MEMORANDUM

NEW YORK WORLDS FAIR 1964-1965 CORPORATION

	DATE: January 16, 1964
TO:	Mr. Moses
FROM:	Martin Stone, Erwin Witt John Thornton
SUBJECT:	WORLD OF FOOD

As you are aware, the World of Food project has been a matter of grave concern to the Fair at least since the summer of 1963.

The World of Food people recognized, although belatedly, the seriousness of the situation and have been making, since September of 1963, various efforts to obtain financing for the project.

Yesterday the World of Food, at a lengthy meeting with us, presented its final financial plan which, it believes, will enable it to proceed with the pavilion.

FINANCING PLAN: FIRST ELEMENT: ACCELERATED RENTALS

The first element of the plan involves the agreement, on the part of sixteen subtenants, to accelerate rental payments amounting to approximately $300,000 so that the $300,000 will be payable in four equal installments on January 1, February 1, March 1 and April 1, 1964. These acceleration agreements, however, ARE conditional upon other subtenants executing similar agreements sufficient to bring the total accelerated rentals to $650,000 by April 1, 1964. Thirteen of these subtenants have agreed to an extension of the April 1st date to May 1st and to the counting of regular rental payments, falling due in April and May, as part of the $650,000 goal necessary to make the acceleration agreements effective.

The World of Food contends that, in actuality, approximately $850, 000 rather than the legally necessary minimum of $650, 000 will become available to it between now and the opening of the Fair. This $850, 000 will consist of cash on hand, regular rental payments and accelerated rental payments.

FINANCING PLAN: SECOND ELEMENT: CONSTRUCTION CONTRACT

The second principal element of the plan relates to arrangements contract with World of Food for construction of the pavilion for a lump sum of $1,800,000 of which $289,500 has already been paid. Except as hereinafter stated, overtime work is not included in this $1, 800,000 and is to be billed at cost plus 10%.

The Contractor has agreed to substantially complete the work by April 22, 1964 provided that progress payments totaling a minimum of $750,000 are made to him between now and May 10, 1964. He has stated orally though not in writing that the commitment to complete the building, provided at least $750, 000 is paid to him, includes a commitment to put in up to $100, 000 of overtime.

The general contractor is a substantial stockholder of World of Food.

FINANCING PLAN: THIRD ELEMENT: DEFERALS BY SUBCONTARCTORS

A third element of the plan involves agreements on the part of the general contractor, two subcontractors and the architect, Mr. Lionel Levy (who is also president and a stockholder of World of Food) to defer collection of amounts totaling $910,000 until completion of the construction contract.

CONSTRUCTION FEASIBILITY

Mr. Denny has been consulted upon the feasibility of permitting the project to continue. He believes that, by working at top speed virtually around the clock, the building can be closed in by April 22nd but cannot be open until middle or late June. Mr. Douglas feels an opening date of the middle of August is more likely. Both opinions predicated upon the existence of good weather conditions and an intensive all out drive for completion.

Mr. Denny further points out that the contractor, although willing now to promise substantial completion by April 22nd may later insist that the tenants, the Fair Corporation or both pay him additional funds for overtime men and additional equipment, much in the manner of the recent arrangement with Johnson Electric.

Mr. Witt is of the opinion, in which Mr. Stone and Mr. Thornton concur, that the plan of financing is very thin and leaves little if any room for contingencies. For instance, adequate provision does not appear to have been made for defraying the heavy overtime costs, which will unquestionably be required, even if the building is to be open by the middle or end of June. Moreover, unrealistic liquidated damages provisions running in favor of the subtenants will substantially reduce World of Food's rentals if--as appears inevitable- - the building is not ready at the opening of the Fair.

No adequate provision exists in the financial plan for operating expenses during the Fair. The assumption apparently is that rentals from leases hereafter signed and from the operation of concessions will take care of those expenses.

Mr. Lionel Levy, President of World of Food, has guaranteed payment of $150,000 of the construction contract price. Mr. Levy, however, has put very little money into the venture. Contrary to representations by World of Food and Mr. Levy that the project would move forward at top speed during the past month, progress has been extremely slow, presumably because Mr. Levy or the World of Food has failed to advance sufficient monies to the contractor.

After analyzing the documents and data submitted by Mr. Levy and World of Food, we are of the opinion that permitting this project to proceed would be most inadvisable. It appears extremely questionable that the financing is adequate. We have little confidence in the World of Food management. It is clear that, if the project goes ahead, we shall at the very best have a building directly at the main entrance of the Fair, which will not be ready for opening until June 15th.

In making a determination on this project, it should be noted that various other problems of a non-construction nature exist. One of such matters, which have been of major concern, is that many of the World of Food's leases envisage intensive selling activities, which would make the project primarily a conglomeration of concessions. For example, Mr. Levy has indicated a desire to lease space to "Whitey Ford Steak House", a promotion which Mr. Levy states is one of Leonard Ruskin' s projects

January 16, 1964

CERTIFIED MAIL

The World of Food, Inc
49 West 37th Street
New York 18, New York

Gentlemen:

Reference is made to the agreement of lease (hereinafter referred to as "Agreement") of February 26, 1962, between New York World's Fair 1964 - 1965 Corporation (hereinafter referred to as the "Fair Corporation") and The World of Food, Inc. (hereinafter referred to as "Lessee") as last Amended by Amendment No. 3 dated December 16, 1963.

As you know, Amendment No. 2 to your Agreement dated September 9, 1963 contemplated that you would submit a proposal for continuation of your project on or before September 20, 1963 including a plan of financing, performance bond, and construction schedule. By reason of your failure of execution of an Amendment to the Agreement embodying such plan, the Agreement was terminated by the Fair Corporation by letter to you dated December 6, 1963.

By Amendment No. 3 to the Agreement, dated December 16, 1963, the Fair Corporation's December 6, 1963 letter of termination was rescinded and the Agreement, as amended to and including Amendment No. 2 of September 9, 1963, was reinstated. In said Amendment No. 3, the Fair Corporation agreed not to exercise it's absolute right to terminate the Agreement until December 20 1963.

You have not, as required by Amendment No. 3 proceeded with due diligence in the construction of your pavilion since the execution of such Amendment.

On January 15, 1964, you submitted to the Fair Corporation a plan dealing with financing and construction of the project. The Fair Corporation has carefully examined such plan and found it unsatisfactory.

The Fair Corporation hereby notifies you that your Agreement is terminated effective immediately.

Very truly yours,
NEW YORK WORLD'S FAIR
1964-1965 CORPORATION

By: W. E Potter
Executive Vice President

January 18, 1964

CERTIFIED MAIL

Mr. Lionel K. Levy
158 East 36th Street
New York, New York

Dear Mr. Levy:

Reference is made to the agreement of December 16, 1963 between New York World's Fair 1964 - 1965 Corporation (hereinafter referred to as the "Fair Corporation") and you.

You are hereby notified that the Fair Corporation has, by notice dated January 16, 1964 terminated the lease between it and The World of Food, Inc. The Fair Corporation will accordingly look to you for the discharge of your obligations under
Of December 16, 1963.

You are further notified that you are in default under said agreement of December 16, 1963 by reason of your failure to deposit the security payments therein required to be deposited by you.

Very truly yours,

New York World's Fair
1964 -1965 Corporation

Executive Vice.
W.E. Potter