QUALIFIED STOCK OPTION AGREEMENT
THIS
AGREEMENT, effective as of the 30th
day of March, 2007 (the “Grant Date”),
between
Manchester Inc. (the “Company”), and Xxxxxxxx
Xxxxxx (the
“Optionee”).
WHEREAS,
the Board of Directors has determined that it is in the best interest of the
corporation to provide additional incentive to selected directors, officers,
employees and consultants of the Company; and
WHEREAS,
The Corporation desires to grant to the Participant an Option to purchase shares
of its common capital stock (the "Shares") under and for the purposes of the
Company’s 2006 Equity Incentive Plan (the "Plan"); and
WHEREAS,
The Corporation and the Participant understand and agree that any terms used
herein have the same meanings as in the Plan.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option.
Effective as of the Grant Date, the Company hereby grants to the Optionee the
right and option (the “Option”) to purchase all or any part of an aggregate of
200,000
shares (the
“Shares”)of Company common stock, par value $.001 per share (the “Common
Stock”), subject to, and in accordance with, the terms and conditions set forth
in this Agreement.
2. Purchase Price.
The
price
at which the Optionee shall be entitled to purchase Shares upon the exercise
of
the Option shall be US$1.85
per Share,
being
the closing price of the Company’s common stock on the OTC Bulletin Board on the
effective date of grant of this Option.
3. Exerciseability
of Option.
The
Option shall vest in accordance with the following schedule and become
exercisable with respect to the following number of Shares covered by the Option
so long as Optionee remains employed by the Company or continues to serve the
Company in a consulting capacity as of each such vesting date: 33.3% of the
Shares on each anniversary of the date of this Agreement.
4. Duration of Option.
(a) The
Option shall be exercisable to the extent vested and in the manner provided
herein until the fifth anniversary of the date hereof so long as Optionee
remains in good standing with the Company as an employee or continuing in
service as a consultant to the Company. In the event the Optionee is an employee
of the Company and such employment of the Optionee is terminated for cause,
the
Option, whether or not exercisable, shall terminate on the effective date of
the
Optionee's termination of employment. If the employment of the Optionee is
terminated for any reason other than cause, the Optionee may at any time within
ninety (90) days after such termination of employment (but in no event beyond
the expiration of the stated term of the Option), exercise the Option to the
extent, but only to the extent, that the Option or portion thereof was
exercisable on the date of the termination of employment, after which time
the
Option shall terminate in full. Nothing in this Agreement shall be interpreted
or construed to confer upon the Optionee any right with respect to continuance
of employment or consulting arrangements with the Company, nor shall this
Agreement interfere in any way with the right of the Company to terminate the
Optionee's employment or consulting services at any time.
(b)
Notwithstanding
any provision to the contrary herein, in
the event of Optionee's death, his Option shall terminate on the date of death,
provided that all or a portion of the Option to the extent that the right is
exercisable but not exercised on the date of death may be exercised by
Optionee's Survivors. Such Option must be exercised by the Survivors, if at
all,
within six (6) months after the date of death of Optionee or, if earlier, within
the originally prescribed term of the Option, notwithstanding that the decedent
might have been able to exercise the Option as to some or all of the shares
on a
later date if the Optionee were alive and had continued to be a Optionee of
the
Corporation or of an Affiliate.
5. Manner of Exercise and Payment.
5.1 Subject
to the terms and conditions of this Agreement the Option may be exercised by
delivery of written notice to the Company in the form attached hereto, at its
principal executive office. Such notice shall state that the Optionee is
electing to exercise the Option and the number of Shares in respect of which
the
Option is being exercised and shall be signed by the person or persons
exercising the Option. If requested by the Company, such person or persons
shall
(i) deliver this Agreement to an Officer of the Company who shall endorse
thereon a notation of such exercise and (ii) provide satisfactory proof as
to
the right of such person or persons to exercise the Option.
5.2 The
notice of exercise described in Section 5.1 shall be accompanied by payment
of
the full purchase price for the Shares in respect of which the Option is being
exercised, in cash or by check.
5.3 Upon
receipt of the notice of exercise and any payment or other documentation as
may
be necessary pursuant to Section 5.2 relating to the Shares in respect of which
the Option is being exercised, the Company shall, subject to this Agreement,
take such action as may be necessary to effect the transfer to the Optionee
of
the number of Shares as to which such exercise was effective.
5.4 The
Optionee shall not be deemed to be the holder of, or to have any of the rights
of a holder with respect to any Shares subject to the Option until (i) the
Option shall have been exercised pursuant to the terms of this Agreement and
the
Optionee shall have paid the full purchase price for the number of Shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered the Shares to the Optionee, and (iii) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company,
whereupon the Optionee shall have full voting and other ownership rights with
respect to such Shares during the period of ownership thereof.
6. Notices.
All
notices, demands, instructions and other communications required or permitted
to
be given to or made upon either Party hereto or any other person shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, or by a reputable courier
delivery service, or by telegram (with messenger delivery), or by telecopy
(confirmed by mail), and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective Parties
hereto, in the case of the Optionee to
the
address of record on file with the Company; and in the case of the Company,
to
the principal executive office of the Company addressed to the Corporate
Secretary.
7. Non-Transferability.
The
Option shall not be transferable other than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the U.S. Internal Revenue Code. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee, except in the case of an
Option transferred pursuant to a qualified domestic relations order.
8. Securities
Act Restrictions; Sales of Shares.
The
Optionee acknowledges that neither the U.S. Securities and Exchange Commission
(the “SEC”) nor any state securities commission has approved the Option nor any
Shares issuable upon exercise thereof, nor passed upon or endorsed the merits
of
this Option or the Shares; the Optionee further understands and agrees that
neither the Option nor the Shares have been registered (i) under with the SEC
under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) with
any state securities commission. The Optionee understands that the neither
the
Option nor the Shares may be offered, sold, transferred or otherwise disposed
of
in the U.S., its territories or possessions, or to persons known to be residents
of the U.S. or to a U.S. person within the meaning of the Securities Act and
the
rules promulgated thereunder; provided that the Shares may be so sold after
the
earlier to occur of the effectiveness of a registration statement registering
the Shares under the Securities Act or the expiration of the restricted period
under Rule 144 promulgated under the Securities Act and thereafter only if
the
Shares are registered under the Securities Act or an exemption from the
registration requirements under the Securities Act is available. The Optionee
acknowledges that the Company has no obligation to cause the registration of
this Option or the Shares under the Securities Act. Following exercise of some
or all of the Option, Optionee agrees not to sell or transfer more than 25%
of
the aggregate of all such Shares underlying the Option during any single
calendar quarter and that the certificates representing such Shares shall bear
a
legend to such effect.
9. Adjustments.
In
the
event of a change applicable to the entire class of shares of Common Stock,
such
as a stock split, stock dividend, or similar action with respect to all issued
and outstanding shares of Common Stock, the Board of Directors shall make
corresponding adjustments to the number of Shares subject to this Option and
the
purchase price for such Shares. For purposes of clarity, however, no adjustments
shall be made with respect to issuances of Common Stock by the Company or any
instruments exercisable or convertible into shares of Common Stock.
10. Effect of a Liquidation, Merger or Consolidation.
Upon
the
effective date of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a ”Transaction”), the
Option shall continue in effect in accordance with its terms and the Optionee
shall be entitled to receive in respect of each Share subject to the Option,
upon exercise of the Option, the same number and kind of stock, securities,
cash, property or other consideration that each holder of a Share was entitled
to receive in the Transaction in respect of a Share.
11. Withholding of Taxes;
Qualified Stock Option Treatment
The
Company shall have the right to deduct from any distribution of cash to the
Optionee an amount equal to the federal, state and local income taxes and other
amounts as may be required by law to be withheld (the “Withholding Taxes”) with
respect to the Option. If the Optionee is entitled to receive Shares upon
exercise of the Option, the Optionee shall pay the Withholding Taxes to the
Company in cash prior to the issuance of such Shares. In satisfaction of the
Withholding Taxes, the Optionee may make a written election (the “Tax
Election”), which may be accepted or rejected in the discretion of the Company,
to have withheld a portion of the Shares issuable to him or her upon exercise
of
the Option, having an aggregate Fair Market Value, on the date preceding the
date of such issuance, equal to the Withholding Taxes. This Option shall be
construed as a qualified stock option for purposes of interpretation under
the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
12. No
Assignment.
Except
as
otherwise provided herein, the rights of the Optionee hereunder may not be
assigned or otherwise transferred to any other party.
13. Modification of Agreement.
This
Agreement may be modified, amended, suspended or terminated, and any terms
or
conditions may be waived, but only by a written instrument executed by the
parties hereto.
14. Severability.
Should
any provision of this Agreement be held by a court of competent jurisdiction
to
be unenforceable or invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall continue in full
force
in accordance with their terms.
15. Successors in Interest.
All
obligations imposed upon the Optionee and all rights granted to the Company
under this Agreement shall be final, binding and conclusive upon the Optionee's
heirs, executors, administrators, successors and (subject to Section 12 above)
assigns of the parties hereto.
16. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
17. Entire
Agreement.
This
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof, and there are
no
written or oral terms or representations made by either party other than those
contained herein. This Agreement cannot be modified, altered or amended except
by a writing signed by all the parties. No waiver by either party of any
provision or condition of this Agreement at any time shall be deemed a waiver
of
such provision or condition at any prior or subsequent time or of any other
provision or condition at the same or any prior or subsequent time.
18. Governing
Law; Arbitration.
(a)
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Texas without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
(b)
The
parties hereto agree to submit to arbitration any and all matters in dispute
or
in controversy among them concerning the terms and provisions of this Agreement.
All such disputes and controversies shall be determined and adjudged by the
decision of an arbitrator (hereinafter sometimes called the “Arbitrator”)
selected by mutual agreement of the parties hereto or if the parties hereto
fail
to reach agreement on the Arbitrator within ten days after a party has notified
the other of its interest to submit a matter to arbitration, the Arbitrator
shall be selected by the American Arbitration Association upon application
made
to it for such purpose by the parties. Arbitration shall take place in Dallas,
Texas or such other place as the parties hereto may agree in writing. The
Arbitrator shall reach and render a decision in writing with respect to the
amount, if any, of payment respecting the disputed matter. Notwithstanding
anything to the contrary herein, in no event will any award include
consequential or punitive damages of any kind or nature. The arbitration
proceedings shall be held in accordance with the applicable rules of the
American Arbitration Association. Any award rendered shall be final and
conclusive upon the parties and adjudgment thereon may be entered in the highest
court of the forum, state or federal, having jurisdiction. The fees and expenses
of the Arbitrator and the respective fees and expenses of the parties hereto
in
connection with any such arbitration (including, without limitation, reasonable
fees and expenses of legal counsel and consultants) shall be paid by the party
against whom a decision by the Arbitrator is rendered.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above with the understanding that this Agreement shall constitute
a legal, valid, binding and enforceable obligation of the Company and the
Optionee, respectively.
| MANCHESTER INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxx | |
|
Name: Xxxxxxx Xxxxxx |
||
| Title: Corporate Secretary | ||
| OPTIONEE | ||
| |
|
|
| /s/ | Xxxxxxxx Xxxxxx | |
|
|
||
STOCK
OPTION AGREEMENT
Notice
of Exercise
|
Optionee
|
|
|
|
|
|
Number
of Shares purchased pursuant
|
|
|
to
Exercise of Option
|
|
|
|
|
|
Exercise
Date
|
|
|
|
|
|
Exercise
Price per Share
|
|
|
|
|
|
Aggregate
Purchase Price
|
|
|
|
|
|
Form
of Payment
|
|
By
this
exercise, the Optionee agrees to (i) promptly provide such additional documents
as the Company may reasonably require and (ii) provide for the payment to the
Company (in the manner designated by the Company) of tax withholding
obligations, if any, relating to the exercise of this Option.
| Optionee: |
| By: | /s/ | |
|
Name: __________________________________________ |
||
| Title: __________________________________________ | ||
Accepted:
| By: | /s/ | |
|
Name: __________________________________________ |
||
| Title: __________________________________________ | ||
