SECURITIES ISSUANCE AGREEMENT
 
This SECURITIES ISSUANCE AGREEMENT (this “Agreement”) is entered into as of the
24th day of December, 2009, by and between PETROALGAE INC., a Delaware
corporation (“Seller,” or the “Company”), and Green Science Energy LLC
(“Purchaser”).
 
WITNESSETH:
 
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to accept
from Seller, three hundred fifty-seven thousand one hundred forty-three
(357,143) (the “Shares”) of common stock, par value $0.001 per share, of the
Company (the “Common Stock”) and a warrant to purchase three hundred fifty-seven
thousand one hundred forty-three (357,143) shares of Common Stock, in the form
attached hereto as Exhibit A (the “Warrant”, and together with the Shares, the
“Securities”) upon the terms and subject to the conditions set forth herein.
 
WHEREAS, Purchaser is a Delaware limited liability company, and as consideration
for the Securities, is issuing the Company equity in the Purchaser equal to
thirty percent (30%) of the outstanding equity interests in the Purchaser on a
fully diluted basis, in the form to be determined and governed by an operating
agreement to be negotiated and executed pursuant to Section 1.1 below (the “LLC
Equity”).
 
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements, undertakings and obligations
set forth herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
 
ARTICLE 1
 
ISSUANCE OF THE SECURITIES
 
Section 1.1            Issuance of the Securities.  Upon the terms and subject
to the conditions set forth in this Agreement and on the basis of the
representations, warranties, covenants, agreements, undertakings and obligations
contained herein, Seller hereby sells and issues to Purchaser, and Purchaser
hereby purchases from Seller, the Securities, free and clear of any and all
Liens (as defined in Section 7.11 hereof), for the consideration specified in
this Article 1.
 
Section 1.2            Consideration.  As consideration for the issuance of the
Securities, Purchaser shall issue to Seller the LLC Equity.  The parties will in
good faith mutually agree upon, finalize, and execute the operating agreement
for Purchase (the “LLC Agreement”) no later than thirty (30) days after the date
hereof.  Such LLC Agreement will, at a minimum, contain anti-dilution protection
for the LLC Equity and provide Seller with other standard and customary rights
and protections for minority-equity holders in closely held companies (such as,
solely by way of example and not by way of limitation, the right to approve
major transactions, debt facilities, new equity issuances, equity transfers by
then existing holders, events of bankruptcy, distributions, certain amendments
to the LLC Agreement, and otherwise).
 
 
 

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Section 1.3            Option to Purchase Additional Securities.  Purchaser
shall have the option (the “Option”), exercisable no later than June 30, 2010,
to purchase up to an additional two hundred fifty thousand (250,000) shares of
Common Stock (the “Option Shares”) for eight dollars ($8) per share, and
purchase a warrant to purchase up to an additional two hundred fifty thousand
(250,000) shares of Common Stock for fifteen dollars ($15) per share in a form
substantially similar as that attached hereto as Exhibit “A” (the “Option
Warrant”), for a total purchase price of two million dollars ($2,000,000) (the
“Option Purchase Price”), upon and subject to the same terms and conditions as
those contained and incorporated herein; provided, however, that Seller may
issue the Option Shares and Option Warrant at such time to the Purchaser without
violating any of the securities laws, rules, or regulations of the United States
or any other country.  The Option may be exercised in whole or in part by the
Purchaser at any time prior to its expiration by delivering written notice to
Seller of Purchaser’s intent to exercise such Option.
 
ARTICLE 2

 
DELIVERY
 
Section 2.1            No later than five (5) Business Days after the date
hereof, Seller shall deliver, or cause to be delivered, to Purchaser a
certificate or certificates evidencing all of the Shares and the duly executed
Warrant.  Such Shares and Warrant shall bear appropriate (in the Company’s
reasonable discretion) restrictive legends reflecting the terms and conditions
hereof.
 
ARTICLE 3

 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
As used herein (i) any reference to any event, change or effect being “material”
with respect to the Company means an event, change or effect which is material
in relation to the condition (financial or otherwise), properties, business,
operations, prospects, assets or results of operations of the Company, and (ii)
the term “Material Adverse Effect” on the Company means a material adverse
effect on (x) the condition (financial or otherwise), properties, business,
operations, prospects, assets, nature of assets, liabilities, or results of
operations of the Company and its subsidiaries taken individually and/or as
whole, or (y) the ability of the Company to perform its obligations under this
Agreement.
 
The Company hereby represents and warrants to Purchaser as follows:
 
Section 3.1            Organization and Good Standing.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation with full corporate power and
authority to conduct its business as it is now being conducted.  The Company is
duly qualified or licensed to do business as a foreign corporation and is in
good standing as a foreign corporation in each jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such licensing, qualification or good
standing, except for any failure to so license, qualify or be in such good
standing, which, when taken together with all other such failures, has not had,
does not have and could not reasonably be expected to have a Material Adverse
Effect on the Company.
 
 
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Section 3.2            Capitalization.
 
(a)           The authorized capital stock of the Company consists solely of
300,000,000 shares of Common Stock, and 25,000,000 shares of Preferred Stock, of
which one hundred five million eight hundred seventy-two thousand two hundred
thirteen (105,872,213) shares of Common Stock are issued and outstanding and of
which no shares of Preferred Stock are issued and outstanding.  All of the
issued and outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and nonassessable and have been
issued in compliance with all foreign, federal and state securities laws.
 
(b)           The Securities and the shares issuable upon exercise of the
Warrant to be issued and sold by the Company to the Purchaser hereunder and
thereunder have been duly and validly authorized and, when issued and delivered
against payment therefore as provided herein and therein, will be duly and
validly issued and fully paid and non-assessable.
 
Section 3.3            Corporate Authority.  The Company has taken all corporate
action necessary in order to execute, deliver and perform fully, its obligations
under this Agreement and to consummate the Securities Purchase contemplated
hereby.  The execution and delivery by the Company of this Agreement and the
consummation by the Company of the Securities Purchase contemplated hereby have
been duly authorized and approved by the Board of Directors of the Company and
no other corporate proceeding with respect to the Company is necessary to
authorize this Agreement or the Securities Purchase contemplated hereby.  This
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
 
Section 3.4            No Violations; No Consents.  The execution and delivery
by the Company of this Agreement does not, and the performance and consummation
by the Company of the Securities Purchase contemplated hereby will not, directly
or indirectly (with or without the giving of notice or the lapse of time or
both):
 
(a)           contravene, conflict with, or constitute or result in a breach or
violation of, or a default under (i) any provision of the Company’s Certificate
of Incorporation or By-laws or (ii) any resolution adopted by the Board of
Directors (or similar governing body) of the Company;
 
(b)           contravene, conflict with, or constitute or result in a breach or
violation of any Law (as defined below), award, decision, injunction, judgment,
decree, settlement, order, process, ruling, subpoena or verdict (whether
temporary, preliminary or permanent) entered, issued, made or rendered by any
court, administrative agency, arbitrator, Governmental Entity or other tribunal
of competent jurisdiction (“Order”) or give any Governmental Entity or any other
Person the right to challenge the Securities Purchase contemplated hereby; or
 
(c)           require the consent or approval of any Governmental Entity or any
third party which has not already been obtained.

 
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For purposes of this Agreement, the term “Law” shall mean any federal, state,
local, municipal, foreign, international, multinational, or other constitution,
law, rule, standard, requirement, administrative ruling, order, ordinance,
principle of common law, legal doctrine, code, regulation, statute, treaty or
process.
 
Section 3.5            Actions.  There are no civil, criminal, administrative,
investigative or informal actions, audits, demands, suits, claims, arbitrations,
hearings, litigations, disputes, investigations or other proceedings of any kind
or nature (“Actions”) or Orders issued, pending or, to the knowledge of the
Company, threatened, against the Company or any of its assets, at law, in equity
or otherwise, in, before, by, or otherwise involving, any Governmental Entity,
arbitrator or other Person that individually or in the aggregate, (i) have had,
do have or could reasonably be expected to have a Material Adverse Effect on the
Company or (ii) question or challenge the validity or legality of, or have the
effect of prohibiting, preventing, restraining, restricting, delaying, making
illegal or otherwise interfering with, this Agreement, the consummation of the
Securities Purchase contemplated hereby or any action taken or proposed to be
taken by the Company pursuant hereto or in connection with the Securities
Purchase contemplated hereby.  To the knowledge of the Company, no event has
occurred or circumstance exists that could reasonably be expected to give rise
to or serve as a basis for the commencement of any such Action or the issuance
of any such Order.
 
Section 3.6            SEC Reports.  The Company has filed all reports required
to be filed by it under the Securities Act and the Securities Exchange Act of
1934, as amended (the “Exchange Act”), (the foregoing materials being
collectively referred to herein as the “SEC Reports”), on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the “Commission”) promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. There has been no
material change in the financial condition or results of operations of the
Company and its subsidiaries taken individually and/or as whole since the last
audited financial statements of the Company included in the SEC Reports.
 
Section 3.7            No Material Adverse Effect. There has been no Material
Adverse Effect on the Company since September 30, 2009.
 
Section 3.8            Trading With the Enemy Act; Patriot Act.  To the
knowledge of the Company, no sale of the Company’s securities by the Company nor
the Company’s use of the proceeds from such sale has violated the Trading with
the Enemy Act, as amended, or any of the foreign assets control regulations of
the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating
thereto.  Without limiting the foregoing, the Company (a) is not a person whose
property or interests in property are blocked pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) and (b) to the knowledge of the Company, does not engage in any
dealings or transactions, or be otherwise associated, with any such person.  The
Company is in compliance with the USA Patriot Act of 2001 (signed into law
October 26, 2001).

 
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Section 3.9            Listing of Common Stock.  The Common Stock is eligible to
trade and be quoted on, and is quoted on, the over-the-counter Bulletin Board
market maintained by the National Associate of Securities Dealers (the “OTCBB”),
and the Company has received no notice or other communication indicating that
such eligibility is subject to challenge or review by any applicable regulatory
agency, electronic market administrator, or exchange. The Company has not, and
shall not take any action that would preclude, or otherwise jeopardize, the
inclusion of the Common Stock for quotation on the OTCBB.  The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all listing requirements of the OTCBB.
 
ARTICLE 4

 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to Seller as follows:
 
Section 4.1            Organization and Good Standing.  Purchaser is a
corporation, limited liability company or limited partnership, as the case may
be, and duly incorporated or formed, validly existing and in good standing in
the jurisdiction of its incorporation or formation, as applicable, or (b) a
natural person competent to execute and deliver this Agreement.
 
Section 4.2            Corporate Authority.  Purchaser has the full legal right,
requisite corporate, limited liability company or limited partnership power and
authority, as the case may be, and has taken all corporate, limited liability
company, or limited partnership action necessary in order to execute, deliver
and perform fully, its obligations under this Agreement and to consummate the
Securities Purchase.  The execution and delivery by Purchaser of this Agreement
and the consummation by Purchaser of the Securities Purchase have been duly
authorized and approved by the governing body of Purchaser and no other
corporate, limited liability company or limited partnership proceeding with
respect to Purchaser is necessary to authorize this Agreement or the Securities
Purchase contemplated hereby.  This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms.
 
Section 4.3            No Violations.  (a)  The execution and delivery by
Purchaser of this Agreement does not, and the performance and consummation by
Purchaser of the Securities Purchase will not, with respect to Purchaser,
directly or indirectly (with or without the giving of notice or the lapse of
time or both):
 
(i)           contravene, conflict with, or constitute or result in a breach or
violation of, or a default under (A) any provision of the Certificate of
Incorporation or By-laws (or equivalent documents) of Purchaser or (B) any
resolution adopted by the Board of Directors (or similar governing body) of
Purchaser; or

 
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(ii)           contravene, conflict with, or constitute or result in a breach or
violation of, any material Law or Order to which Purchaser, or any of the assets
owned or used by Purchaser, are subject.
 
Section 4.4            Securities Act.  Purchaser is acquiring the Securities,
and will acquire the shares of Common Stock issuable upon exercise of the
Warrant (“Warrant Shares”), for its own account and not with a view to their
distribution within the meaning of Section 2(a)(11) of the Securities Act of
1933, as amended (the “Securities Act”) in any manner that would be in violation
of the Securities Act.
 
Section 4.5            Investment Representation and Warranty.  Purchaser
understands that the Securities have not been, and the Securities and the
Warrant Shares will not upon issuance be, registered under the Securities Act,
and that the Warrant and the certificates evidencing the Shares and the Warrant
Shares shall bear a legend to that effect.
 
Section 4.6            Purchaser Status.  At the time Purchaser was offered the
Securities, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.
 
Section 4.7            Experience of Purchaser.  Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.  Purchaser understands that
it must be able to bear the economic risk of this investment in the Securities
indefinitely, and is able to bear such risk and is able to afford a complete
loss of such investment.
 
Section 4.8            Reliance on Exemptions.  Purchaser understands that the
Securities have not been, and the Warrant Shares will not be, registered under
the Securities Act or any state securities laws and are being offered and sold
in reliance upon specific exemptions from the registration requirements of
federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations and warranties of Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
such Purchaser to acquire the Securities and the Warrant Shares, and that the
Securities and Warrant Shares may not be offered, sold, pledged or transferred
unless such offer, sale, pledge, or transfer is made in compliance with
applicable federal and state securities laws and the Investment Company Act.
 
Section 4.9            Appropriate Purchaser.
 
(a)           If Purchaser is a U.S. person within the meaning of Regulation S
of the Securities Act, or a non U.S. Person who desires to purchase the Shares
without relying on Regulation S, Purchaser is a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) and is also a "qualified
purchaser" (as defined in Section 2(a)(51) under the Investment Company Act).

 
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(b)           If Purchaser is a non-U.S. person within the meaning of Regulation
S of the Securities Act, such Purchaser (i) is acquiring the Shares in an
offshore transaction in accordance with Rule 904 of Regulation S, (ii) is
acquiring the Shares for such Purchaser's own account, (iii) understands that
the Shares may not, absent an applicable exemption, be transferred without
registration and/or qualification under the Securities Act and applicable state
securities laws and the laws of any other applicable jurisdiction and (iv) is a
non-U.S. person within the meaning of Regulation S.
 
Section 4.10          Access to Information.  Purchaser acknowledges: (i) that
it has been afforded the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the
merits and risks of investing in the Securities; (ii) that it has been given
access to and has carefully and completely reviewed information (other than
material non-public information) about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment, including but not limited to the
materials provided by the Company as set forth on Exhibit B hereto, and (iii) it
has been afforded the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment.
 
Section 4.11          Restricted Securities.  Purchaser understands that the
Securities are, and the Warrant Shares will be, characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances.
 
ARTICLE 5

 
COVENANTS
 
Section 5.1            Public Announcements.  Each of the parties hereto shall
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the Securities Purchase contemplated
hereby and, except as may be required by applicable law, will not issue any such
press release or make any such public statement prior to such consultation and
without the consent of the other parties.
 
Section 5.2            Notices of Certain Events.  In addition to any other
notice required to be given by the terms of this Agreement, each of the parties
shall promptly notify the other parties hereto of:
 
(a)           any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Securities Purchase contemplated by this Agreement;

 
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(b)         any notice or other communication from any governmental or
regulatory agency or authority in connection with the Securities Purchase
contemplated by this Agreement; and
 
(c)          any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge threatened against, relating to or involving or otherwise
affecting such party or that relate to the consummation of the Securities
Purchase contemplated by this Agreement.
 
Section 5.3           Extraordinary Events Regarding Common Stock. In the event
that the Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company, (b) subdivide its outstanding shares of Common
Stock, (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the number of
Option Shares shall be adjusted to a number determined by multiplying the number
of Option Shares immediately prior to any such event by a fraction of which (a)
the numerator is the number of issued and outstanding shares of Common Stock
immediately after to any such event, and (b) the denominator is the number of
issued and outstanding shares of Common Stock immediately prior to any such
event.  In the event of any such adjustment, no change shall be made to the
aggregate purchase price of the Option Shares (as adjusted).
 
ARTICLE 6
 
TERMINATION
 
Section 6.1           Termination.  In the event of the termination and
abandonment of this Agreement, this Agreement (other than Section 3
(Representations and Warranties of the Company), Section 4 (Representations and
Warranties of the Purchaser), Section 7.3 (Fees and Expenses), Section 7.5
(Governing Law) and Section 7.6 (Consent to Jurisdiction; Waiver of Jury Trial),
which shall remain in full force and effect) shall forthwith become null and
void and no party hereto shall have any Liability or further obligation to any
other party hereto, except as provided in this Section 6.1.
 
ARTICLE 7

 
MISCELLANEOUS
 
Section 7.1           Notices.  All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (a) on the date
received if delivered personally or by facsimile or (b) on the date received if
mailed by registered or certified mail (return receipt requested), to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
 
If to Seller:

PetroAlgae Inc.
1901 S. Harbor City Boulevard

 
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Suite 300
Melbourne, Florida   32901
Attn:     David Szostak
Facsimile:  (321) 723-7047
 
With a copy (which shall not constitute notice) to:
 
Torys LLP
237 Park Avenue
20th Floor
New York, New York   10017
Attn:      Andrew J. Beck
Daniel P. Raglan
Facsimile:  (212)  682-0200
 
If to Purchaser:
 
Green Science Energy LLC
[Street]
[City, State, Zip]
Attn:
Facsimile:
 
Section 7.2           Amendments; No Waivers.
 
(a)          Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the Company and Purchaser; or in the case of a waiver, by the
party against whom the waiver is to be effective.
 
(b)         No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
 
Section 7.3           Fees and Expenses.  Except as otherwise expressly provided
herein, all costs and expenses incurred in connection with this Agreement and
the obligations contemplated hereby shall be paid by the party incurring such
cost or expense.  In the event of termination of this Agreement, the obligation
of each party to pay its own expenses will be subject to any rights of such
party arising from a breach of this Agreement by another party.
 
Section 7.4           Successors and Assigns; No Third-Party Beneficiaries.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided that no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each other party hereto,
but any such transfer or assignment will not relieve the appropriate party of
its obligations hereunder.  Nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement or any provision of this
Agreement.
 
 
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Section 7.5            Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
 
Section 7.6            Consent to Jurisdiction; Waiver of Jury Trial.
 
(a)           Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the Securities Purchase contemplated hereby may be brought in any federal or
state court located in the City of New York, Borough of Manhattan, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum.  Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 7.1 shall be
deemed effective service of process on such party.
 
(b)           Each party hereto hereby acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement, any document referred to in this Agreement or the
Securities Purchase contemplated hereby.
 
Section 7.7            Counterparts; Effectiveness.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.  No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
 
Section 7.8            Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof.
 
Section 7.9            Captions.  The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
 
 
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Section 7.10          Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the Securities Purchase
contemplated hereby is not affected in any manner materially adverse to any
parties.  Upon such a determination, the parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
 
Section 7.11          Definition and Usage.
 
For purposes of this Agreement:
 
“Governmental Entity” means any foreign, federal, state, local, municipal,
county or other governmental, quasi-governmental, administrative or regulatory
authority, body, agency, court, tribunal, commission or other similar entity
(including any branch, department or official thereof).
 
“Liability” means any debt, liability, commitment or obligation of any kind,
character or nature whatsoever, whether known or unknown, choate or inchoate,
secured or unsecured, accrued, fixed, absolute, contingent or otherwise, and
whether due or to become due.
 
“Lien” means any charges, claims, community property interests, conditions,
conditional sale or other title retention agreements, covenants, easements,
encumbrances, equitable interests, exceptions, liens, mortgages, options,
pledges, reservations, rights of first refusal, security interests, or
restrictions of any kind, including any restrictions on use, voting, transfer,
alienation, receipt of income, or exercise of any other attribute of ownership.
 
Section 7.12          Survival.  The representations and warranties of the
Purchaser set forth in Section 4.4, Section 4.5, Section 4.7, Section 4.10 and
Section 4.11, shall survive any termination hereof.
 
Section 7.13          Further Assurances.   From time to time, each party hereto
will execute such additional instruments and take such actions as may be
reasonably required to carry out the intent and purposes of this Agreement.
 
Section 7.14          Review of Agreement.  Each party hereto acknowledges that
it has had time to review this Agreement and, as desired, consult with
counsel.  In the interpretation of this Agreement, no adverse presumption shall
be made against any party on the basis that it has prepared, or participated in
the preparation of, this Agreement.
 
Section 7.15          Brokerage.  Each party hereto represents and warrants to
the other that there are no claims for brokerage commissions or finder’s fees or
agent’s commissions or other like payment in connection with this Agreement or
the transactions contemplated hereby, except for such commissions and fees
incurred by reason of any action taken by a party hereto that will be paid by
and be the responsibility of such party.

 
11

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[SIGNATURE PAGE FOLLOWS]

 
12

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
the day and year first above written by the duly authorized officers of Seller
and Purchaser.
 

 
SELLER:
     
PETROALGAE INC.
     
By:
/s/ David Szostak
   
Name: David Szostak
   
Title:  President
     
PURCHASER:
     
GREEN SCIENCE ENERGY LLC
       
By:
/s/ Patrick Regan
   
Name:
   
Title:

 
[SIGNATURE PAGE TO SECURITES PURCHASE AGREEMENT]
 
 
13

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EXHIBIT A
 
TO SECURITIES PURCHASE AGREEMENT
 
WARRANT
 
See attached.
 
 

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EXHIBIT B
 
Private Placement Memorandum, dated September 28,, 2009
 
 

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