Document:

ex10_11.htm

Exhibit 10.11

INDEPENDENT DIRECTOR'S AGREEMENT

This INDEPENDENT DIRECTOR'S AGREEMENT (the "Agreement") is made as of February 29, 2016 by and between VerifyMe, Inc., a Nevada corporation (hereinafter referred to as the "Company"), and Michael Madon (the "Director").

BACKGROUND

WHEREAS, the Board of Directors of the Company (the "Board of Directors") desires to appoint the Director to perform the duties of an "independent" director (within the meaning of the rules of the U.S. Securities and Exchange Commission (the "SEC")) and, potentially in the future, on committees of the Board of Directors, and the Director desires to be so appointed for such position(s) and to perform the duties required of such position(s) in accordance with the terms and conditions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration for the above recited promises and the mutual promises contained herein, and for other good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:

1.           DUTIES.  The Company requires that the Director be available to perform the duties customarily related to an independent director as may be determined and assigned by the Board of Directors and as may be required by the Company's constituent instruments, including its certificate of incorporation, by-laws and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including, without limitation, the Nevada Revised Statutes (the "NRS") and the rules and regulations of the SEC, any exchange or quotation system on which the Company's securities may be traded from time to time and all other applicable legal or regulatory requirements. The Director agrees to devote as much time as is necessary to perform completely the duties as an independent director in accordance with such Company requirements, including duties as a member of committees of the Board of Directors as the same may be established from time to time. The Director will attend all meetings of Board of Directors and its committees as the Director may be appointed to, in person or by teleconference.  The Director will perform such duties described herein in accordance with the general fiduciary duty of directors arising under the NRS.

2.           TERM. The appointment is subject to the Board of Directors determining, both initially and from time to time, that the Director meets the definition of "independent" under the applicable rules of the SEC and the market on which the Company's shares are traded or listed for quotation.  The term of this Agreement shall commence as of the date hereof and shall continue until December 31, 2015 or his earlier death, incapacity, removal or resignation; provided, however, that this Agreement shall automatically continue for successive one (1) year terms beginning each December 31 unless terminated in accordance with the terms hereof.  The Board of Directors or a designated committee thereof shall have the discretion to nominate or decline to nominate the Director for election at each annual or applicable special meeting of the Company's stockholders, and the failure to nominate the Director as, if and when such nominations are made shall be deemed a termination of this Agreement for purposes of Section 8 hereof.

 

  

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3.           COMPENSATION.  Subject to the approvals by the Compensation Committee or the Board of Directors, for all duties and services to be performed by the Director hereunder, the Director may be entitled to earn cash fees under guidelines and rules established by the Company from time to time for compensating non-employee directors for serving on, and attending meetings of, committees of its Board of Directors and the boards of directors of its subsidiaries.  In addition to the cash fees described above, the Company may grant the Director options to purchase or restricted shares of the Company's common stock (collectively, the "Shares") under the Company's director compensation plans adopted from time to time.  No registration rights are hereby granted with respect to the Shares.

Initial compensation for the Director will consist of:

	
  

	
1)

	
$25,000 per year, payable quarterly

	
  

	
2)

	
100,000 Stock Options per year of Service, vesting over 1 year according to the following schedule:

	
  

	
a.

	
50,000 Stock Options upon acceptance

	
  

	
b.

	
50,000 Stock Options after 12 months

4.           MARKET STAND-OFF AGREEMENT. In the event of a public or private offering of the Company's securities and upon request of the Company, the underwriters or placement agents placing the offering of the Company's securities, the Director agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any of the Shares other than those included in the registration, without the prior written consent of the Company or such underwriters, as the case may be, for such period of time from the effective date of such registration as may be requested by the Company or such placement agent or underwriter.

5.           EXPENSES.  In addition to the compensation provided in paragraph 3 hereof, the Company will reimburse the Director for pre-approved reasonable business related expenses incurred in good faith in the performance of the Director's duties for the Company including attending meetings of the Board of Directors and its committees as the Director may be appointed to.  Such payments shall be made by the Company upon submission by the Director of a signed statement itemizing the expenses incurred.  Such statement shall be accompanied by sufficient documentary matter to support the expenditures.

 

  

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6.           OTHER AGREEMENTS.

(a)           CONFIDENTIAL INFORMATION AND INSIDER TRADING. The Company and the Director each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to, business methods, information systems, financial data and strategic plans which are unique assets of the Company (as further defined below, the "Confidential Information") and that the communication of such Confidential Information to third parties could irreparably injure the Company and its business.  Accordingly, Director agrees that, during his association with the Company and thereafter, he will treat and safeguard as confidential and secret all Confidential Information received by him at any time and that, without the prior written consent of the Company, he will not disclose or reveal any of the Confidential Information to any third party whatsoever or use the same in any manner except in connection with the business of the Company and in any event in no way harmful to or competitive with the Company or its business.  For purposes of this Agreement, "Confidential Information" means any information not generally known to the public or recognized as confidential according to standard industry practice, any trade secrets, know-how, development, manufacturing, marketing and distribution plans and information, inventions, formulas, methods or processes, whether or not patented or patentable, pricing policies and records of the Company (and such other information normally understood to be confidential or otherwise designated as such in writing by the Company), all of which Director expressly acknowledges and agrees shall be confidential and proprietary information belonging to the Company.  Upon termination of his association with the Company, Director shall return to the Company all documents and papers relating to the Company, including any Confidential Information, together with any copies thereof, or certify that he has destroyed all such documents and papers.  Furthermore, Director recognizes that the Company has received and in the future will receive confidential or proprietary information from third parties subject to a duty on the Company's part to maintain the confidentiality of such information and, in some cases, to use it only for certain limited purposes.  Director agrees that Director owes the Company and such third parties, both during the term of Directors association with the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to, except as is consistent with the Company's agreement with the third party, disclose it to any person or entity or use it for the benefit of anyone other than the Company or such third party, unless expressly authorized to act otherwise by an officer of the Company.  In addition, Director acknowledges and agrees that Director may have access to "material non-public information" for purposes of the federal securities laws ("Insider Information") and that the Director will abide by all securities laws relating to the handling of and acting upon such Insider Information.  Further, Director agrees to sign an acknowledgement certifying that Director has reviewed the Company's Insider Trading Manual, which is attached hereto as Exhibit A, and understands the policies and procedures contained therein and agrees to be bound by them.

(b)            DISPARAGING STATEMENTS.  At all times during and after the period in which Director is a director of the Board of Directors and at all times thereafter, Director shall not either verbally, in writing, electronically or otherwise: (i) make any derogatory or disparaging statements about the Company, any of its affiliates, any of their respective officers, directors, shareholders, employees and agents, or any of the Company's current or past customers or employees, or (ii) make any public statement or perform or do any other act prejudicial or injurious to the reputation or goodwill of the Company or any of its affiliates or otherwise interfere with the business of the Company or any of its affiliates; provided, however, that nothing in this paragraph shall preclude the Director from complying with all obligations imposed by law or legal compulsion, and provided, further, however, that nothing in this paragraph shall be deemed applicable to any testimony given by Director in any legal or administrative proceedings. The Company has issued a policy requiring its employees to avoid using statements that reasonably could be viewed as disparaging the Company’s directors, officers, employees, customers, members, associates or suppliers.  Examples of such conduct might include offensive online posts meant to intentionally harm someone's reputation.

 

  

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(c)            ENFORCEMENT. The Director acknowledges and agrees that the covenants contained herein are reasonable, that valid consideration has been and will be received and that the agreements set forth herein are the result of arms-length negotiations between the parties hereto.  The Director recognizes that the provisions of this Section 6 are vitally important to the continuing welfare of the Company and its affiliates and that any violation of this Section 6 could result in irreparable harm to the Company and its affiliates for which money damages would constitute a totally inadequate remedy.  Accordingly, in the event of any such violation by the Director, the Company and its affiliates, in addition to any other remedies they may have, shall have the right to institute and maintain a proceeding to compel specific performance thereof or to obtain an injunction or other equitable relief restraining any action by the Director in violation of this Section 6 without posting any bond therefore or demonstrating actual damages, and Director will not claim as a defense thereto that the Company has an adequate remedy at law or require the posting of a bond.  If any of the restrictions or activities contained in this Section 6 shall for any reason be held by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, such restrictions shall be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible with the applicable law; it being understood that by the execution of this Agreement the parties hereto regard such restrictions as reasonable and compatible with their respective rights.  Director acknowledges that injunctive relief may be granted immediately upon the commencement of any such action without notice to Director and in addition Company may recover monetary damages.

(d)            SEPARATE AGREEMENT.  The parties hereto further agree that the provisions of Section 6 are separate from and independent of the remainder of this Agreement and that Section 6 is specifically enforceable by the Company notwithstanding any claim made by Director against the Company.  The terms of this Section 6 shall survive termination of this Agreement.

7.           NOTICE OF MATERIAL CHANGE IN FINANCIAL CONDITION OF THE COMPANY.  The Company shall endeavor to notify the Director in writing, at the earliest practicable time, of (i) any material adverse change in the financial condition of the Company and (ii) any changes to the Company’s officers, C-level executives, general counsel (if any), or controller.

8.           TERMINATION.  With or without cause, Director may terminate this Agreement and Director's director position with the Company at any time upon ten (10) days written notice to the Company.  In such event, the Company shall be obligated to pay to the Director the compensation and expenses incurred in accordance with this Agreement due up to the date of the termination.

Prior to the expiration of the term of this Agreement, the Company may terminate this Agreement and Director's director position with the Company for Cause by giving written notice to Director setting forth the date of termination.  As used herein, the term "Cause" shall be limited to the following grounds:

	
  

	
i.

	
a failure of Director to materially perform assigned duties and responsibilities set forth herein, after notice from the Company and failure to cure within ten (10) business days after delivery of such notice;

	
  

	
ii.

	
any gross negligence, malfeasance, willful misconduct, theft, fraud, embezzlement on the part of Director or other criminal financial malfeasance by Director against the Company;

	
  

	
iii.

	
Director’s arrest or indictment for the commission of a felony or crime of moral turpitude under the laws of the United States or any state thereof;

 

  

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iv.

	
the commencement by any federal, state, or local agency or authority of an investigation of Director if the Company determines it to be injurious to the financial condition or business reputation of the Company;

	
  

	
v.

	
Director’s material breach of this Agreement or any of the Company’s written rules, policies and/or procedures, after notice from the Company and failure to cure within ten (10) business days after delivery of such notice;

	
  

	
vi.

	
Director’s disability, ninety (90) days after Director becomes disabled;

	
  

	
vii.

	
any other act or omission by Director that is injurious to the financial condition or business reputation of the Company; or

	 	
viii.

	
any intentional misconduct by Director, whether or not in the course of services as a member of the Board of Directors of the Company, which has a material adverse effect on the financial condition or reputation of the Company.

Nothing contained herein or omitted herefrom shall prevent the stockholders of the Company from removing Director with immediate effect at any time for any reason or voting for or against the nomination of Director to serve as such at any annual or special meeting of the Company's stockholders.

9.           INDEMNIFICATION; INSURANCE. The Company shall indemnify, defend and hold harmless the Director, to the full extent allowed by the law of the State of Nevada, and as provided by, or granted pursuant to the Company's Certificate of Incorporation (as amended and/or restated from time to time) (the "COI"), By-laws (as amended and/or restated from time to time) (the "By-Laws"), or any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in the Director's official capacity and as to action in another capacity relating to the Company's business while holding such office except for matters arising out of the Director's gross negligence or willful misconduct.  Such indemnification shall cover payment for or reimbursement of expenses (including legal fees and expenses) to the fullest extent provided for in the COI and the By-Laws.  The Company’s compliance with the following insurance provision shall not relieve the Company from liability under this indemnity provision.

The Company shall have and maintain at its sole cost and expense throughout the term of this Agreement and for six (6) years thereafter, directors’ and officers’ insurance from a recognized insurance company with coverage in an amount no less than $5,000,000.  The stipulated limits of coverage shall not be construed as a limitation of any potential liability of the Company, and failure to request evidence of this insurance by Director shall in no way be construed as a waiver of the Company’s obligation to provide the insurance coverage specified.  The insurance policy shall provide that it may not be canceled or amended in a manner which restricts the existing coverage without at least thirty (30) days prior written notice to Director.  Within thirty (30) days after this Agreement is fully executed, (and thereafter at least thirty (30) days prior to the expiration of insurance coverage), the Company shall furnish to Director a Certificate of Insurance evidencing the foregoing coverage and specifically listing Director as a member of the Board of Directors of the Company.

10.           AMENDMENTS; WAIVERS.  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Director or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.  No waiver of any breach 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 breach or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

  

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11.           NOTICE. 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 an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

	 	
Attention: 

	
Chief Executive Officer

	 	
Address:

	
8th Floor

12 Twenty First Street

New York, NY 10010

	 	
Facsimile: 

	
+1 (646) 532-6775

If to the Director:

	 	
Attention: 

	
Michael Madon

	 	
Address: 

	
As listed in Exhibit "B"

or to 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 an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

12.           GOVERNING LAW AND DISPUTE RESOLUTION.  This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by the laws of Nevada without reference to its conflicts of laws principles. Should a dispute arise between the parties under or relating to this Agreement, each party agrees that prior to initiating any formal proceeding against the other (except when injunctive relief is appropriate), the parties will each designate a representative for purposes of resolving the dispute.  If the parties' representatives are unable to resolve the dispute within 14 business days, the dispute shall be settled by mediation and then, if necessary, by arbitration under the then-current commercial arbitration rules of the American Arbitration Association.  The location of the proceeding shall be in New York, NY. The award in any such arbitration shall be final, binding, conclusive and not appealable. Judgment upon any award rendered by the arbitrator may be entered by any court having jurisdiction thereof.

 

  

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13.           ASSIGNMENT.  The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns.  The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company, which consent shall not be delayed or unreasonably withheld.

14.           SEVERABILITY.  If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.

15.           HEADINGS; CONSTRUCTION.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

16.           NO 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 or entity.

17.           WITHHOLDING. The Company may withhold from any and all amounts payable under this Agreement such federal, state, local and foreign taxes as may be required to be withheld pursuant to any applicable law or regulation.

18.           ENTIRE AGREEMENT.  Subject to the provisions of the NRS and the Company's certificates of incorporation and bylaws, this Agreement and the exhibit hereto sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.

19.           COUNTERPARTS. This Agreement may be executed in any number of 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 the other party.  In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.  Execution and delivery of this Agreement by facsimile or other electronic signature is legal, valid and binding for all purposes.

[Signature Page Follows]

[Remainder of page intentionally left blank.]

 

  

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[Signature Page to Independent Director's Agreement]

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

 

	  	
VERIFYME, INC.

	  
	 	 	 	 
	  	
By:

	
/s/ Paul Donfried

	  
	  	  	
Paul Donfried

	  
	  	  	
Chief Executive Officer

	  

DIRECTOR

	
/s/ Michael Madon

	  
	
Michael Madon

	  

DIRECTOR

	
/s/ Larry Schafran

	  
	
 
Larry Schafran

	  

 

 

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EXHIBIT A

[Insider Trading Manual]

 

 

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EXHIBIT B:  DIRECTOR'S HOME ADDRESS

Michael Madon

 

10EX-10.1

Ex. 10.1

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

$35,000.00 April 12, 2016

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 THIRTY FIVE THOUSAND Dollars ($35,000.00), 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 eight percent (8.0%) 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) April 12, 2017
(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
THIRTY FIVE THOUSAND Dollars ($35,000.00) 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 $300,000
issued or to be issued by Company on or about the period from January 2016 to January 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 January 25, 2016, 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 Company’s Common Stock, par value $0.0001.

(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 Company’s 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 Company’s receipt of Holder’s 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 Company’s receipt of Holder’s 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 twenty per cent (20%) of the Average Closing Price as reported by the principal trading exchange
on which the Company’s 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 Company’s 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
holder’s 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 Holder’s 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/ HARIS BASIT

Name: HARIS BASIT

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 $35,000.00 of the principal and $0 of the interest
due on the Note issued by VIASPACE Inc. on April 12, 2016 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:       April 12, 2016      

Conversion Price:      $0.0006      

Shares To Be Delivered:      58,333,333      

Signature:      /S/ KEVIN L. SCHEWE—

Print Name:       Kevin L. Schewe—

Address:      400 Indiana St., Suite 220, Golden, CO 80401      

2

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