THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.

 
MANCHESTER, INC.
 
S TAX REIMBURSEMENT PROMISSORY NOTE
 

U.S. $1,577,785.00
October 4, 2006

 

1.  
FOR VALUE RECEIVED, pursuant to the terms that certain Share Purchase and
Exchange Agreement, of even date hereof (the “Share Purchase and Exchange
Agreement”), by and between Nice Cars Acceptance AcquisitionCo, Inc., a Delaware
corporation (the “Company”), Manchester Inc., a Nevada corporation
(“Manchester”), Nice Cars Capital Acceptance Corporation, a Georgia corporation
(“NCCAC”), and the Shareholders of NCCAC, Ray Lyle and Victoria Lyle (the
“Sellers”), the Company, Nice Cars Operations AcquisitionCo, Inc. and Manchester
(collectively herein referred to as “Maker”) jointly and severally hereby
promise to pay to the order of the Sellers, on such date as set forth in Section
3 below, at such place and in such manner as the Sellers may specify in writing,
the principal amount of one million five hundred seventy seven thousand seven
hundred eighty five dollars ($1,577,785) (the “Principal”), subject to
adjustment as provided herein. Maker shall pay ordinary interest on the
outstanding principal of this note (this “Note”) at the annual rate of ten
percent (10%) per annum, calculated based on a year of 360 days and actual days
elapsed (the “Interest”). In addition, the Maker shall pay a gross-up surcharge
reflecting the additional tax due in respect of payment of taxes on behalf of
the Sellers, which shall equal fifteen percent (15%) of the Principal after
giving effect to the adjustment of such Principal as provided herein (the “Gross
Up Payment”). All capitalized terms not otherwise defined herein shall have the
meaning set forth in the Share Purchase and Exchange Agreement.

 

2.  
Interest in arrears on the Principal shall be payable as and when the Principal
is due. Such interest payment shall be in an amount equal to the Interest
accrued through the payment date.

 

3.  
The Principal, subject to adjustment as provided herein, together with all
accrued and unpaid Interest, the Gross Up Payment, and all other sums due
hereunder or in connection herewith if not sooner due and payable in accordance
with the terms of this Note shall on January 2, 2007 (the “Initial Due Date”) be
paid by Maker in whole or in part to the extent that Sellers have prepared and
filed their federal and state income tax returns for the years ending December
31, 2005 and for December 31, 2006 and paid the S Taxes attributed to the S
Income which is respectively due thereunder, or if such S Taxes are not paid in
part or in full as of the Initial Due Date, the balance of the Principal,
subject to adjustment as provided herein, together with all accrued and unpaid
Interest, the Gross Up Payment, and all other sums due hereunder or in
connection herewith, shall be paid on the date that such S Taxes are
respectively paid thereafter. The Sellers shall provide Maker with at least two
(2) business days advance notice in respect of each such payment of S Taxes. The
S Taxes attributable to the S Income shall be computed in accordance with the
procedures set forth in Section 8 of the Share Purchase and Exchange Agreement,
and the amount of the S Taxes due and payable by the Sellers are so computed,
the Maker and Sellers will make any adjustments necessary as set forth in
Section 8(a) of the Share Purchase and Exchange Agreement.

 

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4.  
The failure at any time of the Sellers to exercise any of its options or any
other rights hereunder shall not constitute a waiver thereof, nor shall it be a
bar to the exercise of any of its options or rights at a later date. All rights
and remedies of the Sellers shall be cumulative and may be pursued singly,
successively or together, at the option of the Sellers. The acceptance by the
Sellers of any partial payment shall not constitute a waiver of any default or
of any of the Sellers' rights under this Note. No waiver of any of its rights
hereunder, and no modification or amendment of this Note, shall be deemed to be
made by the Sellers unless the same shall be in writing, duly signed on behalf
of the Sellers; and each such waiver shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of the Sellers
in any other respect at any other time.

5.  
Any term or condition of this Note may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition.

6.  
Maker represents and warrants that this Note is the valid and binding obligation
of Maker, fully enforceable in accordance with its terms. The execution and
delivery by Maker of this Note, the performance by Maker of its obligations
hereunder and the consummation of the transactions contemplated hereby and
thereby does not and will not: (a) conflict with or result in a violation or
breach of any of the terms, conditions or provisions of Maker’s charter
instruments; (b) conflict with or result in a violation or breach of any term or
provision of any law or order applicable to Maker or any of its assets and
properties; or (c) (i) conflict with or result in a violation or breach of, or
(ii) result in or give to any person any rights or create any additional or
increased liability of Maker under, or (iii) create or impose any lien upon
Maker or any of its assets and properties under, any contract or permit to which
Maker is a party or by which its assets and properties are bound.

7.  
If any provision of this Note is held to be illegal, invalid or unenforceable
under any present or future Law, and if the rights or obligations of any party
hereto under this Note will not be materially and adversely affected thereby,
(i) such provision will be fully severable; (ii) this Note will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof; (iii) the remaining provisions of this Note will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance here from; and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Note a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible.

 
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8.  
Any notice, authorization, request or demand required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given two
days after it is sent by an internationally recognized delivery service to the
address of record of the Sellers or Maker, respectively. Any party may change
its address for such communications by giving notice thereof to the other
parties in conformity with this Section.

9.  
This Note shall be governed by and construed under the laws of the State of
Georgia as applied to agreements entered into and to be performed entirely
within such State. In any such litigation Maker waives personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to the registered corporate office
of Maker in the State of its incorporation. Maker hereby waives the right to
interpose any setoff or non-compulsory counterclaim or cross-claim in connection
with any such litigation, irrespective of the nature of such setoff,
counterclaim or cross-claim.

10.  
MAKER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT SITTING IN THE STATE OF GEORGIA OVER ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE. MAKER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. MAKER HEREBY AGREES
THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT, AFTER ALL APPROPRIATE APPEALS, SHALL BE CONCLUSIVE AND BINDING UPON IT.

MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE
OR THE TRANSACTIONS CONTEMPLATED HEREIN. FURTHER, MAKER HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF HOLDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT HOLDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. MAKER ACKNOWLEDGES THAT
HOLDER HAS BEEN INDUCED TO ACCEPT THIS NOTE BY, INTER ALIA, THE PROVISIONS OF
THIS PARAGRAPH.

11.  
A default shall exist on this Note if any of the following occurs and is
continuing: (i) failure to timely make any payment of Principal, interest or
other sum when due; (ii) failure by Maker to perform or observe any other
covenant or agreement of Maker contained in this Note; (iii) a custodian,
receiver, liquidator or trustee of Maker, or any other person acting under
actual or purported force of law takes ownership, possession or title to Maker’s
property; (iv) any of the property of Maker is sequestered by court order; (v) a
petition or other proceeding, voluntary or otherwise is filed by or against
Maker under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of indebtedness, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect; (vi) Maker makes an assignment
for the benefit of its creditors, or generally fails to pay its obligations as
they become due, or consents to the appointment of or taking possession by a
custodian, receiver, liquidator or trustee of Maker or all or any part of its
property; or (vii) any default referred to in Paragraph 12 of this Note. Upon
any such default, the Sellers may declare the Principal of the Note, plus
accrued Interest, to be immediately due and payable, upon which such Principal
and accrued Interest shall become due and payable immediately. Interest upon
default shall thereafter accrue at the rate of 15% per annum, calculated based
on a year of 360 days and actual days elapsed from the date of such default.

 
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12.  
Any default upon the Purchase Note, the S Tax Reimbursement Note or the
Shareholder Note (each, a “Transaction Note” and collectively, the “Notes”)
issued pursuant to the Share Purchase and Exchange Agreement, shall constitute a
default under the terms of each such Transaction Note individually and all such
Notes collectively, except with respect to any Transaction Note which has been
satisfied in full prior to the default of another Transaction Note.

 

13.  
Maker, any endorser, or guarantor hereof or in the future (individually an
“Obligor” and collectively “Obligors”) and each of them jointly and severally:
(a) waive presentment, demand, protest, notice of demand, notice of intent to
accelerate, notice of acceleration of maturity, notice of protest, notice of
nonpayment, notice of dishonor, and any other notice required to be given under
the law to any Obligor in connection with the delivery, acceptance, performance,
default or enforcement of this Note, any endorsement or guaranty of this Note,
any pledge, security, guaranty or other documents executed in connection with
this Note; (b) consent to all delays, extensions, renewals or other
modifications of this Note, or waivers of any term hereof or thereof, or release
or discharge by the Sellers of any of Obligors, or release, substitution or
exchange of any security for the payment hereof, or the failure to act on the
part of the Sellers or any indulgence shown by the Sellers (without notice to or
further assent from any of Obligors), and agree that no such action, failure to
act or failure to exercise any right or remedy by the Sellers shall in any way
affect or impair the Obligations (as hereinafter defined) of any Obligors or be
construed as a waiver by the Sellers of, or otherwise affect, any of the
Sellers' rights under this Note, under any endorsement or guaranty of this Note;
(c) if Maker fails to fulfill its obligations hereunder when due, agrees to pay,
on demand, all costs and expenses of enforcement of collection of this Note or
of any endorsement or guaranty hereof and/or the enforcement of the Sellers'
rights with respect to, or the administration, supervision, preservation,
protection of, or realization upon, any property securing payment hereof,
including, without limitation, all attorney's fees, costs, expenses and
disbursements, including, without further limitation, any and all fees related
to any legal proceeding, suit, mediation arbitration, out of court payment
agreement, trial, appeal, bankruptcy proceedings or any other actions of any
nature whatsoever required on the part of the Sellers or the Sellers’
representatives to enforce this Note and the rights hereunder; and (d) waive the
right to interpose any defense, set-off or counterclaim of any nature or
description.

 
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14.  
Maker will not, by amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by Maker, but will at all times in good faith assist in
the carrying out of all the provisions of this Agreement and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Sellers against impairment. This Note shall be enforceable against
all successors and assigns of Maker. Maker hereby covenants that all of its
subsidiaries and affiliates shall jointly and severally perform this Agreement
to the same and full extent on behalf of Maker if Maker is unable to perform.

15.  
This Note supersedes all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof and contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.

16.  
If the Sellers lose this Note, Maker shall issue an identical replacement note
to the Sellers upon the Sellers' delivery to Maker of a customary agreement to
indemnify Maker reasonably satisfactory to Maker for any losses resulting from
issuance of the replacement note.

17.  
The terms and conditions of this Note shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Note, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Note, except as
expressly provided in this Note.

 
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IN WITNESS WHEREOF, Maker has caused this Note to be dated, executed and issued
on its behalf, by its duly appointed and authorized officer, as of the 4th day
of October, 2006.
 

 
MAKER:
       
MANCHESTER, INC.
 
   
   
  By:  
/s/ Richard D. Gaines 
 

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Name: Richard D. Gaines
 
Title:   Corporate Secretary

 

       
NICE CARS ACCEPTANCE ACQUISITIONCO, INC.
 
   
   
  By:  
/s/ Richard D. Gaines 
 

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Name: Richard D. Gaines
 
Title:   Corporate Secretary

 

       
NICE CARS OPERATIONS ACQUISITIONCO, INC.
 
   
   
  By:  
/s/ Richard D. Gaines 
 

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Name: Richard D. Gaines
 
Title:   Corporate Secretary

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