Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 14

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          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                  

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