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GUARANTY AGREEMENT THIS AGREEMENT is executed as of this 7th day of April , 1997, by and between HORIZON COACH, INC., a California corporation ("Horizon") and the REDEVELOPMENT AGENCY OF THE CITY OF RIVERSIDE, a public agency (the "Agency") and is made with reference to the following facts: RECITALS A. Horizon operates a business within the Airport Industrial Redevelopment Area of the City of Riverside, California, from property which it leases at 6901 Central Avenue (the "Property"). Horizon is obtaining loans from Inland Empire National Bank (the "Bank") in a total amount of One Hundred Twenty-Five Thousand Dollars ($125,000.00) -- (the "Loan"), the proceeds of which will be used to upgrade and expand Horizon's business operations at the Property. B. As a condition to funding the Loan, the Bank has required that the Agency provide certain credit enhancement, in the form of the assignment of deposit accounts, in the full initial principal amount of the Loan. The Agency has agreed to provide such credit enhancement, in the form of the collateral assignment of certain deposit accounts (Certificates of Deposit) maintained by the Agency at the Bank. C. The credit enhancement to be provided by the Agency will be made available through the Agency's Downtown/Airport Capital Project Fund. As consideration to the Agency for the providing of such credit enhancement in favor of Horizon, the parties desire by this Agreement to provide assurances to the Agency regarding the use of the proceeds of the Loan and its repayment by Horizon. The parties therefore agree as follows: 1. Use of Proceeds. Horizon acknowledges and agrees that the proceeds of the Loan will be used solely for purposes related to its business activities at the Property and for no other purpose and with respect to no other business location, if any, which might be maintained by Horizon. 2. Loan Repayment. Horizon agrees that it will fully repay the Loan to the Bank in a timely manner. Horizon acknowledges and agrees that in the event of a default under the Loan by Horizon, and in the further event that the security which has been provided by the Agency is utilized by the Bank to repay the Loan, the Agency shall be subrogated to the rights of the Bank and may thereafter pursue all rights and remedies available to it against Horizon in order to enforce repayment of the Loan. 3. Job Creation. Horizon has agreed that as a result of the Loan, approximately forty (40) new full-time jobs will be created at the Property within twenty-four (24) months following the date upon which the Loan is funded. The Agency has relied upon this representation as an inducement to provide credit enhancement with respect to the Loan. Horizon hereby confirms to the Agency its intention to create approximately forty (40) new full-time jobs using the proceeds of the Loan. Until such time as the Loan is repaid in full and the Agency's collateral is fully released,