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STOCK PLEDGE AGREEMENT

Stock Pledge Agreement

STOCK PLEDGE AGREEMENT | Document Parties: VIASPACE INC. You are currently viewing:
This Stock Pledge Agreement involves

VIASPACE INC.

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Title: STOCK PLEDGE AGREEMENT
Date: 5/18/2010
Industry: Chemical Manufacturing     Sector: Basic Materials

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Execution Copy

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (this “Agreement” ) is dated as of May 14, 2010, by and between VIASPACE, INC. , a Nevada corporation (the “Pledgor” ) , and SUNG HSIEN CHANG (the “Noteholder” ) .

W I T N E S S E T H :

WHEREAS, pursuant to a Secured Promissory Note, dated as of the 14th day of May, 2010 (as the same may be amended, modified or supplemented from time to time, the “Secured Note” ) issued by the Pledgor in favor of the Noteholder; and

WHEREAS , the Pledgor agreed to secure its obligations under the Secured Note in accordance with the terms of this Agreement and the other applicable Security Documents (as defined in the Secured Note) .

NOW, THEREFORE , in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.  Definitions . Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Secured Note.

2.  Pledge and Grant of Security Interest . To secure the prompt payment and performance in full when due, whether by lapse of time or otherwise, of the Secured Obligations (as defined in Section 3 hereof), Pledgor hereby pledges and assigns to the Noteholder and grants to the Noteholder, a continuing security interest in any and all right, title and interest of Pledgor in and to the following, whether now owned or existing or owned, acquired or arising hereafter (collectively, the “Pledged Collateral” ):

(a)  Pledged Shares . All of the issued and outstanding shares of capital stock (the “ Shares ”) of Viaspace Green Energy, Inc. , a company organized under the laws of the British Virgin Islands (the “ Subsidiary ”) issued to or otherwise in which rights are held by Pledgor (all certificates representing such shares and all options and other rights, contractual or otherwise, with respect thereto, collectively the “Pledged Shares” ). In no event shall Pledgor cause, authorize, approve or permit Subsidiary to issue, sell, convey, transfer, grant or otherwise encumber or otherwise grant any right or other Lien in or on any of its Shares in favor of any Person without the prior written consent of Noteholder.

(b)  Additional Shares . All of the issued and outstanding shares of capital stock held by Pledgor of any subsidiary organized in a jurisdiction outside of the United States and that number of issued and outstanding shares of capital stock held by Pledgor of any subsidiary organized in a jurisdiction inside the United States, which is hereafter formed or acquired by Pledgor or is a successor to Pledgor, including, without limitation, the certificates representing such shares.

(c)  RESERVED

(d)  Proceeds . All proceeds and products of the foregoing (other than dividends and interest permitted to be received, retained and used by Pledgor pursuant to Section 7(f) hereof), however and whenever acquired and in whatever form.

Without limiting the generality of the foregoing, it is hereby specifically understood and agreed that Pledgor may, with the prior written consent of the Noteholder, from time to time hereafter deliver additional shares of stock to the Noteholder as collateral security for the Secured Obligations. Upon delivery to the Noteholder, such additional shares of stock shall be deemed to be part of the Pledged Collateral and shall be subject to the terms of this Agreement whether or not Schedule 1 is amended to refer to such additional shares.

3.  Security for Secured Obligations . The security interest created hereby in the Pledged Collateral constitutes continuing collateral security for all money which Pledgor is or at any time may become actually or contingently liable to pay to or for the account of Noteholder for any reason whatever under the Secured Note (collectively, the “Secured Obligations” ).

4.  Delivery of the Pledged Collateral . Pledgor hereby agrees that:

(a)  Certificates . Pledgor shall deliver to the Noteholder (i) simultaneously with or prior to the execution and delivery of this Agreement, all certificates representing the Pledged Shares and (ii) promptly upon the receipt thereof by or on behalf of Pledgor, all other certificates and instruments constituting Pledged Collateral. Prior to delivery to the Noteholder, all such certificates and instruments constituting Pledged Collateral shall be held in trust by Pledgor for the benefit of the Noteholder pursuant hereto. All such certificates shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, in form provided in Schedule 2 attached hereto.

(b)  Additional Securities . If Pledgor shall receive by virtue of its being or having been the owner of any Pledged Collateral, any (i) stock certificate, including without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock splits, spin-off or split-off, promissory notes or other instrument; (ii) option or right, whether as an addition to, substitution for, or an exchange for, any Pledged Collateral or otherwise; (iii) dividends payable in securities; or (iv) distributions of securities in connection with a partial or total liquidation, dissolution or reduction of capital, capital surplus or paid-in surplus, then Pledgor shall receive such stock certificate, instrument, option, right or distribution in trust for the benefit of the Noteholder, shall segregate it from Pledgor’s other property and shall deliver it forthwith to the Noteholder in the exact form received together with any necessary endorsement and/or appropriate stock power duly executed in blank substantially in the form provided in Schedule 2 , to be held by the Noteholder as Pledged Collateral and as further collateral security for the Secured Obligations.

(c)  Financing Statements. Pledgor hereby authorizes the Noteholder to file such UCC financing statements the Noteholder may reasonably deem appropriate in order to perfect and protect the security interest created hereby in the Pledged Collateral.

5.  Representations and Warranties . Pledgor hereby represents and warrants to the Noteholder, that so long as the Secured Note is in effect or any amounts payable thereunder shall remain outstanding:

(a)  Authorization of Pledged Shares . The Pledged Shares are duly authorized and validly issued, are fully paid and nonassessable and are not subject to the preemptive rights of any person or entity. All other shares of stock constituting Pledged Collateral will be duly authorized and validly issued, fully paid and nonassessable and not subject to the preemptive rights of any person or entity. Pledgor owns the capital stock of the corporations listed on Schedule I attached hereto as and to the extent so described therein.

(b)  Title . Pledgor has good and indefeasible title to the Pledged Collateral and will at all times be the legal and beneficial owner of the Pledged Collateral free and clear of any lien or other encumbrance, except for any security interests in favor of Noteholder. There exists no “adverse claim” within the meaning of Section 8-302 of the Uniform Commercial Code as in effect in the State of Georgia (the “UCC” ) with respect to the Pledged Shares.

(c)  Exercising of Rights . The exercise by the Noteholder of its rights and remedies hereunder does not violate any law or governmental regulation or any material contractual restriction binding on or affecting Pledgor or any of its property.

(d)  Pledgor’s Authority . No authorization, approval or action by, and no notice or filing with any governmental authority or with the issuer of any Pledged Stock is required either (i) for the pledge made by Pledgor or for the granting of the security interest by Pledgor pursuant to this Agreement; or (ii) for the exercise by the Noteholder of its rights and remedies hereunder (except as may be required by laws affecting the offering and sale of securities).

(e)  Security Interest/Priority . This Agreement creates a valid security interest in favor of the Noteholder in the Pledged Collateral. The taking possession by the Noteholder of the certificates representing the Pledged Shares and all other certificates and instruments constituting Pledged Collateral will perfect and establish the first priority of the Noteholder’s security interest in the Pledged Shares and in all other Pledged Collateral represented by Pledged Shares and instruments securing the Secured Obligations. Except as set forth in this Section 5(e), no action is necessary to perfect or otherwise protect such security interest in the Pledged Shares and Pledged Collateral represented by certificates.

6.  Covenants . Pledgor hereby covenants that so long as the Secured Note is in effect or any Secured Obligations remains unpaid, Pledgor shall:

(a)  Books and Records . Mark its books and records (and shall cause the issuer of the Pledged Shares to mark its books and records) to reflect the security interest granted to the Noteholder pursuant to this Agreement.

(b)  Defense of Title . Warrant and defend title to and ownership of the Pledged Collateral at its own expense against the claims and demands of all other parties claiming an interest therein, keep the Pledged Collateral free from all liens and security interests, except for those in favor of Noteholder, and not sell, exchange, transfer, assign, lease or otherwise dispose of Pledged Collateral or any interest therein.

(c)  Further Assurances . Promptly execute and deliver at its expense all further instruments and documents and take all further action that may be reasonably necessary and desirable or that the Noteholder may reasonably request in order to (i) perfect and protect the security interest created hereby in the Pledged Collateral; (ii) enable the Noteholder to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral; and (iii) otherwise effect the purposes of this Agreement, including, without limitation and if requested by the Noteholder, delivering to the Noteholder irrevocable proxies in respect of the Pledged Collateral.

(d)  Amendments . Not make or consent to any amendment or other modification or waiver with respect to any of the Pledged Collateral or enter into any agreement or allow to exist any restriction with respect to any of the Pledged Collateral other than pursuant hereto or as may be permitted under the Secured Note.

(e)  Compliance with Securities Laws . File all reports and other information now or hereafter required to be filed by Pledgor with the United States Securities and Exchange Commission and any other state, federal or foreign agency in connection with the ownership of the Pledged Collateral.

7.  Rights of the Noteholder .

(a)  Power of Attorney . In addition to other powers of attorney contained herein, Pledgor hereby designates and appoints the Noteholder and each of its designees or agents as its attorney-in-fact, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default:

(i) to demand, collect, settle, compromise, adjust, give discharges and releases relating to the Pledged Collateral, all as the Noteholder may reasonably determine;

(ii) to commence and prosecute any actions at any court for the purposes of collecting any of the Pledged Collateral and enforcing any other right in respect thereof;

(iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release relating to the Pledged Collateral as the Noteholder may deem appropriate;

(iv) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Pledged Collateral;

(v) to direct any parties liable for any payment under any of the Pledged Collateral to make payment of any and all monies due and to become due thereunder directly to the Noteholder or as the Noteholder shall direct;

(vi) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Pledged Collateral;

(vii) to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Pledged Collateral;

(viii) to exchange any of the Pledged Collateral or other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof and in connection therewith, deposit any of the Pledged Collateral with any depository, transfer agent, registrar or other designated agency upon such terms as the Noteholder may determine; and

(ix) to do and perform all such other acts and things as the Noteholder may reasonably deem to be necessary, proper or convenient in connection with the Pledged Collateral.

The Pledgor recognizes and agrees that this power of attorney is a power coupled with an interest and shall be irrevocable. The Noteholder sha


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