EXHIBIT 4.1
ERF WIRELESS, INC.
2008 STOCK OPTION PLAN
ARTICLE I - PLAN
1.1 Purpose. This Plan is a plan for key employees, officers, directors,
and consultants of the Company and its Affiliates and is intended to advance the
best interests of the Company, its Affiliates, and its stockholders by providing
those persons who have substantial responsibility for the management and growth
of the Company and its Affiliates with additional incentives and an opportunity
to obtain or increase their proprietary interest in the Company, thereby
encouraging them to continue in the employ of the Company or any of its
Affiliates.
1.2 Rule 16b-3 Plan. The Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and therefore the Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the 1934 Act. To the extent any provision of the Plan or action by the
Board of Directors or Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee. In
addition, the Board of Directors may amend the Plan from time to time, as it
deems necessary in order to meet the requirements of any amendments to Rule
16b-3 without the consent of the shareholders of the Company.
1.3 Effective Date of Plan. The Plan shall be effective April 1, 2008
(the "Effective Date"). No Award shall be granted pursuant to the Plan ten years
after the Effective Date.
ARTICLE II - DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "Affiliate" means any subsidiary corporation. The term "subsidiary
corporation" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of the action or
transaction, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
2.2 "Award" means each of the following granted under this Plan:
Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted
Stock Award, Performance Stock Award or Stock Award.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
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2.5 "Committee" means the Compensation Committee of the Board of
Directors, or if no Compensation Committee has been formed, then it shall mean
the entire Board of Directors.
2.6 "Company" means ERF Wireless, Inc., a Nevada corporation.
2.7 "Consultant" means any person, including an advisor, engaged by the
Company or Affiliate to render services and who is compensated for such
services.
2.8 "Eligible Persons" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are (i) Employees and all
other key personnel, including officers and directors, of the Company or
Affiliate, or (ii) Consultants or independent contractors who provide valuable
services to the Company or Affiliate as determined by the Committee.
2.9 "Employee" means a person employed by the Company or any Affiliate
to whom an Award is granted.
2.10 "Fair Market Value" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the Nasdaq; or (c) if the Stock
is not listed on the Nasdaq, the average of the high and low bid quotations for
the Stock on that date as reported by the National Quotation Bureau
Incorporated; or (d) if none of the foregoing is applicable, an amount at the
election of the Committee equal to (x), the average between the closing bid and
ask prices per share of Stock on the last preceding date on which those prices
were reported or (y) that amount as determined by the Committee in good faith.
2.11 "Incentive Option" means an option to purchase Stock granted under
this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.
2.12 "Non-Employee Directors" means that term as defined in Rule 16b-3
under the 1934 Act.
2.13 "Nonqualified Option" means an option to purchase Stock granted
under this Plan other than an Incentive Option.
2.14 "Option" means both an Incentive Option and a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.15 "Option Agreement" means the written agreement by and between the
Company and an Eligible Person, which sets out the terms of an Option.
2.16 "Outside Director" shall mean a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.
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2.17 "Plan" means the ERF Wireless, Inc. 2008 Stock Option Plan, as set
out in this document and as it may be amended from time to time.
2.18 "Plan Year" means the Company's fiscal year.
2.19 "Performance Stock Award" means an award of shares of Stock to be
issued to an Eligible Person if specified predetermined performance goals are
satisfied as described in Article VII.
2.20 "Restricted Stock" means Stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with (i)
all rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.
2.21 "Restricted Stock Agreement" means an agreement between the Company
or any Affiliate and the Eligible Person pursuant to which the Eligible Person
receives a Restricted Stock Award subject to Article VI.
2.22 "Restricted Stock Award" means an Award of Restricted Stock.
2.23 "Restricted Stock Purchase Price" means the purchase price, if any,
per share of Restricted Stock subject to an Award. The Committee shall determine
the Restricted Stock Purchase Price. It may be greater than or less than the
Fair Market Value of the Stock on the date of the Stock Award.
2.24 "Stock" means the common stock of the Company, $.001 par value, or,
in the event that the outstanding shares of common stock are later changed into
or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
2.25 "Stock Appreciation Right" and "SAR" means the right to receive the
difference between the Fair Market Value of a share of Stock on the grant date
and the Fair Market Value of the share of Stock on the exercise date.
2.26 "Stock Award" means an Award of Stock to an Eligible Person.
2.27 "10% Stockholder" means an individual who, at the time the Option is
granted, owns Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any Affiliate. An individual shall
be considered as owning the Stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be considered as being owned
proportionately by or for its stockholders, partners, or beneficiaries.
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ARTICLE III - ELIGIBILITY
The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee shall
determine from time to time. However, no member of the Committee shall be
eligible to receive any Award or to receive Stock, Options, Stock Appreciation
Rights, or any Performance Stock Award under any other plan of the Company or
any of its Affiliates, if to do so would cause the individual not to be a
Non-Employee Director or Outside Director. The Board of Directors may designate
one or more individuals who shall not be eligible to receive any Award under
this Plan or under other similar plans of the Company.
ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The Committee may grant to those Eligible
Persons of the Company or any of its Affiliates, as it shall from time to time
determine, Awards under the terms and conditions of this Plan. The Committee
shall determine subject only to any applicable limitations set out in this Plan,
the number of shares of Stock to be covered by any Award to be granted to an
Eligible Person.
4.2 Dedicated Shares. The total number of shares of Stock with respect
to which Awards may be granted under the Plan shall be 15,000,000 shares. The
shares may be treasury shares or authorized but unissued shares. The number of
shares stated in this Section 4.2 shall be subject to adjustment in accordance
with the provisions of Section 4.5. In the event that any outstanding Award
shall expire or terminate for any reason or any Award is surrendered, the shares
of Stock allocable to the unexercised portion of that Award may again be subject
to an Award under the Plan.
4.3 Non-transferability. Awards shall not be transferable by the
Eligible Person otherwise than by will or under the laws of descent and
distribution, or pursuant to a qualified domestic relations order (as defined by
the Code or the rules thereunder), and shall be exercisable, during the Eligible
Person's lifetime, only by him or a transferee permitted by this Section 4. Any
attempt to transfer an Award other than under the terms of the Plan and the
Agreement shall terminate the Award and all rights of the Eligible Person to
that Award.
4.4 Requirements of Law. The Company shall not be required to sell or
issue any Stock under any Award if issuing that Stock would constitute or result
in a violation by the Eligible Person or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
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or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 Changes in the Company's Capital Structure.
(a) The existence of outstanding Options or Awards shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money,
services or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options under this Plan shall be appropriately
adjusted in such a manner as to entitle an Eligible Person to receive upon
exercise of an Option, for the same aggregate cash consideration, the equivalent
total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of shares of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class of shares
of Stock then reserved, that number and class of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class of Stock as the result of the event requiring the adjustment.
(b) If the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if the Company is
liquidated or sells or otherwise disposes of substantially all its assets while
unexercised Options remain outstanding under this Plan (each of the foregoing
referred to as a "Corporate Transaction"):
(i) Subject to the provisions of clause (ii) below, in the event
of such a Corporate Transaction, any unexercised Options shall
automatically accelerate so that they shall, immediately prior to the
specified effective date for the Corporate Transaction become 100% vested
and exercisable; provided, however, that any unexercised Options shall not
accelerate if and to the extent such Option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation
or parent thereof (the "Successor Corporation") or to be replaced with a
comparable award for the purchase of shares of the capital stock of the
Successor Corporation. Whether or not any unexercised Option is assumed or
replaced shall be determined by the Company and the Successor Corporation
in connection with the Corporate Transaction. The Board of Directors shall
make the determination of what constitutes a comparable award to the
unexercised Option, and its determination shall be conclusive and binding.
The unexercised Option shall terminate and cease to remain outstanding
immediately following the consummation of the Corporate Transaction,
except to the extent assumed by the Successor Corporation.
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(ii) All outstanding Options may be canceled by the Board of
Directors as of the effective date of any Corporate Transaction, if (i)
notice of cancellation shall be given to each holder of an Option and (ii)
each holder of an Option shall have the right to exercise that Option in
full (without regard to any limitations set out in or imposed under this
Plan or the Option Agreement granting that Option) during a period set by
the Board of Directors preceding the effective date of the merger,
consolidation, liquidation, sale, or other disposition and, if in the
event all outstanding Options may not be exercised in full under
applicable securities laws without registration of the shares of Stock
issuable on exercise of the Options, the Board of Directors may limit the
exercise of the Options to the number of shares of Stock, if any, as may
be issued without registration. The method of choosing which Options may
be exercised, and the number of shares of Stock for which Options may be
exercised, shall be solely within the discretion of the Board of
Directors.
(c) After a merger of one or more corporations into the Company or after
a consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Eligible Person shall be entitled to
have his Restricted Stock and shares earned under a Performance Stock Award
appropriately adjusted based on the manner the Stock was adjusted under the
terms of the agreement of merger or consolidation.
(d) In each situation described in this Section 4.5, the Committee will
make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.
(e) The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.
4.6 Election under Section 83(b) of the Code. No Employee shall exercise
the election permitted under Section 83(b) of the Code without written approval
of the Committee. Any Employee doing so shall forfeit all Awards issued to him
under this Plan.
ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 Type of Option. The Committee shall specify at the time of grant
whether a given Option shall constitute an Incentive Option or a Nonqualified
Option. Incentive Stock Options may only be granted to Employees.
5.2 Option Exercise Price. The price at which Stock may be purchased
under an Incentive Option shall not be less than the greater of: (a) 100% of the
Fair Market Value of the shares of Stock on the date the Option is granted or
(b) the aggregate par value of the shares of Stock on the date the Option is
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granted. The Committee in its discretion may provide that the price at which
shares of Stock may be purchased under an Incentive Option shall be more than
100% of Fair Market Value. In the case of any 10% Stockholder, the price at
which shares of Stock may be purchased under an Incentive Option shall not be
less than 110% of the Fair Market Value of the Stock on the date the Incentive
Option is granted. The price at which shares of Stock may be purchased under a
Nonqualified Option shall be such price as shall be determined by the Committee
in its sole discretion but in no event lower than the par value of the shares of
Stock on the date the Option is granted.
5.3 Duration of Options and SARS. No Option or SAR shall be exercisable
after the expiration of ten (10) years from the date the Option or SAR is
granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.
5.4 Amount Exercisable -- Incentive Options. Each Option may be
exercised from time to time, in whole or in part, in the manner and subject to
the conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding. To the extent that
the aggregate Fair Market Value (determined as of the time an Incentive Option
is granted) of the Stock with respect to which Incentive Options first become
exercisable by the optionee during any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company or any Affiliate) exceeds
$100,000, the portion in excess of $100,000 of the Incentive Option shall be
treated as a Nonqualified Option. In making this determination, Incentive
Options shall be taken into account in the order in which they were granted.
5.5 Exercise of Options. Each Option shall be exercised by the delivery
of written notice to the Committee setting forth the number of shares of Stock
with respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the option price of
the shares;
(b) stock at its Fair Market Value on the date of exercise (if approved
in advance in writing by the Committee);
(c) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance in writing by the Committee);
(d) an election to have shares of Stock, which otherwise would be issued
on exercise, withheld in payment of the exercise price (if approved in advance
in writing by the Committee); and/or
(e) any other form of payment which is acceptable to the Committee,
including without limitation, payment in the form of a promissory note, and
specifying the address to which the certificates for the shares are to be
mailed.
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As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or
less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Eligible Person, at the address specified
by the Eligible Person.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Eligible Person, the Eligible Person shall deliver to the Company certificates
registered in the name of the Eligible Person representing a number of shares of
Stock legally and beneficially owned by the Eligible Person, free of all liens,
claims, and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by a commercial bank or trust company or
by a brokerage firm having a membership on a registered national stock
exchange). The delivery of certificates upon the exercise of Options is subject
to the condition that the person exercising the Option provides the Company with
the information the Company might reasonably request pertaining to exercise,
sale or other disposition.
5.6 Stock Appreciation Rights. All Eligible Persons shall be eligible to
receive Stock Appreciation Rights. The Committee shall determine the SAR to be
awarded from time to time to any Eligible Person. The grant of a SAR to be
awarded from time to time shall neither entitle such person to, nor disqualify
such person from, participation in any other grant of awards by the Company,
whether under this Plan or any other plan of the Company. If granted as a
stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
5.7 Stock Appreciation Rights in Tandem with Options. Stock Appreciation
Rights may, at the discretion of the Committee, be included in each Option
granted under the Plan to permit the holder of an Option to surrender that
Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. In the event of the
surrender of an Option, or a portion of it, to exercise the Stock Appreciation
Rights, the shares represented by the Option or that part of it which is
surrendered, shall not be available for reissuance under the Plan. Each Stock
Appreciation Right issued in tandem with an Option (a) will expire not later
than the expiration of the underlying Option, (b) may be for no more than 100%
of the difference between the exercise price of the underlying Option and the
Fair Market Value of a share of Stock at the time the Stock Appreciation Right
is exercised, (c) is transferable only when the underlying Option is
transferable, and under the same conditions, and (d) may be exercised only when
the underlying Option is eligible to be exercised.
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5.8 Conditions of Stock Appreciation Rights. All Stock Appreciation
Rights shall be subject to such terms, conditions, restrictions or limitations
as the Committee deems appropriate, including by way of illustration but not by
way of limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company, or
payment of any applicable employment or withholding taxes.
5.9 Payment of Stock Appreciation Rights. The amount of payment to which
the Eligible Person who reserves an SAR shall be entitled upon the exercise of
each SAR shall be equal to the amount, if any by which the Fair Market Value of
the specified shares of Stock on the exercise date exceeds the Fair Market Value
of the specified shares of Stock on the date of grant of the SAR. The SAR shall
be paid in either cash or Stock, as determined in the discretion of the
Committee as set forth in the SAR agreement. If the payment is in Stock, the
number of shares to be paid shall be determined by dividing the amount of such
payment by the Fair Market Value of Stock on the exercise date of such SAR.
5.10 Exercise on Termination of Employment. Unless it is expressly
provided otherwise in the Option or SAR agreement, Options and SAR's granted to
Employees shall terminate three months after severance of employment of the
Employee from the Company and all Affiliates for any reason, with or without
Cause (defined below), other than death, retirement under the then established
rules of the Company, or severance for disability. The Committee shall determine
whether authorized leave of absence or absence on military or government service
shall constitute severance of the employment of the Employee at that time.
Notwithstanding anything contained herein, no Option or SAR may be exercised
after termination of employment for any reason (whether by death, disability,
retirement or otherwise) if it has not vested as at the date of termination of
employment. Cause shall mean any of the following: (A) conviction of a crime
(including conviction on a nolo contendere plea) involving a felony or
dishonesty, or moral turpitude; (B) deliberate and continual refusal to perform
employment duties reasonably requested by the Company or an affiliate after
thirty (30) days' written notice by certified mail of such failure to perform,
specifying that the failure constitutes cause (other than as a result of
vacation, sickness, illness or injury); (C) fraud or embezzlement as determined
by an independent certified public accountant firm; or (D) gross misconduct or
gross negligence in connection with the business of the Company or an affiliate
which has substantial effect on the Company or the affiliate.
5.11 Death. If, before the expiration of an Option or SAR, the Eligible
Person, whether in the employ of the Company or after he has retired or was
severed for disability, or otherwise dies, the Option or SAR may be exercised
until the earlier of the Option's or SAR's expiration date or six months
following the date of his death, unless it is expressly provided otherwise in
the Option or SAR agreement. After the death of the Eligible Person, his
executors, administrators, or any persons to whom his Option or SAR may be
transferred by will or by the laws of descent and distribution shall have the
right, at any time prior to the Option's or SAR's expiration or termination,
whichever is earlier, to exercise it, to the extent to which he was entitled to
exercise it immediately prior to his death, unless it is expressly provided
otherwise in the Option or SAR's agreement.
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5.12 Retirement. Unless it is expressly provided otherwise in the Option
Agreement, before the expiration of an Option or SAR, the Employee shall be
retired in good standing from the employ of the Company under the then
established rules of the Company, the Option or SAR may be exercised until the
earlier of the Option's or SAR's expiration date or three months following the
date of his retirement, unless it is expressly provided otherwise in the Option
or SAR agreement.
5.13 Disability. If, before the expiration of an Option or SAR, the
Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's expiration
date or six months after the date he was severed because of disability, unless
it is expressly provided otherwise in the Option or SAR agreement.
5.14 Substitution Options. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in this Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.
5.15 Reload Options. Without in any way limiting the authority of the
Board of Directors or Committee to make or not to make grants of Options
hereunder, the Board of Directors or Committee shall have the authority (but not
an obligation) to include as part of any Option Agreement a provision entitling
the Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Stock in accordance with this Plan
and the terms and conditions of the Option Agreement. Any such Reload Option (a)
shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (b) shall have an expiration
date which is the greater of (i) the same expiration date of the Option the
exercise of which gave rise to such Reload Option or (ii) one year from the date
of grant of the Reload Option; and (c) shall have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Reload Option which is an Incentive Option and
which is granted to a 10% Stockholder, shall have an exercise price which is
equal to one hundred ten percent (110%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified
Option, as the Board of Directors or Committee may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Reload Option as an Incentive Option shall be subject to the provisions of the
Code. There shall be no Reload Options on a Reload Option. Any such Reload
Option shall be subject to the availability of sufficient shares under Section
4.2 herein and shall be subject to such other terms and conditions as the Board
of Directors or Committee may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options.
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5.16 No Rights as Stockholder. No Eligible Person shall have any rights
as a stockholder with respect to Stock covered by his Option until the date a
stock certificate is issued for the Stock.
ARTICLE VI - AWARDS
6.1 Restricted Stock Awards. The Committee may issue shares of Stock to
an Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock shall
be subject to restrictions as to sale, transfer, alienation, pledge or other
encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Restricted Stock Award, and the other terms and provisions which are included
in a Restricted Stock Agreement.
6.2 Restrictions. Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation, any or
all of the following:
(a) a prohibition against the sale, transfer, alienation, pledge, or
other encumbrance of the shares of Restricted Stock, such prohibition to lapse
(i) at such time or times as the Committee shall determine (whether in annual or
more frequent installments, at the time of the death, disability, or retirement
of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of Restricted Stock forfeit,
or in the case of shares sold to an Eligible Person, resell back to the Company
at his cost, all or a part of such shares in the event of termination of the
Eligible Person's employment during any period in which the shares remain
subject to restrictions;
(c) a prohibition against employment of the holder of Restricted Stock
by any competitor of the Company or its Affiliates, or against such holder's
dissemination of any secret or confidential information belonging to the Company
or an Affiliate;
(d) unless stated otherwise in the Restricted Stock Agreement, (i) if
restrictions remain at the time of severance of employment with the Company and
all Affiliates, other than for reason of disability or death, the Restricted
Stock shall be forfeited; and (ii) if severance of employment is by reason of
disability or death, the restrictions on the shares shall lapse and the Eligible
Person or his heirs or estate shall be 100% vested in the shares subject to the
Restricted Stock Agreement.
6.3 Stock Certificate. Shares of Restricted Stock shall be registered in
the name of the Eligible Person receiving the Restricted Stock Award and
deposited, together with a stock power endorsed in blank, with the Company. Each
such certificate shall bear a legend in substantially the following form:
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"The transferability of this certificate and the shares of Stock
represented by it is restricted by and subject to the terms and conditions
(including conditions of forfeiture) contained in the ERF Wireless, Inc.
2008 Stock Option Plan, and an agreement entered into between the
registered owner and the Company. A copy of the Plan and agreement is on
file in the office of the Secretary of the Company."
6.4 Rights as Stockholder. Subject to the terms and conditions of the
Plan, each Eligible Person receiving a certificate for Restricted Stock shall
have all the rights of a stockholder with respect to the shares of Stock
included in the Restricted Stock Award during any period in which such shares
are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to shares
of Restricted Stock in cash or property other than Stock in the Company or
rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock in
the Company shall be added to and become a part of the Restricted Stock.
6.5 Lapse of Restrictions. At the end of the time period during which
any shares of Restricted Stock are subject to forfeiture and restrictions on
sale, transfer, alienation, pledge, or other encumbrance, such shares shall vest
and will be delivered in a certificate, free of all restrictions, to the
Eligible Person or to the Eligible Person's legal representative, beneficiary or
heir; provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.
6.6 Restriction Period. No Restricted Stock Award may provide for
restrictions continuing beyond ten (10) years from the date of grant.
6.7 Award of Stock. The Committee may award shares of Stock, without any
cash payment for such shares or without any restrictions, to designated Eligible
Persons for services rendered to the Company. The Stock may be awarded at, above
or below the Fair Market Value on the date of grant. The designation of a Stock
Award shall be made by the Committee in writing at any time after such Eligible
Person has provided value to the Company (or within such period as permitted by
IRS regulations). The Committee reserves the right to make adjustments in the
amount of an Award if in its discretion unforeseen events make such adjustment
appropriate.
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ARTICLE VII - PERFORMANCE STOCK AWARDS
7.1 Award of Performance Stock. The Committee may award shares of Stock,
without any payment for such shares, to designated Eligible Persons if specified
performance goals established by the Committee are satisfied. The terms and
provisions herein relating to these performance-based awards are intended to
satisfy Section 162(m) of the Code and regulations issued thereunder. The
designation of an employee eligible for a specific Performance Stock Award shall
be made by the Committee in writing prior to the beginning of the period for
which the performance is measured (or within such period as permitted by IRS
regulations). The Committee shall establish the maximum number of shares of
Stock to be issued to a designated Employee if the performance goal or goals are
met. The Committee reserves the right to make downward adjustments in the
maximum amount of an Award if in its discretion unforeseen events make such
adjustment appropriate.
7.2 Performance Goals. Performance goals determined by the Committee may
be based on specified increases in cash flow; net profits; Stock price; Company,
segment, or Affiliate sales; market share; earnings per share; return on assets;
and/or return on stockholders' equity.
7.3 Eligibility. The employees eligible for Performance Stock Awards are
the senior officers (i.e., chief executive officer, president, vice presidents,
secretary, treasurer, and similar positions) of the Company and its Affiliates,
and such other employees of the Company and its Affiliates as may be designated
by the Committee.
7.4 Certificate of Performance. The Committee must certify in writing
that a performance goal has been attained prior to issuance of any certificate
for a Performance Stock Award to any Employee. If the Committee certifies the
entitlement of an Employee to the Performance Stock Award, the certificate will
be issued to the Employee as soon as administratively practicable, and subject
to other applicable provisions of the Plan, including but not limited to, all
legal requirements and tax withholding. However, payment may be made in shares
of Stock, in cash, or partly in cash and partly in shares of Stock, as the
Committee shall decide in its sole discretion. If a cash payment is made in lieu
of shares of Stock, the number of shares represented by such payment shall not
be available for subsequent issuance under this Plan.
ARTICLE VIII - ADMINISTRATION
The Committee shall administer the Plan. All questions of interpretation
and application of the Plan and Awards shall be subject to the determination of
the Committee. A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options, which are designated to
be Incentive Options, to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the Eligible Persons to whom and the time or times at
which Options or Awards will be made;
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(b) determine the number of shares and the purchase price of Stock
covered in each Option or Award, subject to the terms of the Plan;
(c) determine the terms, provisions, and conditions of each Option and
Award, which need not be identical;
(d) accelerate the time at which any outstanding Option or SAR may be
exercised, or Restricted Stock Award will vest;
(e) define the effect, if any, on an Option or Award of the death,
disability, retirement, or termination of employment of the Employee;
(f) prescribe, amend and rescind rules and regulations relating to
administration of the Plan; and
(g) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend this
Plan at any time, in its sole and absolute discretion; provided, however, that
to the extent required to qualify this Plan under Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, no amendment that
would (a) materially increase the number of shares of Stock that may be issued
under this Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
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ARTICLE X - MISCELLANEOUS
10.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.
10.2 No Employment Obligation. The granting of any Option or Award shall
not constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of this Plan, if
the Committee finds by a majority vote after full consideration of the facts
that an Eligible Person, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the
Company or Affiliate, or disclosed trade secrets of the Company or an Affiliate,
or (b) participated, engaged in or had a material, financial, or other interest,
whether as an employee, officer, director, consultant, contractor, stockholder,
owner, or otherwise, in any commercial endeavor in the United States which is
competitive with the business of the Company or an Affiliate without the written
consent of the Company or Affiliate, the Eligible Person shall forfeit all
outstanding Options and all outstanding Awards, and including all exercised
Options and other situations pursuant to which the Company has not yet delivered
a stock certificate. Clause (b) shall not be deemed to have been violated solely
by reason of the Eligible Person's ownership of stock or securities of any
publicly owned corporation, if that ownership does not result in effective
control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
10.4 Tax Withholding. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Eligible Person any sums required
by federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or SAR, lapse of restrictions on Restricted Stock, or
award of Performance Stock. In the alternative, the Company may require the
Eligible Person (or other person exercising the Option, SAR or receiving the
Stock) to pay the sum directly to the employer corporation. If the Eligible
Person (or other person exercising the Option or SAR or receiving the Stock) is
required to pay the sum directly, payment in cash or by check of such sums for
taxes shall be delivered within 10 days after the date of exercise or lapse of
restrictions. The Company shall have no obligation upon exercise of any Option
or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.
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10.5 Written Agreement or Course of Conduct. Each Option and Award shall
be embodied in a written agreement which shall be subject to the terms and
conditions of this Plan and shall be signed by the Eligible Person and by a
member of the Committee on behalf of the Committee and the Company or an
executive officer of the Company, other than the Eligible Person, on behalf of
the Company. The agreement may contain any other provisions that the Committee
in its discretion shall deem advisable which are not inconsistent with the terms
of this Plan. Notwithstanding the foregoing, a written agreement is not required
if the Option or Award is granted in the ordinary course of conduct of the
business and the Company has sufficient accounting records reflecting the
services rendered in connection with the grant.
10.6 Indemnification of the Committee and the Board of Directors. With
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments, and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
10.7 Gender. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.
10.8 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
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10.9 Other Compensation Plans. The adoption of this Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
10.10 Other Options or Awards. The grant of an Option or Award shall not
confer upon the Eligible Person the right to receive any future or other Options
or Awards under this Plan, whether or not Options or Awards may be granted to
similarly situated Eligible Persons, or the right to receive future Options or
Awards upon the same terms or conditions as previously granted.
10.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
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