Loren F. Paullus and Donna Paullus - Page 12

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               class A golf, tennis and social membership or class A                  
               golf and social membership if the subscriber becomes                   
               the owner of a lot or unit and a resident of Ridgemark                 
               Estates within the five year term and pays the excess                  
               of the membership initiation fee over the $4,000.00                    
               subscription price.                                                    
          The corporate minutes reflect that the board of directors                   
          considered the further expansion of the golf facility and other             
          related activities, such as the purchase of 10 gasoline-powered             
          golf carts.  The board also explored the possibility of future              
          development of all the remaining land south of Airline Highway.             
          Ridgemark’s engineer estimated that approximately 300 lots would            
          be produced at an average net sale price of $60,000, which would            
          produce gross profits of $18 million.  An additional $9 million             
          could be produced by selling the lots improved with houses.                 
               In the same meeting, the board of directors also authorized            
          Paullus to have preliminary discussions with representatives of             
          potential purchasers regarding the sale of Ridgemark.  By that              
          time, certain Ridgemark shareholders sought to dispose of their             
          shares.  Paullus desired to be relieved of the responsibilities             
          involved in the management of Ridgemark Golf and Country Club.              
          He also sought to liquidate Ridgemark’s assets in order to expand           
          into a new venture, the proposed Paicines project.                          
               On February 23, 1988, the corporate minutes reflected the              
          fact that the tentative map for the unit 10 property, comprising            
          164 lots, had been filed with the San Benito County Planning                






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