MANCHESTER INC.
PROMISSORY NOTE
U.S. $290,000.00 FEBRUARY 1, 2006
1. FOR VALUE RECEIVED, Manchester Inc., a Nevada corporation (the
"Borrower"), hereby promises to pay to the order of Brazos Equities LLC
("Lender"), at such time, place and in such manner as Lender may specify
in writing, the principal amount of TWO HUNDRED NINETY THOUSAND US DOLLARS
(U.S.$290,000.00) (the "Principal"). The Borrower shall pay interest on
the outstanding principal of this Note at the annual rate of 6% per annum,
calculated based on a year of 365 days and actual days elapsed (the
"Interest").
2. The Borrower hereby promises to pay to the order of the Lender the
Principal and all Interest due thereon within thirty (30) days upon
delivery to the Company of written demand by the Lender (the "Due Date"),
at such place and in such manner as Lender may specify in writing.
3. Any and all fees, costs, expenses and disbursements charged by financial
institutions with respect to wire transfer or other transmittal charges
incurred in connection with delivery of the Principal from the Lender to
the Borrower shall be deemed to have been received by the Borrower from
the Lender and all such amounts shall be included in the calculation of
Principal hereunder.
4. This Note shall not be transferable by Borrower and the Borrower may not
assign, transfer or sell all or a portion of its rights and interests to
and under this Note to any persons and any such purported transfer shall
void ab initio. The Lender may transfer and assign this Note at its sole
discretion.
5. The failure at any time of the Lender 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 Lender shall be cumulative and
may be pursued singly, successively or together, at the option of the
Lender. The acceptance by the Lender of any partial payment shall not
constitute a waiver of any default or of any of the Lender's 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 Lender unless
the same shall be in writing, duly signed on behalf of the Lender; and
each such waiver shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of the Lender in any other
respect at any other time.
6. 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.
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7. The Borrower represents and warrants that this Note is the valid and
binding obligation of the Borrower, fully enforceable in accordance with
its terms. The execution and delivery by the Borrower of this Note, the
performance by the Borrower 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 the Borrower'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 the Borrower 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 the Borrower under or
create or impose any lien upon, the Borrower or any of its assets and
properties under, any contract or permit to which the Borrower is a party
or by which its assets and properties are bound.
8. 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.
9. 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 Lender or the Borrower,
respectively. Any party may change its address for such communications by
giving notice thereof to the other parties in conformity with this
Section.
10. This Note shall be governed by and construed under the laws of the State
of Nevada as applied to agreements entered into and to be performed
entirely within such State. Each party hereby irrevocably consents to the
jurisdiction of the courts of any competent jurisdiction over one or more
of the parties. In any such litigation the Borrower 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 Borrower in the State of its
incorporation. The company hereby waives trial by jury in any litigation
in any court with respect to, in connection with, or arising out of this
note or the validity, protection, interpretation, collection or
enforcement hereof and the company 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.
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11. A default shall exist on this Note if any of the following occurs and is
continuing: (i) Failure to pay Principal and any accrued Interest on the
Note on or before the Due Date; (ii) Failure by the Borrower to perform or
observe any other covenant or agreement of the Borrower contained in this
Note; (iii) A custodian, receiver, liquidator or trustee of the Borrower,
or any other person acting under actual or purported force of law takes
ownership, possession or title to Borrower property; (iv) any of the
property of the Borrower is sequestered by court order; (v) a petition or
other proceeding, voluntary or otherwise is filed by or against the
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of indebtedness, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect; or (vi) the Borrower
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
the Borrower or all or any part of its property. Upon any such default,
the Borrower shall immediately notify the Lender, and upon notice to the
Borrower, the Lender 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 365 days and actual days elapsed from the date of such
default.
12. The Borrower, 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 Lender 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 Lender or any indulgence shown by the
Lender (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 Lender shall in any way affect or impair the Obligations
(as hereinafter defined) of any Obligors or be construed as a waiver by
the Lender of, or otherwise affect, any of the Lender's rights under this
Note, under any endorsement or guaranty of this Note; (c) if the Borrower
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
Lender's 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 Lender or
Lender's 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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13. The Borrower 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
the Borrower, 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 Lender of this Note against impairment. This Note shall be
enforceable against all successors and assigns of Borrower. Borrower
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 Borrower if Borrower is unable to perform.
14. 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.
15. If the Lender loses this Note, the Borrower shall issue an identical
replacement note to the Lender upon the Lender's delivery to the Borrower
of a customary agreement to indemnify the Borrower reasonably satisfactory
to the Borrower for any losses resulting from issuance of the replacement
note.
16. 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.
IN WITNESS WHEREOF, the Borrower has caused this Note to be dated, executed and
issued on its behalf, by its duly appointed and authorized officer, as of the
1st day of February, 2006.
MANCHESTER INC.
By: /s/ Richard D. Gaines
--------------------------
Name: Richard D. Gaines
Title: Corporate Secretary
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