EXECUTION
VERSION
THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT AS PROVIDED HEREIN. ANY ATTEMPTED TRANSFER OF
THIS PROMISSORY NOTE IN VIOLATION OF SUCH TERMS SHALL BE NULL AND
VOID AND OF NO EFFECT. THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS, AND NO OFFER, TRANSFER OR ASSIGNMENT OF THIS
PROMISSORY NOTE MAY BE MADE IN THE ABSENCE OF SUCH
REGISTRATIONS .
PROMISSORY
NOTE
FOR VALUE RECEIVED, Manchester Indiana
Acceptance, Inc., a Delaware corporation (" Maker "), hereby
promises to pay to the order of Rick Stanley, as Shareholders
Representative (the " Holder "), the principal amount of
Three Million Dollars ($3,000,000.00) (the " Principal
Amount "), plus interest, as provided herein, all without
relief from valuation or appraisement laws.
This Promissory Note (the " Note ")
is being issued and delivered by the Maker to the Holder pursuant
to Section 2.2 of the Stock Purchase Agreement, dated as of
December 2, 2006, as amended on December 29, 2006, by and among the
Maker, the Holder and other parties signatory thereto (the "
Purchase Agreement ") together with the Subordinated Note.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Purchase Agreement.
(a) From the Closing Date until the first
anniversary of the date hereof, interest on the unpaid Principal
Amount shall accrue at the rate of five percent (5%) per annum (the
“ Interest ”).
(b) In the event of the occurrence of an Event of
Default, as defined in Section 10 of this Note and
specifically including the failure of the Maker to make the payment
required by Sections 2 of this Note, interest on the unpaid
Principal Amount shall accrue at the rate of fifteen (15%) per
annum.
(c) Interest shall be computed on the basis of
actual days elapsed over a three hundred sixty-five (365) day
year.
2. Payment of Principal Amount and
Interest . Subject to the
principal prepayment requirements applicable to the Maker set forth
in Section 3 and the optional pre-payment provisions of Section 4,
the Maker shall pay to the Holder any and all unpaid Principal
Amount of this Note and all Interest accrued thereon under
Section 1(a) in one installment on or before the first
anniversary of the date hereof.
3. Prepayments . The Maker shall pay to the Holder the
Principal Amount of this Note and all unpaid Interest accrued
thereon in accordance with the following:
(i) Mandatory Prepayments . There will be no mandatory pre-payments of
Principal or Interest under this Note;
(ii) Reasonable Cooperation . The Maker shall exercise its commercially
reasonable cooperation to assist Rick Stanley to facilitate the
Closing of the Inventory & Fixture Refinancing and the Maker
shall not unreasonably refuse any third-party offers for such
Inventory & Fixture Refinancing, provided, however, any and all
determinations to accept any proposed terms and conditions for such
Inventory & Fixture Refinancing shall be made at the sole
discretion of the Board of Directors of the Maker.
(iii) Voluntary Prepayments . The Maker may prepay all or any portion of the
unpaid balance of this Note, without premium or penalty, at any
time and from time to time.
4. Method of Payment . The Principal Amount of this Note and any and
all interest thereon shall be paid by Maker in lawful currency of
the United States of America to the Holder at the address of the
Holder specified in Section 14 of this Note or at such other
place as the Holder shall direct in writing to the Maker. All
payments due hereunder shall be made not later than the end of the
business day on the day when due.
5. Satisfaction of Holder’s
Expenses . The Maker
shall pay to the Holder all reasonable out-of-pocket costs and
expenses (including reasonable counsel fees and expenses) incurred
by the Holder in connection with any proceedings or enforcement
action instituted by or on behalf of the Holder to collect any sums
due and owing by the Maker under this Note in the event of an Event
of Default.
6. Application of Payments . All payments made by the Maker hereunder,
including any prepayment, shall be applied: (a) first, to the
payment of any costs and expenses for which Maker is responsible
under Section 6 of this Note, (b) second, to the payment in
full of accrued unpaid interest, and (c) finally, to the reduction
of the unpaid Principal Amount.
7. Security . This Note is secured by a Security Agreement
among the Maker, the Holder, and Manchester Inc. of even date
herewith with respect to certain Collateral (as defined in the
Security Agreement). All of the terms, covenants, and conditions
the Security Agreement are hereby made a part of this Note and the
rights and remedies of the Holder hereof as provided in the
Security Agreement and in this Note shall be cumulative and
concurrent and may be pursued singly, successively or
together.
8. Covenants . The Maker agrees that, until such time as this
Note has been paid in full:
(a) The Maker will provide to the Holder, promptly
on the Maker's receipt thereof, any notice of default received by
it under any agreements between the Maker and third parties
relating to other indebtedness incurred by the Maker.
(b) Maker will not create, assume, or suffer to
exist, any lien or other encumbrance of any kind upon any of its
assets securing this Note, whether now owned or hereafter acquired,
except those liens granted by the Maker to the Parent’s
lender to finance the Closing of the Purchase Agreement or liens
granted to third parties in connection with any refinancing of the
Maker’s assets, or such other liens as may arise in the
ordinary course of business.
9. Events of Default . For purposes of this Note, each of the
following constitutes an " Event of Default "
hereunder:
(a) If the payment of the Principal Amount or of
interest on this Note is not paid when due (as set forth in
Sections 2 and 3 of this Note).
(b) The default by Maker in the performance or
observance of any covenant, agreement or condition contained in
this Note.
(c) If the Maker becomes insolvent or generally
fails to pay, or admits in writing the Maker's inability to pay,
debts as they become due; or the Maker applies for, consents to or
acquiesces in the appointment of a trustee, receiver or other
custodian for the Maker or any property or assets of the Maker, or
makes a general assignment for the benefit of creditors; or,
i
