**EXHIBIT 10.3**

 

**AXESSTEL, INC.**

**2003 STOCK OPTION PLAN**

 

**1. ESTABLISHMENT, PURPOSE ANDTERM OF PLAN.**

 

1.1 **Establishment**. The Axesstel,Inc. 2003 Stock Option Plan (the *“********Plan**********”*) is established effective as of March 23, 2003, the date on which it is approved by the stockholders of the Company (the “***EffectiveDate***”). 

 

1.2 **Purpose**. The purpose of thePlan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons tocontribute to the growth and profitability of the Participating Company Group. 

 

1.3 **Term of Plan**. The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued andall restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Incentive Stock Options shall be granted, if at all, within ten (10) years from the Effective Date.

 

**2. DEFINITIONS AND CONSTRUCTION.**

 

2.1 **Definitions.**Whenever used herein, the following terms shall havetheir respective meanings set forth below: 

 

(a) “***Board***” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s). 

 

(b) “***Code***” means the InternalRevenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. 

 

(c) “***Committee***” means the compensation committee or other committee of the Board duly appointed to administer thePlan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power toamend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. 

 

(d) “***Company***” means Axesstel, Inc., a Nevada corporation, or any successor corporation thereto. 

 

(e) “***Consultant***” means a personengaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided wouldnot preclude the Company from offering or selling securities to such 

 

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person pursuant to the Plan in reliance on registration on a Form S-8 Registration Statement under the Securities Act. 

 

(f) “***Director***” means a member of theBoard or of the board of directors of any other Participating Company. 

 

(g) “***Disability***” means the permanent and total disability of the Optionee within the meaning of Section 22(e)(3) of the Code. 

 

(h) “***Employee***” means any person treated as an employee (including an Officer or aDirector who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, thatneither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual hasbecome or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the Plan as of the time of theCompany’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination. 

 

(i) “***Exchange Act***” means theSecurities Exchange Act of 1934, as amended. 

 

(j) “***Fair Market Value***” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expresslyallocated to the Company herein, subject to the following: 

 

(i) If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of theclosing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other national or regional securities exchange or market system constituting the primarymarket for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the dateon which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion. 

 

(ii) If, on such date, the Stock is not listed on a nationalor regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.

 

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(k) “***Incentive Stock Option***” means an Option intended to be (asset forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code. 

 

(l) “***Insider***” means an Officer, a Director of the Company or other person whose transactions in Stock are subjectto Section 16 of the Exchange Act. 

 

(m)“***Nonstatutory Stock Option***” means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option. 

 

(n) “***Officer***” means any person designated by the Board as an officer of the Company.

 

(o) “***Option***” means aright to purchase Stock pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option. 

 

(p) “***Option Agreement***” means a written agreement between the Company and an Optionee setting forth the terms,conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the exercise thereof. An Option Agreement may consist of a form of “Notice of Grant of Stock Option” and a form of “Stock OptionAgreement” incorporated therein by reference, or such other form or forms as the Board may approve from time to time. 

 

(q) “***Optionee***” means a person who has been granted one or more Options. 

 

(r) “***Parent Corporation***” means anypresent or future “parent corporation” of the Company, as defined in Section 424(e) of the Code. 

 

(s) “***Participating Company***” means the Company or any Parent Corporation or Subsidiary Corporation. 

 

(t) “***Participating Company Group***”means, at any point in time, all corporations collectively which are then Participating Companies. 

 

(u) “***Rule 16b-3***” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule orregulation. 

 

(v) “***SecuritiesAct***” means the Securities Act of 1933, as amended. 

 

(w) “***Service***” means an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. An Optionee’s Serviceshall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, providedthat there is no interruption or termination of the Optionee’s Service. Furthermore, an Optionee’s Service shall not be deemed to have terminated if the Optionee takes any military 

 

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leave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90) days, on theone hundred eighty-first (181st) day following the commencement of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory StockOption unless the Optionee’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service forpurposes of determining vesting under the Optionee’s Option Agreement. An Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Serviceceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether an Optionee’s Service has terminated and the effective date of such termination. 

 

(x) “***Stock***” means the common stockof the Company, as adjusted from time to time in accordance with Section 4.2. 

 

(y) “***Subsidiary Corporation***” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 

 

(z) “***Ten Percent Stockholder***” meansa person who, at the time an Option is granted to such person, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of theCode. 

 

2.2 **Construction**. Captions and titles containedherein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use ofthe term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

 

**3. ADMINISTRATION.**

 

3.1 **Administration by the Board**.**** The Plan shall be administered by the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and bindingupon all persons having an interest in the Plan or such Option. 

 

3.2 **Authority of Officers**.****Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated tothe Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election. The Board may, in its discretion, delegate to a committee comprised of one or more Officers the authority togrant one or more Awards, without further approval of the Board or the Committee, to any Employee, other than a person who, at the time of such grant, is an Insider; provided, however, that (a) such Awards shall not be granted for shares in excessof the maximum aggregate number of shares of Stock authorized for issuance pursuant to Section 4.1, (b) the exercise price per share of each Option shall be not less than the Fair Market Value per share of 

 

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the Stock on the effective date of grant (or, if the Stock has not traded on such date, on the last day preceding theeffective date of grant on which the Stock was traded), and (iii) each such Award shall be subject to the terms and conditions of the appropriate standard form of Award Agreement approved by the Board or the Committee and shall conform to theprovisions of the Plan and such other guidelines as shall be established from time to time by the Board or the Committee. 

 

3.3 **Powers of the Board**. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have thefull and final power and authority, in its discretion: 

 

(a) to determine the persons to whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option; 

 

(b) to designate Options as Incentive Stock Options or Nonstatutory Stock Options; 

 

(c) to determine the Fair Market Value of shares of Stock orother property; 

 

(d) to determine the terms,conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for sharespurchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, termsand conditions of the exercisability of the Option or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service on any of the foregoing,and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; 

 

(e) to approve one or more forms of Option Agreement; 

 

(f) to amend, modify, extend, cancel or renew any Option or to waive any restrictions or conditionsapplicable to any Option or any shares acquired upon the exercise thereof; 

 

(g) to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’stermination of Service with the Participating Company Group; 

 

(h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary ordesirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and 

 

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(i) to correct any defect, supply any omission or reconcile any inconsistency in the Planor any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

 

3.4 **Administration with Respect to Insiders**.****With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any,of Rule 16b-3. 

 

3.5 **Committee Complying with Section162(m)**.**** If the Company is a “publicly held corporation” within the meaning of Section 162(m) of the Code, the Board may establish a Committee of “outside directors” within the meaning of Section 162(m) to approve thegrant of any Option which might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m). 

 

3.6 **No Repricing**.**** Without the affirmative vote of holders of amajority of the shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, the Board shall not approve aprogram providing for either (a) the cancellation of outstanding Options and the grant in substitution therefore of any new Option having a lower exercise price or (b) the amendment of outstanding Options to reduce the exercise price thereof. Thisparagraph shall not be construed to apply to “issuing or assuming a stock option in a transaction to which section 424(a) applies,” within the meaning of Section 424 of the Code. 

 

3.7 **Indemnification**.**** In addition to such other rights ofindemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or theCompany is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with anyappeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (providedsuch settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action,suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer tothe Company, in writing, the opportunity at its own expense to handle and defend the same. 

 

**4. SHARES SUBJECT TO PLAN.**

 

4.1 **Maximum Number of Shares Issuable**.**** Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued 

 

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under the Plan shall be Nine Hundred and Eighty-Two Thousand One Hundred and Seventy-One (982,171). Shares issuable underthe Plan shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled without having been exercised in full, the shares of Stockallocable to the unexercised portion of such Option shall again be available for issuance under the Plan. 

 

4.2 **Adjustments for Changes in Capital Structure**. Subject to any required action by the stockholders of the Company, in the event of any change inthe Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off,spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normalcash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options, in the Section162(m) Grant Limit set forth in Section 5.4 and in the exercise price per share of any outstanding Options in order to prevent dilution or enlargement of Optionees’ rights under the Plan. For purposes of the foregoing, conversion of anyconvertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearestwhole number, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. Such adjustments shall be determined by the Board, and its determination shall befinal, binding and conclusive. 

 

**5. ELIGIBILITY AND OPTIONLIMITATIONS.**

 

5.1 **Persons Eligible for Options**.Options may be granted only to Employees, Consultants, and Directors. Eligible persons may be granted more than one (1) Option. However, eligibility in accordance with this Section shall not entitle any person to be granted an Option, or, havingbeen granted an Option, to be granted an additional Option. 

 

5.2 **Option Grant Restrictions**. Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Option granted to a person upon the condition thatsuch person become an Employee, Consultant or Director shall be deemed granted effective on the date such person commences Service with a Participating Company, with an exercise price determined as of such date in accordance with Section 6.1.

 

5.3 **Fair Market Value Limitation**. To the extent thatoptions designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by an Optionee for the first time during any calendar year for stock having a Fair MarketValue greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options designated as Incentive Stock Options shallbe taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is 

 

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granted. If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, suchdifferent limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as aNonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of such designation, the Optionee shall be deemed to haveexercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. 

 

5.4 **Section 162(m) Grant Limit**.**** Subject to adjustment as provided in Section 4.2, at any such time as theCompany is a “publicly held corporation” within the meaning of Section 162(m) of the Code, no Employee shall be granted one or more Options within any fiscal year of the Company which in the aggregate are for the purchase of more thanThree Hundred Thousand (300,000) shares (the ***“Section 162(m) Grant Limit”***). 

 

6. **TERMS AND CONDITIONS OF OPTIONS****.**

 

Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time totime establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and shallcomply with and be subject to the following terms and conditions: 

 

6.1 **Exercise Price**. The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Option shall be not less than the Fair Market Value of ashare of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share ofStock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forthabove if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. 

 

6.2 **Exercisability and Term of Options**. Options shall be exercisable at such time or times, or upon such event orevents, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Incentive Stock Option shall beexercisable after the expiration of ten (10) years after the effective date of grant of such Option and (b) no Incentive Stock Option granted to a Ten Percent Stockholder shall be exercisable after the expiration of five (5) years after theeffective date of grant of such Option. Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unlessearlier terminated in accordance with its provisions. 

 

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6.3 **Payment of Exercise Price.**

 

(a) ***Forms of Consideration Authorized***.****** Except as otherwise provided below,payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock ownedby the Optionee having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale orloan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board ofGovernors of the Federal Reserve System) (a *“********Cashless Exercise**********”*), (iv) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicablelaw, or (v) by any combination thereof. The Board may at any time or from time to time, by approval of or by amendment to the standard forms of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of theforegoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration. 

 

(b) ***Limitations on Forms of Consideration***.******

 

(i) **Tender of Stock**.**** Notwithstanding the foregoing, an Option may not be exercised by tenderto the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months (and not usedfor another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company. 

 

(ii) **Cashless Exercise**.**** The Company reserves, at any and all times, the right, in the Company’s sole and absolutediscretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 

 

6.4 **Effect of Termination of Service.**

 

(a) ***Option Exercisability***.****** Subject to earlier termination of the Option as otherwise provided herein andunless otherwise provided by the Board in the grant of an Option and set forth in the Option Agreement, an Option shall be exercisable after an Optionee’s termination of Service only during the applicable time period determined in accordancewith this Section 6.4 and thereafter shall terminate: 

 

(i) **Disability**.**** If the Optionee’s Service terminates because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may beexercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date 

 

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on which the Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the OptionAgreement evidencing such Option (the “***Option Expiration Date****”*). 

 

(ii) **Death**.****If the Optionee’s Service terminates because of the death of the Optionee, the Option, to the extentunexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason of the Optionee’sdeath at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the OptionExpiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months (or such longer period of time as determined by the Board, in its discretion) after the Optionee’stermination of Service. 

 

(iii) **OtherTermination of Service**.**** If the Optionee’s Service terminates for any reason, other than Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Serviceterminated, may be exercised by the Optionee at any time prior to the expiration of thirty (30) days (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but inany event no later than the Option Expiration Date. 

 

(b) ***Extension if Exercise Prevented by Law***.****** Notwithstanding the foregoing, other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a)is prevented by the provisions of Section 11 below, the Option shall remain exercisable until thirty (30) days (or such longer period of time as determined by the Board, in its discretion) after the date the Optionee is notified by the Company thatthe Option is exercisable, but in any event no later than the Option Expiration Date. 

 

(c) ***Extension if Optionee Subject to Section 16(b)***.****** Notwithstanding the foregoing, other than termination ofService for Cause, if a sale within the applicable time periods set forth in Section 6.4(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall remainexercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee’stermination of Service, or (iii) the Option Expiration Date. 

 

6.5 **Transferability of Options**.****During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No Option shall be assignable or transferable bythe Optionee, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory StockOption shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 Registration Statement under the Securities Act. 

 

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**7. STANDARD FORMS OF OPTION AGREEMENT.**

 

7.1 **Option Agreement.** Unless otherwise provided by the Board at the time the Option is granted, an Option shallcomply with and be subject to the terms and conditions set forth in the appropriate form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as amended from time to time. 

 

7.2 **Authority to Vary Terms.** The Board shall have the authority fromtime to time to vary the terms of any standard form of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or forms;provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan. 

 

**8. CHANGE IN CONTROL.**

 

8.1 **Definitions.**

 

(a) An “***Ownership Change Event****”* shall be deemed to have occurred if any of the following occurs withrespect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidationin which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or (iv) a liquidation or dissolution of the Company. 

 

(b) A “***Change in Control***” shall mean an Ownership Change Event or a series ofrelated Ownership Change Events (collectively, a “***Transaction***”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportionsas their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities ofthe Company or, in the case of a Transaction described in Section 8.1(a)(iii), the corporation or other business entity to which the assets of the Company were transferred (the “***Transferee***”), as the case may be. For purposesof the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee,as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multipleOwnership Change Events are related, and its determination shall be final, binding and conclusive. 

 

8.2 **Effect of Change in Control on Options.**

 

(a) ***Accelerated Vesting.*** Notwithstanding any other provision of the Plan to the contrary, the Board, in its sole discretion,may provide in any Option Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to provide for 

 

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the acceleration of the exercisability and vesting in connection with such Change in Control of any or all outstanding Options and shares acquired upon theexercise of such Options. 

 

(b)***Assumption or Substitution of Options.*** In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “***AcquiringCorporation****”*), may, without the consent of any Optionee, either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the AcquiringCorporation’s stock. Any Options which are not assumed by the Acquiring Corporation in connection with the Change in Control shall, to the extent not exercised as of the date of the Change in Control, terminate and cease to be outstandingeffective as of the date of the Change in Control. Notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constitutinga Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation, the outstandingOptions shall not terminate. 

 

(c)***Cash-Out of Options.*** The Board may, in its sole discretion and without the consent of any Optionee, determine that, upon the occurrence of a Change in Control, each or any Option outstanding immediately prior to the Change in Controlshall be canceled in exchange for a payment with respect to each vested share of Stock subject to such canceled Option in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii)other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control over the exercise price per share under such Option(the “***Spread***”). In the event such determination is made by the Board, the Spread (reduced by applicable withholding taxes, if any) shall be paid to Optionees in respect of their canceled Options as soon as practicablefollowing the date of the Change in Control. 

 

**9. TAX WITHHOLDING.**

 

9.1 **Tax Withholding in General.** The Company shallhave the right to deduct from any and all payments made under the Plan, or to require the Optionee, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, thefederal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to an Option or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stockuntil the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee. 

 

9.2 **Withholding in Shares.** The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to an Optioneeupon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of theParticipating Company Group. The Fair Market Value of any shares of Stock 

 

12 

withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholdingrates. 

 

**10. PROVISION OF INFORMATION.**

 

Each Optionee shall be given access to information concerning the Companyequivalent to that information generally made available to the Company’s common stockholders. 

 

**11. COMPLIANCE WITH SECURITIES LAW.**

 

The grant of Options and the issuance of shares of Stock upon exercise of Options shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or marketsystem upon which the Stock may then be listed. In addition, no Option may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable uponexercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the SecuritiesAct. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve theCompany of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of any Option, the Company may require the Optionee to satisfy anyqualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 

 

**12. TERMINATION OR AMENDMENT OF PLAN.**

 

The Board may terminate or amend the Plan at any time. However, subject tochanges in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan(except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, (c) no Option repricing as described in Section 3.6, and (d) no other amendment of the Plan that would requireapproval of the Company’s stockholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then outstanding Option unless expressly provided by the Board. In any event, no termination oramendment of the Plan may adversely affect any then outstanding Option without the consent of the Optionee, unless such termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive StockOption or is necessary to comply with any applicable law, regulation or rule. 

 

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PLAN HISTORY

 
                , 2003  Board adopts Plan, effective as of the date stockholder approval obtained, with an initial reserve of 982,171 shares.March 23, 2003  Stockholders approve Plan.

**AXESSTEL, INC.**

**STOCK OPTION AGREEMENT**

 

Axesstel, Inc. has granted to the individual (the “***Optionee***”) named in the *Notice of Grant of Stock Option* (the “***Notice***”) to which this Stock Option Agreement (the “***OptionAgreement***”) is attached an option (the “***Option***”) to purchase certain shares of Stock upon the terms and conditions set forth in the Notice and this Option Agreement. The Option has been granted pursuant to andshall in all respects be subject to the terms and conditions of the Axesstel, Inc. 2003 Stock Option Plan (the “***Plan***”), as amended to the Date of Option Grant, the provisions of which are incorporated herein by reference. Bysigning the Notice, the Optionee: (a) represents that the Optionee has read and is familiar with the terms and conditions of the Notice, the Plan and this Option Agreement, including the Effect of Termination of Service set forth in Section 7, (b)accepts the Option subject to all of the terms and conditions of the Notice, the Plan and this Option Agreement, (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under theNotice, the Plan or this Option Agreement, and (d) acknowledges receipt of a copy of the Notice, the Plan and this Option Agreement. 

 

**1. DEFINITIONS AND CONSTRUCTION.**

 

1.1 **Definitions.** Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Notice or the Plan.

 

1.2 **Construction**. Captions and titles contained hereinare for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 

 

**2. TAX CONSEQUENCES.**

 

2.1 **Tax Status of Option**. This Option is intended to have the tax status designated in the Notice. 

 

(a) ***Incentive Stock Option.*** If the Notice so designates, this Option is intended to be an Incentive Stock Option within themeaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such. The Optionee should consult with the Optionee’s own tax advisor regarding the tax effects of this Option and therequirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements. (NOTE TO OPTIONEE: If the Option is exercised more than three (3) months after the date onwhich you cease to be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option tothe extent required by Section 422 of the Code.) 

 

1 

(b) ***Nonstatutory Stock Option.*** If the Notice so designates, this Option isintended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code. 

 

2.2 **ISO Fair Market Value Limitation.***If the Notice designates this Option as an Incentive Stock Option,* then to the extent that the Option(together with all Incentive Stock Options granted to the Optionee under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable for the first time during any calendar year for shares having a Fair MarketValue greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section 2.2, options designated as Incentive Stock Options aretaken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that setforth in this Section 2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock Option in part and as aNonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of such designation, the Optionee shall be deemed to haveexercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. (NOTE TO OPTIONEE: If the aggregate Exercise Price of the Option (that is, theExercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) isgreater than $100,000, you should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.) 

 

**3. ADMINISTRATION.**

 

All questions of interpretation concerning this Option Agreement shall be determined by the Board. All determinations by the Board shall be final andbinding upon all persons having an interest in the Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of orwhich is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election. 

 

**4. EXERCISE OF THE OPTION.**

 

4.1 **Right to Exercise.**Except as otherwise provided herein, the Option shall be exercisable on and after the Date of Option Grant (or if later, theOptionee’s Service commencement date) and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option.

 

4.2 **Method of Exercise.** Exercise of the Option shall beby written notice to the Company which must state the election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as 

 

2 

to the Optionee’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. The writtennotice must be signed by the Optionee and must be delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Chief Financial Officerof the Company, or other authorized representative of the Participating Company Group, prior to the termination of the Option as set forth in Section 6, accompanied by full payment of the aggregate Exercise Price for the number of shares of Stockbeing purchased. The Option shall be deemed to be exercised upon receipt by the Company of such written notice and the aggregate Exercise Price. 

 

4.3 **Payment of Exercise Price.**

 

(a) ***Forms of Consideration Authorized.*** Except as otherwise provided below, payment of the aggregate Exercise Price for thenumber of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of whole shares of Stock owned by the Optionee having aFair Market Value (as determined by the Company without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than theaggregate Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(b), or (iv) by any combination of the foregoing. 

 

(b) ***Limitations on Forms of Consideration.***

 

(i) **Tender of Stock.** Notwithstanding the foregoing, the Option may not be exercised by tender to theCompany, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. TheOption may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from theCompany. 

 

(ii) **Cashless Exercise.** A“***Cashless Exercise***” means the delivery of a properly executed notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a saleor loan with respect to some or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with the provisions ofRegulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to decline to approve or terminate anysuch program or procedure. 

 

4.4 **Tax Withholding.** At thetime the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll and any other amounts payable to the Optionee, and otherwise agrees to make adequateprovision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax 

 

3 

withholding obligations of the Participating Company Group, if any, which arise in connection with the Option, including, without limitation, obligationsarising upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in part, of any shares acquired upon exercise of the Option, (iii) the operation of any law or regulation providing for the imputationof interest, or (iv) the lapsing of any restriction with respect to any shares acquired upon exercise of the Option. The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the ParticipatingCompany Group have been satisfied by the Optionee. 

 

4.5**Certificate Registration.** Except in the event the Exercise Price is paid by means of a Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be registered in the name of the Optionee, or, if applicable,in the names of the heirs of the Optionee. 

 

4.6 **Restrictionson Grant of the Option and Issuance of Shares.** The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respectto such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of anystock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respectto the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registrationrequirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION ISVESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shallrelieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of the Option, the Company may require the Optionee tosatisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 

 

4.7 **Fractional Shares.** The Company shall not be required to issuefractional shares upon the exercise of the Option. 

 

**5. NONTRANSFERABILITYOF THE OPTION.**

 

The Option may be exercised during thelifetime of the Optionee only by the Optionee or the Optionee’s guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of descent and distribution. Following the death of theOptionee, the Option, to the extent provided in Section 7, may be exercised by 

 

4 

the Optionee’s legal representative or by any person empowered to do so under the deceased Optionee’s will or under the then applicable laws ofdescent and distribution. 

 

**6. TERMINATION OF THE OPTION.**

 

The Option shall terminate and may no longer be exercisedon the first to occur of (a) the Option Expiration Date, (b) the last date for exercising the Option following termination of the Optionee’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.

 

**7. EFFECT OF TERMINATION OF SERVICE.**

 

7.1 **Option Exercisability.**

 

(a) ***Disability.*** If the Optionee’s Servicewith the Participating Company Group terminates because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or theOptionee’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. 

 

(b) ***Death.*** If the Optionee’s Service withthe Participating Company Group terminates because of the death of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legalrepresentative or other person who acquired the right to exercise the Option by reason of the Optionee’s death at any time prior to the expiration of twelve (12) months after the date on which the Optionee’s Service terminated, but in anyevent no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months after the Optionee’s termination of Service. 

 

(c) ***Other Termination of Service.*** If theOptionee’s Service with the Participating Company Group terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated,may be exercised by the Optionee at any time prior to the expiration of three (3) months (or such other longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in anyevent no later than the Option Expiration Date. 

 

7.2**Extension if Exercise Prevented by Law**. Notwithstanding the foregoing, if the exercise of the Option within the applicable time periods set forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option shall remainexercisable until three (3) months after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date. 

 

7.3 **Extension if Optionee Subject to Section 16(b).** Notwithstanding the foregoing, if a sale within the applicabletime periods set forth in Section 7.1 of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth

 

5 

(10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit,(ii) the one hundred and ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. 

 

**8. CHANGE IN CONTROL.**

 

In the event of a Change in Control, the Acquiring Corporation may either assume the Company’s rights and obligations under the Option or substitutefor the Option a substantially equivalent option for the Acquiring Corporation’s stock. The Option shall terminate and cease to be outstanding effective as of the date of the Change in Control to the extent that the Option is neither assumed orsubstituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of the Option prior to the Change in Controland any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Option Agreement except as otherwise provided herein. 

 

**9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.**

 

In the event of any stock dividend, stock split, reverse stock split,recapitalization, combination, reclassification, or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number, Exercise Price and class of shares of stock subject to the Option. If a majority of theshares which are of the same class as the shares that are subject to the Option are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the*“********New Shares********”*), the Board may unilaterally amend the Option to provide that the Option is exercisable for New Shares. In the event of any such amendment, the Number of Option Shares and the ExercisePrice shall be adjusted in a fair and equitable manner, as determined by the Board, in its discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 9 shall be rounded down to the nearestwhole number, and in no event may the Exercise Price be decreased to an amount less than the par value, if any, of the stock subject to the Option. The adjustments determined by the Board pursuant to this Section 9 shall be final, binding andconclusive. 

 

**10. RIGHTS AS A STOCKHOLDER, EMPLOYEE OR CONSULTANT.**

 

The Optionee shall have no rights as a stockholder withrespect to any shares covered by the Option until the date of the issuance of a certificate for the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transferagent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 9. If the Optionee is an Employee, the Optioneeunderstands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Optionee, the Optionee’s employment is “at will” and is for no specified term. Nothingin this Option Agreement shall confer upon the Optionee any right to continue in the Service of a Participating Company or 

 

6 

interfere in any way with any right of the Participating Company Group to terminate the Optionee’s Service as anEmployee or Consultant, as the case may be, at any time. 

 

**11. NOTICE OFSALES UPON DISQUALIFYING DISPOSITION.**

 

The Optioneeshall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, *if the Notice designates this Option as an Incentive Stock Option,* the Optionee shall (a) promptlynotify the Chief Financial Officer of the Company if the Optionee disposes of any of the shares acquired pursuant to the Option within one (1) year after the date the Optionee exercises all or part of the Option or within two (2) years after theDate of Option Grant and (b) provide the Company with a description of the circumstances of such disposition. Until such time as the Optionee disposes of such shares in a manner consistent with the provisions of this Option Agreement, unlessotherwise expressly authorized by the Company, the Optionee shall hold all shares acquired pursuant to the Option in the Optionee’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Optionand the two-year period immediately after Date of Option Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting thetransfer agent for the Company’s stock to notify the Company of any such transfers. The obligation of the Optionee to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificatepursuant to the preceding sentence. 

 

**12. LEGENDS.**

 

The Company may at any time place legends referencing any applicablefederal, state or foreign securities law restrictions, and, if applicable, that the shares were acquired upon exercise of an Incentive Stock Option on all certificates representing shares of stock subject to the provisions of this Option Agreement.The Optionee shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to carry out the provisions of this Section.

 

**13. LOCK-UP AGREEMENT.**

 

The Optionee hereby agrees that in the event of any underwritten publicoffering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grantany option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement asmay be established by the underwriter for such public offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with suchpublic offering. The foregoing limitation shall not apply to shares registered in the public offering under the Securities Act. 

 

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**14. RESTRICTIONS ON TRANSFER OF SHARES.**

 

No shares acquired upon exercise of the Option may be sold, exchanged, transferred (including, without limitation, anytransfer to a nominee or agent of the Optionee), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law, in any manner which violates any of the provisions of this Option Agreement, and any such attempted dispositionshall be void. The Company shall not be required (a) to transfer on its books any shares which will have been transferred in violation of any of the provisions set forth in this Option Agreement or (b) to treat as owner of such shares or to accordthe right to vote as such owner or to pay dividends to any transferee to whom such shares will have been so transferred. 

 

**15. MISCELLANEOUS PROVISIONS.**

 

15.1 **Binding Effect.** Subject to the restrictions on transfer set forth herein, this Option Agreement shall inure to the benefit of and be bindingupon the parties hereto and their respective heirs, executors, administrators, successors and assigns. 

 

15.2 **Termination or Amendment.** The Board may terminate or amend the Plan or the Option at any time; provided, however, that except as provided inSection 8 in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee unless such termination or amendment is necessary to comply withany applicable law or government regulation or is required to enable the Option, if designated an Incentive Stock Option in the Notice, to qualify as an Incentive Stock Option. No amendment or addition to this Option Agreement shall be effectiveunless in writing. 

 

15.3 **Notices.** Any notice required orpermitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery or upon deposit in theUnited States Post Office, by registered or certified mail, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature on the Notice or at such other address as such party may designate inwriting from time to time to the other party. 

 

15.4**Integrated Agreement.** The Notice, this Option Agreement and the Plan constitute the entire understanding and agreement of the Optionee and the Participating Company Group with respect to the subject matter contained herein or therein andsupersedes any prior agreements, understandings, restrictions, representations, or warranties among the Optionee and the Participating Company Group with respect to such subject matter other than those as set forth or provided for herein or therein.To the extent contemplated herein or therein, the provisions of the Notice and the Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. 

 

15.5 **Applicable Law.** This Option Agreement shall be governed by the laws of the State of Texas as such laws areapplied to agreements between Texas residents entered into and to be performed entirely within the State of Texas. 

 

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15.6 **Counterparts.** The Notice may be executed in counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the same instrument. 

 

9 

TMIncentive Stock Option
   Optionee:                                                             
TMNonstatutory Stock Option
        Date:                                                             
 

**STOCK OPTIONEXERCISE NOTICE**

 

Axesstel, Inc. 

Attention: Chief Financial Officer 

6305 Lusk Boulevard 

San Diego, CA 92121 

 

Ladies and Gentlemen: 

 

1.**Option**. I was granted an option (the *“********Option********”*) to purchase shares of the common stock (the *“********Shares********”*) of Axesstel, Inc. (the*“********Company********”*) pursuant to the Company’s 2003 Stock Option Plan (the *“********Plan********”*), my Notice of Grant of Stock Option (the*“********Notice********”*) and my Stock Option Agreement (the *“********Option Agreement********”*) as follows: 

 

Grant Number:
       
Date of Option Grant:
       
Number of Option Shares:
       
Exercise Price per Share:
  $                                            
 

2. **Exercise ofOption**. I hereby elect to exercise the Option to purchase the following number of Shares: 

 

Total Shares Purchased:
       
Total Exercise Price (Total Shares X Price per Share)
  $                                            
 

3.**Payments**. I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by my Option Agreement: 

 

TMCash:
  $                                            
TMCheck:
  $                                            
TMTenderof Company Stock:
   Contact Plan Administrator
TMCashless exercise Contact Plan Administrator
   Contact Plan Administrator
 

4. **TaxWithholding**. Subject to the Option Agreement, I authorize payroll withholding and otherwise will make adequate provision for the federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with theOption. 

 

1 

5. **Optionee Information**. 

 

My address is:
   
My Social Security Number is:
  
 

6. **Notice ofDisqualifying Disposition**. If the Option is an Incentive Stock Option, I agree that I will promptly notify the Chief Financial Officer of the Company if I transfer any of the Shares within one (1) year from the date I exercise all or part ofthe Option or within two (2) years of the Date of Option Grant. 

 

7. **Binding Effect**. I agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Option Agreement, to all of which I hereby expressly assent. This Agreement shallinure to the benefit of and be binding upon the my heirs, executors, administrators, successors and assigns. 

 

I understand that I am purchasing the Shares pursuant to the terms of the Plan, the Notice and my Option Agreement, copies of which I have received andcarefully read and understand. 

 

Very truly yours,

(Signature)

 

 

Receipt of the above is hereby acknowledged. 

 

AXESSTEL, INC.
By:    Title:    Dated:    
 

2 

**AXESSTEL, INC.**

**NOTICE OF GRANT OF STOCK OPTION**

 

                     (the *“********Optionee********”*) has been granted an option (the*“********Option********”*) to purchase certain shares of Stock of Axesstel, Inc. pursuant to the Axesstel, Inc. 2003 Stock Option Plan (the *“********Plan********”*), as follows:

 

**Date of Option Grant:**
   
**Number of Option Shares:**
   
**Exercise Price:**
  
$             per share

**Initial Vesting Date:**
   **Option Expiration Date:**  
The date ten (10) years after the Date of Option Grant.

**Tax Status of Option:**
  
             Stock Option. (Enter “Incentive” or“Nonstatutory.” If blank, this Option will be a Nonstatutory Stock Option.)

 

**Vested Shares:** Except asprovided in the Plan and Stock Option Agreement, the number of Vested Shares (disregarding any resulting fractional share) as of any date is determined by multiplying the Number of Option Shares by the *“********VestedRatio********”* determined as of such date as follows: 

 
   **Vested Ratio**