Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 11

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               Dealings Between Winery and Unrelated Growers                          
               From 1983 through 1986, Winery purchased grapes from                   
          unrelated growers pursuant to agreements that would continue                
          until canceled.  The agreements, which were prepared on Winery              
          letterhead, provided that Winery would pay one half of the                  
          purchase price 30 days after delivery of the grapes and the                 
          balance by December 15 of the year of delivery.  For grapes                 
          purchased from one grower during 1983, Winery paid one half of              
          the purchase price during 1983 and the balance during 1984.  For            
          grapes purchased from other growers during 1983, and for all                
          grapes purchased during 1984, 1985, and 1986, Winery paid for its           
          purchases by yearend pursuant to the terms of its agreements.               
               During relevant periods, Winery could not have purchased all           
          of the grapes that it needed from unrelated growers without                 
          additional capital.  Bank of America did not suggest that the               
          unrelated vineyards from which Winery purchased grapes execute              
          subordination agreements similar to those executed by Vineyards.            
          Winery did not purchase grapes from unrelated vineyards from 1987           
          through 1990 and purchased grapes only from Vineyards during                
          those years.                                                                
               A February 5, 1985, letter to Mr. Venge from one of the                
          unrelated growers supplying Winery confirms an agreement to (1)             
          sell Winery 60 tons of chardonnay grapes and (2) review the                 
          pricing structure used in the past "and possibly reduce and align           

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Last modified: May 25, 2011