EX-20.4
November 1, 2000
Xx. Xxxx Xxxxxx
2236 Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
RE: OPERATING AGREEMENT - TREATS BAKERY CAFE at
Center One, Detroit, MI (The "Premises")
This Operating Agreement as of the above date
supersedes a Letter Agreement (the "Agreement") between Xxxx Xxxxxx and Treats
International, Inc. dated June 24, 1997, which Agreementas assigned by Treats
International, Inc. as of December 1, 1997 to EMC Group, Inc.
You agree to continue operating the above noted Premises on behalf of
EMC Group, Inc. ("EMC") on the following terms and conditions:
(1) all equipment and trade fixtures located in the Premises during the
Management Period are the sole property of EMC (the "Equipment").
(2) you agree during the Management Period to maintain, at your expense,
the Equipment in good operating condition to the satisfaction of EMC;
(3) all profits and losses during the Management Period shall be to your
account,
(4) so long as this Agreement is in effect, you agree to pay EMC an
administration fee ("administration fee") in the amount of
US$148,711.08, payable over an eighty-five month period as follows:
(a) thirty-six (36) monthly payments in the amount of One Thousand
Seven Hundred Seventy and 37/100 Dollars, U.S. currency
($l,770.37US) each.
The Company acknowledges that you have made a total of
thirty-six (36) monthly payments to Treats Canada
Corporation and EMC Group, Inc. up to and including September 2000,
and
(b) thirty-six (36) monthly payments in the amount of Nine
Hundred Dollars, U.S. currency ($900.00 US), each;
retroactive to August 1, 2000 and the Company acknowledges
that it has received payments totaling $3,540.74 which was
applied as a credit against the months of August,
September, October and November 2000 as follows:
Total due "EMC" for August, September, October
and November 2000 $3,600.00
Payments received 3,540.74
Balance still due and payable to "EMC" 59.26
(c) twelve (twelve) monthly payments of One Thousand Seven
Hundred Seventy and 37/100 Dollars, U.S. currency
($l,770.37US) each, and
(d) one monthly payment in the amount of Thirty-one thousand,
three hundred thirty-three Dollars U.S. currency
($31,000.XX)
payable in advance on the first day of each and every month
commencing on the first day of November 1, 2000.
(5) you agree to pay during the Management Period all other
expenses, including liability insurance for the premises in
accordance with the provisions of the lease for the Premises
and/or Treats.
(6) this Agreement may be terminated by you at anytime upon SIXTY (60)
days' written Notice ("Termination Notice") to EMC and in
the event such Termination Notice is served, then and in such
event you shall cease operating the Store at the expiration of
such sixty day period;
(7) If at any time during the Management Period you are in default of
any of the terms and conditions of this Agreement, and fail to
remedy such default within fourteen days after receipt of Notice
from EMC of any such default, EMC shall have the right to
terminate this Agreement upon thirty (30) days' Notice.
(8) This paragraph regarding inventories no longer applies.
(9) At all times during the Management Period you will be directly
responsible for payment of all taxes including payroll, sales tax
and any other applicable taxes as required by law;
(10) During the Management Period you agree to pay to EMC a Management
Fee as follows:
2% of Gross Sales from August 1, 1998 up to and including for the
week ended September 9, 2000 during the Management period.
0% of Gross Sales from September 10, 2000 through March 31, 2001
during the Management period.
Commencing April 1, 2001 a monthly Management Fee of $400.00 through
the remainder of the Management period.
(11) You agree, at all times during the Management Period to maintain a
monthly Pest Control services contract with a qualified and
certified Michigan Extermination Company at your expense and
provide "EMC" with a copy of such contract.
(12) You agree, at all times during the Management Period to have grease
trap located in the Premises satisfactorily maintained by an
authorized service company and provide EMC with a copy of such
contract.
(13) You agree to pay as of October 1, 2000 any and all rent and other
charges such as promotional fund, the Landlord charges "EMC" under
the Lease for the Premises which will be paid directly to "EMC" on
or before the first day of each and every month for the remainder
of the lease term.
(14) EMC agrees that you may negotiate favorable Minimum Rent reduction
"Rent Reduction") with the Landlord. on behalf of EMC Group, Inc.,
subject to prior discussion with and written approval by an
authorized officer of EMC Group, Inc. and subject to final and
subsequent written approval by EMC Group, Inc.,
(15) You agree during the Management Period to pay directly to the
Landlord, all monthly utility charges in respect of the Premises in
advance on or before the first day of each and every month.
(16) Provided you have satisfactorily carried out your obligations under
this Agreement, you shall have a first right to purchase the
"Treats" franchise for the Premises, at a price equal to the then
outstanding balance owing "EMC" on account of the administration
fee at the date of exercise of this first right of refusal.
(17) "EMC" agrees that in the event the first right of refusal referred
to herein is not exercised on or before the seventh (7th)
anniversary of the commencement date of the Management Period,
EMC, upon receipt of written request therefor, agrees to transfer
to you title to the equipment owned by "EMC" and located in the
Premises on the seventh (7th) anniversary of the commencement date
of the Management Period.
For the purpose of clarification, the 7th anniversary date is to
mean July 1, 2004.
(18) You agree at all times during the Management Period to comply with
all mandatory specifications, standards and operating procedures as
determined by EMC in its sole discretion. The specifications and
operating standards are as follows:
(1).quality and appearance of products sold by the Store and
Services performed at the Store;
(2) the safety, maintenance, cleanliness, function and
appearance of the Store premises, fixtures, equipment and
signs;
(3) appearance and demeanor of Store employees;
(4) staff, Management or operating personnel uniforms;
(5) use of Marks;
(6) use and illumination of signs, posters, displays,
standard formats and similar items;
(7) use and retention of standard forms;
(8) displays of advertising materials for a Store franchise;
and
(9) establishment of daily business hours for the Store.
(10) only the sale of products as authorized by EMC.
(11) purchasing all products, paper goods supplies and other
materials utilized in the Premises only from suppliers
and/or distributors as from time to time approved by EMC
and EMC agrees to provide you with a list of such approved
competitively priced suppliers and/or distributors as at
the commencement date of the Management Period.
Please indicate your acceptance and Agreement to the above-noted terms and
conditions by signing the enclosed copy of this letter and returning same to
my attention via FAX with hard copy to follow by mail.
Yours truly,
EMC Group, Inc.
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
President & CEO
THE ABOVE-NOTED TERMS AND CONDITIONS ARE HEREBY AGREED TO AND
ACCEPTED BY:
/s/ Xxxx Xxxxxx 11/20/00
XXXX XXXXXX DATE
ES\MSWORD\EMC\NEWCENTER ONE\PROPOSED NEW AGREEMENT NOV. 10, 2000
____________________________________________________________________________
EMC GROUP, INC. , 000 Xxxxxxx Xxxxx, Xxxxxxxx, XX 00000
Telephone: 000-000-0000 FAX: 000-000-0000
