The Warranty provided herein does not cover damage, malfunctions or service failures caused by:
		5.2.1.	Failure to follow the Operations and Maintenance Manual or other maintenance instructions provided by Contractor in all material respects;
		5.2.2.	Repair, modification, or movement of the System or components thereof by someone other than a service technician approved by Contractor or attachment to the System of equipment not supplied by Contractor;
		5.2.3.	Abuse, misuse, or negligent acts of any Person (other than Contractor, its subcontractors, and their respective employees, representatives and agents); or
		5.2.4.	Damage or deteriorated performance of the System caused by electrical surges (to the extent not caused by the System or any portion thereof), lightning, fire, flood, extreme weather creating conditions outside of the Specifications for such System, pest damage, accidental breakage (not including accidental breakage by Contractor, its subcontractors, and their respective employees, representatives and agents)), actions of third parties (other than Contractor, its subcontractors, and their respective employees, representatives and agents) and other events or accidents outside the reasonable control of Contractor, its subcontractors, and their respective employees, representatives and agents and not arising under normal operating conditions.
6.	ASSIGNMENT OF MANUFACTURERS' WARRANTIES. Contractor hereby assigns to Owner all manufacturers' warranties as to the System's solar panels and inverter.
7.	The Contractor shall meet or exceed all local, State or utility specific requirements including, but not limited to those under the California Solar initiative Program. These include the following per section 2.4 - All systems must have a minimum 10-year warranty provided in combination by the manufacturer and installer to protect the purchaser against defective workmanship, system or component breakdown, or degradation in electrical output of more than fifteen percent from their originally rated electrical output during the ten-year period. The warranty must cover the solar generating system only, including PV modules (panels) and inverters, solar collectors, tracking mechanisms, associated with the solar system and provide for no-cost repair or replacement of the system or system components, including any associated labor during the warranty period.

December 31,2008

Page 3 of 3

EX-10.14

Exhibit 10.14

SUSTAINABLE STRATEGY, PLANNING AND SOLAR ADVISORY

SERVICES

AGREEMENT BETWEEN

Centre for Environmental Planning and Technology

and

ENVISION SOLAR

AGREEMENT made this  1st day of OCT         in the year of Two Thousand and Nine between Envision Solar International, Inc. of La Jolla, California, USA (Envision), and Centre for Environmental Planning and Technology, of Ahmedabad, India (CEPT).

For the Project: Gandhinagar Solar City Master Plan and Pilot Demonstration Project (The Plan)

ENVISION and CEPT agree as set forth below.

1)   SCOPE OF BASIC SERVICES

a)   CEPT will engage, with affiliated government, academic and other partners, in the planning for the Gandhinagar Solar City, one of the first projects being developed under the Indian national government's initiatives. Envision will provide senior professional advisory and project management support to CEPT in coordination and partnership with institutions, agencies and other parties participating with CEPT on the project.

b)   Envision will provide Basic Services as described below. As "Senior Sustainable Planning Advisor", Envision will advise CEPT and other participants in the project in the management and deployment of The Plan, in the following activities (Lead/Support):

i)   Overall Master Planning for the Solar City project (Envision Solar India (ESI) lead / Centre for Environmental Planning and Technology(CEPT) support)

ii)   General assessment of solar & other renewable technology opportunities including solar-photovoltaic and solar-thermal, as well as other sources of renewable energy like wind and biomass. (ESI lead/CEPT support)

iii)   Collection of existing data, drawings and maps, certified land surveys, including information on grades and lines of streets, alleys, pavements and adjoining property; rights-of-way, restrictions, easements, encroachments, zoning, deed restrictions, boundaries and contours of the site; locations, dimensions and complete data pertaining to existing buildings, other improvements and trees; and full information concerning available service and utility lines both public and private, above and below grade. (CEPT lead)

iv)   Collation of items in #3 above and incorporation of key information into "base" drawings and other documents. (CEPT lead/ESI support)

v)   Assessment and conceptual design of solar technology for a high profile, high visibility pilot demonstration project (ESI lead)

vi)   Coordination of, or participation in the commissioning of presentation models, colour renderings, digital animations, videos, documentary films and other materials needed (ESI lead/CEPT support)

vii)   Preliminary cost estimations for project implementation (CEPT lead/ES' support)

viii)   Coordination and leadership for key meetings including:

ix)   Kick-off (ESI lead/CEPT support)

x)  Stakeholder Workshop (ESI lead/CEPT support)

xi)   Final Report Presentation (ESI lead/CEPT support)

xii)   Other key activities necessary for the implementation of the planning process

2)    PROJECT PHASES and DELIVERABLES

Envision's services will commence with the execution of this agreement and continue through the following Phases:

a) Phase 1 (month 1):

Activities:

i)Kick-off, Plan Conceptualization (ESI/CEPT)

ii)Assembly of Initial Participants (ESI/CEPT)

iii) Stakeholder Workshop (ESI/CEPT)

Deliverables:

i.Plan Conceptualization Report, digital and hard-copy (ESI/CEPT)

ii.Drawings, Digital Models (ESI/CEPT)

b) Phase 2 (Month 2):

Activities:

i)Sustainable Concept Master Plan Development (ESI/CEPT)

ii)Concept Design for High Profile Demonstration Project

iii)Presentation Material Development

iv)Tender – Bill of quantity / Specification / Condition of Contract (for Executing agency)

Deliverables:

i)Concept Master Plan Final Report, digital and hard copy (ESI/CEPT)

ii)Outline proposal for high profile showcase project (ESI)

iii)Tender Document with BoQ, Condition of Contract and Specification (CEPT/ESI)

iv)Web-ready digital models and narrated animation (ESI/CEPT) v) Live Project Website (or section on envisionsolar.com / CEPT /links) (ESI)

3)    FEES AND BASIC EXPENSES

To carry out services as listed in scope of work, CEPT will pay consultation fees to ESI amounting to Total INR 14,10,660.00 (Rupees fourteen lacs ten thousand, six hundred and sixty rupees. (Or its equivalent in US Dollars) in addition CEPT will spend maximum up to INR 1,65,000 (one lac sixty five thousand rupees) for ESI's expenses in India

2

4)   ADDITIONAL SERVICES

a)   This contract is intended to cover the basic services outlined above in heading one. In the event that Additional Services not included in Basic Services are required, they will be charged separately according to the schedule in heading seven. Additional services shall include the following:

b)   Documentation of existing conditions: Includes measuring, field notes, to scale drawings and photographs of existing context.

c)   Detailed Cost Estimating

d)   Design Changes after phase approval.

e)   Physical presentation models

f)   IGBC LEED® consulting or certification applications.

g)   Energy Modelling or other energy specialization

h)  Any other service not otherwise included in this Agreement under Basic Services or not customarily furnished in accordance with generally accepted design and planning practices. i) Fees paid for securing approval of authorities having jurisdiction over the Project

i)  Fees paid for securing approval of authorities having jurisdiction over the Project

5)    CEPT'S RESPONSIBILITIES

a)CEPT shall provide full information available regarding its requirements for the Project.

b) CEPT Shall designate, when necessary, a representative authorized ot act on its behalf  with respect to the Project

c) Other responsibilities as indicated in section 2 — Project Phases and Deliverables: above.

6)    CONSTRUCTION ESTIMATES

a)  It is expressly understood that statements of probable construction cost and detailed cost estimates prepared by Envision represent best judgment only. It is recognized that neither CEPT nor Envision have any control over cost of material, labor or equipment, over the Contractor's methods of determining bid prices or over competitive bidding or market conditions.

7)   PAYMENTS TO ENVISION

According to the agreement between GEDA & CEPT, GEDA will pay CEPT in the following instalments:

One third of the total amount at the commencement of the project; payable on signing the agreement between GEDA & CEPT.

One third of the total amount on completion & submission of the interim report following the first round of meetings;

The final third of the total amount on completion & submission of the completed proposals for the project.

CEPT will pay ESI its proportion of the fees & expenses on receipt of the corresponding payments from GEDA, in the same installments.

3

i.   One third of the amount due to ESI at the commencement of the project; payable once the initial payment has been received by CEPT from GEDA;

ii.   One third of the amount payable to ESI on completion & submission of the interim report; payable once the interim payment has been received by CEPT from GEDA;

  iii.   One third of the amount payable to ESI on completion & submission of the completed proposals for the project; payable once the final payment has been received by CEPT from GEDA

Invoices will be submitted by ESI at the end of Phase 1 and Phase 2 and are due upon receipt

8)   TERMINATION OF AGREEMENT

a)   This agreement may be terminated by either party upon seven days' written notice should the other party fail substantially to perform in accordance with its terms through no fault of the party initiating the termination.

b)   In the event Envision terminates or is terminated, Envision shall be paid its compensation for services performed to termination date, including Reimbursable Expenses then due and all termination expenses.

9)    INSTRUMENTS OF SERVICE

Original Drawings, Models and Specifications as instruments of service are and shall remain the joint property of CEPT and ESI. Both retain property regarding this project – Both can use this ONLY for promotional purpose (Website and Presentation for future projects) whether the Project for which they are made is executed of not. They are not to be used by either CEPT or ESI on other projects or extensions to this Project except by agreement in writing and with appropriate compensation to Envision.

10)  HOLD HARMLESS

CEPT shall indemnify and hold harmless ESI, ESI consultants, sub-consultants and agents, and any of its and their employees from and against any and all liability, claims, judgments, or demands including but not limited to attorney's fees arising directly or indirectly out of this agreement, save and except claims or litigation arising through the sole negligence of ESI or any of its employees or its consultants, sub-consultants and agents and any of their employees.

11) RESOLUTION OF DISPUTES

All disputes or differences which may arise between the ESI and the CEPT on any matter connected with this agreement or in regard to the interpretation of the context there of including any claim shall be referred to at the request of either party for arbitration. For such purpose an arbitrator who shall be nominated by ESI and CEPT. The arbitration shall be conducted as per the provision of the Arbitration and Conciliation Act 1996 and/or any statutory modification thereof. Upon every or any such reference the cost of such arbitration references and award shall be as per the rules of the Indian Council of Arbitration as amended time to time. The decision and award of the arbitrator shall be final and binding on the ESI and CEPT.

12)   EXTENT OF AGREEMENT

This Agreement represents the entire and integrated agreement between CEPT and Envision and supersedes all prior negotiations, representations or agreements, either written or oral. This agreement may be amended only by written instrument signed by both CEPT and Envision.

4

13)  GOVERNING LAW

Unless otherwise specified, this Agreement shall be governed by the laws of the India.

This Agreement executed the day and year first written above.

ENVISION:	Centre for Environmental Planning and Technology:
/s/ Robert Noble	/s/Dr R.N.Vakil
Robert Noble, AIA, LEED AP California License #C21574	Dr R.N.Vakil

EX-10.15

Exhibit 10.15

This SUBORDINATION AGREEMENT (this "Agreement"), dated as of October 1, 2009 is among Envision Solar International, Inc., a California corporation (the "Company"), Envision Solar Construction, Inc., a California corporation ("ESC"), Envision Solar Residential, Inc., a California corporation ("ESR"), Envision Africa, LLC ("EA"; the Company, ESC, ESR and EA, each an "Obligor" and, together, "Obligors"), Jon Evey ("Subordinated Creditor"), the Purchaser (as defined in the Purchase Agreement described below), and Gemini Strategies, LLC, a Delaware limited liability company, in its capacity as collateral agent for itself and for the Purchaser (including any successor agent, hereinafter, the "Collateral Agent").

R E C I T A L S

A.           The Company has executed and delivered to the Purchaser that certain senior note dated as of November 12, 2008 (as the same may be amended, supplemented, restated or modified and in effect from time to time, the "Note"). The Note was issued pursuant to that certain Securities Purchase Agreement, dated as of November 12, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the "Purchase Agreement"), by and among the Company and the Purchaser, and pursuant to which the Purchaser has made certain loans ("Loans") to the Company.

B.           Each of the Obligors (other than the Company) (each such entity, together with each other person or entity who becomes a party to the Guaranty (as defined herein) by execution of a joinder in the form of Exhibit A attached thereto, is referred to individually as a "Guarantor" and collectively as the "Guarantors") have executed a Guaranty dated as of November 12, 2008 (as the same may be amended, supplemented, restated or modified and in effect from time to time, the "Guaranty") in favor of the Collateral Agent in respect of the Company's obligations under the Purchase Agreement and the Note.

C.           The Company has issued the Subordinated Creditor a 10% subordinated convertible promissory note pursuant to which, among other things, the Subordinated Creditor has extended credit to the Company in the aggregate original principal amount of $102,235.62(as the same may be amended, supplemented, restated or otherwise modified from time to time as permitted hereunder and including any notes issued in exchange or substitution therefor, collectively, the "Subordinated Note"), and pursuant to which the Company has incurred and may hereafter incur other obligations and liabilities to the Subordinated Creditor. NOW, THEREFORE, in reliance upon this Agreement, to induce the Purchaser to continue to make the Loans, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

1. Definitions. All capitalized terms used but not elsewhere defined in this Agreement shall have the respective meanings ascribed to such terms in the Purchase Agreement and the Note. The following terms shall have the following meanings in this Agreement:

Purchasershall mean holders of Senior Indebtedness including, without limitation, any holder of any Senior Indebtedness after the consummation of any Permitted Refinancing.

Enforcement Actionis defined in subsection 2.7.

Loan Documentsmeans the collective reference to the Purchase Agreement and the Note, the Security Agreement, the Guaranty and each of the other agreements to which any Obligor is a party or is bound in connection with the transactions contemplated under the Purchase Agreement and the Note.

Paid in Fullor Payment in Fullshall mean the indefeasible payment in full in cash or conversion in full of all Senior Indebtedness and termination of all commitments to lend under the Loan Documents and Permitted Refinancing Loan Documents.

Permitted Refinancingmeans any refinancing of the Senior Indebtedness.

Permitted Refinancing Loan Documentsmeans any and all agreements, documents and instruments executed in connection with a Permitted Refinancing of Senior Indebtedness.

Proceedingis defined in subsection 2.3.

Purchasershall mean holders of Senior Indebtedness including, without limitation, any holder of any Senior Indebtedness after the consummation of any Permitted Refinancing.

Senior Indebtednessshall mean the obligations, liabilities and other amounts owed under the Purchase Agreement, the Note or any other Loan Document including all interest, fees, expenses, indemnities and enforcements costs, whether before or after the commencement of a Proceeding and without regard to whether or not an allowed claim, and all obligations and liabilities incurred with respect to Permitted Refinancings, together with any amendments, restatements, modifications, renewals or extensions of any thereof.

Subordinated Creditorshall mean the "Subordinated Creditor" which is signatory to this Agreement and any other holders of the Subordinated Note or any other Subordinated Indebtedness from time to time as permitted hereunder.

Subordinated Defaultshall mean a default in the payment of the Subordinated Indebtedness, or performance of any term, covenant or condition contained in the Subordinated Indebtedness Documents or the occurrence of any event or condition, which default, event or condition permits the Subordinated Creditor to accelerate or demand payment of all or any portion of the Subordinated Indebtedness.

Subordinated Default Noticeshall mean a written notice to the Collateral Agent pursuant to which the Collateral Agent is notified of the existence of a Subordinated Default, which notice incorporates a reasonably detailed description of such Subordinated Default.

Subordinated Indebtednessshall mean all of the obligations of Obligors to the Subordinated Creditor evidenced by the Subordinated Note and all other amounts now or hereafter owed by Obligors to the Subordinated Creditor pursuant to the Subordinated Indebtedness Documents.

Subordinated Indebtedness Documentsshall mean the Subordinated Note and all other documents and instruments evidencing or pertaining to any portion of the Subordinated Indebtedness, as amended, supplemented, restated or otherwise modified from time to time as permitted hereunder.

2.       Subordination of Subordinated Indebtedness to Senior Indebtedness.

2.1Subordination. The payment of any and all of the Subordinated Indebtedness hereby expressly is subordinated, to the extent and in the manner set forth herein, to the Payment in Full of the Senior Indebtedness. Each holder of Senior Indebtedness, whether now outstanding or hereafter arising, shall be deemed to have acquired Senior Indebtedness in reliance upon the provisions contained herein.

2.2Restriction on Payments. Notwithstanding any provision of the Subordinated Indebtedness Documents to the contrary and in addition to any other limitations set forth herein or therein, no payment (whether made in cash, securities or other property or by set-off) of principal, interest or any other amount due with respect to the Subordinated Indebtedness shall be made or received, and the Subordinated Creditor shall not exercise any right of set-off or recoupment with respect to any Subordinated Indebtedness, until all of the Senior Indebtedness is Paid in Full.

2.3Proceedings. In the event of any insolvency, bankruptcy, receivership, custodianship, liquidation, reorganization, assignment for the benefit of creditors or other proceeding for the liquidation, dissolution or other winding up of any Obligor or any of its Subsidiaries or any of their respective properties (a "Proceeding"):

(i)           the Purchaser shall be entitled to receive payment in full in cash of the Senior Indebtedness before the Subordinated Creditor is entitled to receive any payment upon the Subordinated Indebtedness, and the Purchaser shall be entitled to receive for application in payment such Senior Indebtedness any payment or distribution of any kind or character, whether in cash, property or securities or by set-off or otherwise, which may be payable or deliverable in any such Proceedings in respect of the Subordinated Indebtedness;

(ii)           any payment or distribution of assets of any Obligor of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Subordinated Creditor would be entitled pursuant to the Subordinated Indebtedness but for the provisions hereof shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the Collateral Agent for the benefit of Purchaser until the Senior Indebtedness shall have been Paid in Full, and the Subordinated Creditor acknowledges and agrees that such payment or distribution may, particularly with respect to interest on Senior Indebtedness after the commencement of a Proceeding, result in the Subordinated Creditor receiving less than it would otherwise receive;

(iii)           the Subordinated Creditor hereby irrevocably (x) authorizes, empowers and directs all receivers, trustees, debtors in possession, liquidators, custodians, conservators and others having authority in the premises to effect all such payments and deliveries, and the Subordinated Creditor also irrevocably authorizes, empowers and directs, the Collateral Agent until the Senior Indebtedness shall have been Paid in Full, to demand, sue for, collect and receive every such payment or distribution, and (y) agrees to execute and deliver to the Collateral Agent and the Purchaser all such further instruments confirming the authorization referred to in the foregoing clause (x); and

(iv)           the Subordinated Creditor hereby irrevocably authorizes, empowers and appoints the Collateral Agent (until the Senior Indebtedness shall have been Paid in Full) as its agent and attorney in fact to (x) execute, verify, deliver and file such proofs of claim upon the failure of the Subordinated Creditor promptly to do so (and in any event prior to thirty (30) days before the expiration of the time to file any proof) and (y) vote such claims in any such Proceeding; provided that no holder of Senior Indebtedness shall have any obligation to execute, verify, deliver and/or file any such proof of claim or vote such claim. In the event the Collateral Agent or the Purchaser (or any agent, designee or nominee thereof) votes any claim in accordance with the authority granted hereby, the Subordinated Creditor shall not be entitled to change or withdraw such vote.

The Senior Indebtedness shall continue to be treated as Senior Indebtedness and the provisions hereof shall continue to govern the relative rights and priorities of the Purchaser and the Subordinated Creditor even if all or part of the Senior Indebtedness or the security interests securing the Senior Indebtedness are subordinated, set aside, avoided or disallowed in connection with any such Proceeding and the provisions hereof shall be reinstated if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be returned by the Collateral Agent, the Purchaser or any agent, designee or nominee of such holder.

2.4 Incorrect Payments. If any payment (whether made in cash, securities or other property) not permitted under this Agreement is received by the Subordinated Creditor on account of the Subordinated Indebtedness before all Senior Indebtedness is Paid in Full, such payment shall not be commingled with any asset of the Subordinated Creditor, shall be held in trust by the Subordinated Creditor for the benefit of the Purchaser and shall promptly be paid over to the Collateral Agent or its designated representative, for application (in accordance with the Purchase Agreement, the Note or the Permitted Refinancing Loan Documents) to the payment of the Senior Indebtedness then remaining unpaid, until all of the Senior Indebtedness is Paid in Full.

2.5Sale, Transfer. The Subordinated Creditor shall not sell, assign, dispose of or otherwise transfer all or any portion of the Subordinated Indebtedness (a) without giving prior written notice of such action to the Collateral Agent, (b) unless prior to the consummation of any such action, the transferee thereof shall execute and deliver to the Collateral Agent a joinder to this Agreement, or an agreement substantially identical to this Agreement and acceptable to the Collateral Agent, in either case providing for the continued subordination and forbearance of the Subordinated Indebtedness to the Senior Indebtedness as provided herein and for the continued effectiveness of all of the rights of the Collateral Agent and the Purchaser arising under this Agreement and (c) unless following such sale, assignment, pledge, disposition or other transfer, there shall either be (i) no more than two holders of Subordinated Indebtedness or (ii) one Person acting as agent for all holders of the Subordinated Indebtedness pursuant to documentation reasonably satisfactory to the Collateral Agent such that any notices and communications to be delivered to the Subordinated Creditor hereunder and any consents required by the Subordinated Creditor shall be made to or obtained from such agent and shall be binding on the Subordinated Creditor as if directly obtained from the Subordinated Creditor. In the event of a permitted sale, assignment, disposition or other transfer, the Subordinated Creditor engaging in such sale, assignment, disposition or other transfer, prior to the consummation of any such action, shall cause the transferee thereof to execute and deliver to the Collateral Agent a joinder to this Agreement, or an agreement substantially identical to this Agreement and acceptable to the Collateral Agent, in either case providing for the continued subordination and forbearance of the Subordinated Indebtedness to the Senior Indebtedness as provided herein and for the continued effectiveness of all of the rights of the Purchaser and the Collateral Agent arising under this Agreement. Notwithstanding the failure to execute or deliver any such agreement, the subordination effected hereby shall survive any sale, assignment, disposition or other transfer of all or any portion of the Subordinated Indebtedness, and the terms of this Agreement shall be binding upon the successors and assigns of the Subordinated Creditor, as provided in Section 10 below.

2.6Legends. Until the Senior Indebtedness is Paid in Full, each of the Subordinated Indebtedness Documents at all times shall contain in a conspicuous manner the following legend:

"This Note and the indebtedness evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination Agreement (the "Subordination Agreement") dated as of____________, 2009 among Envision Solar International, Inc., a California corporation, Envision Solar Construction, Inc., a California corporation, Envision Solar Residential, Inc., a California corporation, Envison Africa, LLC, a Delaware limited liability company, [_____________], a [_______________], and Gemini Strategies, LLC, to the Senior Indebtedness (as defined in the Subordination

Agreement); and each holder of this Note, by its acceptance hereof, shall be bound by the provisions of the Subordination Agreement."

2.7     Restriction on Action by the Subordinated Creditor.

(a)Until the Senior Indebtedness is Paid in Full and notwithstanding anything contained in the Subordinated Indebtedness Documents, the Purchase Agreement, the other Loan Documents or the Permitted Refinancing Loan Documents to the contrary, the Subordinated Creditor shall not, without the prior written consent of the Collateral Agent, agree to any amendment, modification or supplement to the Subordinated Indebtedness Documents, the effect of which is to (i) increase the maximum principal amount of the Subordinated Indebtedness or rate of interest (or cash pay rate of interest) on any of the Subordinated Indebtedness, (ii) shorten the dates upon which payments of principal or interest on the Subordinated Indebtedness are due, (iii) change in a manner adverse to any Obligor or add any event of default or add or make more restrictive any covenant with respect to the Subordinated Indebtedness, (iv) change the redemption, prepayment or put provisions of the Subordinated Indebtedness, (v) alter the subordination provisions with respect to the Subordinated Indebtedness, including, without limitation, subordinating the Subordinated Indebtedness to any other debt, (vi) shorten the maturity date of any of the Subordinated Indebtedness or otherwise alter the repayment terms of the Subordinated Indebtedness in a manner adverse to any Obligor, (vii) take any liens in any assets of any Obligor or any of its Subsidiaries or any other assets securing the Senior Indebtedness or (viii) obtain any guaranties or credit support from any Person or (ix) change or amend any other term of the Subordinated Indebtedness Documents if such change or amendment would increase the obligations of any Obligor or confer additional material rights on the Subordinated Creditor or any other holder of the Subordinated Indebtedness in a manner adverse to any Obligor, the Collateral Agent or the Purchaser.

(b)Until the Senior Indebtedness is Paid in Full, the Subordinated Creditor shall not, without the prior written consent of the Collateral Agent, take or continue any action, or exercise any rights, remedies or powers in respect of any of the Subordinated Note or any other Subordinated Indebtedness Documents, or exercise or continue to exercise any other right or remedy at law or in equity that the Subordinated Creditor might otherwise possess, to collect any amount due and payable in respect of any Subordinated Note or any of the other Subordinated Indebtedness, including, without limitation, the acceleration of the Subordinated Indebtedness, the commencement of any action to enforce payment or foreclosure on any lien or security interest, the filing of any petition in bankruptcy or the taking advantage of any other insolvency law of any jurisdiction (any of the foregoing, an "Enforcement Action"). If the Subordinated Creditor shall attempt to take any Enforcement Action or otherwise seek to collect or realize upon any of the Subordinated Indebtedness in violation of the terms hereof, the holders of the Senior Indebtedness may, by virtue of the terms hereof, restrain any such Enforcement Action or other action, either in its own name or in the name of the applicable Obligor.

(c) Until the Senior Indebtedness is Paid in Full, any Liens of the Subordinated Creditor in the Collateral which may exist in breach of the Subordinated Creditor's agreement pursuant to subsection 2.7(a)(vii) or Section 18 of this Agreement shall be and hereby are subordinated for all purposes and in all respects to the Liens of the Collateral Agent and the Purchaser in the Collateral, regardless of the time, manner or order of perfection of any such Liens. In the event that the Subordinated Creditor obtains any Liens in the Collateral in violation of subsection 2.7(a)(vii) or Section 18 of this Agreement, the Subordinated Creditor (i) shall (or shall cause their agent) to promptly execute and deliver to the Collateral Agent such termination statements and releases as the Collateral Agent shall request to effect the release of the Liens of the Subordinated Creditor in such Collateral and (ii) shall be deemed to have authorized the Collateral Agent to file any and all termination statements required by the Collateral Agent in respect of such Liens. In furtherance of the foregoing, the Subordinated Creditor hereby irrevocably appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of the Subordinated Creditor and in the name of the Subordinated Creditor or otherwise, to execute and deliver any document or instrument which the Subordinated Creditor may be required to deliver pursuant to this subsection 2.7(c).

3.Continued  Effectiveness  of this  Agreement;  Modifications  to  Senior

Indebtedness.

(a)The terms of this Agreement, the subordination effected hereby, and the rights and the obligations of the Subordinated Creditor, the Collateral Agent and the Purchaser arising hereunder, shall not be affected, modified or impaired in any manner or to any extent by: (i) any amendment or modification of or supplement to the Purchase Agreement, any other Loan Document or any Permitted Refinancing Loan Document or any Subordinated Indebtedness Document; (ii) the validity or enforceability of any of such documents; or (iii) any exercise or non-exercise of any right, power or remedy under or in respect of the Senior Indebtedness or the Subordinated Indebtedness or any of the instruments or documents referred to in clause (i) above.

(b)The Collateral Agent and the Purchaser may at any time and from time to time in their sole discretion, renew, amend, refinance, extend or otherwise modify the terms and provisions of Senior Indebtedness (including, without limitation, the terms and provisions relating to the principal amount outstanding thereunder, the rate of interest thereof, the payment terms thereof and the provisions thereof regarding default or any other matter) or exercise (or refrain from exercising) any of their rights under the Loan Documents, all without notice to or consent from the Subordinated Creditor and without incurring liability to the Subordinated Creditor and without impairing or releasing the obligations of the Subordinated Creditor under this Agreement. No compromise, alteration, amendment, renewal, restatement, refinancing or other change of, or waiver, consent or other action in respect of any liability or obligation under or in respect of, any terms, covenants or conditions of Senior Indebtedness or the Loan Documents, whether or not in accordance with the provisions of the Senior Indebtedness, shall in any way alter or affect any of the subordination provisions hereof.

4.Representations and Warranties.

(a)           The Subordinated Creditor hereby represents and warrants to the Collateral Agent and the Purchaser as follows:

4.1Existence and Power. The Subordinated Creditor is duly organized, validly existing and in good standing under the laws of the state of its organization.

4.2Authority. The Subordinated Creditor has full power and authority to enter into, execute, deliver and carry out the terms of this Agreement and to incur the obligations provided for herein, all of which have been duly authorized by all proper and necessary action and are not prohibited by the organizational documents of the Subordinated Creditor.

4.3Binding Agreements. This Agreement, when executed and delivered, will constitute the valid and legally binding obligation of the Subordinated Creditor enforceable in accordance with its terms.

4.4Conflicting Agreements; Litigation. No provisions of any mortgage, indenture, contract, agreement, statute, rule, regulation, judgment, decree or order binding on the Subordinated Creditor or affecting the property of the Subordinated Creditor conflicts with, or requires any consent which has not already been obtained under, or would in any way prevent the execution, delivery or performance of the terms of this Agreement. The execution, delivery and carrying out of the terms of this Agreement will not constitute a default under, or result in the creation or imposition of, or obligation to create, any Lien upon the property of the Subordinated Creditor pursuant to the terms of any such mortgage, indenture, contract or agreement. No pending or, to the best of the Subordinated Creditor's knowledge, threatened, litigation, arbitration or other proceedings if adversely determined would in any way prevent the performance of the terms of this Agreement.

4.5No Divestiture. On the date hereof, the Subordinated Creditor is the current owner and holder of its Subordinated Note and all other Subordinated Indebtedness Documents.

4.6Default under Subordinated Indebtedness Documents. (a) On the date hereof, no default exists under or with respect to the Subordinated Note or any of the other Subordinated Indebtedness Documents.

(b)           Each Obligor hereby represents and warrants to the Collateral Agent and the Purchaser that the signatories to this Agreement under the heading "Subordinated Creditor" constitute all of the holders of the Subordinated Note and the other Subordinated Indebtedness.

5.Cumulative Rights, No Waivers. Each and every right, remedy and power granted to the Collateral Agent or the Purchaser hereunder shall be cumulative and in addition to any other right, remedy or power specifically granted herein, in the Purchase Agreement, the other Loan Documents or Permitted Refinancing Loan Documents or now or hereafter existing in equity, at law, by virtue of statute or otherwise, and may be exercised by the Collateral Agent or the Purchaser, from time to time, concurrently or independently and as often and in such order as the Collateral Agent or the Purchaser may deem expedient. Any failure or delay on the part of the Collateral Agent or the Purchaser in exercising any such right, remedy or power, or abandonment or discontinuance of steps to enforce the same, shall not operate as a waiver thereof or affect the Collateral Agent's or the Purchaser's right thereafter to exercise the same, and any single or partial exercise of any such right, remedy or power shall not preclude any other or further exercise thereof or the exercise of any other right, remedy or power, and no such failure, delay, abandonment or single or partial exercise of the Collateral Agent's or the Purchaser's rights hereunder shall be deemed to establish a custom or course of dealing or performance among the parties hereto.

6.Modification. Any modification or waiver of any provision of this Agreement, or any consent to any departure by the Collateral Agent or the Subordinated Creditor therefrom, shall not be effective in any event unless the same is in writing and signed by the Collateral Agent and the holders of at least 51% of the then outstanding principal balance of the Subordinated Note, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific instance and for the specific purpose given. Any notice to or demand on the Subordinated Creditor in any event not specifically required of the Collateral Agent hereunder shall not entitle the Subordinated Creditor to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

7.Additional Documents and Actions. The Subordinated Creditor at any time, and from time to time, after the execution and delivery of this Agreement, upon the request of the Collateral Agent and at the expense of the Company, promptly will execute and deliver such further documents and do such further acts and things as the Collateral Agent may request in order to effect fully the purposes of this Agreement.

8.Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to a Subordinated Creditor:	[___________________________]
with a copy to:	[____________________________]
If to any Obligor:	Envision Solar International, Inc. 4225 Executive Square Suite 1000 La Jolla, CA 92037 Attention: Chief Executive Officer Telecopy: (858) 799-4592
with a copy to:	Haynes and Boone, LLP 1221 Avenue of the Americas 26th Floor New York, NY 10020 Attention: Rick A. Werner, Esq. Telecopy: (212) 844-8234
If to the Collateral Agent:	Gemini Strategies, LLC 135 Liverpool Drive, Suite C Cardiff, CA 92007 Attention: Steven Winters Telecopy: (858) 509-8808
with a copy to:	Peter J. Weisman, P.C. 767 Third Avenue, 6th Floor New York, N.Y. 10017 Telecopy: (212) 676-5665

or, in the case of party named above, at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or deposit with a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

9.Severability. In the event that any provision of this Agreement is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, this Agreement shall be construed as not containing such provision and the invalidity of such provision shall not affect the validity of any other provisions hereof, and any and all other provisions hereof which otherwise are lawful and valid shall remain in full force and effect.

10.Successors and Assigns. This Agreement shall inure to the benefit of the successors and assigns of the Collateral Agent and the Purchaser and shall be binding upon the successors and assigns of the Subordinated Creditor and Obligors.

11.Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

12.Defines Rights of Creditors; Subrogation.

(a)The provisions of this Agreement are solely for the purpose of defining the relative rights of the Subordinated Creditor, the Collateral Agent and the Purchaser and shall not be deemed to (i) create any rights or priorities in favor of any other Person, including, without limitation, any Obligor, or (ii) amend any of the Loan Documents or in any way waive any of the rights that the Collateral Agent and the Purchaser have against any Obligor under the Loan Documents.

(b)Subject to the Payment in Full of the Senior Indebtedness, in the event and to the extent cash, property or securities otherwise payable or deliverable to the holders of the Subordinated Indebtedness shall have been applied pursuant to this Agreement to the payment of Senior Indebtedness, then and in each such event, the holders of the Subordinated Indebtedness shall be subrogated to the rights of each holder of Senior Indebtedness to receive any further payment or distribution in respect of or applicable to the Senior Indebtedness; and, for the purposes of such subrogation, no payment or distribution to the holders of Senior Indebtedness of any cash, property or securities to which any holder of Subordinated Indebtedness would be entitled except for the provisions of this Agreement shall, and no payment over pursuant to the provisions of this Agreement to the holders of Senior Indebtedness by the holders of the Subordinated Indebtedness shall, as between any Obligor, its creditors other than the holders of Senior Indebtedness and the holders of Subordinated Indebtedness, be deemed to be a payment by such Obligor to or on account of Senior Indebtedness.

13.Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the Subordinated Indebtedness Documents, the provisions of this Agreement shall control and govern. For purposes of this Section 13, to the extent that any provisions of any of the Subordinated Indebtedness Documents provide rights, remedies and benefits to the Collateral Agent or the Purchaser that exceed the rights, remedies and benefits provided to the Collateral Agent or the Purchaser under this Agreement, such provisions of the applicable Subordinated Indebtedness Documents shall be deemed to supplement (and not to conflict with) the provisions hereof.

14.Statement of Indebtedness to Subordinated Creditor. The Company will furnish to the Collateral Agent upon demand, a statement of the indebtedness owing from Obligors to the Subordinated Creditor, and will give the Collateral Agent access to the books of Obligors in accordance with the Purchase Agreement so that the Collateral Agent can make a full examination of the status of such indebtedness.

15.Headings. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof.

16.Termination. This Agreement shall terminate upon the Payment in Full of the Senior Indebtedness.

17.Subordinated Default Notice. The Subordinated Creditor and the Company each shall provide the Collateral Agent with a Subordinated Default Notice upon the occurrence of each Subordinated Default, and the Subordinated Creditor shall notify the Collateral Agent in the event such Subordinated Default is cured or waived.

18.No Contest of Senior Indebtedness or Liens; No Security for Subordinated Indebtedness. The Subordinated Creditor agrees that it will not, and will not encourage any other Person to, at any time, contest the validity, perfection, priority or enforceability of the Senior Indebtedness or Liens in the Collateral granted to the Collateral Agent pursuant to the Purchase Agreement, the other Loan Documents or the Permitted Refinancing Loan Documents or accept or take any collateral security for the Subordinated Indebtedness. In furtherance of the foregoing, on the date hereof, the Subordinated Creditor hereby represents and warrants that it has not taken or received a security interest in, or lien upon, any asset of any Obligor, whether in respect of the Subordinated Indebtedness or otherwise.

19.Governing Law, Jurisdiction Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such notices to it under this Agreement 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR

ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

20.Waiver of Consolidation. The Subordinated Creditor acknowledges and agrees that (i) Obligors are each separate and distinct entities; and (ii) it will not at any time insist upon, plead or seek advantage of any substantive consolidation, piercing the corporate veil or any other order or judgment that causes an effective combination of the assets and liabilities of Obligors in any case or proceeding under Title 11 of the United States Code or other similar proceeding.

[remainder of page intentionally left blank]

IN WITNESS WHEREOF, each Subordinated Creditor, each Obligor, the Collateral Agent and the Purchaser have caused this Agreement to be executed as of the date first above written.

SUBORDINATED CREDITOR:

/s/  John Evey

John Evey

COLLATERAL AGENT:
Gemini Strategies, LLC in its capacity as collateral agent for the Purchaser
By:
	Name: Steven Winters
	Title: President

THE PURCHASER:
Gemini Master Fund, Ltd., a Cayman Islands corporation
By:
	Gemini Strategies, LLC Its: Investment Adviser
By:
	Name: Steven Winters
	Title: President

EX-10.16

Exhibit 10.16

  Chevron Energy Solutions Company. a division of Chevron U.S.A. Inc.   Chevron ES Project # DWCES-31912-320 Chevron ES Contract #:4012 Chevron ES Service Order #:

WORK ORDER #03

FOR ENGINEERING SERVICES

Consultant: Envision Solar International, Inc.	Consultant Address: 4225 Executive Square, Suite 1000, La Jolla, CA 92037
Consultant Phone:858-768-5153
Work Order Amount:  Not-to-Exceed $211,350   (which shall include all applicable taxes pursuant to Section 5 of the Contract) Bond Required: No	Retention:  0%

The Consulting Services Agreement ("Contract") entered into on October 23, 2008 by and between Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc. ("Company") and Consultant is hereby amended on this date, December 16, 2008 by this Work Order which is fully incorporated into the Contract as follows:

A.SCOPE OF WORK:

I. Services to be Provided. Consultant and the Company agree that the work to be done hereunder (hereinafter referred to as the "Work") by Consultant is as follows:

Provide all labor, materials, and services necessary to provide professional engineering design and specification services for the required scope of work as described in Exhibit A at Los Angeles CCD Southwest College ("Customer") site.

Deliverables. Deliver complete design, specification (based on CSI2004) and DSA submittal package for Photovoltiac parking structure canopy, roof mounted, building elevation façade, side walks, amphitheatre and green zone area based on solar world PV model 230 panel at Los Angeles Southwest College. Assist with the DSA approval process. Lead the coordination for RFI, submittals, specifications, DSA forms and DSA approval.

B.SCHEDULE:

Consultant shall commence Work upon receipt of executed Work Order and Company's receipt of a current Certificate of Insurance as required pursuant to EXHIBIT B. In addition, the Work shall not commence until Subcontractors' receipt of a Notice to Proceed from Company for each step of the work (i.e., 10%, 50% and 100% of work), and shall complete performance of its Work no later than December 30, 2009 and according to the schedule milestones as described in Exhibit A unless otherwise directed by the Company in writing. Consultant will meet with the Company regularly to keep the Company informed of the progress of his activities.

C.COMPENSATION:

In total consideration of the services described herein to be furnished and provided by Consultant:

I.  The Work Order Amount to be paid by the Company to Consultant is listed above. The Work Order Amount is a fixed not-to-exceed price, and includes all Reimbursable Expenses. Prior to its first monthly requisition, Consultant shall submit a detailed cost breakdown showing the subdivision of the Work Order Amount into its various parts.

II.  Reimbursable expenses mean the actual, direct, out-of-pocket costs incurred for coach air travel (when such travel is requested by the Company), car rental, lodging, meals, mileage, tolls, parking, phone calls, copying, etc. Company shall reimburse consultant in the full amount to the extent that said expenses appear to be reasonable and have been approved in advance by the Company. Any expenses or costs incurred shall be charged at actual cost without markup. Original receipts must be provided to obtain reimbursement.

III. Consultant shall prepare and present to the Company, monthly, an original invoice on the attached form for services rendered and approved costs incurred as provided herein. Within forty-five (45) days of Company's receipt and approval of Consultant's invoice, the Company shall pay Consultant the amount, minus retention, therefore in U.S. dollars.

Send all invoices to:

Chevron Energy Solutions Company

2929 E. Imperial Highway,

Suite 200 Brea, CA 92821

Attn: Steve Pelaseyed

IV.  Since Consultant is not an employee of the Company, Consultant is not entitled to participate in any benefit programs provided by the Company. The Company will not provide consultant with office space, telephone, or secretarial services, except on a temporary basis, as related to a specific project assignment and for the Company's own convenience. Work hours and work location shall be separately determined for each individual assignment.

V.  No overtime shall be performed on the services hereunder nor shall any claim therefore be valid, unless the same shall have been authorized in writing by the Company prior to the performance thereof. Overtime which does not result in any extra charge to the Company may be authorized orally. As used in this section, overtime is all time in excess of eight hours per person per day or in excess of forty hours per person per week and any other time for which a rate higher than a straight time rate will be charged to the Company pursuant to this Work Order.

VI. No payment to Consultant will be authorized until Company receives a Payment and Performance Bond (if required) and a current Certificate of Insurance and any required lien releases (Exhibit C).

After a one-week review period by the Company and the Owner, Consultant shall complete final documents within one week of receipt of the Company's and Owner's comments. Consultant shall provide all printing/copying/binding services.

If additional services are required beyond the scope of this document, Consultant shall provide such additional services on a time and materials basis at the pre approved hourly rate.

NOTE: Hourly fee shall include overhead, profit, administration costs, etc. This breakdown shall be used for checking Consultant's monthly requisition for payment and for potential work scope reduction or addition (via a Change Order to this Work Order) if needed. This estimate breakdown shall be subject to the Company's approval and shall be used as a guide only and shall not be binding on the Company. The balance of the Work Order Amount shall be paid to Consultant upon:

·      Satisfactory completion of all Consultant's Work including record drawings and O&M data;

·      Acceptance thereof by the Company and the Owner, in writing;

No payment to Consultant shall operate as an approval of Consultant's Work.

D.CONSULTANT INFORMATION:

Key Contact                                 Mariana Moncada AIA  Phone: 858-768-5153

E.CONSULTANT OBLIGATIONS:

I. Responsibilities. Consultant agrees to furnish and pay for all materials, labor, services, equipment, tools, appliances, licenses, taxes, permits, and everything necessary for the proper completion of the Work described in Section A hereof. Consultant agrees to be bound to the Company by all of the terms of the agreement between the Company and the Owner as it relates to the Work set out in Section A hereof.

II. Site Visitation and Layout Responsibility. The Consultant represents and warrants that it has thoroughly familiarized itself with the complete scope of work and construction schedule for this project and has completely investigated all aspects of the Work and the work of other trades. The Consultant acknowledges that it has visited the Project site and visually inspected the general and local conditions which could affect the Work. Any failure of the Consultant to reasonably ascertain from a visual inspection of the site, the general and local conditions which could affect the Work, will not relieve the Consultant from its responsibility to properly complete the Work without additional expense to the Company. The Consultant shall lay out and be strictly responsible for the accuracy of the Work and for any loss or damage to the Company or others by reason of the Consultant's failure to set out or perform its Work correctly. The Consultant shall exercise prudence so that the actual and final conditions and details of its Work shall result in alignment of finish surfaces.

III. Safety. Consultant and its subcontractors, if any, shall work safely at all times while at Customer's facilities. Consultant shall provide adequate training and supervision to ensure that its employees and subcontractors work safely. If the job cannot be done safely, Consultant shall stop work immediately and notify Company. Also, Company may stop work if it deems that Consultant is doing the work in an unsafe manner. Consultant shall not restart work until the work can be done safely. Consultant shall not be entitled to additional compensation or an extension of time if work is stopped due to unsafe conditions. Consultant and its subcontractors, if any, will comply with all of Customer's safety procedures and protocols, as well as local, state, and federal safety codes and requirements, including OSHA. Prior to starting construction, Consultant will provide Company with a written copy of its Injury and Illness Prevention Plan for review. Any lost time accident sustained by any of Consultant's employees, or Consultant's subcontractors' employees, shall be reported to the Chevron ES Safety Manager within 24 hours (Gary Nelson, Phone Number 651-905-5740, Fax Number 651-905-5701).

F. OTHER:

Consultant shall adhere to the insurance and any other applicable requirements as set forth in the Design Build Finance Agreement between Los Angeles Community College District Southwest College and Company and attached as Exhibit B.

Upon execution of this Work Order, it shall become part of and subject to all the terms and conditions of the Contract, to which this Work Order shall be attached. All other terms and conditions provided in the Contract remain unchanged.

IN WITNESS WHEREOF, the duly authorized representative of each of the parties hereto has executed this Work Order in duplicate originals to be effective as of December 16, 2008.

Envision Solar International, Inc.			CHEVRON ENERGY SOLUTIONS COMPANY, a division of Chevron U.S.A. Inc.
By:	/s/ Mariana Mencada	By:
	(Signature)		(Signature)
Print Name:	Mariana Mencada	Print Name:
Title:	Senior Architect	Title:

William Brockenborough

General Manager - Operations

EXHIBIT A

1.Ownership of Documents

All documents provided by the Company, at any time, will remain the property of the Company and are to be returned to the Company upon request. All documents prepared by Consultant under this Work Order shall be the property of the Company. The Company agrees to indemnify, defend, and hold the Consultant harmless and releases the Consultant from any liability or claims arising out of the use of the documents for any project other than the project contemplated in this Work Order.

2.Required Services

Develop design package based on solar world model 230 carport structures, roof mounted, building elevation façade, side walks, amphitheatre and green area for complete DSA approval as outlined in scope of work below.

Other Requirements:

A.       A primary consideration for the Consultant throughout this project shall be minimizing construction costs. Consultant shall, if consistent with sound professional practices, reuse existing equipment and materials wherever practical and in good condition. Arbitrary replacement of existing equipment or materials without due diligence in investigating viability of reusing existing equipment or materials is unacceptable. Consultant shall carefully consider placement of equipment to minimize conduit and piping lengths.

B.       Consultant shall accurately identify all obstacles to moving large equipment into place and shall identify temporary or permanent relocation of such obstacles on the drawings.

C.       Consultant shall clearly mark with spray paint during a site visit all asbestos and other hazardous materials to be removed as a result of his work.

D.       Consultant's specifications shall be up-to-date. Utilization of outdated standards or specifications, or specification of discontinued equipment, is unacceptable.

E.       All assumptions made by Consultant which can materially affect installation costs shall be clearly stated in writing prior to completing plans and specifications.

F.      If Consultant determines that a substantial deviation is required or recommended from the indicated scope of work, Consultant shall notify the Company in writing as soon as possible upon this determination.

G.       The Consultant will perform his or her services with due and reasonable diligence consistent with sound professional practices, providing adequate staff and experience to complete the project to meet the intent of the Company's scope of work. Should the consultant discern that the schedule will not be met for any reason, he or she shall so notify the Company as soon as practically possible.

H.       If additional construction costs are incurred due to omissions or negligence by Consultant, the Consultant shall provide the additional services necessary to design the necessary changes for no additional fee. Hidden conditions are not considered omissions or negligent acts. If additional construction costs are incurred due to an error, omissions, or a negligent act by Consultant, the additional cost shall be born by the Consultant or their insurance carrier.

I.        Consultant shall design the modifications to the existing systems and the installation of new equipment and systems utilizing new equipment and materials equivalent to Owner's existing standards.

J.        All critical dimensions shall be verified by the Consultant. Drawings provided by Company or Owner shall not be assumed to be correct for critical dimensions. Notes requiring Subcontractor to verify critical dimensions shall be unacceptable.

K.       Control valves shall be included in the Consultant's designs and specifications.

L.       The Work Order Amount for Consultant's Work shall include costs for any required structural engineering work.

M.      Consultant's drawings shall clearly indicate any existing obstacles requiring a less than optimal pipe or duct routing, equipment location, etc. to the extent possible by review of the drawings and performing a field survey of the existing conditions. Conditions that exist and are not obvious without demolition of existing structure or wall shall be considered hidden conditions.

N.       Validity of reusing versus replacing existing air handlers, pumps, etc. shall be based on field measurements. Measurements shall be performed by the Consultant. Assuming original design conditions are still valid shall be unacceptable.

  O.        Any additional work beyond the scope of this document which results in increased compensation to the Consultant must be authorized in writing, prior to performing the work.

P.        Consultant's professional services shall be performed with the degree of skill and care as is consistent with the degree of reasonable and ordinary skill and care currently and commonly exercised by a reputable member of the design profession in the state in which the project is located under the same or similar circumstances.

Q.       Work will be invoiced on a monthly basis using the actual time and expenses spent on the project to date. All expense charges must be substantiated with receipts. All invoices must be substantiated, if required, with time sheets for all personnel assigned to the project.

  R.        All Work must be prepared or supervised by a licensed Professional Engineer that is registered in the State where the installation is to occur. Design drawings and specifications shall be stamped and signed by the registered Professional Engineer.

3.                 Communication

Unless specifically otherwise authorized, all communication from the Consultant on this project shall be through the Company. There shall be no communication directly between the Consultant and the Owner or Subcontractors unless specifically authorized in writing by the Company.

4.                 Confidentiality

Consultant agrees that any data obtained as the result of this Work Order is confidential and remains the property of the Company. Consultant also agrees that it will not, during the term of this Work Order or subsequent to the expiration or termination thereof, disclose to any third party any information which Consultant acquired from or about the Company (or any of its affiliates) or its plans or operations, as a result of the confidential relationship created herein, and Consultant shall not use for its own benefit any of such information.

SCOPE OF WORK

The basic intent of this Work Order is to retain a design consultant as a single source to perform all or specified design services and to manage the design development phase of the outlined scope of work with minimum input, other than review and approval, from the Company's staff. The following items are to be included in the scope of work

Consultant shall work with Company, to provide the required system ADA, Architectural design, leading coordination effort among all other consultants related to this specific scope of work and survey as well as project management assistance. Consultant will prepare construction documents in accordance with DSA, Customer and Company's design requirement.

The project scope is as follows:

1)   Visit site to analyze project constraints.

2)   Interdisciplinary coordination with Company nd its consultants.

3)   Organization of project plans and specifications.

4)   Architectural design, specifications (based on CSI 2004(, and PV module layouts based on Solar World 230 and/or what Company provides as module specification to Consultant.

5)   Structural engineering design.

6)   Obtain DSA, local fire department, and any other required government approval.

7)   Lead overall team effort in order to achieve DSA approval.

8)   Coordinate technical requirement.

9)   Compliance with ADA access requirements where applicable. Submit hard copies aand electronic copies on CD of all drawings (Autocad 2007 and PDF files formats) to Company. Drawings will be prepared utilizing backgrounds provided by Company. If backgrounds are not available, Consultant will create them.

10)   Prepare documents for DSA review.

11)   Coordinate with Magdelan and others to expedite DSA review / back check/ and final approval

12)   Assist all consultants with CSI2004 specifications

  13)   Construction Administration Support i.e. relevant submittal review, RFIs, construction questions, forms, etc. throughout the construction period.

Attractive and innovative PV systems designs for the areas toured during the November 3, 2008 site visit and area laid out on the PV-01 sheet for Southwest College, including:

a)   Roof top solar design.

b)   Amphitheatre solar trees. Three rows of tree;like structures surrounding the amphitheatre.

c)   Two walkway areas running east west; one on the west side of the campus near the student services activities center and one on the east side of the campus near the Northeast quadrant parking.

d)   A cluster of solar trees in the common area near the Cox building.

e)   Solar rows along the top of the existing parking garage near the track and field.

f)   BIPV (Building Integrated Photovoltaic) at four locations on campus:

·Perimeter of mechanical area screen on the lecture lab building

·South façade of the gymnasium

·South façade of the lectures lab building, applied to existing steel structure

·South façade of technical education

Schedule of Work Milestone

Project documentation/DSA submittal by March 9, 2009

DSA review and approval estimated for eight weeks (i.e., May 9, 2009)

Support construction project through final completion of Parking Lot 3 and 1, which is estimated at December 30, 2009.

Fee Breakdown
10% concept design submittal	$	21,135
50% design submittal	$	84,540
100% design submittal	$	42,270
DSA and Public Agency Sign-Off	$	10,567.50
Project Construction Support	$	10,567.50
Total project fee is	$	211,350

The consultant shall work based on the 10%, 50% and 90% design process. Each step of the process requires a written "Notice to Proceed" from the Company's Project Manager Steve Pelaseyed prior to proceeding to the next level. The intention is to use the 10% conceptual design for customer approval and create a balance between production and approval process.

EXHIBIT B

DESIGN-BUILD-FINANCE AGREEMENT

FOR

THE LOS ANGELES SOUTHWEST COLLEGE

Between

LOS ANGELES COMMUNITY COLLEGE DISTRICT

and

CHEVRON ENERGY SOLUTIONS COMPANY, A DIVISION OF CHEVRON U.S.A., INC.

SECTION 6SUBCONTRACTORS AND SUBCONSULTANTS

A.    Licenses.  Each Subcontractor and Subconsultant shall be properly licensed as required by Applicable Laws to perform the portion of the Work assigned to it to perform.

B.     Competitive Bidding.To the extent required by Applicable Laws. all Subcontractors and Subconsultants shall be selected by means of a competitive selection or bidding process that complies with all Applicable Laws (including, without limitation, the provisions of the California Public Contract Code applicable to California Community College Districts) the District's Community Economic Development Program and the District's Policy on Local, Small and Emerging Businesses. Contractor will thoroughly investigate the qualifications and experience of all proposed first-Tier specialty trade subcontractors and subconsultants, including, without limitation, any factors relevant to bidder experience, skill, safety record, past history of defaults and financial responsibility. Contractor shall not subcontract. and shall disqualify from working on the Project, any individual or firm: (1) that is debarred from contracting with the District, any local agency in the State of California, any agency or department of the State of California or the federal government; or (2) that is not properly licensed or has an existing unsatisfied judgment entered against it arising from a violation of the Applicable Laws pertaining to licensing of contractors; or (3) as to which there exists reasonable evidence that the individual or firm is not qualified or Is unfit to perform, or (4) that has an average experience modifier over the prior five (5) years of greater than 1.24. All information obtained by Contractor in the course of its performance of its obligations under this Part B shall be provided to District upon request.

C.   Third-Party Rights.There is no intent on the part of District or Contractor to create any rights (including, without limitation, third-party beneficiary rights) in favor of any Subcontractor and against District and nothing contained in the Contract Documents and no course of conduct, act or omission on the part of District shall be construed as creating a direct or indirect contractual obligation on the part of District to any Subcontractor, Subconsultant or other third party.

D.     Substitutions.Contractor shall comply with all Applicable Laws in respect to substitution of any Subcontractor with another Subcontractor. All substitute Subcontractors shall be selected through a competitive bidding process that complies with the requirements of this Contract. Any request by Contractor to substitute a Subcontractor will be considered only if such request is in strict conformity with California Public Contract Code Sections 4100 et seq. commonly known as the Subcontracting and Subletting Fair Practices Act, which Sections are incorporated herein by reference. Neither approval nor disapproval of a request for substitution shall give rise to any right on the part of Contractor to an adjustment of the Contract Sum or Contract Time.

E.                Communications.Upon written request to Contractor, District shall have the right, without interfering with nor directing their performance, to communicate with the Subcontractors and Subconsultants with respect to matters that are related to Contractor's penfth mance of its obligations under the Contract Documents. Contractor shall be provided with a copy of all such written communications.

F.                 Written Agreements.By written agreement Contractor shall require each Subcontractor and Subconsultant, to The extent of the Work to be performed by the Subcontractor or Subconsuttant, to be bound to Contractor by terms of the Contract Documents and to assume toward Contractor all the obligations and responsibilities which Contractor, by the Contract Documents, assumes toward the District. Each such agreement shall preserve and protect the rights of District under the Contract Documents with respect to the Work to be performed by the Subcontractor or Subconsultant so that subcontracting thereof will not prejudice such rights. Without limitation to the foregoing, such agreements shall require the Subcontractor or Subconsultant to consent to the contingent assignment of the subcontract agreement to District as provided hereinbelow, and to participate in and be bound to the same extent as Contractor by the dispute resolution processes applicable to resolution and determination of Claims under this Contract. Contractor shall, promptly after their execution, furnish to District for its information a copy of the standard form of agreement that it proposes to use with its Subcontractors and Subconsultants. Contractor shall provide and promptly update as and when new information Is available a complete list of the names and addresses of all Subcontractors and Subconsultants. All written agreements with Subcontractors and Subconsultants shall contain provisions specifying that the Contractor shall have the right to terminate such agreements upon notice of termination of this Agreement by the District, without further obligation by District or Contractor (other than for paying for services and materials incorporated into the Project prior to District's notice of termination).

G.     Contingent Assignment.Contractor hereby assigns to District, or to such person or entity as District, In its discretion, designates, all its interest in both (1) its contracts with first-Tier Subcontractors and Subconsultants now or hereafter entered into by Contractor for performance of any part of the Work; and (2) it's rights as principal under each performance bond furnished by each first-Tier Subcontractor. Such assignment will be effective only as to those contracts which District or its designee accepts in writing. District's and its designee's sole payment obligation in the event it accepts such assignment shall be to pay in accordance with the terms of such contract for the Work performed after District's or its designee's acceptance of such assignment.

H.               Prompt Payment.Contractor shall promptly pay all amounts payable to the Subcontractors and Subconsultants. Contractor shall remain responsible, notwithstanding the exercise by District of any right in accordance with the terms of the Contract Documents, to promptly satisfy from its own funds undisputed amounts that are due to all the Subcontractors and Subconsultants who have performed Work.

I.                  Responsibility.Contractor shall, at all times, be fully responsible for the acts and/or omissions of its Subcontractors and. Subconsultants and their employees and agents. Notwithstanding the foregoing, District shall have the right, without thereby assuming any responsibility or obligation, to monitor the employment and other activities of Contractor and the Subcontractors or Subconsultants for compliance with the terms of the Contract Documents; provided, however, that in doing so District shall not interfere with or direct the performance of Work by any Subcontractor or Subconsultant. Nothing in the Contract Documents and no course of conduct by District shall be interpreted as creating or implying any contractual relationship between District and any Subcontractor, Subconsultant or other person or entity other than Contractor nor as creating or implying the existence of any obligation on the part of the District to pay, or to be responsible for the payment of, any sums to any Subcontractor, Subconsultant or person or entity.

J.    Permits.At Contractors own expense, Contractor will obtain or renew and deliver to District all permits, license, inspections and approvals of Governmental Authorities relating to design, construction or occupancy of the Project (including, without limitation, DSA permits and plan check fees) and shall obtain and pay for any annual operating permits that may be required following Final Completion of the entire Project.

SECTION 14    CEQA COMPLIANCE

In accordance with Government Code Section 5956.6(b)(1), prior to any project development, the Parties shall take all actions necessary to comply with the California Environmental Quality Act, Division 13 (commencing with Section 21000) of the Public Resources Code.

 SECTION 15    TERMINATION OF CONTRACT

A.          TERMINATION FOR CONTRACTOR BREACH.

 (1)       If the Contractor refuses or fails to prosecute the construction of the Project, Work, or any part of either, with such diligence as will ensure its completion within the Contract Time as adjusted pursuant to this Contract, or fails to complete the Project, Work, or any portion of either within the Contract Time, or if the Contractor should be adjudged bankrupt, or if Contractor-should make a general assignment for the benefit of its creditors, or if a receiver should be appointed on account of its insolvency, or the Contractor or any of its Subcontractors or Subconsultants should violate any of the provisions of this Contract, the District may serve written notice upon the Contractor and its Surety of the District's intention to take over and/or terminate this Contract, the Work or any portion of either. This notice of intent to take over and/or terminate shall contain the reasons for such intention to and a statement to that effect that the Contractor's right to perform shall cease and terminate upon the expiration of ten (10) Days unless the circumstances giving rise to such notice have ceased and/or, been corrected in a manner satisfactory to the District.

 (2)       If a Performance Bond has been issued for the Work then notice of take over and/or termination shall be also given to the Surety. In order for Surety to be entitled to take over the Work itself or through its contractor, the Surety shall: (1) give the District written notice of Surety's intention to take over and commence performance of this Contract within (15) Days of the District's service of said notice of intent to terminate upon Surety, and (2) actually commence performance of this Contract within thirty (30) Days of the District's service of said notice upon Surety.

 (3)       In the event that the District elects to take over and/or terminate, then, without limitation to District's other rights under Applicable Laws: (a) the District may, without liability for so doing, take possession of and utilize in completion of the Work such materials, appliances, plants and other property belonging to the Contractor and its Subcontractors that are on the Site and reasonably necessary for such completion; (b) Surety and Contractor shall be jointly and severally liable to the District for any resulting Loss to the District; and (c) District shall have the right, without duplication and in addition to its other rights and remedies under this Contract or Applicable Laws, to withhold any payment to Contractor and/or by Unilateral Change Order to reduce the Contract Sum by the amount of any Loss resulting from Contractor's breach.

 (4)       In the event that District elects to take over or terminate the Work or Contractor, then Contractor's right to payment for the portion of the Work completed in accordance with the terms of the Contract Documents shall be limited to the amounts set forth in Section 15, C, (3), below.

 (5)       In the event that District elects to take over or terminate in accordance with this Section 15, A, then Contractor shall, without limitation to any of its other obligations under the Contract Document, comply with the requirements of Section 15, C, (1), below.

 B.          Termination by District for Convenience.

 (1)       The District may terminate the Project, Work or this Contract, in whole or, from time to time, in part, if the District determines that a termination is in the District's interest.

 (2)       Such termination for convenience shall be effective upon delivery to the Contractor of written notice specifying that the termination is for the convenience of the District, the extent of termination, and the effective date of such termination.

 C.          Obligations of Contractor Upon Termination (for Cause or Convenience) by District.

 (1)       After receipt of notice of termination by District, and except as otherwise directed by the District's representative, the Contractor shall, regardless of any delay in determining or adjusting amounts due, if any, to Contractor, immediately proceed with the following obligations:

(a)  Stop Work as specified in the District's notice.

(b)  Complete any Work specified in the notice to be continued by Contractor in accordance with the Contract Documents.

(c)  Leave the Site and in a safe and sanitary manner such that it does not pose any threat to the public health or safety.

(d)  Provide to District, in writing, no later than two (2) Days after request by District, a statement: (1) listing all subcontracts, purchase orders and contracts between Contractor and each Subcontractor and Subconsultant that are outstanding, as well as any change orders, amendments and modifications thereto; (2) of the status of invoicing, payments and balance owing under each such subcontract, purchase order and contract; (3) of the status of performance and any claims asserted under each such subcontract, purchase order and contract; and (4) such other information as District may determine necessary in order to decide whether to accept assignment of any such subcontract, purchase order or contract;

(e)  promptly following and in accordance with District's written direction: (1) .-asOrt'Ito District or its designee those subcontracts, purchase orders or contracts, or portions thereof, between Contractor and a Subcontractor or Subconsultant that District elects to accept by assignment; (2) cancel, on the most favorable terms reasonably possible, any subcontract, purchase order or contract, or portion thereof, that District does not elect to accept by assignment; and (3) if requested by District, settle, with the prior written approval of District of the terms of settlement, all outstanding liabilities to Subcontractors with respect to the Work terminated or discontinued.

(f)  Place no further subcontracts or orders, except as necessary to complete the continued portion of the Contract, Project or Work.

 (2)       Termination or take over of the Contract or Work by District for cause shall not relieve the Surety of its obligations under the Performance Bond and Payment Bond.

    SECTION 16    MAINTENANCE OF RECORDS; AUDIT

 A. The Contractor, and any Subcontractors and Subconsultants, shalt keep or cause to be kept true and complete books, records, and accounts of alt financial transactions In the course of its activities and operations related to the Project. These documents may Include sales slips, invoices, payrolls, personnel records, requests for payment, and other data relating to all matters covered by the Contract Documents. At all times during and for four (4) years following the expiration of the Term of this Contract the Contractor, and any Subcontractors and Subconsultants, shall retain such data and records. Contractor shall make available for inspection and/or copying by District (at District's expense) at its principal place of business all requested data and records at any time during normal business hours, and as often as the District deems necessary. Upon explratkm of the Term of this Contract, if requested by District and upon receipt of payment for the same. Contractor shall provide District with one (1) complete copy of all books, records and accounts of all financial transactions in the course of its activities and operations related to the Project. Without limitation to District's other rights or remedies under Applicable Laws, failure to make requested records available for audit by the date requete.d witi constitute grounds for termination by District of this Contract for cause

    SECTION 17    LABOR COMPLIANCE PROGRAM AND PROJECT LABOR AGREEMENT

A.        Contractor and all the Subcontractors and Subconsultants shall at all times comply with the requirements of the Project Labor Agreement. Contractor shall include, and shall require the Subcontractors to include, contractual provisions in all contracts they enter into for the performance of the Work, requiring each Subcontractor, of every Tier, who furnishes any labor for the performance of Work, to comply with the provisions of the Project Labor Agreement at no additional cost. Any requirement currently set forth in, or hereafter developed, adopted or implemented pursuant to the terms of the Project Labor Agreement, that Is applicable to the Project, that is not set forth herein or that is by mistake incorrectly stated, shall be deemed to be inserted in the Contract and shall be read and enforced as though it were included herein; and, if through mistake or otherwise any such requirement is not inserted or if inserted and requires correction, then upon request of either Party this Contract shall forthwith be amended by Modification to make such insertion or correction. In the event of a conflict between the Project Labor Agreement and the provisions of the Contract Documents, the Project Labor Agreement shall control.

B.         Pursuant to California Labor Code Section 1771.7, District has implemented and shall enforce Labor Compliance Program that has been established for the Project A pre-construction conference will be held for the benefit of Contractor and the SuboOntractors and Subconsultants to discuss labor requirements of the Labor Compliance Program that apply to the Project at which attendance by Contractor is mandatory. The Labor Compliance Program includes, without limitation, provisions requiring Contractor to comply with the prevailing rates of wages, maintenance and submission of weekly certified payroll records, employment of apprentices and, compliance with legal hours of work, and debarment Contractor shall post *Notice of Initial Approver of the District's Labor Compliance Program at the Site in accordance with 8 California Code of Regulations 16429. Contractor, and any Subcontractors and Subconsultants, are required to comply with the requirements of the Labor Compliance Program, at no additional cost to District. Payroll records shall be certified and submitted to the labor compliance office and furthermore shall be available for inspection at all reasonable hours at the principal office of Contractor. Contractor shall include, and shall require the Subcontractors and Subconsultants to include, contractual provisions In all contracts they enter into for the performance of the Work, requiring each Subcontractor and Subconsultant, of every Tier, who furnishes any labor for the performance of Work, to comply with these provisions at no additional cost. Contractor and the Subcontractors and Subconsultants shall comply with all applicable provisions of the California Labor Code and the Labor Compliance Program relating to prevailing wage, hours of work, apprentices, and maintenance and submission of certified payroll reports, and shall pay appropriate penalties as described above, for failure to comply pursuant to the California Labor Code, including, but not limited to, Sections 1775, 1776, 1777.7 and 1813.

B. Hours of Work.

(1)     As provided in Article 3 (commencing at Section 1810), Chapter 1, Part 7, Division 2 of the Labor Code, eight (8) hours of labor shall constitute a legal Day's work. The time of service of any worker employed at any time by Contractor or by any Subcontractor or Subconsultant on any subcontract under this Contract upon the Work or upon any part of the Work contemplated by this Contract shall be limited and restricted by Contractor to eight (8) hours per Day, and forty (40) hours during any one week, except as hereinafter ,provided. Notwithstanding the provisions herein above set forth, Work performed by employees of Contractor in excess of eight (8) hours per Day and forty (40) hours during any one week, shall be permitted upon the Work upon compensation for all hours worked in excess of eight (8) hours per Day at not less than one and one-half times the basic rate of pay.

(2)     Contractor shall keep and shall cause each Subcontractor and Subcontractor to keep an accurate record showing the name of and actual hours worked each calendar day and each calendar week by each worker employed In connection with the Work or any part of the Work contemplated by this Contract. The record shall be kept open at all reasonable hours to the inspection of District and to the Division of Labor Law Enforcement, Department of Industrial Relations of the State of California.

(3)    Pursuant to Labor Code Section 1813, Contractor shall pay to District (or District may reduce the Contract Sum by the amount of) a penalty of twenty-five dollars ($25) for each worker employed in the execution of this Contract by Contractor or by any Subcontractor or Subconsultant for each Day during which such workman is required or permitted to work more than eight (8) hours in any Day and forty (40) hours in any one calendar week In violation of the provisions of Article 3 (commencing at Section 1810), Chapter 1, Part 7, Division 2 of the Labor Code. Unless compensation to the worker so employed by Contractor is not less than one and one half (1 1/2) times the basic rate of pay for all hours worked in excess of eight (8) hours per Day.

(4)   Any Work necessary to be performed after regular working hours, or on Sundays or other holidays shall be performed at Contractor's own expense. Contractor will also pay at its own expense for overtime inspection costs which are not authorized by District and are over and above the normal rate.

C. Apprentices.

(1)   Contractor acknowledges and agrees that this Contract Is governed by the provisions of Labor Code Section 1777.5. it shall be the responsibility of Contractor to ensure compliance with this Paragraph and with Labor Code Section 1777.5 for all apprenticeable occupations.

(2)   Apprentices of any crafts or trades may be employed and, when required by Labor Code Section 1777.5, shall be employed provided they are properly registered in full compliance with the provisions of the Labor Code.

(3)   Every such apprentice shalt be paid the standard wage paid to apprentices under the regulations of the craft or trade at which he is employed and shall be employed only at the Work of the craft or trade to which he is registered.

(4)   Only apprentices, as defined In Section 3077, who are in training under apprenticeship standards and written apprentice agreements under Chapter 4 (commencing at Section 3070), Division 3 of the Labor Code, are eligible to be employed. The employment and training of each apprentice shall be in accordance with the provisions of the apprenticeship standards and apprentice agreements under which he is training.

(5)   Pursuant to Labor Code Section 1777.5, if that Section applies to this Contract as indicated above, Contractor and any Subcontractor and Subconsultant employing workers in any apprenticeable craft or trade in performing any Work under this Contract shall apply to the applicable joint apprenticeship committee for a certificate approving Contractor or Subcontractor under the applicable apprenticeship standards for the employment and training of apprentices in the area or industry affected and fixing the ratio of apprentices to journeymen employed in performing the Work. However, approval as established by the joint apprenticeship committee or committees shall be subject to the approval of the Administrator of Apprenticeship. The joint apprenticeship committee or committees, subsequent to approving Contractor or the subject Subcontractor or Subconsultant, shall arrange for the dispatch of apprentices to Contractor or the Subcontractor in order to comply with this section. Contractor and each Subcontractor and Subconsultant shall submit Contract award information to the applicable joint apprenticeship committee which shall include an estimate of

journeyman hours to be performed under the Contract, the number of apprentices to be employed, and the approximate dates the apprentices will be employed. Contractor or Subcontractors shall not be required to submit individual applications for approval to local joint apprenticeship committees provided they are already covered by the local apprenticeship standards. The ratio of Work performed by apprentices to journeyman, who shall be employed in the craft or trade on the Project, may be the ratio stipulated in the apprenticeship standards under which the joint apprenticeship committee operates, but, except as otherwise provided in this Section 17, in no case shall the ratio be less than one hour of apprentices work for every five hours of labor performed by a journeyman.However, the minimum ratio for the land surveyor classification shall be less than one apprentice for each five journeyman.

(6)   Any ratio shall apply during any day or portion of a day when any journeyman, or the higher standard stipulated by the joint apprenticeship committee, is employed at the Site and shall be computed on the basis of the hours worked during the day by journeymen so employed, except for the land surveyor classification. Contractor shall employ apprentices for the number of hours computed as above before the end of the Contract. However, Contractor shall endeavor, to the greatest extent possible, to employ apprentices during the same time period that the journeymen in the same craft or trade are employed at the Site. Where an hourly apprenticeship ratio is not feasible for a particular craft or trade, the Division of Apprenticeship Standards, upon application of a joint apprenticeship committee, may order a minimum ratio of not less than one apprentice for each five journeymen in a craft or trade classification.

(7)   Contractor and each Subcontractor and Subconsultant, if covered by this Section 18, upon the Issuance of the approval certificate, or if previously approved in the craft or trade, shall employ the number of apprentices or the ratio of apprentices to journeymen stipulated in the apprenticeship standards. Upon proper showing by Contractor or Subcontractor or Subconsuitant that it employs apprentices in the craft or trade in the state on all of its contracts on an annual average of not less than one hour of apprentice work for every five hours of labor performed by a journeyman, or in the land surveyor classification, one apprentice for each five journeymen, the Division of Apprenticeship Standards may grant a certificate exempting Contractor from the 1-to-5 hourly ratio as set forth in this Section 18. This Paragraph 7 hall not apply to contracts of general contractors or to contracts of specialty contractors not bidding for work through a general or prime contractor, when the contracts of general contractors or those specialty contractors involve less than thirty thousand dollars ($30,000). Any Work performed by a journeyman in excess of eight hours per Day or 40 hours per week, shall not be used to calculate the hourly ratio required by this Section 18. "Apprenticeable craft or trade," as used in this Section 18 means a craft or trade determined as an apprenticeable occupation in accordance with rules and regulations prescribed by the Apprenticeship Council. The joint apprenticeship committee shall have the discretion to grant a certificate, which shall be subject to the approval of the Administrator of Apprenticeship, exempting a contractor from the 1-to-5 ratio set forth in this Section 18 when it finds that any one of the following conditions is met:

(a)  Unemployment for the previous three-month period in the area exceeds an average of 15 percent (15%), or

(b)  The number of apprenttma in training in such area exceeds a ratio of 1-to-5.

(c)  There is a showing that the apprenticeable craft or trade is replacing at least one-thirtieth (1/30) of its journeymen annually through apprenticeship training, either on a statewide basis or on a local basis.

(d)  Assignment of an apprentice to any work performed under a public works contract would create a condition which would jeopardize his or her life or the life, safety, or property of fellow employees or the public at large, or If the specific task to which the apprentice is to be assigned is of such a nature that training cannot be provided by a journeyman.

(8)    When exemptions are granted to an organization which represents contractors in a specific trade from the 1 -to-5 ratio on a local or statewide basis, the member contractors will not be required to submit individual applications for approval to local joint apprenticeship committees. if they are already covered by the local apprenticeship standards.

(9)   Pursuant to Labor Code Section 1777.5, Contractor and any Subcontractor and Subconsultant under Contractor, who, in performing any of the Work under the Contract, employs journeymen or apprentices in any apprenticeable craft or trade and who is not contributing to a fund or funds to administer and conduct the apprenticeship program in any such craft or trade in the area of the Site, to which fund or funds other contractors In the area of the Site are contributing, shall contribute to the fund or funds In each craft or trade in which he or she employs journeymen or apprentices on the Project in the same amount or upon the same basis and in the same manner as the other contractors do, but where the trust fund administrators are unable to accept the funds, contractors not signatory to the trust agreement shall pay a like amount to the California Apprenticeship Council. The Division of Labor Standards Enforcement is authorized to enforce the payment of the contributions to the fund or funds as set forth in Labor Code Section 227.

(10)   The responsibility of compliance with this Section 18 and Section 1777.5 for all apprenticeable occupations is with Contractor.

(11)   All decisions of the joint apprenticeship committee under this Section 18 and Section 1777.5 are subject to Section 3081.

(12)   It shall be unlawful for an employer or a labor union to refuse to accept otherwise qualified employees as registered apprentices on the grounds of race, religious creed, color, national origin, ancestry, sex, or age, except as provided in Section 3077.

(13)   Pursuant to Section 1777.7, in the event Contractor or a Subcontractor willfully fails to comply with the provisions of this Section 18 and Section 1777.5 of the Labor Code:

(a)  The Director of Industrial Relations shall deny Contractor or a Subcontractor, both individually and in the name of the business entity under which Contractor or the Subcontractor Is doing business, the right to bid on or to receive, any public works contract for a period of up to one year for the first violation and for a period of up to three (3) years for the second and subsequent violations. Each period of debarment shall run from the date the determination of noncompliance by the Administrator of Apprenticeship becomes an order of the California Apprenticeship Council.

(b)  Contractor or a Subcontractor or Subconsultant who violates Section 1777.5 shall forfeit as a civil penalty an amount not exceeding one hundred dollars ($100) for each calendar day of noncompliance. Pursuant to Section 1727, upon receipt of a determination that a civg penalty has been imposed, District may reduce the Contract Sum by the amount of the civil penalty .

(14)    In lieu of the penalty provided for above, the Director of Industrial Relations may for a first time violation and with the concurrence of the joint apprenticeship committee, order Contractor or Subcontractor or Subconsultant to provide apprentice employment equivalent to the work hours that would have been provided for apprentices during the period of noncompliance.

(15)    Any penalties assessed by the awarding body pursuant to this Section 18 shall be deposited in the general fund of District

(16)    The interpretation and enforcement of Labor Code Section 1777.5 shall be in accordance with the rules and procedures of the California Apprenticeship Council.

(17)    Contractor shall become fully acquainted with the Applicable Laws regarding apprentices prior to commencement of the Work. Special attention is directed to Sections 1777.5, 1777.6, and 1777.7 of the Labor Code. and Title 8, California Code of Regulations, Section 200 et seq. Questions may be directed to the State Division of Apprenticeship Standards, 455 Golden Gate Avenue, San Francisco, California.

SECTION 19  BONDING REQUIREMENTS

Prior to commencing Work, Contractor shall furnish, without adjustment to the Contract Sum, a Performance Bond in an amount equal to one hundred percent (100%) of the Contract Sum and a Payment Bond to guarantee payment of all claims for labor and materials furnished, in an amount equal to one hundred percent (100%) of said Contract Sum (collectively 'Bonds"). The Bonds shall be issued using the forms in Attachment "M" - "Performance and Payment Bond Forms". The Surety(ies) supplying the Payment Bond and Performance Bond shall be an 'admitted surety insurer," as defined by Section 995120 of the Code of Civil Procedure authorized to do business In the State of California, and reasonably satisfactory to District. The Surety supplying the Performance Bond shall have an A.M. Best's Insurance Rating of not less than The Payment and Performance Bonds shall remain in effect until Final Completion of the entirety of the Work and payment of all stop notices and Claims by Contractor or the Subcontractors, of any Tier, have been satisfied. The filing of Performance and Payment Bonds shall provide security to the District to ensure the proper completion of the construction under this Contract, including the initial warranty period, and are not being furnished to cover the performance of any energy guaranty or guaranteed savings under this Contract. The Payment Bond and Performance Bond shall each name the District as obligee. Neither Changes nor adjustments to the Contract Sum or Contract Time shall in any way release or exonerate Contractor or its Surety(ies) from their obligations, and notice thereof shall be waived by the Surety(ies).

SECTION 20  BONDING REQUIREMENTS

[intentionally omitted]

SECTION 21 CONTRACTOR WARRANTY, CONTRACTOR PERFORMANCE GUARANTEE AND SUBCONTRACTOR WARRANTIES

A.        Contractor Warranty. Contractor guarantees that all materials, equipment, workmanship related to the Project Facility shall be free of defects for a period of twelve (12) months from Substantial Completion of the Project Facility. The Contractor Warranty shall be renewed for any portion of the labor, equipment appears within twelve (12) months after Substantial Completion and shall be thereafter extended for an additional period of twelve (12) months. All services provided under the Contractor Warranty shall be performed in a timely manner and at the reasonable convenience of the District. The Contractor Warranty expressly excludes any remedy for damage caused by improper use by District, improper or inadequate maintenance by District, corrosion, erosion or deterioration (other than corrosion, erosion or deterioration caused by a defect in the Work), abuse by District, modifications or repairs not performed by an authorized Subcontractor (unless Contractor has failed, after request by District, to provide for repair by an authorized Subcontractor), improper operation by District, or normal wear and tear under normal usage. The Contractor Warranty is not intended and shall not be interpreted as a limit upon the District's rights under any Subcontractor warranties that are required by the Project Criteria or that are otherwise provided in connection with the Work. Contractor's liability under the Contractor Warranty shall be limited to repairing or replacing (if repair is not sufficient fully cure the breach of the Contractor Warranty) the labor, equipment or materials that are the basis for the breach of the Contractor Warranty (including the repair or replacement of any other property or work damaged in the course of such replacement or repair). If the Contractor is unable, after receipt of two (2) written notices given to Contractor by District, to successfully repair or replace the labor, equipment or materials within six (6) months of the second notice, then the District's repair and replace warranty shall be deemed to have failed and the District's rights and remedies shall not be limited by the provisions of this Section 21.  

  B.         Subcontractor Warranties. The Subcontractor warranties for equipment and materials shall comply with the requirements of the Project Criteria. Each shall commence no earlier than the date of issuance of the Certificate of Substantial Completion for the Project Facility in which such warranted portion of the Work is contained. Contractor shall provide that each Subcontractor will provide such warranty or guarantee In writing directly to District. Warranties by Subcontractors shall be provided directly by the entity providing such extended warranty and shall run directly to the District If they do not run directly to the District, then any rights that Contractor may have under such warranty shall be deemed assigned to District. Contractor shall (as a separate service to District and not as part of its Contractor Warranty or Contractor Performance Guarantee) and at Contractors own expense, assist, facilitate and cooperate with District in exercising District's rights under the Subcontractor warranties, including, without limitation, making at District's request appropriate demands and assisting District is securing performance under any Subcontractor warranty.

SECTION 23 ASSIGNMENT OF ANTI TRUST CLAIMS

California Public Contract Code Section 7103.5(b), which is hereby incorporated by this reference, provides:

"In entering into a public works contract or a subcontract to supply goods, services, or materials pursuant to a public works contract, the contractor or the subcontractor offers and agrees to assign to the awarding body [the District] all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act, (15 U.S.C. Sec. 15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services, or materials pursuant to the public works contract or the subcontract. This assignment shall be made and become effective at the time the awarding body tenders final payment to Contractor or contractor, without further acknowledgement by the parties."

Contractor for itself and all the Subcontractors and Subconsultants agree to assign to District all rights, title and interest in and to all such causes of action Contractor and all the Subcontractors and Subconsultants may have under Section 4 of the Clayton Act, (15 U.S.C. Sect. 15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of division 7 of the Business and Professions Code), arising from purchase of goods, services, or materials pursuant to the public works contract or the subcontract. Contractor shall require assignments from all the Subcontractors and Subconsultants to comply herewith.

SECTION 24 SEPARATE CONTRACTORS

District reserves the right to perform construction or operations on the Site though Its Separate Contractors or District's own forces. District and Contractor shall cooperate to coordinate the activities of Contractor and its Subcontractors with the District's Separate Contractors, employees and agents so as avoid and minimize Delay affecting either the Work or such other construction or operations. If part of Contractor's Work depends for proper execution on the construdiun by the Separate Contractors or District's own forces, Contractor shall, prior to proceeding with that portion of the Work, promptly report to the District apparent discrepancies or defects in such construction or operations that would render the Work unsuitable. deficient or not in compliance with the Contract Documents. if a dispute arises between Contractor and a Separate Contractor as to the responsibility for maintaining the Site and surrounding area free from waste materials and rubbish, the District may dean up and allocate the cost thereof among those responsible as the District determines to be just.

SECTION 25 USE OF PREMISES

Contractor shall confine operations at the Site to areas permitted by Applicable Laws, Applicable Permits and the Contract Documents and shall not unreasonably encumber the Site or existing facilities on the Site with any materials or equipment Contractor shall not load or permit any part of the Work to be loaded with a weight so as to endanger the safety of persons or property at the Site.

SECTION 26 CLEANING UP

Contractor shall at all times keep the Site free from accumulations of waste material or rubbish caused by the performance of the Work, and at Substantial Completion and Final Completion of each Project Facility. Contractor shall remove from the all such waste material and rubbish and all tools, scaffolding and surplus materials belonging to Contractor and/or is Subcontractors, it being specifically understood that at prior to turning over any portion of the Work to the District for beneficial use and occupancy. Contractor shall leave the are to be occupied or used at the Site "broom clean," or its equivalent, unless more exactly specified.

District warrants and represents that District has, and will continue to retain at all times during the course of constriction, legal title to the Site and that said land is properly subdivided and zoned so as to permit the construction and use of said Site. District further warrants and represents that title to said land is free of any easements, conditions, limitation, special permits, variances, agreements or restrictions which would prevent, limit, or otherwise restrict the construction or use of said Site.

SECTION 28 TRENCH SHORING

As required by California Labor Code Section 6705, if the Contract Sum exceeds Twenty-Five Thousand Dollars ($25,000) and involves the excavation of any trench or trenches five (5) feet or more in depth, Contractor shall, in advance of commencing excavation, submit to District a detailed plan showing the design of shoring, bracing, sloping or other provisions to be made for worker protection from the hazard of caving ground duging the excavation of such trench or trenches. If such plan varies from the Shoring Systems Standards established by the Construction Safety Orders of the Division of Industrial Safety, the plan shall be prepared by a registered civil or structural engineer, employed by Contractor at Contractor's own expense. Nothing in this Section shall be deemed to allow the use of a system less effective than that required by such Construction Safety Orders. No excavation of such trench or trenches shall be commenced until such plan has been reviewed by District or Its Consultant assigned to conduct such review. Nothing in this Section shall be construed to impose any liability, including, without limitation, any tort liability, upon neither District nor any of its officers, agents, representatives or employees.

SECTION 29 INSURANCE

B. Coverage; Subcontractor, Subconsultant Insurance.

(1) Contractor shall maintain and shall require that every Subcontractor and Suboonsultant, of any Tier, performing or providing any portion of the Work obtain and maintain, for the duration of its performance of the Work and for the full duration of all guarantee or warranty periods set forth in the Contract Documents (and such longer periods as required below for completed operations coverage), the insurance coverage outlined in (a) through (d) below, and all such other insurance as required by Applicable Laws; provided, however, that Subcontractors not providing professional services shall not be required to provide Professional Liability coverage and except where District has given its written approval to waive said limits for a specific Subcontractor.

(a) Commercial General Liability and Property Insurance, on an 'occurrences form covering occurrences (including, but not limited to those listed below) arising out of or related to

operations, whether such operations be by the Contractor, a Subcontractor or Subconsultant or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable, involving damage or loss, of any kind: (1) because or bodily injury, sickness or disease or death of any person other than the Contractor's, Subcontractors or Subconsultant's employees; (2) sustained (a) by a person as a result of an offense directly or indirectly related to employment of such person, or (b) by another person; (3) other than to the Work itself, because of injury to or destruction of tangible property including loss of use resulting therefrom; (4) because of bodily injury, death of a person or property damages arising out of ownership, maintenance or use of a motor vehicle; (5) contractual liability insurance; and (6) completed operations, with limits as follows:

$2,000,000 per occurrence for Bodily Injury and Property Damage.

$2,000,000 General Aggregate - other than Products/Completed Operations.

$1,000,000 Products/Completed Operations Aggregate for the duration of a period of not shorter than 1 year after Final Completion and Acceptance of the Project.

$1,000,000 Personal & Advertising Injury.

Full replacement value for Fire Damage.

and including, without limitation, special hazards coverage for: $1,000,000 Material hoists

$1,000,000 Explosion, collapse & underground (XCU

(b)	Auto Liability insurance, on an occurrence form, for owned, hired and non-owned vehicles with limits of $1,000,000 per occurrence
(c)	Professional Liability insurance (only to be provided by Subconsultants or Subcontractors performing professional services), written on a "claims-made" form, with limits of:
	$1,000,000 per claim $1,000,000 aggregate
(d)	Excess Liability insurance, on an "occurrence" form, in excess of coverages provided for Commercial General Liability, Auto Liability, Professional Liability and Employer's Liability, with limits as follows:
	$1,000,000 each occurrence (or, In the case of coverage in excess of Professional Liability, each claim).
	$1,000,000 aggregate

(2) Evidence of Insurance. Upon request of District, Contractor shall promptly deliver to District Certificates of Insurance evidencing that the Subcontractors and Subconsultants have obtained and maintained policies of insurance in conformity with the requirements of this Section 29. Failure or refusal of Contractor to do so may be deemed by District to be a material default by Contractor of the Contract

(3) Builder's Risk "All-Risk" Insurance. Builder's Risk 'All Risk' Insurance will be purchased by District, which shall include primary coverage protecting the insured's interest in materials, supplies, equipment, lectures, structures, and real property to be incorporated into and forming a part of the Project and with policy limits protects up to the Estimated Maximum Value of the Project for any one loss or occurrence and with deductibles of between $5,000-$25,000 per occurrence. Said Builder's Risk policy shall be endorsed to add Contractor and its Subcontractors of the first Tier and Suboonsultants of the first Tier as additional named insureds, as their interests may appear, and to waive the carrier's right of recovery under subrogation against Contractor and all Subcontractors and Subconsultants whose interest are insured under such policy. If a claim results from any construction activity of Contractor or a Subcontractor of Subconsultant, then Contractor or the Subcontractor or Subconsultant having care, custody and control of the damaged property shall pay the deductible amount. Any loss or damage covered by the Builder's Risk Policy shall be adjusted by and payable to District, or its designee, for the benefit of all parties as their interest may appear. District shall not be responsible for loss or damage to and shall not obtain and/or maintain In force insurance on temporary structures, construction equipment, tools or personal effects, owned, rented to, or in the care, custody and control of Contractor or any Subcontractor or Subconsultant. In the event of loss or damage is caused by the acts or omissions of Contractor or its Subcontractors or Subconsultants that is not covered by the Builders Risk policy, the cost of the repair and/or replacement of such loss or damage shall be at Contractor's own expense. District, Contractor and all Subcontractors and Subconsultants each and all waive rights of subrogation against each other to the extent that said Builder's Risk policy covers property damage arising out of the perils of fire or other casualty also covered by Contractor's or a Subcontractor's or Sub consultant's insurance policy.

(4) Policy Requirements and Endorsements. Except as otherwise stated in this Paragraph 4, Contractor's self-Insurance and each policy of insurance required to be provided by Subcontractors and Subconsultants shalt comply with the following:

(a) The Contractor's self-insurance or the insurance policies shall contain waivers of subrogation rights against District, members of the Board of Trustees, District's Consultants, and each of their respective agents, employees and volunteers, and the State Allocation Board

(b) The Contractor's self-insurance or the insurance policies provided for Commercial General Liability, Auto Liability, as well as any Excess Liability coverage in excess thereof, shall be endorsed to include, individually and collectively, the District, members of the Board of Trustees, District's Consultants, and each of their respective agents, employees and volunteers, and the State Allocation Board, as additional insureds.

(c) The Contractor's self-insurance or the insurance polices shall provide that the insurance is primary coverage with respect to District and all other additional insureds, shall not be considered contributory insurance with any Insurance policies of the District or any other additional insureds, and all insurance coverages provided by District and any other additional insureds shall be considered excess to the coverages provided by the Subcontractor or Subconsultant.

(5)            Deductibles. In the event of any loss or damage covered by a policy of insurance required to be obtained and maintained a Subcontractor or Subconsultant hereunder, Contractor shall be solely and exclusively responsible for the payment of the deductible, if any, under such policy of insurance, without adjustment to the Contract Sum.

(6)             Insurer Ratings. The policies of Insurance required to be obtained by Subcontractors and Subconsultants shall be issued by Insurer having: (a) A.M. Best rated A- or better, (b) A.M. Best Financial Size Category VII or higher. and (c) authorized under California law to transact business in the State of California and authorized to issue insurance policies in the State of California. Contractor shall include in its contracts with its Subcontractors and Subconsultants provisions stating that If at any time during performance of the Work, the insurer fails to comply with any of the foregoing requirements, then within thirty (30) Days of District's or Contractor's written notice of the Insufficiency of the insurer, such insurer shaft be replaced with another insurer who does comply with said requirements.

(7)

Cancellation. Each of the foregoing policies of insurance shall require the insurer to provide, written notice to District and all additional insureds no later than thirty (30) Days prior to any cancellation, material change in terms or reduction In the limits of any Insurance required to be maintained by the Subcontractor or Subconsultant. Should any coverage required to be provided by a Subcontractor or Subconsultant be cancelled, its terms materially changed or its limits reduced below the requirements of this Section 29, then District shall have the right but not the obligation, after written notice to Contractor, to procure replacement insurance at no cost to District.

(8)

No Limitation or Waiver. Nothing contained in this Section 29 is to be construed as limiting the extent of Contractors responsibility for Losses resulting from its operations or performance of the Work under the Contract Documents. in no instance will the District's exercise of its option to occupy and use completed portions of the Work relieve Contractor of its obligation to maintain self-insurance or Subcontractor and Subconsultant insurance for the full duration of time required under this Section 29.

SECTION 30 INDEMNIFICATION

A. Contractor Indemnification Obligation. Contractor shall indemnify, hold harmless and defend the District, Board of Trustees, District's Consultants, and each of their members, officers, employees, agents, insurers and volunteers ("Indemnitee(s)"), from and against any and all Losses arising out of or relating to any of the following: (1) any act or omission of Contractor or a Subcontractor or Subconsultant, of any Tier, constituting

negligence, breach of contract, breath of warranty or willful misconduct; (2) the nonpayment of any Subcontractor or Subconsultant, of any Tier, for the Work performed; (3) the violation by Contractor or a Subcontractor, of any Tier, of any labor agreements; provided, however, that nothing contained herein shall be construed as obligating Contractor to indemnify an Indemnitee for Losses resulting from that Indemnitee's sole negligence, that lndemnitee's active negligence or willful misconduct of such Indemnitee or its agents, servants or independent contractors who are directly responsible to such lndemnitee, where such sole negligence, active negligence or willful misconduct has been determined by agreement of Contractor and that Indemnitee or has been adjudged by the final and binding findings of a court or arbitrator of competent jurisdiction. In instances where the active negligence or willful misconduct of an Indemnitee or its agents, servants or independent contractors who are directly responsible to such Indemnitee accounts for only a percentage of the Loss involved, the obligation of Contractor will be for that portion of the Loss not due to the active negligence or willful misconduct of such Indemnitee or its agents, servants or independent contractors who are directly responsible to such Indemnitee. The waiver of Consequential Damages provisions of Section 21, above, shall not apply to Contractor's indemnification obligations for Losses suffered by the District from claims made by third parties.

B. Not Limited by Insurance. The indemnification, defense and hold harmless obligations of Contractor under this Section 30, as well as any such obligations stated elsewhere in the Contract Documents: (1) shall not be limited by the amounts or types of insurance (or the deductibles or self-insured retention amounts of such insurance) which Contractor or any Subcontractor of Subconsultant Is required to carry under the terms of the Contract Documents; (2) are independent of and in addition to the Indemnitees' rights under the Insurance to be provided by Contractor or any Subcontractor or Subconsultant; and (3) shall not be limited, in the event of a claim against an Indemnitee by an employee of Contractor, a Subcontractor, a Subconsultant, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, by a limitation on amount or type of damages, compensation or benefits payable by or for Contractor or Subcontractor or Subconsultant under any workers compensation act, disability benefit act or other employee benefit program.

C. Subcontractors, Subconsultants. Contractor agrees to include provisions identical to those set forth in this Section 30 in the agreements it executes with each and every Subcontractor and Subconsultant, of every Tier. In the event Contractor fails to do so, Contractor agrees to be fully responsible to provide such defense and indemnification on the Subcontractor's or Subconsultant's behalf according to the terms of this Section 30.

D. Other Rights. Notwithstanding anything stated in this Section 30 or elsewhere in the Contract Docuinents to the contrary. an Indemnitee's right to seek equitable indemnity and contribution from Contractor is in no way diminished or precluded by any agreement by Contractor to provide express contractual indemnity to such indemnitee.

E. Defense Costs. The Contractors obligation to defend under this Section 30 includes, without limitation, the obligation to immediately reimburse an Indemnitee for any attorney's fees), court costs (statutory and non-statutory), arbitration and mediation expenses, professional, expert and consultant fees, investigative costs, postage costs, document copying costs, telecopy costs and any and all other costs and expenses associated with defense of such Indemnitee) as and when Incurred by any Indemnitee in defense of a claim by any third person or entity as a result of Contractors failure or refusal to comply with its immediate defense obligation to such Indemnitee. Nothing stated in this Section 30 or elsewhere in the Contract Documents shall be interpreted as providing or implying that the obligation of Contractor to defend an Indemnitee against an alleged Loss that is within the scope of the Contractor's indemnification obligation under this Section 30 or under any other provision of the Contract Documents is to any extent released, excused, limited or relieved by a finding, determination, award or judgment by a court or arbitrator that the alleged Loss was due to circumstances not within the scope of such indemnification obligation, provided that, in the event that such findings, determination, award or judgment states that such loss was due to the sole negligence, active negligence or willful misconduct of the Indemnitee, the Indemnitee shall reimburse Contractor for all the above-stated reimbursable costs and expenses paid by Contractor for the defense of the Indemnitee.

SECTION 32 SITE USE AND ACCESS

D. Coordination. Contractor shall: (1) coordinate its operations with, and secure the approval of, the District before using any portion of the Site; (2) leave its Work and storage areas and surrounding areas at the Site in as good condition as it found them and restore them to the condition they were in prior to its commencing the Work; (3) confine its operations, access and parking at the Site to areas permitted by Applicable Laws, Applicable Permits and the Contract Documents and not unreasonably encumber the Site with materials or equipment; and (4) keep mobile equipment and operable machinery locked or otherwise made inoperable whenever left unattended. Contractor shall confine apparatus, the storage of materials and the operations of the workers to the areas designated by District. Without limitation to the foregoing, Contractor acknowledges that it is experienced in performing construction within limited and confined areas and spaces such as those that are anticipated to exist on the Site and agrees to assume responsibility, without adjustment to the Contract Sum or Contract Time, to take all responsible measures (including, without limitation, those related to protection, storage, staging and deliveries) as may be necessary to adapt its performance to the constraints of the Site.

E. Restrictions. Contractor shall not allow any person, other than the workers, Subcontractors, Subconsultants, and authorized union representatives, or other individuals authorized by the District, to come upon any portion of the Site where the Work is being performed. Contractor shall submit to the District the names of all personnel either directly employed by Contractor or in the employ of any of the Subcontractors or Subconsultants who will be present at the Site. All personnel will be required to register and wear badges furnished by the District. Personnel not displaying badge identification will be removed from the Site. All such badges shall all be returned to the District when no longer needed for performance of the Work.

G. Prohibited Substances. Contractor shall not permit the use of tobacco or the possession of alcohol or controlled substances on the Site.

SECTION 38 NON-DISCRIMINATION

A. Contractor shall not discriminate in the provision of services hereunder because of race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability in accordance with the requirements of Applicable Laws. For the purpose of this Section, discrimination in the provision of services may include, but is not limited to the following: (1) denying any person any service or benefit or the availability of a facility; (2) providing any service or benefit to any person which is not equivalent, or in a non­equivalent manner or at a non-equivalent time, from that provided to others; (3) subjecting any person to segregation or separate treatment in any manner related to the receipt of any service; (4) restricting any person in any way in the enjoyment of any advantage or privilege enjoyed by others receiving any service or benefit; (5) treating any person differently from others in determining admission, enrollment, eligibility, membership, or any other requirement or condition which persons must meet in order to be provided any service or benefit. Contractor shall ensure that services are provided without regard to race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability. Contractor shall establish and maintain written procedures under which any person, applying for, performing or receiving services hereunder, may seek resolution from Contractor of a complaint with respect to any alleged discrimination. Such persons shall be advised by Contractor of these procedures. A copy of such procedures shall be posted by Contractor in a conspicuous place, available and open to the public, in each of Contractor's facilities where Work is to be prepared or performed.

B. Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability in accordance with requirements of Applicable Laws. Without limitation to any other provisions of this Section, in the performance of the obligations under the Contract Documents, the Contractor and the Subcontractors and Subconsultants shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S. C. 200e -217), whichever is more restrictive. Contractor and the Subcontractors and Subconsultants shall ensure that qualified applicants are employed and that employees are treated during employment without regard to race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability, in accordance with requirements of Applicable Laws. Such shall include, but not be limited to, the following: (1) employment, promotion, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation and (2) selection for training, including apprenticeship. Contractor agrees to post in conspicuous places in each of Contractor's facilities preparing or providing the Work hereunder, available and open to employees and applicants for employment, notices setting forth the provisions of this Section. Contractor shall, in all solicitations or advertisements for employees placed by or on behalf of Contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, national origin, ancestry, sex, age, sexual orientation, marital status, AIDS or disability, in accordance with requirements of Applicable Laws. Coptractor shall send to each labor union, or representative co-workers with which it has a collective bargaining agreement or other contract or understanding a notice advising the labor union or the workers' representative of Contractor's commitments under this Section.

C. In accordance with Applicable Laws, Contractor shall allow duly authorized representatives of the County, State, and Federal government access to its employment records during regular business hours in order to verify compliance with the provisions of this Section. Contractor shall provide such other information and records as such representatives may require in order to verify compliance with the provisions of this Section. If the District finds that any of the provisions of this Section have been violated by Contractor or any of the Subcontractors or Subconsultants, such violation shall, if not cured in the manner required by this Contract, constitute an Event of Default by Contractor upon which District may cancel, terminate or suspend this Contract or any portion of the Work undertaken hereunder. While District reserves the right to determine independently that the anti-discrimination provisions of the Contract have been violated, in addition, a determination by the California Fair Employment and Housing Commission or the Federal Equal Employment Opportunity Commission that Contractor or the Subcontractor or Subconsultant has violated State or Federal anti-discrimination laws shall constitute a finding by the District that Contractor or the Subcontractor or Subconsultant has violated the provisions of this Section.

D. Contractor hereby agrees that it will comply with Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794) and similar Applicable Laws relating to employment of or access to persons with disabilities, all requirements imposed by applicable Federal Regulations, and all guidelines and interpretations issued pursuant thereto, to the end that no qualified disabled person shall, on the basis of disability, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity of Contractor receiving Federal Financial Assistance.

SECTION 39 COMPLIANCE WITH DTSC GUIDELINES/IMPORTED SOILS

If the Project requires the use of imported soils, the Contractor shall be responsible to use and shall certify that the imported material it uses is free of any Hazardous Materials of any nature or type as defined in accordance with California Law and the California Health and Safety Code. The District reserves the right to reject any imported material that has come from agricultural or commercial land uses. Contractor must notify the District of the source of material and comply with all Environmental Laws, including (but not limited to) any Los Angeles Regional Water Quality Control Board rules, regulations and resolutions, and when applicable, with the guidelines of the Department of Toxic Substances Control (DTSC).

SECTION 60 CONFIDENTIALITY

Contractor shall treat all information and data furnished to it by District or its Consultants, or otherwise obtained or prepared by the Contractor concerning the Project or the Work, as strictly confidential and shall not disclose any of the same to any other person or entity unless required to do so in connection with Contractor's performance of the Contract or any filings or applications submitted to Governmental Authorities. Contractor's obligation of confidentiality hereunder shall not apply to: (1) information which is in the public domain through no action or inaction of Contractor; or (2) information proprietary to the Contractor that was in the possession of Contractor prior to the Contract Effective Date. Contractor shall instruct all of its employees and all of its Subcontractors and Subconsultants of this obligation and shall be responsible for their full compliance herewith.

Attachment D

1.7.5 Allowable Markups. Except as otherwise provided in Part .5, below, of this Paragraph 1.7.5 or elsewhere in the Contract Documents, adjustments to the Contract Sum for Compensable Changes or Deleted Work shall be calculated based upon the Allowable Costs added (in the case of Compensable Change) or saved (in the case of Deleted Work) plus the Allowable Markups set forth below, which markups shall be deemed full compensation for, without limitation, the following: (1) direct and indirect overhead, insurance and bond premiums, consumables, small tools, cleanup and profit of Contractor; (2) direct and indirect overhead, insurance and bond premiums, consumables, small tools, cleanup and profit of the Subcontractors, and Subconsultants, of every Tier; and (3) all other costs set forth in Paragraph 1.7.4, above. The Allowable Markups, shall be computed as follows:

\

.3 Lower-Tier Subcontractor or Subconsultant Work:

   (i)Compensable Change. With respect to a Compensable Change performed by a Subcontractor or Subconsultant below the first-Tier, the added Allowable Markup shall for each such Tier be (a) fifteen percent (15%) of the (b) cumulative Allowable Costs added for that portion of the Compensable Change performed by such lower-Tier Subcontractor or Subconsultant; plus (c) five percent (5%) for first Tier Subcontractors and Subconsultants, plus (d) an additional Allowable Markup on the sum of (a), (b) and (c) of twenty-five percent (25%) by Contractor.

  (ii)    Deleted Work. Subject to further adjustment as provided in Paragraph 1.7.8, below, with respect to Deleted Work involving Work to be performed by second and any lower-Tier Subcontractors, the District shall be entitled to a cumulative credit from the lower-Tier Subcontractors of (a) eight percent (8%) of the (b) Allowable Costs for portion of the Deleted Work involving the Work of such lower-Tier Subcontractors, and (c) an additional credit from the first-Tier Subcontractor on the sum of (a) and (b) of five percent (5%), and (d) an additional credit from Contractor on the sum of (a), (b) and (c) of five percent (5%).

.4 Review of Markups. It is Contractor's responsibility to review information submitted by Subcontractors and Subconsultants to ensure that all markups by Subcontractors and Subconsultants, of every Tier, comply with the requirements of the Contract Documents. Payment by the District of markups that exceed Allowable Markups shall not be considered as a waiver by the District of the right to repayment by Contractor of any markup charged that is in excess of Allowable Markups.

.5 No Markup Allowed. Notwithstanding and without limitation to anything else stated in the Contract Documents, Contractor shall not be entitled to an Allowable Markup or any other amount or allowance as markup for overhead or profit on sums due to Contractor for Extra Work that are based on agreed unit prices; or (2) other amounts with respect to which the Contract Documents provide that no additional Allowable Markup shall be paid.

EXHIBIT C

Lien Waivers and Releases

CONDITIONAL WAIVER AND RELEASE

UPON PROGRESS PAYMENT

Project Name:  

CES Contract Number:  

Upon receipt by the undersigned of a check from Chevron Energy Solutions Company ("CES") in the sum of $   

                                                                                                                                          & #160;                                                      (amount of check) 

payable to   

                      (Contractor Company name)

and when the check has been properly endorsed and has been paid by the bank upon which it is drawn, this document shall become effective to release any mechanic's lien, stop notice, or bond right the undersigned has on the job of located at   

                                               (owner's name)

                                                                                                                                                 & #160;                                                                                    

(address of location/job description--if multiple sites/locations, please specify amount of funds allocated to each site/location)

to the following extent. This release covers a progress payment for labor, services, equipment, or material furnished to 

                                                                                                                                    & #160;                                                                            (Customer's name)     

through  only and

         (date)

does not cover any retentions retained before or after the release date; extras furnished before the release date for which payment has not been received; extras or items furnished after the release date. Rights based upon work performed or items furnished under a written change order which has been fully executed by the parties prior to the release date are covered by this release unless specifically reserved by the claimant in this release. This release of any mechanic's lien, stop notice, or bond right shall not otherwise affect the contract rights, including rights between parties to the contract based upon a rescission, abandonment, or breach of the contract, or the right of the undersigned to recover compensation for furnished labor, services, equipment, or material covered by this release if that furnished labor, services, equipment, or material was not compensated by the progress payment. Before any recipient of this document relies on it, said party should verify evidence of payment to the undersigned.

Dated:                    (Contractor Company Name)

By:        

                  (Signature)

Name: 

                 (Printed or Typed Name)

Title:  

UNCONDITIONAL WAIVER AND RELEASE

UPON PROGRESS PAYMENT

Project Name:  

CES Contract Number: 

The undersigned has been paid and has received a progress payment in the in the sum of $  for labor, services, equipment,

                                                                                                                                           
60;                         (amount of check)    

or material furnished to    on the job of     located at  

                                                (Customer's name)                                              (owner's name)          (address of location/job description-- if multiple sites/locations)   

and does hereby release any mechanic's 

                                                                          (please specify amount of funds allocated to each site /location)

lien, stop notice, or bond right that the undersigned has on the above referenced job to the following extent. This release covers a progress payment for labor, services, equipment, or material furnished to    through      

                                            (Customer's name)                                                                (date)

only and does not cover any retentions retained before or after the release date; extras furnished before the release date for which payment has not been received; extras or items furnished after the release date. Rights based upon work performed or items furnished under a written change order which has been fully executed by the parties prior to the release date are covered by this release unless specifically reserved by the claimant in this release. This release of any mechanic's lien, stop notice, or bond right shall not otherwise affect the contract rights, including rights between parties to the contract based upon a rescission, abandonment, or breach of the contract, or the right of the undersigned to recover compensation for furnished labor, services, equipment, or material covered by this release if that furnished labor, services, equipment, or material was not compensated by the progress payment.

NOTICE: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM.

Dated:                    (Contractor Company Name)

By:        

                   (Signature)

Name: 

                 (Printed or Typed Name)

Title:  

CONDITIONAL WAIVER AND RELEASE

UPON FINAL PAYMENT

Project Name:  

CES Contract Number: 

Upon receipt by the undersigned of a check from Chevron Energy Solutions Company.

(CES") in the sum of $     payable to   

(amount of check)                                                                          (Contractor Company name)

and when the check has been properly endorsed and has been paid by the bank upon which it is drawn, this document shall become effective to release any mechanic's lien, stop notice, or bond right the undersigned has on the job of

                                                                                                                                                       (owner's name)

located at                                                                                                                                                                   &# 160;                                                                  

(address of location/job description -- if multiple sites/locations, please specify amount of funds allocated to each site/location)

This release covers the final payment to the undersigned for all labor, services, equipment, or material furnished to on the job, except for disputed claims for additional work in the amount of $  . Except as otherwise disclosed herein, all subcontractors and/or

(amount of disputed claims)

suppliers to the undersigned have been paid in full for the labor, services, equipment, or material included in this voucher or will be paid from the proceeds of any funds disbursed to the undersigned in accordance with this voucher; such funds will be received in trust for that purpose. Before any recipient of this document relies on it, said party should verify evidence of payment to the undersigned.

Dated:                    (Contractor Company Name)

By:        

                  (Signature)

Name: 

                 (Printed or Typed Name)

Title:  

UNCONDITIONAL WAIVER AND RELEASE

UPON FINAL PAYMENT

Project Name:  

CES Contract Number: 

The undersigned has been paid in full for all labor, services, equipment, or material furnished to  

                                                                                                                                            ;                                                    (Customer's name)

on the job of   located at  

                      (owner's name)                 (address of location/job description -- if multiple sites/locations, please specify amount of funds allocated to each site/location)

and does hereby waive and release any right to a mechanic's lien, stop notice, or any right against a labor and material bond on the job, except for disputed claims for extra work in the amount of $     . Except as otherwise disclosed herein, all subcontractors and/or

                                                                 (amount of disputed claims)

suppliers to the undersigned have been paid in full for the labor, services, equipment, or material included in this voucher or will be paid from the proceeds of any funds disbursed to the undersigned in accordance with this voucher; such funds will be received in trust for that purpose.

NOTICE: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM.

Dated:                    (Contractor Company Name)

By:        

                   (Signature)

Name: 

                 (Printed or Typed Name)

Title:  

CONTINUATION SHEET
APPLICATION AND CERTIFICATE FOR PAYMENT containing CONTRACTOR'S signed Certification is attached
Use Column I on Contracts where variable retainage for the line items may apply
			Work Completed
Item No.	Description of Work	Scheduled Value	Previous Applications	This Application	Stored Materials	Total Completed and Stored to-Date		Balance to Finish	Retainage
A	B	C	D	E	F	G (D+E+F)	%	H (C-G)	I
	SUB TOTAL OR TOTAL

EX-10.17

Exhibit 10.17

  Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc. Chevron E5 Contract #: 4012

CONSULTING SERVICES AGREEMENT

Consultant:  Envision Solar International. Inc.Consultant Address: 4225 Executive Square           

                                                                                                                                                              Suite 1000

Consultant Phone: 858-768-5151                                                  La Jolla. CA 92037                                   

Taxpayer Identification # (or SS #): 26-1342810                        

This Consulting Services Agreement ("Contract") is entered into effective as of October 23, 2008, by and between Consultant and Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc., a Pennsylvania corporation, with principal offices at 345 California Street, 18th Floor, San Francisco, CA 94104 ("Company"). The parties hereto agree as follows:

1. Work Orders. Under this Contract, Consultant shall provide the services (the "Services") and Deliverables (as hereinafter defined), described on Work Orders which shall, from time to time, be attached hereto and incorporated herein by reference. Individual Work Orders issued under this Contract shall constitute Amendments to this Contract and will be fully incorporated herein. Each Work Order shall set forth the scope of work (for both Services and Deliverables) to be performed by Consultant, payment amount and project schedule. The deliverables identified in the Work Orders, and all notes, drafts, drawings, works authored, inventions, and other information and materials created, conceived, or reduced to practice by consultant in completing those deliverables shall be collectively referred to herein as the "Deliverables". Each Work Order shall be subject to all the terms and conditions of this Contract, but shall constitute a separate and independent performance obligation of the part of Consultant and payment obligation on the part of Company.

2.   Use of Subcontractors. Consultant shall not subcontract, assign, or transfer any of its rights or obligations under this Contract without the prior written consent of Company. If Company so consents, Consultant shall remain liable and responsible to Company for the work of any subcontractor to the same extent as if the work had been performed by Consultant,

3.   Changes in Scone of Work. Company requested changes in the Scope of Work, including Services to be provided and Deliverables, and changes to compensation and project schedule shall be made by a subsequently executed Change Order, or new Work Order. Prior to issuing a Change Order or new Work Order, Company may request from Consultant a detailed estimate in writing of the cost for such extra work, and its impact on current work and scheduled completion dates, including (i) a description of work to be performed, including detailed breakdown by identifiable tasks; (ii) the estimated cost of each task; and (111) the expected dale or completion of each task. Consultant shall not proceed with any such additional requested work prior to receiving written Change Order or new Work Order authorizing the Consultant to perform the requested changes. If Company requests certain changes to the work that Consultant believes is outside an existing Scope ot Work, before proceeding with such work, Consultant shall notify Company in writing stating why it believes such work is not included in an existing Scope of Work, and Consultant's estimate of the additional cost of such work and additional time required to perform, if applicable. If the parties disagree on whether or not certain work is within an existing Scope of Work, Consultant shall proceed with performing such work under protest and such dispute shall be resolved in accordance with Section 21, "Dispute Resolution".

1

4. Term. Consultant shall complete the Services and complete and deliver to Company the Deliverables on or before the date set forth in the applicable Work Order, unless this Contract is terminated earlier pursuant to Section 16. Notwithstanding the foregoing, Company may suspend or extend time for Consultant's performance at any time, and from time-to-tlme, upon two (2) days prior written notice. Thereafter, Consultant shall resume performance as directed by Company. In the event of such suspension or extension, Consultant shall be entitled to reimbursement for additional costs reasonably and necessarily incurred by Consultant in effecting such suspension or extension period, to the extent that such additional costs are actually incurred, if claimed within thirty (30) days an,er resumption of performance or early termination of the Contract.

  5. Compensation. Company shall pay Consultant for the Services and Deliverables to be performed and delivered in connection with the work as described and identified in the applicable Wurk Order. This amount includes all royalties or other charges for patents, copyrights, trademarks, trade secrets used by Consultant in the performance of this Contract; all allowances for wages, payroll burden (i.e., insurance, payroll taxes, vacations, fringe benefits, etc.), overhead, general and administrative expenses, local telephone calls, postage, insurance, profits, fees; all social security, employment withholdings and taxes, unemployment, gross receipts, income, sales, use, occupation or cither taxes; and all costs and expenses of whatever kind, except as otherwise expressly set forth in the applicable Work Order.

6.   Billing and payment. Consultant shall bill Company monthly for work performed during the month. Consultant shall submit to the Company monthly, on the form provided by Company, a written requisition for payment showing the aggregate value of the Work performed and completed through the iast billing date, from which there shall be deducted retainage, subject to approval by the Company of the amount of the evaluation of the Work stated in each requisition, IT IS IMPFRATIVE THAT THE COMPANY RECEIVE AN ORIGINAL, HARD COPY INVOICE MONTHLY. Consultant's invoices shall set forth in reasonable detail the work performed and amounts due. In addition, Consultant shall submit to Company with its invoice, copies of receipts for each Reimbursable Expense (as defined in the applicable Work Order) over $25. Consultant shall provide copies of any other receipts for expenses for which Consultant has requested reimbursement promptly upon Company's request. Consultant shall submit invoices and copies of receipts to the address set forth in the applicable Work Order. Company shall pay Consultant the undisputed amount of such invoices within forty-five (46) days after Company's receipt and approval of the invoice. Amounts not paid within forty-five (45) days shall accrue interest at a rate of one percent (1%) per month. No payment to Subcontractor will be authorized until Chevron ES receives a Payment and Performance Bond (if required), a current Certificate of Insurance, and any Hen waivers and releases (as required).

7.   Notice. All notices in connection with this Contract shall be in writing, addressed to the addresses set forth below, and shall refer to Company's Contract Number and the number of the applicable Work Order. All notices or other communications so addressed shall be effective when received. Either party may change its address for notices by providing written notice to the other.

To: Company (Project Manager) Chevron tnergy solutions Company, a division of Chevron U.S.A. Inc.   As Specified on Work Order With copy to: Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc. 345 California Street, 18th Floor San Francisco, CA 94104 Attention: Manager, Contract Services To Consultant: Envision Solar International, Inc, 4225 Executive Square Suite 1000 La Jolla, CA 92037 Attn: Pamela Steven   Tel No: 858.768.5151 Fax No: 858.799,4592

8. Access to Premises and Equipment.Company will arrange for access to premises, facilities, equipment, personnel, and data to the extent reasonably required in order for Consultant to perform the Services and provide the Deliverables. Such access shall be provided during business hours as directed by Company, unless the parties agree on other arrangements. Consultant agrees to comply, and to cause its employees, subcontractors, consultants and any other representatives to comply, with such arrangements, including without limitation, any rules pertaining to use of designated access areas, logging in and out of the premises, or securing permits or identification required to enter the premises. Consultant shall not enter any areas outside of those for which access is provided, without prior written permission from Company.

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9. Independent Contractor. In performing this Contract, Consultant agrees that it is acting as an independent contractor and not as an employee or agent of Company. As an independent contractor. Consultant shall not be eligible for any benefits Company may provide its employees. All persons, if any, hired by Consultant shall be employees of Consultant and shall not be construed as employees or agents of Company in any respect. Consultant shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with Consultant's performance of this Contract, including without limitation, all withholding taxes, worker's compensation insurance, and similar costs.

10. Conflict Of Interest. Conflicts of interest relating to this Agreement are strictly prohibited. Except as otherwise expressly provided herein, no Party nor any director, employee or agent of any Party shall give to or receive from any director, employee or agent of any other Party any gift, entertainment or other favor of significant value, or any commission, fee or rebate in connection with this Agreement. Likewise, no Party nor any director, employee or agent of any Party, shall without prior notification thereof to all Parties enter into any business relationship with any director, employee or agent of another Party or of any Affiliate of another Party, unless such person is acting for and on behalf of the other Party or any such Affiliate. A Party shall promptly notify the other Parties of any violation of this section and any consideration received as a result of such violation shall be paid over or credited to the Party against whom it was charged. Any representative of any Party, authorized by that Party, may audit the records of the other Parties related to this Agreement, including the expense records of the Party's employees involved in this Agreement, upon reasonable notice and during regular business hours, for the sole purpose of determining whether there has been compliance with this Section.

11.   Non-Compete. During the term of this Contract, Consultant shall not accept any employment or engage in any work for anyone other than the Company to perform work for or on the specified facilities for which the Company has hired the Consultant to provide consulting services as described herein.

12.   Performance. Consultant represents to Company that Consultant possesses the degree ul" skill and knowledge necessary to perform its obligations under this Contract, and that the Services and Deliverables provided by Consultant under this Contract shall be performed with the degree of skill and care that is required by current, good and sound professional procedures and practices, and in conformance with generally accepted professional standards prevailing at the time the work is performed. If Consultant's performance of this Contract requires any permits, licenses, or performance bonds, Consultant has obtained alt such permits, licenses, and performance bonds, and shall maintain them in full force and effect throughout the term of this Contract. Consultant shall provide copies of all such permits, licenses, and performance bunds to Company, upon request. Consultant shall comply with all applicable federal, state, and local laws, codes, and regulations in performing this Contract Consultant will, at its own expense, promptly and properly perform, at the written request of Company, all corrective services necessary to conform the Services and Deliverables to the foregoing representations. Consultant understands and acknowledges that Company will rely upon the competence and completeness of Consultant's Services in fulfilling Company's contractual commitments to third parties.

13.   indemnification. Consultant shall indemnify Company, its directors, officers, agents, and employees and Company's customers' directors, officers, agents and employees against (i) Consultant's willful misconduct and /or negligent acts or omissions in Consultant's performance of this Contract; (ii) Consultant's breach of its covenants set forth in this Contract, including without limitation, its failure to comply with all applicable laws governing performance of the Services or to withhold taxes from its compensation as required by law; (iii) for any and all taxes assessed against Company that are included within the amounts paid to Consultant or otherwise are amounts Consultant is responsible for under this Contract; (iv) for any claim of infringement of any intellectual property rights arising out of or in connection with Consultant's performance or this contract; (v) for all I033, damage, expense and liability resulting from injury to or death of any person or injury to property arising out of or in connection with Consultant's negligent performance of this Contract. Consultant shall, on Company's request, defend any action, claim, or suit asserting a claim covered by this indemnity. Consultant shall pay all costs that may be incurred by Company in enforcing this indemnity, including reasonable attorneys' fees.

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14. Confidential Information. All oral or written records, reports, computer programs, written procedures, materials, documents, data or information In whatever form Company or its affiliates, agents or customers may provide Consultant in connection with this Contract (the "Information") and all Deliverables shall be considered the confidential and proprietary information of Company. Consultant agrees not to disclose, and to cause its employees, subcontractors and any other representatives not to disclose, any of the Information or Deliverables to any third party or use any such Information or Deliverables for any purpose other than the performance of this Contract, without the prior written consent of Company. Without limiting the foregoing, (i) if Consultant knew the same information or deliverables before Company disclosed it or caused it to be disclosed to Consultant or before Consultant created it for this Contract; (ii) if Consultant obtains the same information or deliverable from a third party who did not receive it directly or indirectly from Company or its affiliates, agents or customers; or (iii) if such Information or Deliverable is, at the time of disclosure by Consultant, in the public domain through no act or omission of Consultant, Consultant may use or disclose such information or deliverable as permitted by Consultant's other obligations. The obligations imposed by this Section shall survive termination of this Contract All Information and Deliverables shall be returned to Company at the earlier of Company's request or termination or completion of this Contract. As damages may not be an adequate remedy for Consultant's breach of this Section, Consultant agrees that Company also shall be entitled to the remedies of injunctive relief and specific performance for any breach by Consultant of this Section or Section 15.

15. Ownership. Company shall own all Information and Deliverables and all rights therein, including without limitation, all patent, copyright, trademark, service mark, trade secret or other intellectual property rights therein. Consultant shaJJ obtain and/or retain no right, title or interest in or to the Information and/or the Deliverables, including without limitation, any patent, copyright, trademark, service mark, trade secret or other intellectual property rights therein, and hereby assigns and transfers to Company any such rights Consultant may have in such Information and Deliverables-Consultant agrees that any copyrightable Deliverables are a work for hire. Consultant further agrees to execute, deliver, and perform all documents, acts, or things that may be necessary to assign or transfer to Company the rights granted hereby. Notice of copyright ownership of Company shall be placed by Consultant on all Deliverables in a manner and location as to give reasonable notice of the claim of copyright. To Consultant's actual knowledge, the Services and the Deliverables do not infringe on the ownership or intellectual property rights of any third party. Application for copyright and/or patent registration shall be the responsibility of Company. Consultant shall deliver such Information and Deliverables free and clear of all liens, claims, and encumbrances of any kind. The obligations imposed by this Section shall survive termination of this Contract.

16. Termination. Company may terminate this Contract or any Work Order hereto at any time for any reason by providing two (2) days prior written notice to Consultant, such termination to be effective at the end of the two (2) day notice period In the event of such termination. Company shall pay Consultant for Services and Deliverables satisfactorily performed and for all Reimbursable Expenses, if any, incurred by Consultant on or before the effective date of termination. Upon receipt of notice of termination from Company, Consultant shall thereafter seek to minimize further charges under this Contract or the applicable Work Order, whichever has been terminated. Unless earlier terminated, each Work Order shall terminate effective as of the date set forth thereon, subject to any extensions pursuant to Section 4.

17.   Access to Work and Records, Company shall have, during the term of the Contract and for two years thereafter, access at all reasonable times to all of the Consultant's and Consultant's subcontractors" personnel, accounts and records or all description pertaining to the Contract, including but not limited to computer files, to verify or review the quantity, quality, and progress of the Services, reimbursable costs, amounts claimed by the Consultant, estimates of cost for fixed rates including those applicable to proposed changes, and for any other reasonable purposes.

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18.   Insurance. Consultant shall maintain the following insurance coverage. An insurance certificate (or copy of insurance policy) and a completed Federal Form W-9 must be provided to the Company at the time of execution of this Contract and must be in effect during all periods of subsequent Work Orders. Consultant is also responsible for Its subcontractors maintaining sufficient limits of the same insurance coverage.

a)      Workers' Compensation and Employers' Liability.

(i) Workers' Compensation insurance or self-insurance indicating compliance with any applicable labor codes, acts, laws or statutes, state or federal, where Consultant performs work.

(ii) Employers' Liability insurance shall not be less than 31,000,000 for injury or death each accident.

b)      Commercial General Liability.

(i) Coverage shall be at least as broad as the Insurance Services Office (ISO) Commercial General Liability Coverage "occurrence" form, with no coverage deletions,

(ii) The limit shall not be less than $1,000,000 each occurrence for bodily injury, property damage and personal injury. If coverage is subject to a general aggregate limit, this  aggregate limit shall be twice the occurrence limit.

(iii) Coverage shall: a) by "Additional Insured" endorsement add as insureds Company, its directors, officers, agents and employees with respect to liability arising out of work performed by or for the Consultant; and b) be endorsed to specify that the Consultant's insurance is primary and that any insurance or self-insurance maintained by Company shall not contribute with it.

c)      Business Auto.

(i) Coverage shall be at least as broad as the Insurance Services Office (ISO) Business Auto Coverage form covering Automobile Liability, codes 7 and O, for hired and non- owned autos.

(ii) The limit shall not be less than $1,000,000 each accident for bodily injury and property damage.

(iii) Notwithstanding the foregoing, Consultant indemnifies Company from all loss, claims, costs, and liabilities, resulting from or arising out of Consultant's use of any automobile in connection with the performance of this Contract.

d)      Professional Liability Insurance.

(i) Errors and Omissions Liability insurance appropriate to the Consultant's profession. Coverage shall be for a professional error, act, or omission arising out of the scope of services shown in the Contract.

(ii) The limit shall not be less than $1,000,000 for each claim. If coverage is subject to an aggregate, this anfjrGgate limit shall be twice each claim limit.

e)      Additional Insurance Provisions.

(i) Simultaneous with Consultant's execution of this Contract, Consultant shall furnish Company with certificates of insurance and endorsements of all required insurance for  Consultant.

(ii) The documentation shall state that coverage shall not be cancelled except after thirty (30) days prior written notice has been given to Company.

(iii) The documentation must be signed by 9 person authorized by that insurer to bind coverage on its behalf and shall be submitted to: Chevron Energy Solutions Company, a division of Chevron U.S.A. Inc., 345 California Street, 18th Floor, San Francisco. CA  94104, Attention; Contract Administrator.

(iv) Company may inspect the original policies or require complete certified copies, at any time.

(v) Upon request, Consultant shall furnish Company the same evidence of insurance for the subcontractors as Company requires of Consultant,

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19. Limitation of Liability. NOTWITHSTANOtNG ANYTHING CONTAINED IN THIS CONTRACT TO THE CONTRARY, COMPANY SHALL NOT BE LIABLE TO CONSULTANT FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF THE PERFORMANCE OF THIS CONTRACT, IRRESPECTIVE OF EITHER PARTY'S FAULT, NEGLIGENCE (IN WHOLE OR PART), OR STRICT LIABILITY.

20.   Precautions andProtection to Property. Consultant shall plan and perform all Services, including without limitation, any Services to be performed on the premises of Company, its customers, or other third parties, so as to safeguard persons and property from injury, and to assure compliance with all reasonable and safe work practices, and federal, state, and local laws, rules and regulations, including without limitation, those applicable to work in areas adjacent to electrically charged racililies. Company may require, at Company's expense, the provision of any additional safeguards not in use but considered necessary or prudent, in Company's reasonable judgment. As part of these efforts, Consultant will assure that all of its employees, subcontractors and any other representatives that perform any Services on the premises of Company, its customers or other third parties refrain from the use, abuse, possession, selling or purchasing of illegal drugs or controlled substances, as defined under applicable federal or state law, and from the use at any time (including without limitation at meals) of alcohol, prescription drugs, or any other substance that could impair the ability to perform the Services in accordance with this Contract or to maintain a safe work place. Where reasonable cause exists to believe the foregoing provision has been violated, Consultant shall notify Company and take all appropriate steps to determine the existence of and eliminate any violation.

21.   Dispute Resolution, in the event of a dispute, controversy, or claim arising out of or relating to this Contract, the Parties shall confer and attempt to resolve such matter informally. If such dispute or claim cannot be resolved in this manner, then the dispute or claim shall be referred first to the Parties' executive officers for their review and resolution. If the dispute or claim still cannot be resolved by such officers, then the matter shall be arbitrated and either Party may file a written demand for arbitration with Judicial Arbitration & Mediation Services ("JAMS") and shall send a copy of such demand to the other Party. The arbitration shall be conducted pursuant to the appropriate JAMS Arbitration Rules in effect at the time the arbitration is commenced. For amounts in excess of 5250,000, JAMS Comprehensive Arbitration Rules and Procedures shall apply. For lesser disputed amounts, JAMS Streamlined Arbitration Rules and Procedures shall apply. The award rendered by the arbitrator shall be final and binding on the Parties and shall be deemed enforceable in any court having jurisdiction thereof and of the Parties. The arbitration shall be heard by one arbitrator, who shall have experience in the general subject matter Lo which the dispute relates- The arbitration shall take place at the JAMS office geographically closest to the site where the Work or Services has been performed. Fee Shifting: If either party ("Party") becomes involved in arbitration or litigation ("Proceeding) arising from or relating to this Contract or the performance of it, the court or arbitrator(s) in such Proceeding, or in a separate proceeding, shall award to the prevailing Party or Parties alt reasonable attorney fees, expert witness fees, and all other costs and expenses incurred in, arising from, or relating to such Proceeding.

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22. Hazardous_Materials. Consultant's_Duties Regarding Management of Hazardous Materials: consultant shall oe responsible for complying with all Applicable Laws with respect to the removal and proper disposal of all Hazardous Materials brought onto or generated by Consultant or by any of Its Subcontractors in the course of performing the Work. Consultant shall defend, indemnify and hold the Company and Customer harmless from and against any and all losses, damages, expenses, fees, claims, costs and liabilities (including, but not limited to, attorneys' fees and costs of litigation) arising out of or in any manner related to the release or threatened released ot any Hazardous Materials brought onto or generated by Consultant during the course of performing the Work. It is expressly understood that this responsibility includes protecting the Company and Customer from any clean-up responsibility imposed on the Company or Customer under Applicable Laws. Consultant shall not be responsible for any pre-existing Hazardous Materials at the Site. Consultant shall provide written notice to the company immediately upon the discovery of any pre-existing Hazardous Substances. Except in case of emergency, Consultant, or any of its subcontractors, shall not disturb, disrupt, remove," alter, dislodge, or otherwise handle any pre-existing Hazardous Substances at the Site without the prior written consent of the Company. As appropriate, the company will issue a Work Order to Consultant for the removal of any pre-existing Hazardous Substances from the Site. Consultant shall defend, indemnify and hold the company and Customer harmless from and against any and all losses, damages, expenses, fees, claims, costs and liabilities (including, but not limited to, attorneys' fees and costs of litigation) arising directly out of Consultant disturbing or causing a release of any Hazardous Substances at the Site. UNDER NO CIRCUMSTANCES SHALL THE COMPANY BE LIABLE FOR ANY INJURY TO CONSULTANT WHICH IS THE RESULT OF CONSULTANT'S EXPOSURE TO HAZARDOUS SUBSTANCES. The term "Hazardous Materials" as used herein means any material that, because of its quantity, concentration, or physical or chemical characteristics, poses a significant present or potential hazard to human health and safety or to the environment if released into the workplace or the environment.

23.   Chevron .Policies. Consultant and agency personnel are expected to comply with applicable Chevron and Chevron ES Policies (such as the Contract and Travel Policies) and Compliance Practices and Procedures (such as non-use of drugs, anti-harassment, and cell phone usage guidelines). Consultant's supervisor shall be responsible for informing the Consultant of applicable policies and ensuring that they are followed.

24.   Miscellaneous, (a) Choice of Laws. THIS CONTRACT SHALL BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA, EXCLUDING ANY CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAW OF ANOTHER JURISDICTION, (b)Waiver. The waiver by either party of any provision of this Contract shall not be deemed to be a waiver of the entire Contract, nor a continuing waiver of the same provision, (c) Severability. If any provision of this Contract is determined to be unenforceable, such unenforceable provision shall be deemed deleted from this Contract and this Contract shall be enforced without such provision, (d) Prior Work. Services performed by Consultant pursuant to Company's authorization, but before the execution of this Contract, shall be considered as having been performed subject to the provisions of this Contract (e) Publicity. Consultant shall not release any Information or Deliverables or any other information relating to this Contract, including without limitation, its existence, without the prior written approval of Company, and without giving Company the opportunity to review and comment upon any requested release, unless the disclosure is otherwise required by law. (f) Entire Agreement- This Contract, including any applicable Work Order attached hereto, contains the entire agreement and understanding between the parties as to the subject matter of the Contract and supersedes all prior or contemporaneous agreements, commitments, representations, writings, and discussions between Company and Consultant, whether oral or written, (g) Public Testimony. If requested by Company, Consultant shall provide testimony before the California Public Utilities Commission or any other public agency to substantiate the Deliverables, at additional compensation to the Consultant, (h) Amendment. This Contract may not be amended except by a writing executed by both parties hereto. No oral amendment shall be enforceable, even if supported by new consideration, (i) Conflicting Terms. In the event of any conflict between the terms of this Contract and the terms of a Work Order, the terms of the Work Order shall control, (j) Energy Policy Act. Consultant agrees that for the Work on the Project hereunder, Chevron ES shall be the "designer* as that term is identified in the Energy Policy Act of 2005, and Chevron ES shall have the exclusive right to report to any federal, state, or local agency, authority or other party, including without limitation under Section 179(b) of the Energy Policy Act of 2005, any tax benefit associated with the Work.

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25.   Communication. Unless otherwise provided in writing, Consultant communications by and with the Owner, Architect, Contractors, and other Consultants and suppliers of the Company, regardless of tier, shall be through the Company,

26.   Data_Privacy. Consultant will comply with all reasonable requests of Company with respect to protecting personal data of Company employees, customers, and suppliers it receives in connection with its performance of this Contract, including but not limited to following Company's instructions in connection with processing such personal data; implementing adequate security measures to protect such personal data; not disclosing such pereonal data to any third party without Company's written permission; and complying with all applicable data privacy laws.

27.   Successors and Assigns. This Agreement may not be assigned by either party in whole or in part without the prior written consent of the other party, which consent may not be unreasonably withheld or delayed; provided however, that Company may assign this Agreement and all related agreements without the consent of Consultant (i) to an affiliate; (ii) to an entity that is controlled by, controls, or is under common control with Company; or (iii) pursuant to a merger, consolidation, transfer of substantially all its assets, or by operation of law; and provided further that Company may assign its rights, but not its obligations, under this Agreement and ail related agreements without the consent of Consultant to (x) a lender providing financing to Company, or (y) a special purpose entity that is an affiliate of or is controlled by such lender. This Agreement will be binding on, enforceable by, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Any assignment made in contravention of this clause shall be void and unenforceable.

IN WITNESS WHEREOF, the duly authorized representative of each of the parties hereto has executed this Contract in duplicate originals to be effective as of the date and year first written above.

ENVISION SOLAR INTERNATIONAL, INC.	CHEVRON ENERGY SOLUTIONS COMPANY
	A division of Chevron U.S.A. Inc.
By:  /s/ Pamela Stevens	By:  William Brookenborough
Print Name:  Pamela Stevens	Print Name:  William Brookenborough
Its: Chief Operating Officer	General manager - Operations

EX-10.18

Exhibit 10.18

AMENDMENT AGREEMENT

This Amendment Agreement (this “Agreement”), dated as of October 30, 2009, is entered into by and among Envision Solar International, Inc., a California corporation (“Company”), Envision Solar Construction, Inc., a California corporation, Envision Solar Residential, Inc., a California corporation, and Envision Africa, LLC, a Delaware limited liability company, (collectively, 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”).

R E C I T A L S:

WHEREAS, the Company and the Investor are party to the Purchase Agreement, pursuant to which the Company issued to the Investor a Secured Bridge Note, dated November 12, 2008, in the principal amount of $591,770.83 (the “Note”);

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;

WHEREAS, the Company and the Guarantors have entered into that certain Security Agreement and that certain Intellectual Property Security Agreement, each dated as of November 12, 2008 (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;

WHEREAS, the Company defaulted on the Note, and the Envision Entities and the Investor entered into that certain Forbearance Agreement on or about April 11, 2009, pursuant to which the Investor agreed to temporarily forbear from exercising its rights and remedies under the Transaction Documents;

 WHEREAS, the Company wishes to become subject to the reporting requirements of the Exchange Act and have its Common Stock listed or quoted on the Over-The-Counter Bulletin Board (“Bulletin Board”) and requires approximately $125,000 to effect such registration and listing; and

WHEREAS, the parties have agreed (a) to amend and restate the Note in the form of Exhibit A attached hereto, pursuant to which, among other things, the Maturity Date of the Note shall be extended and the Note shall be convertible into shares of common stock of the Company, no par value per share (“Common Stock”), in accordance with the terms thereof, and (b) the Investor shall loan an additional $125,000 to the Company in consideration for the issuance of a new Secured Bridge Note in the form of Exhibit A attached hereto (“New Note” and together with the Note, the “Notes”), each on the terms and conditions set forth herein;

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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.ACKNOWLEDGMENTS.

1.1.Acknowledgment of Obligations. The Investor and the Envision Entities hereby acknowledge, confirm and agree that as of the date hereof, the Company is indebted to Investor in respect of the Note in the amount of$657,194.38 (the “Note Amount”) (consisting of $591,770.83 principal amount plus$65,423.55 of accrued interest at the default rate under the Note between the Maturity Date under the Note (April 12, 2009) and the date hereof.  The Note Amount is unconditionally owing by Envision to the Investor, without offset, defense or counterclaim of any kind, nature or description whatsoever.

1.2.Acknowledgment of Security Interests.  The Envision Entities hereby acknowledge, confirm and agree that 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 the Note (as amended and restated hereby) and the New Note.  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.

2.           AMENDMENT AND RESTATEMENT OF NOTE.The Note shall be amended and restated in the form attached hereto as Exhibit A (the “Amended and Restated Note”), which shall provide, among other things, that (i) the original principal face amount of the Note is $657,194.38, (ii) the Maturity Date shall be extended until December 31, 2010, and (iii) the Note is convertible into shares of Common Stock as set forth therein.  Such amended and restated Note shall be executed by the Company and delivered to the Investor in exchange for the surrender of the original issued Note within five (5) Business Days following the date hereof.

3.           NEW NOTE.  The Investor has or shall prior to the close of business on the date hereof advance $125,000 in loan proceeds to the Company, and the Company shall execute, deliver and issue to the Investor the New Note within five (5) Business Days following the date hereof to evidence the Company’s obligations pursuant to such loan.  The Company agrees that contemporaneously herewith it shall enter into an escrow agreement with the Investor’s counsel, as escrow agent (“Escrow Agent”), in the form of Exhibit C attached hereto (“Escrow Agreement”), pursuant to which all such funds advanced under the New Note shall be deposited into an escrow account for the benefit of the Company (“Escrow Account”) and distributed only in accordance with the terms of such Escrow

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Agreement and Section 4.9 below.  To effect a disbursement under the Escrow Agreement, the Company shall deliver written notice (which may be by email) (“Disbursement Notice”) to the Investor specifying (a) the amount of such disbursement, (b) the name, address and wire transfer instructions of the Person to which such disbursement is to be made on behalf of the Company, (c) a description of the use of such proceeds, together with an explanation as to why such use of proceeds is included within the parameters set forth in Section 4.9 below, and (d) such other information as may be reasonably requested by the Investor.  The Person to which such disbursement shall be made (i) shall be the Person rendering services to the Company in connection with Section 4.1 or 4.9 and (ii) shall not be the Company or any direct or indirect Affiliate of the Company.  Promptly following receipt of any Disbursement Notice, if the Investor approves of such disbursement in accordance with Section 4.9 below, the Investor shall instruct the Escrow Agent to disburse the amount set forth in such Distribution Notice to such Person providing services set forth therein.  Upon the Company completing all expenses required in connection with satisfying Section 4.1 below, it shall promptly notify the Investor, and if any amount remains in the Escrow Account at such time, such amount shall either be (1) disbursed to the Company, or (2) paid to the Investor as repayment under the New Note, as may be elected by the Investor in its sole discretion.  The Investor shall instruct the Escrow Agent to disburse such remaining amount in accordance with such election.  If any amount remains in the Escrow Account (x) on December 31, 2010 or (y) at any time following any acceleration of the New Note by the Holder pursuant to Section 8(b) thereof, such amount shall be paid to the Investor as repayment under the New Note, and the Investor shall so instruct the Escrow Agent to disburse such remaining amount.  The term “Note” under the Security Documents and Subsidiary Guaranty is hereby amended to also include the New Note, and the Company’s and its Subsidiaries’ obligations under the New Note, Subsidiary Guaranty and other Transaction Documents shall be secured by all the assets of the Company and its Subsidiaries as set forth in the Security Documents.

4.           OTHER AGREEMENTS.

4.1           Exchange Act Reporting Requirements; Reverse Split.  The Company shall cause the Company to be subject to the reporting requirements of the Exchange Act and listed or quoted for trading on the Bulletin Board on or prior to April 1, 2010 and shall promptly take any and all actions necessary and appropriate to effectuate such Exchange Act registration and Bulletin Board listing, including without limitation having the requisite independent audit of its financial statements, filing a Form 10 with the Securities and Exchange Commission (“Commission”) (and promptly amending such Form 10 in response to Commission comments), and securing a market maker to file a listing application with the Bulletin Board.  At all times after such Form 10 becomes effective, the Company shall have filed with the Commission all reports required to be filed by it under the Exchange Act by issuers that are subject to the reporting requirements of the Exchange Act (whether or not the Company is subject to the reporting requirements of the Exchange Act), and the Company shall thereafter continue to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all such reports with the Commission. Prior to the filing of such Form 10, the Company shall effect a forward stock split of the Company’s Common Stock (“Split”) whereby each share of Common Stock outstanding is subdivided into between 20 and 60 shares of Common Stock (such figure, the “Split Factor”), provided that the Split Factor shall be subject to approval by the Investor.  The Company

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shall not engage in a Reverse Merger Transaction without the prior written consent of the Investor (which consent may be withheld in its sole discretion and which may be conditioned upon any terms imposed by the Investor).  The Company shall not issue any equity securities or Common Stock Equivalents (as defined in the Notes) without the prior written consent of the Investor, except for (i) Common Stock issued or the issuance or grants of options to purchase Common Stock pursuant to the Company’s stock option plans and employee stock purchase plans outstanding as they exist on the date of this Agreement, (ii) Common Stock issued to any of the Company’s creditors in connection with the satisfaction of any of the Company’s Indebtedness to such creditors and (iii) equity securities of the Company issued to investors in connection with a private placement or series of private placements that result in aggregate proceeds to the Company of up to $10 million, provided that (a) in each case the Company shall notify the Investor in writing prior such issuance, and (b) at the election of the Investor 25% of the proceeds of any such private placement shall be paid directly to the Investor in repayment of the Amended and Restated Note and New Note.  The Company covenants and agrees that, after such Form 10 becomes effective, neither it nor any other Person acting on its behalf will provide the Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Investor shall have executed a written agreement regarding the confidentiality and use of such information (the Company understands and confirms that the Investor shall be relying on such covenant in effecting transactions in securities of the Company).  The Company represents and warrants that it possesses, or believes it can obtain in a timely manner, all documents and information necessary or appropriate for timely complying with all terms contained in this paragraph, including without limitation having the requisite financial statements prepared and audit conducted.

4.2           Reservation of Common Stock.  At all times hereafter the Company shall cause to be authorized and reserved for issuance to the Investor from its duly authorized capital stock, for issuance upon conversion of the Notes, a number of shares of Common Stock equal to 125% of the number of Conversion Shares (as defined in the Notes) issuable upon the full conversion of the Notes (without regard to any beneficial ownership limitation contained therein).

4.3           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 this Agreement), this Agreement, the Forbearance Agreement, the Escrow Agreement, the New Note and the Lock-Up Agreements, and (ii) “Note” or “Notes” shall be deemed to be references to collectively the Note, as amended and restated hereby, and the New Note (together with any future Notes issued to the Investor).

4.4           Rule 144.  The Company acknowledges and agrees that, for purposes of Rule 144 promulgated under the Securities Act, the holding period for the Conversion Shares issuable upon conversion of, or otherwise pursuant to, the Note and/or the New Note shall have commenced on November 12, 2008 (the date of original issuance of the Note, for the Note) and October 30, 2009 (the date of original issuance of the New Note, for the New Note).  Without limiting the foregoing, if at any time it is determined that such holding period does not relate back to such date, the Company will

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promptly, but no later than 30 days thereafter, cause the registration of all such Conversion Shares under the Securities Act (without regard to any beneficial ownership or issuance limitations contained in the Notes).  In connection with any registration of Conversion Shares pursuant to this Section, the Company and the Investor shall enter into a registration rights agreement containing customary and reasonable provisions regarding the registration of securities under the Securities Act.

4.6           Disclosure.  The Company and the Investors 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 (subject to Section 4.1 above).

4.7           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, the Note (as amended and restated hereby) and the New Note were each in effect at the time of execution of such Security Agreements and referenced therein.  The Company 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.

4.8           No Legends.  After the date on which the Conversion Shares may be sold without registration pursuant to Rule 144, the Company shall issue certificates without any legends or restrictions thereon evidencing any Conversion Shares, and any certificates with legends previously imprinted shall be replaced with certificates without any legends.

4.9           Use of Proceeds.  The Company shall use the $125,000 in loan proceeds from the advance made by the Investor hereunder, as evidenced by the New Note, solely in connection with expenses incurred by the Company in connection with complying with Section 4.1 above, which shall include, without limitation, legal and audit fees (including amounts payable to counsel in connection with amending current agreements, converting liabilities into equity or subordinated notes and adopting corporate governance measures consistent with being a publicly listed company and amounts payable to unaffiliated third party experts in connection with preparing the Company’s financial statements for an audit) and disbursements for Commission filings and financial statements and transfer agent fees and be subject to the prior written approval of the Investor, provided that such expenses shall not include any overhead or costs of Company personnel or stock option plan expenses and shall be substantially in accordance with Schedule 4.9 attached.

4.10           IR/PR.  Contemporaneously with the filing of the Form 10 with the Commission, the Company shall retain NetGain Financial, Inc. as a consultant/advisor for public relations and investor relations for the Company for one year on terms mutually acceptable to the Company and NetGain Financial, Inc.

4.11           Forbearance Shares.  The Company acknowledges and agrees that is has issued 10,000 shares of Common Stock pursuant to Section 3.1(f) of the Forbearance Agreement in consideration for the forbearance set forth therein (“Forbearance Shares”), but has failed to deliver a stock  certificate evidencing such Forbearance Shares.  The Company shall deliver a stock certificate evidencing such Forbearance Shares, with an issuance date of April 11, 2009, within five (5) Business Days following the date hereof.  The Company represents, acknowledges and agrees that (a) such

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Forbearance Shares have been and were duly and validly issued, fully paid and nonassessable, and free and clear of all Liens, (b) upon the Split such Forbearance Shares will be converted into such number of shares as is equal to 10,000 shares multiplied by the Split Factor, and (c) for purposes of Rule 144 promulgated under the Securities Act, the holding period for the Forbearance Shares shall have commenced on April 11, 2009 (the date of the Forbearance Agreement).

4.12           Lock Up Agreements.  Within thirty (30) days from the date hereof, the Company shall use its best efforts to cause each stockholder of the Company categorized under “Founder Shares”, “Generating Assets Shareholders” and “Nexcore Capital / FWG”, as indicated on Schedule 5.7 attached hereto, to execute and deliver to the Investor a “lock-up agreement” in the form set forth as Exhibit B attached hereto, irrevocably agreeing not to sell or otherwise dispose of any shares of Common Stock until June 30, 2010.

4.13           Public Company Shares.  In substitution for any shares of Common Stock which would have been issued to the Investor in a Reverse Merger Transaction pursuant to Section 4.8 of the Purchase Agreement, promptly following the Split contemplated hereby the Company shall issue to the Investor 0.3125% of the fully-diluted number of outstanding shares of Common Stock of the Company (assuming conversion and exercise of all outstanding options, warrants and convertible securities and including the issuance of any shares of Common Stock or Common Stock Equivalents to NetGain Financial, Inc. or any other investor relations or public relations firm) prior to the date thereof.  All shares of Common Stock issued pursuant to this paragraph shall be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.

5.           REPRESENTATIONS AND WARRANTIES OF THE ENVISION ENTITIES.

Each of the Envision Entities hereby jointly and severally represents and warrants to the Investor as of the date hereof:

5.1           Organization.  Such Envision Entity is duly organized, validly existing and in good standing under the laws of its organization.

                5.2           Authorization.  Such Envision Entity has the requisite corporate power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party.  All corporate action on the part of such Envision Entity and by its officers, directors and shareholders necessary for the authorization, execution and delivery of, and the performance by such Envision Entity of its obligations under this Agreement, the New Note and the other Transaction Documents to which it is a party has been taken, and no further consent or authorization of any other party is required.

5.3           Enforceability.  This Agreement, the New Note and the other Transaction Documents to which such Envision Entity is a party constitute such Envision Entity’s valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

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5.4           No Conflicts.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which such Envision Entity is a party, and the consummation of the transactions contemplated hereby and thereby, will not result in any violation of any provisions of any of such Envision Entity’s organizational documents or in a default under any provision of any instrument or contract to which such Envision Entity is a party or by which any of its assets are bound, or in violation of any provision of any governmental requirement applicable to such Envision Entity or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or the triggering of any preemptive or anti-dilution rights (including without limitation pursuant to any “reset” or similar provisions) or rights of first refusal or first offer.

5.5           Valid Issuance.  The Note, as amended and restated hereby, has been duly authorized and duly and validly issued, free and clear of any Liens imposed by or through any of the Envision Entities.  The New Note has been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be duly and validly issued, free and clear of any Liens imposed by or through any of the Envision Entities.

5.6           Bring-Down of Representations and Covenants.  The representations and warranties of the Company contained in the Purchase Agreement are in all material respects true and complete on and as of the date hereof as though made on and as of the date hereof.  Each Envision Entity has in all material respects complied with or performed all terms, covenants and conditions to be complied with or performed by such party under the Transaction Documents (except for repayment at the Maturity Date of the Note and the timely deliverance of the Forbearance Shares).

5.7           Capitalization and Indebtedness.  The current capitalization of the Company is as set forth on Schedule 5.7 attached hereto, which includes, without limitation (a) a list of all holders of Common Stock by name and number of shares held, (b) a list of all holders of warrants and options by name and number of warrants and options held, and (c) a list of holders of all other Common Stock Equivalents by name and number and type of security held.  Other than the Notes, the Company does not have any Indebtedness except as set forth on Schedule 5.7 attached hereto.  The Company shall cause all Indebtedness (other than the Notes and the other items indicated on Schedule 5.7 as “Permitted Indebtedness”) to be converted into Common Stock, at an effective price equal to or greater than $10.00 per share (as such figure shall be appropriately and equitably adjusted upon any stock split, stock dividend, recapitalization or similar transaction), on or prior to the filing of the Form 10 as contemplated in Section 4.1 above.  Such items indicated on Schedule 5.7 as “Permitted Indebtedness” shall be included as “Permitted Indebtedness” under the Notes (provided such Indebtedness shall not be (a) secured, (b) paid or payable prior to repayment in full of the Notes, (c) bear interest at a rate higher than the Notes, or (d) have any terms more favorable than the Notes, except for the credit card debt owed to Company executives indicated thereon).  Schedule 5.7 shall also include a schedule of all accounts payable, broken down by creditor, amount owed, and approximate number of days outstanding as of the date hereof.

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5.8           No Novation.  The amended and restated Note is being issued in substitution for and not in satisfaction of the Note.  The amended and restated Note shall not constitute a novation or satisfaction and accord of the Note.  The Company hereby acknowledges and agrees that the amended and restated Note shall amend, restate, modify, extend, renew and continue the terms and provisions contained in the Note and shall not extinguish or release the Company or any of its Subsidiaries under any Transaction Document or otherwise constitute a novation of its obligations thereunder.

5.9.           Compliance.  Since the date of original issuance of the Note, the Company and its subsidiaries have not (a) other than Permitted Indebtedness, entered into, created, incurred, assumed, guaranteed or suffered to exist any Indebtedness of any kind, or (b) other than Permitted Liens (as defined in the Notes), entered into, created, incurred, assumed or suffered to exist any Liens of any kind, on or with respect to any of its or their property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom.  Without limiting the foregoing, the convertible notes issued by the Company to John Evey are not secured notwithstanding anything set forth therein, and the Company agrees to cause John Evey to promptly enter into a written subordination agreement with the Investor that is acceptable to the Investor in its sole and absolute discretion.

6.           REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

The Investor represents and warrants to the Company as of the date hereof:

6.1           Organization.  The Investor is duly organized, validly existing and in good standing under the laws of its organization.

6.2           Authorization.  The Investor has the requisite corporate power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party.  All corporate action on the part of the Investor and by its officers, directors and shareholders necessary for the authorization, execution and delivery of, and the performance by the Investor of its obligations under this Agreement and the other Transaction Documents to which it is a party has been taken, and no further consent or authorization of any other party is required.

6.3           Enforceability.  This Agreement and the other Transaction Documents to which the Investor is a party constitute the Investor’s valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles of equity.

6.4           No Conflicts.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Investor is a party, and the consummation of the transactions contemplated hereby and thereby, will not result in any violation of any provisions of any of the Investor’s organizational documents or in a default under any provision of any instrument or contract to which the Investor is a party or by which any of its assets are bound, or in violation of any provision of any governmental requirement applicable to the Investor or be in conflict with or constitute, with or without the passage of time and giving of notice, a default under any such provision, instrument or contract.

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6.5           Investor Status. At the time the Investor was offered the Notes, the Conversion Shares and the Forbearance Shares, it was, and at the date hereof it is, and on each date on which it converts any Notes it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Investor is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

6.6           Experience of Investor. The Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Notes and the Conversion Shares, and has so evaluated the merits and risks of such investment. The Investor is able to bear the economic risk of an investment in the Notes and Conversion Shares and, at the present time, is able to afford a complete loss of such investment.

6.7           General Solicitation. The Investor is not purchasing the Notes or Conversion Shares as a result of any advertisement, article, notice or other communication regarding the Notes or Conversion Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement..

7. MISCELLANEOUS

7.1           Effect of this Agreement.  Except as modified pursuant hereto, no other changes or modifications to the original Transaction Documents are intended or implied and in all other respects the original 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.

7.2           Costs and Expenses.  The Company, the Envision Guarantors and the Investor each absolutely and unconditionally agree to pay all of their own expenses, including all fees and disbursements of any counsel in connection with the preparation, negotiation, execution or delivery of this Agreement and any agreements delivered in connection with the transactions contemplated hereby or any of its directors, officers, members, managers, partners, employees, agents or other representatives as a consequence of or in any way in connection with the preparation, negotiation, execution or delivery of this Agreement and any agreements prepared, negotiated, executed or delivered in connection with the transactions contemplated hereby, provided, however, that the Company shall pay the Investor $5,000 for its expenses incurred or to be incurred by it in connection with the negotiation and preparation of this Agreement and the other Transaction Documents to be delivered in connection herewith and $2,500 for Escrow Agent fees, which amounts may be withheld from the $125,000 being advanced by the Investor hereunder.

7.3           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.

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7.4           Merger.  This Agreement and the documents executed in connection herewith represent the entire expression of the agreement of Company, the Envision Guarantors and Investor regarding the matters set forth herein.  No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made, except by a written agreement signed by Company, the Envision Guarantors and Investor.

7.5           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.

7.6           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns, as the case may be.

7.7           Survival of Representations and Warranties.  All representations and warranties made in this Agreement or any other document furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other documents, and no investigation by Investor or any closing shall affect the representations and warranties or the right of Investor to rely upon them.

7.8           Severability.  Any determination that any provision of this Agreement or any application thereof is invalid, illegal or unenforceable in any respect in any instance shall not affect the validity, legality or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provision of this Agreement.

7.9           Reviewed by Attorneys.  Company and the Envision Guarantors represent and warrant that they (a) understand fully the terms of this Agreement and the consequences of the execution and delivery of this Agreement, (b) have been afforded an opportunity to have this Agreement reviewed by, and to discuss this Agreement and all documents executed in connection herewith with, such attorneys and other persons as Company may wish, and (c) have entered into this Agreement and executed and delivered all documents in connection herewith of its own free will and accord and without threat, duress or other coercion of any kind by any person.  The parties hereto acknowledge and agree that neither this Agreement nor the other documents executed pursuant hereto shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement and the other documents executed pursuant hereto or in connection herewith.

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7.10           Mutual Waiver of Right of Jury Trial. THE COMPANY, THE ENVISION GUARANTORS, AND THE INVESTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO:  (A) THIS AGREEMENT, OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS REFERRED TO HEREIN; (B) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN THEM; OR (C) ANY CONDUCT, ACTS OR OMISSIONS OF INVESTOR, ENVISION GUARANTORS OR COMPANY OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, MANAGERS, MEMBERS, PARTNERS, EMPLOYEES, AGENTS, ATTORNEYS OR AFFILIATES; IN EACH OF THE FOREGOING CASES, WHETHER IN CONTRACT OR TORT OR OTHERWISE.

7.11           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.

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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 California corporation

By:______/s/ Robert Noble____________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR CONSTRUCTION, INC., a California corporation

By:______/s/ Robert Noble____________________________________

Name:  Robert Noble

Title:    CEO

ENVISION SOLAR RESIDENTIAL, INC., a California corporation

By:______/s/ Robert Noble____________________________________

Name:  Robert Noble

Title:    CEO

ENVISION AFRICA, LLC, a Delaware limited liability company

By:______/s/ Robert Noble____________________________________

Name:  Robert Noble

Title:    CEO

GEMINI MASTER FUND, LTD.

By: GEMINI STRATEGIES, LLC, as investment manager

By: /s/ Steven Winters                                                          

Name:  Steven Winters

Title:  Managing Member

GEMINI STRATEGIES, LLC, as Agent

By: /s/ Steven Winters                                                          

Name:  Steven Winters

           Title:  Managing Member

EX-10.19

Exhibit 10.19

LOCK-UP AGREEMENT

This Lock-Up Agreement ("Agreement") is made as of the date set forth below by the undersigned ("Holder") in connection with such Holder’s ownership of shares of Envision Solar International, Inc., a California corporation (the "Company").

Whereas, Holder is the actual and/or beneficial owner of shares of Common Stock (“Common Stock”) of the Company;

Whereas, Holder acknowledges and understands that the Company has entered into an Amendment Agreement dated on or about the date hereof (“Amendment Agreement”) with Gemini Master Fund, Ltd. (the “Purchaser”), pursuant to which such Purchaser has, among other things, extended the maturity date of a past due loan to the Company until December 31, 2010 and loaned additional funds to the Company to enable it to become a public company (“Transactions”); capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Amendment Agreement; and

Whereas, Holder acknowledges and understands that, as a condition subsequent to proceeding with the Transactions, the Purchaser has required that, and the Company has agreed to obtain an agreement from each Holder that, such Holder shall refrain from selling any securities of the Company during the “Restricted Period”, where the “Restricted Period” includes the period commencing on October 30, 2009 and ending on June 31, 2010;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged, Holder agrees as follows:

1.Share Restriction.

(a)Holder hereby irrevocably agrees that during the Restricted Period, Holder will not (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise.  The foregoing sentence shall not apply in connection with an offer made to all shareholders of the Company in connection with any merger, consolidation or similar transaction involving the Company.  In addition, Holder agrees that during the Restricted Period the Holder will not make any demand for or exercise any right with respect to the registration under the Securities Act of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock.

(b)In furtherance of the foregoing, Holder further agrees that (i) the Company is authorized to place "stop orders" on its books to prevent any transfer of shares of Common Stock or other securities of the Company held by Holder in violation of this Agreement, and (ii) the Company and any duly appointed transfer agent for the registration or transfer of the securities described herein are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.

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(c)Any subsequent issuance and/or acquisition of shares or the right to acquire shares by or to Holder will be subject to the provisions of this Agreement.

(d)Notwithstanding the foregoing restrictions on transfer, Holder may, at any time and from time to time during the Restricted Period, transfer the Common Stock or other applicable securities (i) as bona fide gifts or transfers by will or intestacy, (ii) to any trust for the direct or indirect benefit of Holder or the immediate family of Holder, provided that any such transfer shall not involve a disposition for value, (iii) to a partnership of which the Holder is a general partner, provided that, in the case of any gift or transfer described in clauses (i), (ii) or (iii), each donee or transferee agrees in writing to be bound by the terms and conditions contained herein in the same manner as such terms and conditions apply to Holder.  For purposes hereof, "immediate family" means any relationship by blood, marriage or adoption, not more remote than first cousin.

2.Miscellaneous.

(a)At any time and from time to time after the signing of this Agreement, Holder will execute such additional instruments and take such action as may be reasonably requested by the Purchaser to carry out the intent and purposes of this Agreement.

(b)This Agreement shall be governed, construed and enforced in accordance with the laws of the State of New York without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction, except to the extent that the securities laws of the state in which Holder resides and federal securities laws may apply.  Any proceeding brought to enforce this Agreement may be brought in courts sitting in New York County, New York.

(c)This Agreement contains the entire agreement of Holder with respect to the subject matter hereof.  Holder hereby represents and warrants that Holder has full power and authority to enter into this Agreement.  This Agreement shall be binding upon Holder, its legal representatives, heirs, successors and assigns.  This Agreement may be signed and delivered by facsimile and such facsimile signed and delivered shall be enforceable.

(d)The Holder understands that the execution of this Agreement by Holder is a condition subsequent to the Purchaser’s obligation to consummate the Transactions contemplated by the Amendment Agreement and continue the loans advanced to the Company under the Notes.

(e)The Purchaser is a third party beneficiary of this Agreement, with right of enforcement.

[Signature Page Follows]

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IN WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed this Agreement as of the date set forth below.

HOLDER:

   _/s/ Robert Noble______________________

  (Signature of Holder)

Robert Noble_______________________________

  (Print Name of Holder)                                                                           

October 30, 2009_________________________

   (Date)

COMPANY:

ENVISION SOLAR INTERNATIONAL, INC.

By: /s/ Robert Noble

Name: Robert Noble

Title: Chief Executive Officer

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EX-10.20

Exhibit 10.20

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EX-10.21

Exhibit 10.21

THE SECURITIES REPRESENTED HEREBY, OR INTO WHICH THIS NOTE IS CONVERTIBLE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B)AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF.

THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF SEPTEMBER 2009 AMONG ENVISION SOLAR INTERNATIONAL, INC., A CALIFORNIA CORPORATION, ENVISION SOLAR CONSTRUCTION, INC., A CALIFORNIA CORPORATION, ENVISION SOLAR RESIDENTIAL, INC., A CALIFORNIA CORPORATION, ENVISION AFRICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, JOHN EVEY, AND GEMINI MASTER FUND, LTD., A CAYMAN ISLANDS CORPORATION, TO THE SENIOR INDEBTEDNESS (AS DEFINED IN THE SUBORDINATION AGREEMENT); AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

ENVISION SOLAR INTERNATIONAL, INC.

AMENDED AND RESTATED 10% SUBORDINATED CONVERTIBLE PROMISSORY NOTE

(non-negotiable)

$100,000.00      December 17, 2009

FOR VALUE RECEIVED Envision Solar International, Inc., a California corporation (the "Company"), promises to pay to John Evey (the "Holder"), the principal amount of One Hundred Two Thousand Two Hundred Thirty Five and Sixty Two Cents ($102,235.62), or such lesser amount as shall equal the outstanding principal amount hereof, together with simple interest on the unpaid principal balance, commencing on October 1, 2009 at a rate equal to ten percent (10%) per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with any then accrued but unpaid interest and any other amounts payable hereunder, unless previously converted pursuant to Section 4 below, shall be due and payable on December 31, 2010 (the "Maturity Date"); provided, however, that in the event the Company receives more than $1,000,000 from any financing or series of financings (whether related or unrelated), in the form or debt, equity or any combination thereof, prior to the Maturity Date, 25% of the proceeds of any such financing in excess of $1,000,000 shall be used to pay down this Note and all of the other Notes (as hereinafter defined), pro rata; provided, further, that no funds provided to the Company by Gemini Master Fund, Ltd. ("Gemini") or any person or entity that co-invests with Gemini in the Company shall be credited towards this $1,000,000 threshold. This Note is one of a series of subordinated notes issued to certain trade creditors of the Company, on the date hereof, in settlement of the Company's obligations to such creditors (together, the "Notes").

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The following is a statement of the rights of the Holder of this Note and the conditions to which this Note is subject, and to which the Holder, by the acceptance of this Note, agrees:

1.      Event of Default.

(a)     For purposes of this Note, an "Event of Default" means:

(i)           the Company shall default in the payment of interest and/or principal on this Note; or

(ii)           the Company shall fail to materially perform any covenant, term, provision, condition, agreement or obligation of the Company under this Note (other than for non-payment) and such failure shall continue uncured for a period of ten (10) business days after notice from the Holder of such failure; or

(iii)           the Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for it or for a substantial part of its property or business; or

(iv)           a trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(v)           any governmental agency or any court of competent jurisdiction at the insistence of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or

(vi)           the Company shall sell or otherwise transfer all or substantially all of its assets; or

(vii)           bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings, or relief under any bankruptcy law or any law for the relief of debt shall be instituted by or against the Company and, if instituted against the Company shall not be dismissed within thirty (30) days after such institution, or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit to any material allegations of, or default in answering a petition filed in any such proceeding.

(b) Upon the occurrence of an Event of Default, the entire indebtedness with accrued interest thereon due under this Note shall, at the option of the Holder, be immediately due and payable without notice. Failure to exercise such option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Event of Default.

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2.Seniority. The indebtedness evidenced by this Note is hereby expressly subordinated, in right of payment to the prior payment in full of all of the Company's existing and future Senior Indebtedness. The Holder shall execute any intercreditor agreement requested by the Company to give effect to the foregoing seniority.

3.Prepayment. The Company may, subject to the terms set forth in the Subordination Agreement, prepay this Note at any time, in whole or in part, provided any such prepayment will be applied first to the payment of expenses due under this Note, second to interest accrued on this Note and third, if the amount of prepayment exceeds the amount of all such expenses and accrued interest, to the payment of principal of this Note.

4.Conversion. The Holder may at his option elect to convert all or a portion of the outstanding principal amount and unpaid accrued interest thereon as of such date into shares of the Company's common stock (the "Common Stock"), in accordance with this Section 4 at any time or from time to time (the "Company Conversion Shares"). The Holder shall notify the Company in writing of the date on which such conversion is to be effectuated (such date, the "Conversion Date"). The number of shares of Company Conversion Shares (calculated to the nearest whole share) to which the Holder shall be entitled upon such conversion shall be determined by dividing the outstanding principal amount and unpaid accrued interest thereon to be converted by ten dollars ($10.00), as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction (the "Conversion Price"). On the Conversion Date, the Holder shall surrender this Note to the Company or its transfer agent, and the Holder shall receive from the Company share certificates evidencing the Company Conversion Shares in the name or names in which the Holder wishes such certificate or certificates for the Company Conversion Shares to be issued and, if the entire principal amount is not converted, a replacement note in the amount of the unconverted principal amount.

5.Miscellaneous.

(a)     Loss, Theft, Destruction or Mutilation of Note. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Note, the Company shall execute and deliver, in lieu of this Note, a new note executed in the same manner as this Note, in the same principal amount as the unpaid principal amount of this Note and dated the date to which interest shall have been paid on this Note or, if no interest shall have yet been so paid, dated the date of this Note.

(b)Payment. All payments under this Note shall be made in lawful tender of the United States.

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(c)Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

(d)Waiver and Amendment. Any provision of this Note may be amended, waived or modified only by an instrument in writing signed by the party against which enforcement of the same is sought

(e)Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing sent by mail, facsimile with printed confirmation, nationally recognized overnight carrier or personal delivery and shall be effective upon actual receipt of such notice, to the following addresses until notice is received that any such address or contact information has been changed:

To the Company:

Envision Solar International, Inc.

4225 Executive Square Suite 1000

La Jolla, California 92037

Attn: Chief Executive Officer

To Holder:

Pegasus Enterprises, LP

4542 Ruffrer Street, Suite 387

San Diego, CA 92111

Attn: General Counsel

(f)Successors and Assigns. This Note may not be assigned or transferred by the Holder without the prior written consent of the Company. Subject to the preceding sentence, the rights and obligations of the Company and the Holder of this Note shall be binding upon and benefit the successors, permitted assigns, heirs, administrators and permitted transferees of the parties.

(g)Governing Law; Jurisdiction. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE PERSONAL AND SUBJECT MATTER JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. EACH PARTY HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, (A) ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT; AND (B) ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON EACH PARTY DULY SERVED WITH PROCESS THEREIN AND MAY BE ENFORCED IN THE COURTS OF THE JURISDICTION OF WHICH EITHER PARTY OR ANY OF THEIR PROPERTY IS SUBJECT, BY A SUIT UPON SUCH JUDGMENT.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Note to be executed as of the date first above written by its duly authorized officer.

ENVISION SOLAR INTERNATIONAL, INC.
By:	/s/  Robert Noble
	Name: Robert Noble
	Title: CEO

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EX-10.22

Exhibit 10.22

THE SECURITIES REPRESENTED HEREBY, OR INTO WHICH THIS NOTE IS CONVERTIBLE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B)AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF.

THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF SEPTEMBER 2009 AMONG ENVISION SOLAR INTERNATIONAL, INC., A CALIFORNIA CORPORATION, ENVISION SOLAR CONSTRUCTION, INC., A CALIFORNIA CORPORATION, ENVISION SOLAR RESIDENTIAL, INC., A CALIFORNIA CORPORATION, ENVISION AFRICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, JOHN EVEY, AND GEMINI MASTER FUND, LTD., A CAYMAN ISLANDS CORPORATION, TO THE SENIOR INDEBTEDNESS (AS DEFINED IN THE SUBORDINATION AGREEMENT); AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

ENVISION SOLAR INTERNATIONAL, INC.

AMENDED AND RESTATED 10% SUBORDINATED CONVERTIBLE PROMISSORY NOTE

(non-negotiable)

$102,235.62      December 31, 2010

FOR VALUE RECEIVED Envision Solar International, Inc., a California corporation (the "Company"), promises to pay to John Evey (the "Holder"), the principal amount of One Hundred Two Thousand Two Hundred Thirty Five and Sixty Two Cents ($102,235.62), or such lesser amount as shall equal the outstanding principal amount hereof, together with simple interest on the unpaid principal balance, commencing on October 1, 2009 at a rate equal to ten percent (10%) per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with any then accrued but unpaid interest and any other amounts payable hereunder, unless previously converted pursuant to Section 4 below, shall be due and payable on December 31, 2010 (the "Maturity Date"); provided, however, that in the event the Company receives more than $1,000,000 from any financing or series of financings (whether related or unrelated), in the form or debt, equity or any combination thereof, prior to the Maturity Date, 25% of the proceeds of any such financing in excess of $1,000,000 shall be used to pay down this Note and all of the other Notes (as hereinafter defined), pro rata; provided, further, that no funds provided to the Company by Gemini Master Fund, Ltd. ("Gemini") or any person or entity that co-invests with Gemini in the Company shall be credited towards this $1,000,000 threshold. This Note is one of a series of subordinated notes issued to certain trade creditors of the Company, on the date hereof, in settlement of the Company's obligations to such creditors (together, the "Notes").

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This Note amends, restates and supersedes in its entirety that certain 8% Secured Convertible Note, dated March 10, 2009, issued by the Company to the Holder in the principal amount of $50,000.00.

The following is a statement of the rights of the Holder of this Note and the conditions to which this Note is subject, and to which the Holder, by the acceptance of this Note, agrees:

1.      Event of Default.

(a)     For purposes of this Note, an "Event of Default" means:

(i)           the Company shall default in the payment of interest and/or principal on this Note; or

(ii)           the Company shall fail to materially perform any covenant, term, provision, condition, agreement or obligation of the Company under this Note (other than for non-payment) and such failure shall continue uncured for a period of ten (10) business days after notice from the Holder of such failure; or

(iii)           the Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (4) apply for or consent to the appointment of a trustee, liquidator or receiver for it or for a substantial part of its property or business; or

(iv)           a trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(v)           any governmental agency or any court of competent jurisdiction at the insistence of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or

(vi)           the Company shall sell or otherwise transfer all or substantially all of its assets; or

(vii)           bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings, or relief under any bankruptcy law or any law for the relief of debt shall be instituted by or against the Company and, if instituted against the Company shall not be dismissed within thirty (30) days after such institution, or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit to any material allegations of, or default in answering a petition filed in any such proceeding.

(b) Upon the occurrence of an Event of Default, the entire indebtedness with accrued interest thereon due under this Note shall, at the option of the Holder, be immediately due and payable without notice. Failure to exercise such option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Event of Default.

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2.Seniority. The indebtedness evidenced by this Note is hereby expressly subordinated, in right of payment to the prior payment in full of all of the Company's existing and future Senior Indebtedness. The Holder shall execute any intercreditor agreement requested by the Company to give effect to the foregoing seniority.

3.Prepayment. The Company may, subject to the terms set forth in the Subordination Agreement, prepay this Note at any time, in whole or in part, provided any such prepayment will be applied first to the payment of expenses due under this Note, second to interest accrued on this Note and third, if the amount of prepayment exceeds the amount of all such expenses and accrued interest, to the payment of principal of this Note.

4.Conversion. The Holder may at his option elect to convert all or a portion of the outstanding principal amount and unpaid accrued interest thereon as of such date into shares of the Company's common stock (the "Common Stock"), in accordance with this Section 4 at any time or from time to time (the "Company Conversion Shares"). The Holder shall notify the Company in writing of the date on which such conversion is to be effectuated (such date, the "Conversion Date"). The number of shares of Company Conversion Shares (calculated to the nearest whole share) to which the Holder shall be entitled upon such conversion shall be determined by dividing the outstanding principal amount and unpaid accrued interest thereon to be converted by ten dollars ($10.00), as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction (the "Conversion Price"). On the Conversion Date, the Holder shall surrender this Note to the Company or its transfer agent, and the Holder shall receive from the Company share certificates evidencing the Company Conversion Shares in the name or names in which the Holder wishes such certificate or certificates for the Company Conversion Shares to be issued and, if the entire principal amount is not converted, a replacement note in the amount of the unconverted principal amount.

5.Miscellaneous.

(a)     Loss, Theft, Destruction or Mutilation of Note. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of

this Note and, in the case of loss, theft or destruction, delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Note, the Company shall execute and deliver, in lieu of this Note, a new note executed in the same manner as this Note, in the same principal amount as the unpaid principal amount of this Note and dated the date to which interest shall have been paid on this Note or, if no interest shall have yet been so paid, dated the date of this Note.

(b)Payment. All payments under this Note shall be made in lawful tender of the United States.

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(c)Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

(d)Waiver and Amendment. Any provision of this Note may be amended, waived or modified only by an instrument in writing signed by the party against which enforcement of the same is sought

(e)Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing sent by mail, facsimile with printed confirmation, nationally recognized overnight carrier or personal delivery and shall be effective upon actual receipt of such notice, to the following addresses until notice is received that any such address or contact information has been changed:

To the Company:

Envision Solar International, Inc.

4225 Executive Square Suite 1000

La Jolla, California 92037

Attn: Chief Executive Officer

To Holder:

(f)Successors and Assigns. This Note may not be assigned or transferred by the Holder without the prior written consent of the Company. Subject to the preceding sentence, the rights and obligations of the Company and the Holder of this Note shall be binding upon and benefit the successors, permitted assigns, heirs, administrators and permitted transferees of the parties.

(g)Governing Law; Jurisdiction. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE PERSONAL AND SUBJECT MATTER JURISDICTION OF THE

SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR

RELATING TO THIS NOTE. EACH PARTY HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, (A) ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT; AND (B) ANY CLAIM THAT ANY

SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON EACH PARTY DULY SERVED WITH PROCESS THEREIN AND MAY BE ENFORCED IN THE COURTS OF THE JURISDICTION OF WHICH EITHER PARTY OR ANY OF THEIR PROPERTY IS SUBJECT, BY A SUIT UPON SUCH JUDGMENT.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Note to be executed as of the date first above written by its duly authorized officer.

ENVISION SOLAR INTERNATIONAL, INC.
By:	/s/  Robert Noble
	Name: Robert Noble
	Title: CEO

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EX-10.23

Exhibit 10.23

AGREEMENT OF CONVEYANCE, TRANSFER AND ASSIGNMENT OF ASSETS AND ASSUMPTION OF OBLIGATIONS

This Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (“Transfer and Assumption Agreement”) is made as of February  10, 2010, by Casita Enterprises, Inc., a Nevada corporation (“Assignor”), and Casita Enterprises Holdings, Inc., a Delaware corporation and a wholly owned subsidiary of Assignor (“Assignee”).

WHEREAS, Assignee intends to commence operations as a provider of computer network services for consumers in Mexico (the “Business”); and

WHEREAS, Assignor desires to convey, transfer and assign to Assignee, and Assignee desires to acquire from Assignor, all of the assets of Assignor relating to the operation of the Business, and in connection therewith, Assignee has agreed to assume all of the liabilities of Assignor relating to the Business, on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1.Assignment.

1.1.           Assignment of Assets.  For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by Assignor, Assignor does hereby assign, grant, bargain, sell, convey, transfer and deliver to Assignee, and its successors and assigns, all of Assignor’s right, title and interest in, to and under the assets, properties and business, of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, held or used in the conduct of the Business (the “Assets”), including, but not limited to, the assets listed on Exhibit A hereto, and identified in part by reference to Assignor’s most recent balance sheet as of September 30, 2009, filed with the Securities and Exchange Commission as part of Assignor’s predecessor’s quarterly report on Form 10-Q on November 13, 2009 (the “Balance Sheet”).  Notwithstanding anything to the contrary contained herein, the term Assets shall not include either the assets of or the business conducted by Envision Solar International, Inc., a California corporation;

1.2           Further Assurances.  Assignor shall from time to time after the date hereof at the request of Assignee and without further consideration execute and deliver to Assignee such additional instruments of transfer and assignment, including without limitation any bills of sale, assignments of leases, deeds, and other recordable instruments of assignment, transfer and conveyance, in addition to this Transfer and Assumption Agreement, as Assignee shall reasonably request to evidence more fully the assignment by Assignor to Assignee of the Assets.

Section 2. Assumption.

2.1           Assumed Liabilities.  As of the date hereof, Assignee hereby assumes and agrees to pay, perform and discharge, fully and completely, all liabilities, commitments, contracts, agreements, obligations or other claims against Assignor, whether known or unknown, asserted or unasserted, accrued or unaccrued, absolute or contingent, liquidated or unliquidated, due or to become due, and whether contractual, statutory, or otherwise associated with the Business whenever arising (the “Liabilities”), including, but not limited to, the Liabilities listed on Exhibit B, and identified in part by reference to the Balance Sheet.

2.2           Further Assurances.  Assignee shall from time to time after the date hereof at the request of Assignor and without further consideration execute and deliver to Assignor such additional instruments of assumption in addition to this Transfer and Assumption Agreement as Assignor shall reasonably request to evidence more fully the assumption by Assignee of the Liabilities.

Section 3.  Headings.  The descriptive headings contained in this Transfer and Assumption Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Transfer and Assumption Agreement.

Section 4.Governing Law.  This Transfer and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within that state, except that any conveyances of leaseholds and real property made herein shall be governed by the laws of the respective jurisdictions in which such property is located.

[The remainder of this page is blank intentionally.]

IN WITNESS WHEREOF, this Transfer and Assumption Agreement has been duly executed and delivered by the parties hereto as of the date first above written.

CASITA ENTERPRISES, INC.

By: /s/ Robert Noble

Robert Noble

  Chief Executive Officer

CASITA ENTERPRISES HOLDINGS, INC.

By: Casita Enterprises, Inc.,

       Its sole stockholder

By: /s/ Robert Noble

Robert Noble

  Chief Executive Officer

Exhibit A

(a)All of the equipment, computers, servers, hardware, appliances, implements, and all other tangible personal property that are owned by Assignor and have been used in the conduct of the Business;

(b)all inventory associated with the Business;

(c)all real property and real property leases to which Assignor is a party, and which affect the Business or the Assets;

(d)all contracts to which Assignor is a party, or which affect the Business or the Assets, including leases of personal property;

(e)all rights, claims and causes of action against third parties resulting from or relating to the operation of the Business or the Assets, including without limitation, any rights, claims and causes of action arising under warranties from vendors and other third parties;

(f)all governmental licenses, permits, authorizations, consents or approvals affecting or relating to the Business or the Assets;

(g)all accounts receivable, notes receivable, prepaid expenses and insurance and indemnity claims to the extent related to any of the Assets or the Business;

(h)all goodwill associated with the Assets and the Business;

(i)all business records, regardless of the medium of storage, relating to the Assets and/or the Business, including without limitation, all schematics, drawings, customer data, subscriber lists, statistics, promotional graphics, original art work, mats, plates, negatives, accounting and financial information concerning the Assets or Business;

(j)Assignor’s right to use the name “Casita Enterprises” and all other names used in conducting the Business, and all derivations thereof, in connection with Assignee’s future conduct of the Business;

(k)all internet domain names and URLs of the Business, software, inventions, art works, patents, patent applications, processes, shop rights, formulas, brand names, trade secrets, know-how, service marks, trade names, trademarks, trademark applications, copyrights, source and object codes, customer lists, drawings, ideas, algorithms, processes, computer software programs or applications (in code and object code form), tangible or intangible proprietary information and any other intellectual property and similar items and related rights owned by or licensed to Assignor used in the Business, together with any goodwill associated therewith and all rights of action on account of past, present and future unauthorized use or infringement thereof; and

(l)all other privileges, rights, interests, properties and assets of whatever nature and wherever located that are owned, used or intended for use in connection with, or that are necessary to the continued conduct of, the Business as presently conducted or planned to be conducted.

Exhibit B

(a)All liabilities in respect of indebtedness of Assignor related to the Business;

(b)product liability and warranty claims relating to any product or service of Assignor associated with the Business;

(c)taxes, duties, levies, assessments and other such charges, including any penalties, interests and fines with respect thereto, payable by Assignor to any federal, provincial, municipal or other government, domestic or foreign, incurred in the conduct of the Business;

(d)liabilities for salary, bonus, vacation pay, severance payments damages for wrongful dismissal, or other compensation or benefits relating to Assignor’s employees employed in the conduct of the Business;

(e)any liability or claim for liability (whether in contract, in tort or otherwise, and whether or not successful) related to any lawsuit or threatened lawsuit or claim (including any claim for breach or non-performance of any contract) based upon actions, omissions or events relating to the Business; and

(f)any liability, ongoing duty or obligation, or any claim for liability or performance of any ongoing duty or obligation arising under any and all contracts to which Assignor is a party that relate to the Business or the Assets, or which affect the Business or the Assets.

.

EX-10.24

Exhibit 10.24

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of February 10, 2010, is made by and between Casita Enterprises, Inc., a Nevada corporation (“Seller”), and each of the individuals listed under the heading “Buyers” on the signature page hereto  (collectively, “Buyers”).

RECITALS

A.           Seller owns all of the issued and outstanding shares of common stock $0.001 par value per share (the “Shares”) of Casita Enterprises Holdings, Inc., a Delaware corporation (the “Company”), which Shares constitute, as of the date hereof, all of the issued and outstanding capital stock of the Company.

B.           Buyers hold 5,000,000 shares of common stock, $0.001 par value per share, of Seller (the “Purchase Price Shares”), and Buyers have agreed to transfer such shares back to Seller for cancellation (the “Repurchase”).

C.           In connection with the Repurchase, Buyers wish to acquire from Seller, and Seller wishes to transfer to Buyers, the Shares, upon the terms and subject to the conditions set forth herein.

Accordingly, the parties hereto agree as follows:

1.           Purchase and Sale of Stock.

(a)           Purchased Shares. Subject to the terms and conditions provided below, Seller shall sell and transfer to Buyers and Buyers shall purchase from Seller, on the Closing Date (as defined in Section 1(c)), all of the Shares.

(b)           Purchase Price.  The purchase price for the Shares shall be the transfer and delivery by Buyers to Seller of the Purchase Price Shares, deliverable as provided in Section 2(b).

(c)           Closing. The closing of the transactions contemplated in this Agreement (the “Closing”) shall take place as soon as practicable following the execution of this Agreement.  The date on which the Closing occurs shall be referred to herein as the Closing Date (the “Closing Date”).

2.           Closing.

(a)           Transfer of Shares. At the Closing, Seller shall deliver to Buyers certificates representing the Shares, duly endorsed to Buyers or as directed by Buyers, which delivery shall vest Buyers with good and marketable title to all of the issued and outstanding shares of capital stock of the Company, free and clear of all liens and encumbrances.

(b)  Payment of Purchase Price. At the Closing, Buyers shall deliver to Seller a certificate or certificates representing the Purchase Price Shares duly endorsed to Seller, which delivery shall vest Seller with good and marketable title to the Purchase Price Shares, free and clear of all liens and encumbrances.

3.           Representations and Warranties of Seller. Seller represents and warrants to Buyers as of the date hereof as follows:

(a)           Corporate Authorization; Enforceability. The execution, delivery and performance by Seller of this Agreement is within the corporate powers and has been, duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(b)           Governmental Authorization. The execution, delivery and performance by Seller of this Agreement requires no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.

(c)           Non-Contravention; Consents. The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby do not (i) violate the certificate of incorporation or bylaws of Seller or (ii) violate any applicable Law or Order.

(d)           Capitalization. As of the date hereof, Seller owns the Shares, which shares represent 100% of the authorized, issued and outstanding capital stock of the Company. The Shares are duly authorized, validly issued, fully-paid, non-assessable and free and clear of any Liens.

4.           Representations and Warranties of Buyers. Buyers, jointly and severally, represent and warrant to Seller as of the date hereof as follows:

(a)           Enforceability. The execution, delivery and performance by Buyers of this Agreement are within Buyers’ powers. This Agreement has been duly executed and delivered by Buyers and constitutes the valid and binding agreement of Buyers, enforceable against Buyers in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.

(b)           Governmental Authorization. The execution, delivery and performance by Buyers of this Agreement require no consent, approval, Order, authorization or action by or in respect of, or filing with, any Governmental Authority.

(c)           Non-Contravention; Consents. The execution, delivery and performance by Buyers of this Agreement, and the consummation of the transactions contemplated hereby do not violate any applicable Law or Order.

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(d)           Purchase for Investment.  Buyers are financially able to bear the economic risks of acquiring an interest in the Company and the other transactions contemplated hereby, and have no need for liquidity in this investment. Buyers have such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of the Company, so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares. Buyers are acquiring the Shares solely for their own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration is available. Buyers have (i) received all the information they have deemed necessary to make an informed investment decision with respect to the acquisition of the Shares, (ii) had an opportunity to make such investigation as they have desired pertaining to the Company and the acquisition of an interest therein, and to verify the information which is, and has been, made available to them and (iii) had the opportunity to ask questions of Seller concerning the Company. Buyers have received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyers realize that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyers understand that any resale of the Shares by them must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for the Company at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyers acknowledge and consent that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.

Buyers understand that the Shares are being sold to them pursuant to the exemption from registration contained in Section 4(1) of the Securities Act and that Seller is relying upon the representations made herein as one of the bases for claiming the Section 4(1) exemption.

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(e)           Liabilities.  Following the Closing, Seller will have no debts, liabilities or obligations relating to the Company or its business or activities, whether before or after the Closing, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to the Company or its business and that may survive the Closing.

(f)           Title to Purchase Price Shares.  Buyers are the sole record and beneficial owners of the Purchase Price Shares. At Closing, Buyers will have good and marketable title to the Purchase Price Shares, which Purchase Price Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Seller, except for restrictions on transfer as contemplated by applicable securities laws.

5.           Indemnification and Release.

(a)           Indemnification. Buyers covenant and agree to jointly and severally indemnify, defend, protect and hold harmless Seller, and its officers, directors, employees, stockholders, agents, representatives and affiliates (collectively, together with Seller, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of Buyers set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement on the part of Buyers under this Agreement, (iii) any debt, liability or obligation of the Company, whether incurred or arising prior to the date hereof or after, (iv) any debt, liability or obligation of Seller for actions taken prior to that certain merger by and between Seller, Envision Acquisition Corp., a Delaware corporation, and Envision Solar International, Inc., a California corporation (the “Merger”), including, without limitation, any amounts due or owing to any former officer, director or Affiliate of Seller, (v) the conduct and operations of the business of the Company whether before or after the Closing, (vi) claims asserted against the Company whether arising before or after the Closing, or (vii) any federal or state income tax payable by Seller and attributable to the transaction contemplated by this Agreement or activities prior to the Merger or with respect to the Company after the Merger.

(b)           Third Party Claims.

(i)           If any claim or liability (a “Third-Party Claim”) should be asserted against any of the Seller Indemnified Parties (the “Indemnitee”) by a third party after the Closing for which Buyers have an indemnification obligation under the terms of Section 5(a), then the Indemnitee shall notify Buyers (the “Indemnitor”) within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and in connection therewith and to conduct any proceedings or negotiations relating thereto and necessary or appropriate to

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defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (ii) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.

(ii)           If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate. The Indemnitor shall promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.

(c)           Non-Third-Party Claims. Upon discovery of any claim for which Buyers have an indemnification obligation under the terms of this Section 5 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyers of such claim and, in any case, shall give Buyers such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyers shall not excuse Buyers from any indemnification liability except to the extent that Buyers are materially and adversely prejudiced by such failure.

(d)           Release.  Buyers, on behalf of themselves and their Related Parties, hereby release and forever discharge Seller and its individual, joint or mutual, past and present representatives, Affiliates, officers, directors, employees, agents, attorneys, stockholders, controlling persons, subsidiaries, successors and assigns (individually, a “Releasee” and collectively, “Releasees”) from any and all claims, demands, proceedings, causes of action, orders, obligations, contracts, agreements, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which Buyers or any of their Related Parties now have or have ever had against any Releasee. Buyers hereby irrevocably covenant to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter released hereby. “Related

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Parties” shall mean, with respect to Buyers, (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with Buyers, (ii) any Person in which Buyers hold a Material Interest or (iii) any Person with respect to which any Buyer serves as a general partner or a trustee (or in a similar capacity). For purposes of this definition, “Material Interest” shall mean direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

6.           Definitions. As used in this Agreement:

(a)           “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person. For the purposes of this definition, “Control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing;

(b)           “Governmental Authority” means any domestic or foreign governmental or regulatory authority;

(c)           “Law” means any federal, state or local statute, law, rule, regulation, ordinance, code, Permit, license, policy or rule of common law;

(d)           “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person will be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset;

(e)           “Order” means any judgment, injunction, judicial or administrative order or decree;

(f)           “Permit” means any government or regulatory license, authorization, permit, franchise, consent or approval; and

(h)           “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

7.           Miscellaneous.

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(a)           Counterparts. This Agreement may be signed in any number of counterparts, each of which will be deemed an original but all of which together shall constitute one and the same instrument.

(b)           Amendments and Waivers.

(i)           Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

(ii)           No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by Law.

(c)           Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer (including by operation of Law) any of its rights or obligations under this Agreement without the consent of each other party hereto.

(d)           No Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted successors and assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto, those referenced in Section 5 above, and such permitted successors and assigns, any legal or equitable rights hereunder.

(e)           Governing Law. This Agreement will be governed by, and construed in accordance with, the internal substantive law of the State of New York.

(f)           Headings. The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof.

(g)           Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof of this Agreement.

(h)           Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of the provisions of this Agreement (or the application of such provision in other jurisdictions or to Persons or circumstances other than those to which it was held invalid, illegal or unenforceable) will in no way be affected, impaired or invalidated, and to the extent permitted by applicable Law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the parties prior to the determination of such invalidity or unenforceability.

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(i)           Notices.  Any notice, request or other communication hereunder shall be given in writing and shall be served either personally, by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:

(a)           If to Buyers:

c/o Jose Cisneros

1093 East Main Street, Suite 508

El Cajon, California 92021

(b)           If to Seller:

Casita Enterprises, Inc.

7675 Dagget St, Suite 150

San Diego, California 92111

Attention: Robert Noble

[Signature Page Follows]

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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, effective as of the date first above written.

“SELLER”

CASITA ENTERPRISES, INC.

By:  /s/  Robert Noble

     Name: Robert Noble

     Title: Chief Executive Officer

“BUYERS”

/s/ Jose Cisneros                                                    

Jose Cisneros

/s/ Lydia Marcos                                                     

Lydia Marcos

/s/ Marco Martinez                                                  

Marco Martinez

/s/ Paco Sanchez                                                     

Paco Sanchez

/s/  Don Miguel                                                        

Don Miguel

EX-10.25

Exhibit 10.25

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between Envision Solar, LLC, a California limited liability company (the "Company"), and Robert Noble, an individual ("Employee"), effective June 15, 2007 ("Effective Date"). The Company desires to retain the services of Employee, and Employee desires to continue to be employed by the Company for the term of this Agreement.

NOW, THEREFORE, in the consideration of the premises and the mutual covenants and agreements set forth herein, the Company and Employee, intending to be legally bound, hereby agree as follows:

AGREEMENT

1.           Employment. The Company hereby employs Employee on an at-will basis for the position of Chief Executive Officer and President. Employee hereby accepts such at-will employment, and agrees to perform services for the Company, upon the terms and conditions set forth in this Agreement.

2.           Position and Duties.

2.1 Duties. During the term of this Agreement, Employee shall perform all duties and functions customarily performed by the Chief Executive Officer and President of a business of the size and nature similar to that of the Company, and such other employment duties as the Company's Board of Managers (the "Board") shall assign to him from time to time.

2.2 Competitive Activities. During the term of this Agreement Employee shall not, directly or indirectly, either as an executive, employer, consultant, agent, principal, partner, stockholder, member, manager, officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of the Company or any affiliate. This Agreement shall not be interpreted to prohibit Employee from making passive personal investments or conducting private business affairs if those activities do not materially interfere with the services required under this Agreement. However; Employee shall not directly or indirectly, acquire, hold, or retain any interest in any business competing with or similar in nature to the business of the Company or any affiliate.

3.           Compensation.

3.1Salary.As compensation for services to be rendered by Employee under this Agreement, the Company shall pay to Employee an annual salary of One Hundred and Twenty Thousand and 00/100 Dollars ($120,000.00) (the "Salary"), which shall be paid on a regular basis in accordance with the Company's regular payroll procedures. In addition, Employee shall receive an additional allowance of One Thousand and Two Hundred and 00/100 Dollars ($1,200.00) per month to cover automobile expenses, which do not include parking and gas expenses.

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3.2Participation in Benefit Plans. Employee shall be included to the extent eligible thereunder in any and all plans of the Company providing general benefits for the Company's employees, including, but not limited to, any group life insurance, hospitalization, disability, medical, dental, Section 125 cafeteria, pension, profit sharing, savings and stock bonus plans. Employee's participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable thereto. Nothing in this Agreement shall impose on the Company any affirmative obligation to establish any benefit plan. The Company reserves the right to prospectively terminate or change benefit plans and programs it offers to its employees at any time.

3.3 Unit Options. Employee shall receive options to purchase Units of the Company as more fully set forth in a Unit Option Agreement between Employee and the Company dated, which is attached hereto as Exhibit A.

3.4 Expenses. In accordance with the Company's policies established from time to time, the Company will pay or reimburse Employee for all reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties under this Agreement, provided that:

3.4.1 Each such item is of a type which qualifies it as a proper item for deduction or capitalization by the Company for federal or state income tax purposes, or, with respect to business meals, the item qualifies as a partial deduction; and

3.4.2 Employee furnishes the Company with such records and other documentary evidence as are customarily sufficient to satisfy the requirement for substantiation of such expenditures as an income tax deduction (or capitalization) pursuant to applicable federal and state statutes and/or regulations.

4.           Annual Vacation. Employee shall be entitled to 30 days vacation time each year without loss of compensation. In no event may Employee accrue more than 45 days of vacation. In the event Employee at any time has accrued 45 days of vacation, no further vacation shall accrue unless and until the accrued time is reduced to less than 45 days. Once this maximum is reached, all further accruals will cease. Vacation accruals will recommence after Employee has taken vacation and the accrued hours have been dropped below the 45-day maximum. Employee may be absent from his employment for vacation only at such times as approved by the Board.

5.           Compensation upon Termination. In the event Employee's employment with the Company is terminated for any reason, voluntarily or involuntarily, Employee shall be entitled to receive Employee's then current Salary accrued through the effective date of termination, plus accrued but unused vacation time. Employee shall not be entitled to further compensation upon termination.

6.           Proprietary Matter. Except as permitted or directed by the company, Employee shall not during the term of his employment or at any time thereafter divulge, furnish, disclose or make accessible (other than in the ordinary course of the business of the Company) to anyone for use in any way any confidential, secret, or proprietary knowledge or information of the Company ("Proprietary

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Matter") which Employee has acquired or become acquainted with or will acquire or become acquainted with, whether developed by himself or by others, including, but not limited to, any trade secrets, confidential or secret designs, processes, formulae, software or computer programs, plans, devices, or material (whether or not patented or patentable, copyrighted or copyrightable) directly or indirectly useful in any aspect of the business of the Company, any confidential customer, distributor or supplier lists of the Company, any confidential or secret development or research work of the Company, or other confidential, secret or non-public aspects of the business of the Company. Employee acknowledges that the Proprietary Matter. constitutes a unique and valuable asset of the Company acquired at great time and expense by the Company, and that any disclosure or other use of the Proprietary Matter other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the term of this Agreement, Employee will refrain from any acts or omissions that would reduce the value of Proprietary Matter to the Company. The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this Agreement by Employee.

7.         Inventions. Any and all inventions, innovations or improvements ("Inventions") made, developed or created by Employee (whether at the request or suggestion of the Company or otherwise, whether alone or in conjunction with others, and whether during regular hours of work or otherwise) during his employment by the Company which may be directly or indirectly useful in, or relate to, the business of the Company shall be promptly and fully disclosed by Employee to the Managers of the Company and shall be the Company's exclusive property, and Employee shall promptly deliver to an appropriate representative of the Company as designated by the Managers all papers, drawings, models, data and other material relating to any inventions made, developed or created by him. Employee shall, at the request of the Company and without any payment therefor, execute any documents necessary or advisable in the opinion of the Company's counsel to direct issuance of patents or copyrights to the Company with respect to such Inventions or to vest in the Company title to such Inventions. The expense of securing any such patent or copyright shall be borne by the Company. Employee hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as Employee's agent and attorney-in-fact to act for and in Employee's behalf and stead to execute and file any document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyrights and other proprietary rights with the same force and effect as if executed and delivered by Employee.

8.         Ventures. If, during the term of this Agreement, Employee is engaged in or associated with the planning or implementing of any project, program or venture involving the Company and a third party or parties, all rights in the project, program or venture shall belong to the Company and shall constitute a corporate opportunity belonging exclusively to the Company. Except as expressly approved in writing by the Company, Employee shall not be entitled to any interest in such project, program or venture or to any commission, finder's fee or other compensation in connection therewith, other than the compensation to be paid to Employee as provided in this Agreement.

9.         Copyright. Employee recognizes and understands that Employee's duties for the Company may include the preparation of materials, including software, written or graphic materials, and that any such materials conceived or written by Employee shall be "work made for

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hire" within the meaning of United States and other applicable copyright laws. Employee understands that since such works are "works made for hire," The Company will retain exclusive ownership of all rights in such materials, including copyrights.

10.       Solicitation of Customers. During his employment by the Company, Employee will not, either directly or indirectly, on his own behalf or in the service or on behalf of others, solicit, divert or appropriate, or attempt to solicit, divert or appropriate, to any competing business any customer or client of the Company, or any person or entity whose account has been solicited by the Company.

11.       Solicitation of Employees. Employee agrees that during his employment by the Company and for the one-year period following the termination of such employment for any reason, Employee shall not, either directly or indirectly, on his own behalf or in the service or on behalf of others solicit, divert or hire away, or attempt to solicit, divert or hire away any person then employed by the Company or any affiliate.

12.       Termination Upon Notice. This Agreement and the employment created thereby may be terminated by the Company or Employee at any time, with or without cause, in the absolute and sole discretion of either party, upon the provision of written notice of termination to the other party. It is understood that no employee or representative of the Company, other than a member of the Board, has any authority to enter into any agreement for any specified period of time, or to make any agreement contrary to the foregoing. Termination of this Agreement pursuant to this provision shall not prejudice any other remedy to which either party may be entitled either at law, in equity, or under this Agreement.

13.       Surrender of Records and Property. Upon termination of his employment for any reason, Employee shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, and calculations or copies thereof, which are the property of the Company and which relate in any way to the business, products, practices or techniques of the Company, and all other property of the Company and Proprietary Matter, including, but not limited to, all documents which in whole or in part, contain any trade secrets or confidential information of the Company, which in any of these cases are in his possession or under his control. If Employee purchases any record book, ledger, or similar item to be used for keeping records of or information regarding the business of the Company or its customers, Employee shall immediately notify the Company, which shall then immediately reimburse Employee for the expense of such purchase.

14.       Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the written consent of the other party, except that the Company may, without the consent of Employee, assign its rights and obligations under this Agreement to any corporation, firm or other business entity (i) with or into which the Company may merge or consolidate, (ii) to which the Company may sell or transfer all or substantially all of its assets, or (iii) to any Affiliate. Upon such assignment by the Company, the Company shall obtain the assignees' written agreement enforceable by Employee to assume and perform, from and after the date of such assignment, the terms, conditions, and provisions imposed by this Agreement upon the Company. After any such assignment by the Company and such written agreement by the assignee, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the Company for the purposes of all provisions of this Agreement including this section.

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15.          Injunctive Relief. Employee agrees that it would be difficult to compensate the Company fully for damages for any violation of the provisions of this Agreement, including, without limitation, the provisions of Sections 6, 7, 8, 9, 10, 11 and 13. Accordingly, Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of this Agreement. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages in addition to injunctive relief.

16.          Arbitration.

16.1 Claims Covered. The parties shall settle by arbitration all statutory, contractual and/or common law claims or controversies ("Claims") that the Company may have against Employee, or that Employee may have against the Company or any of its officers, directors, executives or agents in their capacity as such or otherwise. Claims subject to arbitration include (i) claims for discrimination (including but not limited to, age, disability, marital status, medical condition, national origin, race, religion, sex, sexual harassment or sexual orientation); (ii) claims for breach of any contract (express or implied); (iii) claims for any federal, state or governmental law, statute, regulation or ordinance; and (iv) tort claims (including but not limited to, negligent or intentional injury, defamation and termination of employment in violation of public policy).

16.2 Claims Not Covered. The arbitration of Claims shall not apply to (i) claims by Employee for workers' compensation or unemployment insurance; (ii) claims which even in the absence of these arbitration provisions could not have been litigated in court or before any administrative proceeding under applicable federal, state or local law; and (iii) claims by the Company for injunctive and/or other equitable relief

16.3 Procedures. Claims shall be settled by arbitration by a single, neutral arbitrator in accordance with the Natural Rules for Resolution of Employment Disputes of the American Arbitration Association. The parties shall have the right to take depositions and obtain discovery regarding the subject matter of the arbitration as provided in Title III of Part 4 (commencing with section 1985) of the California Code of Civil Procedure. The arbitrator shall determine all questions of fact and law relating to any Claim, including but not limited to, whether or not any such Claim is subject to the arbitration provisions contained herein. The arbitrator shall issue a written arbitration decision which shall include essential findings and conclusions on which any award is based. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case, except insofar as such fees or expenses are otherwise recoverable pursuant to a statutory claim or cause of action, e.g., FEHA, ADEA or EEO claims. Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company.

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5

16.4 Remedies. Employee understands that Employee is waiving the right to seek remedies in court, including the right to a jury trial. The arbitrator shall be empowered to award any relief which might have been available in a court of law or equity.

16.5 Required Notice and Statute of Limitations. Arbitration shall be initiated by serving or mailing a written notice to the other party within one year of the date the complaining party has knowledge of the event first giving rise to the claim. If the claim is not properly submitted in this time frame, all rights and claims that the complaining party has or may have had against the other party shall be waived and void, even if there is a federal or state statute of limitations which would have given the complaining party more time to pursue the claims. Any notice to be sent to the Company shall be delivered to the Chairman of the Board of the Company or, if none, to any member of the Board. The notice shall identify and describe the nature of all claims asserted and the facts upon which such claims are based.

17.           Indemnification.

17.1 Indemnification of Employee. The Company shall, to the maximum extent permitted by law, indemnify and hold Employee harmless for any acts or decisions made in good faith while performing services for the Company. To the same extent, the Company will pay, and subject to any legal limitations, advance all expenses, including reasonable attorneys' fees and costs of court-approved settlements, actually and necessarily incurred by Employee in connection with the defense of any action, suit or proceeding and in connection with any appeal, which has been brought against Employee by reason of his service as an officer or agent of the Company.

17.2 Indemnification of Company. Employee shall indemnify and hold the Company harmless for any acts or decisions made by Employee which constitute gross negligence or misconduct. Employee shall pay, and subject to any legal limitations, advance all expenses, including reasonable attorneys' fees and costs of court-approved settlements, actually and necessarily incurred by the Company in connection with the defense of any action, suit or proceeding and in connection with any appeal, which has been brought against the Company by reason of the gross negligence or misconduct of Employee.

18.           Miscellaneous.

18.1 Governing Law. This Agreement is made under and shall be governed by and construed in accordance with the laws of the State of California.

18.2 Prior Agreements. This Agreement contains the entire agreement of the parties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect to such subject matter. The parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein.

18.3 Taxes. The Company may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.

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18.4 Successors.

18.4.1 Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or substantially all of the Company's business and/or assets shall assume the Company's obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this subsection or which becomes bound by the terms of this Agreement by operation of law.

18.4.2 Employee's Successors. The terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

18.5 Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing signed by the parties hereto.

18.6 No Waiver. No term or condition of this Agreement shall be deemed to have been waived nor shall there be any estoppel to enforce any provisions of this Agreement, except by a statement in writing signed by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

18.7 Severability. To the extent any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

18.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all which together shall be deemed to be one and the same instrument.

18.9 Notices. Any notice to Employee provided for in this Agreement shall be given by personal delivery or by mailing such notice by first-class mail addressed to Employee at the address specified on the execution page of the Agreement or at such other address as Employee may designate by written notice to the Company. All notices shall be deemed delivered upon personal delivery, or, if mailed in accordance with this provision, three days after deposit in United States mail.

[Signature page follows]

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THE COMPANY:
ENVISION SOLAR, LLC
a California limited liability company
	By:  /s/  Bill Adelson
	Name: Bill Adelson
	Title: COO
EMPLOYEE:
/s/ Robert Noble
Robert Noble
Address for Notice
150 Hummingbird Hill
Encinitas, CA  92024

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EX-10.26

Exhibit 10.26

ASSIGNMENT OF EMPLOYMENT AGREEMENT

ASSIGNMENT OF EMPLOYMENT AGREEMENT (this “Agreement”), dated as of February 10, 2010 by and among Envision Solar International, Inc., a California corporation (“Envision”), Casita Enterprises, Inc., a Nevada corporation (“Casita”), and Robert Noble (“Executive”).

WHEREAS, Envision and Executive have entered into that certain Employment Agreement, dated as of June 15, 2007 (the “Employment Agreement”);

WHEREAS, Casita and Executive wish to assign all of Envision’s, right, title and interest in, to and under the Employment Agreement to Casita and Casita agrees to assume and accept such assignments and Executive consents to such assignment.

NOW THEREFORE, Envision, Casita and Executive agree as follows:

1.           Assignment and Assumption. Envision does hereby sell, assign and transfer (the “Assignment”) unto Casita and its successors and assigns, all of its obligations, right, title and interest in, to and under the Employment Agreement.  Each of the undersigned consents to the Assignment.

2.            Ratification.  Except as assigned hereby, nothing herein contained shall otherwise modify, reduce, amend or otherwise supplement the terms and provisions of the Employment Agreement, which shall remain in full force and effect in accordance with its terms.

3.           Governing Law.  This Agreement shall be governed by, and be construed in accordance with, the laws of the State of New York.

4.           Counterparts.  This Agreement may be executed in one or more counterparts by the parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and all of which together shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the date first written above.

ENVISION SOLAR INTERNATIONAL, INC.
By:	/s/ Howard Smith
	Name:                 Howard Smith
	Title:                 Chief Financial Officer
CASITA ENTERPRISES, INC.
By:	/s/ Howard Smith
	Name:                 Howard Smith
	Title:                 Chief Financial Officer
Executive:
/s/ Robert Noble
Robert Noble

EX-10.27

Exhibit 10.27

THER EMPLOYMENT AGREEMENT (“Agreement”) is entered into by and between Envision Solar International, Inc., a California Corporation (the “Company”), and Joanna Tan, an individual (“Employee”), effective February 2, 2009 (“Effective Date”). The Company desires to retain the services of Employee, and Employee desires to continue to be employed by the Company for the term of ther Agreement.

NOW, THEREFORE, in the consideration of the premises and the mutual covenants and agreements set forth herein, the Company and Employee, intending to be legally bound, hereby agree as follows:

AGREEMENT

1.           Employment. The Company hereby employs Employee on an at-will basis for the position of Executive Vice President and Chief Operating Officer of Envision Solar International, Inc. Employee hereby accepts such at-will employment, and agrees to perform services for the Company, upon the terms and conditions set forth in ther Agreement.

2.           Position and Duties.

2.1Duties. During the term of ther Agreement, Employee shall perform all duties and functions customarily performed by an Executive Vice President of a business of the size and nature similar to that of the Company, and such other employment duties as the Company’s CEO shall reasonably assign to her from time to time.

2.2Competitive Activities. During the term of ther Agreement Employee

shall not, directly or indirectly, either as an executive, employer, consultant, agent, principal, partner, stockholder, member, manager, officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of the Company or any affiliate. Ther Agreement shall not be interpreted to prohibit Employee from making passive personal investments or conducting private business affairs if those activities do not materially interfere with the services required under ther Agreement. However, Employee shall not directly or indirectly, acquire, hold, or retain any interest in any business competing with or similar in nature to the business of the Company or any affiliate.

3.           Compensation.

3.1Salary. As compensation for services to be rendered by Employee under ther Agreement, the Company shall pay to Employee an annual salary of One Hundred Sixty Five Thousand and 00/100 Dollars ($165,000.00) (the “Salary”), which shall be paid on a regular basis in accordance with the Company’s regular payroll procedures (exception: see 3.5 below).

3.2Participation in Benefit Plans. Employee shall be included to the extent

eligible thereunder in any and all plans of the Company providing general benefits for the Company’s employees, including, but not limited to, any group life insurance, hospitalization, disability, medical, dental, Section 125 cafeteria, pension, profit sharing, savings and stock bonus plans. Employee’s participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable thereto. Nothing in ther Agreement shall impose on the Company any affirmative obligation to establish any benefit plan. The Company reserves the right to prospectively terminate or change benefit plans and programs it offers to its employees at any time.

3.3Options. Employee shall be entitled to receive options to purchase

Common Stock of the Company under the same terms and conditions as other senior level executives.

3.4Expenses. In accordance with the Company’s policies established from

time to time, the Company will pay or reimburse Employee for all reasonable and necessary out-of-pocket expenses incurred by her in the performance of her duties under ther Agreement, provided that:

3.4.1 Each such item is of a type which qualifies it as a proper item for deduction or capitalization by the Company for federal or state income tax purposes, or, with respect to business meals, the item qualifies as a partial deduction; and

3.4.2 Employee furnishes the Company with such records and other documentary evidence as are customarily sufficient to satisfy the requirement for substantiation of such expenditures as an income tax deduction (or capitalization) pursuant to applicable federal and state statutes and/or regulations.

3.5Equity in Lieu of Salary. For a period of up to six months, or until Company secures additional financing of at least $500,000, Employee agrees to accept options in lieu of Salary at the following conversion rate:

# of Common Shares (as defined below) x 2 = # of options with FMV strike price.

# of Common Shares = Amount of salary forgiven divided by (FMV) $/share (at the time of salary earned).

4.           Annual Vacation. Employee shall be entitled to 30 days vacation time each year without loss of compensation. In no event may Employee accrue more than 45 days of vacation. In the event Employee at any time has accrued 45 days of vacation, no further vacation shall accrue unless and until the accrued time is reduced to less than 45 days. Once ther maximum is reached, all further accruals will cease. Vacation accruals will recommence after Employee has taken vacation and the accrued hours have been dropped below the 45-day maximum.

5.           Compensation upon Termination. In the event Employee’s employment with the Company is terminated for any reason, voluntarily or involuntarily, Employee shall be entitled to receive Employee’s then current Salary accrued (subject to 3.5 above) through the effective date of termination, plus accrued but unused vacation time. Employee shall not be entitled to further compensation upon termination.

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6.           Proprietary Matter. Except as permitted or directed by the company, Employee shall not during the term of her employment or at any time thereafter divulge, furnish, disclose or make accessible (other than in the ordinary course of the business of the Company) to anyone for use in any way any confidential, secret, or proprietary knowledge or information of the Company

(“Proprietary Matter”) which Employee has acquired or become acquainted with or will acquire or become acquainted with, whether developed by herself or by others, including, but not limited to, any trade secrets, confidential or secret designs, processes, formulae, software or computer programs, plans, devices, or material (whether or not patented or patentable, copyrighted or copyrightable) directly or indirectly useful in any aspect of the business of the Company, any confidential customer, distributor or supplier lists of the Company, any confidential or secret development or research work of the Company, or other confidential, secret or non-public aspects of the business of the Company. Employee acknowledges that the Proprietary Matter constitutes a unique and valuable asset of the Company acquired at great time and expense by the Company, and that any disclosure or other use of the Proprietary Matter other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the term of ther Agreement, Employee will refrain from any acts or omissions that would reduce the value of Proprietary Matter to the Company. The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of ther Agreement by Employee.

7.           Inventions. Any and all inventions, innovations or improvements (“Inventions”) made, developed or created by Employee (whether at the request or suggestion of the Company or otherwise, whether alone or in conjunction with others, and whether during regular hours of work or otherwise) during her employment by the Company which may be directly or indirectly useful in, or relate to, the business of the Company shall be promptly and fully disclosed by Employee to the Managers of the Company and shall be the Company’s exclusive property, and Employee shall promptly deliver to an appropriate representative of the Company as designated by the Managers all papers, drawings, models, data and other material relating to any inventions made, developed or created by her. Employee shall, at the request of the Company and without any payment therefor, execute any documents necessary or advisable in the opinion of the Company’s counsel to direct issuance of patents or copyrights to the Company with respect to such Inventions or to vest in the Company title to such Inventions. The expense of securing any such patent or copyright shall be borne by the Company. Employee hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as Employee’s agent and attorney-in-fact to act for and in Employee’s behalf and stead to execute and file any document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyrights and other proprietary rights with the same force and effect as if executed and delivered by Employee.

8.           Ventures. If, during the term of the Agreement, Employee is engaged in or associated with the planning or implementing of any project, program or venture involving the Company and a third party or parties, all rights in the project, program or venture shall belong to the Company and shall constitute a corporate opportunity belonging exclusively to the Company. Except as expressly approved in writing by the Company, Employee shall not be entitled to any interest in such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith, other than the compensation to be paid to Employee as provided in the Agreement.

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9.           Copyright. Employee recognizes and understands that Employee’s duties for the Company may include the preparation of materials, including software, written or graphic

materials, and that any such materials conceived or written by Employee shall be “work made for hire” within the meaning of United States and other applicable copyright laws. Employee understands that since such works are “works made for hire,” The Company will retain exclusive ownership of all rights in such materials, including copyrights.

10.           Solicitation of Customers. During her employment by the Company, Employee will not, either directly or indirectly, on her own behalf or in the service or on behalf of others, solicit, divert or appropriate, or attempt to solicit, divert or appropriate, to any competing business any customer or client of the Company, or any person or entity whose account has been solicited by the Company.

11.           Solicitation of Employees. Employee agrees that during her employment by the Company and for the one-year period following the termination of such employment for any reason, Employee shall not, either directly or indirectly, on her own behalf or in the service or on behalf of others solicit, divert or hire away, or attempt to solicit, divert or hire away any person then employed by the Company or any affiliate.

12.           Termination Upon Notice. Ther Agreement and the employment created thereby may be terminated by the Company or Employee at any time, with or without cause, in the absolute and sole discretion of either party, upon the provision of written notice of termination to the other party. It is understood that no employee or representative of the Company, other than the CEO, has any authority to enter into any agreement for any specified period of time, or to make any agreement contrary to the foregoing. Termination of ther Agreement pursuant to ther provision shall not prejudice any other remedy to which either party may be entitled either at law, in equity, or under ther Agreement.

13.           Surrender of Records and Property. Upon termination of her employment for any reason, Employee shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, and calculations or copies thereof, which are the property of the Company and which relate in any way to the business, products, practices or techniques of the Company, and all other property of the Company and Proprietary Matter, including, but not limited to, all documents which in whole or in part, contain any trade secrets or confidential information of the Company, which in any of these cases are in her possession or under her control. If Employee purchases any record book, ledger, or similar item to be used for keeping records of or information regarding the business of the Company or its customers, Employee shall immediately notify the Company, which shall then immediately reimburse Employee for the expense of such purchase.

14.           Assignment. Ther Agreement shall not be assignable, in whole or in part, by either party without the written consent of the other party, except that the Company may, without the consent of Employee, assign its rights and obligations under ther Agreement to any corporation, firm or other business entity (i) with or into which the Company may merge or consolidate, (ii) to which the Company may sell or transfer all or substantially all of its assets, or (iii) to any Affiliate. Upon such assignment by the Company, the Company shall obtain the assignees’ written agreement enforceable by Employee to assume and perform, from and after the date of such assignment, the terms, conditions, and provisions imposed by ther Agreement upon the Company. After any such assignment by the Company and such written agreement by the assignee, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the Company for the purposes of all provisions of ther Agreement including ther section.

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15.           Injunctive Relief. Employee agrees that it would be difficult to compensate the Company fully for damages for any violation of the provisions of ther Agreement, including, without limitation, the provisions of Sections 6, 7, 8, 9, 10, 11 and 13. Accordingly, Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of ther Agreement. Ther provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages in addition to injunctive relief.

16.           Arbitration.

16.1 Claims Covered. The parties shall settle by arbitration all statutory, contractual and/or common law claims or controversies (“Claims”) that the Company may have against Employee, or that Employee may have against the Company or any of its officers, directors, executives or agents in their capacity as such or otherwise. Claims subject to arbitration include (i) claims for discrimination (including but not limited to, age, disability, marital status, medical condition, national origin, race, religion, sex, sexual harassment or sexual orientation); (ii) claims for breach of any contract (express or implied); (iii) claims for any federal, state or governmental law, statute, regulation or ordinance; and (iv) tort claims (including but not limited to, negligent or intentional injury, defamation and termination of employment in violation of public policy).

16.2 Claims Not Covered. The arbitration of Claims shall not apply to (i) claims by Employee for workers’ compensation or unemployment insurance; (ii) claims which even in the absence of these arbitration provisions could not have been litigated in court or before any administrative proceeding under applicable federal, state or local law; and (iii) claims by the Company for injunctive and/or other equitable relief.

16.3 Procedures. Claims shall be settled by arbitration by a single, neutral arbitrator in accordance with the Natural Rules for Resolution of Employment Disputes of the American Arbitration Association. The parties shall have the right to take depositions and obtain discovery regarding the subject matter of the arbitration as provided in Title III of Part 4 (commencing with section 1985) of the California Code of Civil Procedure. The arbitrator shall determine all questions of fact and law relating to any Claim, including but not limited to, whether or not any such Claim is subject to the arbitration provisions contained herein. The arbitrator shall issue a written arbitration decision which shall include essential findings and conclusions on which any award is based. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case, except insofar as such fees or expenses are otherwise recoverable pursuant to a statutory claim or cause of action, e.g., FEHA, ADEA or EEO claims. Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company.

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16.4 Remedies. Employee understands that Employee is waiving the right to seek remedies in court, including the right to a jury trial. The arbitrator shall be empowered to award any relief which might have been available in a court of law or equity.

16.5 Required Notice and Statute of Limitations. Arbitration shall be initiated by serving or mailing a written notice to the other party within one year of the date the complaining party has knowledge of the event first giving rise to the claim. If the claim is not properly submitted in ther time frame, all rights and claims that the complaining party has or may have had against the other party shall be waived and void, even if there is a federal or state statute of limitations which would have given the complaining party more time to pursue the claims. Any notice to be sent to the Company shall be delivered to the Chairman of the Board of the Company or, if none, to any member of the Board. The notice shall identify and describe the nature of all claims asserted and the facts upon which such claims are based.

 17.           Indemnification.

17.1 Indemnification of Employee. The Company shall, to the maximum extent permitted by law, indemnify and hold Employee harmless for any acts or decisions made in good faith while performing services for the Company. To the same extent, the Company will pay, and subject to any legal limitations, advance all expenses, including reasonable attorneys’ fees and costs of court-approved settlements, actually and necessarily incurred by Employee in connection with the defense of any action, suit or proceeding and in connection with any appeal, which has been brought against Employee by reason of her service as an officer or agent of the Company.

 18.           Miscellaneous.

18.1 Governing Law. Ther Agreement is made under and shall be governed by and construed in accordance with the laws of the State of California.

18.2 Prior Agreements. Ther Agreement contains the entire agreement of the parties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect to such subject matter. The parties hereto have made no agreements, representations or warranties relating to the subject matter of ther Agreement which are not set forth herein.

18.3 Taxes. The Company may withhold from any benefits payable under ther Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.

18.4 Successors.

18.4.1 Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under ther Agreement and agree expressly to perform the obligations under ther Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under ther Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in ther subsection or which becomes bound by the terms of ther Agreement by operation of law.

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18.4.2 Employee’s Successors. The terms of ther Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

18.5 Amendments. No amendment or modification of ther Agreement shall be deemed effective unless made in writing signed by the parties hereto.

18.6 No Waiver. No term or condition of ther Agreement shall be deemed to have been waived nor shall there be any estoppel to enforce any provisions of ther Agreement, except by a statement in writing signed by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

18.7 Severability. To the extent any provision of ther Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of ther Agreement shall be unaffected and shall continue in full force and effect.

18.8 Counterparts. Ther Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all which together shall be deemed to be one and the same instrument.

18.9 Notices. Any notice to Employee provided for in ther Agreement shall be given by personal delivery or by mailing such notice by first-class mail addressed to Employee at the address specified on the execution page of the Agreement or at such other address as Employee may designate by written notice to the Company. All notices shall be deemed delivered upon personal delivery, or, if mailed in accordance with ther provision, three days after deposit in United States mail.

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THE COMPANY:

ENVISION SOLAR, LLC

a California limited liability company

By:     /s/  Robert Noble                                                             

Name: Robert Noble

Title: CEO

EMPLOYEE:

/s/  Joanna Tan

Joanna Tan

Address for Notice:

13333 Mango Drive

Del Mar, CA 92014

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EX-10.28

Exhibit 10.28

ASSIGNMENT OF EMPLOYMENT AGREEMENT

ASSIGNMENT OF EMPLOYMENT AGREEMENT (this “Agreement”), dated as of February 10, 2010 by and among Envision Solar International, Inc., a California corporation (“Envision”), Casita Enterprises, Inc., a Nevada corporation (“Casita”), and Joanna Tan (“Executive”).

WHEREAS, Envision and Executive have entered into that certain Employment Agreement, dated as of February 2, 2009 (the “Employment Agreement”);

WHEREAS, Casita and Executive wish to assign all of Envision’s, right, title and interest in, to and under the Employment Agreement to Casita and Casita agrees to assume and accept such assignments and Executive consents to such assignment.

NOW THEREFORE, Envision, Casita and Executive agree as follows:

1.           Assignment and Assumption.  Envision does hereby sell, assign and transfer (the “Assignment”) unto Casita and its successors and assigns, all of its obligations, right, title and interest in, to and under the Employment Agreement.  Each of the undersigned consents to the Assignment.

2.            Ratification.  Except as assigned hereby, nothing herein contained shall otherwise modify, reduce, amend or otherwise supplement the terms and provisions of the Employment Agreement, which shall remain in full force and effect in accordance with its terms.

3.           Governing Law.  This Agreement shall be governed by, and be construed in accordance with, the laws of the State of New York.

4.           Counterparts.  This Agreement may be executed in one or more counterparts by the parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and all of which together shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the date first written above.

ENVISION SOLAR INTERNATIONAL, INC.
By:	/s/ Robert Noble
	Name:               Robert Noble
	Title:                 Chief Executive Officer
CASITA ENTERPRISES, INC.
By:	/s/ Robert Noble
	Name:               Robert Noble
	Title:                 Chief Executive Officer
Executive:
/s/ Joanna Tan
Joanna Tan

EX-10.29

Exhibit 10.29

Interim Services Agreement

September 1, 2009

Robert Noble. CEO

Envision Solar International, Inc.

'1225 Executive Square Suite 1000.

La Jolla, CA 92037

Dear Bob:

Tatum, LLC ("Tatum," "we," "us" or "our") is pleased that Envision Solar International. Inc. ("Company," "you" or "your") has selected us to provide you with outsourced interim services. The services (the "Services") and tees will be more particularly described on the Schedule attached hereto and will be provided by the individual resource (the "Tatum Resource") identified on such Schedule. Schedules for additional Tatum Resources may he added from time to time upon the mutual written agreement of the parties. In addition, upon the request of the Company and the execution of an additional Schedule to this agreement, Tatum will provide search Services to the Company.

Engagement The Tatum Resource will be one of Tatum's employees or members, and we will be solely responsible for determining the conditions, terms and payment of compensation and benefits for the Tatum Resource. You will be solely responsible for providing the TatumResource day-to-day guidance. supervision. direction, assistance and other information necessary for the successful and timely completion of the Services. Tatum will have no oversight, control, or authority over the Tatum Resource with respect to the Services. The Company acknowledges that it is solely responsible for the sufficiency of the Services for its purposes. The Company will designate a management-level individual to be responsible for overseeing the Services, and the Tatum Resource will report directly to such individual with respect to the provision of the Services. Unless the Tatum Resource is acting as an executive officer of the Company and is authorized by the Company to make such decision, the Company will not permit or require the Tatum Resource to be the ultimate decision making authority for any material decision relating to your business, including, without limitation, any proposed merger, acquisition, recapitalization, financial strategy or restructuring.

Fees and Expenses. You will pay us the tees set forth on the applicable Schedule. In addition to our standard professional service fees. we will charge an administrative fee equal to 5% of our professional Service fees, which covers ancillary administrative costs such as technology, communication, and supplies. In addition, you will reimburse Tatum directly for all pre-approved travel and out-of-pocket expenses incurred in connection with this agreement (including any Schedules).

Payment Terms. Payments to Tatum should be made within 30 days of receipt of invoice by electronic transfer in accordance with the instructions set forth below or such alternative instructions as provided by us from time to time. Any amounts not paid when due may be subject to a periodic service charge equal to the lesser of 1.5% per month and the maximum amount allowed under applicable law, until such amounts arc paid in full. including assessed service charges. In lieu of terminating this agreement, we may suspend the provision of any Services if amounts owed are not paid in accordance with the terms of this agreement.

Bank Name and Address: Silicon Valley Bank, 3003 Tasman Drive, Santa Clara, CA 95054

Beneficiary: Tatum. LLC

Beneficiary Account Number: 3300599791

ABA Transit/Routing Number: 121140399 Please reference Company name in the body of the payment.

Effective Date and Termination_ This agreement will he effective as of the earlier of (0 the date Tatum begins providing Services to the Company, and (ii) the date of the last signature to this agreement as indicated on the signature page. In the event that a party commits a breach of this agreement (including any Schedule) and fails to cure the same within 10 days following delivery by the non-breaching party of written notice specifying the nature of the breach. the non-breaching party may terminate this agreement or the applicable Schedule effective upon written notice of such termination. The termination rights set forth in this Section are in addition to and not in lieu of the termination rights set forth in each of the Schedules.

Hiring the Tatum Resource Outside of a Tatum Agreement. The parties recognize and agree that Tatum is responsible for introducing the Tatum Resources to the Company. Therefore, if at any time during the time frame in which a Tatum Resource is providing Services to the Company and for a period of 12-months thereafter, other than in connection with this agreement or another Tatum agreement, the Company or any of its subsidiaries or affiliates employs such Tatum Resource, or engages such Tatum Resource as an independent contractor, the Company will pay Tatum a placement fee in an amount equal to 50% of Tatum's Annualized Fees (as defined below) The amount will be due and payable to Tatum upon written demand to the Company. "Annualized Fees" means the equivalent of what Tatum would receive under this agreement for such Tatum Resource on a full-time annual basis plus the maximum amount of any bonus for which Tatum was eligible with respect to the then -current bonus year for the Tatum Resource. You will have the opportunity to make the Tatum Resource a permanent_ full -time member of the Company at any time during the term of this Schedule by entering into another form of Tatum agreement, the terms of which will be negotiated at such time.

Warranties and Disclaimers. We disclaim all representations and warranties, whether express. implied or statutory, including, but not limited to any warranties of quality, performance, merchantability, or fitness of use or purpose. Without limiting the foregoing, we make no representation or warranty with respect to the Tatum Resource or the Services provided hereunder, and we will not be responsible for any action taken by you in following or declining to follow any of the Tatum Resource's advice or recommendations. The Services provided by Tatum and the Tatum Resource hereunder are for the sole benefit of the Company and not any unnamed third parties. The Services will not constitute an audit, review. opinion, or compilation, or any other type of financial statement reporting or attestation engagement that is subject to the rules of the AICPA or other similar state or national professional bodies or laws and will not result in an opinion or any form of assurance on internal controls.

Limitation of Liability; Indemnity.

(a)Tatum's liability in any and all categories and for any and all causes arising under this agreement, whether based in contract, tort, negligence, strict liability or otherwise, will. in the aggregate, not exceed the actual fees paid by you to us over the previous two months' of the agreement with respect to the Tatum Resource from whom the liability arises. In no event will we be liable for incidental, consequential, punitive, indirect or special damages, including, without limitation, interruption or loss of business, profit or goodwill. As a condition for recovery of any liability, you must assert any claim against us within three months after discovery or 60 days after the termination or expiration of the applicable Schedule under which the liability arises, whichever is earlier

(b)You agree to indemnify us and the Tatum Resource to the full extent permitted by law for any losses, costs, damages, and expenses (including reasonable attorneys' fees), as they are incurred, in connection with any cause of action, suit, or other proceeding arising in connection with the Tatum Resource's services to you.

Insurance. To the extent the Company has directors' and officers' liability insurance in effect, the Company will provide such insurance coverage for any Tatum Resource serving as an officer or executive of the Company under this agreement at no additional cost to the Tatum Resource, along with written evidence to Tatum or the Tatum Resource that the Tatum Resource is covered by such insurance. Furthermore, the Company will maintain such insurance coverage with respect to occurrences arising during the term of this agreement for at least three years following the termination or expiration of the applicable Schedule or will purchase a directors' and officers' extended reporting period or "tail" policy to cover the Tatum Resource for such three year period.

Governingand Witness Fees.

(a)This agreement will be governed by and construed in accordance with the laws of the State of California. without regard to conflicts of laws provisions.

(b)If the parties are unable to resolve any dispute arising out of or in connection with this agreement, the parties agree and stipulate that any such disputes will be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The arbitration will be conducted in the San Diego, California office of the AAA by a single arbitrator selected by the parties according to the rules of the AAA, and the decision of the arbitrator will be final and binding on both parties. In the event that the parties fail to agree on the selection of the arbitrator within 30 days after either party's request for arbitration under this Section. the arbitrator will be chosen by the AAA. The arbitrator may in his or her discretion order documentary discovery but will not allow depositions without a showing of compelling need. The arbitrator will render his or her decision within 90 days after the call for arbitration. Judgment on the award of the arbitrator may be entered in and enforced by any court of competent jurisdiction. The arbitrator will have no authority to award damages in excess nr in contravention of this agreement and may not amend or disregard any provision of this agreement, including this section. Notwithstanding the foregoing, either party may seek appropriate injunctive relief from any court of competent jurisdiction, and Tatum may pursue payment of any unpaid amounts due under this agreement through any court of competent jurisdiction.

(c)In the event any member or employee of Tatum (including, without limitation. any Tatum Resource) is requested or authorized by you or is required by government regulation, subpoena or other legal process to produce documents or appear as witnesses in connection with any action, suit or other proceeding initiated by a third party against you or by you against a third party. you will, so long as Tatum is not a party to the proceeding in which the information is sought, reimburse Tatum for its member's or employee's professional time (based on customary rates) and expenses, as well as the fees and expenses of its counsel, incurred in responding to such requests. This provision is in addition to and not in lieu of any indemnification obligations the Company may have under this agreement.

Miscellaneous.

(a)Thisagreement together with all Schedules constitutes the entire agreement between the parties with regard to the subject matter hereof and supersedes any and all agreements, whether oral or written. between the parties with respect to its subject matter. No amendment or modification to this agreement will be valid unless in writing and signed by both parties.

(b)Ifany portion of this agreement is found to be invalid or unenforceable, such provision will be deemed severable from the remainder of this agreement and will not cause the invalidity or unenforceability of the remainder of this agreement, except to the extent that the severed provision deprives either party of a substantial portion of its bargain.

(c)Neither party will be deemed to have waived any rights or remedies accruing under this agreement unless such waiver is in writing and signed by the party electing to waive the right or remedy. The waiver by any party of a breach or violation of any provision of this agreement will not operate or be construed as a waiver of any subsequent breach of such provision or any other provision of this agreement.

(d)Neither party will be liable for any delay or failure to perform under this agreement

(other than with respect to payment obligations) to the extent such delay or failure is a result of an act of God, war, earthquake, civil disobedience. court order, labor dispute, or other cause beyond such party's reasonable control.

(e)You may not assign your rights or obligations under this agreement without the express

written consent of Tatum. Nothing in this agreement will confer any rights upon any person or entity other than the parties hereto and their respective successors and permitted assigns and the Tatum Resources.

(f)The expiration or termination of this agreement or any Schedule will not destroy or

diminish the binding force and effect of any of the provisions of this agreement or any Schedule that expressly, or by reasonable implication, come into or continue in effect on or after such expiration or termination, including, without limitation, provisions relating to payment of fees and expenses (including witness fees and expenses and liquidated damage fees), governing law, arbitration, limitation of liability and indemnity.

(g)You agree to reimburse Tatum for all costs and expenses incurred by Tatum in enforcing

collection of any monies due under this agreement. including, without limitation, reasonable attorneys' fees. court costs and arbitration fees.

(h)You agree to allow us to use the Company's logo and name on Tatum's website and other

marketing materials for the sole purpose of identifying the Company as a client of Tatum. Tatum will not use the Company's logo or name in any press release or general circulation advertisement without the Company's prior written consent.

We appreciate the opportunity to serve you and believe this agreement accurately reflects our mutual understanding of the terms upon which the Services will be provided. We would be pleased to discuss this agreement with you at your convenience. If the foregoing is in accordance with your understanding, please sign a copy of this agreement and return it to my attention.

Sincerely,

Tatum, LLC

/s/  Mark Neilson

Mark Neilson

Managing Partner - San Diego

Accepted and Agreed:

Envision Solar International, Inc.

By:  Robert Noble

Name:  Robert Noble

Title:  CEO

Date:  9/1/09

Schedule to Interim Services Agreement

This Schedule is entered into in connection with that certain Interim Services Agreement. dated

September 1, 2009 (the "Agreement"), by and between Tatum, LLC ("Tatum," "we," "us" or "our") and Envision Solar International. Inc. ("Company." "you" or "your") and will be governed by the terms and conditions of the Agreement.

Tatum Resource Name: Howard Smith

Position: Part-time: Chief Financial Officer & Executive Vice President Company Supervisor: Robert Noble, CEO

Start Date: September 2, 2009

End Date: Estimated to be December 31, 2009 but may be modified as mutually agreed.

Replacement: If you are dissatisfied with the Services provided by the Tatum Resource(s). we will immediately remove the Tatum Resource(s) and endeavor to furnish a replacement as soon as reasonably practical. We do not guarantee that we will be able to find a suitable replacement.

Termination: Either party may terminate this Schedule at any time for any reason upon notice to the other party; provided, however. the parties will endeavor to provide as much notice as possible prior to termination. preferably two weeks.

Fees: You will pay Tatum 520,000 per month for the Tatum Resource. prorated for billing periods less than one month. TatumResource will work from the Company's offices for at least three days per week and be accessible remotely for the balance of each week by phone and email.

Payroll taxes and employee benefits: You will not be responsible for payroll taxes or employee benefits since the Tatum Resource will not be an employee of the Company.

Expenses: You will directly reimburse Tatum Resource for reasonable and customary business expenses, including parking related expenses, as submitted and pi e-approved by you.

Billings: Tatum will bill monthly for Services in arrears of the provision of such Services as follows payable within 30 days of invoice date:

·25% of fees billed will be payable in cash;

·75% of fees billed will be payable in qualified employee stock options;

  °    a Share calculation: Amount of fees deferred divided by Fair Market Value per share, at the time of services equals the number of shares. Option calculation: Number of shares calculated above times two equals the number of stock options to be issued with a Fair Market Value above strike price.

·Within 15 days of execution of agreement: $2,500 (applied of cash portion of fees)

Permanent Engagement: You will have the opportunity to make the Tatum Resource a permanent, full-time member of the Company at any time during the term of this Schedule by entering into another form of Tatum agreement, the terms of which will be negotiated at such time.

In the event of a conflict between the terms and conditions of this Schedule and the Agreement, the terms and conditions of the Agreement will control.

Tatum, LLC	Envision Solar International, Inc.
By:  /s/  Mark C. Neilson	/s/  Robert Noble
Name:  Mark C. Neilson	Name:  Robert Noble
Title:  managing Partner-San Diego	CEO
Date: 9-1-09	Date: 9-1-09

EX-10.30

Exhibit 10.30

ASSIGNMENT OF INTERIM SERVICES AGREEMENT

ASSIGNMENT OF INTERIM SERVICES AGREEMENT (this “Agreement”), dated as of February10, 2010 by and among Envision Solar International, Inc., a California corporation (“Envision”), Casita Enterprises, Inc., a Nevada corporation (“Casita”), and Tatum, LLC (“Tatum”).

WHEREAS, Envision and Tatum have entered into that certain Interim Services Agreement, dated as of September 1, 2009 (the “Interim Services Agreement”);

WHEREAS, Casita and Tatum wish to assign all of Envision’s, right, title and interest in, to and under the Interim Services Agreement to Casita and Casita agrees to assume and accept such assignments and Tatum consents to such assignment.

NOW THEREFORE, Envision, Casita and Tatum agree as follows:

1.           Assignment and Assumption.  Envision does hereby sell, assign and transfer (the “Assignment”) unto Casita and its successors and assigns, all of its obligations, right, title and interest in, to and under the Interim Services Agreement.  Each of the undersigned consents to the Assignment.

2.            Ratification.  Except as assigned hereby, nothing herein contained shall otherwise modify, reduce, amend or otherwise supplement the terms and provisions of the Interim Services Agreement, which shall remain in full force and effect in accordance with its terms.

3.           Governing Law.  This Agreement shall be governed by, and be construed in accordance with, the laws of the State of New York.

4.           Counterparts.  This Agreement may be executed in one or more counterparts by the parties hereto in separate counterparts, each of which when executed shall be deemed to be an original and all of which together shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the date first written above.

ENVISION SOLAR INTERNATIONAL, INC.
By:	/s/ Robert Noble
	Name:               Robert Noble
	Title:                 Chief Executive Officer
CASITA ENTERPRISES, INC.
By:	/s/ Robert Noble
	Name:               Robert Noble
	Title:                 Chief Executive Officer
TATUM:

EX-99.1

Exhibit 99.1

Envision Solar International, Inc. and Subsidiaries

Consolidated Financial Statements

December 31, 2008 and 2007

Envision Solar International, Inc. and Subsidiaries

Table of Contents

	Page (s)
Report of Independent Register Public Accounting Firm	1
Consolidated Balance Sheets	2
Consolidated Statement of Operations	3
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6 - 22

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of:

Envision Solar International, Inc.

We have audited the accompanying consolidated balance sheets of Envision Solar International, Inc. and Subsidiaries as of December 31, 2008 and 2007 and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2008.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Envision Solar International, Inc. and Subsidiaries as of December 31, 2008 and 2007 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company reported a net loss of $9,595,342 and $3,282,592 in 2008 and 2007, respectively, and used cash for operating activities of $2,898,044 and $1,276,670 in 2008 and 2007, respectively.  At December 31, 2008, the Company had a working capital deficiency, stockholders' deficiency and accumulated deficit of $1,550,307, $1,157,819 and $13,164,806, respectively.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  Management's plans as to these matters are also described in Note 2.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

Boca Raton, Florida

February 10, 2010

1

Envision Solar International, Inc. and Subsidiaries
Consolidated Balance Sheets
	December 31,
Assets
	2008			2007
Current Assets
Cash	$	3,083		$	257,753
Accounts Receivable, net		173,798			60,269
Prepaid and other current assets, net		70,663			87,068
Total Current Assets		247,544			405,090
Property and Equipment, net		359,098			227,427
Other Assets
Deposits		33,390			19,240
Total Other Assets		33,390			19,240
Total Assets	$	640,032		$	651,757
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts Payable	$	990,357		$	106,789
Accounts Payable - Related Party		41,374			15,979
Accrued Expenses		58,990			61,624
Sales Tax Payable		36,828			-
Billings in excess of costs on uncompleted contract		56,831			-
Note Payable-Officer		18,700			-
Note Payable		591,771			-
Deferred Revenue		3,000			62,700
Total Current Liabilities		1,797,851			247,092
Commitments and Contingencies (Note 9)
Stockholders' Equity (Deficit)
Common Stock, no par value, 10,000,000 shares authorized,		4,648,852			2,142,576
841,263 and 763,702 shares issued and outstanding
at December 31, 2008 and 2007, respectively
Additional Paid-in-Capital		7,358,135			1,831,553
Accumulated Deficit		(13,164,806	)		(3,569,464	)
Total Stockholders' Equity (Deficit)		(1,157,819	)		404,665
Total Liabilities and Stockholders' Equity (Deficit)	$	640,032		$	651,757

The Accompanying notes are an integral part of these Consolidated Financial Statements.

2

Envision Solar International, Inc. and Subsidiaries
Consolidated Statements of Operations
	For the Year Ended December 31,
	2008			2007
Revenues	$	2,418,391		$	52,661
Cost of Revenues
Materials		1,338,289			38,238
Consultants		47,642			25,742
Consultants-related party		-			66,167
Design		14,450			-
Subcontractors		1,448,627			-
Other Cost of Revenues		46,456			17,600
Total Cost of Revenues		2,895,464			147,747
Gross Loss		(477,073	)		(95,086	)
Operating Expenses (including stock based compensation expense
of $4,363,912 for the year ended December 31, 2008 and $1,831,553
for the year ended December 31, 2007)		9,076,473			3,186,706
Loss From Operations		(9,553,546	)		(3,281,792	)
Other Income (Expense)
Interest Expense		(32,376	)		-
Total Other Income (Expense)		(32,376	)		-
Income (Loss) Before Income Tax		(9,585,922	)		(3,281,792	)
Income Tax Expense		(9,420	)		(800	)
Net Loss	$	(9,595,342	)	$	(3,282,592	)

The Accompanying notes are an integral part of these Consolidated Financial Statements

3

Envision Solar International Inc. and Subsidiaries
Consolidated Statements of Changes of Stockholders' Equity (Deficit)
Years Ended December 31, 2008 and 2007
	Common Stock					Additional Paid-in-Capital		Accumulated
	Shares		Amount					Deficit			Total
Balance at June 12, 2006 (Inception)		-	$	-		$	-	$	-		$	-
Stock issued for cash		255,000		155,000			-		-			155,000
Net Loss from June 12, 2006 (Inception) to December 31, 2006		-		-			-		(286,872	)		(286,872	)
Balance at December 31, 2006		255,000		155,000			-		(286,872	)		(131,872	)
Stock issued as compensation		49,994		49,994			-		-			49,994
Conversion of debt from related party to stock		238,875		238,875			-		-			238,875
Stock Issued for Cash		199,848		1,998,480			-		-			1,998,480
Cash offering costs		-		(299,773	)		-		-			(299,773	)
Common stock issued as part of offering costs		19,985		199,850			-		-			199,850
Stock based offering costs		-		(199,850	)		-		-			(199,850	)
Stock option expense		-		-			1,831,553		-			1,831,553
Net Loss 2007		-		-			-		(3,282,592	)		(3,282,592	)
Balance at December 31, 2007		763,702		2,142,576			1,831,553		(3,569,464	)		404,665
Value of options issued to seller of company acquired		-		-			1,157,676		-			1,157,676
Stock issued to seller of company acquired		10,000		100,000			-		-			100,000
Value of options granted to reduce the outstanding liabilities from certain vendors		-		-			14,994		-			14,994
Common stock issued for cash		67,311		2,692,444			-		-			2,692,444
Capital raising fees incurred during the year		-		(296,168	)		-		-			(296,168	)
Stock Option Expense		-		-			4,353,912		-			4,353,912
Stock issued for services		250		10,000			-		-			10,000
Net Loss 2008		-		-			-		(9,595,342	)		(9,595,342	)
Balance at December 31, 2008		841,263	$	4,648,852		$	7,358,135	$	(13,164,806	)	$	(1,157,819	)

The Accompanying notes are an integral part of these Consolidated Financial Statements

4

Envision Solar International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
	Year Ended December 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(9,595,342	)	$	(3,282,592	)
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities
Amortization of prepaid interest		32,108			-
Depreciation and Amortization		52,105			17,829
Bad debt expense		105,955			14,071
Goodwill impairment		1,358,254			-
Common stock issued for services		10,000			49,994
Trademark impairment		68,827			-
Compensation expense related to grant of stock options		4,353,912			1,831,553
Changes in assets and liabilities
(Increase)decrease in:
Accounts Receivable		(219,484	)		(61,830	)
Prepaid Expenses and other current assets		86,068			(99,578	)
Deposits		(14,150	)		(19,240	)
Increase(decrease) in:
Accounts Payable		806,984			106,789
Accounts Payable - related party		25,395			74,736
Accrued Expenses		(2,635	)		28,898
Sales Tax Payable		36,828			-
Billings in excess of costs on uncompleted contract		56,831			-
Deferred Revenue		(59,700	)		62,700
NET CASH USED IN OPERATING ACTIVITIES		(2,898,044	)		(1,276,670	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisition		(9,000	)		-
Purchase of trademark		(71,200	)		-
Purchase of Equipment		(181,402	)		(224,256	)
NET CASH USED IN INVESTING ACTIVITIES		(261,602	)		(224,256	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common Stock		2,692,444			1,998,480
Capital Raising costs		(296,168	)		(299,773	)
Proceeds from Issuance of notes payable		490,000			-
Proceeds from notes payable from-shareholders		18,700			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		2,904,976			1,698,707
NET INCREASE (DECREASE) IN CASH		(254,670	)		197,781
CASH AT BEGINNING OF YEAR		257,753			59,972
CASH AT END OF YEAR	$	3,083		$	257,753
Supplemental Disclosure of Cash Flow Information:
Interest Expense	$	32,376		$	-
Income Tax	$	(9,420	)	$	800
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Conversion of note payable to a related party to common stock	$	-		$	238,875
Common stock issued as offering costs	$	-		$	199,850
Stock-based fees paid for acquisition	$	1,257,676		$	-
Conversion of accounts payable to common stock	$	14,994		$	-
Original issue discount on note payable	$	101,771		$	-

The Accompanying notes are an integral part of these Consolidated Financial Statements

5

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

1.   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CORPORATE ORGANIZATION

The Company was incorporated on June 12, 2006 as a limited liability company (“LLC”), under the name Envision Solar, LLC.  In September 2007, the company was reorganized as a California C Corporation and issued one share of common stock for each outstanding member unit in the LLC.  The change in capitalization to common stock from member equity has been retroactively applied to all periods presented in the accompanying consolidated financial statements.  Also during 2007, the Company formed various wholly owned subsidiaries to account for its planned future operations.  All references to “us”, “we”, “our”, “Envision” or “the Company”, refer to Envision Solar, LLC or the newly formed Corporation and its wholly-owned subsidiaries unless otherwise stated.

In 2007, the Company established a series of subsidiaries: 1. Envision Energy Group, Inc. 2.  Envision Solar Construction Company, Inc. 3.  Envision Solar Design, Inc. 4.  Envision Solar Development, Inc. 5.  Envision Solar Operation & Management, Inc. 6.  Envision Solar Residential, Inc. 7.  Envision Solar Technology, Inc. and 8.  Greenshade Network, Inc.  In addition, in 2008, the Company established one other subsidiary, Envision Africa LLC, a wholly owned LLC.  During 2008 only two were operational, with Envision Africa anticipated to become operational in the future.  The remaining subsidiaries were dissolved with the Secretary of State of California in 2008.  The two operational subsidiaries included in these consolidated financial statements are:  Envision Solar Residential, Inc. and Envision Solar Construction Company, Inc.

NATURE OF OPERATIONS

Envision Solar (“the Company”) is a solar project and technology developer providing turn-key design/build solutions for commercial, industrial, institutional and residential projects.  Founded by award-winning sustainable design architects with extensive international business development and industrial design expertise, the Company strives to be first-to-market and the leading worldwide brand in solar parking arrays.  The Company has two lines of business, ParkSolarSM for commercial, industrial and government projects, and LifeSystemsSM for residential and light commercial products and projects. Both groups have envisioned, invented and engineered the leading next generation, patent pending, “solar integrated building systems™” (SIBS™) which are providing the foundation for the lowest cost, most highly engineered solutions available for the massive future worldwide market for solar parking array installations.

The Company’s business model includes vertical integration of all key capabilities required for the full, turn-key “single-point-of-contract™” implementation of each project.  These capabilities include project planning and management, design, construction, operations and maintenance, and structured finance. The Company is continuing to secure its position as the key participant at the convergence of solar energy and the real estate and building industry.

The Company operates with the following trade names: ParkSolarSM: Commercial Scale Solar Parking Arrays, LifeSystemsSM: Residential Component-Based Solar Integrated Buildings, and GreenShade.SM

PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of Envision Solar International Inc. and its wholly-owned subsidiaries.  All significant inter-company balances and transactions have been eliminated in the consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts receivable, depreciable lives of property and equipment, fair value allocation in an acquisition, valuation of goodwill and trademarks, valuation of share-based payments and the valuation allowance on deferred tax assets.

6

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

CONCENTRATIONS

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and accounts receivable.

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts from inception through December 31, 2008.  As of December 31, 2008 and 2007, there was approximately $0 and $94,539, respectively, in excess of federally insured limits.

Concentration of Accounts Receivable

At December 31, 2008 and 2007, customers that each accounted for more than 10% of our gross accounts receivable individually were as follows:

	2008			2007
Customer 1		-			49	%
Customer 2		-			20	%
Customer 3		28	%		-
Customer 4		24	%		-
Customer 5		14	%		-

Concentration of Revenues

For the year ended December 31, 2008 and 2007, customers that each represented more than 10% of our net revenues were as follows:

	2008			2007
Customer A		-			56	%
Customer B		-			23	%
Customer C		-			20	%
Customer D		50	%		-
Customer E		29	%		-

CASH AND CASH EQUIVALENTS

For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.  There were no cash equivalents at December 31, 2008 or 2007.

ACCOUNTS RECEIVABLE

Accounts receivable are customer obligations due under normal trade terms.  Management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible.  Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, our historical write-off experience, net of recoveries and economic conditions.  The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its overall allowance for doubtful accounts.  After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

7

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

PROPERTY, EQUIPMENT AND DEPRECIATION

Property and equipment is recorded at cost.  Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 5 to 7 years.  Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements.  Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred.

WEBSITE AND OTHER SOFTWARE DEVELOPMENT COSTS

In accordance with EITF Issue No. 00-2, the Company accounts for its website development costs in accordance with Statement of Position No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”).  The Company also applies SOP 98-1 to its other software development or purchase costs of software for internal use.  These costs are included in property and equipment in the accompanying consolidated financial statements.

SOP 98-1 requires the expensing of all costs of the preliminary project stage and the training and application maintenance stage and the capitalization of all internal or external direct costs incurred during the application development stage.  The Company amortizes the capitalized cost of software developed or obtained for internal use over an estimated life of five years.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

REVENUE AND COST RECOGNITION

     Revenues consist of design fees for the design of solar systems and arrays, and revenues from sales, construction and installation of the same.

Revenues from design services are recognized as earned.

Construction contracts are generally short term (less than one year duration) and revenues and related costs are recognized using the “completed contract method” of accounting in accordance with Statement of Position 81-1, “Accounting for Performance of Construction-Type and Certain Production Type Contracts”.  Under this method, contract costs are accumulated as deferred assets and billings and/or cash received are recorded to a deferred revenue liability account, during the periods of construction, but no revenues, costs, or profits are recognized in operations until the period upon completion of the contract.  Costs include direct material, direct labor and subcontract labor.  A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer.  Corporate general and administrative expenses are charged to the periods as incurred.  However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is incurred.

The deferred asset (accumulated contract costs) in excess of the deferred liability (billings and/or cash received) is classified as a current asset under costs in excess of billings on uncompleted contracts.  The deferred liability (billings and/or cash received) in excess of the deferred asset (accumulated contract costs) is classified under current liabilities as billings in excess of costs on uncompleted contracts.  Contract retentions are included in accounts receivable.

8

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.  The company does not provide any warranties on its products other than those passed on to its customers from its manufacturers, if any.

Additionally, the Company follows the guidance of Emerging Issues Task Force (EITF) Issue 01-9 “Accounting for Consideration Given by a Vendor to a Customer” and (EITF) Issue 02-16 “Accounting By a Customer (Including a Reseller) for Certain Considerations Received from Vendors.”  Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products.  Cash incentives provided to our customers are recognized as a reduction of the related sale price, and therefore, are a reduction in sales.

RESEARCH AND DEVELOPMENT

In accordance with Statement of Financial Accounting Standards No. 2, “Accounting for Research and Development Costs” expenditures for research and development of the Company’s products are expensed when incurred, and are included in operating expenses.  The Company recognized research and development costs of $127,337 for the year ending December 31, 2008 and $13,785 for the year ending December 31, 2007.

ADVERTISING

The Company conducts advertising for the promotion of its products and services.  In accordance with SOP 93-7, advertising costs are charged to operations when incurred; such amounts aggregated $18,845 in 2008 and $395 in 2007.

STOCK-BASED COMPENSATION

At inception, the Company adopted SFAS No. 123(R), “Share Based Payment” and related interpretations.  SFAS No. 123(R) requires companies to estimate and recognize the fair value of stock-based awards to employees and directors.  The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.

The Company estimated the fair value of each stock option at the grant date by using the Black-Scholes option pricing model.

INCOME TAXES

Prior to September 12, 2007 the Company operated as an LLC and thus had no income tax exposure.  Effective September 12, 2007, the Company accounts for income taxes pursuant to the provisions of SFAS No. 109, “Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes.  The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.  A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

Beginning September 12, 2007, the Company adopted the provisions of the FASB’s Financial Interpretation Number 48 (FIN. 48), Accounting for Uncertain Income Tax Positions.  When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.  In accordance with the guidance of FIN 48, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.  Tax positions taken are not offset or aggregated with other positions.  Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.  The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.  The Company believes its tax positions are all highly certain of being upheld upon examination.  As such, the Company has not recorded a liability for unrecognized tax benefits.  As of December 31, 2008, tax years 2007 and 2008 remain open for IRS audit.  The Company has received no notice of audit from the IRS for any of the open tax years.

9

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

Effective September 12, 2007, the Company adopted FASB Staff Position FIN 48-1, Definition of Settlement in FASB Interpretation No. 48, (“FSP FIN 48-1”), which was issued on May 2, 2007.  FSP FIN 48-1 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.  The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under FIN 48.  FSP FIN 48-1 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished.  For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of FSP FIN 48-1 did not have an impact on the accompanying consolidated financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short term loans the carrying amounts approximate fair value due to their short maturities.

Effective January 1, 2008, we adopted accounting guidance for financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and  assumptions developed by us, which reflect those that a market participant would use.

We currently measure and report at fair value our intangible assets.  The fair value of intangible assets including goodwill has been determined using the present value of estimated future cash flows method.  The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2008 (in thousands):

		Balance at December 31, 2008		Quoted Prices in Active Markets for Identical Assets		Significant other Observable Inputs		Significant Unobservable Inputs
				(Level 1)		(Level 2)		(Level 3)
Assets:
Goodwill	$	-	$	-	$	-	$	-
Trademarks		-		-		-		-
Total Financial Assets	$	-	$	-	$	-	$	-

10

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

Following is a roll forward through December 31, 2008 of the fair value of intangible assets: (in thousands):

Balance at December 31, 2007	$	-
Cumulative effect of adoption of accounting principle		-
Balance at January 1, 2008		-
Fair value recorded for goodwill		1,358,254
Fair value recorded for trademarks		71,200
Amortization of trademarks		(2,373	)
Change in fair value included in net loss		(1,427,081	)
Ending balance at December 31, 2008	$	-

NEW ACCOUNTING PRONOUNCEMENTS

In May 2009, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that became part of ASC Topic 855, “Subsequent Events”.  ASC Topic 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC Topic 855 sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  ASC Topic 855 is effective for interim or annual financial periods ending after June 15, 2009.  The adoption of ASC Topic 855 did not have a material effect on the Company’s consolidated financial statements.

In June 2009, the FASB issued an accounting standard whereby the FASB Accounting Standards Codification (“Codification”) will be the single source of authoritative nongovernmental U.S. generally accepted accounting principles.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  ASC Topic 105 is effective for interim and annual periods ending after September 15, 2009.  All existing accounting standards are superseded as described in ASC Topic 105.  All other accounting literature not included in the Codification is non-authoritative.  The Codification is not expected to have a significant impact on the Company’s consolidated financial statements.

2. GOING CONCERN

As reflected in the accompanying consolidated financial statements for the year ended December 31, 2008 and 2007, the Company had net losses of $9,595,342 and $3,282,592 respectively (which includes stock based compensation of $4,363,912 in 2008 and $1,831,553 in 2007) and cash used in operations of $2,898,044 and $1,276,670, respectively. Additionally at December 31, 2008 and 2007, the Company had an accumulated deficit of $13,164,806 and $3,569,464, respectively and a stockholders’ deficit and working capital deficiency of $1,157,819 and $1,550,307 at December 31, 2008.  Throughout 2008 and 2007, the Company received funds through private offerings of approximately $2,700,000 in 2008 and $2,000,000 in 2007, before deducting cash offering costs of $296,168 and $299,773 respectively.  In addition, subsequent to December 31, 2008, based on the passage of time since the December 31, 2008 balance sheet date and other mitigating factors, management believes that the Company has not met its expected needs required to support its operations for the next 12 months through December 31, 2010.

Pursuant to a plan of merger between Casita Enterprises and the Company, Envision expects to execute a merger agreement whereby it will become a wholly owned subsidiary of Casita Enterprises.  Casita Enterprises is an over-the-counter-bulletin board listed company whose assets consist principally of cash and other miscellaneous assets.  At the time of merger, which is expected to occur not later than February 11, 2010, Casita is expected to hold approximately $200,000 in cash.  In addition, Envision, which will be a publicly traded company following the merger, expects to conduct a capital raising process whereby it will raise not less than $600,000.  These funds are expected to be sufficient to cover monthly operating expenses as well as meet minimum payments with respect to the Company’s liabilities over the next twelve months.

11

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

3. COSTS IN EXCESS OF BILLINGS (BILLINGS IN EXCESS OF COSTS) ON UNCOMPLETED CONTRACTS AND ACCOUNTS RECEIVABLE

Costs in excess of billings on uncompleted contracts represent accumulated contract costs that exceeded billings and/or cash received on uncompleted contracts.

At December 31, 2008 and 2007, there were no costs in excess of billings on uncompleted contracts.

Billings in excess of costs on uncompleted contracts represents billings and/or cash received that exceed accumulated contract costs on uncompleted contracts.  There were no billings in excess of costs on uncompleted contracts at December 31, 2007.

At December 31, 2008 billings in excess of costs on uncompleted contracts consisted of the following:

Billings and/or cash receipts on uncompleted contracts	$	309,465
Less: Uncompleted contract costs		(252,634	)
Billings in excess of costs on uncompleted contracts	$	56,831

The Company records accounts receivable related to its construction contracts and its design services, based on billings or on amounts due under the contractual terms.  Allowance for doubtful accounts is based upon the Company's policy.  Any amounts considered recoverable under the customer’s surety bonds are treated as contingent gains and recognized only when received.  Accounts receivable throughout the year may decrease based on payments received, credits for change orders, or back charges incurred.

At December 31, 2008 and 2007, accounts receivable were as follows:

	December 31, 2008			December 31, 2007
Accounts Receivable	$	277,070		$	61,830
Less: Allowance for doubtful accounts		(103,272	)		(1,561	)
Accounts Receivable, Net	$	173,798		$	60,269

Bad debt expense for 2008 and 2007 was $105,955 and $1,561, respectively.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets are summarized as follows:

	December 31, 2008		December 31, 2007
Prepaid Health Insurance	$	-	$	3,080
Prepaid Rent		-		22,737
Non-Trade Receivables, net		-		33,518
Prepaid interest		69,633			-
Other		1,030		27,734
Total prepaid expenses and other current assets	$	70,663	$	87,069

At December 31, 2007, the Company had other non-trade receivables of $12,510 for expenses to be reimbursed to the company by strategic partners, which was fully reserved at December 31, 2007.  Additionally, another $33,518 at December 31, 2008 was due from a vendor at December 31, 2007, that was subsequently paid in 2008.  Prepaid interest of $69,633 relates to the note payable of $591,771 as the note was issued at a $101,771 discount.  A total of $32,128 of prepaid interest was amortized to interest expense in 2008.

12

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	Est. Useful Lives	December 31, 2008			December 31, 2007
Computer equipment and software	5 years	$	145,015		$	95,847
Furniture and fixtures	7 years		197,169			127,458
Leasehold improvements	5 years		60,399			14,195
Office equipment	5 years		24,076			7,756
Total property and equipment		$	426,659		$	245,256
Less accumulated depreciation			(67,561	)		(17,829	)
Property and Equipment, Net		$	359,098		$	227,427

Total depreciation expense for 2008 and 2007 was $49,732 and $17,829, respectively.

6.           ACCRUED EXPENSES

      The major components of accrued expenses are summarized as follows:

	December 31, 2008		December 31, 2007
Accrued vacation	$	42,115	$	27,969
Accrued officer salary		16,875		-
Other accrued expenses		-		33,655
Total accrued expenses	$	58,990	$	61,624

7.            NOTE PAYABLE - OFFICER

In 2008 one of the Company’s officers advanced the cost for various expenses on behalf of the company. As a result in June 2008, the Company issued the shareholder a note in the amount of $18,700. The note bears interest at 5% and is due and payable with accrued interest on or before May 31, 2009. The note was not paid at maturity and the balance was included in the $34,246 principal balance of a new note executed in October 2009 and due December 31, 2009. The officer resigned in November 2009. As of February 2010, this note was in default for payment of principal and interest. (see Note 13)

8.            NOTE PAYABLE

In November 2008, the Company entered into a five-month $591,771 promissory note with Gemini Master Fund, Ltd. (the "holder" or "lender") as bridge financing to an equity raise. Under the terms of the note, $101,771 of prepaid interest was included in the note balance of which $10,000 was a loan fee. The note bears interest at the rate of 7% annum on the $500,000 net subscription amount, plus a 15% fee on the subscription amount, plus 15% of the 7% per annum interest (effective interest in approximately 49%) with a default rate of 20% per annum. The note was due April 11, 2009 and is secured by substantially all assets of the Company and its subsidiaries and is unconditionally guaranteed by all the subsidiaries. Under the terms of the note, the outstanding principal and interest can be converted into equity at a 10% discount from any reverse merger financing in the event the company enters into a “reverse merger” with a publicly traded Company. Additionally, promptly following the consummation of a reverse merger transaction, the Company shall issue the lender such number of shares of public Company common stock such that following the reverse merger the lender shall own 0.3125% of the fully-diluted number of outstanding shares of common stock of the public company.

13

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

Subsequent to December 31, 2008, the note came due and the Company was unable to fulfill its obligations under the original terms of the note. In April 2009, the Company and the lender entered into a forbearance agreement, which extended the due date to December 31, 2009. Under the terms of the forbearance agreement, the interest rate changed to 15% and the Company issued 10,000 shares of its common stock to the lender in consideration of this agreement. This was not considered a troubled debt restructure or debt modification under generally accepted accounting principles. The shares were valued at the most recent common stock offering and sale price of $40 per share resulting in a $400,000 value, which was recorded as a debt discount and is being amortized through the new maturity date of December 31, 2009. Interest only payments would start being due monthly in arrears in the first calendar month after which the Company raises $100,000 from all capital raising transactions.

Interest expense under this note in 2008 was $32,138 and prepaid interest was $69,633 at December 31, 2008.

On October 30, 2009, the Company entered into a second amendment to the loan agreement. This amendment increases the interest rate at 20% retroactive to April 11, 2009 through October 30, 2009, adjusts the per annum interest to 12% starting November 1, 2009 (default rate of 20%), extends the maturity to December 31, 2010 and adds a conversion feature to allow conversion at the holder’s option to common stock at $10 per share. The $591,771 note was amended to add accrued interest of $65,423 to the principal balance resulting in a new principal balance of $657,194. Additionally, a new second note was issued for $125,000 with proceeds of $117,500, net of issue costs of $7,500, which was deposited into an escrow account for purposes of the Company paying expenses for the cost of becoming a publicly held company. This new note has the same terms of the amended note. Interest under both notes is due on the first business day of each calendar quarter starting January 4, 2010, however, upon three days advance notice, the Company may elect to add such interest to the note principal balance effectively making the interest due at note maturity. With regard to the conversion feature of both notes, the conversion rights contain price protection whereby if the Company sells equity or converts existing instruments to common stock at a price less than the $10 conversion price, the conversion price will be adjusted downward to the sale price. Furthermore, if the Company issues new rights, warrants, options or other common stock equivalents at an exercise price less than the $10 conversion price, then the conversion price shall be adjusted downward to a new price based on a stipulated formula. The holder may not convert the debt if it results in the holder beneficially holding more than 9.9% of the Company common stock. The holder is subject to a lock-up agreement on the debt and underlying shares from October 30, 2009 through June 30, 2010. This October 30, 2009 amendment was considered a debt extinguishment under generally accepted accounting principles due to the addition of the conversion feature. The accounting effect was to fully amortize the remaining debt discount at October 30, 2009, remove the old debt and record the new debt.

9.            COMMITMENTS AND CONTINGENCIES

Leases:

On March 26, 2007, the Company entered into a lease agreement for its corporate office on a month-to-month basis beginning May 1, 2007, in La Jolla, California. Monthly rent at the premise is approximately $6,140 per month. Subsequent to December 31, 2007, the Company entered into an amended lease agreement at the same location in order to expand operations. The new lease had a commencement date of April 1, 2008 and is for a period of three years with an escalating yearly base rent beginning at $16,505. Future minimum lease payments as of December 31, 2008 for the amended lease agreement with non-cancelable terms in excess of one year are as follows:

14

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

Year Ended December 31,
2009		202,497
2010		208,413
2011		52,473
Total	$	463,383

Rent expense was $163,879 and $71,940 for the years ended December 31, 2008 and 2007, respectively.

During 2009, the Company entered into litigation with the landlord due to the Company’s default on rental payments and in December 2009 the Company abandoned the premises.  (See Legal Matters below)

Legal Matters:

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.  As of December 31, 2008, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations except for the following:

In August 2008, the Company received a letter from a contractor asserting that $400,000 was owed resulting from an alleged breach of contract. The Company denies any liability under the agreement and facts of the assertion and rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter.

The Company is a party to a wrongful termination suit filed by former employee.  The employee was an “at-will” employee under California employment law. The plaintiff claims that he was promised a job as in-house counsel, which never materialized. ESII successfully demurred to Plaintiff’s complaint. Plaintiff amended complaint, ESII answered it and it is now undergoing discovery process to obtain evidence to disprove the Plaintiff's allegations. The Company denies any liability under the agreement and facts of the assertion and rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter, however, as the Company does not believe it is probable the plaintiff will prevail, no amounts have been accrued as of December 31, 2008.

The Company is a party to a lawsuit filed in July 2009 with a company owned by one its shareholders.  The lawsuit alleges fraud in misrepresenting signed contracts in the 2008 Private Placement Memorandum and seeks to recover $250,000 in investments made in the private placement and approximately $166,000 plus interest at 10% from April 1, 2009 in monies owed for project work in 2008 and 2009. In connection with the litigation the Company is responding to discovery of documents.  The Company denies any liability under the lawsuit and has rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter.  The amounts owned under project work aggregating approximately $124,000 have been accrued as accounts payable as of December 31, 2008.  The amounts owned under project work aggregating approximately $166,000 have been accrued as accounts payable as of September 30, 2009.

The Company is a party to a lawsuit with its former landlord whereby the landlord claims that the Company broke its lease with respect to the rental of office space which housed the Company’s headquarters.  The Company attempted to renegotiate the remaining term of its lease at a lower rate but the proposal was rejected by the Landlord. The Company vacated premises on December 20, 2009 and landlord repossessed premises on January 1, 2010. Plaintiff seeks damages for past rent due, interest and attorney’s fees.  The Company does not deny the breach of its lease and is attempting to work out a settlement. As of December 31, 2009, the Company has accrued approximately $268,000 representing the fair value of the future rent due under the abandoned lease. (see Note 15)

On February 4, 2010, Continental Maritime filed a complaint for breach of contract. The plaintiff provided steel columns and associated labor to Company as part of UC-San Diego Solar Parking Structure project. The claim is for approximately $140,000. The Agreement was entered into on June 9. 2008. Due to project cost overruns and capital raise shortfalls in 2008 and 2009, the Company was unable to make payments on the remaining balance.  The Company is reviewing the claim to assess its liability if any under the lawsuit and the basis for the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter. The Company has accrued payables to this vendor of approximately $132,000 at September 30, 2009.

15

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Other Commitments:

The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments.  During 2008 and 2007, the Company entered into agreements to act as a reseller for certain vendors; joint development contracts with third parties; referral agreements where the Company would pay a referral fee to the referrer for business generated; sales agent agreements whereby sales agents would received a fee equal to a percentage of revenues generated by the agent; business development agreements and strategic alliance agreements where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first refusal with respect to certain projects of the other parties; agreements with vendors where the vendor may provide marketing, public relations, technical consulting or subcontractor services and financial advisory agreements where the financial advisor would receive a fee and/or commission for raising capital for the Company.  All expenses and liabilities relating to such contracts were recorded in accordance with generally accepted accounting principles during 2008 and 2007 and as of December 31, 2008 and 2007.  Although such agreements increase the risk of legal actions against the Company for potential non-compliance, there are no firm commitments in such agreements as of December 31, 2008 and 2007.

Effective December 19, 2006, the Company entered into an agreement with a manufacturer who owns the trademarks “Solar Grove” and “Solar Tree”.  Under the terms of the agreement, the manufacturer is to provide products to the Company on a per unit basis and the Company is to pay the manufacturer a royalty, set at 0.25% of revenue, for each project sold under the above-mentioned trademarks, less the fees for the product provided by the manufacturer.  The Company also had the right to purchase the above-mentioned trademarks during the term of the agreement which purchase cancels any future royalties.  In November 2008, the Company exercised its option to purchase the trademarks for $71,200.  Royalties owed in 2007 and 2008 were de minimis.  In 2008 the Company amortized $2,373 of the trademarks and then wrote off the remaining balance of $68,827 trademarks under the impairment provisions since there is not a justifiable means to document its future value.  This impairment charge is included in operating expenses.

Upon the signing of customer contracts, the Company enters into various other agreements with third party vendors who will provide services and/or products to the Company.  Such vendor agreements typically call for a deposit along with certain other payments based on the delivery of goods or services.  Payments made by the Company before the completion of projects are treated as prepaid assets and due to the contractual nature of the agreement; the Company may be contingently liable for other payments required under the agreement.

10.          COMMON STOCK

Shares issued

Issuances of the Company’s common stock during the years ended December 31, 2008 and 2007 as follows:

Shares Issued for Cash

2007

From April through November 2007, 199,848 shares of common stock were issued at $10.00 per share aggregately, for $1,998,480 cash.

Offering costs paid were $299,773 cash and 19,985 common shares valued at the $10.00 sale price of $199,850 and were offset against the proceeds in common stock on the accompanying consolidated financial statements.

16

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

2008

During 2008, the Company issued 67,311 shares of common stock for cash at $40.00 per share.  The gross proceeds from these issuances were $2,692,444.  The Company also incurred capital raising fees of $296,168 related to the sale and issuance of the aforementioned common stock.

Shares Issued as Finders Fees

2007

In November, in accordance with our selling agreement for the 2007 private placement, 19,985 shares of common stock were issued as partial finder’s fee compensation related to the raising of equity.  The shares were valued at $199,850 based on the contemporaneous stock sale price of $10.00 per share and offset against the proceeds in the common stock account.

Shares Issued as Compensation

2007

In early 2007, 49,994 shares of common stock were issued as compensation to employees with a value of $49,994 based upon the then most recent cash sales price of $1.00 per share.

2008

In 2008, the Company issued 250 shares of stock valued at $40.00 per share or an aggregate $10,000 based on the contemporaneous sale price in exchange for non-employee services rendered to the company.  The expense was fully recognized on the grant date as services were completed.

Shares Issued in Conversion of Other Liabilities

2007

In early 2007, 238,875 shares of common stock were issued upon conversion of other liabilities from a related party, in the amount of $238,895 based upon the then most recent cash sales price of $1.00 per share.

Shares Issued in Connection with Acquisition of a Company

2008

In January 2008, the Company issued 10,000 shares to the seller in an acquisition.  The shares were valued at the contemporaneous sale price of $10.00 per share resulting in a $100,000 value, which was recorded as part of the purchase accounting (see Note 14).

The Company issued options to certain Company vendors in exchange for the vendors reducing their obligations to the Company.  The Company issued options valued at $14,994 to these vendors.  (See Notes 11 and 14)

11.          STOCK OPTIONS AND WARRANTS

In 2008, the Board approved the 2008 Stock Option Plan, which authorizes 200,000 shares under the plan.  Exercise rights may not expire more than three months after the date of termination of the employee but may expire in less time as stipulated in the individual grant notice.  For disability or death the optionee or estate will generally have up to twelve months to exercise their options.  For certain options the Company may have rights of first refusal for a stipulated period of time, under a separate stock restriction agreement, whereby if the holder exercise the options and then desires to sell the underlying shares, the Company has the right to repurchase such shares at a price to which the holder has agreed to sell them to a third party.

17

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

In 2007, the Company authorized the 2007 Unit Option Plan when the Company was a limited liability company.  Options granted under this plan were exchanged one for one for options of Envision Solar International, Inc. upon conversion to a corporation from an LLC.  (See Note 1)

Stock Options

At inception in 2006, the Company adopted the provisions of Statement of Financial Accounting Standards 123(Revised 2004), Share-Based Payment (“SFAS 123R”).  SFAS 123R establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as options issued under the Company’s Stock Option Plans.  The Company’s stock option compensation expense was $4,353,912 and $1,831,553 for the years ended December 31, 2008 and 2007, respectively, and there was $2,523,862 of total unrecognized compensation cost related to unvested options granted under the Company’s options plans as of December 31, 2008.  This stock option expense will be recognized through December 2012.

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model.  This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock.  We used the following assumptions for options issued in fiscal 2008 and 2007:

	2008	2007
Expected volatility	106%	74%
Expected lives	2-10 Years	7 Years
Risk-free interest rate	2%	2.20%
Expected dividend yield	None	None

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.  In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.  Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options.  The risk free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term.  The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends.  As the Company was not publicly traded during the time of the option grants, expected volatility in 2008 and 2007 was based on the comparative company method where other, publicly traded companies within the same industry as us, were used as the benchmark for our calculation.  The Expected lives for such grants were based on the simplified method for employees or on the contractual terms of the options or warrants for non-employees.

All options qualify as equity pursuant to EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”.  Option activity for the years ended December 31, 2008 and 2007 under the 2007 Plan is as follows:

18

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

	Number of Options			Weighted Average Exercise Price
Outstanding at December 31, 2006		-		$	-
Granted		441,860			10.00
Exercised		-			-
Forfeited		-			-
Expired		-			-
Outstanding at December 31, 2007		441,860		$	10.00
Exercisable at December 31, 2007		263,323		$	10.00
Weighted average grant date fair value				$	6.96
Granted		348,224			25.18
Exercised		-			-
Forfeited		(179,075	)		23.25
Expired		-			-
Outstanding at December 31, 2008		611,009		$	14.77
Exercisable at December 31, 2008		560,643		$	15.27
Weighted average grant date fair value				$	16.18

The following table summarizes information about employee stock options under the 2008 Stock Option Plan outstanding at December 31, 2008:

Options Outstanding										Options Exercisable
Range of Exercise Price		Number Outstanding at December 31, 2008		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number Exercisable at December 31, 2008		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	10-40		611,009	8.52 Years		$	14.77	$	9,024,577		560,643	$	15.27	$	8,560,577
			611,009		-	$	14.77	$	9,024,577		560,643	$	15.27	$	8,560,577

           Included in the 2008 grants are to certain Company vendors in exchange for the vendors reducing their obligations to the Company.  The Company issued options valued at $14,994 to these vendors.  There was no gain or loss on these settlements.

Warrants

In connection with the asset purchase agreement (see Note 14), the Company reduced an assumed liability of $8,006 through the issuance of 800 warrants with an exercise price of $0.01.  The warrants expire in seven years and were valued at $8,006 using the Black-Sholes option-pricing model with the following assumptions: share value $10, exercise price $0.01, expected volatility of 74%, expected life 7 years, risk free interest rate 2.20%.  The quantity of these options is variable based on the liability of $8,006 divided by the lesser of (i) $10 or (ii) a preferred stock sale price in a future offering.

During 2008, the Company issued 4,712 warrants directly related to its stock offering as finder fees.  These warrants were valued at $141,687, using the Black-Sholes option-pricing model with the following assumptions: share value $40, exercise price $40.00, expected volatility of 106%, expected life 5 years, risk free interest rate 2.21%.  There was not accounting effect as the warrant were issued as an offering cost to be offset against the gross proceeds of the offering and charged to additional paid-in capital.

12.           INCOME TAXES

There was no income tax expense for period from June 12, 2006 (inception) to September 11, 2007 since the Company was a limited liability company taxed as pass through entity to its members and there was no income tax expense for the period from September 12, 2007 to December 31, 2007 or for the year ended December 31, 2008 due to the Company’s net losses.

19

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

The blended Federal and State tax rate of 39.83% applies to loss before taxes.  The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 34% to  loss before taxes), as follows:

	Year ended December 31,
	2008			2007
Computed “expected” tax expense (benefit)	$	(3,262,416	)	$	(1,116,081	)
Reduction of “expected” tax expense (benefit) for pre-incorporation period from January 1, 2007 to September 11, 2007		-			236,359
State taxes, net of federal benefit		(476,033	)		(150,674	)
Goodwill impairment and other non-deductible items		488,331			1,671
Change in deferred tax asset valuation allowance		3,250,018			1,028,725
	$	-		$	-

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31 are as follows:

	2008			2007
Deferred tax assets:
Accrued vacation	$	16,776		$	11,141
Accrued salaries		6,722
Charitable contributions		899			220
Reserve for bad debt		41,138			5,605
Stock options		2,463,943			729,588
Net operating loss carryforward		1,775,943			295,126
Total gross deferred tax assets		4,305,421			1,041,680
Less: Deferred tax asset valuation allowance		(4,278,843	)		(1,028,725	)
Total net deferred tax assets		26,578			12,955
Deferred tax liabilities:
Depreciation		(26,578	)		(12,955	)
Total deferred tax liabilities		(26,578	)		(12,955	)
Total net deferred taxes	$	-		$	-

The valuation allowance at December 31, 2008 was $4,278,843.  The increase in the valuation allowance during 2008 was $3,250,118.

At December 31, 2008, the Company has a net operating loss carry forward of approximately $4,458,000 available to offset future net income through 2028.  The NOL expires during the years 2013 to 2028.  The utilization of the net operating loss carryforwards is dependent upon the ability of the Company to generate sufficient taxable income during the carryforward period.  In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred.

13.           RELATED PARTY TRANSACTIONS

Accounts Payable and Related Party Vendor Payments

At December 31, 2008 and 2007, the Company owed its Chief Executive Officer (CEO) $41,374 and $15,979, respectively.  For the year ended December 31, 2007, the Company made payments to a related party firm where our current CEO formerly held an equity stake, included in costs of sales, totaling $66,167.

20

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

Note Payable to Officer

In 2008 one of the Company’s officers advanced the cost for various expenses on behalf of the company.  As a result in June 2008, the Company issued the shareholder a note in the amount of $18,700.  The note bears interest at 5% and is due and payable with accrued interest on or before May 31, 2009. The note was not paid at maturity and the balance was included in the $34,246 principal balance of a new note executed in October 2009 and due December 31, 2009.  The officer resigned in November 2009.  As of February 2010, this note was in default for payment of principal and interest. (see Note 7)

Conversion of Note by Related Party to Equity

In early 2007, the Company’s CEO converted a $238,875 note payable into 238,875 shares of common stock (See Note 10).

14.           ACQUISITION

In January 2008, the company acquired the assets and assumed the liabilities of a company, Generating Assets, LLC.  The purchase price included cash of $9,000, 10,000 shares of common stock of the Company valued at the contemporaneous sale price of $10 per share or $100,000 and options to purchase 168,980 common shares such options valued at $1,157,676.  The total purchase price was $1,266,676.  The Company entered into this asset purchase agreement with an individual who then became an officer of the Company.  The Company acquired all right, title and interest, including the name “Generating Assets, LLC”, along with all intellectual property of the company, all transferable or assignable licenses, all of the rights, title and interest to certain contracts and the right to negotiate final agreements for predetermined contracts.  The Company assumed $91,578 of liabilities and assumed all obligations under the assigned contracts.  All of the intangible rights were assigned to goodwill since the assigned contracts were not executed and there was no other value to intangibles.  At the end of the year 2008, the company wrote off as an impairment charge all the $1,358,254 goodwill related to this asset purchase since the future value and current value of the goodwill is not readily discernible.  This impairment charge is included in operating expenses.

In connection with the above acquisition, the Company issued 1,020 options in exchange for another assumed liability of $6,988.  The options were valued at the same $6,988 value of the liability using the black-scholes pricing method.

The Company accounted for this acquisition using the purchase method of accounting.

The final allocation of fair value of the assets acquired and liabilities assumed was as follows:

Goodwill	$	1,358,254
Liabilities		(91,578	)
Purchase Price	$	1,266,676

There were no material operations of Generating Assets, LLC through the acquisition date.

15.          SUBSEQUENT EVENTS

From March 2009 through September 30, 2009, the Company granted to employees 61,631 ten-year common stock options exercisable at $10.00 per share.  The options were fully vested on the grant dates.

During the nine months ended September 30, 2009, $2,449,014 was recognized for previous and current year  granted stock options which vested.

21

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

In April 2009, the Company issued 10,000 common shares to a lender as a loan extension fee whereby the $591,771 note payable due date was extended to December 31, 2009.  (See Note 8).

On October 30, 2009, the note payable was amended a second time to extend the maturity to December 31, 2010, add a conversion feature and modify the interest rate both retroactively and prospectively, and accrued interest to the note principal.  In addition, the lender loaned an additional $125,000 to the Company under the same terms as the amended note (see Note 8).

During 2009, a lender advanced $50,000 in March and $50,000 in September to the Company.  On October 1, 2009, the Company executed a 10% convertible promissory note for $102,236, which includes the total $100,000 principal advanced plus $2,236 of accrued interest.  This note is due December 31, 2010.  This note is convertible to common shares at $10.00 per share.  There was no beneficial conversion feature at the note date.  However if the Company receives greater than $100,000 debt or equity financing proceeds, 25% of amount in excess of $100,000 shall be used to pay down the note.  This note is subordinate to the Gemini Master Funds notes.

On December 17, 2009, the Company executed a convertible promissory note for $100,000 to a new landlord in lieu of paying rent for one year for new office space.  The interest is 10% per annum and the note principal and interest are due on December 18, 2010.  However if the Company receives greater than $100,000 debt or equity financing proceeds, 25% of amount in excess of $100,000 shall be used to pay down the note.  This note is subordinate to all existing senior indebtness of the Company.  The note is convertible at $10.00 per share.  There was no beneficial conversion feature at the note date.

In December 2009, the Company abandoned the office premises which was subject to a lease agreement.  In accordance with generally accepted accounting principles the Company has accrued the fair value of the remaining lease payment aggregating approximately $268,000.  The fair value was computed based on the present value of the remaining lease payments. (see Note 9)

On December 16, 2009 the Company executed a letter of intent to be acquired by an inactive publicly-held company in a transaction contemplated to be treated as a recapitalization of the Company.  It is intended that just subsequent to consummation of the acquisition, the shareholders of the Company will retain approximately 67% of the voting common stock of the public company before consideration of unexercised common stock options and warrants.

Management evaluated all activity of the Company through February 11, 2010 (the issue date of the Company’s consolidated financial statements) and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements.

22

EX-99.2

Exhibit 99.2

Envision Solar International, Inc. and Subsidiaries

Consolidated Financial Statements

September 30, 2009 and 2008

(Unaudited)

Envision Solar International, Inc. and Subsidiaries

Table of Contents

	Page (s)
Consolidated Balance Sheets	1
Consolidated Statement of Operations (unaudited)	2
Consolidated Statements of Cash Flows (unaudited)	3
Notes to Consolidated Financial Statements (unaudited)	4 - 11

Envision Solar International, Inc. and Subsidiaries
Consolidated Balance Sheets
	September 30, 2009			December31, 2008
Assets
	(Unaudited)
Current Assets
Cash	$	20,376		$	3,083
Accounts Receivable, net		39,488			173,798
Prepaid and other current asset		-			70,663
Costs in excess of billings on uncompleted contract		14,254			-
Total Current Assets		74,118			247,544
Property and Equipment, net		313,700			359,098
Other Assets
Deposits		33,390			33,390
Total Other Assets		33,390			33,390
Total Assets	$	421,208		$	640,032
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts Payable	$	1,122,545		$	990,357
Accounts Payable - Related Party		1,168			41,374
Accrued Expenses		415,245			58,990
Sales Tax Payable		36,828			36,828
Billings in excess of costs on uncompleted contracts		125,324			56,831
Note Payable-Officer		34,204			18,700
Note Payable-net of discount		452,377			591,771
Note Payable-Evey		100,000			-
Deferred Revenue		-			3,000
Total Current Liabilities		2,287,691			1,797,851
Commitments and Contingencies (Note 5)
Stockholders' Equity (Deficit)
Common Stock, no par value, 10,000,000 shares authorized, 851,263 and 841,263 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		5,048,852			4,648,852
Additional Paid-in-Capital		9,807,150			7,358,135
Accumulated Deficit		(16,722,485	)		(13,164,806	)
Total Stockholders' Equity (Deficit)		(1,866,483	)		(1,157,819	)
Total Liabilities and Stockholders' Equity (Deficit)	$	421,208		$	640,032

The Accompanying notes are an integral part of these Consolidated Financial Statements

1

Envision Solar International, Inc. and Subsidiaries
Consolidated Statements of Operations
Nine Months Ended September 30,
(Unaudited)
	2009			2008
Revenues	$	715,522		$	973,018
Cost of Revenues
Materials		-			923,398
Consultants		331,647			126,212
Design		9,900			52,995
Subcontractors		-			14,276
Other Cost of Revenues		24,869			194,091
Total Cost of Revenues		366,416			1,310,972
Gross Profit (Loss)		349,106			(337,954	)
Operating Expenses (including stock based compensation expense
of $2,449,014 for the nine months ended September 30, 2009 and $4,350,496
for the nine months ended September 30, 2008)		3,549,654			8,057,987
Loss From Operations		(3,200,548	)		(8,395,941	)
Other Income (Expense)
Other Income		33,692			48,543
Interest Expense		(387,604	)		-
Total Other Income (Expense)		(353,912	)		48,543
Income (Loss) Before Income Tax		(3,554,460	)		(8,347,398	)
Income Tax Expense		3,219			8,408
Net Loss	$	(3,557,679	)	$	(8,355,806	)

The Accompanying notes are an integral part of these Consolidated Financial Statements

2

Envision Solar International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
(Unaudited)
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(3,557,679	)	$	(8,355,806	)
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities:
Depreciation and Amortization		45,398			24,866
Bad debt expense		72,101			-
Common stock issued for services		-			10,000
Compensation expense related to grant of stock options		2,449,015			4,350,496
Goodwill impairment		-			1,358,254
Amortization of Discount on Loan		260,606			-
Amortization of prepaid interest		69,633			-
Changes in assets and liabilities
(Increase) decrease in:
Accounts Receivable		62,209			(622,064	)
Prepaid Expenses and other current assets		1,030			32,003
Costs in excess of billings on uncompleted contract		(14,254	)		-
Deposits		-			(17,350	)
Increase (decrease) in:
Accounts Payable		132,188			980,050
Accounts Payable - related party		(40,206	)		-
Accrued Expenses		356,255			5,477
Billings in excess of costs on uncompleted contracts		68,493			49,000
Deferred Revenue		(3,000	)		(62,700	)
NET CASH USED IN OPERATING ACTIVITIES		(98,211	)		(2,247,774	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisition		-			(9,000	)
Purchase of Equipment		-			(181,403	)
NET CASH USED IN INVESTING ACTIVITIES		-			(190,403	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common Stock, net		-			2,325,076
Proceeds from Issuance of notes payable		100,000			-
Proceeds from notes payable from shareholders		15,504			-
NET CASH FROM FINANCING ACTIVITIES		115,504			2,325,076
NET INCREASE (DECREASE) IN CASH		17,293			(113,101	)
CASH AT BEGINNING OF PERIOD		3,083			257,753
CASH AT END OF PERIOD	$	20,376		$	144,652
Supplemental Disclosure of Cash Flow Information:
Interest Expense	$	387,604		$	-
Income Tax	$	3,219		$	800
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Stock based fees paid for acquisition	$	-		$	1,257,676
Conversion of accounts payable to common stock	$	-		$	14,994
Common stock paid as load fee and recorded as debt discount	$	400,000		$	-

The Accompanying notes are an integral part of these Consolidated Financial Statements

3

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

1.         NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Corporate Organization

The Company was incorporated on June 12, 2006 as a limited liability company (“LLC”), under the name Envision Solar, LLC.  In September 2007, the company was reorganized as a California C Corporation and issued one share of common stock for each outstanding member unit in the LLC.  The change in capitalization to common stock from member equity has been retroactively applied to all periods presented in the accompanying consolidated financial statements.  Also during 2007, the Company formed various wholly owned subsidiaries to account for its planned future operations.  All references to “us”, “we”, “our”, “Envision” or “the Company”, refer to Envision Solar, LLC or the newly formed Corporation and subsidiaries unless otherwise stated.

In 2007, the Company established a series of subsidiaries: 1. Envision Energy Group, Inc. 2.  Envision Solar Construction Company, Inc. 3.  Envision Solar Design, Inc. 4.  Envision Solar Development, Inc. 5.  Envision Solar Operation & Management, Inc. 6.  Envision Solar Residential, Inc. 7.  Envision Solar Technology, Inc. and 8.  Greenshade Network, Inc.  In addition, in 2008 the Company established one other subsidiary Envision Africa LLC, a wholly owned LLC.  During 2008, only two were operational, with Envision Africa anticipated to become operational in the future.  The remaining subsidiaries were dissolved with the Secretary of State of California in 2008.  The two operational subsidiaries included in these consolidated financial statements are:  Envision Solar Residential, Inc. and Envision Solar Construction Company, Inc.

Nature of Operations

Envision Solar (“the Company”) is a solar project and technology developer providing turn-key design/build solutions for commercial, industrial, institutional and residential projects.  Founded by award-winning sustainable design architects with extensive international business development and industrial design expertise, the Company strives to be first-to-market and the leading worldwide brand in solar parking arrays.  The Company has two lines of business, ParkSolarSM for commercial, industrial and government projects, and LifeSystemsSM for residential and light commercial products and projects. Both groups have envisioned, invented and engineered the leading next generation, patent pending, “solar integrated building systems™” (SIBS™) which are providing the foundation for the lowest cost, most highly engineered solutions available for the massive future worldwide market for solar parking array installations.

The Company’s business model includes vertical integration of all key capabilities required for the full, turn-key “single-point-of-contract™” implementation of each project.  These capabilities include project planning and management, design, construction, operations and maintenance.  The Company is continuing to secure its position as the key participant at the convergence of solar energy and the real estate and building industry.

The Company operates with the following trade names: ParkSolarSM: Commercial Scale Solar Parking Arrays, LifeSystemsSM: Residential Component-Based Solar Integrated Buildings, and GreenShade.SM

Basis of Presentation

The interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations and cash flows for the nine months ended September 30, 2009 and 2008 and our financial position as of September 30, 2009 have been made.  The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.

4

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

Certain information and disclosures normally included in the notes to the annual financial statements have been condensed or omitted from these interim financial statements.  Accordingly, these interim condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2008.  The December 31, 2008 balance sheet is derived from those statements.

Principals of Consolidation

The consolidated financial statements include the accounts of Envision Solar International Inc. and its wholly-owned subsidiaries.  All significant inter-company balances and transactions have been eliminated in the consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts receivable, depreciable lives of property and equipment, valuation of share-based payments and the valuation allowance on deferred tax assets.

Concentrations

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and accounts receivable.

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits.  The Company has not experienced any losses in such accounts from inception, through September 30, 2009.

Concentration of Accounts Receivable

At September 30, 2009 customers that each accounted for 10% or more of our gross accounts receivable individually were as follows:

Customer 1	54%
Customer 2	14%
Customer 3	10%

Concentration of Revenues

For the nine months ended September 30, 2009, customers that each represented 10% or more of our net revenues were as follows:

Customer A	45%
Customer B	35%
Customer C	13%

5

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

Fair Value of Financial Instruments

The Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short term loans, are carried at historical cost basis. At September 30, 2009, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

New Accounting Pronouncements

In May 2009, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that became part of ASC Topic 855, “Subsequent Events”.  ASC Topic 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  ASC Topic 855 sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.  ASC Topic 855 is effective for interim or annual financial periods ending after June 15, 2009.  The adoption of ASC Topic 855 did not have a material effect on the Company’s consolidated financial statements.

In June 2009, the FASB issued an accounting standard whereby the FASB Accounting Standards Codification (“Codification”) will be the single source of authoritative nongovernmental U.S. generally accepted accounting principles.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  ASC Topic 105 is effective for interim and annual periods ending after September 15, 2009.  All existing accounting standards are superseded as described in ASC Topic 105.  All other accounting literature not included in the Codification is non-authoritative.  The Codification did not have a significant impact on the Company’s consolidated financial statements.

2.         GOING CONCERN

As reflected in the accompanying consolidated financial statements for the nine months ended September 30, 2009 the company had a net losses of $3,557,679 (which includes stock based compensation for options of $2,449,014 and amortization of stock based loan fees of $260,600)  and cash used in operations of $98,211.  Additionally at September 30, 2009 the Company had an accumulated deficit of $16,722,485 and a stockholders’ deficit of $1,866,483.

Pursuant to a plan of merger between Casita Enterprises and the Company, Envision expects to execute a merger agreement whereby it will become a wholly owned subsidiary of Casita Enterprises.  Casita Enterprises is an over-the-counter-bulletin board listed company whose assets consist principally of cash and other miscellaneous assets.  At the time of merger, which is expected to occur not later than February 11, 2010, Casita is expected to hold approximately $200,000 in cash.  In addition, Envision, which will be a publicly traded company following the merger, expects to conduct a capital raising process whereby it will raise not less than $600,000.  These funds are expected to be sufficient to cover monthly operating expenses as well as meet minimum payments with respect to the Company’s liabilities over the next twelve months.

3.         NOTE PAYABLE - OFFICER

In 2008, one of the Company’s officers advanced the cost for various expenses on behalf of the company.  As a result in June 2008, the Company issued the shareholder a note in the amount of $18,700.  The note bears interest at 5% and was due and payable with accrued interest on or before May 31, 2009. The note was not paid at maturity and the balance was included in the $34,246 principal balance of a new note executed in October 2009 and due December 31, 2009. The officer resigned in November 2009.  As of February 2010 this note was in default for payment of principal and interest.

6

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

4.         NOTE PAYABLE

In November 2008 the Company entered into a five-month $591,771 promissory note with Gemini Master Fund, Ltd. (the "holder" or "lender") as bridge financing to an equity raise.  Under the terms of the note, $101,771 of prepaid interest was included in the note balance of which $10,000 was a loan fee..  The note bears interest at the rate of 7% annum on the $500,000 net subscription amount, plus a 15% fee on the subscription amount, plus 15% of the 7% per annum interest (effective interest in approximately 49%) with a default rate of 20% per annum.  The note was due April 11, 2009 and is secured by substantially all assets of the Company and its subsidiaries and is unconditionally guaranteed by all the subsidiaries.  Under the terms of the note, the outstanding principal and interest can be converted into equity at a 10% discount from any reverse merger financing in the event the company enters into a “reverse merger” with a publicly traded Company.  Additionally, promptly following the consummation of a reverse merger transaction, the Company shall issue the lender such number of shares of public Company common stock such that following the reverse merger the lender shall own 0.3125% of the fully-diluted number of outstanding shares of common stock of the public company.

Subsequent to December 31, 2008, the note came due and the Company was unable to fulfill its obligations under the original terms of the note.  In April 2009, the company and the lender entered into a forbearance agreement, which extended the due date to December 31, 2009.  Under the terms of the forbearance agreement, the interest rate changed to 15% and the Company issued 10,000 shares of its common stock to the lender in consideration of this agreement.  This was not considered a troubled debt restructure or debt modification under generally accepted accounting principals.  The shares were valued at the most recent common stock offering and sale price of $40 per share resulting in a $400,000 value, which was recorded as a debt discount and is being amortized through the new maturity date of December 31, 2009. Amortization of the loan fee to interest expense through September 30, 2009 was $260,606 and the discount at September 30, 2009 was $139,394.  Interest only payments would start being due monthly in arrears in the first calendar month after which the Company raises $100,000 from all capital raising transactions.

Interest expense under this note in 2008 was $32,138 and prepaid interest was $69,633 at December 31, 2008.Interest expense under this note in 2009 was $109,587 and accrued interest at September 30, 2009 was $39,945.

On October 30, 2009, the Company entered into a second amendment to the loan agreement.  This amendment increases the interest rate at 20% retroactive to April 11, 2009 through October 30, 2009, adjusts the per annum interest to 12% starting November 1, 2009 (default rate of 20%), extends the maturity to December 31, 2010 and adds a conversion feature to allow conversion at the holder’s option to common stock at $10 per share.  The $591,771 note was amended to add accrued interest of $65,423 to the principal balance resulting in a new principal balance of $657,194.  Additionally a new second note was issued for $125,000 with proceeds of $117,500, net of issue costs of $7,500, which was deposited into an escrow account for purposes of the Company paying expenses for the cost of becoming a publicly held company.  This new note has the  same terms of the amended note.  Interest under both notes is due on the first business day of each calendar quarter starting January 4, 2010, however, upon three days advance notice, the Company may elect to add such interest to the note principal balance effectively making the interest due at note maturity. With regard to the conversion feature of both notes, the conversion rights contain price protection whereby if the Company sells equity or converts existing instruments to common stock at a price less than the $10 conversion price, the conversion price will be adjusted downward to the sale price.  Furthermore, if the Company issues new rights, warrants, options or other common stock equivalents at an exercise price less than the $10 conversion price, then the conversion price shall be adjusted downward to a new price based on a stipulated formula.  The holder may not convert the debt if it results in the holder beneficially holding more than 9.9% of the Company common stock. 

7

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

The holder is subject to a lock-up agreement on the debt and underlying shares from October 30, 2009 through June 30, 2010.  This October 30, 2009 amendment was considered a debt extinguishment under generally accepted accounting principals due to the addition of the conversion feature. The accounting effect was to fully amortize the remaining debt discount at October 30, 2009, remove the old debt and record the new debt.

5.         COMMITMENTS AND CONTINGENCIES

Leases:

On March 26, 2007, the Company entered into a lease agreement for its corporate office on a month-to-month basis beginning May 1, 2007, in La Jolla, California.  Monthly rent at the premise is approximately $6,140 per month.  Subsequent to December 31, 2007, the Company entered into an amended lease agreement at the same location in order to expand operations.  The new lease had a commencement date of April 1, 2008 and is for a period of three years with an escalating yearly base rent beginning at $16,505.

Rent expense was $137,127 for the nine months ended September 30, 2009.

During 2009, the Company entered into litigation with the landlord due to the Company’s default on rental payments and in December 2009 the Company abandoned the premises.  (See Legal Matters below)

Legal Matters:

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.  As of September 30, 2009, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations except for the following:

In August 2008, the Company received a letter from a contractor asserting that $400,000 was owed resulting from an alleged breach of contract. The Company denies any liability under the agreement and facts of the assertion and rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter.

The Company is a party to a wrongful termination suit filed by former employee.  The employee was an “at-will” employee under California employment law. The plaintiff claims that he was promised a job as in-house counsel, which never materialized. ESII successfully demurred to Plaintiff’s complaint. The plaintiff amended the complaint, ESII answered it and it is now undergoing discovery process to obtain evidence to disprove the Plaintiff's allegations. The Company denies any liability under the agreement and facts of the assertion and rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter however as the Company does not believe it is probable the plaintiff will prevail, no amounts have been accrued as of December 31, 2008 or September 31, 2009..

The Company is a party to a lawsuit filed in July 2009 with a Company owned by one its shareholders.  The lawsuit alleges fraud in misrepresenting signed contracts in the 2008 Private Placement Memorandum and seeks to recover $250,000 in investments made in the private placement and approximately $166,000 plus interest at 10% from April 1, 2009 in monies owed for project work in 2008 and 2009. In connection with the litigation the Company is responding to discovery of documents.  The Company denies any liability under the law suit and has rejected the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter.  The amounts owned under project work aggregating approximately $166,000 have been accrued as accounts payable as of September 30, 2009.

The Company is a party to a lawsuit with its former landlord whereby the landlord claims that the Company broke its lease with respect to the rental of office space which housed the Company’s headquarters.  The Company attempted to renegotiate the remaining term of its lease a at lower rate but the proposal was rejected by the Landlord.  . The Company vacated premises on December 20, 2009 and landlord repossessed premises on January 1, 2010. Plaintiff seeks damages for past rent due, interest and attorney’s fees.  The Company does not deny the breach of its lease and is attempting to work out a settlement. As of December 31, 2009 the Company has accrued approximately $268,000 representing the fair value of the future rent due under the abandoned lease. (see Note 15)

8

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

On February 4, 2010, Continental Maritime filed a complaint for breach of contract. The plaintiff provided steel columns and associated labor to the Company as part of UC-San Diego Solar Parking Structure project. The claim is for approximately $140,000. The Agreement was entered into on June 9. 2008. Due to project cost overruns and capital raise shortfalls in 2008 and 2009, the Company was unable to make payments on the remaining balance.  The Company is reviewing the claim to assess its liability if any under the law suit and the basis for the claim.  No further communications have been had to date and based on the information available at this time, it is not possible to determine the possible outcome of this matter. The Company has accrued payables to this vendor of approximately $132,000 at September 30, 2009.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Other Commitments:

The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments.  During 2008 and 2007 the Company entered into agreements to act as a reseller for certain vendors; joint development contracts with third parties; referral agreements where the Company would pay a referral fee to the referrer for business generated; sales agent agreements whereby sales agents would received a fee equal to a percentage of revenues generated by the agent; business development agreements and strategic alliance agreements where both parties agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first refusal with respect to certain projects of the other parties; agreements with vendors where the vendor may provide marketing, public relations, technical consulting or subcontractor services and financial advisory agreements where the financial advisor would receive a fee and/or commission for raising capital for the Company.  All expenses and liabilities relating to such contracts were recorded in accordance with generally accepted accounting principles during 2008 and 2007 and as of December 31, 2008 and 2007.  Although such agreements increase the risk of legal actions against the Company for potential non-compliance, there are no firm commitments in such agreements as of September 30, 2009.

Effective December 19, 2006, the Company entered into an agreement with a manufacturer who owns the trademarks “Solar Grove” and “Solar Tree”.  Under the terms of the agreement, the manufacturer is to provide products to the Company on a per unit basis and the Company is to pay the manufacturer a royalty, set at 0.25% of revenue, for each project sold under the above-mentioned trademarks, less the fees for the product provided by the manufacturer.  The Company also had the right to purchase the above-mentioned trademarks during the term of the agreement which purchase cancels any future royalties.  In November 2008, the Company exercised its option to purchase the trademarks for $71,200.  Royalties owed in 2007 and 2008 were de minimis.  In 2008 the Company amortized $2,373 of the trademarks and then wrote off the remaining balance of $68,827 trademarks under the impairment provisions since there is not a justifiable means to document its future value.  This impairment charge is included in operating expenses in 2008.

Upon the signing of customer contracts, the Company enters into various other agreements with third party vendors who will provide services and/or products to the Company.  Such vendor agreements typically call for a deposit along with certain other payments based on the delivery of goods or services.  Payments made by the Company before the completion of projects are treated as prepaid assets and due to the contractual nature of the agreement; the Company may be contingently liable for other payments required under the agreement.

9

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

6.         COMMON STOCK

Shares issued

Issuances of the Company’s common stock during the nine months ended September 30, 2009 are as follows:

Shares Issued in Connection with the Extension of Loan.

As discussed above in Note 4 the company issued 10,000 shares of stock with a value of $400,000 based upon the most recent sale of common shares at $40 per share.. This amount was recorded as a discount against the note and is being amortized to interest expense over the life of the note through December 31, 2009.  Amortization of the loan fee to interest expense through September 30, 2009 was $260,606.

7.         STOCK OPTIONS

From March 2009 through September 30, 2009, the Company granted to employees 61,631 ten-year common stock options exercisable at $10.00 per share. The options were fully vested on the grant dates.

During the nine months ended September 30, 2009, $2,449,014 was recognized for previous and current year granted stock options which vested.

8.         RELATED PARTY TRANSACTIONS

Accounts Payable and Related Party Vendor Payments

At September 30, 2009, the Company owed its Chief Executive Officer (CEO) $1,168.

As of September 30, 2009 the Company owed one of its officers/shareholders $34,204. The note bears interest at 5%.  The note was due on December 31, 2009 and was not paid.

9.         SUBSEQUENT EVENTS

On October 30, 2009, the $591,771 note payable (see Note 4) was amended a second time to extend the maturity to December 31, 2010, add a conversion feature and modify the interest rate both retroactively and prospectively, and accrued interest to the note principal.  In addition, the lender loaned an additional $125,000 to the Company under the same terms as the amended note.

During 2009, a lender advanced $50,000 in March and $50,000 in September to the Company.  On October 1, 2009, the Company executed a 10% convertible promissory note for $102,236, which includes the total $100,000 principal advanced plus $2,236 of accrued interest.  This note is due December 31, 2010.  This note is convertible to common shares at $10.00 per share.  There was no beneficial conversion feature at the note date.  However if the Company receives greater than $100,000 debt or equity financing proceeds, 25% of amount in excess of $100,000 shall be used to pay down the note.  This note is subordinate to the Gemini Master Funds notes.

On December 17, 2009, the Company executed a convertible promissory note for $100,000 to a new landlord in lieu of paying rent for one year for new office space.  The interest is 10% per annum and the note principal and interest are due on December 18, 2010.  However if the Company receives greater than $100,000 debt or equity financing proceeds, 25% of amount in excess of $100,000 shall be used to pay down the note.  This note is subordinate to all existing senior indebtness of the Company.  The note is convertible at $10.00 per share.  There was no beneficial conversion feature at the note date.

10

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

In December 2009, the Company abandoned the office premises which was subject to a lease agreement.  In accordance with generally accepted accounting principles the Company has accrued the fair value of the remaining lease payment aggregating approximately $268,000.  The fair value was computed based on the present value of the remaining lease payments.

On December 16, 2009, the Company executed a letter of intent to be acquired by an inactive publicly-held company in a transaction contemplated to be treated as a recapitalization of the Company.  It is intended that just subsequent to consummation of the acquisition, the shareholders of the Company will retain approximately 67% of the voting common stock of the public company before consideration of unexercised common stock options and warrants.

Management evaluated all activity of the Company through February 11, 2010 (the issue date of the Company’s consolidated financial statements) and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements.

11

EX-99.3

Exhibit 99.3

Casita Inc

PRO-FORMA FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Casita Inc

CONTENTS

PAGE	1	PRO-FORMA COMBINED BALANCE SHEET AT SEPTEMBER 30, 2009, (Unaudited)
PAGE	2	PRO-FORMA COMBINED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTMEBER 30, 2009 (Unaudited)
PAGE	3	SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA COMBINED FINANCIAL STATEMENTS (Unaudited)

Casitas Inc Pro Forma Combined Balance Sheet September 30, 2009 (Unaudited)
								Pro Forma Adjustments
ASSETS	Envision Solar Interantional, Inc			Casita, Inc				Dr		Cr		Pro Forma
Current Assets
Cash and Cash Equivalents		20,376			165		(1)				165		20,376
Trade Accounts Receivable		39,488											39,488
Costs in excess of billings on uncompleted contracts		14,254											14,254
													-
Total Current Assets		74,118			165								74,118
Other Assets
Net Property, Plant and Equipment		313,700											313,700
Deposits		33,390											33,390
Total Other Assets		347,090											347,090
Total Assets		421,208			165								421,208
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable		1,122,545			100		(1)		100				1,122,545
Accounts Payable-related party		1,168											1,168
Accrued expenses		415,245											415,245
Sales tax Payable		36,828											36,828
Billings in excess of costs on uncompleted contracts		125,324											125,324
Niotes Payable Officer		34,204											34,204
Note Payable net of discount		452,377											452,377
Note Payable-Evey		100,000											100,000
Loan Paayble Director					18,145		(1)		18,145				-
Total Current Liabilities		2,287,691			18,245								2,287,691
Total Liabilities		2,287,691			18,245								2,287,691
Stockholders' Equity
Common stock		5,048,852			9,000		(2)		5,013,852				39,000
							(1)		5,000
Additional Paid-In Capital		9,807,150			27,000		(1)				23,080		14,817,002
							(2)				4,959,772
Accumulated deficit		(16,722,485	)		(54,080	)	(2)				54,080		(16,722,485	)
Total Stockholders' Equity		(1,866,483	)		(18,080	)							(1,866,483	)
Total Liabilities and Stockholders' Equity		421,208			165								421,208

See Summary of Significant Notes and Assumptions to Pro Forma Financial Statements

1

Casita Inc Proforma Statement of Operations Nine Months Ended September 30, 2009 (Unaudited)
								Pro Forma Adjustments			Nine Months Ended
	Historical							Dr	Cr		September 30, 2009
	Envision Solar International Inc			Casita, Inc							Pro Forma
Revenues	$	715,522		$	-						$	715,522
Cost of Sales												-
Materials		-										-
Consultants		331,647										331,647
Desgin		9,900										9,900
Subcontractors		-										-
Other Cost of Revenues		24,869										24,869
Total Cost of Revenues		366,416			-							366,416
Gross Profit		349,106			-							349,106
Selling, General and Administrative Expenses		3,549,654			12,542		(3)			12,542		3,549,654
Net Operating Income (loss)		(3,200,548	)		(12,542	)						(3,200,548	)
Other Inceom (Expense)
Other Income		33,692										33,692
Interest Expense		(387,604	)									(387,604	)
Total Other Income (Expense)		(353,912	)		-							(353,912	)
Income (Loss) Before Income Tax Expense		(3,554,460	)		(12,542	)						(3,554,460	)
Income Tax Expense		3,219										3,219
Net Income (Loss)	$	(3,557,679	)	$	(12,542	)					$	(3,557,679	)

See Summary of Significant Notes and Assumptions to Pro Forma Financial Statements

2

Casita Inc.

SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA FINANCIAL STATEMENTS

(Unaudited)

(1)   The accompanying unaudited pro-forma financial information reflects the financial statements of Casita, Inc. and Envision Solar International, Inc. regarding a planned acquisition of Envision Solar International, Inc. The pro-forma adjustments to the balance sheet give effect to the acquisition as if it occurred on September 30, 2009 and the pro-forma statement of operations gives effect to the acquisition as if it occurred on January 1, 2009.  The acquisition is treated as a recapitalization of Envision Solar International, Inc. since Casita Inc. is an inactive publicly held corporation and the stockholders of Envision Solar International, Inc. will obtain a controlling 67% interest in the voting common stock of Casita Inc. as a result of the acquisition.  Accordingly, the assets and liabilities of Casita Inc. are recorded at their historical cost on the books of Envision Solar International, Inc with a balancing charge to additional paid-in capital.  In addition, the common stock issued to the Envision Solar International, Inc. stockholders is recorded as common stock at par value with a balancing charge to additional paid-in capital.  Under recapitalization accounting, the historical results of operations are those of Envision Solar International, Inc. and the results of operations of Casita, Inc. are included only from the acquisition date.

(2)   Significant assumptions include (a) the stock holders of Envision Solar International, Inc. are issued 8,000,000 new Casita Inc. common shares,  (b) a transfer of all assets and liabilities of Casita, Inc. to its wholly owned subsidiary, Casita Enterprise Holdings, Inc. (“Splitco”) and then transfer of all common shares of Splitco to certain former shareholders of Casita, Inc. in exchange for the cancellation of 5,000,000 common shares of Casita, Inc. by such shareholders  (c) Casita, Inc forward splits its common stock by  3.25 (d)  no operations of Casita Inc.. are included from the acquisition date since it is assumed that if Envision Solar International, Inc. obtained control of Casita Inc on January 1, 2009 the operations of Casita, Inc. would have ceased at that time.  In addition, no transactions that may have occurred subsequent to September 30, 2009 have been considered.

(3)   The following reflect the pro forma adjustments as of September 30, 2009

First adjustment is to reflect the split off and to reflect the related cancellation of 5,000,000 outstanding shares of common stock with a par value of $.001.

Accounts Payable	$	100
Loan Payable Director	$	18,145
Common Stock	$	5,000
Additional Paid in Capital			$	23,080
Cash			$	165

3

Casita Inc.

SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA FINANCIAL STATEMENTS

(Unaudited)

The second adjustment is to reflect the issuance of 8,000,000 common shares to Envision Solar International, Inc. and adjustment of the common stock to 39,000,000 shares outstanding and to eliminate the accumulated deficit of Casita, Inc.

Common Stock	$	5,013,852
Accumulated Deficit			$	54,080
Additional Paid in Capital			$	4,959,772

The third adjustment removes the operations of Casita, Inc. from January 1, 2009.

4