Document:

EX-10.3

Exhibit 10.3

Execution Copy

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as of
November 2, 2006, by and between VIASPACE INC., a Nevada corporation with its principal place of
business located at 171 N. Altadena Drive, Suite 101, Pasadena, CA 91107 (the “Company”),
and the BUYER(S) (the “Secured Party”) listed on Schedule I attached to the Securities
Purchase Agreement (the “Securities Purchase Agreement”) dated the date hereof between the
Company and the Secured Party.

WHEREAS, the Company shall issue and sell to the Secured Party, as provided in the Securities
Purchase Agreement of even date herewith between the Company and the Secured Party (the
“Securities Purchase Agreement”), and the Secured Party shall purchase up to Three Million
Eight Hundred Thousand Dollars ($3,800,000) of secured convertible debentures (the “Convertible
Debentures”), which shall be convertible into shares of the Company’s common stock, par value
$0.001 (the “Common Stock”) (as converted, the “Conversion Shares”) in the
respective amounts set forth opposite each Buyer(s) name on Schedule I attached to the Securities
Purchase Agreement;

WHEREAS, to induce the Secured Party to enter into the transaction contemplated by the
Securities Purchase Agreement, the Convertible Debentures, the Investor Registration Rights
Agreement of even date herewith between the Company and the Secured Party (the “Investor
Registration Rights Agreement”), the Pledge and Escrow Agreements of even date herewith among
the Company, Carl Kukkonen and Amjad Abdallat, the Secured Party and David Gonzalez, Esq. (the
“Pledge Agreement”), and the Irrevocable Transfer Agent Instructions among the Company, the
Secured Party, Nevada Agency and Trust Company, and David Gonzalez, Esq. (the “Transfer Agent
Instructions”) (collectively referred to as the “Transaction Documents”), the Company
hereby grants to the Secured Party a security interest in and to the pledged property identified on
Exhibit A hereto (collectively referred to as the “Pledged Property”) until the
satisfaction of the Obligations, as defined herein below.

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained,
and for other good and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

	 	 	 	Section 1.1. Recitals.

The above recitals are true and correct and are incorporated herein, in their entirety, by
this reference.

	 	 	 	Section 1.2. Interpretations.

Nothing herein expressed or implied is intended or shall be construed to confer upon any
person other than the Secured Party any right, remedy or claim under or by reason hereof.

	 	 	 	Section 1.3. Obligations Secured.

The obligations secured hereby are any and all obligations of the Company now existing or
hereinafter incurred to the Secured Party, whether oral or written and whether arising before, on
or after the date hereof including, without limitation, those obligations of the Company to the
Secured Party under this Agreement, the Transaction Documents, and any other amounts now or
hereafter owed to the Secured Party by the Company thereunder or hereunder (collectively, the
“Obligations”).

ARTICLE 2.

PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL 

AND TERMINATION OF SECURITY INTEREST

	 	 	 	Section 2.1 Pledged Property.

(a) Company hereby pledges to the Secured Party, and creates in the Secured Party for its
benefit, a security interest for such time until the Obligations are paid in full, in and to all of
the property of the Company as set forth in Exhibit “A” attached hereto and the products
thereof and the proceeds of all such items (collectively, the “Pledged Property”):

(b) Simultaneously with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any documents reasonably
requested by the Secured Party to perfect its security interest in the Pledged Property.
Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute,
acknowledge and deliver to the Secured Party such documents and instruments, including, without
limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s
reasonable judgment, be necessary to effectuate, complete or perfect, or to continue and preserve,
the security interest of the Secured Party in the Pledged Property, and the Secured Party shall
hold such documents and instruments as secured party, subject to the terms and conditions contained
herein.

	 	 	 	Section 2.2. Rights; Interests; Etc.

(a) So long as no Event of Default (as hereinafter defined) shall have occurred and be
continuing:

(i) the Company shall be entitled to exercise any and all rights pertaining to the Pledged
Property or any part thereof for any purpose not inconsistent with the terms hereof; and

(ii) the Company shall be entitled to receive and retain any and all payments paid or made in
respect of the Pledged Property.

(b) Upon the occurrence and during the continuance of an Event of Default:

(i) All rights of the Company to exercise the rights which it would otherwise be entitled to
exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it would otherwise be
authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all
such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole
right to exercise such rights and to receive and hold as Pledged Property such payments; provided,
however, that if the Secured Party shall become entitled and shall elect to exercise its right to
realize on the Pledged Property pursuant to Article 5 hereof, then all cash sums received by the
Secured Party, or held by Company for the benefit of the Secured Party and paid over pursuant to
Section 2.2(b)(ii) hereof, shall be applied against any outstanding Obligations; and

(ii) All interest, dividends, income and other payments and distributions which are received
by the Company contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust
for the benefit of the Secured Party, shall be segregated from other property of the Company and
shall be forthwith paid over to the Secured Party; or

(iii) The Secured Party in its sole discretion shall be authorized to sell any or all of the
Pledged Property at public or private sale in order to recoup all of the outstanding principal plus
accrued interest owed pursuant to the Convertible Debenture as described herein

(c) An “Event of Default” shall be deemed to have occurred under this Agreement upon
an Event of Default under the Convertible Debentures.

ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

	 	 	 	Section 3.1. Secured Party Appointed Attorney-In-Fact.

Upon the occurrence of an Event of Default, the Company hereby appoints the Secured Party as
its attorney-in-fact, with full authority in the place and stead of the Company and in the name of
the Company or otherwise, from time to time in the Secured Party’s discretion to take any action
and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish
the purposes of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect of the Pledged
Property or any part thereof and to give full discharge for the same. The Secured Party may
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the
Pledged Property as and when the Secured Party may determine. To facilitate collection, the
Secured Party may notify account debtors and obligors on any Pledged Property to make payments
directly to the Secured Party.

	 	 	 	Section 3.2. Secured Party May Perform.

If the Company fails to perform any agreement contained herein, the Secured Party, at its
option, may itself perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be included in the Obligations secured hereby
and payable by the Company under Section 8.3.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

	 	 	 	Section 4.1. Authorization; Enforceability.

Each of the parties hereto represents and warrants that it has taken all action necessary to
authorize the execution, delivery and performance of this Agreement and the transactions
contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and
binding obligation of the respective party, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights or by the principles
governing the availability of equitable remedies.

	 	 	 	Section 4.2. Ownership of Pledged Property.

The Company warrants and represents that it is the legal and beneficial owner of the Pledged
Property free and clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement.

ARTICLE 5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

	 	 	 	Section 5.1. Default and Remedies.

(a) If an Event of Default occurs and continues for a period of ten (10) days after notice of
such Event of Default has been delivered to the Company from the Secured Party, then in each such
case the Secured Party may declare the Obligations to be due and payable immediately, by a notice
in writing to the Company, and upon any such declaration, the Obligations shall become immediately
due and payable.

(b) Upon the occurrence of an Event of Default, the Secured Party shall: (i) be entitled to
receive all distributions with respect to the Pledged Property, (ii) to cause the Pledged Property
to be transferred into the name of the Secured Party or its nominee, (iii) to dispose of the
Pledged Property, and (iv) to realize upon any and all rights in the Pledged Property then held by
the Secured Party.

	 	 	 	Section 5.2 Method of Realizing Upon the Pledged Property: Other Remedies.

Upon the occurrence of an Event of Default, in addition to any rights and remedies available
at law or in equity, the following provisions shall govern the Secured Party’s right to realize
upon the Pledged Property:

(a) Any item of the Pledged Property may be sold for cash or other value in any number of lots
at brokers board, public auction or private sale and may be sold without demand, advertisement or
notice (except that the Secured Party shall give the Company ten (10) days’ prior written notice of
the time and place or of the time after which a private sale may be made (the “Sale
Notice”)), which notice period is hereby agreed to be commercially reasonable. At any sale or
sales of the Pledged Property, the Company may bid for and purchase the whole or any part of the
Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of
the same without further accountability to the Secured Party. The Company will execute and
deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers,
certificates, and affidavits and supply or cause to be supplied such further information and take
such further action as the Secured Party reasonably shall require in connection with any such sale.

(b) Any cash being held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of, sale of, collection from, or other realization upon
all or any part of the Pledged Property shall be applied as follows:

(i) to the payment of all amounts due the Secured Party for the expenses reimbursable to it
hereunder or owed to it pursuant to Section 8.3 hereof;

(ii) to the payment of the Obligations then due and unpaid.

(iii) the balance, if any, to the person or persons entitled thereto, including, without
limitation, the Company.

(c) In addition to all of the rights and remedies which the Secured Party may have pursuant to
this Agreement, the Secured Party shall have all of the rights and remedies provided by law,
including, without limitation, those under the Uniform Commercial Code.

(i) If the Company fails to pay such amounts due upon the occurrence of an Event of Default
which is continuing, then the Secured Party may institute a judicial proceeding for the collection
of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company and collect the monies adjudged or decreed to be payable in
the manner provided by law out of the property of Company, wherever situated.

(ii) The Company agrees that it shall be liable for any reasonable fees, expenses and costs
incurred by the Secured Party in connection with enforcement, collection and preservation of the
Transaction Documents, including, without limitation, reasonable legal fees and expenses, and such
amounts shall be deemed included as Obligations secured hereby and payable as set forth in
Section 8.3 hereof.

	 	 	 	Section 5.3. Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the
Company or the property of the Company or of such other obligor or its creditors, the Secured Party
(irrespective of whether the Obligations shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Secured Party shall have made any demand
on the Company for the payment of the Obligations), subject to the rights of Previous Security
Holders, shall be entitled and empowered, by intervention in such proceeding or otherwise:

(i) to file and prove a claim for the whole amount of the Obligations and to file such other
papers or documents as may be necessary or advisable in order to have the claims of the Secured
Party (including any claim for the reasonable legal fees and expenses and other expenses paid or
incurred by the Secured Party permitted hereunder and of the Secured Party allowed in such judicial
proceeding), and

(ii) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby authorized by the
Secured Party to make such payments to the Secured Party and, in the event that the Secured Party
shall consent to the making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.

	 	 	 	Section 5.4. Duties Regarding Pledged Property.

The Secured Party shall have no duty as to the collection or protection of the Pledged
Property or any income thereon or as to the preservation of any rights pertaining thereto, beyond
the safe custody and reasonable care of any of the Pledged Property actually in the Secured Party’s
possession.

ARTICLE 6.

AFFIRMATIVE COVENANTS

The Company covenants and agrees that, from the date hereof and until the Obligations have
been fully paid and satisfied, unless the Secured Party shall consent otherwise in writing (as
provided in Section 8.4 hereof):

	 	 	 	Section 6.1. Existence, Properties, Etc.

(a) The Company shall do, or cause to be done, all things, or proceed with due diligence with
any actions or courses of action, that may be reasonably necessary (i) to maintain Company’s due
organization, valid existence and good standing under the laws of its state of incorporation, and
(ii) to preserve and keep in full force and effect all qualifications, licenses and registrations
in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as
defined below); and (b) the Company shall not do, or cause to be done, any act impairing the
Company’s corporate power or authority (i) to carry on the Company’s business as now conducted, and
(ii) to execute or deliver this Agreement or any other document delivered in connection herewith,
including, without limitation, any UCC-1 Financing Statements required by the Secured Party to
which it is or will be a party, or perform any of its obligations hereunder or thereunder. For
purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and
adverse affect as determined by Secured Party in its sole and reasonable discretion, whether
individually or in the aggregate, upon (a) the Company’s assets, business, operations, properties
or condition, financial or otherwise; (b) the Company’s ability to make payment as and when due of
all or any part of the Obligations; or (c) the Pledged Property.

	 	 	 	Section 6.2. Financial Statements and Reports.

The Company shall furnish to the Secured Party within the later of (i) a reasonable time after
any such request; or (ii) five (5) business days after any corresponding filings with the
Securities and Exchange Commission, including, without limitation, the following:

(a) The balance sheet of the Company as of the close of each fiscal year, the statement of
earnings and retained earnings of the Company as of the close of such fiscal year, and statement of
cash flows for the Company for such fiscal year, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied, certified by the chief
executive and chief financial officers of the Company as being true and correct and accompanied by
a certificate of the chief executive and chief financial officers of the Company, stating that the
Company has kept, observed, performed and fulfilled each covenant, term and condition of this
Agreement during such fiscal year and that no Event of Default hereunder has occurred and is
continuing, or if an Event of Default has occurred and is continuing, specifying the nature of
same, the period of existence of same and the action the Company proposes to take in connection
therewith;

(b) A balance sheet of the Company as of the close of each quarter, and statement of earnings
and retained earnings of the Company as of the close of such quarter, all in reasonable detail, and
prepared substantially in accordance with generally accepted accounting principles consistently
applied, certified by the chief executive and chief financial officers of the Company as being true
and correct; and

(c) Copies of all accountants’ reports and accompanying financial reports submitted to the
Company by independent accountants in connection with each annual examination of the Company.

	 	 	 	Section 6.3. Accounts and Reports.

The Company shall maintain a standard system of accounting in accordance with generally
accepted accounting principles consistently applied and provide, at its sole expense, to the
Secured Party the following:

(a) as soon as available, a copy of any notice or other communication alleging any nonpayment
or other material breach or default, or any foreclosure or other action respecting any material
portion of its assets and properties, received respecting any of the indebtedness of the Company in
excess of $50,000 (other than the Obligations), or any demand or other request for payment under
any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the
indebtedness or obligations of others in excess of $50,000, including any received from any person
acting on behalf of the Secured Party or beneficiary thereof; and

(b) within fifteen (15) days after the making of each submission or filing, a copy of any
report, financial statement, notice or other document, whether periodic or otherwise, submitted to
the shareholders of the Company, or submitted to or filed by the Company with any governmental
authority involving or affecting (i) the Company that could have a Material Adverse Effect;
(ii) the Obligations; (iii) any part of the Pledged Property; or (iv) any of the transactions
contemplated in this Agreement or the Loan Instruments.

	 	 	 	Section 6.4. Maintenance of Books and Records; Inspection.

The Company shall maintain its books, accounts and records in accordance with generally
accepted accounting principles consistently applied, and permit the Secured Party, its officers and
employees and any professionals designated by the Secured Party in writing, at any time to visit
and inspect any of its properties (including but not limited to the collateral security described
in the Transaction Documents and/or the Loan Instruments), corporate books and financial records,
and to discuss its accounts, affairs and finances with any employee, officer or director thereof.

	 	 	 	Section 6.5. Maintenance and Insurance.

(a) The Company shall maintain or cause to be maintained, at its own expense, all of its
assets and properties in good working order and condition, making all necessary repairs thereto and
renewals and replacements thereof.

(b) The Company shall maintain or cause to be maintained, at its own expense, insurance in
form, substance and amounts (including deductibles), which the Company deems reasonably necessary
to the Company’s business, (i) adequate to insure all assets and properties of the Company, which
assets and properties are of a character usually insured by persons engaged in the same or similar
business against loss or damage resulting from fire or other risks included in an extended coverage
policy; (ii) against public liability and other tort claims that may be incurred by the Company;
(iii) as may be required by the Transaction Documents and/or applicable law and (iv) as may be
reasonably requested by Secured Party, all with adequate, financially sound and reputable insurers.

	 	 	 	Section 6.6. Contracts and Other Collateral.

The Company shall perform all of its obligations under or with respect to each instrument,
receivable, contract and other intangible included in the Pledged Property to which the Company is
now or hereafter will be party on a timely basis and in the manner therein required, including,
without limitation, this Agreement.

	 	 	 	Section 6.7. Defense of Collateral, Etc.

The Company shall defend and enforce its right, title and interest in and to any part of:
(a) the Pledged Property; and (b) if not included within the Pledged Property, those assets and
properties whose loss could have a Material Adverse Effect, the Company shall defend the Secured
Party’s right, title and interest in and to each and every part of the Pledged Property, each
against all manner of claims and demands on a timely basis to the full extent permitted by
applicable law.

	 	 	 	Section 6.8. Payment of Debts, Taxes, Etc.

The Company shall pay, or cause to be paid, all of its indebtedness and other liabilities and
perform, or cause to be performed, all of its obligations in accordance with the respective terms
thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other
governmental charges and levies imposed upon it, upon any of its assets and properties on or before
the last day on which the same may be paid without penalty, as well as pay all other lawful claims
(whether for services, labor, materials, supplies or otherwise) as and when due

	 	 	 	Section 6.9. Taxes and Assessments; Tax Indemnity.

The Company shall (a) file all tax returns and appropriate schedules thereto that are required
to be filed under applicable law, prior to the date of delinquency, (b) pay and discharge all
taxes, assessments and governmental charges or levies imposed upon the Company, upon its income and
profits or upon any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if unpaid,
might become a lien or charge upon any of its properties; provided, however, that the Company in
good faith may contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto.

	 	 	 	Section 6.10. Compliance with Law and Other Agreements.

The Company shall maintain its business operations and property owned or used in connection
therewith in compliance with (a) all applicable federal, state and local laws, regulations and
ordinances governing such business operations and the use and ownership of such property, and
(b) all agreements, licenses, franchises, indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound. Without limiting the foregoing, the
Company shall pay all of its indebtedness promptly in accordance with the terms thereof.

	 	 	 	Section 6.11. Notice of Default.

The Company shall give written notice to the Secured Party of the occurrence of any default or
Event of Default under this Agreement, the Transaction Documents or any other Loan Instrument or
any other agreement of Company for the payment of money, promptly upon the occurrence thereof.

	 	 	 	Section 6.12. Notice of Litigation.

The Company shall give notice, in writing, to the Secured Party of (a) any actions, suits or
proceedings wherein the amount at issue is in excess of $50,000, instituted by any persons against
the Company, or affecting any of the assets of the Company, and (b) any dispute, not resolved
within fifteen (15) days of the commencement thereof, between the Company on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be expected to have a
Material Adverse Effect on the business operations or financial condition of the Company.

ARTICLE 7.

NEGATIVE COVENANTS

The Company covenants and agrees that, from the date hereof until the Obligations have been
fully paid and satisfied, the Company shall not, unless the Secured Party shall consent otherwise
in writing:

	 	 	 	Section 7.1. Indebtedness.

The Company shall not, except in the ordinary course of business, directly or indirectly
permit, create, incur, assume, permit to exist, increase, renew or extend on or after the date
hereof any indebtedness on its part, including commitments, contingencies and credit
availabilities, or apply for or offer or agree to do any of the foregoing.

	 	 	 	Section 7.2. Liens and Encumbrances.

The Company shall not, except in the ordinary course of business, directly or indirectly make,
create, incur, assume or permit to exist any assignment, transfer, pledge, mortgage, security
interest or other lien or encumbrance of any nature in, to or against any part of the Pledged
Property or of the Company’s capital stock, or offer or agree to do so, or own or acquire or agree
to acquire any asset or property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement), or assign, pledge or
in any way transfer or encumber its right to receive any income or other distribution or proceeds
from any part of the Pledged Property or the Company’s capital stock; or enter into any
sale-leaseback financing respecting any part of the Pledged Property as lessee, or cause or assist
the inception or continuation of any of the foregoing.

	 	 	 	Section 7.3. Certificate of Incorporation, By-Laws, Mergers, Consolidations,
Acquisitions and Sales.

Without the prior express written consent of the Secured Party, which consent shall not be
unreasonably withheld, the Company shall not: (a) Amend its Certificate of Incorporation or
By-Laws; (b) issue or sell its stock, stock options (except for stock options issued pursuant to
the VIASPACE Inc. 2005 Stock Incentive Plan), bonds, notes or other corporate securities or
obligations; provided, however, that notwithstanding anything to the contrary herin, Company shall
be permitted to dispose of its shareholdings in ViaLogy Corp., QWIP Technologies, Inc. and QWIP
Systems, Inc.; (c) be a party to any merger, consolidation or corporate reorganization,
(d) purchase or otherwise acquire all or substantially all of the assets or stock of, or any
partnership or joint venture interest in, any other person, firm or entity, (e) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its assets, nor
(f) create any subsidiaries nor convey any of its assets to any subsidiary.

	 	 	 	Section 7.4. Management, Ownership.

The Company shall not materially change its executive officers without the prior written
consent of the Secured Party, which consent shall not be unreasonably withheld. The ownership,
executive staff and management of the Company are material factors in the Secured Party’s
willingness to institute and maintain a lending relationship with the Company.

	 	 	 	Section 7.5. Dividends, Etc.

The Company shall not declare or pay any dividend of any kind, in cash or in property, on any
class of its capital stock, nor purchase, redeem, retire or otherwise acquire for value any shares
of such stock, nor make any distribution of any kind in respect thereof, nor make any return of
capital to shareholders, nor make any payments in respect of any pension, profit sharing,
retirement, stock option, stock bonus, incentive compensation or similar plan (except as required
or permitted hereunder), without the prior written consent of the Secured Party.

	 	 	 	Section 7.6. Guaranties; Loans.

The Company shall not guarantee nor be liable in any manner, whether directly or indirectly,
or become contingently liable after the date of this Agreement in connection with the obligations
or indebtedness of any person or persons, except for (i) the indebtedness currently secured by the
liens identified on the Pledged Property identified on Exhibit A hereto and (ii) the endorsement of
negotiable instruments payable to the Company for deposit or collection in the ordinary course of
business. The Company shall not make any loan, advance or extension of credit to any person other
than in the normal course of its business.

	 	 	 	Section 7.7. Debt.

The Company shall not create, incur, assume or suffer to exist any additional indebtedness of
any description whatsoever in an aggregate amount in excess of $100,000 (excluding any indebtedness
of the Company to the Secured Party, trade accounts payable and accrued expenses incurred in the
ordinary course of business and the endorsement of negotiable instruments payable to the Company,
respectively for deposit or collection in the ordinary course of business).

	 	 	 	Section 7.8. Conduct of Business.

The Company will continue to engage, in an efficient and economical manner, in a business of
the same general type as conducted by it on the date of this Agreement.

	 	 	 	Section 7.9. Places of Business.

The location of the Company’s chief place of business is 171 N. Altadena Drive, Suite 101,
Pasadena, CA 91107. The Company shall not change the location of its chief place of business,
chief executive office or any place of business disclosed to the Secured Party or move any of the
Pledged Property from its current location without thirty (30) days’ prior written notice to the
Secured Party in each instance.

ARTICLE 8.

MISCELLANEOUS

	 	 	 	Section 8.1. Notices.

All notices or other communications required or permitted to be given pursuant to this
Agreement shall be in writing and shall be considered as duly given on: (a) the date of delivery,
if delivered in person, by nationally recognized overnight delivery service or (b) five (5) days
after mailing if mailed from within the continental United States by certified mail, return receipt
requested to the party entitled to receive the same:

	 	 	 
	If to the Secured Party:

	 	Cornell Capital Partners, LP
	 
	 	 
	
 
	 	101 Hudson Street-Suite 3700
	 
	 	 
	
 
	 	Jersey City, New Jersey 07302
	 
	 	 
	
 
	 	Attention: Mark Angelo
	 
	 	 
	
 
	 	Portfolio Manager
	 
	 	 
	
 
	 	Telephone: (201) 986-8300
	 
	 	 
	
 
	 	Facsimile: (201) 985-8266
	 
	 	 
	With a copy to:

	 	David Gonzalez, Esq.
	 
	 	 
	
 
	 	101 Hudson Street, Suite 3700
	 
	 	 
	
 
	 	Jersey City, NJ 07302
	 
	 	 
	
 
	 	Telephone: (201) 985-8300
	 
	 	 
	
 
	 	Facsimile: (201) 985-8266
	 
	 	 
	And if to the Company:

	 	VIASPACE Inc.
	 
	 	 
	
 
	 	171 N. Altadena Drive – Suite 101
	 
	 	 
	
 
	 	Pasadena, CA 91107
	 
	 	 
	
 
	 	Attention: Carl Kukkonen, President and Chief

Executive Officer
	 
	 	 
	
 
	 	Telephone: (626) 768-3360
	 
	 	 
	
 
	 	Facsimile: (626) 578-9063
	 
	 	 
	With a copy to:

	 	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	 
	 	 
	
 
	 	One Financial Center
	 
	 	 
	
 
	 	Boston, MA 02111
	 
	 	 
	
 
	 	Attention: Megan N. Gates, Esq.
	 
	 	 
	
 
	 	Telephone: (617) 348-4443
	 
	 	 
	
 
	 	Facsimile: (617) 542-2241

Any party may change its address by giving notice to the other party stating its new address.
Commencing on the tenth (10th) day after the giving of such notice, such newly
designated address shall be such party’s address for the purpose of all notices or other
communications required or permitted to be given pursuant to this Agreement.

	 	 	 	Section 8.2. Severability.

If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall not in any manner affect or render
invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall
be carried out as if any such invalid or unenforceable provision were not contained herein.

	 	 	 	Section 8.3. Expenses.

In the event of an Event of Default, the Company will pay to the Secured Party the amount of
any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which
the Secured Party may incur in connection with: (i) the custody or preservation of, or the sale,
collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or (iii) the failure by the Company
to materially perform or observe any of the provisions hereof.

	 	 	 	Section 8.4. Waivers, Amendments, Etc.

The Secured Party’s delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not waiver, affect, or
diminish any right of the Secured Party under this Agreement to demand strict compliance and
performance herewith. Any waiver by the Secured Party of any Event of Default shall not waive or
affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and
whether of the same or a different type. None of the undertakings, agreements and covenants of the
Company contained in this Agreement, and no Event of Default, shall be deemed to have been waived
by the Secured Party, nor may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Secured Party.

	 	 	 	Section 8.5. Continuing Security Interest.

This Agreement shall create a continuing security interest in the Pledged Property and shall:
(i) remain in full force and effect until payment in full of the Obligations; and (ii) be binding
upon the Company and its successors and heirs and (iii) inure to the benefit of the Secured Party
and its successors and assigns. Upon the payment or satisfaction in full of the Obligations, the
Company shall be entitled to the return, at its expense, of such of the Pledged Property as shall
not have been sold in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.

	 	 	 	Section 8.6. Independent Representation.

Each party hereto acknowledges and agrees that it has received or has had the opportunity to
receive independent legal counsel of its own choice and that it has been sufficiently apprised of
its rights and responsibilities with regard to the substance of this Agreement.

	 	 	 	Section 8.7. Applicable Law: Jurisdiction.

This Agreement shall be governed by and interpreted in accordance with the laws of the State
of New Jersey without regard to the principles of conflict of laws. The parties further agree that
any action between them shall be heard in Hudson County, New Jersey, and expressly consent to the
jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United
States District Court for the District of New Jersey sitting in Newark, New Jersey for the
adjudication of any civil action asserted pursuant to this Paragraph.

	 	 	 	Section 8.8. Waiver of Jury Trial.

AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO MAKE THE
FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS
RELATED TO THIS TRANSACTION.

	 	 	 	Section 8.9. Entire Agreement.

This Agreement constitutes the entire agreement among the parties and supersedes any prior
agreement or understanding among them with respect to the subject matter hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

1

IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as of the date
first above written.

	 
	 

	COMPANY:

	 

	VIASPACE INC.

	 

	By: /S/ CARL KUKKONEN

	 

	Name: Carl Kukkonen

	Title: President and Chief Executive Officer

	 

	SECURED PARTY:

	 

	CORNELL CAPITAL PARTNERS, LP

	 

	By: Yorkville Advisors, LLC

	Its: General Partner

	By: /S/ MARK ANGELO

	 

	 

	Name: Mark Angelo

	 

	Title: Portfolio Manager

2

EXHIBIT A

DEFINITION OF PLEDGED PROPERTY

For the purpose of securing prompt and complete payment and performance by the Company of all
of the Obligations, the Company unconditionally and irrevocably hereby grants to the Secured Party
a continuing security interest in and to, and lien upon, the following Pledged Property of the
Company:

(a) all goods of the Company, including, without limitation, machinery, equipment, furniture,
furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and
description, now or hereafter owned by the Company or in which the Company may have or may
hereafter acquire any interest, and all replacements, additions, accessions, substitutions and
proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds
of insurance and of any tort claims involving any of the foregoing;

(b) all inventory of the Company, including, but not limited to, all goods, wares,
merchandise, parts, supplies, finished products, other tangible personal property, including such
inventory as is temporarily out of Company’s custody or possession and including any returns upon
any accounts or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing;

(c) all contract rights and general intangibles of the Company, including, without limitation,
goodwill, trademarks, trade styles, trade names, leasehold interests, partnership or joint venture
interests, patents and patent applications, copyrights, deposit accounts whether now owned or
hereafter created;

(d) all documents, warehouse receipts, instruments and chattel paper of the Company whether
now owned or hereafter created;

(e) all accounts and other receivables, instruments or other forms of obligations and rights
to payment of the Company (herein collectively referred to as “Accounts”), together with
the proceeds thereof, all goods represented by such Accounts and all such goods that may be
returned by the Company’s customers, and all proceeds of any insurance thereon, and all guarantees,
securities and liens which the Company may hold for the payment of any such Accounts including,
without limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid
vendor and/or lienor, all of which the Company represents and warrants will be bona fide and
existing obligations of its respective customers, arising out of the sale of goods by the Company
in the ordinary course of business;

(f) to the extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection with the
operations of any of its facilities;

(g) all equity interests, securities or other instruments in other companies, including,
without limitation, any subsidiaries, investments or other entities (whether or not controlled);
and

(h) all products and proceeds (including, without limitation, insurance proceeds) from the
above-described Pledged Property.

3EX-10.4

Exhibit 10.4

Execution Copy

Dated: November 2, 2006

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. VSPC-1-3 $1,500,000

VIASPACE INC.

Secured Convertible Debenture

Due: November 2, 2011

This Secured Convertible Debenture (the “Debenture”) is issued by VIASPACE INC., a
Nevada corporation (the “Company”), to CORNELL CAPITAL PARTNERS, LP (the “Holder”),
pursuant to that certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) dated November 2, 2006.

FOR VALUE RECEIVED, the Company hereby promises to pay to the Holder or its successors and
assigns the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) together with
accrued but unpaid interest on or before November 2, 2011 (the “Maturity Date”) in
accordance with the following terms:

Section 1. General Terms

(a) Interest. Interest shall accrue on the outstanding principal balance hereof at an
annual rate equal to ten percent (10%). Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by applicable law. Interest
hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its
assignee in whose name this Debenture is registered on the records of the Company regarding
registration and transfers of Debentures in cash or in Common Stock (valued at the Closing Bid
Price on the Trading Day immediately prior to the date paid) at the option of the Company.

(b) Security. This Debenture is secured by Pledge and Escrow Agreements dated
November 2, 2006 by and between the Company, the Holder and the Escrow Agent and Carl Kukkonen and
Amjad Abdallat (the “Pledge Agreements”), and Security Agreements dated November 2, 2006
between the Company and the Holder and Arroyo Sciences, Inc., and Concentric Water Technology,
Inc., each a wholly owned subsidiary of the Company (individually, a “Subsidiary”, and
together, the “Subsidiaries”), and the Holder dated November 2, 2006 (the “Security
Agreements”).

Section 2. Events of Default.

(a) An “Event of Default”, wherever used herein, means any one of the following
events, unless such event shall have been previously consented to by the Holder (whatever the
reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant
to any judgment, decree or order of any court, or any order, rule or regulation of any
administrative or governmental body):

(i) Any default in the payment of the principal of, interest on or other charges in respect of
this Debenture, free of any claim of subordination, as and when the same shall become due and
payable whether upon a Mandatory Redemption (as defined in Section 3(b)), an Optional Redemption
(as defined in Section 3(a)), or the Maturity Date or by acceleration or otherwise, provided
however, an Event of Default shall not be deemed to have occurred pursuant to this Section 2(a)(i)
if the following conditions are satisfied: (A) the Company issues to the Holder shares of Common
Stock in an amount equal to the payment amount that the Company failed to make divided by the
Conversion Price within three days of the date that the payment was due, (B) the Closing Bid Price
of the Common Stock is greater than the Conversion Price as of the last completed Trading Day prior
to the date such shares are delivered to the Holder, and (C) such shares are freely tradeable by
the Holder;

(ii) The Company or a Subsidiary of the Company shall commence, or there shall be commenced
against the Company or a Subsidiary of the Company under any applicable bankruptcy or insolvency
laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of
the Company commences any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or a Subsidiary of the Company or there
is commenced against the Company or a Subsidiary of the Company any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 61 days; or the Company or a Subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Company or a Subsidiary of the Company
suffers any appointment of any custodian, private or court appointed receiver or the like for it or
any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or a Subsidiary of the Company makes a general assignment for the
benefit of creditors; or the Company or a Subsidiary of the Company shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its debts generally as they become due;
or the Company or a Subsidiary of the Company shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or the Company or a Subsidiary
of the Company shall by any act or failure to act expressly indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or a
Subsidiary of the Company for the purpose of effecting any of the foregoing;

(iii) The Company or a Subsidiary of the Company shall default in any of its material
obligations under any other debenture or any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by
which there may be secured or evidenced any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement of the Company or a Subsidiary of the Company in an
amount exceeding $500,000, whether such indebtedness now exists or shall hereafter be created and
such default shall result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable;

(iv) The Common Stock shall cease to be quoted for trading or listing for trading on any of
(a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the
Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board (“OTC”) (each, a “Primary
Market”) and shall not again be quoted or listed for trading on any Primary Market within five
(5) Trading Days of such delisting;

(v) The Company or any Subsidiary of the Company shall be a party to a consummated Change of
Control Transaction (as defined in Section 6);

(vi) The Company shall fail to file the Underlying Shares Registration Statement (as defined
in Section 6) with the Commission (as defined in Section 6), or the Underlying Shares Registration
Statement shall not have been declared effective by the Commission, in each case within the time
periods set forth in the Investor Registration Rights Agreement (“Registration Rights
Agreement”) dated November 2, 2006 between the Company and the Holder;

(vii) If the effectiveness of the Underlying Shares Registration Statement lapses for any
reason or the Holder shall not be permitted to resell the shares of Common Stock underlying this
Debenture under the Underlying Shares Registration Statement as a result of actions taken or not
taken by the Company, in either case, for more than fifteen (15) consecutive Trading Days or an
aggregate of twenty (20) Trading Days (which need not be consecutive Trading Days);

(viii) The Company shall fail for any reason to deliver Common Stock certificates to a Holder
prior to the fifth (5th) Trading Day after a Conversion Date or after a Redemption Date
if the Company elects to settle a Mandatory Redemption in shares of Common Stock, or the Company
shall provide notice to the Holder, including by way of public announcement, at any time, of its
intention not to comply with requests for conversions, or settlements of Mandatory Redemptions in
shares of Common Stock, in accordance with the terms hereof;

(ix) The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In
(as defined herein) within three (3) days after notice is delivered hereunder;

(x) The Company shall fail to observe or perform any other material covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any material provision of this
Debenture (except as may be covered by Section 2(a)(i) through 2(a)(ix) hereof) or any Transaction
Document (as defined in Section 6) which is not cured with in the time prescribed, or an Event of
Default under any other debenture issued to the Holder in connection with the Securities Purchase
Agreement shall occur;

(b) During the time that any portion of this Debenture is outstanding, if any Event of Default
has occurred and is continuing for a period of fifteen (15) days after notice of such default has
been delivered by the Holder to the Company (the “Notice Period”), the full principal
amount of this Debenture, together with interest and other amounts owing in respect thereof, to the
date of acceleration shall become at the Holder’s election, immediately due and payable in cash,
provided however, the Holder may request (but shall have no obligation to request) payment of such
amounts in Common Stock of the Company. If an Event of Default shall occur the Conversion Price
shall be reduced to $0.30 (the “Default Conversion Price”). Furthermore, in addition to
any other remedies, the Holder shall have the right (but not the obligation) to convert this
Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion
Price then in-effect. The Holder need not provide and the Company hereby waives any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and without expiration
of any grace period (other than the Notice Period) enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Upon an Event of Default, notwithstanding any other provision of this Debenture or any Transaction
Document, the Holder shall have no obligation to comply with or adhere to any limitations, if any,
on the conversion of this Debenture or the sale of the Underlying Shares.

Section 3. Redemptions.

(a) Company’s Optional Cash Redemption. The Company at its option shall have the
right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this
Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a
Redemption Notice (as defined herein) (i) the Closing Bid Price of the of the Common Stock, as
reported by Bloomberg, LP, is less than the Conversion Price, (ii) the Underlying Share
Registration Statement is effective, and (iii) no Event of Default has occurred. The Company shall
pay an amount equal to the principal amount being redeemed plus a redemption premium
(“Redemption Premium”) equal to ten percent (10%) of the principal amount being redeemed,
and accrued interest, (collectively referred to as the “Redemption Amount”). In order to
make a redemption, the Company shall first provide written notice to the Holder of its intention to
make a redemption (the “Redemption Notice”) setting forth the amount of principal it
desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) business
days to elect to convert all or any portion of this Debenture, subject to the limitations set forth
in Section 4(b). On the fourth (4th) business day after the Redemption Notice, the
Company shall deliver to the Holder the Redemption Amount with respect to the principal amount
redeemed after giving effect to conversions effected during the three (3) business day period.

(b) Mandatory Redemptions. Beginning on the earlier of (i) the first Trading Day of
the month immediately following the month in which the Underlying Share Registration Statement is
first declared effective or (ii) May 2, 2007, and continuing on the first Trading Day of each
calendar month for thirteen (13) months thereafter, the Company shall make mandatory redemptions
(“Mandatory Redemptions”) consisting of outstanding principal and accrued and unpaid
interest. The principal amount of each Mandatory Redemption shall be equal to One Hundred Fifteen
Thousand Three Hundred Eighty-Four Dollars and Sixty-Two Cents ($115,384.62) plus an amount of
accrued and unpaid interest based upon interest due over the life of the Debenture divided by
thirteen (13) scheduled Mandatory Redemptions (“Mandatory Redemption Amount”) per calendar
month, until all amounts owed under this Debenture have been paid in full, provided however the
Investor at it sole option shall have the ability one (1) time during the life of this debenture,
upon twenty (20) calendar days advance written notice to the Company notice provided that the VWAP
of the Company’s Common Stock is at or above the Conversion Price with a volume traded of at least
1,250,000 shares per day for twenty (20) or more consecutive Trading Days, require that a Mandatory
Redemption Amount be increased up to Seven Hundred Fifty Thousand Dollars ($750,000).

The Company shall transmit a copy of a Redemption Notice in the form attached hereto as
Exhibit A (the “Redemption Notice”) via facsimile (or other delivery) for receipt
on or prior to 12:00 pm New York City time on the due date of such Mandatory Redemption (the
“Redemption Date”) which shall (i) indicate the applicable Mandatory Redemption Amount,
(ii) indicate the Company’s choice of settlement options (pursuant to Section 3(c)) with respect to
such Redemption Notice, and (iii) be signed by an officer of the Company. The Company shall settle
all Mandatory Redemptions within 5 Trading Days of the Redemption Date (the “Settlement
Date”). The Holder shall have the absolute right, in its sole discretion, to suspend the
Company’s obligations to make Mandatory Redemptions by providing the Company with written notice of
such election (a “Suspension Notice”) prior to a Redemption Date. The Holder shall have no
obligation to accept any Mandatory Redemptions made by the Company during any suspension period
specified in a Suspension Notice after the Holder’s submission of such Suspension Notice. The
obligation of the Company to make Mandatory Redemptions shall resume on the first Trading Day of
the month following the expiration of the suspension period specified in a Suspension Notice.

Notwithstanding the foregoing, if (A) the average VWAP of the Common Stock over the thirty (3)
consecutive Trading Days immediately prior to the Redemption Date is equal to or greater than 110%
of the of the Conversion Price then in effect, and (B) the Underlying Share Registration Statement
has been declared effective and remains effective on the Redemption Date, then the Company shall
not be permitted or required to make a Mandatory Redemption in that month (a “Waiver Mandatory
Redemption Month”).

(c) Company’s Settlement of Mandatory Redemptions. The Company shall settle Mandatory
Redemptions by paying the Holder cash in an amount equal to the Mandatory Redemption Amount.

Section 4. Conversion.

(a) Conversion at Option of Holder.

(i) This Debenture shall be convertible into shares of Common Stock at the option of the
Holder, in whole or in part at any time and from time to time, after the Original Issue Date (as
defined in Section 6) (subject to the limitations on conversion set forth in Section 4(b) hereof).
The number of shares of Common Stock issuable upon a conversion hereunder equals the quotient
obtained by dividing (x) the outstanding amount of this Debenture to be converted by (y) the
Conversion Price (as defined in Section 4(c)(i)). The Company shall deliver Common Stock
certificates to the Holder prior to the Fifth (5th) Trading Day after a Conversion Date.

(ii) Notwithstanding anything to the contrary contained herein, if on any Conversion Date:
(1) the number of shares of Common Stock at the time authorized, unissued and unreserved for all
purposes, or held as treasury stock, is insufficient to pay principal and interest hereunder in
shares of Common Stock; (2) the Common Stock is not listed or quoted for trading on the OTC or on a
Primary Market; or (3) the Company has failed to timely satisfy a conversion; then, at the option
of the Holder, the Company, in lieu of delivering shares of Common Stock pursuant to Section
4(a)(i), shall deliver, within three (3) Trading Days of each applicable Conversion Date, an amount
in cash equal to the product of the outstanding principal amount to be converted divided by the
applicable Conversion Price, and multiplied by the highest Closing Bid Price of the Common Stock
from the date of the conversion notice until the date that such cash payment is made.

Further, if the Company shall not have delivered any cash due in respect of conversion of this
Debenture by the fifth (5th) Trading Day after the Conversion Date, the Holder may, by
notice to the Company, require the Company to issue shares of Common Stock pursuant to Section
4(c), except that for such purpose the Conversion Price applicable thereto shall be the lesser of
the Conversion Price on the Conversion Date and the Conversion Price on the date of such Holder
demand. Any such shares will be subject to the provisions of this Section.

(iii) The Holder shall effect conversions by delivering to the Company a completed notice in
the form attached hereto as Exhibit B (a “Conversion Notice”). The date on which a
Conversion Notice is delivered is the “Conversion Date.” Unless the Holder is converting
the entire principal amount outstanding under this Debenture, the Holder is not required to
physically surrender this Debenture to the Company in order to effect conversions. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of this Debenture plus
all accrued and unpaid interest thereon in an amount equal to the applicable conversion. The Holder
and the Company shall maintain records showing the principal amount converted and the date of such
conversions. In the event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.

(b) Certain Conversion Restrictions.

(i) The Company shall not effect any conversions of this Debenture and the Holder shall not
have the right to convert any portion of this Debenture or receive shares of Common Stock as
payment of interest hereunder to the extent that after giving effect to such such conversion or
receipt of such interest payment, the Holder, together with any affiliate thereof, would
beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules
promulgated thereunder) in excess of 4.99% of the number of shares of Common Stock outstanding
immediately after giving effect to such conversion or receipt of shares as payment of interest.
Since the Holder will not be obligated to report to the Company the number of shares of Common
Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would
result in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares
of Common Stock without regard to any other shares which may be beneficially owned by the Holder or
an affiliate thereof, the Holder shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular conversion hereunder and to the
extent that the Holder determines that the limitation contained in this Section applies, the
determination of which portion of the principal amount of this Debenture is convertible shall be
the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice
for a principal amount of this Debenture that, without regard to any other shares that the Holder
or its affiliates may beneficially own, would result in the issuance in excess of the permitted
amount hereunder, the Company shall, to the extent that it is aware that the Conversion by the
Holder at that time would result in such excess, notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such Conversion Date in
accordance with the periods described in Section 4(a)(i) and, any principal amount tendered for
conversion in excess of the permitted amount hereunder shall remain outstanding under this
Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not
to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.

(c) Conversion Price and Adjustments to Conversion Price.

(i) The conversion price in effect on any Conversion Date shall be equal to $0.60 per share
(the “Conversion Price”). The Conversion Price may be adjusted to reflect certain events
as set forth in this Section 4(c).

(ii) If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock
dividend or otherwise make a distribution or distributions on shares of its Common Stock or any
other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d)
issue by reclassification of shares of the Common Stock any shares of capital stock of the Company,
then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

(iii) If the Company, at any time while this Debenture is outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to the Holder) entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than the Conversion
Price, then the Conversion Price shall be multiplied by a fraction, of which the denominator shall
be the number of shares of the Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants (plus the number of additional shares of Common Stock
offered for subscription or purchase), and of which the numerator shall be the number of shares of
the Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants, plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at the Conversion Price. Such adjustment shall be made
whenever such rights or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such rights, options or
warrants. However, upon the expiration of any such right, option or warrant to purchase shares of
the Common Stock the issuance of which resulted in an adjustment in the Conversion Price pursuant
to this Section, if any such right, option or warrant shall expire and shall not have been
exercised, the Conversion Price shall immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price which it would have been (but reflecting
any other adjustments in the Conversion Price made pursuant to the provisions of this Section after
the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights, options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of the Common Stock actually purchased upon the exercise of
such rights, options or warrants actually exercised.

(iv) If the Company or any subsidiary thereof, as applicable, at any time while this Debenture
is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities
or debt that are convertible into or exchangeable for shares of Common Stock (“Common Stock
Equivalents”) entitling any Person to acquire shares of Common Stock, at a price per share less
than the Conversion Price (if the holder of the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per
share which are issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price per share which is less than the Conversion Price, such issuance shall be deemed
to have occurred for less than the Conversion Price), then, at the sole option of the Holder, the
Conversion Price shall be adjusted to mirror the conversion, exchange or purchase price for such
Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The
Company shall notify the Holder in writing, no later than one (1) business day following the
issuance of any Common Stock or Common Stock Equivalent subject to this Section, indicating therein
the applicable issuance price, or of applicable reset price, exchange price, conversion price and
other pricing terms. No adjustment under this Section shall be made as a result of issuances of
Excluded Securities, as defined in Section 6 hereof.

(v) If the Company, at any time while this Debenture is outstanding, shall distribute to all
holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security, then in each such case the Conversion Price
at which this Debenture shall thereafter be convertible shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the denominator shall be
the Closing Bid Price determined as of the record date mentioned above, and of which the numerator
shall be such Closing Bid Price on such record date less the then fair market value at such record
date of the portion of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the Holder of the portion
of assets or evidences of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.

(vi) In case of any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is converted into other securities, cash or property, the Holder
shall have the right thereafter to, at its option, (A) convert the then outstanding principal
amount, together with all accrued but unpaid interest and any other amounts then owing hereunder in
respect of this Debenture into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of the Common Stock following such reclassification
or share exchange, and the Holder of this Debenture shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock of the Company into
which the then outstanding principal amount, together with all accrued but unpaid interest and any
other amounts then owing hereunder in respect of this Debenture could have been converted
immediately prior to such reclassification or share exchange would have been entitled, or (B)
require the Company to prepay the outstanding principal amount of this Debenture, plus all interest
and other amounts due and payable thereon. The entire prepayment price shall be paid in cash. This
provision shall similarly apply to successive reclassifications or share exchanges.

(vii) Whenever the Conversion Price is adjusted pursuant to Section 4 hereof, the Company
shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.

(viii) If (A) the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other securities, cash or
property; or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company; then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of this Debenture, and
shall cause to be mailed to the Holder at its last address as it shall appear upon the stock books
of the Company, at least twenty (20) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided, that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required to be specified in
such notice. The Holder is entitled to convert this Debenture during the 20-day calendar period
commencing the date of such notice to the effective date of the event triggering such notice.

(ix) In case of any (1) merger or consolidation of the Company or any Subsidiary of the
Company with or into another Person, in which the Company is not the surviving entity, or (2) sale
by the Company or any Subsidiary of the Company of more than one-half of the assets of the Company
in one or a series of related transactions, a Holder shall have the right to (A) exercise any
rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into
the shares of stock and other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and such Holder shall be
entitled upon such event or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal amount of this Debenture
could have been converted immediately prior to such merger, consolidation or sale, or (C) in the
case of a merger or consolidation described in clause (i), require the surviving entity to issue to
the Holder a convertible Debenture with a principal amount equal to the aggregate principal amount
of this Debenture then held by such Holder, plus all accrued and unpaid interest and other amounts
owing thereon, which newly issued convertible Debenture shall have terms substantially identical
(including with respect to conversion) to the terms of this Debenture, and shall be entitled to all
of the rights and privileges of the Holder of this Debenture set forth herein and the agreements
pursuant to which this Debenture was issued. In the case of clause (C), the conversion price
applicable for the newly issued shares of convertible preferred stock or convertible Debentures
shall be based upon the amount of securities, cash and property that each share of Common Stock
would receive in such transaction and the Conversion Price in effect immediately prior to the
effectiveness or closing date for such transaction. The terms of any such merger, sale or
consolidation shall include such terms so as to continue to give the Holder the right to receive
the securities, cash and property set forth in this Section upon any conversion or redemption
following such event. This provision shall similarly apply to successive such events.

(d) Other Provisions.

(i) The Company shall at all times reserve and keep available out of its authorized Common
Stock the full number of shares of Common Stock issuable upon conversion of all outstanding amounts
under this Debenture; and within three (3) Business Days following the receipt by the Company of a
Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall
promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.

(ii) All calculations under this Section 4 shall be rounded up to the nearest $0.0001 or whole
share.

(iiii) The Company covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion
of this Debenture and payment of interest on this Debenture, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of persons other than the Holder,
not less than such number of shares of the Common Stock as shall (subject to any additional
requirements of the Company as to reservation of such shares set forth in this Debenture or in the
Transaction Documents) be issuable (taking into account the adjustments and restrictions set forth
herein) upon the conversion of the outstanding principal amount of this Debenture and payment of
interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the
Underlying Shares Registration Statement has been declared effective under the Securities Act,
registered for public sale in accordance with such Underlying Shares Registration Statement.

(iv) Upon a conversion hereunder the Company shall not be required to issue stock certificates
representing fractions of shares of the Common Stock, but may if otherwise permitted, make a cash
payment in respect of any final fraction of a share based on the Closing Bid Price at such time. If
the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to
receive, in lieu of the final fraction of a share, one whole share of Common Stock.

(v) The issuance of certificates for shares of the Common Stock on conversion of this
Debenture shall be made without charge to the Holder thereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such certificate, provided that
the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holder of such Debenture so converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.

(vi) Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 2 herein for the Company ‘s failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified herein and such
Holder shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief, in each case without
the need to post a bond or provide other security. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.

(vii) In addition to any other rights available to the Holder, if the Company fails to deliver
to the Holder such certificate or certificates pursuant to Section 4(a)(i) by the fifth
(5th) Trading Day after the Conversion Date, and if after such fifth (5th)
Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to
deliver in satisfaction of a sale by such Holder of the Underlying Shares which the Holder
anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount
by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common
Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the
market price of the Common Stock at the time of the sale giving rise to such purchase obligation
and (B) at the option of the Holder, either reissue a Debenture in the principal amount equal to
the principal amount of the attempted conversion or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with its delivery
requirements under Section 4(a)(i). For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of
Debentures with respect to which the market price of the Underlying Shares on the date of
conversion was a total of $10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In.

(viii) Over Allotment Option. At anytime during the twelve (12) months following
the effectiveness of the Underlying Shares Registration Statement the Investor shall have the sole
option, upon ten (10) calendar days notice to the Company, to purchase up to $2,850,000 of
Convertible Debentures from the Company on the same terms as this Convertible Debenture.

(ix) Acceleration of Maturity. On the three (3) year anniversary of this
Convertible Debenture the Investor shall have the sole option, upon fifteen (15) calendar days
advance written notice to the Company to demand repayment of all outstanding principal amounts plus
interest due and outstanding hereunder (the “Acceleration Notice”), which payment shall be
made within fifteen (15) calendar days of the Company’s receipt of such Acceleration Notice.
Provided, however, the Company shall still be obligated to pay any and all Mandatory Redemption
payments deferred hereunder.

Section 5. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms hereof 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) Trading Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

	 	 	 
	If to the Company, to:

	 	VIASPACE Inc.
	 
	 	 
	
 
	 	171 N. Altadena Drive – Suite 101
	 
	 	 
	
 
	 	Pasadena, CA 91107
	 
	 	 
	
 
	 	Attention: Carl Kukkonen, President and

Chief Executive Officer
	 
	 	 
	
 
	 	Telephone: (626) 768-3360
	 
	 	 
	
 
	 	Facsimile: (626) 578-9063
	 
	 	 
	With a copy to:

	 	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	 
	 	 
	
 
	 	One Financial Center
	 
	 	 
	
 
	 	Boston, MA 02111
	 
	 	 
	
 
	 	Attention: Megan N. Gates, Esq.
	 
	 	 
	
 
	 	Telephone: (617) 348-4443
	 
	 	 
	
 
	 	Facsimile: (617) 542-2241

	 	 	 	 	 
	If to the Holder:
	 	Cornell Capital Partners, LP

	 
	 	101 Hudson Street, Suite 3700
	 
	 	Jersey City, NJ  07303

	 
	 	Attention: Mark Angelo

	 
	 	Telephone: (201) 985-8300

	With a copy to:
	 	David Gonzalez, Esq..

	 
	 	101 Hudson Street – Suite 3700
	 
	 	Jersey City, NJ 07302

	 
	 	Telephone: (201) 985-8300

	 
	 	Facsimile: (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3) business
days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the
recipient of such notice, consent, waiver or other communication, (ii) 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 (iii) provided by a
nationally recognized overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

Section 6. Definitions. For the purposes hereof, the following terms shall
have the following meanings:

“Approved Stock Plan” means a stock option plan that has been approved by the Board of
Directors of the Company, pursuant to which the Company’s securities may be issued only to any
employee, officer or director for services provided to the Company.

“Business Day” means any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States or a day on which banking institutions are authorized or
required by law or other government action to close.

“Change of Control Transaction” means the occurrence of (a) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent
(50%) of the voting securities of the Company (except that the acquisition of voting securities by
the Holder shall not constitute a Change of Control Transaction for purposes hereof), (b) a
replacement at one time or over time of more than one-half of the members of the board of directors
of the Company which is not approved by a majority of those individuals who are members of the
board of directors on the date hereof (or by those individuals who are serving as members of the
board of directors on any date whose nomination to the board of directors was approved by a
majority of the members of the board of directors who are members on the date hereof), (c) the
merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any
Subsidiary of the Company in one or a series of related transactions with or into another entity,
or (d) the execution by the Company of an agreement to which the Company is a party or by which it
is bound, providing for any of the events set forth above in (a), (b) or (c).

“Closing Bid Price” means the price per share in the last reported trade of the Common
Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by
Bloomberg, LP.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock, par value $.001, of the Company and stock of
any other class into which such shares may hereafter be changed or reclassified.

“Conversion Date” shall mean the date upon which the Holder gives the Company notice
of their intention to effectuate a conversion of this Debenture into shares of the Company’s Common
Stock as outlined herein.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Securities” means, (a) shares issued or deemed to have been issued by the
Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued
by the Company upon the conversion, exchange or exercise of any right, option, obligation or
security outstanding on the date prior to date of the Securities Purchase Agreement, provided that
the terms of such right, option, obligation or security are not amended or otherwise modified on or
after the date of the Securities Purchase Agreement, and provided that the conversion price,
exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise
modified and the number of shares of Common Stock issued or issuable is not increased (whether by
operation of, or in accordance with, the relevant governing documents or otherwise) on or after the
date of the Securities Purchase Agreement, (c) the shares of Common Stock issued or deemed to be
issued by the Company upon conversion of this Debenture, and (d) any securities issued pursuant to
a financing that is conducted by the Company following an offer to the Holder made pursuant to
Section 4(m) of the Securities Purchase Agreement, if such offer is rejected in whole or in part.

“Original Issue Date” shall mean the date of the first issuance of this Debenture
regardless of the number of transfers and regardless of the number of instruments, which may be
issued to evidence such Debenture.

“Person” means a corporation, an association, a partnership, organization, a business,
an individual, a government or political subdivision thereof or a governmental agency.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Trading Day” means a day on which the shares of Common Stock are quoted on the OTC or
quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or
listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then
Trading Day shall mean a Business Day.

“Transaction Documents” means the Securities Purchase Agreement or any other agreement
delivered in connection with the Securities Purchase Agreement, including, without limitation, the
Security Agreements, Pledge and Escrow Agreements, the Irrevocable Transfer Agent Instructions, and
the Registration Rights Agreement.

“Underlying Shares” means the shares of Common Stock issuable upon conversion of this
Debenture or as payment of interest in accordance with the terms hereof.

“Underlying Shares Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering among other things the resale
of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

“VWAP” shall mean the volume weighted average price of the Company’s Common Stock as quoted by
Bloomberg, LP.

Section 7. Except as expressly provided herein, no provision of this Debenture shall
alter or impair the obligations of the Company, which are absolute and unconditional, to pay the
principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate,
and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the
Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under
the terms set forth herein. As long as this Debenture is outstanding, the Company shall not and
shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate
of incorporation, bylaws or other charter documents so as to adversely affect any rights of the
Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its
Common Stock or other equity securities other than as to the Underlying Shares to the extent
permitted or required under the Transaction Documents; or (iii) enter into any agreement with
respect to any of the foregoing.

Section 8. This Debenture shall not entitle the Holder to any of the rights of a
stockholder of the Company, including without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any
other proceedings of the Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.

Section 9. If this Debenture is mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and upon cancellation of the mutilated
Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new
Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.

Section 10. No indebtedness of the Company is senior to this Debenture in right of
payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.
Without the Holder’s consent, the Company will not and will not permit any of their subsidiaries
to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness
of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or
any interest therein or any income or profits there from that is senior in any respect to the
obligations of the Company under this Debenture.

Section 11. This Debenture shall be governed by and construed in accordance with the
laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the
parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in
Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in
Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives,
to the maximum extent permitted by law, any objection, including any objection based on
forum non conveniens to the bringing of any such proceeding in such
jurisdictions.

Section 12. If the Company fails to strictly comply with the terms of this Debenture,
then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses incurred by the Holder in any action in
connection with this Debenture, including, without limitation, those incurred: (i) during any
workout, attempted workout, and/or in connection with the rendering of legal advice as to the
Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder,
(iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or
(iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

Section 13. Any waiver by the Holder of a breach of any provision of this Debenture
shall not operate as or be construed to be a waiver of any other breach of such provision or of any
breach of any other provision of this Debenture. The failure of the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to that term or any
other term of this Debenture. Any waiver must be in writing.

Section 14. If any provision of this Debenture is invalid, illegal or unenforceable,
the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other persons and
circumstances. If it shall be found that any interest or other amount deemed interest due hereunder
shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of this indenture,
and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay
or impeded the execution of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

Section 15. Whenever any payment or other obligation hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding Business Day.

Section 16. This Debenture is exchangeable for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder surrendering the same.
No service charge will be made for such registration of transfer or exchange.

Section 17. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

1

IN WITNESS WHEREOF, the Company has caused this Secured Convertible Debenture to be duly
executed by a duly authorized officer as of the date set forth above.

	 
	 

	COMPANY:

	 

	VIASPACE INC.

	 

	By: /S/ CARL KUKKONEN

	 

	Name: Carl Kukkonen

	Title: President and Chief Executive Officer

	 

2

EXHIBIT A

REDEMPTION NOTICE

Redemption Date: Mandatory Redemption Amount:

	 	 	 	 	 
	Settlement in Common Stock
	All Conditions to Company’s option to settle in Common Stock (Section 3(c)) are
	satisfied	 	 	 	 
	Mandatory Redemption Amount:
	 	$	 	 
	 
	 	 	 	 
	Redemption Conversion Price:
	 	$	—	 
	Number of shares of Common Stock to be issued:
	 	 	 	 
	 
	 	 	 	 
	Please issue the shares of Common Stock in the following name and to the following address:

	Issue to:
	 	 	 	 
	Broker DTC Participant Code:
	 	 	 	 
	Account Number:
	 	 	 	 

                                    Settlement in Cash

	 	 	 	 	 
	Mandatory Redemption Amount:
	 	$		
	 
	 	 	 	 
	Redemption Premium:
	 	$		
	 
	 	 	 	 
	Total Cash Settlement:
	 	$		
	 
	 	 	 	 

	 	 	 
	Notification of Settlement Option
	Settlement in Common Stock	 	Settlement in Cash
	
 
	 	 
	 
	 	 
	Viaspace Inc.

	 	

	 
	 	 
	By:

	 
	 	 
	Its:

	 
	 	 
	**THIS REDEMPTION NOTICE MUST BE SIGNED & RETURNED VIA
FACSIMILE TO THE HOLDER AT (201) 946-0851 NO LATER THAN 5:00
N.Y.C. TIME ON THE DAY PRIOR TO THE REDEMPTION DATE**

	 
	 	 

3

EXHIBIT B

CONVERSION NOTICE

(To be executed by the Holder in order to Convert the Debenture)

	 
	 

	TO:

The undersigned hereby irrevocably elects to convert $ of the principal amount of
Debenture No. ABCD-1-     into Shares of Common Stock of VIASPACE INC., according to the conditions
stated therein, as of the Conversion Date written below.

	 	 	 	 	 
	Conversion Date:
	 	 	 	 
	Amount to be converted:
	 	$		
	 
	 	 	 	 
	Conversion Price:
	 	$		
	 
	 	 	 	 
	Number of shares of Common Stock to be issued:
	 	 	 	 
	Amount of Debenture
Unconverted:
	 	$		
	 
	 	 	 	 
	 
	 	 	 	 
	Please issue the shares of Common Stock in the following name and to the following address:
	 	 	 	 
	Issue to:
	 	 	 	 
	Authorized Signature:
	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	Broker DTC Participant Code:
	 	 	 	 
	Account Number:
	 	 	 	 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]