Peoplefeeders, Inc. and Subsidiaries - Page 3




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               At the time the petition was filed, petitioner's principal             
          place of business was located in San Diego, California.                     
               Prior to July 1, 1987, Karl Motsenbocker (Motsenbocker)                
          owned 82.5 percent of the shares of stock in Peoplefeeders, Inc.,           
          a closely held California corporation that was the parent                   
          corporation of a group of affiliated corporations that owned and            
          operated a chain of pizza restaurants under the name of Square              
          Pan Pizza.                                                                  
               In the summer of 1987, Jeffrey Partrick (Partrick) and three           
          other individuals formed HPPW Restaurants, Inc. (HPPW), and on              
          July 1, 1987, HPPW acquired for $3,317,560 all of Motsenbocker's            
          shares of stock in Peoplefeeders and Motsenbocker's ownership               
          interest in a related partnership.                                          
               The $3,317,560 purchase price for the stock in                         
          Peoplefeeders and for the related partnership interest was                  
          reflected by and was to be paid as follows:                                 

                    Form of Payment                    Amount                         
                    Cash at closing                    $  167,560                     
                    Promissory notes* due:                                            
                         Sept. 1, 1987                 150,000                        
                         Mar. 31, 1988                 1,500,000                      
                         June 30, 1992                 1,500,000                      
                                             Total     $3,317,560                     
                    * Interest accrued on the promissory notes at                     
                    an annual rate of 3-1/4 percent over the                          
                    prime rate.1                                                      

          1    After July 1, 1990, the interest rate on the June 30, 1992,            
          promissory note increased to 3-3/4 percent over the prime rate              
          and after July 1, 1991, the interest rate on the third promissory           
                                                             (continued...)           


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