Peoplefeeders, Inc. and Subsidiaries - Page 4




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               Upon HPPW’s acquisition of the stock in Peoplefeeders, HPPW            
          became the parent corporation of Peoplefeeders, and HPPW changed            
          its name to Peoplefeeders.  The former Peoplefeeders corporate              
          entity changed its name to Square Pan Pizza Co. of California,              
          Inc. (Square Pan), and remained parent to other subsidiary                  
          corporations that owned and operated restaurants.  Hereinafter,             
          references to Peoplefeeders and to Square Pan are to those parent           
          and subsidiary corporate entities as they existed and operated              
          after the July 1987 acquisition and name change of the                      
          corporations.                                                               
               On August 11, 1987, Peoplefeeders obtained a $1.7 million              
          loan from California Commerce Bank (Commerce Bank), reflected by            
          a promissory note in favor of Commerce Bank payable in 53 monthly           
          installments of $32,075 with interest at 2-1/2 percent over prime           
          and due in full on June 5, 1992.                                            
               On March 31, 1988, using proceeds from the $1.7 million                
          Commerce Bank loan, Peoplefeeders paid Motsenbocker the $1.5                
          million due on that date relating to HPPW's acquisition of                  
          Motsenbocker's stock interest in Peoplefeeders.                             
               With regard both to the $1.5 million debt obligation owed to           
          Motsenbocker and the $1.7 million loan obtained from Commerce               
          Bank, the board of directors of Peoplefeeders formally acted on             
          and approved such debt obligations.  Promissory notes were issued           


          (...continued)                                                              
          note increased to 4-1/4 percent over the prime rate.                        


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