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
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Date of Report (Date of Earliest Event Reported):
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October 28, 2014
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VIASPACE Inc.
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(Exact name of registrant as specified in its charter)
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Nevada
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333-110680
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76-0742386
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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382 N. Lemon Ave., Ste. 364, Walnut, California
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91789
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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626-768-3360
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Not Applicable
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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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Employment Agreements
The Registrant entered into Employment Agreements (the "Agreements") on October 28, 2014, with Dr. Carl Kukkonen, CEO and Mr. Stephen Muzi, CFO. The Agreements are effective for the period from October 1, 2014 through September 30, 2015. Dr. Kukkonen will be paid $169,744 annually and Mr. Muzi will be paid $63,654 annually.
The Agreements are attached hereto as Exhibits 10.1 and 10.2.
Amendment to Senior Secured Convertible Promissory Note
The Registrant entered into a Senior Secured Convertible Promissory Note (the "Agreement") with Kevin Schewe, Director, on September 28, 2012. On October 28, 2014, the Board of Directors of the Registrant voted to change the Conversion Price in the Agreement from 80% of the Average Trading Price as reported by the principal trading exchange on which the Registrant’s Common Stock is traded for the twenty (20) trading days preceding the date of the Note to 50% of the Average Trading Price as reported by the principal trading exchange on which the Registrant’s Common Stock is traded for the twenty (20) trading days preceding the date of the Note.
The Amendment to Senior Secured Convertible Promissory Note is attached hereto as Exhibit 10.3.
Loan Agreements
On October 29, 2014, Kevin Schewe, Director of the Registrant, made a $22,000 loan to the Registrant in conjunction with the Loan Agreement entered into with the Registrant on September 30, 2012. In the Loan Agreement, Schewe agreed, subject to satisfaction of certain conditions, including among other things, Schewe’s satisfaction with the use proceeds of past loans, to provide loans of up to $1,000,000 as required by the Registrant for a five-year period. The loans would be evidenced by a Secured Convertible Note. The loans accrue interest at 6% per annum and are secured by all assets of the Registrant. At Schewe's election, the notes are convertible into shares of Registrant common stock at a price equal to 50% of the average closing price of the Registrant's common stock for the 20 trading days immediately preceeding the date of the loan. Each note matures on the second anniversary of the issuance date of such note. If Schewe chooses to convert, the $22,000 loan made on October 29, 2014 would convert into 5,789,474 shares of Registrant common stock at a common stock price of $0.0038 per share.
Including the newest loan, Schewe has made cumulative loans to the Registrant totaling $547,000 since the execution of the Loan Agreement.
The Note for the loan on October 29, 2014 is attached hereto as Exhibit 10.4.
Notice of Conversion
On October 29, 2014, Kevin Schewe, Director of the Registrant, in conjunction with the Loan Agreement entered into with the Registrant on September 30, 2012, converted $22,000 of loans that he previously made to the Registrant into shares of Registrant common stock.
Schewe had made a $22,000 loan to the Registrant on October 29, 2014. The $22,000 loan owed to him converted into 5,789,474 shares of Registrant common stock at a conversion price of $0.0038 per common share.
2005 Stock Incentive Plan
On February 14, 2008, a majority of the common stockholders of the Registrant and the Board of Directors of the Registrant approved an amendment to the Registrant's 2005 Stock Incentive Plan (the "Amendment"). This Amendment revised Section 3 (a) in its entirety and was replaced by the following:
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 99,000,000 Shares (the "Maximum Award Shares"); provided, however, that effective as of January 1, 2009 and each January 1 thereafter during the term of the Plan, the Maximum Award Shares will be modified to be equal to 10% percent of the total number of shares of Common Stock issued and outstanding as of the close of business on the immediately preceding December 31, which is the last day of the Registrant’s fiscal year; provided, further that no such modification shall occur if such calculation would result in a decrease in the Maximum Award Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.
On October 28, 2014, the Board of Directors of the Registrant ratified and approved the Amendment that was previously approved by the Board of Directors on February 14, 2008.
Item 3.02 Unregistered Sales of Equity Securities.
On October 29, 2014, the Registrant issued 5,789,474 shares of Registrant common stock to Kevin Schewe, Director of the Company. The shares were issued related to the conversion by Schewe of one convertible note as discussed in detail in Item 1.01. The Registrant relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was not general solicitation or general advertising involved in the offer or sale.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 28, 2014, the Registrant agreed to issue Ms. Angelina Galiteva, Director of the Registrant, 2,000,000 non-qualified stock options out of its existing stock option plan. The stock options will vest quarterly over two years and were issued at $0.0085 per share.
On October 28, 2014, the Registrant agreed to issue Mr. Khuram Irshad, Director of the Registrant, 2,000,000 non-qualified stock options out of its existing stock option plan. The stock options will vest quarterly over two years and were issued at $0.0085 per share.
On October 28, 2014, the Registrant agreed to issue Dr. Kevin Schewe, Director of the Registrant, 8,000,000 non-qualified stock options out of its existing stock option plan. The stock options will vest quarterly over two years and were issued at $0.0085 per share.
On October 28, 2014, the Registrant agreed to issue Dr. Carl Kukkonen, CEO and Director of the Registrant, 8,000,000 incentive stock options out of its existing stock option plan. The stock options will vest quarterly over two years and were issued at $0.0085 per share.
On October 28, 2014, the Registrant agreed to issue Mr. Stephen Muzi, CFO of the Registrant, 4,000,000 incentive stock options out of its existing stock option plan. The stock options will vest quarterly over two years and were issued at $0.0085 per share.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
10.1 Kukkonen Employment Agreement dated October 28, 2014.
10.2 Muzi Employment Agreement dated October 28, 2014.
10.3 Amendment to Senior Secured Convertible Promissory Note dated October 28, 2014.
10.4 Senior Secured Convertible Promissory Note dated October 29, 2014.
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 hereunto duly authorized.
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VIASPACE Inc.
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October 31, 2014
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By:
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Stephen J. Muzi
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Name: Stephen J. Muzi
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Title: Chief Financial Officer
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Exhibit Index
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Exhibit No.
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Description
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10.1
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Kukkonen Employment Agreement dated October 28, 2014.
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10.2
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Muzi Employment Agreement dated October 28, 2014.
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10.3
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Amendment to Senior Secured Convertible Promissory Note dated October 28, 2014.
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10.4
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Senior Secured Convertible Promissory Note dated October 29, 2014.
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Ex. 10.1
Employment Agreement
This Employment Agreement (the Agreement), entered into this 28 day of October, 2014, between
VIASPACE Inc., a Nevada corporation (the Company), and Carl Kukkonen (the Employee),
Witnesseth That:
Whereas, the parties hereto desire to enter into this Agreement to define and set forth the
terms and conditions of the employment of the Employee by the Company;
Now, Therefore, in consideration of the mutual covenants and Agreements set forth below, it is
hereby covenanted and agreed by the Company and the Employee as follows:
1. Position; Employment Period
The Company hereby employs the Employee as its Chief Executive Officer, and the Employee hereby
agrees to serve in such capacity, for the period beginning October 1, 2014, and ending on September
30, 2015 (the Employment Period).
2. Performance of Duties
The Employee agrees that during the Employment Period he shall devote his full business time to the
business affairs of the Company and shall perform his duties faithfully and efficiently subject to
the direction of the Chairman of the Board of the Company; provided that the foregoing shall not
limit or prevent the Employee from serving on the board of directors of charitable organizations or
other business corporations not in competition with the Company. The Employee shall not be assigned
duties and responsibilities that are not generally within the scope and character associated or
required of other employees of similar rank and position.
3. Compensation
(a) Subject to the following provisions of this Agreement, during the Employment Period the
Employee shall be compensated for his services as follows:
(b) Salary. Employee shall receive an annual salary, payable monthly, in an amount
which shall initially be $169,744 per annum, subject to such increases as may from time to
time be determined by the Chairman of the Board of the Company.
(c) Bonus. In addition to the Base Compensation, during the Employment Term,
Employee shall be entitled to such bonuses as may from time to time be determined by the
Board.
(d) Benefits. Company will pay for Employees medical and dental insurance under
the Companys medical and dental family insurance plan. If Employee has medical and dental
family plan independent of Company plan, Employee will be reimbursed for costs paid under
independent plan.
(e) Vacation and Personal Leave. Employee shall be entitled to twenty (20) paid
time off days for each twelve (12) consecutive calendar monthly period during the
Employment Period, to be taken in accordance with the vacation accrual schedule, if any,
and carried over only to the extent set forth or otherwise permitted in Companys personnel
policies or employee handbook.
(f) Reimbursement of Company Business Expenses. Company shall within thirty (30)
days of its receipt from Employee of supporting receipts, to the extent required by
applicable income tax regulations and Companys reimbursement policies, reimburse Employee
for all out-of-pocket business expenses reasonably and actually incurred by Employee in
connection with his employment hereunder including Employees cell phone and internet
charges. Board approval shall be required for any single expense exceeding $10,000 or for
expenses exceeding in the aggregate annually $120,000. Reimbursement of any and all
Business Expenses is conditioned on Employee submitting his request to Company for
reimbursement and supporting substantiation within ninety (90) days of the date on which
any such expenses shall have been incurred.
4. Disability
Subject to the provisions of paragraph 8, if the Employees employment is terminated during the
Employment Period by reason of his Disability (as defined below), the Employee shall continue to
receive an annual salary and benefits in accordance with paragraphs 3(a) and 3(b) through the end
of the full calendar month of such disability but not in any event beyond the end of the Employment
Period.
For purposes of this Agreement the term Disability means a physical or mental disability which
renders the Employee incapable of performing his duties under this Agreement and which disability
has existed for at least one month, as determined by an independent physician selected by the
Company and agreed to by the Employee. Any salary payments to the Employee shall be reduced by the
amount of any benefits paid for the same period of time under the Companys disability insurance
programs.
5. Competing Businesses
During the period of his employment under this Agreement, the Employee shall not be employed by or
otherwise engage in or be interested in any business in competition with the Company, or with any
of its subsidiaries or affiliates.
6. Confidentiality
During and after the Employment Period, the Employee will not divulge or appropriate to his own use
or to the use of others, in competition with the Company, any secret or confidential information or
knowledge pertaining to the business of the Company, or of any of its subsidiaries, obtained by him
in any way while he was employed by the Company or by any of its subsidiaries.
7. Remedies
If at any time the Employee violates to a material extent any of the covenants or Agreements set
forth in paragraphs 5 and 6, the Company shall have the right to terminate all of its obligations
to make further payments under this Agreement. The Employee acknowledges that the Company would be
irreparably injured by a violation of paragraph 5 or 6 and agrees that the Company shall be
entitled to an injunction restraining the Employee from any actual or threatened breach of
paragraph 5 or 6 or to any other appropriate equitable remedy without any bond or other security
being required.
8. Amendment and Termination
This Agreement may be amended or cancelled by mutual Agreement of the parties without the consent
of any other person and, so long as the Employee lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter hereof The
Employment Period shall terminate as of the earliest of:
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The last day of the month in which the date of the Employees death occurs; or the date
on which the Company gives notice to the Employee if such termination is for Cause or
Disability. |
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For purposes of this Agreement, Cause means the Employees gross misconduct resulting
in material damage to the Company or willful and material breach of this Agreement. |
9. Notices
Any notice required or permitted to be given under this Agreement shall be sufficient if in writing
and if sent by registered mail to the Company at its principal Employee offices or to the Employee
at the last address filed by him in writing with the Company, as the case may be.
10. Non-Assignment
The interests of the Employee under this Agreement are not subject to the claims of his creditors
and may not be voluntarily or involuntarily assigned, alienated or encumbered.
11. Successors
This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors
and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Companys assets and business.
12. Applicable Law
The provisions of this Agreement shall be construed in accordance with the laws of the State of
California.
13. Counterparts
The Agreement may be executed in two or more counterparts, any one of which shall be deemed the
original without reference to the others.
IN WITNESS WHEREOF, the Employee has hereunto set his hand, and the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and year first above
written.
/S/ CARL KUKKONEN
Carl Kukkonen
VIASPACE Inc.
By: /S/ KEVIN SCHEWE
Kevin Schewe, Director
Ex. 10.2
Employment Agreement
This Employment Agreement (the Agreement), entered into this 28 day of October, 2014, between
VIASPACE Inc., a Nevada corporation (the Company), and Stephen Muzi (the Employee),
Witnesseth That:
Whereas, the parties hereto desire to enter into this Agreement to define and set forth the
terms and conditions of the employment of the Employee by the Company;
Now, Therefore, in consideration of the mutual covenants and Agreements set forth below, it is
hereby covenanted and agreed by the Company and the Employee as follows:
1. Position; Employment Period
The Company hereby employs the Employee as its Chief Financial Officer, Treasurer and Secretary,
and the Employee hereby agrees to serve in such capacity, for the period beginning October 1, 2014,
and ending on September 30, 2015 (the Employment Period).
2. Performance of Duties
The Employee agrees that during the Employment Period he shall devote his full business time to the
business affairs of the Company and shall perform his duties faithfully and efficiently subject to
the direction of the Chairman of the Board of the Company; provided that the foregoing shall not
limit or prevent the Employee from serving on the board of directors of charitable organizations or
other business corporations not in competition with the Company. The Employee shall not be assigned
duties and responsibilities that are not generally within the scope and character associated or
required of other employees of similar rank and position.
3. Compensation
(a) Subject to the following provisions of this Agreement, during the Employment Period the
Employee shall be compensated for his services as follows:
(b) Salary. Employee shall receive an annual salary, payable monthly, in an amount
which shall initially be $63,654 per annum, subject to such increases as may from time to
time be determined by the Chairman of the Board of the Company.
(c) Bonus. In addition to the Base Compensation, during the Employment Term,
Employee shall be entitled to such bonuses as may from time to time be determined by the
Board.
(d) Benefits. Company will pay for Employees medical and dental insurance under
the Companys medical and dental family insurance plan. If Employee has medical and dental
family plan independent of Company plan, Employee will be reimbursed for costs paid under
independent plan.
(e) Vacation and Personal Leave. Employee shall be entitled to ten (10) paid time
off days for each twelve (12) consecutive calendar monthly period during the Employment
Period, to be taken in accordance with the vacation accrual schedule, if any, and carried
over only to the extent set forth or otherwise permitted in Companys personnel policies or
employee handbook.
(f) Reimbursement of Company Business Expenses. Company shall within thirty (30)
days of its receipt from Employee of supporting receipts, to the extent required by
applicable income tax regulations and Companys reimbursement policies, reimburse Employee
for all out-of-pocket business expenses reasonably and actually incurred by Employee in
connection with his employment hereunder including Employees cell phone and internet
charges. Board approval shall be required for any single expense exceeding $10,000 or for
expenses exceeding in the aggregate annually $120,000. Reimbursement of any and all
Business Expenses is conditioned on Employee submitting his request to Company for
reimbursement and supporting substantiation within ninety (90) days of the date on which
any such expenses shall have been incurred.
4. Disability
Subject to the provisions of paragraph 8, if the Employees employment is terminated during the
Employment Period by reason of his Disability (as defined below), the Employee shall continue to
receive an annual salary and benefits in accordance with paragraphs 3(a) and 3(b) through the end
of the full calendar month of such disability but not in any event beyond the end of the Employment
Period.
For purposes of this Agreement the term Disability means a physical or mental disability which
renders the Employee incapable of performing his duties under this Agreement and which disability
has existed for at least one month, as determined by an independent physician selected by the
Company and agreed to by the Employee. Any salary payments to the Employee shall be reduced by the
amount of any benefits paid for the same period of time under the Companys disability insurance
programs.
5. Competing Businesses
During the period of his employment under this Agreement, the Employee shall not be employed by or
otherwise engage in or be interested in any business in competition with the Company, or with any
of its subsidiaries or affiliates.
6. Confidentiality
During and after the Employment Period, the Employee will not divulge or appropriate to his own use
or to the use of others, in competition with the Company, any secret or confidential information or
knowledge pertaining to the business of the Company, or of any of its subsidiaries, obtained by him
in any way while he was employed by the Company or by any of its subsidiaries.
7. Remedies
If at any time the Employee violates to a material extent any of the covenants or Agreements set
forth in paragraphs 5 and 6, the Company shall have the right to terminate all of its obligations
to make further payments under this Agreement. The Employee acknowledges that the Company would be
irreparably injured by a violation of paragraph 5 or 6 and agrees that the Company shall be
entitled to an injunction restraining the Employee from any actual or threatened breach of
paragraph 5 or 6 or to any other appropriate equitable remedy without any bond or other security
being required.
8. Amendment and Termination
This Agreement may be amended or cancelled by mutual Agreement of the parties without the consent
of any other person and, so long as the Employee lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter hereof The
Employment Period shall terminate as of the earliest of:
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The last day of the month in which the date of the Employees death occurs; or the date
on which the Company gives notice to the Employee if such termination is for Cause or
Disability. |
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For purposes of this Agreement, Cause means the Employees gross misconduct resulting
in material damage to the Company or willful and material breach of this Agreement. |
9. Notices
Any notice required or permitted to be given under this Agreement shall be sufficient if in writing
and if sent by registered mail to the Company at its principal Employee offices or to the Employee
at the last address filed by him in writing with the Company, as the case may be.
10. Non-Assignment
The interests of the Employee under this Agreement are not subject to the claims of his creditors
and may not be voluntarily or involuntarily assigned, alienated or encumbered.
11. Successors
This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors
and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Companys assets and business.
12. Applicable Law
The provisions of this Agreement shall be construed in accordance with the laws of the State of
California.
13. Counterparts
The Agreement may be executed in two or more counterparts, any one of which shall be deemed the
original without reference to the others.
IN WITNESS WHEREOF, the Employee has hereunto set his hand, and the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and year first above
written.
/S/ STEPHEN MUZI
Stephen Muzi
VIASPACE Inc.
By: /S/ KEVIN SCHEWE
Kevin Schewe, Director
Exhibit 10.3
VIASPACE INC.
AMENDMENT TO SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
The following Section 8 (b) is changed to the following:
(b) Conversion Price. Subject to Section 8(c), the Conversion Price shall be equal to
50% of the Average Trading Price as reported by the principal trading exchange on which the
Companys Common Stock is traded for the twenty (20) trading days preceding the date of the Note.
IN WITNESS WHEREOF, Company has caused this Amendment to be issued as of the date first written
above and Holder agrees to the terms and conditions of this Note.
VIASPACE INC.
By:/S/ CARL KUKKONEN
Name: Carl Kukkonen
Its: CEO
KEVIN SCHEWE
/S/ KEVIN SCHEWE
Ex. 10.4
NEITHER THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE 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 OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR OTHER EXEMPTION UNDER SAID ACT.
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.
VIASPACE INC.
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
$22,000.00 October 29, 2014
FOR VALUE RECEIVED, VIASPACE INC., a Nevada corporation (Company), promises to pay to Kevin
Schewe (Holder), or its registered assigns, in lawful money of the United States of America the
principal sum of TWENTY TWO THOUSAND Dollars ($22,000.00), or such other amount as shall equal the
outstanding principal amount hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to six percent (6.0%) per annum, computed on the basis of
the actual number of days elapsed and a year of 365 days. Unless converted into Common Stock of
Company as set forth in Section 3 and/or Section 8 below, all unpaid principal, together with any
then unpaid and accrued interest, shall be due and payable on the earlier of (i) October 29, 2016
(the Maturity Date), (ii) upon prepayment of all amounts due and payable under this Note in
accordance with the terms hereof, or (iii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and payable by Holder or made
automatically due and payable in accordance with the terms hereof. Immediately prior to the
issuance of this Note by Company, Holder acknowledges that it has delivered to Company the sum of
TWENTY TWO THOUSAND Dollars ($22,000.00) reflecting the principal amount under this Note.
This Note is one of a series of notes (the Notes) having like tenor and effect (except for
variations necessary to express the name of the holder, the principal amount of each of the Notes
and the date on which each Note is funded) in an aggregate principal amount of up to $1,000,000
issued or to be issued by Company on or about the period from September 2012 to August 2017 (or
such other period as agreed upon by the Company and the Holder) pursuant to the terms of a Loan
Agreement, dated as of September 30, 2012, by and between Company and the Holder (or his designees)
of the Notes (the Loan Agreement). The Notes shall rank equally without preference or priority
of any kind over one another, and all payments on account of principal and interest with respect to
any of the Notes shall be applied ratably and proportionately on the outstanding Notes on the basis
of the principal amount of the outstanding indebtedness represented thereby.
The following is a statement of the rights of Holder and the conditions to which this Note is
subject, and to which Company by issuance of this Note, and Holder by the acceptance of this Note,
agree:
1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:
(a) Common Stock shall mean the Companys Common Stock, par value $0.001.
(b) Collateral has the meaning given in Section 4 hereof.
(c) Company includes the corporation initially executing this Note and any Person which
shall succeed to or assume the obligations of Company under this Note.
(d) Conversion Notice has the meaning given in Section 8(e) hereof.
(e) Conversion Period shall mean the period from the date of the Note and ending on the
Maturity Date.
(f) Conversion Price has the meaning given in Section 8(b) hereof
(g) Event of Default has the meaning given in Section 6 hereof.
(h) Holder shall mean the Person specified in the introductory paragraph of this Note or any
Person who shall at the time be the registered holder of this Note. Holders shall mean the
Persons collectively specified in the introductory paragraph of this Note and the other Notes or
any Persons who shall at the time be the registered holders of this Note and the other Notes.
(i) Majority Holders shall mean Holders holding a majority of the aggregate principal amount
of the Notes then outstanding.
(j) Note shall mean this Senior Secured Convertible Promissory Note.
(k) Obligations shall mean and include all loans, advances, debts, liabilities and
obligations owed by Company to Holder of every kind and description, now existing or hereafter
arising under or pursuant to the terms of this Note including, all interest, fees, charges,
expenses, attorneys fees and costs and accountants fees and costs chargeable to and payable by
Company hereunder.
(l) Person shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.
(m) Prepayment Amount has the meaning given in Section 3 hereof
(n) Prepayment Notice has the meaning given in Section 3 hereof.
(o) Sale Transaction shall mean a transaction or series of related transactions involving
(i) the consolidation or merger of Company with another Person, (ii) a sale of all or substantially
all of the assets of Company, (iii) a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of capital stock of Company, (iv) the
consummation of a stock purchase agreement or other business combination with another Person
whereby such other Person acquires more than the 50% of the outstanding capital stock of Company.
(p) Securities Act has the meaning given in Section 5(b) hereof.
(q) Loan Agreement has the meaning in the second introductory paragraph of this Note.
(r) Successor Entity has the meaning given in Section 10 hereof.
Capitalized term not otherwise defined shall have the meaning set forth in the Loan Agreement.
2. Interest. Unless converted into Common Stock of Company as set forth in Section 8
below, or unless prepaid or converted as set forth in Section 3 below, accrued interest on this
Note shall be payable on the Maturity Date.
3. Prepayment. During the Conversion Period, Company may, at any time and from time
to time, prepay all or any portion of the principal due under this Note, together with accrued
interest, without penalty. Company shall effect such prepayment by providing Holder twenty (20)
days written notice prior to the date of such prepayment (such notice, a Prepayment Notice)
indicating the amount of principal and accrued interest Company desires to prepay (the Prepayment
Amount). Notwithstanding the foregoing, Holder shall have 10 days following receipt of such
Prepayment Notice to notify Company in writing of its election to convert the Prepayment Amount
into shares of Common Stock, in which case such Prepayment Amount shall be converted into shares of
Common Stock in accordance with the conversion procedures set forth in Section 8(e) hereof
(provided that, with respect to conversions effected pursuant to this Section 3, any references to
the Conversion Amount in Section 8(e) shall refer to the Prepayment Amount). Should Holder elect
to convert the Prepayment Amount into shares of Common Stock, the number of shares of Common Stock
into which such Prepayment Amount will be converted shall be determined by dividing the Prepayment
Amount by the then applicable Conversion Price.
4. Security Interest. As security for the payment and performance of the Obligations
under this Note and the other Notes, Company hereby grants to the holder of this Note and of the
other Notes a first lien security interest in all of Companys right, title and interest in, to and
under all of its personal property, wherever located and whether now existing or owned or hereafter
acquired or arising, including all accounts, chattel paper, commercial tort claims, deposit
accounts, documents, equipment (including all fixtures), general intangibles, intellectual property
(including all patents and patent applications, all copyrights and applications for copyright, all
state (including common law), federal and foreign trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and trade names, and all trade
secrets), instruments, inventory, investment property, letter-of-credit rights, money and all
products, proceeds and supporting obligations of any and all of the foregoing (collectively, the
Collateral). Notwithstanding the foregoing, the security interest granted herein shall not
extend to any property, rights or licenses to the extent the granting of a security interest
therein would be contrary to applicable law.
5. Representations and Warranties of Holder. Holder represents and warrants to Company
as follows:
(a) Binding Obligation. Holder has full legal capacity, power and authority to execute
and deliver this Note and to perform his obligations hereunder. This Note is a valid and binding
obligation of Holder, enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the enforcement of
creditors rights generally and general principles of equity.
(b) Securities Law Compliance. Holder has been advised that this Note has not been
registered under the Securities Act of 1933, as amended (the Securities Act), or any state
securities laws and, therefore, cannot be resold unless they are registered under the Securities
Act and applicable state securities laws or unless an exemption from such registration requirements
is available. Holder is aware that Company is under no obligation to effect any such registration
with respect to this Note, or the Common Stock issuable or issued pursuant to the conversion of
this Note, or to file for or comply with any exemption from registration. Holder has not been
formed solely for the purpose of making this investment and is purchasing this Note for its own
account for investment, not as a nominee or agent, and not with a view to, or for resale in
connection with, the distribution thereof. Holder has such knowledge and experience in financial
and business matters that Holder is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment and is able to bear the economic risk of such
investment for an indefinite period of time.
(c) Accredited Investor. Holder is an accredited investor within the meaning of SEC
Rule 501 of Regulation D of the Securities Act, as presently in effect.
(d) Restricted Securities. Holder understands that this Note is a restricted
security under the federal securities laws inasmuch as it is being acquired from Company in a
transaction not involving a public offering and that under such laws and applicable regulations
such Note may be resold without registration under the Securities Act only in certain limited
circumstances. In the absence of an effective registration statement covering the Note or an
available exemption from registration under the Securities Act, the Note must be held indefinitely.
Holder represents that it is familiar with SEC Rule 144, and understands the resale limitations
imposed thereby and by the Securities Act.
(e) Access to Information. Holder acknowledges that Company has given Holder access
to the corporate records and accounts of Company and to all information in its possession relating
to Company, has made its officers and representatives available for interview by Holder, and has
furnished Holder with all documents and other information required for Holder to make an informed
decision with respect to the purchase of this Note.
6. Events of Default. The occurrence of any of the following shall constitute an
Event of Default under this Note:
(a) Failure to Pay. Company shall fail to pay (i) when due any principal or interest
payment on the due date hereunder or (ii) any other payment required under the terms of this Note
on the date due, and (in either case) such payment shall not have been made within twenty (20) days
of Companys receipt of Holders written notice to Company of such failure to pay;
(b) Failure to Perform. Company fails to perform any obligation under this Note and
does not cure that failure within twenty (20) days of Companys receipt of Holders written notice
to Company of such failure to perform; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment
of a receiver, trustee, liquidator or custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.
7. Rights of Holder upon Default. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 6(c) and 6(d)) and at any time
thereafter during the continuance of such Event of Default, the Majority Holders may, by written
notice to Company, declare all outstanding Obligations payable by Company under the Notes to be
immediately due and payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. Upon the occurrence or existence of any Event of Default
described in Sections 6(c) and 6(d), immediately and without notice, all outstanding Obligations
payable by Company under the Notes shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived. In addition to the foregoing remedies, upon the occurrence or existence of any Event of
Default, Holder may exercise any other right power or remedy permitted to him by law, either by
suit in equity or by action at law, or both.
8. Conversion.
(a) Conversion. Holder shall have the right to convert, at any time during the
Conversion Period, all or any portion of the principal amount, together with any unpaid and accrued
interest, then outstanding under this Note into fully paid and non-assessable shares of Common
Stock at a conversion price per share equal to the Conversion Price (as defined below). The number
of shares of Common Stock into which such principal and interest then outstanding under this Note
will be converted shall be determined by dividing the amount of principal, together with all unpaid
and accrued interest, then outstanding under this Note to be converted (the Conversion Amount) by
the Conversion Price.
(b) Conversion Price. Subject to Section 8(c), the Conversion Price shall be equal
to 50% of the Average Trading Price as reported by the principal trading exchange on which the
Companys Common Stock is traded for the twenty (20) trading days preceding the date of the Note.
(c) Adjustments to Conversion Price. The Conversion Price shall be subject to
proportional adjustments for stock splits, stock dividends, combinations, consolidations,
reclassifications and the like.
(d) Conversion Procedure. Before Holder shall be entitled to convert the Conversion
Amount then outstanding under this Note into shares of Common Stock, Holder shall surrender this
Note at the office of this Company, and shall give written notice (a form of which is attached to
this Note, the Conversion Notice) to Company at its principal corporate office, of the election
to convert the same and shall state therein the total Conversion Amount. Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion
unless (i) Holder executes and delivers to Company the Conversion Notice for the converted shares
and (ii) this Note is delivered to Company. Company shall, as soon as practicable after such
delivery, issue and deliver certificates (bearing such legends as are required by applicable state
and federal securities laws in the opinion of counsel to Company and required by this Note and the
Loan Agreement), representing the number of fully paid and non-assessable shares of the Common
Stock into which the Conversion Amount will be converted in accordance with the provisions herein,
and a new promissory note having like tenor as this Note for the principal amount and interest then
outstanding under this Note that are not being so converted. Any conversion pursuant to this
Section 8 shall be deemed to have been made immediately prior to the close of business on the date
of Companys receipt of the Conversion Notice, so that the rights of Holder under this Note to the
extent of the Conversion Amount shall cease at such time and Holder shall be treated for all
purposes as having become the record holder of such shares of Common Stock at such time.
(e) Fractional Shares; Effect of Conversion. No fractional shares shall be issued
upon conversion of this Note. In lieu of Company issuing any fractional shares to Holder upon the
conversion of this Note, Company shall pay to Holder an amount equal to the product obtained by
multiplying the Conversion Price by the fraction of a share not issued pursuant to the previous
sentence. Upon conversion of this Note in full and the payment of the amounts specified in this
Section 9(f), Company shall be forever released from all its obligations and liabilities under this
Note.
(f) Reservation of Stock Issuable Upon Conversion. Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of this Note such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of this Note.
9. Reserved
10. Effect of Sale Transaction. Upon the occurrence of any Sale Transaction, the
Successor Entity (as defined below) shall succeed to, and be substituted for the Company (so that
from and after the date of such Sale Transaction, the provisions of this Note referring to the
Company shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note with the same
effect as if such Successor Entity had been named as the Company herein. Upon consummation of the
Sale Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon conversion of this Note at any time after the consummation of the Sale Transaction, in
lieu of the shares of the Common Stock purchasable upon the conversion of the Notes prior to such
Sale Transaction, such shares of common stock (or other securities, cash, assets or other property)
of the Successor Entity. The provisions of this Section shall apply similarly and equally to
successive Sale Transactions and shall be applied without regard to any limitations on the
conversion of this Note. As used in this Section 10, Successor Entity means the Person, which
may be the Company, formed by, resulting from or surviving any Sale Transaction, or the parent
entity of such Person, as applicable.
11. Successors and Assigns. Subject to the restrictions on transfer described in
Sections 12 and 13 below, the rights and obligations of Company and Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and transferees of the
parties.
12. Waiver and Amendment. Any term of this Note may be amended or waived only with
the written consent of Company and the Majority Holders; provided, however, that any such amendment
or modification which by its terms would not apply equally to all holders of the Notes shall not be
applicable to any holder whose rights under the Notes would be adversely affected by such amendment
or modification in a different manner than other holders thereof without such adversely affected
holders written consent.
13. Transfer of this Note or Securities Issuable on Conversion Hereof. With respect
to any offer, sale or other disposition of this Note or securities into which such Note may be
converted, Holder will give written notice to Company prior thereto, describing briefly the manner
thereof, together with a written opinion of Holders counsel, or other evidence if reasonably
satisfactory to Company, to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in effect). Upon
receiving such written notice and reasonably satisfactory opinion, if so requested, or other
evidence, Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the terms of the notice
delivered to Company. If a determination has been made pursuant to this Section 12 that the
opinion of counsel for Holder, or other evidence, is not reasonably satisfactory to Company,
Company shall so notify Holder promptly after such determination has been made. Each Note thus
transferred and each certificate representing the securities thus transferred shall bear a legend
as to the applicable restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for Company such legend is not required in order
to ensure compliance with the Securities Act. Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by or on behalf of
Company. Prior to presentation of this Note for registration of transfer, Company shall treat the
registered Holder hereof as the owner and Holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever, whether or not
this Note shall be overdue and Company shall not be affected by notice to the contrary.
14. 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 business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be to the respective addresses or facsimile
numbers of the parties as set forth in the Loan Agreement, or at such other address or facsimile
number as such parties shall have furnished in writing.
15. Usury. In the event any interest is paid on this Note which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment representing an
amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
16. Waivers. 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.
17. Governing Law and Forum. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with the laws of the
State of Colorado, United States of America, without regard to the conflicts of law provisions of
the State of Colorado, or of any other state. All disputes or controversies relating to or arising
from this Note shall be adjudicated in the state and federal courts located in the state of
Colorado. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER. The Convention on Contracts for the International Sale of Goods shall not apply to this
Note.
[Remainder of Page Intentionally Left Blank]
1
IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date first written
above and Holder agrees to the terms and conditions of this Note.
VIASPACE INC.
By: /S/ CARL KUKKONEN
Name: Carl Kukkonen
Its: CEO
KEVIN SCHEWE
/S/ KEVIN SCHEWE
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $22,000.00 of the principal and $ 0 of the
interest due on the Note issued by VIASPACE Inc. on October 29, 2014 into Shares of Common Stock of
VIASPACE Inc. (the Borrower) according to the conditions set forth in such Note, as of the date
written below.
Date of Conversion: October 29, 2014
Conversion Price: $0.0038
Shares To Be Delivered: 5,789,474
Signature: /S/ KEVIN L. SCHEWE
Print Name: Kevin L. Schewe
Address: 400 Indiana St., Suite 220, Golden, CO 80401
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