Exhibit 4
PETROALGAE INC.
2009 EQUITY COMPENSATION
PLAN
The purpose of this PetroAlgae Inc.
2009 Equity Compensation Plan (the “Plan”) is to
provide (i) employees of PetroAlgae Inc., a Delaware
corporation (the “Company”) and its parent and
subsidiaries (including without limitation PA LLC, a Delaware
limited liability company f/k/a PetroAlgae, LLC, hereinafter
“PA”), (ii) certain consultants and advisors who
perform services for the Company and its parent and subsidiaries
(including without limitation PA) and (iii) non-employee
members of the Board of Directors of the Company and its parent and
subsidiaries (including without limitation PA) with the opportunity
to receive grants of incentive stock options, nonqualified stock
options, stock awards, and other stock-based awards. The Plan also
provides employees of PA with the opportunity to exchange their PA
units (issued to them pursuant to PA’s Equity Incentive Plan)
for stock-based awards in the Company, on such terms as are
provided below. The Company believes that the Plan will encourage
the participants to contribute materially to the growth of the
Company, thereby benefiting the Company’s stockholders, and
will align the economic interests of the participants with those of
the stockholders.
The Plan is effective as of
June 17, 2009.
Section 1.
Definitions
The following terms shall have the
meanings set forth below for purposes of the Plan:
(a) “Award” shall mean
an Option or other form of Stock Award granted under the
Plan.
(b) “Award Agreement”
shall mean the paper or electronic document evidencing an Award
granted under the Plan.
(c) “Board” shall mean
the Board of Directors of the Company.
(d) “Change of Control”
shall be deemed to have occurred if:
(i) Any “person” (as
such term is used in sections 13(d) and 14(d) of the Exchange Act)
becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the
combined voting power of the then outstanding securities of the
Company; provided that a Change of Control shall not be deemed to
occur as a result of a transaction in which the Company becomes a
subsidiary of another corporation and in which the stockholders of
the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares
entitling such stockholders to more than fifty percent
(50%) of all votes to which all stockholders of the parent
corporation would be entitled in the election of
directors.
(ii) The consummation of (A) a
merger or consolidation of the Company with another corporation
where the stockholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own, immediately
after the merger or consolidation, shares entitling such
stockholders to more than fifty percent (50%) of all votes to
which all stockholders of the surviving corporation would be
entitled in the election of directors, or where the members of the
Board, immediately prior to the merger or consolidation, would not,
immediately after the merger or consolidation, constitute a
majority of the board of directors of the surviving corporation,
(B) a sale or other disposition of all or substantially all of
the assets of the Company, or (C) a liquidation or dissolution
of the Company.
Notwithstanding the foregoing, with
respect to Awards subject to Section 409A of the Code, what
constitutes a Change of Control shall be set forth in the
underlying Award programs and/or Award Agreements.
(e) “Code” shall mean
the Internal Revenue Code of 1986, as amended, including any rules
and regulations promulgated thereunder.
(f) “Committee” shall
mean the committee, consisting of one or more members of the Board
who shall satisfy the requirements of Rule 16b-3 of the 1934 Act
and who shall also qualify, and remain qualified, as “outside
directors”, as defined in Section 162(m) of the Code,
designated by the Board to administer the Plan. Notwithstanding the
foregoing, if the Board administers the Plan, references to the
“Committee” shall be deemed to refer to the
Board.
(g) “Company” shall mean
PetroAlgae Inc., a Delaware corporation.
(h) “Common Stock” shall
mean the common stock of the Company, par value $.001 per
share.
(i) “Covered Employee”
shall mean “covered employee” as such term is defined
in Section 162(m) of the Code.
(j) “Deferred Stock”
shall mean an Award payable in shares of Common Stock at the end of
a specified deferral period that is subject to the terms,
conditions and limitations described or referred to in Section 7(d)
and Section 7(f).
(k) “Dividend
Equivalent” shall mean an amount determined by multiplying
the number of shares of Common Stock subject to an Award by the
per-share cash dividend paid by the Company on its outstanding
Common Stock, or the per-share fair market value (as determined by
the Committee) of any dividend paid on its outstanding Common Stock
in consideration other than cash.
(l) “Effective Date”
shall mean June 17, 2009.
(m) “Employee” shall
have the meaning set forth in General Instruction A to the
Registration Statement on Form S-8 promulgated under the Securities
Act of 1933, as amended, or any successor form or statute, as
determined by the Committee.
(n) “Employer” shall
mean the Company and each of its Parent and
Subsidiaries.
(o) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
(p) “Exercise Price”
shall mean the purchase price per share of Common Stock subject to
an Option.
(q) “Fair Market Value”
shall mean:
(i) If the Common Stock is publicly
traded, then the Fair Market Value per share shall be determined as
follows: (A) if the Common Stock has been admitted to trading
on the NASDAQ Global Select Market, the NASDAQ Global Market, or
the NASDAQ Capital Market (collectively, the “NASDAQ
Market”), and such is the principal market for the Common
Stock, the last reported sale price thereof on the relevant date or
(if there were no trades on that date) the latest preceding date
upon which a sale was reported, or (B) if the Common Stock is
then admitted to trading on the OTCBB, the last reported sale price
of a share of Common Stock on the relevant date, as reported by the
OTCBB or, if shares are not reported on the OTCBB, as determined by
the Committee through any reasonable valuation method authorized
under the Code.
(ii) If the Common Stock is not
publicly traded or, if publicly traded, is not subject to reported
transactions as set forth above, the Fair Market Value per share
shall be as determined by the Committee through the reasonable
application of any valuation method authorized under the Code and
the Treasury Regulations thereunder.
4-2
(r) “Incentive Stock
Option”, or “ISO”, shall mean an option to
purchase Common Stock that is intended to meet the requirements of
Section 422 of the Code.
(s) “Misconduct” shall
mean the commission of any act of fraud, embezzlement or dishonesty
by the Employee, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Company (or any
Parent or Subsidiary), any attempt by such person, directly or
indirectly, to induce any employee of the Company or any Subsidiary
to be employed or perform services elsewhere, any disparagement by
such person of the Company, any Subsidiary or any of their
respective officers or directors, or any other intentional
misconduct by such person adversely affecting the business or
affairs of the Company (or any Parent or Subsidiary) in a material
manner. The foregoing definition shall not in any way preclude or
restrict the right of the Company (or any Parent or Subsidiary) to
discharge or dismiss any Employee in the Service of the Company (or
any Parent or Subsidiary) for any other acts or omissions, but such
other acts or omissions shall not be deemed, for purposes of the
Plan, to constitute grounds for termination for
Misconduct.
(t) “1934 Act” shall
mean the Securities and Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder and any successor
thereto.
(u) “Non-Employee
Director” shall mean a non-employee member of the Board or a
non-employee member of the board of directors of any Parent or
Subsidiary.
(v) “Nonqualified Stock
Option” shall mean an option to purchase Common Stock that is
not designated as an Incentive Stock Option.
(w) “Option” shall mean
the right to purchase a specified number of shares of Common Stock
at a stated exercise price for a specified period of time subject
to the terms, conditions and limitations described or referred to
in Section 6 and Section 7(f). The term “Option” as
used in this Plan includes the terms “Nonqualified Stock
Option” and “Incentive Stock Option”.
(x) “Other Stock-Based
Award” shall mean any Award based on, measured by or payable
in Common Stock, as described in Section 8.
(y) “Parent” shall mean
any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in
the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(z) “Participant” shall
mean an Employee who has been granted an Award under the
Plan.
(aa) “Plan
Administrator” shall have the meaning set forth in Section
9.
(bb) “Restriction
Period” shall mean the period of time during which the Stock
Awards remain subject to the restrictions designated in the Award
Agreement.
(cc) “Restricted Stock”
shall mean an Award of Common Stock that is subject to the terms,
conditions, restrictions and limitations described or referred to
in Section 7(c) and Section 7(f).
(dd) “Section 16(a)
Officer” shall mean an Employee who is subject to the
reporting requirements of Section 16(a) of the 1934
Act.
(ee) “Securities Act”
shall mean the Securities Act of 1933, as amended.
(ff) “Separation from
Service” shall have the meaning set forth in
Section 1.409A-1(h) of the Treasury Regulations.
4-3
(gg) “Service” shall
mean the performance of services for the Employer, whether now
existing or subsequently established) by a person in the capacity
of an Employee, except to the extent otherwise specifically
provided in the Award Agreement. For purposes of the Plan, an
Employee shall be deemed to cease Service immediately upon the
occurrence of the either of the following events: (i) the
Employee no longer performs services in any of the foregoing
capacities for the Employer or (ii) the entity for which
Employee is performing such services ceases to remain a Parent or
Subsidiary of the Company, even though the Employee may
subsequently continue to perform services for that
entity.
(hh) “Stock Award” shall
have the meaning set forth in Section 7(a).
(ii) “Stock Payment”
shall mean a stock payment that is subject to the terms, conditions
and limitations described or referred to in Section 7(b) and
Section 7(f).
(jj) “Stock Unit” shall
mean a stock unit that is subject to the terms, conditions and
limitations described or referred to in Section 7(e) and Section
7(f).
(kk) “Subsidiary” shall
mean any corporation, limited liability company, or other form of
corporate entity (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each such entity
(other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock or other form of equity
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock or other form of equity in one
of the other corporations in such chain. As used herein, Subsidiary
shall include, without limitation, PA.
(ll) “Treasury
Regulations” shall mean the regulations promulgated under the
Code by the United States Internal Revenue Service, as
amended.
Section 2.
Administration
(a) Committee . The Plan
shall be administered and interpreted by the Board or by a
Committee appointed by the Board. To the extent that the Board
administers the Plan, references in the Plan to the
“Committee” shall be deemed to refer to the Board. The
Committee shall have full and exclusive power to administer and
interpret the Plan, to grant Awards and to adopt such
administrative rules, regulations, procedures and guidelines
governing the Plan and the Awards as if deems appropriate, in its
sole discretion, from time to time.
(b) Committee Authority . The
Committee’s sole authority shall include, but not be limited
to, the authority to (i) determine the individuals to whom
Awards shall be made under the Plan, (ii) determine the type,
size and terms of the Awards to be made to each such individual,
(iii) determine the time when the Awards will be made and the
duration of any applicable exercise or restriction period,
including the criteria for exercisability and the acceleration of
exercisability, (iv) amend the terms of any previously issued
Award, subject to the provisions of Section 18, (v) establish
all other terms, conditions, and limitations applicable to Awards,
Award programs and the shares of Common Stock issued pursuant
thereto, and (vi) deal with any other matters arising under
the Plan. The Committee may accelerate or defer the vesting or
payment of Awards, cancel or modify outstanding Awards, waive any
conditions or restrictions imposed with respect to Awards or the
Common Stock issued pursuant to Awards and make any and all other
determinations that it deems appropriate with respect to the
administration of the Plan, subject to the limitations contained in
Section 7(f) and Section 409A of the Code with respect to all
Participants, and subject to the provisions of Section 162(m)
of the Code with respect to Covered Employees.
(c) Committee Determinations
. The Committee shall have full power and express discretionary
authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan and for the
conduct of its business as it deems necessary or advisable, in its
sole discretion. The Committee’s interpretations of the Plan
and all determinations made by the Committee pursuant to the powers
vested in it hereunder shall be conclusive and binding on all
persons having any interest in the Plan or in any awards granted
hereunder. The Committee shall have the power to prescribe and
modify, as necessary, the form of Award Agreement, to correct any
defect, supply
4-4
any omission or clarify any inconsistency in the
Plan and/or in any Award Agreement and to take such actions and
make such administrative determinations that the Committee deems
appropriate in its sole discretion.
(d) Delegation of Authority .
To the extent permitted by applicable law, the Committee may at any
time delegate to one or more officers or directors of the Company
some or all of its authority over the administration of the Plan,
with respect to persons who are not Section 16(a) Officers or
Covered Employees.
(e) Indemnification . No
member of the Committee nor any other person to whom any duty or
power relating to the administration or interpretation of the Plan
has been delegated shall be personally liable for any action or
determination made with respect to the Plan, except for his or her
own willful misconduct or as expressly provided by statute. The
members of the Committee and its delegates, including any employee
with responsibilities relating to the administration of the Plan,
shall be entitled to indemnification and reimbursement from the
Company, to the extent permitted by applicable law and the By-laws
and policies of the Company. In the performance of its functions
under the Plan, the Committee (and each member of the Committee and
its delegates) shall be entitled to rely upon information and
advice furnished by the Company’s officers, accountants,
counsel and any other party they deem appropriate, and neither the
Committee nor any such person shall be liable for any action taken
or not taken in reliance upon any such advice.
Section 3.
Awards
Awards under the Plan may consist of
grants of Options as described in Section 6, Stock Awards as
described in Section 7, and Other Stock-Based Awards as described
in Section 8. All Awards shall be subject to the terms and
conditions set forth herein and to such other terms and conditions
consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in the
Award Agreement. Awards shall not be pensionable. Notwithstanding
anything herein to the contrary, no Options, Awards or Other
Stock-Based Awards shall be granted hereunder unless the shares to
be issued in connection therewith have been registered under a then
currently effective registration statement under the Securities
Act.
Section 4. Available Shares
of Common Stock Subject to the Plan
(a) Shares Authorized .
Subject to adjustment as described in Section 4(b) below, the
aggregate number of shares of Common Stock that may be issued to
Participants pursuant to Awards (including ISOs) granted under the
Plan shall not exceed four million (4,000,000) shares of
Common Stock. Subject to adjustment as described in Section 4(b)
below, the aggregate number of shares of Common Stock that may be
granted to any single individual during a calendar year in the form
of Options and/or Stock Awards shall not exceed one million
(1,000,000). Common Stock issued pursuant to Awards granted under
the Plan may be authorized but unissued shares of Common Stock or
reacquired shares of Common Stock (including shares purchased by
the Company on the open market for purposes of the Plan), or both.
If and to the extent Options granted under the Plan terminate,
expire or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any Stock Awards are forfeited,
terminated or otherwise not paid in full, the shares subject to
such Awards shall again be available for purposes of the Plan.
Shares of Common Stock surrendered in payment of the Exercise Price
of an Option or withheld for purposes of satisfying the
Company’s minimum tax withholding obligations with respect to
Awards under the Plan shall again be available for issuance or
transfer under the Plan. All Awards under the Plan shall be
expressed in shares of Common Stock. To the extent that Awards are
paid in cash, and not in shares of Common Stock, the shares subject
to such Awards shall again be available for issuance or transfer
under the Plan.
(b) Adjustments . If there is
any change in the number or kind of shares of Common Stock
outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split or combination or exchange of shares,
(ii) by reason of a reclassification or change in par value,
or (iii) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without the
Company’s receipt of consideration, or if the value of
outstanding shares of Common Stock is substantially reduced as a
result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number and kind
of shares of Common Stock available for issuance under the Plan,
the kind and number of shares covered by outstanding Awards and the
price per share or the applicable market value of such Awards shall
be equitably adjusted by the Committee, in such manner as the
Committee deems appropriate to preclude, to the extent practicable,
the enlargement or
4-5
dilution of rights and benefits under the Plan
and such outstanding Awards. In the event of a Change in Control of
the Company, the provisions of Section 14 of the Plan shall apply.
Any adjustments determined by the Committee shall be final, binding
and conclusive. The Company shall give each Participant notice of
an adjustment hereunder and, upon notice, such adjustment shall be
conclusive and binding for all purposes. Notwithstanding the
foregoing, the Committee may, in its discretion, decline to adjust
any Award made to a Participant, if it determines that such
adjustment would violate applicable law or result in adverse tax
consequences to the Participant or to the Company.
Section 5. Eligibility for
Participation
(a) Eligible Persons . The
Committee shall determine which Employees shall be eligible to
receive Awards under the Plan.
(b) Participation by
Subsidiaries . Employees of Subsidiaries may participate in the
Plan upon approval of Awards to such Employees by the Committee. A
subsidiary’s participation in the Plan may be conditioned
upon the Subsidiary’s agreement to reimburse the Company for
costs and expenses of such participation, as determined by the
Company. The committee may terminate the Subsidiary’s
participation in the Plan at any time and for any reason. If a
Subsidiary’s participation in the Plan shall terminate, such
termination shall not relieve it of any obligations theretofore
incurred by it under the Plan, except with the approval of the
Committee, and the Committee shall determine, in its sole
discretion, the extent to which Employees of the Subsidiary may
continue to participate in the Plan with respect to previously
granted Awards. Unless the Committee determines otherwise, a
Subsidiary’s participation in the plan shall terminate upon
the occurrence of any event that results in such entity no longer
constituting a Subsidiary as defined herein; provided, however,
that such termination shall not relieve such Subsidiary of any of
its obligations to the Company theretofore incurred by it under the
Plan, except with the approval of the Committee. Notwithstanding
the foregoing, unless otherwise specified by the Committee, upon
any such Subsidiary ceasing to be a Subsidiary as defined herein,
the Employees and participants employed by such Subsidiary shall be
deemed to have terminated employment for purposes of the Plan. With
respect to Awards subject to Section 409A of the Code, for
purposes of determining whether a distribution is due to a
Participant, such Participant’s employment shall be deemed
terminated as described in the preceding sentence only if the
Committee determines that a Separation from Service has
occurred.
(c) Participation outside of the
United States . In order to facilitate the granting of Awards
to Employees who are foreign nationals or who are employed outside
of the U.S., the Committee may provide for such special terms and
conditions, including, without limitation, substitutes for Awards,
as the Committee may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom. The
Committee may approve any supplements to, or amendments,
restatements or alternative versions of, this Plan as it may
consider necessary or appropriate for the purposes of this Section
5(c) without thereby affecting the terms of this Plan as in effect
for any other purpose, and the Secretary, or any Assistant
Secretary or other appropriate officer of the Company, may certify
any such documents as having been approved and adopted pursuant to
properly delegated authority; provided, that no such supplements,
amendments, restatement or alternative versions shall include any
provisions that are inconsistent with the intent and purpose of
this Plan, as then in effect; and further provided that any such
action taken with respect to a Covered Employee shall be taken in
compliance with Section 162(m) of the Code and that any such
action taken with respect to an Employee who is subject to
Section 409A of the Code shall be taken in compliance with
Section 409A of the Code.
Section 6.
Options
The Committee may grant Options upon
such terms as the Committee deems appropriate subject to the
following provisions:
(a) Number of Shares . The
Committee shall determine the number of shares of Common Stock that
will be subject to Option grant.
(b) Type of Option and Price
.
4-6
(i) The Committee may grant
Incentive Stock Options or Nonqualified Stock Options or any
combination of the two, provided, however, that Incentive Stock
Options may be granted only to employees of the Company, its parent
or any subsidiary of the Company, as such terms are defined in
Sections 424
