NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, effective as of the 20th day of April, 2006 (the
"Grant Date"), between Manchester Inc. (the "Company"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(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, consultants and strategic partners of the
Company; and
WHEREAS, the Board of Directors has determined to grant a
non-qualified option to the Optionee as provided herein, and the Company and the
Optionee hereby wish to memorialize the terms and conditions applicable to the
Option;
NOW, THEREFORE, 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 100,000 shares of Company common stock (the
"Shares"), 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$4.63 per Share, being the closing
price of the Company's common stock on the OTC Bulletin Board on the trading day
immediately preceding the date of this Agreement.
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.
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.
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. Cashless Exercise.
In lieu of payment upon exercise of the Option as set forth in
Section 5, the Optionee may alternatively surrender to the Company for
cancellation a portion of this Option representing that number of unissued
shares underlying this Option which is equal to the quotient obtained by
dividing (A) the product obtained by multiplying the Purchase Price by the
number of shares of stock being purchased underlying the Option upon such
exercise, by (B) the difference obtained by subtracting the Purchase Price from
the closing price of the Company's common stock on the date immediately
preceding such date of such exercise; or (iii) by a combination of the foregoing
methods of payment selected by the Holder of this Option.
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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 in capitalization, the Board of Directors
may make appropriate adjustments to the number and class of Shares or other
stock or securities subject to the Option and the purchase price for such Shares
or other stock or securities, provided, however, that the number of Shares
subject to the Option set forth in Section 1 reflects any and all changes in
capitalization of the Company as of the date hereof.
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.
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11. Withholding of Taxes; Non-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 non-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.
This Agreement shall inure to the benefit of and be binding upon any
successor to the Company. This Agreement shall inure to the benefit of the
Optionee's legal representatives. 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 and
successors.
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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 Nevada without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.
(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.
19. Notices. Any notice required or permitted under this Agreement
shall be deemed to have been effectively made or given if in writing and
personally delivered, mailed properly addressed in a sealed envelope, postage
prepaid by certified or registered mail, delivered by a reputable overnight
delivery service, in each case with confirmation of receipt. Unless otherwise
changed by notice, notice shall be properly addressed to the Optionee if
addressed to the address of record then on file with the Company; and properly
addressed to the Company if addressed to its registered agent.
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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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Corporate Secretary
OPTIONEE
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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MANCHESTER INC.
STOCK OPTION AGREEMENT
Notice of Exercise
Optionee
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Number of Shares purchased pursuant
to Exercise of Option
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Exercise Date
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Exercise Price per Share
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Aggregate Purchase Price
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Form of Payment
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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:
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By:
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Name:
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Title:
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Accepted:
MANCHESTER INC.
By:
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Name:
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Title:
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