Karns Prime & Fancy Food, Ltd. - Page 11

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               hereof on the unpaid principal balance hereof and shall                
               be computed on the basis of the actual number of days                  
               for which due.                                                         
                    The principal balance of this Note shall be repaid                
               in six (6) annual payments of $250,000.00 each, com-                   
               mencing on April 16, 2000, and continuing on the third                 
               Friday of each April thereafter through and including                  
               April 16, 2005; provided however, that the payment of                  
               the annual payment shall be forgiven by the Lender                     
               [Super Rite] if the Lender determines that the Borrower                
               is in compliance with, and shall not have materially                   
               breached or then be in uncured default under, that                     
               certain Supply and Requirements Agreement of even date                 
               herewith[9] among the Borrower and Lender.  The entire                 
               unpaid and unforgiven principal balance hereof shall be                
               due and payable, if prior to April 16, 2005, Borrower                  
               ceases, for any reason, to use Lender as its primary                   
               food supplier.  Notwithstanding the foregoing, the                     
               entire unpaid and unforgiven principal balance hereof                  
               and accrued interest thereon shall be due and payable                  
               on April 16, 2005.                                                     
               Even though execution of the April 16, 1999 supply agreement           
          and the corresponding April 15, 1999 note occurred in mid-April             
          1999, it was not until around May 4, 1999, that petitioner                  
          received the $1.5 million at issue.10  Around that last date,               
          Rich Foods, Inc. (Rich Foods), the then parent of Super Rite,               

               9The April 15, 1999 note referred to the April 16, 1999                
          supply agreement as a supply agreement of “even date”.  The                 
          record does not clarify the inconsistency between the date of               
          that supply agreement to which the note referred (i.e., Apr. 15,            
          1999) and the date of that supply agreement to which such supply            
          agreement referred (i.e., Apr. 16, 1999).  What is clear from the           
          record is that the April 15, 1999 note and the April 16, 1999               
          supply agreement were entered into around the same time and were            
          interdependent.  See supra note 7.                                          
               10The record does not explain why petitioner did not receive           
          until May 4, 1999, the $1.5 million to which the April 16, 1999             
          supply agreement and the corresponding April 15, 1999 note                  
          pertained.                                                                  





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