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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 witho
