Unassociated Document


    
      
         

      

      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).

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      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.

       

      
        
           


        

        
          2

          
            

          

        

        
           


        

      

       

      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.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

       

      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).


      
        
           


        

        
          4

          
            

          

        

        
           


        

      

       

      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


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

       

      (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).


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

       

      (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;


      
        
           


        

        
          7

          
            

          

        

        
           


        

      

       

      (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

      

        
          
             


          

          
            8

            
              

            

          

          
             


          

        

      

       

      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.

       

      
        
           


        

        
          9

          
            

          

        

        
           


        

      

       

      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.

       

      
        
           


        

        
          10

          
            

          

        

        
           


        

      

       

      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

        
          

        

      

      
         


      

    

     

    [SIGNATURE
PAGE FOLLOWS]


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    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

        
          

        

      

      
         


      

    


    EXHIBIT
A

     

    TO
SECURITIES PURCHASE AGREEMENT

     

    WARRANT

     

    See
attached.

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    EXHIBIT
B

     

    Private
Placement Memorandum, dated September 28,, 2009