Exhibit 10.7
PetroTech Holdings, Corp.
c/o Laurus Capital Management, LLC
335 Madison Avenue,
10 th Floor
New York, New York 10017
May 12, 2009
PetroAlgae Inc.
11901 South Harbor City Blvd. Third
Floor
Melbourne, Florida 32901
Attn: David Szostak, President
Re: Letter
Agreement
Gentlemen:
Reference is made to PetroTech
Holding, Corp.’s (“ PetroTech ”) current
holdings of 100,000,000 million shares of common stock, par
value $0.001 per share, of PetroAlgae Inc. (“
PetroAlgae ” or “ Issuer ”), a
publicly traded company quoted on the Over-the-Counter Electronic
Bulletin Board (the “ Principal Market ”) under
the symbol “PALG” (the “ Equity Interest
”).
1. PetroTech and PetroAlgae each
hereby agree, subject to the restrictions described below, to
consummate a merger and/or consolidation (a “ Merger
”) of Petrotech with and into PetroAlgae, with PetroAlgae as
the surviving party of the Merger, to take place promptly following
the first date upon which (i) PetroAlgae shall have attained,
for a consecutive twelve (12) month period, EBITDA, as
calculated in accordance with GAAP or otherwise in a manner agreed
to by each of the parties hereto, of not less than $100,000,000
(such first date, the “ Trigger Date ”) and
(ii) the Merger Pre-Conditions (as defined below) shall have
been satisfied. Each of PetroTech and PetroAlgae hereby agree to
negotiate in good faith the final definitive documentation
necessary to effect the Merger, such negotiation to commence
promptly following or in reasonable anticipation of the occurrence
of the Trigger Date. Such final document shall include, without
limitation, the following terms and conditions (the “
Merger Pre-Conditions ”):
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a.
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The Equity
Interests and all other assets and liabilities of PetroTech as of
closing date of the Merger (the “ Exchanged Assets
”) shall at the time of closing of the Merger be exchanged
with PetroAlgae for newly issued shares of common stock, par value
$0.001 per share, of PetroAlgae (the “ Exchanged
Shares ”). The number of Exchanged Shares to be issued to
the owners of PetroTech or their designee(s) shall be determined by
dividing the fair market value of the Exchanged Assets (less
liabilities of PetroTech that are assumed by PetroAlgae) by the
average closing price of each share of common stock of PetroAlgae
as reported by Bloomberg, L.P. on the Principal Market for the five
(5) trading days immediately preceding the closing date of the
Merger.
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b.
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Each of the
Issuer, each registered owner, option holder and warrant holder of
PetroTech as of the Trigger Date (collectively, the “
Owners ” and each, an “ Owner ”),
XL TechGroup, Inc. (“ XLT ” and, together with
each Owner, the “ Related Shareholders ” and
each, a “ Related Shareholder ”), shall have
agreed to, executed and delivered to all other parties thereto, a
shareholders agreement (the “ Sh
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