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issue was transferred to petitioner governs our resolution of
whether such transfer constitutes a loan. See id.
Based upon our examination of the entire record before us,
we find that the substance of the bargain between petitioner and
Super Rite at the time of the transfer to petitioner of the $1.5
million at issue17 was that petitioner’s obligation for a given
annual period to make the annual payment set forth in the April
15, 1999 note would not arise unless and until it materially
breached the April 16, 1999 supply agreement with respect to such
period. On that record, we find that at the time of the transfer
to petitioner of the $1.5 million at issue petitioner did not
have an unconditional obligation to make each of the annual
payments set forth in the April 15, 1999 note.18 We further find
17Although the April 15, 1999 note is dated Apr. 15, 1999,
it was not until around May 4, 1999, that petitioner received the
$1.5 million at issue. See supra note 10.
18We have found, based on the testimony of Joseph Della Noce
(Mr. Della Noce), an officer of Rich Foods, the parent of Super
Rite at the time of the transaction at issue, that Super Rite
expected that the customer would satisfy the minimum annual
purchase requirement set forth in the supply agreement, but that
Super Rite nonetheless required the customer to execute a note
payable to it in the amount of any advanced funds in order to
facilitate repayment of all or a portion of such funds in the
event that the customer did not satisfy such minimum annual
purchase requirement or otherwise materially breached the supply
agreement. We have also found, based on Mr. Della Noce’s testi-
mony, that Super Rite intended that the customer’s obligation to
repay funds that it advanced to such customer would arise only if
the customer did not satisfy the minimum annual purchase require-
ment set forth in the supply agreement or otherwise materially
breached that agreement.
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