viaspace_s1-ex1002.htm


    Exhibit
10.2

     

    SHAREHOLDERS
AGREEMENT

    


     

    THIS
SHAREHOLDERS AGREEMENT (this “Agreement”) is made and entered into as of October
21, 2008 by and among VIASPACE Green Energy Inc., a British Virgin Islands
international business company (the “Company”), VIASPACE, Inc., a Nevada
corporation (“VIASPACE”), and Sung Hsien Chang, an individual (“Chang”) (each of
VIASPACE and Chang shall be referred to as a “Shareholder”)

     

    RECITALS

     

    WHEREAS,
the Shareholders hold or will hold all Company securities in connection with
that certain Securities Purchase Agreement dated as of this date pursuant to
which Chang will exchange all of the equity securities of IPA BVI and IPA China
in exchange for shares of Company common stock (“Securities Purchase
Agreement”);

     

    WHEREAS,
the Shareholders wish to define certain rights among the parties as set forth
herein.

     

    AGREEMENT

     

    In
consideration of the mutual covenants and agreements contained herein, and for
other valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    As used
in this Agreement, the following capitalized terms have the meanings indicated
below.

     

    “Affiliate”
of a Person means any other Person who, directly or indirectly, controls, is
controlled by, or is under common control with such Person, and for this
purpose, “control” means beneficial ownership of   50% equity
interest or greater.

     

    “Board” shall mean the
Board of Directors of the Company.

     

     “Business
Day” means each day that is not a Saturday, Sunday, or other day on which banks
are required or permitted by law to be closed in Hong Kong or
California.

     

    “First
Closing” has the meaning given in the Purchase Agreement.

     

    “IPA BVI”
means Inter-Pacific Arts Corp., a British Virgin Islands international business
company.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


     

    “IPA
China” means Guangzhou Inter-Pacific Arts Corp., a Chinese wholly owned foreign
enterprise registered in Guangdong province.

     

     “Permitted
Transferee” means (a) with respect to a Shareholder who is an individual,
(i) such Shareholder’s spouse or issue, (ii) a corporation,
partnership, or trust, the beneficiaries of which include, or which is
controlled by, only such Shareholder, such Shareholder’s spouse, or such
Shareholder’s issue, and (iii) in the event of such Shareholder’s death,
such Shareholder’s heirs and legatees, (b) with respect to a Shareholder
that is not an individual, any Affiliate of such Shareholder and (c) a purchaser
of Company common stock from VIASPACE, the net proceeds of which shall be used
to pay Chang up to $4.8 million at the Second Closing and which shall not be
subject to Article III.

     

    “Person”
means any individual, sole proprietorship, partnership, joint venture, limited
liability company, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity, or government (whether federal,
state, county, city, or otherwise, including without limitation any
instrumentality, division, agency, body, or department thereof).

     

    “Permitted
Issuance” means issuances of up to 14 million shares of Company common stock
issued pursuant to exercises of outstanding stock options approved by the Board
and sales of up to $4.8 million in Company equity securities to third party
purchasers.

     

    “Purchase
Agreement” means the Securities Purchase Agreement date as of October 21, 2008,
by and among the Company, VIASPACE and Chang.

     

    “Second
Closing” has the meaning given in the Purchase Agreement.

     

    “Shares”
means the ordinary shares of the Company held by a Shareholder.

     

    “Subsidiaries”
means IPA BVI and IPA China.

     

     “Transfer”
means a transfer, sale, assignment, pledge, hypothecation, gift, creation of a
security interest in or lien on, placement in trust (voting or otherwise),
assignment, or any other encumbrance or disposition of, directly or indirectly,
voluntarily or involuntarily, any Shares.

     

    “Transferee”
means any Person (including a Permitted Transferee) who acquires Shares by means
of a Transfer in accordance with this Agreement.

     

    ARTICLE
II

    GOVERNANCE
OF THE COMPANY AND THE SUBSIDIARIES

     

    2.1           Directors.   The
number of directors constituting the board of directors of the Company and each
Subsidiary shall be three (3).  Except as otherwise provided herein,
each director shall serve until the earlier of his death, resignation or
removal.  Any director may resign at any time upon written notice to
the Company.  For each of the Company and Subsidiaries, VIASPACE has
the right to designate and appoint two (2) directors (the "VIASPACE Directors")
and Chang has the right to designate and appoint one (1) director (the "Chang
Director").  Each Shareholder has the right to remove and replace any
directors appointed by it at any time.  Such designation, appointment,
removal or replacement shall be effective as among the Shareholders upon receipt
of written notice to such effect from the Shareholder making such designation,
appointment, removal or replacement.   The initial VIASPACE
Directors shall be Carl Kukkonen and A.J. Abdallat.  The initial Chang
Director shall be Sung Hsien Chang.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


     

    Each
Shareholder shall vote his or its Securities at any regular or special meeting
of shareholders of the Company or Subsidiaries or in any written consent
executed in lieu of such a meeting of shareholders and shall take all other
actions (including using his or its best efforts to cause the Board of Directors
of the Company to take all actions) necessary to give effect to the agreements
contained in this Shareholders Agreement (including, without limitation, the
election of the Designees) and to ensure that the charter of the Company and any
Subsidiary as in effect at any time hereafter do not conflict in any respect
with the provisions of this Shareholders Agreement.  In order to
effectuate the provisions of this Article 2, each
Shareholder hereby agrees that when any action or vote is required to be taken
by such Shareholder pursuant to this Shareholders Agreement, such Shareholder
shall use his or its best efforts to call, or cause the appropriate officers and
directors of the Company to call, a special or annual meeting of shareholders of
the Company, as the case may be, or execute or cause to be executed a consent in
writing in lieu of any such meetings pursuant to applicable corporate law, as
amended from time to time, or any successor statutes.  The Company
will pay all reasonable out-of-pocket expenses incurred by the directors in
connection with their participation in meetings of the Board.

     

    2.2           Vacancies.  In
the event of a vacancy on any board of directors, each Shareholder agrees to
vote in favor of an individual designated in writing by (a) VIASPACE if the
vacant position on the board of directors had been held by a VIASPACE Director
or (b) Chang, if the vacant position on the board of directors had been held by
the Chang Director.

     

    2.3           Compensation.  Directors
shall serve on the Board and on any of its committees, without compensation from
the Company for such service.

     

    2.4           Company
Management.  Carl Kukkonen will be the initial Chairman of the
Board and Chief Executive Officer of the Company.  Stephen Muzi will
be the initial Chief Financial Officer and Secretary of the
Company.   Chang will be the initial President of the Company,
effective as of the Second Closing.

     

    2.5           Subsidiaries
Management.  Carl Kukkonen will be the initial Chief Executive
Officer of IPA BVI and IPA China, effective as of the Second
Closing.  Stephen Muzi will be the initial Chief Financial Officer and
Secretary of IPA BVI and IPA China, effective as of the Second
Closing.  Chang will be the initial President of IPA BVI and IPA
China.  Maclean Wang will be initial Managing Director of Grass
Development of IPA China.

     

    2.6           Actions by the Board of
Directors.

     

    (a)           General.  Meetings
of each board of directors shall be held at least [four] times per year, at such
places and on such dates as are agreed by the directors.  The presence
of any two (2) of the directors shall constitute a quorum for the transaction of
business at a meeting of the board of directors, provided that the Chang
Director has been duly notified (or is present and has waived due
notice).  The affirmative vote of a majority of the directors present
at a meeting will constitute a decision of the board of directors; provided,
however, that decisions as to Fundamental Matters, as set forth below, shall
require the unanimous approval of Directors.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


     

    (b)           Fundamental
Matters.  The approval by the Board of any of the following
actions (the "Fundamental Matters") shall be subject to the unanimous approval
of the Directors:

     

    (i)         
   other than Permitted Issuances, any issuance or agreement to
issue any capital stock of the Company or the Subsidiaries or any securities or
rights of any kind convertible into or exchangeable for, any capital stock of
the Company or the Subsidiaries;

     

    (ii)       
    any transaction of merger, consolidation, amalgamation,
recapitalization or other form of business combination; any joint venture; any
liquidation, winding up or dissolution of the Company or the Subsidiaries; or
any acquisition of any business or assets from, or capital stock of, any
Person;

     

    (iii)           any
sale, conveyance, lease, transfer or other disposition of any substantial assets
of the Company or the Subsidiaries or any other transaction not in the ordinary
course of business;

     

    (iv)           any
declaration or making of dividend payments or other payments or distributions
made to any shareholders of the Company or the Subsidiaries;

     

    (v)           any
amendment or modification of the Memorandum and Articles of Association of the
Company or IPA BVI or the Articles of Association of IPA China;

     

    (vi)           except
as contemplated in the Purchase Agreement, an initial public offering of the
shares of the Company or the Subsidiaries;

     

    (vii)          the
engagement to any substantial extent in any line or lines of business activity
other than the businesses in which the Company and the Subsidiaries were engaged
as of the date of this Agreement;

     

    (viii)         any
indebtedness incurred or guaranty made by the Company or the Subsidiaries or any
pledge of the Company's or the Subsidiaries’ assets in connection with any loan
or other extension of credit or any loan by the Company or the Subsidiaries to
any Person;

     

    (ix)           commercial
proposals or contracts which would commit the Company or the Subsidiaries for a
total amount (including both recurring and non-recurring charges) in excess of
$100,000;

     

    (x)         
  decisions relating to the officers and executive management of the
Company or the Subsidiaries, including compensation, employment and termination
of employment;


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


     

    (xi)           approval
of the annual budget of the Company and the Subsidiaries, including without
limitation, sub-budgets for the artwork business, grass business, public company
formation  process and ongoing management and administration
expenses;

     

    (xii)          the
opening of bank accounts of the Company and the Subsidiaries; and

     

    (xiii)         selection
of auditors for the Company and the Subsidiaries.

     

    2.7           Operations of the
Subsidiaries.  Notwithstanding anything to the contrary in this
Agreement but subject to Section 2.6, Chang shall have sole authority to manage
and control the operations of the Subsidiaries until the Second
Closing.

     

    ARTICLE
III

    TRANSFERS

     

    3.1           Transfer.  Each
Shareholder agrees that no Transfer of Shares by a Shareholder will be valid,
binding, or of any force or effect with respect to the Company or any other
Shareholder, except as permitted under this Article III and effected in
accordance with all of the terms, conditions, and provisions of this
Agreement.  Shares purchased through a Transfer permitted under this
Agreement will remain subject to the provisions of this Agreement and the
Articles of Association of the Company.  Any Transferee will be
required to execute, and any transferor of Shares shall cause such Transferee to
execute, this Agreement.

     

    3.2           Notation.  The
Company will make a notation in the relevant share certificates with respect to
the restrictions on Transfer of the Shares, and each share certificate issued to
a Shareholder will bear a legend in wording substantially as
follows:

     

    THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED WITHOUT COMPLIANCE WITH THE
PROVISIONS OF THE SHAREHOLDERS AGREEMENT OF VIASPACE GREEN ENERGY
INC.  A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL EXECUTIVE OFFICES OF VIASPACE GREEN ENERGY INC.

     

     

    3.3           Restrictions on
Transfer.  Each Shareholder agrees that it may not Transfer
Shares except (i) to a Permitted Transferee or (ii) in accordance with
this Article III.

     

    3.4           Right of First
Refusal.

     

    (a)           If
a Shareholder receives a bona fide offer to buy all (and not less than all) of
its Shares (“Offer”) and such Shareholder (“Offeree”) wishes to sell such Shares
(“Offered Shares”), it will promptly deliver written notice (“Notice”) to the
other Shareholder offering to sell the Offered Shares to the other Shareholder
on no less favorable terms and conditions set forth in the Offer.  The
Notice will contain all the terms and conditions of the Offer, a copy of any
written Offer, and adequate information regarding the identity and background of
the Person making the Offer (the “Offeror”).


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


     

    (b)           Upon
receipt of the Notice, the other Shareholder will have an irrevocable option to
purchase all, and not less than all, the Offered Shares on the same terms and
conditions set forth in the Offer.  For a period of 15 days after the
receipt of the Notice, the other Shareholder may exercise this purchase option
by delivering written notice to the Offeree.  If the other Shareholder
fails to exercise its purchase option within the 15-day period, the Offeree may,
for a period of 30 days after the earlier of (i) the expiration of the
15-day purchase option period and (ii) the date the Offeree has received
written notice from the each other Shareholder stating that it will not exercise
its purchase option, sell the Offered Shares to the Offeror on the terms and
conditions set forth in the Notice; provided that such sale otherwise complies
with the Tag Along provision in Section 3.5 and other provisions of this
Agreement.

     

    (c)           If
a Shareholder exercises its purchase option under this section, the closing of
the purchase of the Offered Shares with respect to such exercise will take place
on or before the 30th day after the latest date a Shareholder delivers timely
notice of such exercise to the Offeree.

     

    (d)           No
offer by a Permitted Transferee of a Shareholder to purchase Shares of such
Shareholder will constitute an Offer.

     

    3.5           Tag Along
Right.  Within 30 days after receipt of the Notice, the other
Shareholder may give written notice to the Offeree of its desire to sell all,
and not less than all, of its Shares on the same terms and conditions set forth
in the Offer (“Tag Along Notice”).  If within such 30-day period the
other Shareholder elects to sell its Shares in accordance with Section 3.5, such
Tag Along Notice shall constitute a binding commitment of such Shareholder and
the Offeree shall not consummate the sale of its Shares unless the Shares of the
other Shareholder are included in such sale.  If a Shareholder
exercises its right of first refusal under Section 3.4, it may not exercise any
rights under this Section 3.5.

     

    ARTICLE
IV

    PURCHASE
OPTION

     

    4.1           Option
Events.  Each of the following events is an “Option
Event”:

     

    (a)           Bankruptcy.  If
a Shareholder files or has filed against such Shareholder a petition under any
federal or state bankruptcy, insolvency or similar law, or makes an assignment
of assets for the benefit of creditors, then the other Shareholder shall have
the option to purchase all of such Shareholder’s Shares.

     

    (b)           Attachment;
Levy.  If an attachment, execution or other process is levied
against a Shareholder or any of Shareholder’s Shares so as to become a lien on
such Shares, and such lien is not released within fifteen (15) days after the
date of levy, then the other Shareholder shall have the option to purchase all
of such Shareholder’s Shares.


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


     

    4.2           Option
Exercise.  If a Shareholder wishes to exercise the foregoing
purchase option, it shall deliver written notice to the other Shareholder within
ninety (90) days after the Option Event.

     

    4.3           Purchase and
Price.  The purchase price to be paid for Shares purchased
pursuant to this section shall be the fair market value of such
Shares.  Fair market value shall be the share price of the Company’s
common stock as of the date of the Option Event, provided that such stock is
traded on a public exchange or, if not traded on a public exchange, as
determined by an appraiser selected by the purchasing Shareholder who has not
had any prior relationship with the purchasing Shareholder and who has at least
ten (10) years experience valuing privately held companies. The fees and expenses of such appraiser shall be
borne by the purchasing Shareholder and the appraiser's determination of fair
market value shall be binding and conclusive.  The purchasing Shareholder shall tender the
consideration within 180 days after the Option Event.

     

    ARTICLE
V

    OTHER
AGREEMENTS

     

    No
Shareholder will enter into any agreement or arrangement of any kind with any
Person with respect to Shares (or any rights therein) held by it from time to
time on terms inconsistent with the provisions of this Agreement.

     

    


     

    ARTICLE
VI 

    MISCELLANEOUS

     

    6.1           Notices.  All
notices, requests, demands, claims, and other communications hereunder shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail (except that a notice of change of address shall not be deemed to
have been given until actually received by the addressee),   to
addresses set forth in the Company’s records.

     

    6.2           Termination.

     

    (a)           This
Agreement will terminate upon the earliest of any one of the following
events:

     

    (i)           
 the Second Closing fails to occur;

     

    (ii)      
     the written consent of both Shareholders;
or

     

    
      (iii)          
the
merger or consolidation of the Company with or into another Person in which the
Shareholders own less than 50% of the voting equity of the surviving
entity.

    


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


     

    (b)           Without
affecting the rights of any other Shareholder or the Company, this Agreement
will terminate prospectively as to a Shareholder when such Shareholder ceases to
own any Shares.

     

    6.3           Successors and
Assigns.  This Agreement is binding upon and inures to the
benefit of the Company, the Shareholders, and their respective successors and
permitted assigns.  No party may assign this Agreement or its rights,
obligations, or interests herein, in whole or in part, without the prior written
consent of the Shareholders, except as otherwise expressly permitted
herein.  If any Shareholder acquires additional Shares and if any
Transferee of any Shareholder acquires any Shares, in each case in any manner,
whether as a Permitted Transferee, by operation of law, or otherwise, such
Shares will be held subject to all of the terms of this Agreement, and by taking
and holding such Shares, such Shareholder or Transferee will be conclusively
deemed to have agreed to be bound by and to comply with all of the terms and
provisions of this Agreement.

     

    6.4           Injunctive
Relief.  The Company and the Shareholders acknowledge and agree
that the legal remedies available in the event any party violates the covenants
and agreements made in this Agreement would be inadequate and that the Company
and each of the Shareholders shall be entitled, without posting any bond or
other security, to temporary, preliminary, and permanent injunctive relief,
specific performance and other equitable remedies in the event of such a
violation, in addition to any other remedies which the Company and the
Shareholders may have at law or in equity.

     

    6.5           Inspection.  For
so long as this Agreement is in effect, the Company will maintain and make
available this Agreement, any amendments hereto, and a complete list of the
names and addresses of all holders of Shares for inspection and copying on any
Business Day by any party hereto at the offices of the Company.

     

    6.6           Amendment;
Waiver.  This Agreement may not be amended, modified or
supplemented in any manner, except by a writing signed by holders of at least
80% of the shares of Company common stock issued pursuant to this
Agreement.  The failure of any party to enforce at any time any
provision hereof will not be construed to be a waiver of any such provision or
any other provision.  No waiver of any breach hereof will be construed
to be a waiver of any other breach.

     

    6.7           Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction will, 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 will
not invalidate or render unenforceable such provision in any other
jurisdiction.

     

    6.8           No Third Party
Beneficiaries.  This Agreement is for the sole benefit of the
parties, their respective successors and permitted assigns.  No other
person or entity is entitled to rely upon or receive any benefit from this
Agreement or any provision hereof.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    


     

    6.9           Entire
Agreement.  This Agreement constitutes the entire agreement
among the Company and the Shareholders with respect to the subject matter hereof
and supersedes all previous negotiations, commitments, and writings with respect
to such subject matter.

     

    6.10          Captions.  The
article and section headings in this Agreement appear for convenience of
reference only, are not part of this Agreement, and do not affect in any way the
interpretation or enforcement of this Agreement.

     

    6.11          Counterparts.  This
Agreement may be executed and delivered in counterparts and by facsimile, each
of which will be deemed an original but which together will constitute one and
the same instrument.

     

    6.12          Governing
Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of California without giving effect to any
choice or conflict of law rule or principle.

     

    6.13           Rules of
Construction.  Unless the context otherwise requires, (a) words
in the singular include the plural, and words in the plural include the
singular;  (b) provisions apply to successive events and transactions;
and  (c) “herein,” “hereof” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.

     

    



    
      
         


      

      
        9

        
          

        

      

      
         


      

    


     

    IN
WITNESS WHEREOF, the parties have duly executed and delivered this Shareholders
Agreement as of the date first above written.

     

    


     

    VIASPACE
Inc.

     

    By:   
/s/ Carl
Kukkonen                                        


    Carl Kukkonen, Chief Executive
Officer

     

    


     

    VIASPACE
Green  Energy Inc.

     

    By:   
/s/ Carl
Kukkonen                                       


    Carl Kukkonen, Chief Executive
Officer

     

     

    /s/ Sung Hsien
Chang                                                                                     

                   
SUNG HSIEN CHANG

     

    


     

     

     

     

     

    


    10