Exhibit 10.17
S REMAINDER CORP.
000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
May 10, 2000
Namdor Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This letter sets forth our agreement with respect to the supermarket
located at 00xx Xxxxxx and First Avenue, New York, New York (the "Store") as
follows:
1. Effective as of May 10, 2000, Namdor Inc. ("Namdor") shall have the right to
operate the Store and all of the assets comprising the Store for its own
account. From May 10, 2000 (the "Commencement Date") until the termination of
this Agreement, Namdor agrees to (i) provide all personnel for the operations of
the Store at its own cost and expense, (ii) pay all taxes incurred from the
operation of the Store, (iii) make all payments required to be made by the
tenant under the lease for the Store directly to the landlord and (iv) pay all
other expenses incurred in connection with the operations of the Store. Namdor
shall be entitled to retain all revenues generated from the operation of the
Store.
1. Without limiting the generality of Paragraph 1 hereof, Namdor is hereby
granted, full and complete authority to operate the Store under the name
"Gristede's" or under such other name as Namdor shall from time to time deem
appropriate, and to do everything and to take such action necessary for the
conduct of business of the Store and for the purchasing of merchandise and
equipment for the operation of the Store as Namdor shall in its sole discretion
determine. By means of example and not of limitation, Namdor may conduct the
following activities with respect to the Store:
2.
- Purchasing inventory, merchandise and equipment; maintaining the
operating books and accounting records of the Store; conducting sale
and promotional activities; and conducting all merchandising and
advertising activities;
- Hiring and firing of employees, agents, and the dealing with
independent contractors as Namdor shall deem necessary, convenient,
advantageous or proper to the operation of the business at the
Store;
- Applying for such licenses and permits as Namdor may determine to be
necessary, convenient, advantageous or proper for the operation of
the Store;
- Implementing selling prices and gross margin goals set by Namdor
from time to time;
- Negotiating contracts for the purchase, sale or disposition of
merchandise and equipment at retail or wholesale, upon such terms as
Namdor shall determine to be necessary, convenient, advantageous or
proper;
- Negotiating contracts of any type and description for services that
Namdor may determine from time to time to be necessary, convenient
or advantageous to the operation of the business at the Store;
- Negotiating leases for personal property and/or real property for
the Store;
- Obtaining and maintaining insurance policies as Namdor may deem
necessary, convenient, advantageous or proper for the operation of
the business at the Store, naming itself as insured party.
1. Namdor hereby agrees to indemnify, defend and hold harmless S Remainder Corp.
("S Corp."), its directors, officers, employees, agents and affiliates and their
successors and assigns, from and against all claims, actions or causes of
action, assessments, demands, losses, damages, judgments, settlements,
liabilities, costs and expenses, including, without limitation, costs and legal
or other expenses for investigating or defending any action or threatened
actions, interest, penalties, and reasonable attorneys' fees and expenses of any
nature whatsoever, whether actual or consequential (collectively, "Damages")
asserted against, resulting to, imposed upon or incurred by S Corp., directly or
indirectly, by reason of Namdor's operation of the Store. S Corp. shall promptly
notify Namdor of the existence of any claim, demand or other matter to which the
indemnification obligations may apply. S Corp. shall give Namdor reasonable
opportunity to defend the same at its own expense and with counsel of its own
selection; provided that S Corp. may participate in such defense with its own
counsel at its own expense.
2.
3. (a) To induce Namdor to enter into this Agreement, S Corp. grants Namdor, its
parent Gristede's Foods, Inc. ("GRI"), or any other affiliated or non-affiliated
entity designated by Namdor or GRI, an option, valid until December 31, 2005, to
purchase the Store at a fair market price as of the date of acquisition to be
calculated by using the methodology set forth on Exhibit A attached hereto.
4.
5. (b) In consideration of the grant to Namdor of the operating rights to the
Store as provided herein, Namdor shall pay to S Corp. $1.00 per annum from the
Commencement Date, plus such amount as shall from time to time be determined by
the directors of GRI (excluding Xxxx Xxxxxxxxxxxx).
6.
7. This Agreement shall terminate on May 10, 2001; provided, however, that the
term of this Agreement shall automatically be extended for additional one year
periods unless either Namdor or S Corp. shall have given the other notice that
it does not wish to extend this Agreement not later than ninety (90) days prior
to the end of the then current term.
8.
9. The terms and conditions of this Agreement shall inure to the successors and
assigns of each party.
10.
11. This Agreement constitutes the entire agreement between Namdor and S Corp.
concerning the subject matter hereof and shall be deemed to supersede and
replace all prior agreements, understandings and undertakings, whether oral or
written.
12.
If this Agreement correctly expresses your understanding, kindly so
indicate by signing all of the enclosed copies and by returning two (2) fully
executed copies to the undersigned.
Very truly yours,
S REMAINDER CORP.
By: /s/ Xxxx X. Xxxxxxxxxxxx
-------------------------------------
Xxxx X. Castimatidis
Chairman of the Board
As of the 10th day of May, 2000, the undersigned hereby acknowledges and agrees
to the foregoing terms and conditions.
NAMDOR INC.
By: /s/ Xxxx X. Xxxxxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxxxxx
Chairman of the Board
EXHIBIT A
METHODOLOGY FOR CALCULATING
PURCHASE PRICE FOR STORE
Multiply (i) EBITDA for the Store for the four consecutive fiscal quarters after
the purchase (commencing with the first day of the first fiscal quarter of
Namdor after the purchase) by (ii) the average EBITDA multiple utilized by
Coopers & Xxxxxxx ("C&L") in rendering its Fairness Opinions on the 1997
acquisition of the Food Group, such average C&L multiple to be adjusted for any
change in market factors in the intervening period (such adjustment, if any, to
be made after consultations by Namdor with C&L). As is standard, the purchase
price will be adjusted for any capital expenditures financed by Namdor and for
the net working capital assets acquired.
