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provide some form of financial assistance to certain of its
creditworthy and strategically important customers in order to
help them meet their respective financial needs. The amount of
funds that Super Rite was willing to advance to a customer
depended upon Super Rite’s estimate of its potential profit under
the supply agreement that it required of such customer.
Before Super Rite agreed to provide financial assistance to
a customer, it required each such customer to (1) enter into a
written supply agreement (supply agreement) that, inter alia,
required the customer to purchase annually a minimum amount of
products and that contemplated that Super Rite would pay an
advance price rebate to such customer at the inception of such
supply agreement and (2) execute a promissory note (note) payable
to Super Rite in the amount of any such advance rebate. Although
Super Rite expected that the customer would satisfy the minimum
annual purchase requirement set forth in the supply agreement,
Super Rite nonetheless required the customer to execute a note
payable to it in order to facilitate repayment of all or a
portion of such advanced funds in the event that the customer did
not satisfy such minimum annual purchase requirement or otherwise
materially breached the supply agreement.1 Super Rite intended
1Even in a situation where a customer of Super Rite did not
seek an advance of funds from Super Rite, Super Rite may have
agreed to enter into a supply agreement with such customer that,
inter alia, required the customer to purchase annually a minimum
(continued...)
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Last modified: May 25, 2011