ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On October 9, 2009, PetroAlgae Inc. (" PetroAlgae " or the " Company " ) entered into agreements with Valens U.S. SPV I, LLC ("Valens U.S.") and Valens Offshore SPV I, Ltd. ("Valens Offshore") pursuant to which the Company (i) agreed to sell to Valens U.S. 68,625 shares of the Company's common stock (" Common Stock ") at a price of $8.00 per share and a warrant to purchase 68,625 shares of Common Stock at an exercise price of $15.00 per share, for an aggregate purchase price of $549,000.00, and (ii) agreed to sell to Valens Offshore 56,375 shares of Common Stock at a price of $8.00 per share and a warrant to purchase 56,375 shares of Common Stock at an exercise price of $15.00 per share, for an aggregate purchase price of $451,000.00.

The $1,000,000.00 of total proceeds from this private placement will be used to fund the working capital needs of PA LLC, an entity in which PetroAlgae holds an approximate 81.3% membership interest on a fully-diluted basis.

6-Month Price Protection Rights on the Common Stock Sold

Under the terms of each purchase agreement for the Common Stock, if the Company issues within the next 6 months Common Stock, options to purchase or rights to subscribe for shares of Common Stock, securities by their terms convertible into, exercisable or exchangeable for shares of Common Stock, or options to purchase or rights to subscribe for such convertible, exercisable or exchangeable securities without consideration or for consideration per share less than $8.00 (as may be subsequently adjusted), then the Company shall issue to Valens U.S. and Valens Offshore for no additional consideration such additional shares of Common Stock which when aggregated to the shares purchased pursuant to the purchase agreements would result in an effective price per share equal to that of the new issuance. Securities issued under the Company's 2009 Equity Compensation Plan or any shares of Common Stock issued to a strategic partner or licensee in connection with a joint venture, strategic alliance, licensing agreement, or other similar form of agreement are excluded from this price protection provision.

6-Month Price Protection Rights on the Warrants Sold

Under the terms of each warrant issued to Valens U.S. and Valens Offshore, for the next 6 months, any shares of Common Stock issued pursuant to the exercise of the warrant shall be entitled to the same price protection as described in the paragraph above.

Furthermore, if the Company issues within the next 6 months options to purchase or rights to subscribe for shares of Common Stock, securities by their terms convertible into, exercisable or exchangeable for shares of Common Stock, or options to purchase or rights to subscribe for such convertible, exercisable or exchangeable securities without consideration or for consideration per share less than $15.00 per share (as may be subsequently adjusted), then the exercise price under each warrant shall be lowered to a price equal to the price per share for which such shares of Common Stock may be issued. Securities issued under the Company's 2009 Equity Compensation Plan or any shares of Common Stock issued to a strategic partner or licensed in connection with a join venture, strategic alliance, licensing agreement, or other form of agreement are excluded from this price protection provision.

Relationship between PetroAlgae, Valens U.S. and Valens Offshore

As of November 16, 2009, PetroTech Holdings Corp., PetroAlgae's principal shareholder, is the record owner of 100,000,000 shares of Common Stock, Valens Offshore is the record owner of 2,761,623 shares of Common Stock and Valens U.S. is the record owner of 975,480 shares of Common Stock. PetroTech Holdings Corp. is owned by a number of related funds, which include Valens U.S. and Valens Offshore.

The securities of the PetroAlgae held by PetroTech Holdings Corp., Valens Offshore and Valens U.S. represent, as of November 16, 2009 in the aggregate approximately 97.3% of the total voting power of PetroAlgae on a fully-diluted basis.

---