Oakcross Vineyards, LTD., Dennis D. Groth, Tax Matters Partner - Page 27

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          could not make payments to Vineyards without the consent of its             
          lenders.  Winery's first payment to Vineyards during March 1984             
          was made with the consent of Bank of America with funds provided            
          by a line of credit that the bank had extended to Winery.  The              
          test used by the bank to decide whether payment was to be allowed           
          was whether the wine made from Vineyard's grapes was released for           
          sale.  The March 1984 payment accordingly was made for 1982                 
          grapes used in wine that had been released for sale approximately           
          6 months prior to the time of that payment.                                 
               Vineyards subsequently consented in addenda to subsequent              
          subordination agreements to receive payment for grapes that had             
          been made into wine that had been released for sale by Winery for           
          a minimum of 7 months.  As a condition of renewing Winery's line            
          of credit during late 1986, Bank of America insisted that Winery            
          pay Vineyards for grapes quarterly, but only as the wine made               
          from the grapes was sold.  The Grape Payment Calculation entered            
          into by Vineyards and Winery during 1986, provided similar                  
          payment terms.  That payment arrangement remained in place                  
          through the remainder of Winery's relationship with Bank of                 
          America and continued when Winery replaced its line of credit               
          from that bank with one obtained from Napa National Bank during             
          November 1988.  The foregoing payment practices resulted in an              
          account receivable from Winery to Vineyards in the amount of                
          $1,615,915 as of December 31, 1990, over 80 percent of which was            
          attributable to Winery's 1989 and 1990 grape purchases.                     

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