OPTION AGREEMENT
This Option Agreement
is entered
into as of this 20th
day of October
2006, by and between
Bloomington Center Associates ("BCA"), a Michigan limited
liability
company and
Midnight Auto Franchise Corporation, a Michigan
corporation ("MAFC") and Midnight Holdings Group, Inc. ("MHG").
R E C I T A L S
A. WHEREAS, of even date herewith, MHG, MAFC, a wholly-owned
subsidiary
of MHG, and BCA formed
All Night Auto of
Bloomington/Normal,
LLC ("ANA B/N")
pursuant to that
certain Operating Agreement of even date herewith (the
"Operating Agreement")
for the purpose of owning and operating auto repair
service and retail stores in Illinois (the "Stores");
B. WHEREAS, BCA agreed
to invest $475,000.00
for the working
capital
necessary for the
launch of a retail store and MAFC agreed to manage such store
along with a contributed service center pursuant to the
Operating Agreement and
that certain
Management
Agreement of even date herewith (the "Management
Agreement");
C. WHEREAS,
MAFC plans to open
additional
service and retail
stores
throughout the United
States similar to the initial
retail store and
service
center owned by the ANA B/N and managed by MAFC; and
D. WHEREAS,
the parties hereto are desirous of granting BCA the
opportunity to
invest in and own multiple future hub and spoke service
center/retail store combinations throughout the United States
(except for those
market areas already
committed to others, a list of which is attached hereto as
Exhibit A) (such store
combinations exclusive
of those set forth on
Exhibit A
the "Future Stores").
NOW THEREFORE,
for good and valuable
consideration,
the receipt and
sufficiency of which is hereby acknowledged, the parties agree:
1. GRANT OF ASSIGNABLE OPTION TO ACQUIRE EQUITY INTEREST IN
FUTURE
STORES.
In consideration of the foregoing, MAFC, MHG and their related
parties
and affiliates hereby grants BCA an irrevocable assignable option
(the "Option")
to acquire 100% of the equity interest in any and all Future Stores
on the terms
and conditions
set forth herein.
Provided, however, in the event that there
exists no uncured event of default under the Operating Agreement, the Guaranty
attached thereto as Exhibit D, this Option Agreement, and further provided the
Management Agreement
has not been
terminated by ANA B/N, then the Option shall
not be assigned to a
person, business
or entity that sells or provides
auto
repair retail products or services, or manages franchises that sell
such retail
products or services, or is otherwise a competitor of ANA B/N.
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2. EXERCISE OF OPTION.
a. MAFC and/or MHG shall notify BCA each time Future Stores
are to be
opened. BCA, or its assignee(s) may, within thirty (30) days,
in
its sole
discretion,
exercise the Option
after receiving in
writing the
following
from MAFC or MHG:
i. Executed
Letters of Intent for leases for the Future
Stores locations;
ii. Financial
projections for the Future Stores which shall
include in reasonable
detail a budget,
business plan
and pro forma financial statements.
iii. A narrative
discussion of the
merits of the
proposed
Future Stores;
iv. Such other
information as may be
reasonably
requested
by BCA.
The foregoing items
must be complete and accurate, to the reasonable
satisfaction of BCA, prior to the commencement of the 30 day time
period.
b. If BCA exercises
the Option, it shall
notify MAFC and MHG
in
writing within thirty days of the receipt of the items in Section
2(a)(i)
through (iv) above,
and deposit
$25,000.00
in the client
trust
account of
Seyburn, Kahn, et al.
3. PURCHASE OF EQUITY AND CLOSING.
a. The closing
pursuant to the e
