EXTENSION AND MODIFICATION OF LEASE
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AGREEMENT made as of this ______ day of September, 1995.
W I T N E S S E T H:
WHEREAS by lease ("Lease") dated as of June 9, 1982, REBAK REALTY
CO. ("Landlord"), having an office at 250 West 57th Street, Suite 1714, New
York, New York 10107, did lease to MEB EMPORIUM CORP. ("Tenant") premises as
described in such Lease ("Demised Premises").
WHEREAS Landlord and Tenant desire to extend and modify such
Lease, it is hereby agreed as follows:
1) The term of the Lease shall be extended to November 30, 2008.
2) Commencing with January 1, 1996 Paragraph 40 of such Lease
shall be deemed deleted and in lieu of the rent payable therein Tenant shall pay
the following fixed minimum rent ("Fixed Minimum Rent") as same may be increased
pursuant to Paragraph 3 below:
a) The sum of $300,000.00 per annum for the period from January
1, 1996 to December 31, 1996 ($25,000.00 per month);
b) The sum of $306,000.00 per annum for the period from January
1, 1997 to December 31, 1997 ($25,500.00 per month);
c) The sum of $312,120.00 per annum for the period from January
1, 1998 to December 31, 1998 ($26,010.00 per month);
d) The sum of $318,362.40 per annum for the period from January
1, 1999 to December 31, 1999 ($26,530.20 per month);
e) The sum of $324,729.65 per annum for the period from January
1, 2000 to December 31, 2000 ($27,060.80 per month);
f) The sum of $331,224.19 per annum for the period from January
1, 2001 to December 31, 2001 ($27,602.02 per month);
g) The sum of $337,848.72 per annum for the period from January
1, 2002 to December 31,2002 ($28,154.07 per month);
h) The sum of $344,605.82 per annum for the period from January
1, 2003 to December 31, 2003 ($28,717.15 per month);
i) The sum of $351,497.92 per annum for the period from January
1, 2004 to December 31,2004 ($29,291.49 per month);
j) The sum of $358,527.84 per annum for the period from January
1, 2005 to December 31, 2005 ($29,877.32 per month);
k) The sum of $365,698.40 per annum for the period from January
1, 2006 to December 31, 2006 ($30,474.87 per month);
l) The sum of $373,012.41 per annum for the period from January
1, 2007 to December 31, 2007 ($31,084.37 per month);
m) The sum of $380,472.69 per annum for the period from January
1, 2008 to November 30, 2008 ($31,706.06 per month).
3) The Fixed Minimum Rent shall be a minimum as against
percentage rent ("Percentage Rent") equal to eight (8%) percent of gross sales
("Gross Sales") of Tenant for the calendar year up to $4,000,000 in sales, and
nine (9%) percent of gross sales above $4,000,000. During the last year of the
term, such percentage rent will be prorated.
a) The term Gross Sales as used herein is hereby defined to
mean, except as specifically excluded below, receipts from sales of food,
liquor, and all other items from business conducted upon the Demised Premises by
Tenant and/or any agents, licensees, or sublessees and whether such sales be
evidenced by check, credit, script or barter certificate, charge account, or
cash. If any one or more departments or other divisions of Tenant's business in
the Demised Premises shall be sublet by Tenant or conducted by any person, firm
or corporation other than Tenant, then there shall be included in Gross Sales
for the purpose of determining
the Rent payable hereunder all the Gross Sales of such departments or divisions
made in the Demised Premises in the same manner and with the same effect as if
the business or sales of such departments and divisions of Tenant's business had
been conducted by Tenant itself. Each charge or sale upon installment or credit
shall be treated as a sale in the month during which such charge or sale shall
be made, irrespective of the time when Tenant shall receive payment (whether
full or partial) therefor.
Notwithstanding anything herein to the contrary, in computing
Gross Sales, the following shall be omitted:
(i) the amount of any sales, use or gross receipt taxes, cabaret,
amusement, excise or other similar tax or use taxes paid by Tenant's customers
at the time of sale and imposed by any federal, state, municipal or other
governmental authority;
(ii) all sums and credits received in settlement of claims for
loss or damage to merchandise; (iii) gratuities paid by customers to waiters or
other employees.
Anything to the contrary hereinabove notwithstanding with regard
to any income received from any juke box at the premises, or cigarette machines
at the premises, if such installations are operated by Tenant, the gross sales
for purpose of this Agreement shall be 10% of the net profits from the operation
of such installations, without giving Tenant credit for cost of installation
thereof. Should any of such equipment be operated by an outside operator, the
income received for purpose of this paragraph shall be the actual net income
received from such operator.
b) Tenant shall keep its records on a fiscal year basis ending on
the Saturday closest to September 30th. Within one hundred twenty (120) days
after the end of each fiscal year, the Tenant shall cause to be delivered to
Landlord a statement certified by an officer of Ark Restaurant Corp., which
shall set forth the Gross Sales (as defined herein) from the operation of the
Demised Premises for such calendar year. Such certification shall further state
that this is the same statement submitted to and accepted by Ark's auditors in
connection with the preparation of Ark's certified statement. So long as Tenant
is controlled by Ark Restaurant Corp., such accountant shall be the one
regularly certifying the records of Ark Restaurant Corp. In addition to all
other remedies of Landlord, failure to deliver such statement within
the period as required above shall be deemed a substantial default by Tenant
under the Lease. If such report shall disclose that overage rent is due for such
preceding fiscal year, Tenant shall pay such overage rent together with such
report. After the first fiscal year and during each fiscal year thereafter
commencing with February 1 of the second fiscal year and February 1 of each
subsequent fiscal year Tenant shall pay as Additional Rent on account of such
years overage percentage of 1/12th of the annualized percentage rent of the
prior fiscal year. Upon the rendering of the certified statement for such year,
there shall be an adjustment by way of immediate payment of any additional sums
due for such year or credit for any overpayment made on account.
c) Tenant, with respect to business done on the Demised Premises,
shall keep or make available at the Demised Premises or office of parent, for a
period of three (3) years following the end of each Lease Year true and accurate
records and accounts which shall show all sales made and all gross receipts from
the business done upon and within the Demised Premises. Tenant shall provide
Landlord with copies of any Tenant's auditor's reports, statements, trial
balances or the like which relate to Tenant's sales in the Demised Premises. The
same shall be retained by Tenant for a period of three years after the date of
Tenant's receipt of such documents to the extent the same have been prepared by
and for Tenant. The Tenant covenants that accurate cash registers or other
commonly accepted method of recording sales will be installed and kept, or cause
to be installed and kept, by the Tenant within the Demised Premises, which shall
show and record each and every sale made upon and within the Demised Premises.
Such registers or other method shall show the total of the daily sales of all
business done upon and within the said Demised Premises by the Tenant. Such
records and accounts of the said business and sales tax returns pertaining
thereto shall be made available to Landlord or an accountant representing
Landlord and may be audited at Tenant's office at Ark Restaurant Corp. at all
reasonable times upon twenty (20) days prior written notice to Tenant, all at
Landlord's expense. If Landlord desires, at its own expense, to audit Tenant's
records of accounts it shall do so within one hundred eighty (180) days
following its receipt of the Tenant's annual certified statement mentioned in
subparagraph (b) of this paragraph. If Landlord does not so audit, then the
Tenant's aforementioned annual certified statement shall be deemed to be
conclusively
accepted by Landlord as being correct, and Landlord shall have no right
thereafter to question or examine said records of accounts, except as to errors
resulting from fraud.
In the event it is determined by Landlord's audit of said
accounts and records that Tenant has understated its Gross Sales, whether
intentionally or unintentionally, Tenant will pay the Additional Rent due plus
interest on such rental from the date it should have been paid at the rate of
three (3) percent over prime of Chemical Bank. If the Gross Sales have been
understated by three (3%) percent or more, the cost of such audit, including all
reasonable expenses pertaining thereto, shall also be paid by Tenant
immediately. Any overpayment revealed by the audit shall be returned to the
Tenant. Notwithstanding the foregoing, should Landlord and Tenant disagree as to
any alleged discrepancy in rent, then the said accounts and records shall be
audited by an independent certified public accounting firm selected by Landlord
and Tenant and said firm's audit shall be deemed to be conclusive as between the
parties hereto, If the parties are unable to agree upon the independent
certified public accounting firm, then each of the parties will name an
independent accounting firm and then by lottery determine which of the two
independent accounting firms shall be utilized. "Independent" as used in the
foregoing sentence shall mean a firm that is not at the time nor has not, within
three (3) years prior to such time, been employed directly or indirectly by
Landlord or Tenant or their respective auditors. The party not prevailing shall
bear the cost of such audit.
3) Paragraph 61 of the Lease is deemed deleted and the sum of
$50,000 shall be deemed deleted from Paragraph 31 and of Paragraph 61 and
replaced with the sum of $100,000. In lieu of Paragraph 61 there shall be
inserted the following paragraph: Should Tenant not have been declared in
default under this lease it may replace the security hereunder with a clean,
irrevocable letter of credit in the sum of $100,000.00 drawn on Bank Leumi or a
major New York bank which is a member of the New York Regional Clearing House,
which letter of credit by its terms shall be automatically annually renewable
unless the bank issuing same serves written notice upon the Landlord, c/o Rebak
Realty Co., 250 West 57th Street, Suite 1714, New York, New York 10107, or such
other agent as to which Landlord notifies bank in writing in accordance with the
bank's standard procedure, and its attorney Jack Weprin, Esq., 1501
Broadway, New York, New York 10036, at least thirty (30) days prior to the
expiration thereof, that it will not renew same. Should the letter of credit not
be replaced within twenty (20) days of its due date, then the beneficiary may
present same for payment. The terms of the letter of credit shall merely state
that the letter of credit is due and payable upon presentation of a sight draft
together with a signed statement by Landlord under the lease for store premises
2150 Broadway, New York, New York, stating that Tenant has defaulted thereunder.
Should such letter of credit be presented for payment, the proceeds thereof
shall be held by Landlord as if same were security in cash received under this
lease and shall be disposed of in such fashion. Tenant may, however, twice
during the term of this Lease as modified herein replace such cash with a letter
of credit as above.
Tenant acknowledges that as of the execution of this Amendment
there is no security held by Landlord or due to Tenant.
4) Anything to the contrary in the Lease as amended hereby
notwithstanding, Landlord may terminate the Lease at any time commencing with
December 1, 2003 ("Date of Termination"), provided Landlord has given Tenant
notice not less than six (6) months prior to Date of Termination, by paying to
Tenant the sum of $250,000.00, which sum shall be reduced by 1/60th for each
month that has transpired from December 31, 2003. Said sum to be placed in
escrow with Landlord's attorney four (4) weeks before date required for
surrender of possession. It is understood that Tenant shall be required to
deliver vacant possession of the premises "broom clean" upon the Date of
Termination which shall be deemed the Date of Termination pursuant to the Lease
as modified with Tenant's right to return of security subject to Landlord's
right to apply such portion of it necessary to cure any unperformed obligations
of Tenant. Should Tenant not peaceably and voluntarily deliver such possession
on such date, this Lease as amended shall in any event be deemed cancelled and
Landlord may use such remedies, at law or equity, which might be necessary to
obtain such possession. However, should such possession not have been granted
peaceably and voluntarily by Tenant on or before Date of Termination, the
aforesaid sum shall cease to be due to Tenant and Landlord shall be under no
obligation to pay same to such Tenant.
Any reference to cancellation referred to in this paragraph
requiring the payment of any sums of money to the Tenant, shall deal only with
voluntary cancellation by Landlord. It is understood and agreed of course, that
should this Lease as amended be terminated or cancelled by Landlord because of
Tenant's failure to perform pursuant to the terms of the Lease as amended, that
there shall be no monetary consideration due to Tenant.
5) Tenant acknowledges that it waives any claim it may have
against Landlord with regard to the collapse of the 2nd floor of the building
containing the premises being let hereunder or any damages suffered by Tenant,
whether to its own property, to the property of other tenants in the building,
or as a result of the remedial work undertaken with regard to any part of the
building. Tenant further acknowledges that it waives any claim it may have
against Landlord as a result of the alleged missing staircase between the 2nd
floor and the 1st floor of the building and Tenant acknowledges it is renting
the premises "as is" with all conditions as presently exist. It is understood
that any reduced size of the premises being let as a result of the alteration to
the premises is what has been considered in arriving at the rental referred to
in this Agreement. This does not negate any claims which Tenant might have
against Avis.
5) Except for the aforementioned modifications, all of the terms,
covenants and conditions of the Lease dated June 9, 1982, including the
continuation of 1982/83 as the base tax year, shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have hereunto executed this
Agreement this ____ day of September, 1995.
REBAK REALTY CO.
By:_____________________________
MEB EMPORIUM CORP.
By:_____________________________