SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
|_| Preliminary information statement
|X| Definitive information statement
|_| Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2))
GRISTEDE'S FOODS, INC.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
GRISTEDE'S FOODS, INC.
823 ELEVENTH AVENUE
NEW YORK, NEW YORK 10019-3535
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 2000
----------------------------------
To the Stockholders:
The Annual Meeting of Stockholders of Gristede's Foods, Inc.
(hereinafter called the "Company") will be held at The New York Hilton and
Towers Hotel, 1335 Avenue of the Americas, New York, New York 10019, on
Friday, the 10th day of November, 2000 at 10:00 A.M., to consider and vote on
the following matters described in this Notice and Information Statement:
1. To approve an amendment to the Certificate of Incorporation of
the Company to change the term for which the Class 2 directors shall serve from
three years to one year.
2. To elect two Class 2 directors to serve for a one-year term
expiring at the 2001 Annual Meeting of Stockholders (subject to approval of
Proposal 1).
3. To transact such other business as may properly come before the
meeting or adjournments thereof.
The Board of Directors has fixed the close of business on October
10, 2000 as the record date for determining stockholders entitled to notice of,
and to vote at, the meeting.
By Order of the Board of Directors
Mark Kassner
Assistant Secretary
New York, New York
October 13, 2000
<PAGE>
GRISTEDE'S FOODS, INC.
----------------------------------
INFORMATION STATEMENT
----------------------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 10, 2000
This information statement is being furnished to stockholders
beginning on or about October 13, 2000 in connection with the Annual Meeting
of Stockholders of Gristede's Foods, Inc. (the "Company") to be held on November
10, 2000 or any adjournments thereof, for the purposes set forth in the
foregoing Notice of Annual Meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND
US A PROXY. However, you may vote your shares of Common Stock at the Annual
Meeting.
OUTSTANDING SHARES AND
VOTING RIGHTS
The Board of Directors has set the close of business on October 10,
2000 as the record date for determining the stockholders entitled to notice of,
and to vote at, the Annual Meeting of Stockholders (the "Annual Meeting"). On
that date, the Company had outstanding 19,636,574 shares of Common Stock, par
value $.02 per share ("Common Stock"), each of which is entitled to one vote on
each matter. No other class of securities other than Common Stock will be
entitled to vote at the meeting. There are no cumulative voting rights.
As of October 1, 2000, John A. Catsimatidis, the Chairman of the
Board and Chief Executive Officer of the Company, owned of record, directly or
indirectly, an aggregate of 18,050,150 shares of Common Stock, constituting
approximately 91.9% of the shares entitled to vote at the Annual Meeting.
Mr. Catsimatidis has informed the Company that he intends to vote
all of the shares owned directly or indirectly by him for approval of the
amendment of the Company's Certificate of Incorporation to change the term for
which the Class 2 directors shall serve from three years to one year and in
favor of each of the Board of Directors' nominees for directors listed below.
Consequently, such approval and elections are expected to occur.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
ownership of Common Stock on October 1, 2000 by: (i) each stockholder known to
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock; (ii) each of the Company's directors and nominees for director; and (iii)
all executive officers and directors of the Company as a group. The address of
each person is c/o Gristede's Foods, Inc., 823 Eleventh Avenue, New York, N.Y.
10019-3535.The Company believes that ownership of the shares by the persons
named below is both of record and beneficial and such persons have sole voting
and investment power with respect to the shares indicated.
Name and Address of Number of
Beneficial Owner Shares Percent of Class
---------------- ------ ----------------
John Catsimatidis 18,575,150(1) 92.1%
Martin Steinberg 117,642(2) *
Kishore Lall 33,333(3) *
Dennis Berberich 25,000(2)(4) *
Martin Bring 16,000(5) *
Frederick Selby 13,110(6) *
Edward Salzano 3,000 *
All executive officers and directors
as a group (7 persons) 18,783,235(1)(4)(7) 92.9%
----------
* Less than 1%.
(1) Includes an aggregate of 12,473,974 shares held by corporations controlled
by Mr. Catsimatidis, 81,900 shares held by Mr. Catsimatidis as a
custodian, 2,057 shares held by a profit sharing plan of which Mr.
Catsimatidis is a trustee, 605 shares held by Mr. Catsimatidis as a
trustee of individual retirement accounts and currently exercisable
options to purchase an aggregate of 525,000 shares of Common Stock.
(2) Includes an aggregate of 5,000 shares of Common Stock which may be
purchased upon exercise of currently exercisable stock options.
(3) Includes an aggregate of 18,133 shares of Common Stock which may be
purchased upon exercise of currently exercisable stock options.
(4) Includes 14,000 shares of Common Stock owned by Mr. Berberich's wife, as
to which shares Mr. Berberich disclaims beneficial ownership.
2
<PAGE>
(5) Includes an aggregate of 16,000 shares of Common Stock which may be
purchased upon exercise of currently exercisable stock options.
(6) Includes an aggregate of 11,000 shares of Common Stock which may be
purchased upon exercise of currently exercisable stock options.
(7) Includes an aggregate of 580,133 shares of Common Stock which may be
purchased upon the exercise of currently exercisable stock options.
PROPOSAL TO AMEND
THE COMPANY'S CERTIFICATE OF INCORPORATION
The Board of Directors has adopted a resolution to change the term for
which Class 2 directors shall serve from three years to one year. The amendment
also eliminates the requirement that each of the three classes of directors
shall be as nearly as possible equal in number. The amendment will not make any
change in the terms of the Class 1 and Class 3 directors, which would remain at
three years. Any vacancies which occur by reason of the resignation or
termination of any Class 1 or Class 3 director may be filled by the Board of
Directors for the entire remaining term of such terminated director. The Board
of Directors believes that the amendment would provide the Company greater
flexibility in selecting persons to serve as directors. The proposed amendment
is attached hereto as Exhibit A and the description of the proposed amendment is
qualified in its entirety by reference to Exhibit A.
Under Section 9.B of the Company's Certificate of Incorporation, the
affirmative vote of holders of at least 80% of the outstanding shares of Common
Stock entitled to vote thereon at the Annual Meeting (15,709,260 shares based on
19,636,574 shares outstanding) with each share entitled to one vote, is required
for approval of the proposed amendment to the Certificate of Incorporation.
The Board of Directors recommends a vote FOR the approval of the proposed
amendment to the Company's Certificate of Incorporation.
ELECTION OF DIRECTORS
Two Class 2 directors to serve for a one-year term expiring at the 2001
Annual Meeting (subject to approval of the proposal to amend the Company's
Certificate of Incorporation) shall be elected.
The Class 2 directors shall each be elected by the affirmative vote of a
plurality of the votes cast at the Annual Meeting. Directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. "Plurality" means that the individuals who
receive the largest number of votes are elected as directors. Therefore, any
shares not voted, whether by withheld authority, broker non-vote or otherwise,
have no effect in the election of directors. The Board of Directors does not
expect that any of the
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<PAGE>
nominees will become unavailable to serve for any reason. If that should occur
before the meeting, another nominee or nominees may be selected by the Board of
Directors.
In accordance with the Company's By-Laws, any stockholder entitled to vote
for the election of directors at a meeting may nominate persons for election as
directors only if written notice of such stockholder's intent to make such
nomination is given, either by personal delivery or by U.S. mail, to the
Secretary of the Company at the main office of the Company not later than (i)
with respect to an election to be held at any annual meeting of stockholders, 20
days in advance of such meeting, and (ii) with respect to an election to be held
at a special meeting of stockholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to the stockholders. Each notice shall set forth: (a) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that such stockholder is
a holder of record of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between such stockholder and each nominee and any other person or
persons (naming such person(s)) pursuant to which the nomination(s) are to be
made by such stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules promulgated by the Commission
had each nominee been nominated or intended to be nominated by the Board of
Directors; and (e) the consent of each nominee to serve as a director of the
Company if so elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing provisions.
The names of, and certain information with respect to, each of the persons
nominated for election as the Class 2 directors are as follows:
Director Principal Occupation
Name and Age Since for the Past Five Years
---------------- ------------ --------------------------------
Class 2
-------
Martin Bring, 57 1988 Partner in the law firm of Wolf,
Block, Schorr and Solis-Cohen
LLP, New York, New York and
predecessor firm for more than
five years.
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<PAGE>
Director Principal Occupation
Name and Age Since for the Past Five Years
---------------- ------------ --------------------------------
Frederick Selby, 62 1978 Managing Director of The Chart
Group, L.P., an investment
banking firm, since January
2000; Chairman of Selby Capital
Partners (acquisition and sale
of privately owned firms and
divisions of public companies)
for more than five years;
Managing Director and senior
officer of mergers and
acquisitions division of Bankers
Trust Company; Senior Vice
President of Corporate Finance
of B.A.I.I. Banking (Paris) and
Director of Corporate Finance of
Legg Mason Wood Walker prior
thereto.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
The names of, and certain information with respect to, the three Class 1
directors (whose terms expire at the 2002 Annual Meeting) and the two Class 3
directors (whose terms expire at the 2001 Annual Meeting) are as follows:
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<PAGE>
Director Principal Occupation
Name and Age Since for the Past Five Years
---------------- ------------ --------------------------------
Class 1
-------
Martin Steinberg, 67 1998 Independent consultant. Mr.
Steinberg also served as a
director of the Company from May
1974 to January 1991.
Kishore Lall, 53 1997 Director of the Company since
October 1997; consultant to Red
Apple Group, Inc. from January
1997 to October 1997; private
investor from June 1994 to
December 1996; Senior Vice
President and Head of Commercial
Banking of ABN AMRO Bank, New
York branch from January 1991
until May 1994.
Edward P. Salzano, 52 1999 Executive Vice President and
Director of Cantisano Foods,
Inc., a privately held sauce and
salsa manufacturing company, for
more than 15 years.
Class 3
-------
John A. Catsimatidis, 52 1988(1) Chairman of the Board, President
and Chief Executive Officer of
the Company since July 28, 1988;
Treasurer of the Company from
July 28, 1988 to March 17, 1998
and since November 15, 1999;
President and Chief Executive
Officer of Red Apple Group, Inc.
(holding company) and Chairman
of the Board and Chief Executive
Officer and Director of United
Refining Company (a refiner and
retailer of petroleum products)
for more than five years;
Director of News Communications
Inc., a public company whose
stock is traded
over-the-counter, since December
4, 1991.
----------
(1) Mr. Catsimatidis also served as a director of the Company from November 4,
1986 to November 27, 1987.
6
<PAGE>
Director Principal Occupation
Name and Age Since for the Past Five Years
---------------- ------------ --------------------------------
Dennis E. Berberich, 61 1998 Independent consultant since
January 1999. President of
Canada Dry Bottling Company of
New York, a privately held soft
drink distributor, for more than
ten years prior thereto.
Meetings of Board of Directors and Committees
The Board of Directors met one time during the fiscal year ended November
28, 1999 ("Fiscal 1999") and acted four times by unanimous written consent of
the directors during Fiscal 1999. All incumbent directors attended the meeting.
The Board of Directors has a Compensation Committee, a Stock Option
Committee and an Audit Committee. Frederick Selby, Martin Steinberg and Dennis
Berberich are the members of each of the foregoing committees. The Compensation
Committee and the Stock Option Committee did not meet during Fiscal 1999. The
Audit Committee met once during Fiscal 1999. Mr. Steinberg did not attend such
meeting.
The function of the Audit Committee is to periodically review the conduct
and scope of the audit of the Company's financial statements by its independent
certified public accountants, to review the conduct of management of the Company
in connection with such audit, and at such time as in the opinion of the Audit
Committee, the scope of the business of the Company shall require it, to
establish an internal audit committee for the Company. The Company does not have
a nominating committee of the Board of Directors or committee performing similar
functions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors and officers of the Company and persons who
own more than 10 percent of the Company's Common Stock to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of the common stock. Directors,
officers and more than 10 percent stockholders are required by the Exchange Act
to furnish the Company with copies of all Section 16(a) forms they file.
Each of Messrs. Lall, Steinberg, Berberich and Bring did not timely file a
Form 5 to report the
7
<PAGE>
grant to him of options to purchase Common Stock, but all of such persons
subsequently filed a Form 5. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required during Fiscal 1999, all
other Section 16(a) filings applicable to its directors, officers and more than
10 percent beneficial owners were timely filed.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended November 28, 1999,
November 29, 1998 and the Transition Period from March 3, 1997 to November 30,
1997, certain information concerning the compensation paid or accrued to certain
executive officers of the Company.
<TABLE>
<CAPTION>
Long-term compensation
------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------
All
Other annual Restricted other
Name and compen- stock Options LTIP compen-
principal Bonus sation award(s) /Sar's payouts sation
position Year Salary ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Catsimatidis, Fiscal 1999 $100,000 $ -- $ -- $ -- -- $ -- $ 0
Chairman of the Fiscal 1998 100,000 -- -- -- -- -- --
Board, President Transition Period 0 -- -- -- -- -- --
and Chief
Executive Officer
Stuart Spivak Fiscal 1999 $132,000 -- -- -- 40,000 -- $ 10,000(2)
Executive Vice Fiscal 1998 89,538 -- -- -- -- -- 7,000(2)
President and Transition Period 0 -- -- -- -- -- --
Chief Financial
Officer (1)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Spivak's employment by the Company commenced in March, 1998 and he
retired effective April 30, 2000.
(2) Represents the personal use of a Company vehicle.
Options Granted in Last Fiscal Year
The following table sets forth certain information concerning options
granted during Fiscal 1999 to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Market Potential Realizable Value
Price of At Assumed Annual Rates
Number of Percentage of Common of Stock Price
Securities Total Options Stock on Appreciation for
Underlying Granted to Exercise Date of Option Term
Options Employees in Price Grant Expiration -----------
Name Granted (#) 1999 ($/Share) ($/Share) Date 5% ($) 10%($)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John Catsimatidis 0 -- -- -- -- -- --
Stuart Spivak 40,000 14.2% $ 2.625 $ 2.625 3/16/08 $ 65,708 $166,824
</TABLE>
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<PAGE>
Aggregate Options Exercised in Last Fiscal Year
and Fiscal Year End Option Values
During Fiscal 1999, no stock options were exercised by either of the
executive officers named in the Summary Compensation Table. The following table
sets forth the number and value of options outstanding at November 28, 1999 held
by the executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held on in-the-Money Options on
November 28, 1999 November 28, 1999
------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
-----------------------------------------------------------------------------------------
<S> <C> <C>
John Catsimatidis 525,000/0 0/0
Stuart Spivak 23,333/26,667 0/0
</TABLE>
The closing sales price of the Common Stock on the American Stock Exchange
on November 26, 1999 (the last trading day before November 28, 1999) was $2.375.
On November 28, 1999 Mr. Catsimatidis held options to purchase 275,000 shares of
Common Stock at $3.75 per share and options to purchase 250,000 shares at $2.875
per share. Mr. Spivak held options to purchase 10,000 shares at $5.625 per share
and 40,000 shares at $2.625 per share.
Compensation of Directors
Non-officer directors receive a quarterly stipend of $1,500 and $500 for each
meeting attended. Directors who serve on committees receive $500 for each
meeting attended.
Compensation Committee Interlocks and Insider Participation
The Board of Directors has a Compensation Committee consisting of
Frederick Selby, Dennis Berberich and Martin Steinberg. During Fiscal 1999, none
of the Directors on the Compensation Committee were employees or officers of the
Company nor had a relationship with the Company requiring disclosure under
applicable Commission disclosure rules.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Philosophy. The Company's executive compensation philosophy is to provide
competitive levels of compensation, integrate management's pay with the
achievement of the Company's annual and long-term performance goals, reward
above average corporate performance, recognize individual initiative and
achievement, and assist the Company in attracting and retaining qualified
management. Executive compensation consists of base salary and long term
incentive compensation in the form of stock options. The compensation of the
Company's executive officers is reviewed and approved by the Compensation
Committee, which is composed entirely of non-employee directors. Management
compensation is intended to be set at levels that the Compensation Committee
believes is consistent with others in the Company's industry.
In reviewing compensation levels of the Company's key executives, the
Compensation Committee considers, among other items, corporate profitability on
an absolute basis as well as relative to budget; previous years' and
competitors' profitability; revenues; and the quality of the Company's services.
No specific weight is accorded to any single factor. Relative weights differ
from executive to executive and change from time to time as circumstances
warrant.
Base Salaries. Base salaries for new management employees are determined
initially by evaluating the responsibilities of the position held and the
experience of the individual, and by reference to the competitive marketplace
for managerial talent. Salary adjustments are determined by evaluating the
performance of the executive and any increased responsibility assumed by the
executive, the competitive marketplace and the performance of the Company.
Equity Ownership. The Company established a stock option plan for its key
employees in October 1994 and in March 1998 the Board of Directors approved the
1998 Option Plan for key employees, directors and consultants. In April 1999 the
Board of Directors approved an amendment to the 1998 Option Plan to increase the
number of shares of stock reserved under the plan from 500,000 to 1,500,000,
which amendment was approved by the stockholders of the Company in August 1999.
The Compensation Committee believes that equity ownership by management is a
means of aligning management's and stockholders' interests in the enhancement of
stockholder value.
Compensation of Chief Executive Officer. Mr. Catsimatidis is the principal
stockholder of the Company and from August 1991 to November 10, 1997 served the
Company without receiving a salary. During the fiscal year ended March 2, 1997
and the period from March 3, 1997 to November 9, 1997, Mr. Catsimatidis received
no compensation from the Company. Since November 10, 1997 Mr. Catsimatidis has
been earning a salary at the rate of $100,000 per year.
11
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The Commission requires the Company to present a chart comparing the
cumulative total stockholder return on its Common Stock with the cumulative
total stockholder return of (i) a broad equity market index and (ii) a published
industry index or "peer group." This chart compares for the period from February
24, 1995 to November 28, 1999, the cumulative total stockholder return on the
Common Stock with (i) the American Stock Exchange Market Value Index and (ii)
the Media General Industry Group 511 Index - Retail Trade - Food Stores (the "MG
Industry Index"), and assumes an investment of $100 on February 24, 1995 in each
of the Common Stock, the stocks comprising the American Stock Exchange Market
Value Index and the stocks comprising the MG Industry Index. The total return
for each of the Company's Common Stock, the American Stock Exchange Market Value
Index and the MG Industry Index assumes the reinvestment of all dividends
(although no dividends were declared on the Company's Common Stock during such
period). Each index is adjusted for additions and deletions of securities from
the index.
Gristede's Foods, Inc. AMEX Market Index MG Group Index
================================================================================
February 24, 1995 100.00 100.00 100.00
March 1, 1996 79.76 121.08 123.86
February 28, 1997 67.38 129.00 160.08
November 28, 1997 49.51 144.59 182.12
November 27, 1998 50.88 142.84 244.73
November 28, 1999 52.26 178.46 198.05
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under a Management Agreement, dated November 10, 1997 (the "Management
Agreement"), Namdor Inc., a subsidiary of the Company, performs consulting and
managerial services for three supermarkets owned by corporations controlled by
John Catsimatidis. In consideration of such services, Namdor Inc. is entitled to
receive on a quarterly basis a cash payment of one and one-quarter (1.25%)
percent of all sales of inventory and merchandise made at or from the managed
supermarkets. During Fiscal 1999 management fee income was $99,732.
Effective as of January 1, 1994, the Company entered into Indemnification
Agreements with each of its directors and officers other than Kishore Lall. The
Company entered into an Indemnification Agreement with Kishore Lall effective as
of October 30, 1997, and also entered into Indemnification Agreements with
Stuart Spivak and a former officer effective March 17, 1998, Martin Steinberg
effective July 21, 1998, Dennis Berberich effective August 18, 1998 and Edward
Salzano effective August 12, 1999. Said agreements supplement the
indemnification provisions of the Company's By-laws and the Delaware General
Corporation Law. The stockholders of the Company authorized the Company to enter
into such agreements with each of its directors at the Annual Meeting of
Stockholders held on August 21, 1987. The Board of Directors has authorized the
Company to enter into such agreements with each of its officers.
C & S Acquisition Corp. (formerly Red Apple Leasing, Inc.), a corporation
wholly owned by John Catsimatidis, leases equipment to the Company. Such leases
are primarily for store operating equipment. Obligations under capital leases at
November 28, 1999 were $459,152 and require monthly payments of $35,114 through
March 1, 2001. Obligations under operating leases were $41,676 per month during
Fiscal 1999.
Advertising services are provided to the company by an affiliated company,
MCV Advertising Associates Inc., a company owned by John Catsimatidis. For
Fiscal 1999 the costs incurred were $1,191,957.
By virtue of his ownership of Common Stock and his position as Chairman of
the Board of the Company, John Catsimatidis may be deemed to be a "parent" of
the Company under rules promulgated by the Commission.
The Company leases four locations from Red Apple Real Estate, Inc., a
company solely owned by John Catsimatidis. During Fiscal 1999 the Company paid
to Red Apple Real Estate, Inc. $636,059 for rent and real estate taxes under
such leases.
Wolf, Block, Schorr and Solis-Cohen LLP, a law firm of which Martin Bring,
a director of the Company, is a member, charged fees of approximately $235,260
for rendering legal services to the Company during Fiscal 1999.
On February 6, 1998, the Company agreed to purchase substantially all of
the assets and assume certain of the liabilities of a supermarket located at
1644 York Avenue, New York City, that was owned by a corporation controlled by
John Catsimatidis. The purchase price was to be determined at a subsequent date
based upon criteria set forth in the purchase agreement. In May 2000 the Company
and the affiliate determined to restructure the transaction by rescinding the
purchase effective as of February 6, 1998 and entering into an operating
agreement which gives the Company full control of the supermarket and the right
to operate the supermarket for the account of the Company. The operating
agreement terminates on December 3, 2000, but the term shall be extended for
additional one year periods unless either party shall give notice of termination
not later than 90 days prior to the end of the then current term of the
agreement. Under the operating agreement the Company shall pay to the affiliate
$1.00 per annum, plus such other consideration as may be approved by the
Company's directors (excluding John
13
<PAGE>
Catsimatidis). Pursuant to the operating agreement the Company, or any designee
of the Company, also has the option until December 31, 2005 to purchase the
supermarket for $2,778,175, which price is the fair market price of the
supermarket established on October 11, 1999 by the Company's directors
(excluding John Catsimatidis).
Amounts due to affiliate, United Acquisition Corp., a corporation wholly
owned by John Catsimatidis, represent liabilities in connection with the
consummation of the merger in November 1997 pursuant to which the Company
acquired 29 supermarkets owned directly or indirectly by Mr. Catsimatidis, plus
money subsequently advanced by such affiliate to the Company. The affiliate has
agreed not to demand payment of these liabilities in the next fiscal year.
Accordingly, the liability has been classified as noncurrent. Amount due to
affiliate at November 28, 1999 and November 29, 1998 was $9,113,500 and
$4,031,394, respectively; of these amounts $9,000,000 and $3,000,000,
respectively, was subordinated to the Company's banks. The liability does not
bear interest. The $5,082,106 increase in due to affiliate represents advances
made during fiscal 1999 by such affiliate, the proceeds of which were primarily
used to partially fund the Company's store renovation and expansion program.
On March 10, 2000 Mr. John Catisimatidis issued a limited $600,000
guarantee of the collection of all accounts receivable acquired pursuant to the
Food Group acquisition. Furthermore, Mr. Catsimatidis has agreed not to permit
the level of the Company's liability due to the affiliate to fall below
$600,000, prior to the issuance of the fiscal year ended December 3, 2000
audited financial statements.
The Company leases one 25,000 square foot warehouse and three supermarkets
locations from entities owned by the Company's Chairman. The lease terms provide
for an aggregate of $1,100,100 per year in lease payments. The leases are
"triple net" whereby the tenant pays all real estate taxes, insurance and
maintenance. The leases expire March 1, 2006 through March 1, 2009.
OTHER MATTERS
Any stockholder intending to submit a proposal for presentation at the
Company's next Annual Meeting of Stockholders must submit such proposal to the
Company at its executive offices by June 15, 2001.
A representative of BDO Seidman, LLP is expected to be present at the
meeting and will have the opportunity to make any desired statement and respond
to appropriate questions.
The Board of Directors knows of no other matters to be brought before this
meeting. The expense of preparing, assembling and mailing this information
statement will be borne by the Company. The Company will reimburse brokerage
houses, banks and custodians for their out-of-pocket expenses in forwarding the
Notice of Annual Meeting and Information Statement and the Company's Annual
Report to Stockholders to the beneficial owners of stock held of record.
The Company will provide to any stockholder of record at the close of
business on October 10, 2000, without charge, upon written request to its
Assistant Secretary, Mark Kassner, a copy of the Company's Annual Report on Form
10-K for the fiscal year ended November 28, 1999.
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EXHIBIT A
RESOLVED, that Article 9.A of the Certificate of Incorporation of
the Corporation be amended in its entirety to read as follows:
"The directors of the Corporation shall be classified with
respect to the time for which they shall severally hold office by
dividing them into three classes, which classes shall be designated
as Class 1, Class 2 and Class 3. The number of directors in each
class shall from time to time be designated by the Board of
Directors of the Corporation. Each Class 1 director and each Class 3
director shall be elected to hold office for a term of three years
and each Class 2 director shall be elected to hold office for a term
of one year. The current term of the Class 1 directors shall expire
at the Annual Meeting of Stockholders to be held in the year 2002.
The current term of the Class 3 directors shall expire at the Annual
Meeting of Stockholders to be held in the year 2001. The term of the
Class 2 directors shall expire at the next Annual Meeting of
Stockholders to be held after their election. In the event of any
change in the authorized number of directors, each director then
continuing to serve as such shall nevertheless continue as a
director of the class of which he is a member until the expiration
of his current term, or his prior death, resignation or removal."
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