ALL NIGHT AUTO BLOOMINGTON/NORMAL, LLC
BUSINESS MANAGEMENT SYSTEM AGREEMENT
This Agreement is made this 20th day of October, 2006 between MIDNIGHT
AUTO FRANCHISE CORPORATION ("MAFC") MIDNIGHT HOLDINGS GROUP, INC. ("MHG") and
ALL NIGHT AUTO OF BLOOMINGTON/NORMAL, LLC ("XXX B/N").
RECITALS
A. MAFC, a wholly-owned subsidiary of MHG, through affiliated companies,
operates auto repair centers under the name and logo "All Night Auto."
MAFC has also franchised the "All Night Auto" concept in other states.
MAFC franchisees operate their stores in accord with the "All Night Auto
Preferred Business Management System."
B. XXX B/N was formed, with a view toward opening and operating certain
stores in Illinois.
C. Bloomington Center Associates, LLC ("BCA"), MHG and MAFC have become
partners via XXX B/N in the retail and service stores operated by XXX B/N;
D. MAFC has entered into that certain Sponsorship Agreement (the "Sponsorship
Agreement") simultaneously herewith with Landlord & Associates Management,
Inc. and/or Eastland Mall, LLC, a Delaware corporation and limited
liability company, respectively, governing the advertising and marketing
of MAFC's and XXX B/N's name and logo and retail and service facilities;
E. The parties hereto acknowledge that XXX B/N is a joint venture between BCA
and MAFC, and is not a franchise of MAFC.
F. MAFC shall manage the retail and service stores and make the All Night
Auto Preferred Business Management System (the "System") available to XXX
B/N.
G. The parties hereto acknowledge and agree that from October 20, 2006
through December 31, 2006, MAFC will provide extensive services apart from
and in addition to the management services contemplated by this Management
Agreement and in exchange therefore will receive an additional payment of
$100,000.00 and the receipt of a Class B Membership Interest in XXX B/N
which the parties have valued at $200,000.00.
NOW, THEREFORE, the parties agree as follows:
1. THE SYSTEM. The All Night Auto Preferred Business Management System
is set forth in "All Night Auto Operating Procedures Manual (the
"Manual") attached hereto as Exhibit A. MAFC agrees to provide goods
and services to XXX B/N AS IF XXX B/N were a franchise
owner/operator under the Manual (including any amendments thereto),
and XXX B/N agrees to perform and make payments to MAFC (except for
royalty fees) in accordance with the Manual AS IF XXX B/N were a
franchise owner/operator thereunder. Provided, however, the
allowable fees that may be charged by MAFC in exchange for providing
such goods
and services shall be as set forth on Exhibit B attached hereto. In
addition, MAFC covenants and agrees to provide the property and
equipment set forth on Exhibit C hereto for the use of XXX B/N in
the operation of the service and retail stores.
2. MAFC OBLIGATIONS. In exchange for the payments to be received by
MAFC pursuant to this Management Agreement, MAFC agrees to the
following:
a. MAFC will timely pay all operating costs and expenses of any
kind or nature associated with the operation of the XXX B/N
service and retail stores. In addition, all operating costs,
expenses and payables attributable to persons or entities
unrelated and unaffiliated with MAFC shall be paid prior to
MAFC remitting any fees to itself.
b. Any fees incurred and unpaid to MAFC shall not exceed Two
Hundred Seventy-Five Thousand and 00/100 ($275,000.00) Dollars
at any time. As used herein "fees" refers to the percentage
markup set forth on the attached Exhibit B. If fees incurred
and unpaid to MAFC exceed this threshold, then MAFC agrees to
provide goods and services at its cost without any xxxx-up,
until such time as the fees incurred and unpaid to MAFC are
reduced below this threshold (at which point, MAFC may again
resume charging the fees under Exhibit B). MAFC's obligation
to pay all of the operating costs and expenses of XXX B/N
shall continue in full force and effect notwithstanding any
period in which it has not been paid its fees or is otherwise
providing goods and services at its cost.
c. All cash in excess of operating costs and expenses and fees
shall be immediately deposited in the XXX B/N bank account.
d. MAFC shall provide XXX B/N a monthly financial/business
report, including such items and in such form as XXX B/N may
reasonably request. Such financial/business report shall be
provided in writing within twenty (20) days after the end of
each month.
3. TERMINATION. This Agreement may be terminated by XXX B/N, in its
sole and absolute discretion, upon the occurrence of any one of the
following events after thirty (30) days written notice and, in the
case of a, b and c below, a failure by MAFC to rectify or remove the
applicable default within such thirty (30) day period:
a. Upon the failure by MAFC to timely pay the operating expenses
of the service and retail stores which has caused a disruption
in the supply of products or services utilized in XXX B/N's
business operations or a default by MAFC under the Sponsorship
Agreement;
b. Upon the failure of MAFC to provide XXX B/N timely
financial/business monthly reports;
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c. Upon the failure by MAFC to deposit excess cash to the bank
account of XXX B/N;
d. In the event XXX B/N loses in excess of Three Hundred Thousand
and 00/100 ($300,000.00) Dollars in any fiscal year; or
e. The mutual consent of XXX B/N and MAFC.
4. MISCELLANEOUS. All of the terms and conditions of this Agreement
shall be binding upon and inure to the benefit of the heirs,
successors, administrators, legal representatives and assigns, as
the case may be, of the parties. This Agreement, together with the
rights, duties and obligations hereunder, shall be construed in
accordance with Michigan law. The paragraph headings in this
Agreement are inserted merely for the convenience of the parties and
shall not be used to construe or modify the terms of this Agreement
in any respect. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable
in any manner, the remaining provisions of this Agreement shall
nonetheless continue in full force and effect without being impaired
or invalidated in any way. In addition, if any provision of this
Agreement may be modified by a court of competent jurisdiction such
that it may be enforced, then that provision shall be so modified
and as modified shall be fully enforced. Except as otherwise stated
in this Agreement, this Agreement contains the entire understanding
of the parties with respect to its subject matter, and supersedes
all prior and contemporaneous agreements, understandings and
negotiations. No parol evidence of prior or contemporaneous
agreements, understandings or negotiations shall govern or be used
to construe or modify this Agreement. No modification of this
Agreement shall be deemed effective unless in writing and signed by
the parties. No modification of this Agreement shall be deemed
effective unless authorized by the manager, president or the chief
executive officer of the parties as applicable. Failure of either
party to complain of any act or omission on the part of the other
party (no matter how long the same may continue) shall not be deemed
to be a waiver by such party of any of its rights under this
Agreement. No consent or waiver by any party at any time of any
provision of this Agreement shall be deemed a consent to any other
action or waiver of any breach of any other provision of this
Agreement or a consent to any future action or later breach of the
same or any other provision of this Agreement. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an
original and all of which shall constitute one agreement. The
signature of any party to any counterpart shall be deemed to be a
signature to, and may be appended to, any other counterpart. The
parties agree that all actions arising directly or indirectly out of
this Agreement shall be litigated only in the United States District
Court for the Eastern District of Michigan, Southern Division, or
the Oakland County, Michigan Circuit Court, and the parties hereby
irrevocably consent to the personal jurisdiction and venue of those
courts over the parties to this Agreement.
5. ARBITRATION. Any dispute between the parties regarding any provision
in this Agreement shall be resolved at the option of the aggrieved
party by expedited
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binding arbitration before a single arbitrator according to the
rules of commercial arbitration of the American Arbitration
Association (AAA). The parties need not use the services of AAA or
an AAA selected arbitrator if they can agree among themselves on a
neutral arbitrator and suitable location. If the parties are unable
to so agree, then such arbitration shall be conducted using the
services and facilities of the AAA. Such arbitration shall occur in
Southfield, Michigan. Judgment upon the award of the arbitrators may
be entered by any court of competent jurisdiction. Costs of the
arbitrator and fees of AAA shall be allocated among the parties as
determined by the arbitrator.
6. WAIVER OF JURY TRIAL: THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN
THE EVENT OF ANY LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT
OF, OR IN ANY WAY RELATED TO: (I) THIS AGREEMENT; OR (II) ANY OF THE
TRANSACTIONS OR OTHER AGREEMENTS CONTEMPLATED BY THIS AGREEMENT.
IN WITNESS WHEREOF the parties have signed this Agreement as of the
date written above.
(signatures on following page)
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"MHG"
Midnight Holdings Group, Inc.
By: /s/ Xxxxxxxx Xxxxx
---------------------------------------------
Xxxxxxxx Xxxxx
Its: President
"MAFC"
Midnight Auto Franchise Corporation
By: /s/ Xxxxxxxx Xxxxx
----------------------------------------------
Xxxxxxxx Xxxxx, President and CEO
"XXX"
All Night Auto of Bloomington/Normal, LLC
By: /s/ Xxxxxx Xxxxx
------------------------------------------------
Xxxxxx Xxxxx, Manager
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EXHIBIT A
ALL NIGHT AUTO FRANCHISE POLICIES MANUAL
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EXHIBIT B
ALLOWABLE FEES
Midnight Auto Franchise Corp ("MAFC") is the exclusive supplier of
labor, management, inventory, advertising, real estate facilities and other
services to All Night Auto of Bloomington/Normal ("XXX B/N"). To supply these
services, MAFC has entered into or will enter into certain agreements with
various suppliers on a national, regional or local basis in support of one or
more All Night Auto(R) branded retail and/or Service Center. MAFC shall charge
XXX B/N on a monthly basis the following fees for the management of and supply
of products and services to the operations of All Night Auto of
Bloomington/Normal:
FACILITY MANAGEMENT FEES: MAFC shall enter into all facility leases
with the owners of the facilities. MAFC shall pay all lease fees as well as
manage and maintain the relationship with each landlord and shall sublease the
facility to XXX B/N, shall pass through rent and all other charges under such
lease to XXX B/N, and shall not charge a xxxx-up for providing these services.
EQUIPMENT HARDWARE/SOFTWARE MANAGEMENT FEES (ANAPEN/ANALAN/ANASMS):
MAFC shall acquire, install and maintain all required retail and service center
equipment required to initially operate and manage the business of XXX B/N. MAFC
shall pay all fees to the vendors directly as well as manage and maintain such
systems. MAFC shall contribute all such equipment to XXX B/N (and shall pass
through any warranties, management agreements, service agreements, etc. with
respect to such equipment). Subsequent equipment required to operate and manage
the business of XXX B/N beyond the initially contributed property and equipment
shall be resold to XXX B/N by MAFC at MAFC's actual cost plus MAFC shall charge
a 33% xxxx-up to such cost.
RETAIL AND AUTOMOTIVE PRODUCT INVENTORY AND MAINTENANCE FEES (ANAPPN):
MAFC shall acquire and resell to XXX B/N all inventories and automotive
replacement parts necessary to operate the XXX B/N facilities (both initial
inventory and replacement parts and replenishment of inventory and replacement
parts). MAFC's cost to XXX B/N for the resale of such items shall equal MAFC's
actual cost of such items, plus MAFC shall charge XXX B/N a 33% xxxx-up for the
management, maintenance and acquisition of all inventory and automotive
replacement parts.
RETAIL AND AUTOMOTIVE OPERATING SUPPLIES (ANAPSN): MAFC shall acquire
and resell to XXX B/N all retail and automotive operating supplies on behalf of
XXX B/N. MAFC shall charge XXX B/N its actual cost of acquiring such items, plus
a 33% markup for the management, maintenance and acquisition of all Supplies.
RETAIL AND AUTOMOTIVE MARKETING (ANAPMN/ANAPCN): MAFC shall acquire and
maintain all marketing and advertising on behalf of XXX B/N. MAFC shall charge
XXX B/N its actual cost of all such marketing and advertising, plus a 33%
xxxx-up for the management, maintenance and acquisition of all marketing
initiatives and/or programs developed for it.
RETAIL AND SERVICE CENTER FINANCIAL MANAGEMENT (ANAPFN): MAFC shall
install and maintain its centralized financial network as required at each of
the operating retail and service centers under Agreement with XXX B/N. All
financial transactions occurring at the facilities shall be processed through
the ANAPFN.
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EXHIBIT C
PROPERTY AND EQUIPMENT
THE FOLLOWING IS A LISTING OF THE PROPERTY AND EQUIPMENT CURRENTLY
INSTALLED AND OPERATING AT ALL NIGHT AUTO OF BLOOMINGTON/NORMAL:
Tire Changer Printer 2550L
Bench, Single Printer 2550L
Brake Lathe and Parts Shelf, Boltless
Adapter Promo (Kit C) Shredder, Confetti
2-Ton Tri-Pod Xxxx Stand 50' Hose Assembly
3/8 X 50 Ft. Auto Hangars & Hardware
Oxyacetylene Welding 10' Hose Assembly
Utility Cart Black 1000 Lb Trans Xxxx
Wheel Charger 70/60 250 2 Ton Xxxx
Adapter 3" Xxxx Reel 40' Stubby w/Tool
3" Y Assembly Wheel Weight Set
Exhaust Hose 3" X 11' Rotor Gage Digital
Drum Micrometer Gear-Driver Set
Network Module 1-1/2 LB Dead Blow
Digital Photo/Video Tool Set
Remote Filter Wrenches
Sensors Cabinet-Strg 24DX72H
4 Post Open Fnt Air Line KT Cabinet-Strg 18DX72H
Mobile Cabinet Wet/Dry Vacuum 10-Gal
6-1/2" Workshop Vise IBM PC
Pisto Grip IBM PC
Waste Oil Drain Ground Sign
Engine Carbon Cleaner Norton Anti Virus
3 Arm Eng Bar 5-Port Switchs
Tester, MM Battery Warranty
Battery Tester Printer C170 CRT
Genisys '04 L170 LCD Monitor
AC Recover Recycle Color Laser Jet Printer (2)
Mounted Frame Wireless Security
72 X 29 Work Bench Payment PC and Cash Drawer
Alignment Tool Set 500 VA/ 300,480
2000-LB Fold-Up Crane DSL Router
Wet/Dry Vac Microsoft Office Standard Software
Grease Adapter Payment Keyboard
Gas Caddy W/Ind Antenna 2.4 GHZ
UV Dye Leak Kit Server, Part of IBM
Transmission Fluid Server
Coolant System Service
Wheel Balancer
2 Tablet System
Technician Kit
Service Writer Kit
Docking Station w/Keyboard
Fax, Copier
Microwave
Coffee Maker
File, Vert 4-DWR
