-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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