MANAGEMENT AGREEMENT
This Management Agreement dated as of April 1, 1998, and is by and
between COMMONWEALTH LUBES, INC., a Florida corporation having offices at 000
Xxxxxxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000 ("Owner") and NAVIGATOR
MANAGEMENT, INC., a Florida corporation having offices at 000 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000 ("Manager").
1. Appointment. Owner has ownership of "Jiffy Lube" service centers
located in eastern Virginia and an exclusive franchise and development license
from Jiffy Lube International, Inc. ("JLI") for such area, and pursuant to
such license, the Owner intends to develop additional Jiffy Lube service
centers (the existing and to-be-built service centers and the area development
rights and license are hereinafter collectively referred to as the
"Franchise"). Owner hereby engages Manager, as an independent contractor, and
not as a servant or employee, to operate, manage and maintain the Franchise in
accordance with the terms and conditions set forth in this Management
Agreement, and Manager hereby accepts such engagement.
2. Powers and Duties of Manager. Owner hereby hires Manager, and
Manager agrees, to diligently exercise and perform the following functions:
a) Operations. To supervise the billing and collection of revenues
from the service centers; and to supervise the purchase of
supplies and inventory required for the operation of each service
center comprising the Franchise, and supervise the payment of all
bills therefore.
b) Maintenance and Repair. To cause to be maintained any real
property owned or leased by the Franchise, including sidewalks,
signs, parking lots and landscaping; to cause to be made and
supervise minor alterations as required; and to report promptly to
Owner, with written confirmation thereof, any conditions in any
property requiring the attention of Owner.
c) Employees. To select, supervise, direct, and, if necessary,
recommend to the Partnership the discharge of such employees,
agents, or independent contractors as shall be hired by the Owner
in connection with the operation of the Franchise. It is
understood and agreed that such persons shall be hired by the
Owner, and not the Manager, shall be paid by the Owner, and may be
affiliates or employees or agents of affiliates of the Manager.
Manager shall use its best efforts to insure that Owner is in
compliance with all state and federal labor and tax laws,
including, but not limited to, FSLA, federal withholding tax laws,
FICA and federal and state unemployment insurance laws.
d) Utilities and Service Contracts. To make arrangements for
electricity, gas, fuel, water, and telephone, and to make
contracts in the name of Owner for window cleaning rubbish
hauling, landscaping, pest control, HVAC, security and other
maintenance services, or such of them as Manager shall deem
advisable.
e) Taxes: Licenses and Permits. To send to Owner, upon receipt; all
notices of assessment or reassessment and tax bills affecting any
real property owned or leased by the Franchise, and to pay or
cause to be paid when due real property taxes and assessments and
employee taxes. To acquire and keep in force all licenses and
certificates and permits required for the operation of the
Franchise.
f) Insurance. To arrange in the name of and for the benefit of the
Owner, with reputable companies subject to the approval of Owner,
insurance against such perils and liability and in such amounts as
Owner shall from time to time instruct.
g) Real Estate. To monitor all properties owned by Owner and to
assist Owner in complying with the provisions of all leases to
which the Owner is a party.
h) Loans. In coordination with the Owner, administer loans in
existence and those made in the future, and negotiate any
refinancings of such loans as may be requested by Owner.
i) Expenses. To cause to be paid out of the gross receipts and the
operating reserve of the Owner all normal and proper operating
expenses of the Franchise incurred in the performance of the
duties required to be performed by Manager under this Management
Agreement, including, but not limited to, reasonable and necessary
costs of insurance, taxes, licenses, utilities, maintenance and
repairs, advertising, travel and entertainment, rent, royalty
fees, payroll and payroll taxes, training and employment of
personnel to manage, market and operate the Franchise, and legal
and accounting services. It is expressly agreed that Manager
shall not be responsible for the payment of the salaries, wages,
or costs of any persons whom it may supervise under this
Management Agreement (other than compensation payable to Manager's
employees), and Owner hereby affirms its understanding that such
persons shall be paid by Owner or another affiliate of Owner.
j) Accounting. To cause to be kept at such place as Owner may
approve, separate, adequate and detailed books and records
covering the operation, maintenance, and management of the
Franchise and all matters arising under this Management Agreement,
including without limitation, properly receipted vouchers covering
all expenses and disbursements. Owner and its designee shall at
all times have access to such books and records and shall have the
right to audit such books and records at any time. Manager shall
also cause to be prepared for JLI such reports as are required by
the license agreement and area development agreement executed by
the Owner and JLI, and in conjunction with such reports, cause to
be made the remittances to JLI as may be required of the Owner
pursuant to the aforesaid license agreements and area development
agreement; to cause to be generated on a monthly basis an income
statement for each service center and consolidated statements of
the Franchise, including a balance sheet; to cause to be prepared
daily summaries of operations for each service center; to cause to
be generated monthly accounts receivable listings for fleet and
special customers; and to cause to be sent out xxxxxxxx each month
to these customers and to supervise the monitoring of collections
thereof; and to cause to be maintained an accounts payable system,
including preparation of the Owner's checks in payment of such
payables.
k) Bank Account. To cause to be deposited all funds collected from
the operation of the Franchise, or in any way incidental thereto,
in a bank account separate from the Manager's personal account and
all other accounts in a bank approved by Owner, its being
understood that all funds so deposited in such account shall be
held in trust for Owner. Manager may cause to be endorsed any and
all checks drawn to the order of owner for deposit in such bank
account for the purpose of paying the expenses mentioned in
subparagraph (i) above out of the gross receipts of such account.
l) Compliance with Laws. To assist Owner in keeping the Franchise in
compliance with all relevant governmental laws, ordinances,
regulations and orders; to furnish Owner promptly with any and all
notices, legal or otherwise, of any governmental authority
relating to the Franchise which have been served upon Manager; and
to provide document review by outside legal counsel retained by or
on behalf of Owner in connection with the administration of the
Owner's affairs.
The powers granted to Manager may be exercised by Manager or any
designee of Manager. To the extent Manager designates any third party to
perform any services of Manager (i) Manager shall nevertheless remain
responsible for the management of the Franchise and (ii) the costs payable by
the Owner pursuant to this Management Agreement shall not be increased by
reason of such designation.
Any powers not expressly granted to Manager are reserved by Owner.
3. Term.
a) This Management Agreement shall be effective and in force until
the termination of the last Franchise Agreement between the Owner
and JLI (or any successor or successors thereto) with respect to
any of the service center to which this Management Agreement
pertains, unless sooner terminated as provided herein.
b) Notwithstanding the provisions of subparagraph (a) above, the
Owner may, at its option, terminate this Management Agreement at
any time, upon notice to the Manager, upon (i) Manager's gross
negligence, willful misfeasance or material breach in the
performance of its duties under this Management Agreement,
provided that Manager shall be entitled to written notice of such
breach and the opportunity to cure same, or, at a minimum,
commence the process of curing same, within 10 business days of
the receipt of the notice; (ii) the filing of a petition in
bankruptcy by or against Manager (if filed against the Manager,
and the petition is not discharged within 60 days of such filing)
or an assignment for the benefit of creditors by Manager or any
proceeding under any insolvency act by Manager, or (iii) the sale
or other disposition of the Franchise.
c) Upon the termination of the agreement, Manager shall deliver to
Owner all books, records, documents, funds and the like maintained
in connection with the operation of the Franchise, and shall
render a final accounting to Owner within 30 days of termination,
reflecting the balance of income and expense as the date of
termination.
4. Compensation.
a) Calculation. The Management Fee shall, with respect to any
service centers in excess of thirty-four, be calculated and
payable on the basis of all of the JLI service centers owned or
operated by Lucor, Inc., directly, or through one or more
affiliates, including the Owner (collectively referred to below as
the "Lucor Service Centers"), as follows:
Number of Lucor Management Fee
Service Centers Per Service Center
1 - 34 4.50%
34 - 70 3.00%
71 - 100 2.25%
More than 100 1.50%
As an example, assuming that as of the date hereof there are
thirty-four Lucor Service Centers, the Management Fee payable with
respect to the thirty-fifth Lucor Service Center, whether or not
operated by the Owner, would be 3%. If the Owner were to operate
any additional Lucor Service Center, the Management Fee payable
with respect to that service center would be determined by the
schedule provided above. For the purposes hereof, payment for a
particular service center shall begin for that first full month
following commencement of operations for such center. Manager
shall be entitled to reimbursement of all reasonable and necessary
travel, entertainment and similar out-of-pocket expenses incurred
in the performance of its duties under this Management Agreement.
b) No Minimum. No minimum monthly or annual Management Fee shall be
payable with respect to any Lucor Service Center.
5. Assignment; Successors and Assigns. This Management
Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective legal representatives, successors and assigns.
6. No Joint Venture. This Management Agreement shall not be
construed as in any way establishing a partnership, joint venture, express or
implied agency, or employer-employee relationship between Owner and Manager.
7. No Waiver. No consent or waiver, express or implied, by the
Owner to or of any breach of covenant, condition, or duty of Manager shall be
construed as a consent or waiver to or of any other breach of the same or any
other covenant, condition or duty.
8. Notices. Any notice, demand, report, consent, approval or other
communications which either party is required or may desire to give to or make
upon the other party shall be in writing and shall be served by the United
States Postal Service, by registered or certified mail, return receipt
requested, addressed to the address of the party to be notified set forth
above (or to such other address as either party may designate by notice to the
other). Notices shall be deemed given when received, but if delivery is not
accepted, on the third business day after the same is deposited with the
United States Postal Service.
9. Governing Law; Amendments. This Management Agreement shall
be construed and enforced in accordance with the laws of the State of Florida.
This Management Agreement may not be amended, modified, discharged, or changed
in any respect whatsoever, except by a further agreement in writing duly
executed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this instrument as
of the date indicated above.
MANAGER:
NAVIGATOR MANAGEMENT, INC.
/s/ Xxxxx X. Xxxxxx
BY:_______________________________
Xxxxx X. Xxxxxx,
President
OWNER:
COMMONWEALTH LUBES, INC.
/s/ Xxxxxxx X. Xxxxxx
BY:________________________________
Xxxxxxx X. Xxxxxx,
President
