Item 1.01 Entry into a Material Definitive
Agreement.
On September 18,
2017, Envision Solar International, Inc., a Nevada corporation (the “Company”), entered into a revolving secured convertible
promissory note (the “Revolver”) and a secured convertible promissory note (the “Note”) with an unaffiliated
lender (the “Lender”). Pursuant to the Revolver, the Company has the right to make borrowings from the Lender in amounts
of up to 70% of the value of any specific purchase order (each a “PO”) received by the Company from a credit worthy
customer (each a “Draw Down”), up to a maximum of $3,000,000, commencing on the date of the Revolver and terminating
300 days after the date of the Revolver, by giving five (5) business days written notice to the Lender of a request for borrowings
(the “Evaluation Period”). During the Evaluation Period, if Lender determines in its commercially reasonable judgement
that the customer (“Customer”) is not credit worthy, Lender may refuse to advance the Draw Down. The Revolver bears
simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York,
New York by the Bloomberg Service plus 600 basis points (the “Interest Rate”). The Interest Rate will be adjusted on
the first day of each calendar month during the term of this Note to reflect any changes in the 12 month LIBOR rate as quoted at
1:00 pm Eastern Time in New York, New York on that day, or if that day is not a business day, on the next business day thereafter.
The principal and accrued unpaid interest with respect to each Draw Down is due and payable within five (5) business days of receipt
from the Customer by the Company of a payment due under the applicable PO (with respect to each Draw Down, the “Maturity
Date”). Each Draw Down is secured by a perfected recorded second priority security interest in all of the Company’s
assets, as set forth in that certain Security Agreement by and between the Company and the Lender, dated September 18, 2017, a
copy of which is attached to this Current Report on Form 8-K as Exhibit 10.3. The Lender will have the right at any time until
the Maturity Date of a Draw Down, provided the Lender gives the Company written notice of the Lender’s election to convert
prior to any prepayment of such Draw Down by the Company with respect to converting that portion of such Draw Down covered by the
prepayment, to convert all or any portion of the outstanding principal and accrued unpaid interest (the “Conversion Amount”),
into such number of fully paid and nonassessable shares of the Company’s common stock as is determined by dividing the Conversion
Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common
stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during
the five (5) consecutive trading days immediately prior to the date of the Lender’s written notice of the Lender’s
election to convert. The Revolver is secured by a second priority perfected recorded security interest in all of the assets of
the Company, evidenced by a Security Agreement with the Lender, a copy of which is attached to this Report as Exhibit 10.3.
As additional consideration
for the loan made by the Lender to the Company as evidenced by the Revolver, the Company agreed to issue to the Lender common stock
purchase warrants exercisable for a period of three years from the date of issuance with an exercise price equal to the greater
of (i) $0.15 per share or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a
public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive
trading days immediately prior to the date of the applicable Draw Down. The number of warrants issuable to the Lender will equal
25% of the increase over the highest amount previously drawn down by the Company on the Revolver divided by the greater of (i)
fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a
public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive
trading days immediately prior to the date of the applicable Draw Down which causes the increase over the previous highest amount
borrowed. A copy of the form of warrant is attached to this Current Report on Form 8-K as Exhibit 10.5.
In addition to the
Revolver, the Lender agreed to lend $1,500,000 to the Company pursuant to the Note. The Company covenanted to use the proceeds
of the Note exclusively to pay-off the entire outstanding balance of that certain loan and security agreement that the Company
has with Silicon Valley Bank, dated October 30, 2015. The Note bears simple interest at the floating rate per annum equal to the
12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 400 basis points (the
“Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during the term of the
Note to reflect any changes in the 12 month LIBOR rate as quoted at 1:00 pm Eastern Time in New York, New York on that day, or
if that day is not a business day, on the next business day thereafter. Interest will only accrue on outstanding principal. Accrued
unpaid interest is payable monthly on the first calendar day of each month for interest accrued during the previous month, with
all outstanding principal and accrued unpaid interest payable in full on or before three hundred and sixty-four (364) days after
the date of the Note (the “Maturity Date”), to the extent not converted into shares of the Company’s common stock.
The Note is secured by a perfected recorded first priority security interest in all of the Company’s assets, as set forth
in that certain Security Agreement by and between the Company and the Lender, dated September 18, 2017, a copy of which is attached
to this Current Report on Form 8-K as Exhibit 10.4. At any time until the Maturity Date and provided Lender gives the Company written
notice of Lender’s election to convert prior to any prepayment of this Note by the Company with respect to converting that
portion of this Note covered by the prepayment, the Lender has the right to convert all or any portion of the outstanding principal
and accrued interest (the “Conversion Amount”), into such number of fully paid and nonassessable shares of the Company’s
common stock as is determined by dividing the Conversion Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the
Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more
than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the
date of the Lender’s written notice of its election to convert.
As additional consideration
for the loan evidenced by the Note, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a
period of three years from the date of issuance with an exercise price equal to $0.15 per share. The number of warrants issuable
to the Lender is equal to 25% of the Loan Amount divided by fifteen cents ($0.15). A copy of the form of warrant is attached to
this Current Report on Form 8-K as Exhibit 10.5.
During any time
when the Note or the Revolver is outstanding, or when the Lender holds any Company stock, or any warrants to acquire Company stock
where the combination of both could result in the Lender owning stock with a current value of one million dollars or greater, in
the Company, the Lender will have certain review and consulting rights as described in the Note and the Revolver.
This brief description
of the Revolver, the Note, the Warrant and the Security Agreements is only a summary of the material terms and is qualified in
its entirety by reference to the full text of the documents as attached to this Current Report on Form 8-K as Exhibits 10.1, 10.2,
10.3, 10.4, and 10.5, respectively.