Cactus Wren Jojoba, Ltd., Cecil R. Almand, Tax Matters Partner - Page 18

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                  On December 31, 1983, MBP entered into a verbal agency                                 
            agreement with Mesa, described in a written memorandum of agency                             
            agreement dated August 5, 1985.  Pursuant to the terms of this                               
            agreement, Mesa engaged AI in a research and development                                     
            management agreement similar to the agreement Mesa negotiated                                
            between AI and Mesa's parent corporation, HTP.  AI handled all of                            
            the physical work that occurred on the 17.2-acre plantation                                  
            related to Cactus Wren.                                                                      
                        d.  Townhill Equities, Inc.                                                      
                  On December 31, 1983, MBP leased 17.2 acres11 (plantation                              
            II) from Townhill Equities, Inc., "for the purpose of undertaking                            
            research and thereafter developing a jojoba plantation of                                    
            approximately 17.2 acres".  Under the terms of this lease, Mesa                              
            agreed to pay a rental fee of $450 per acre, per year, for a                                 
            period of 20 years, starting on December 1, 1983.  Plantation II                             
            was located adjacent to plantation I.  Townhill Equities, Inc.,                              
            and MBP were both owned in equal shares by Peterson, Meinke,                                 
            Damer, and Almand.                                                                           
                  3.  The Expert--Patrick Luna                                                           
                  Patrick Luna (Luna) testified for respondent as to whether                             


            11    The legal description of the property was attached as                                  
            exhibit A to the lease agreement.  The property was described as                             
            follows:                                                                                     
                  The Northeast quarter (NE1/4) of Section Fourteen                                      
                  (14), Township Ten (10) South, Range Twenty-three (23)                                 
                  West, Gila and Salt River Base and Meridan, Yuma                                       
                  County, Arizona.                                                                       




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