EXECUTION
VERSION
UNCONDITIONAL CONTINUING
GUARANTY
THIS
UNCONDITIONAL CONTINUING GUARANTY (this "Guaranty") is made and
entered into as of December 29, 2006 by Manchester Inc., a Nevada
corporation (the "Guarantor") in favor of Rick Stanley, as
Shareholders’ Representative, and Rick Stanley, individually
(collectively, the "Holders").
WHEREAS, the Holders and Manchester
AcquisitionCo, Inc., a Delaware corporation, (the "Purchaser") are
parties to a Stock Purchase Agreement, dated as of December 2,
2006, as amended December 29, 2006 (the "Purchase Agreement"), by
which all of the issued and outstanding capital stock of the
Sellers is being sold and conveyed to the Purchaser.
WHEREAS, as a condition to the sale of assets by
the Holders to the Purchaser, the Purchaser has executed a (i) a
Promissory Note in the principal amount of Three Million Dollars
($3,000,000.00) from Manchester Indiana Acceptance, Inc. (the "
Purchase Note ") and a Subordinated Promissory Note of even
date herewith in the principal amount of One Hundred Fifty Thousand
Dollars ($150,000.00) from Manchester Indiana Acceptance, Inc. (the
" Subordinated Note " and referred to herein together with
the Purchase Note, collectively, as the “Notes”).
Pursuant to the Notes, the Purchaser is indebted to the Holders in
the aggregate original principal amount of $3,150,000.00
WHEREAS, the Purchaser is a special purpose
wholly-owned acquisition subsidiary of the Guarantor and, by
execution of this Guaranty, the Guarantor acknowledges and agrees
that the transactions set forth in the Purchase Agreement and the
Notes will provide direct, indirect, and substantial benefits to
the Guarantor, both financial and otherwise.
WHEREAS, to induce the Holders to agree to the
terms of the Purchase Agreement and the Notes and because the
Guarantor has determined that executing this Guaranty is in the
Guarantor's interest and to the Guarantor's direct or indirect
financial benefit, the Guarantor has agreed to guaranty the
obligations of the Purchaser under the Notes and is willing, and
has agreed, to execute and deliver this Guaranty to the
Holders.
NOW THEREFORE,
in consideration of the mutual premises and conditions set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor hereby
agrees as follows (capitalized terms not otherwise defined herein
shall have the meaning set forth in the Purchase
Agreement):
1. Obligations . As used herein, the term "Obligations" shall
mean any and all indebtedness, obligations, liabilities and sums
which may be presently due and owing or which may become due and
owing under the Promissory Notes, in accordance with their
respective terms, inclusive of the principal aggregate amounts due
under the Notes of $3,150,000.00 and any and all interest that
accrues on the principal amounts under the terms of the
Notes.
2. Guaranty of Payment . The Guarantor hereby unconditionally
guarantees to the Holders, and agrees to be primarily liable to the
Holders for, the payment to the Holders of the Obligations, all
without relief from valuation and appraisement laws. If the
Purchaser does not timely discharge its Obligations to the Holders,
the Guarantor hereby unconditionally and irrevocably guarantees to
the Holders the prompt and complete payment by the Purchaser of the
Obligations. If the Purchaser shall fail or refuse for any reason
to timely discharge the Obligations, the Guarantor will pay the
Obligations to the Holders and pay any and all expenses (including,
without limitation, all fees and disbursements of counsel,
including fees and expenses incurred in a suit to enforce this
provision) which may be paid or incurred by the Holders in
enforcing any rights under this Guaranty. If the Purchaser fails to
pay or perform all or any part of the Obligations when due, the
undersigned Guarantor will immediately pay the amount due and
perform the obligations of the Purchaser in connection therewith as
if such amount and obligations constituted the direct and primary
debts and obligations of the Guarantor.
3. Nature of Guaranty . This Guaranty shall be, and shall remain, a
continuing, unlimited, unconditional, and absolute guaranty of
payment and not of collection. This Guaranty shall remain fully
enforceable irrespective of (a) any defenses (other than
unconditional payment) which the Purchaser may assert on the
underlying Obligations, including but not limited to failure of
consideration, breach of warranty, statute of frauds, statute of
limitations, accord and satisfaction and usury, (b) the absence of
any attempt by the Holders to collect or enforce the
Purchaser’s obligations, (c) the waiver or consent by the
Holders with respect to any provision of any agreement between the
Holders and the Purchaser, (d) The Holders’ failure to obtain
collateral security for Obligations or to perfect and maintain a
security interest in, or preserve, enforce or exhaust its rights
to, or the release by the Holders of any collateral, or (e) any
circumstances which might constitute a legal or equitable discharge
or defense of a guarantor or surety.
Notice of or proof of reliance by the Holders
upon this Guar
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