Karns Prime & Fancy Food, Ltd. - Page 9

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               7.   Liquidated Damages.  The parties understand                       
               that Super Rite’s commitment to supply the specified                   
               requirements of the Retailer will require an allocation                
               of resources by Super Rite that would not be practical                 
               if the Retailer were to purchase less than such speci-                 
               fied percentage requirements from Super Rite.  The                     
               parties agree that the Retailer’s failure to perform                   
               its obligations hereunder will cause damage to Super                   
               Rite that will be difficult or impossible to prove                     
               accurately and, therefore, with the intention of pro-                  
               viding a fair and reasonable formula to calculate the                  
               amount of such damage, the parties agree that upon                     
               Super Rite’s cancellation of this Agreement pursuant to                
               Sections 2 or 5 of this Agreement, the Retailer will                   
               pay Super Rite as liquidated damages an amount equal to                
               1.0% of the product of (i) the Retailer’s aggregate                    
               purchases from Super Rite during the preceding calendar                
               year multiplied by (ii) the number of years remaining                  
               in the term of this Agreement.  The amount of the                      
               Retailer’s aggregate purchases and Super Rite’s damages                
               for periods of less than one year shall be calculated                  
               on a pro rata basis.                                                   
                    8.   Pledge on Assets.  As collateral security for the            
               prompt and complete payment and performance when due of                
               all of Retailer’s liabilities and obligations to Super                 
               Rite hereunder, Retailer hereby mortgages, pledges,                    
               hypothecates and grants to Super Rite a lien and secu-                 
               rity interest in all right, title and interest which                   
               Retailer may now or hereafter have in, to and under the                
               following, wherever located (collectively, the “Collat-                
               eral”):  (i) all “Inventory”, as such term is defined                  
               in Section 9-106(4) of the Uniform Commercial Code                     
               * * * (the “Code”) * * *; (ii) all “Accounts” as such                  
               term is defined in Section 9-106 of the Code * * *;                    
               (iii) all “Equipment” as such term is defined in Sec-                  
               tion 9-109(2) of the Code * * *; and (iv) all “Pro-                    
               ceeds” of the foregoing, as such term is defined in                    
               Section 9-306(1) the Code [sic] * * *.  Retailer cove-                 
               nants that during the term of this Agreement it will                   
               not, without Super Rite’s prior written consent, cre-                  
               ate, incur, assume, or suffer to come into existence                   
               any mortgage, pledge, lien or other encumbrance upon                   
               any of the Collateral or the Proceeds thereof, wherever                
               located, now existing or hereafter acquired, other than                
               that granted to Super Rite hereunder.  Retailer agrees                 
               to execute and deliver such documents, and to take such                
               action, as Super Rite may request to perfect and con-                  

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Last modified: May 25, 2011