Woody F. Lemons - Page 5

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                  At some time during the early 1980's, Mr. Dixon                     
             learned of beachfront property located in Encinitas,                     
             California, a town north of San Diego.  The property                     
             consisted of two contiguous parcels of land (the Moonlight               
             Beach Property).  An old beach house, servants' quarters,                
             and a detached garage stood on one parcel.  The other                    
             parcel, consisting of approximately 17,000 square feet, was              
             vacant.  Mr. Dixon believed that he could develop the                    
             property by constructing  a complex of six villas and other              
             amenities on the vacant parcel, and by remodeling the beach              
             house into a luxury duplex.                                              
                  Initially, Mr. Dixon envisioned selling the six                     
             villas in so-called time-share units.  However, based on                 
             discussions with lawyers and accountants who did not                     
             believe that the project could qualify under California                  
             laws regulating the sale of time-share units, Mr. Dixon                  
             decided to change the structure of the project and to use                
             a "membership approach", under which a limited partnership               
             or nonprofit corporation would purchase the six villas and               
             would sell club memberships to the public.  This structure               
             was similar to the time-share approach in that each club                 
             membership would entitle its holder to use the club's                    
             facilities for a certain number of days per year.  An                    
             integral part of the project was that the entire cost of                 
             acquiring and developing both parcels of property would be               




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Last modified: May 25, 2011