Don Ballantyne and Susanne C. Ballantyne - Page 10

          July 30, 1985.  The agreement was signed by petitioner as                   
          "shareholder" and by Burton on behalf of BTG.                               
               The introductory part of the Capitalization Agreement states           
          that:  (1)  Petitioner owns the Escondido property but legal title          
          to the property is being held by WTC, under Holding Agreement No.           
          1037 for the benefit of petitioner; (2) Balmac is engaged in                
          redeveloping and marketing a portion of the Escondido property              
          (amounting to 44.25 acres) and that it expects that acreage to be           
          developed and marketed over the course of the next 24 months; and           
          (3) petitioner wishes to transfer the 44.25 acres to BTG in                 
          exchange for 1,000 shares of BTG stock.  The Capitalization                 
          Agreement  provides for:  (1)  An assignment of the 44.25 acres             
          from petitioner to BTG; (2) petitioner's agreement to execute and           
          deliver to WTC an assignment of beneficial interest under Holding           
          Agreement 1037; (3) effective July 30, 1985, BTG will have all              
          rights of direction and control under Holding Agreement No. 1037;           
          (4) an agreement by BTG to enter into a joint venture agreement             
          with Balmac to further develop and sell the 44.25 acres and, in             
          this regard, (5) an agreement by BTG to instruct WTC to transfer            
          the entire acreage of the Escondido property to Balmac and to               
          instruct Balmac to hold the 44.25 acres for benefit of the joint            
          venture between BTG and Balmac and the balance of the 86 acres for          
          the benefit of petitioner. The Capitalization Agreement further             
          states that: (1) The parties understand that it is to their mutual          

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