- 14 -
not jeopardize Winery's ability to meet its obligations to Bank
of America.
The terms on which Winery paid Vineyards for grape purchases
were further modified in connection with the renewal of Winery's
line of credit during December 1986. As a condition of renewing
the line, Bank of America required that payments to Vineyards for
grapes be made quarterly no earlier than 60 days after each
quarter's end and ratably as the wine made from Vineyard's grapes
was sold. In a letter dated November 24, 1986, to Bank of
America discussing the bank's proposal with respect to the timing
of Winery's payments to Vineyards for grapes, Mr. Groth wrote
that "Judy and I have provided generous delayed payment terms to
the Winery that are still adequate." As noted above, the
foregoing payment arrangement between Winery and Vineyards
continued for the remainder of the period that Bank of America
provided a line of credit to Winery as well as subsequently, when
Winery obtained a line of credit from Napa National Bank during
November 1988.
During 1986, Vineyards and Winery executed a Grape Payment
Calculation that provided, inter alia, that: (1) Vineyards would
sell grapes to Winery in quantities as needed by Winery, with
Winery having first choice of grapes and Mr. Venge having
authority to select among the grapes available and to coordinate
sales with unrelated buyers; and (2) payment for the grapes would
occur ratably as the wine made from the grapes was sold by
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011