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note (April 15, 1999 note)5 dated April 15, 1999, and payable to
Super Rite that Super Rite also required of petitioner as a
condition to Super Rite’s advancing $1.5 million to it.
Pursuant to the April 16, 1999 supply agreement, petitioner
agreed to purchase annually from Super Rite $16 million in
products over a six-year period. The April 16, 1999 supply
agreement provided in pertinent part:
1. Supply of Requirements; Certification.
Throughout the term of this Agreement, Super Rite will
be the principal wholesaler for all products purchased
by the Retailer [petitioner] for sale in the Retailer’s
stores that are located within the geographic area
served by Super Rite. Throughout the term of this
Agreement, the Retailer shall purchase at least
$16,000,000.00 of product from Super Rite each year of
this Agreement. * * *
2. Pricing and Payment Terms. During the term
of this Agreement, product pricing, fees, billing and
payment terms, returns and credits for products pur-
chased, and other terms and conditions governing the
sale of products hereunder shall be governed by Super
Rite’s general policies and practices in effect from
time to time. In addition, Retailer shall receive a
private label incentive to be determined on the basis
of Exhibit A attached hereto and further, Retailer fees
for Grocery, Frozen and Dairy shall be in accordance
with Exhibit B attached hereto.[6] The parties further
agree that Retailer’s payment terms shall be seven (7)
days. Failure by the Retailer to make payment to Super
Rite of amounts due for the delivery of goods hereunder
5By using the term “April 15, 1999 note”, we do not intend
to suggest that for tax purposes there was a loan by Super Rite
to petitioner that was evidenced by that document.
6Prior to the April 16, 1999 supply agreement, Super Rite
(1) did not provide petitioner with any incentives for private
label purchases and (2) charged petitioner fees higher than those
set forth in exhibit B attached to that supply agreement.
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