FUNDING
      AGREEMENT

     

    Funding
      Agreement (the “Agreement”),
      dated
      as of December [__],
      2006,
      among The Bank of New York, a New York banking corporation with its principal
      corporate trust office at 101 Barclay Street, 8th
      Floor
      West, New York, New York 10286, as Collateral Agent under the Loan Agreement
      (defined below) (the “Collateral
      Agent”),
      Palm
      Beach Multi-Strategy Fund, L.P., a Delaware limited partnership, with its
      principal office at 3601 PGA Blvd., Suite 301, Palm Beach Gardens, Florida
      33410
      (the “Lender”);
      Manchester Indiana Funding LLC, Delaware limited liability company with its
      principal office at 100 Crescent Court, 7th
      Floor,
      Dallas, Texas 75201 (the “Borrower”)
      and
      Manchester, Inc., a Nevada corporation, with its principal office at 100
      Crescent Court, 7th
      Floor,
      Dallas, Texas 75201 (the “Guarantor”).

     

    WHEREAS,
      Lender, Collateral Agent and Borrower have entered into that certain Loan and
      Security Agreement (the “Loan
      Agreement”)
      dated
      December [__],
      2006,
      between Borrower and Lender, and the Collection Account (as defined in the
      Loan
      Agreement) has been established in the name of Lender with Collateral Agent.
      

     

    WHEREAS,
      pursuant to the Loan Agreement, certain conditions precedent are required to
      be
      satisfied prior to Borrower becoming entitled to request an advance thereunder
      from Lender. In this Agreement, the term “Conditions”
shall
      mean all of the conditions precedent to the obligations of Lender under the
      Loan
      Agreement and every other Loan Document (as defined in the Loan
      Agreement).

     

    WHEREAS,
      Guarantor has entered into that certain Guaranty dated December [__],
      2006
      (the “Guaranty”)
      made
      by the Guarantor and others in favor of Lender, whereby the Guarantor has
      guaranteed the obligations of Borrower to Lender under the Loan Agreement and
      the other Loan Documents.

     

    WHEREAS,
      as of the date hereof, not all of the Conditions have been satisfied, and
      Lender, at the request of Borrower and Guarantor, is willing to make an advance
      under the Loan Agreement into the Collection Account (as defined in the Loan
      Agreement) on the terms, and subject to the conditions, of this Agreement.
      

     

    NOW,
      THEREFORE, it is agreed as follows:

     

    Section
      1.1 Deposit
      into Collection Account.

     

    (a) On
      the
      date hereof (the “Funding
      Date”),
      conditional upon Guarantor having wired an amount equal to $[_________]
      to the
      Collection Account, Lender shall wire an amount equal to $[_________]
      (such
      amount advanced by Lender, the “Advanced
      Funds”)
      to the
      Collection Account, to be held therein by Collateral Agent on the terms of
      this
      Agreement. Collateral Agent shall invest the funds in the Collection Account
      in
      Eligible Investments (as defined in the Loan Agreement) in accordance with
      Section 2.14 of the Loan Agreement, provided that any interest or other earnings
      on funds earned in the Collection Account shall be retained in the Collection
      Account until distributed in accordance with this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Except
      as
      otherwise provided in this Agreement, and subject to Section 2, below, the
      Advanced Funds shall be treated as a Loan made by Lender to Borrower under
      the
      Loan Agreement on the Funding Date, and shall bear interest from the Funding
      Date at the rate specified in the Loan Agreement.

     

    Section
      2.1 Disbursements.

     

    (a) Upon
      receipt of a written instruction executed by Lender (a “Disbursement
      Notice”),
      Collateral Agent shall disburse funds on deposit in the Collection Account
      to
      such person or persons, and in such amounts, as may be specified in the
      Disbursement Notice. Collateral Agent shall not accept instructions from
      Borrower, Manchester, or any other person with respect to disbursement of funds
      from, or any other matter regarding, the Collection Account. 

     

    (b) Lender
      agrees with Borrower that, if all of the Conditions are satisfied to the
      satisfaction of Lender in its sole discretion by noon, Dallas, Texas time on
      [__________],
      2006,
      Lender will deliver a Disbursement Notice to Collateral Agent instructing
      Collateral Agent to disburse all funds on deposit in the Collection Account
      in
      the following order of priority: first,
      to
      Lender, an amount equal to (i) all interest due on the Loan pursuant to the
      Loan
      Agreement for the period from the Funding Date until the date of such
      disbursement and (ii) an amount equal to all fees, expenses and any other
      amounts payable to Lender or Collateral Agent under the Loan Agreement and
      any
      other Loan Documents (the “Borrower
      Expenses”)
      as of
      such date; and second,
      to
      Borrower (or to such other person specified in the Disbursement Notice), the
      balance of funds on deposit in the Collection Account.

     

    (c) If
      all of
      the Conditions are not satisfied to the satisfaction of Lender in its sole
      discretion by noon, Dallas, Texas time on [_____________],
      2006,
      Lender and Borrower agree that, notwithstanding any other provision of the
      Loan
      Agreement, Lender may declare an Event of Default (as defined in the Loan
      Agreement) to have occurred and the Loan, all interest accrued thereon and
      all
      Borrower Expenses to be immediately repayable, and in such circumstances Lender
      may deliver a Disbursement Notice to Collateral Agent instructing Collateral
      Agent to disburse all funds on deposit in the Collection Account to Lender,
      which Lender will apply in accordance with Section 2.9 of the Loan Agreement,
      except that the Borrower Expenses shall first be paid. In the event that such
      funds are insufficient to pay or repay (as the case may be) the Loan, all
      interest accrued thereon and all Borrower Expenses (the amount of such
      insufficiency, a “Shortfall”),
      Borrower shall be liable to pay the amount of such Shortfall to Lender, which
      shall be due and payable immediately.

     

    (d) The
      parties hereto agree that, until all funds have been disbursed from the
      Collection Account pursuant to a Disbursement Notice, no payments shall be
      made
      from the Collection Account pursuant to Section 2.11 of the Loan Agreement,
      or
      otherwise.

     

    (e) The
      Guarantor hereby irrevocably, absolutely and unconditionally guarantees the
      payment by Borrower of any Shortfall on the terms of the Guaranty (and, for
      the
      avoidance of doubt, such Shortfall shall be a “Guaranteed Obligation” for the
      purposes of the Guaranty), provided that the limitation on the Guarantor’s
      liability in Section 2(f) of the Guaranty shall not apply to the Guarantor’s
      obligations with respect to the Shortfall.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Section
      3.1 Notices.
      Any
      notice or other communication to any party in connection with this Agreement
      shall be in writing and shall be sent by manual delivery, telegram, facsimile
      transmission, overnight courier or United States mail (postage prepaid)
      addressed to such party at the address specified on Schedule A to the Loan
      Agreement, or at such other address as such party shall have specified to the
      other party hereto in writing. 

     

    Section
      3.2 Assignment.
      No
      Related Party shall assign its rights or duties hereunder without the consent
      of
      Lender.

     

    Section
      3.3 Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts and by the parties
      hereto in separate counterparts, each of which when so executed and delivered
      shall be deemed to be an original, and all of which taken together shall
      constitute but one and the same instrument.

     

    Section
      3.4 GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT MADE UNDER THE LAWS OF
      THE
      STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
      GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED STATES
      OF AMERICA. EACH PARTY HERETO HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
      AGAINST IT WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
      STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
      OF NEW YORK AS LENDER MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, EACH
      PARTY HERETO ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY,
      GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
      COURTS. EACH PARTY HERETO AGREES THAT SECTIONS 5-1401 AND 5.1402 OF THE GENERAL
      OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT AND
      WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE
      SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. 

     

    Section
      3.5 Waiver
      of Jury Trial.
      EACH
      PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
      TO
      ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION
      OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the day and year
      first set forth above.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    
      	 	 	 
	 	
              PALM
                BEACH MULTI-STRATEGY FUND, L.P.

            
	 
 	 
 	 
 
	
            	BY:  	PALM BEACH LINKS CAPITAL, L.P., 
	 	 	
              its
                general partner 

            
	 	 	 
	 	 	
              BY: PBL
                HOLDINGS, LLC,  

            
	
               

            	
               

            	
              its
                general partner 

            
	 	 	 
	 	 	 
	 	 	
              By:


            
	 	
              
                

              

              Managing
                Director

            
	 	 
	 	
            
	 	
              By:


            
	 	
              
                

              
                 
              Managing
              Director


    


    
      	 	 	 
	 	
              MANCHESTER
                INDIANA FUNDING LLC

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	Title:




    
      	 	 	 
	 	
              MANCHESTER
                INC. :

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	Title: