Exhibit 10.11
JOHN A. CATSIMATIDIS
823 Eleventh Avenue
New York, N. Y. 10019
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Gristede's Foods, Inc.
823 Eleventh Avenue
New York, N.Y. 10019-3535
March 10, 2000
Ref: Audit of Gristede's Foods, Inc. Financial Statements for the Fiscal
Year Ended November 28, 1999
Gentlemen:
On November 10, 1997, Gristede's Foods, Inc. ("GRI") acquired 29
supermarkets and City Produce Distributors, Inc. (collectively, the "Food
Group") from entities wholly owned directly or indirectly by myself (the
"Acquisition"). The total consideration for the Acquisition was $40 million --
and was paid by GRI issuing $36 million in common stock and assuming $4 million
in liabilities owed by the Food Group to myself or entities wholly owned by
myself (the "Intercompany Liabilities")
In connection with the Acquisition, GRI acquired (i) the inventories
located at the Food Group stores, (ii) various Food Group vendor trade
receivables, and (iii) certain other Food Group assets. In turn, GRI assumed an
equivalent amount of Food Group trade vendor payables and certain other Food
Group liabilities.
In your audit examination of GRI's financial statements for FYE 11/28/99,
you have indicated that as of such date, GRI had approximately $600,000
remaining of the approximately $3.3 million in vendor trade receivables that
were acquired from the Food Group pursuant to the Acquisition (the "Remaining
Vendor Receivables").
Should any portion of the Remaining Vendor Receivables be deemed by
yourselves to be uncollectible at GRI's next fiscal year end date of December 3,
2000 (the "Net Uncollectible Receivables"), I agree to have such Net
Uncollectible Receivables offset, dollar for dollar, against the Intercompany
Liabilities, provided, however, that the aggregate amount of such offsets do not
exceed $600,000. Subsequent recoveries against the Net Uncollectible Receivables
shall be available to pay Intercompany Liabilities.
I agree not to permit the level of Intercompany Liabilities on GRI's books
to fall below $600,000 prior to the issuance of GRI's audited FYE 12/03/00
financial statements, to cover any contingent liability herein.
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This letter supercedes and nullifies the prior February 27, 1999 letter,
"Ref.: Audit of Gristede's Sloan's, Inc. Financial Statements for the Fiscal
Year Ended 11/29/98" previously executed by myself.
Sincerely,
/s/ John Catsimatidis
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John Catsimatidis
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