- 4 -
that the customer’s obligation to repay funds that it advanced
would arise only if the customer materially breached the supply
agreement.
While petitioner was negotiating with Super Rite with
respect to the terms of the supply agreement and the correspond-
ing note that Super Rite required as conditions to Super Rite’s
advancing any funds to it, petitioner requested, and received,
permission from PNC Bank, petitioner’s primary bank, to enter
into such supply agreement and to execute such note. That is
because petitioner had outstanding indebtedness to PNC Bank, and
the loan documents with respect to that indebtedness required PNC
Bank’s permission before petitioner entered into any transaction
in which it received an advance of funds that it might have to
repay and/or with respect to which certain of petitioner’s assets
were to serve as collateral. In all events, PNC Bank was to
retain a first security interest in any assets of petitioner that
served as collateral with respect to petitioner’s outstanding
1(...continued)
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. Before Super Rite entered into such a
supply agreement, it required the customer to execute a note
payable to Super Rite in the amount of any such advance rebate in
order to facilitate repayment of such advanced funds in the event
that the customer did not satisfy the minimum annual purchase
requirement set forth in the supply agreement or otherwise
materially breached that agreement.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011