SILVERLEAF RESORTS INC, S-1/A, 1997-05-16

SILVERLEAF RESORTS INC
S-1/A, 1997-05-16
LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1997

REGISTRATION NO. 333-24273

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

AMENDMENT NO. 1 TO FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------

SILVERLEAF RESORTS, INC.
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
TEXAS 6552 75-2259890
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
ROBERT E. MEAD
CHIEF EXECUTIVE OFFICER
SILVERLEAF RESORTS, INC.
1221 RIVERBEND DRIVE, SUITE 120 1221 RIVERBEND DRIVE, SUITE 120
DALLAS, TEXAS 75247 DALLAS, TEXAS 75247
(214) 631-1166 (214) 631-1166
(Address, including zip code, and telephone (Address, including zip code, and telephone
number, including area code, number, including area code,
of registrant's principal executive offices) of agent for service)
</TABLE>

Copies to:

<TABLE>
<C> <C>
DAVID N. REED, ESQ.
MEADOWS, OWENS, COLLIER, REED, THOMAS W. DOBSON, ESQ.
COUSINS & BLAU, LLP LATHAM & WATKINS
901 MAIN STREET, SUITE 3700 633 W. FIFTH STREET, SUITE 4000
DALLAS, TEXAS 75202-3792 LOS ANGELES, CALIFORNIA 90071
(214) 744-3700 (213) 485-1234
</TABLE>

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434
of the Securities Act of 1933, please check the following box. [ ]
---------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===========================================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED AMOUNT PROPOSED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share................................ 4,025,000 shares $16.00 $64,400,000 $21,467
===========================================================================================================================
</TABLE>

(1) Includes 525,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.

(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2

SILVERLEAF RESORTS, INC.

CROSS-REFERENCE SHEET

PURSUANT TO RULE 404(a) AND ITEM 501(b) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM NUMBER AND
HEADING IN FORM S-1
REGISTRATION STATEMENT PROSPECTUS CAPTION
---------------------- ------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus..... Facing Page; Cross-Reference Sheet; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Summary; Risk Factors; Selected
Consolidated Historical Financial,
Operating and Pro Forma Financial
Information
4. Use of Proceeds............................ Summary; Use of Proceeds; Capitalization;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
5. Determination of Offering Price............ Outside Front Cover Page; Underwriting
6. Dilution................................... Dilution
7. Selling Security Holders................... Not Applicable
8. Plan of Distribution....................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered................................. Summary; Description of Capital Stock
10. Interests of Named Experts and Counsel..... Legal Matters; Experts
11. Information with Respect to the
Registrant................................. Outside and Inside Front Cover Pages of
Prospectus; Summary; Risk Factors; Use of
Proceeds; Dividend Policy;
Capitalization; Dilution; Selected
Consolidated Historical Financial,
Operating and Pro Forma Financial
Information; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Relationships and
Related Transactions; Principal
Shareholders; Description of Capital
Stock; Certain Provisions of the
Company's Charter and Bylaws; Shares
Eligible for Future Sale; Consolidated
Financial Statements of Silverleaf
Resorts, Inc.
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Management
</TABLE>

<PAGE> 3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

SUBJECT TO COMPLETION, DATED MAY 16, 1997

3,500,000 Shares

LOGO

SILVERLEAF RESORTS, INC.
Common Stock
($0.01) par value

------------------

All of the shares of Common Stock, $0.01 par value ("Common Stock"), of
Silverleaf Resorts, Inc., a Texas corporation (the "Company"), offered hereby
(the "Offering"), are being sold by the Company. Prior to the Offering, there
has been no public market for the Common Stock. It is anticipated that the
initial public offering price will be between $13.00 and $16.00 per share of
Common Stock. For information relating to the factors considered in determining
the initial public offering price, see "Underwriting". The Common Stock has been
approved for listing on The New York Stock Exchange ("NYSE"), subject to
official notice of issuance, under the symbol "SVR".

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING ON PAGE 16.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share............................................ $ $ $
Total(2)............................................. $ $ $
</TABLE>

(1) Before deduction of expenses payable by the Company estimated at $2,147,500.

(2) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 525,000
additional shares to cover over-allotments of shares. If the option is
exercised in full, the total Price to Public will be $ ,
Underwriting Discounts and Commissions will be $ and Proceeds to
Company will be $ .

The Common Stock is offered by the several Underwriters when, as and if
issued by the Company, delivered to and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that the
Common Stock will be ready for delivery on or about , 1997, against
payment in immediately available funds.

The Company will use approximately $9.9 million of the Offering proceeds to
pay indebtedness owed to the chief executive officer of the Company and certain
of his affiliates, and approximately $4.5 million of the Offering proceeds (or
$5.2 million if the Underwriters' over-allotment option is exercised in full) to
pay indebtedness owed to an affiliate of the lead managing Underwriter.

Insiders of the Company will retain control of the Company after the
consummation of the Offering. After taking into account Common Stock currently
owned by insiders of the Company and assuming the immediate exercise of stock
options to be granted to such persons, insiders of the Company will own
approximately 69.9% of the Common Stock of the Company after the Offering.

CREDIT SUISSE FIRST BOSTON

EVEREN SECURITIES, INC.

MCDONALD & COMPANY

SECURITIES, INC.

Prospectus Dated , 1997

<PAGE> 4

CAPTION: "SILVERLEAF RESORTS, INC. LODGE GETAWAY(TM)"

MAP OF CENTRAL U.S. DEPICTING LOCATIONS OF EXISTING RESORTS,

PROPOSED EXPANSION MARKETS, AND THEIR RESPECTIVE PROXIMITIES

TO EACH OTHER AND TO MAJOR METROPOLITAN AREAS.

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING".

2
<PAGE> 5

1. First Picture -- color drawing of planned clubhouse at Hill Country Resort.
Caption: "Rendering of Planned Expansion for Clubhouse/Activity Center at
Hill Country Resort (San Antonio-Austin market)."

2. Second Picture -- photo of exterior timeshare units at Piney Shores Resort.
Caption: "Typical Timeshare Units at Piney Shores Resort -- Lake Conroe,
Texas (Houston market)".

3. Third Picture -- photo of interior of new "lodge-style" unit at Piney Shores
Resort. Caption: "Lodge Getaway(TM) Interior -- Piney Shores Resort."

CAPTION: "SILVERLEAF RESORTS GROWTH STRATEGY

- -- Focus on "Drive-to" Economy Segment.

- -- Increase New Sales and Upgrade Sales at Existing Resorts.

- -- Add New "Drive-to" and Destination Resorts.

- -- Continue Margin Expansion Through Vertical Integration."

3
<PAGE> 6

CAPTION: "SILVERLEAF RESORTS, INC."

1. First Picture -- photo of people playing golf at golf course at Holiday
Hills Resort. Caption: "New Holiday Hills Resort 18-hole Golf Course --
Branson, Missouri."

2. Second Picture -- photo of spa facility at Ozark Mountain Resort.
Caption: "Wellness Center amenities at Ozark Mountain Resort -- Branson,
Missouri."

3. Third Picture -- photo of man and child with tennis racquet at Holly
Lake resort. Caption: "Learning Tennis at Holly Lake Ranch."

4. Fourth Picture -- photo of woman jet skiing on lake. Caption: "Jet
Skiing at The Villages."

<TABLE>
<CAPTION>
GRAPH: INDUSTRY REVENUES GRAPH: SILVERLEAF REVENUES GRAPH: SILVERLEAF EBITDA
- ------------------------ --------------------------- -------------------------
$ BILLIONS $ MILLIONS $ MILLIONS
<C> <C> <C> <C> <C> <C>
1985 1.6 1993 23.5 1993 5.1
1990 3.2 1994 27.2 1994 6.3
1995 4.8 1995 36.7 1995 7.5
1996E 5.7 1996 48.0 1996 14.4
</TABLE>

4
<PAGE> 7

SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data included
elsewhere in this Prospectus, including the Consolidated Financial Statements
and the notes thereto. Except as otherwise noted, all information in this
Prospectus assumes no exercise of the Underwriters' over-allotment option, and
all share information has been adjusted to give effect to a May 15, 1997 common
stock dividend to existing shareholders which resulted in a 719.97204 for one
increase in outstanding shares (the "Stock Split"). Unless otherwise indicated,
all timeshare industry data contained herein is derived from information
prepared by the American Resort Development Association ("ARDA"). This
Prospectus contains certain statements of a forward-looking nature relating to
future events or the future financial performance of the Company. In evaluating
such statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under the
caption "Risk Factors", which could cause actual results to differ materially
from those indicated in such forward-looking statements. Unless the context
otherwise indicates, the "Company" or "Silverleaf" means Silverleaf Resorts,
Inc., doing business as "Silverleaf Vacation Club, Inc.", and its subsidiaries.

THE COMPANY

The Company is a leading developer, marketer, and operator of timeshare
resorts in the economy segment of the timeshare industry. The Company currently
owns and operates five "drive-to" resorts in Texas (the "Drive-to Resorts") and
two "destination" resorts in Missouri (the "Destination Resorts"). The Drive-to
Resorts are designed to appeal to value conscious vacationers seeking
comfortable and affordable accommodations in locations convenient to their
residences. The Drive-to Resorts are located proximate to major metropolitan
areas (currently Dallas-Ft. Worth, Houston, San Antonio and Austin),
facilitating more frequent "short stay" getaways, which the Company believes is
a growing vacation trend. The Destination Resorts, which are located in the
popular resort area of Branson, Missouri, offer Silverleaf customers the
opportunity to upgrade into a higher quality destination resort area as their
lifestyles and travel budgets permit. Both the Drive-to Resorts and the
Destination Resorts (collectively, the "Existing Resorts") are in rustic areas
and provide a quiet, relaxing vacation environment. The Company believes its
combination of Drive-to and Destination Resorts offers its customers within the
"economy segment" an economical alternative to commercial vacation lodging. The
average price for an annual one-week vacation interval (a "Vacation Interval")
for a two-bedroom unit at the Existing Resorts was $6,799 in 1996 and $6,028 in
1995, which compares favorably to an industry average price of $12,014 for a
two-bedroom unit in 1995.

The Company offers benefits to owners of Silverleaf Vacation Intervals
("Silverleaf Owners") which are uncommon in the timeshare industry. These
benefits include (i) use of vacant lodging facilities at the Existing Resorts at
no extra cost through Silverleaf's "Endless Escape" program; (ii) year-round
access to the Existing Resorts' non-lodging amenities such as fishing, boating,
horseback riding, tennis or golf for little or no additional charge; and (iii)
the right of Silverleaf Owners to exchange their Vacation Interval for a
different time period or different Existing Resort through Silverleaf's internal
exchange program. The above benefits are subject to availability. Silverleaf
Owners also have the option of enrolling in the world's largest Vacation
Interval exchange network operated by Resort Condominiums International ("RCI").

Operations

Silverleaf's operations include (i) developing timeshare resorts; (ii)
marketing and selling Vacation Intervals to prospective first-time owners; (iii)
marketing and selling upgraded Vacation Intervals to existing Silverleaf Owners;
(iv) providing financing for the purchase of Vacation Intervals; and (v)
operating timeshare resorts. The Company has substantial in-house capabilities
which enable it to coordinate all aspects of expansion of the Existing Resorts
and the development of any new resorts, including site selection, design, and
construction pursuant to standardized plans and specifications. The Company also
performs substantially all marketing and sales functions internally and has made
a significant investment in operating technology, including sophisticated
telemarketing and computer systems and proprietary software applications. The
Company identifies potential purchasers through internally developed marketing
techniques, and sells Vacation Intervals through on-site sales offices located
at certain Drive-to Resorts. This practice allows the Company to avoid the more
expensive

5
<PAGE> 8

marketing costs of subsidized airfare and lodging which are typically associated
with the timeshare industry. The Company believes its marketing program and
operating systems enable it to market and sell Vacation Intervals at a lower
cost than its competitors in the timeshare industry.

During 1996, the Company sold 6,054 Vacation Intervals at the Existing
Resorts to new customers, compared to 4,831 and 3,705 during 1995 and 1994,
respectively. Total revenues for the same periods increased to $48.0 million in
1996 from $36.7 million and $27.2 million in 1995 and 1994, respectively. In the
first quarter of 1997, the Company sold 1,539 Vacation Intervals at the Existing
Resorts to new customers, compared to 1,419 in the first quarter of 1996. Total
revenues for the first quarter of 1997 were $15.3 million compared to $12.0
million for the first quarter of 1996. At March 31, 1997, the Company had an
existing inventory of 6,024 Vacation Intervals and a master plan to construct up
to 70,740 additional Vacation Intervals at the Existing Resorts, subject to
demand and contingencies applicable to real estate development. See "Risk
Factors -- Development, Construction and Property Acquisition Activities".

As part of the Vacation Interval sales process, the Company offers
potential purchasers financing of up to 90% of the purchase price over a seven
year period. The Company has historically financed its operations by borrowing
from third-party lending institutions at an advance rate of up to 70% of
customer receivables. At December 31, 1996, the Company had a portfolio of
approximately 15,796 customer promissory notes totalling approximately $66.8
million with an average yield of 14.7% per annum, which compares favorably to
the Company's weighted average cost of borrowings of 10.8% per annum. At
December 31, 1996, approximately $3.6 million in principal, or 5.9% of the
Company's loans to Silverleaf Owners, were 60 to 120 days past due, and
approximately $4.3 million in principal, or 7.2% of the Company's loans to
Silverleaf Owners, were more than 120 days past due. The Company provides for
uncollectible notes by reserving an amount which management believes is
sufficient to cover anticipated losses from customer defaults. In 1996 and 1995,
the Company's provision for uncollectible notes exceeded actual loan chargeoffs
by $2.0 million and $467,000, respectively. See "Risk Factors -- Borrower
Defaults", and "-- Financing Customer Borrowings".

Each Existing Resort has a timeshare owners' association (a "Club") which
has contracted with a centralized organization (referred to as the "Master
Club") to manage the Existing Resorts on a collective basis. The Master Club has
contracted with the Company to perform the supervisory, management and
maintenance functions at the Existing Resorts on a collective basis. All costs
of operating the Existing Resorts, including management fees to the Company, are
covered by monthly dues paid by Silverleaf Owners to their respective Clubs,
together with income generated by the operation of certain amenities at the
Existing Resorts. See "Business -- Clubs/Master Club".

Timeshare Industry

The timeshare industry has experienced substantial growth since 1980.
Annual worldwide timeshare sales have increased from approximately $490 million
in 1980 to approximately $5 billion in 1995. The Company believes that the
growth in the worldwide timeshare industry is due to (i) increased consumer
confidence resulting from consumer protection regulation of the timeshare
industry and the entrance of brand name national lodging companies into the
industry; (ii) increased flexibility of timeshare ownership due to the growth of
exchange organizations such as RCI; (iii) improvement in the quality and
management of timeshare resorts and related amenities; (iv) increased consumer
awareness of the value and benefits of timeshare ownership, including the cost
savings relative to other lodging alternatives; and (v) improved availability of
financing for purchasers of Vacation Intervals.

Growth Strategy

The Company believes it is the largest operator and developer in the
economy segment of the timeshare industry, and further believes this segment has
particularly attractive demographic and competitive characteristics. The Company
targets households with earnings between $25,000 and $50,000, which represented
30.2% of the U.S. population in 1995 based on a 1990 projection by the U.S.
Census Bureau; however, only 1% of these households owned a Vacation Interval.
The Company believes it is the only significant timeshare developer

6
<PAGE> 9

focused solely on this segment. See "Business -- Growth Strategy". The Company
intends to grow through the following strategies:

- Increasing Development and Sales of Vacation Intervals at Existing
Resorts. The Company intends to capitalize on its significant expansion
capacity at the Existing Resorts by increasing marketing, sales and
development activities. At March 31, 1997, the Company owned
approximately 3,900 acres of land at the Existing Resorts, including
approximately 3,046 acres which are unsuitable for further development
due to deed restrictions and allowances for lakes or waterways. After
deducting such unsuitable acreage and acreage developed by the Company
through March 31, 1997, approximately 579 acres remained available for
further development of timeshare units and amenities under the Company's
master plan. The Company has broadened its marketing efforts, increased
its sales force, completed (in certain instances) the construction of new
sales offices, and other amenities, and commenced the development of
newer lodging facilities. Furthermore, the Company has continued to
emphasize its Endless Escape program designed to accommodate shorter,
"getaway" vacations and has broadened its product offerings to include
biennial (alternate year) intervals and short-term leasing packages
("Samplers") which are designed to accommodate more cost-conscious
customers.

- Increasing Sales of Upgraded Intervals at Existing Resorts. The Company
has designed specific marketing and sales programs to sell upgraded
Vacation Intervals to Silverleaf Owners. Upgrades may include (i) an
interval in a newly designed and constructed standard unit; (ii) an
interval in a larger or higher quality unit; (iii) an interval during a
more desirable time period (week); (iv) an interval at a different
Drive-to Resort; (v) an interval at a Destination Resort; and (vi) the
purchase of an interval for an additional week by an existing Silverleaf
Owner. The Company generally develops higher quality, larger units for
sale as upgraded intervals. For example, at Ozark Mountain Resort in
Branson, Missouri, luxury "President's View" units are offered for sale
at prices ranging from $8,000 to $17,500 per Vacation Interval. The
Company is expanding the President's View units to other Existing
Resorts. See "Business -- Description of Existing Resorts". In 1996,
sales of upgraded intervals amounted to $7.9 million, or 16.4% of the
Company's total revenues. See "Business -- Growth Strategy".

- Development of New Resorts and Acquisitions. The Company believes there
is significant opportunity for development of new timeshare resorts with
characteristics similar to those of the Existing Resorts. The Company
plans to develop new Drive-to Resorts close to major metropolitan areas
and has recently entered into an agreement to acquire three parcels of
land, two of which are proximate to Chicago, Illinois, and St. Louis,
Missouri, which the Company plans to develop as new drive-to timeshare
resorts. See "Business -- Growth Strategy". The Company also presently
owns a tract of land in Mississippi which it plans to develop as a new
destination resort. See "Business -- Growth Strategy". In developing a
new resort, the Company will use its design, marketing, and sales
capabilities to complete and market such resorts in accordance with the
Company's standard criteria. In addition, the Company selectively
considers acquiring other resorts and timeshare companies where it
believes such acquisitions would be advantageous to its business. See
"Risk Factors -- Development, Construction and Property Acquisition
Activities".

- Improvement of Operating Margins. The Company believes it can increase
sales without significantly increasing general and administrative costs
by capitalizing on recent investments in its marketing and administrative
systems and personnel. See "Business -- Growth Strategy -- Improvement of
Operating Margins". The Company also believes it can improve margins by
selling upgraded Vacation Intervals to existing Silverleaf Owners since
sales of upgraded intervals have significantly lower sales and marketing
costs. In addition, as a public company, Silverleaf may be able to
achieve lower borrowing costs and a lower cost of capital, although there
can be no assurance that as a public company Silverleaf will be able to
achieve such lower borrowing costs and costs of capital.

7
<PAGE> 10

Competitive Advantages

The Company believes the following characteristics provide Silverleaf with
competitive advantages in operating within the economy segment of the timeshare
industry:

- Lower Marketing and Sales Costs. With convenient drive-to locations and
on-site sales offices at certain Drive-to Resorts, the Company can invite
potential customers to tour the Drive-to Resorts without offering
subsidized airline tickets and lodging, a significant marketing expense
typically incurred by competitors in the industry. The Company has also
reduced marketing, operating, and administrative costs through
centralization and automation of many functions at its Dallas, Texas
headquarters.

- Convenient Drive-to Locations. The Company's Drive-to Resorts are located
within a two-hour drive of the target customers' residences, which
accommodates the growing demand for shorter, more frequent, close to home
vacations. This proximity facilitates use of the Company's Endless Escape
program, which offers Silverleaf Owners up to six consecutive nights per
visit on an unlimited basis for no additional charge, subject to
availability and certain limitations. The Company believes it is the only
operator in the industry which offers its customers these benefits.
Silverleaf Owners can also conveniently enjoy non-lodging resort
amenities year-round.

- Substantial Internal Growth Capacity. At March 31, 1997, the Company had
an inventory of 6,024 Vacation Intervals and a master plan to construct
new units at the Existing Resorts which will result in up to 70,740
additional Vacation Intervals on land presently owned by the Company. The
Company is therefore less reliant on acquisitions and new development for
growth. See "Business -- Competitive Advantages -- Substantial Internal
Growth Capacity".

- In-House Operations. The Company has in-house marketing, sales,
financing, development, and property management capabilities. While the
Company utilizes outside contractors to supplement internal resources,
when appropriate, the breadth of the Company's internal capabilities
allows greater control over all phases of its operations and helps
maintain operating standards and reduce overall costs.

- Standard Design, Lower Construction and Operating Costs. The Company has
developed standard architectural designs and operating procedures which
the Company believes significantly reduce construction and operating
expenses at the Existing Resorts and should likewise reduce such expenses
at new resorts. Standardization and integration also allow the Company to
rapidly develop new inventory in response to demand. New units can
normally be constructed on an "as needed" basis in under 150 days.

- Centralized Property Management. The Company operates all of the Existing
Resorts on a centralized and collective basis, with operating and
maintenance costs paid from Silverleaf Owners' monthly dues. The Company
believes that consolidation of resort operations benefits Silverleaf
Owners by providing them with a uniform level of service, accommodations
and amenities on a standardized, cost-effective basis. Integration also
facilitates the Company's internal exchange program, the Endless Escape
program, and the Existing Resorts' qualification in the RCI exchange
program.
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<PAGE> 11

THE EXISTING RESORTS

The following table sets forth certain information regarding each of the
Existing Resorts at March 31, 1997, unless otherwise indicated.

<TABLE>
<CAPTION>
VACATION INTERVALS AT VACATION
UNITS AT RESORTS RESORTS INTERVALS SOLD(a)
------------------------ --------------------- -----------------
INVENTORY INVENTORY DATE IN
PRIMARY AT PLANNED AT PLANNED SALES THROUGH 1996
RESORT/LOCATION MARKET SERVED 3/31/97 EXPANSION(b) 3/31/97 EXPANSION COMMENCED 3/31/97 ONLY
--------------- -------------- --------- ------------ --------- --------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DRIVE-TO RESORTS
Holly Lake Dallas- 130 104 595 5,200(d) 1982 6,110 1,376
Hawkins, TX Ft. Worth, TX
The Villages Dallas- 204 388 560 20,176(e) 1980 9,929 1,970
Flint, TX Ft. Worth, TX
Lake O' The Woods Dallas- 64 16 114 800(d) 1987 3,199 821
Flint, TX Ft. Worth, TX
Piney Shores Houston, TX 96 304 1,184 15,808(e) 1988 3,809 1,139
Conroe, TX
Hill Country Austin-San 113 292(f) 790 14,600(d) 1984 4,990 644
Canyon Lake, TX Antonio, TX
DESTINATION RESORTS
Ozark Mountain Branson, MO 124 78 2,432 4,056(e) 1982 3,864 95
Kimberling City, MO
Holiday Hills Branson, MO 24 202 349 10,100(d) 1984 823 9
Branson, MO
--- ----- ----- ------ ------ -----
TOTAL 755 1,384 6,024 70,740 32,724 6,054
=== ===== ===== ====== ====== =====

AVERAGE
SALES
PRICE AMENITIES/
RESORT/LOCATION IN 1996(a) ACTIVITIES(c)
--------------- ---------- --------------
<S> <C> <C>
DRIVE-TO RESORTS
Holly Lake $ 6,097 B,F,G,H,
Hawkins, TX M,S,T
The Villages 6,336 B,F,H,
Flint, TX M,S,T
Lake O' The Woods 6,272 F,M,S,T
Flint, TX
Piney Shores 7,349 B,F,H,
Conroe, TX M,S,T
Hill Country 6,853 B,M,S,T(g)
Canyon Lake, TX
DESTINATION RESORTS
Ozark Mountain 13,887 B,F,H,
Kimberling City, MO M,S,T
Holiday Hills 11,999 B,F,G,H,
Branson, MO M,S,T(g)
-------
TOTAL $ 6,645
=======
</TABLE>

- ---------------

(a) These totals do not reflect sales of upgraded Vacation Intervals to
Silverleaf Owners. For 1996, upgrade sales at the Existing Resorts were as
follows:

<TABLE>
<CAPTION>
AVERAGE SALES
UPGRADED VACATION PRICE IN 1996 -- NET OF
RESORT INTERVALS SOLD EXCHANGED INTERVAL
------ ----------------- -----------------------
<S> <C> <C>
Holly Lake............................ 279 $4,195
The Villages.......................... 399 4,316
Lake O' The Woods..................... 125 4,303
Piney Shores.......................... 571 4,028
Hill Country.......................... 296 4,209
Ozark Mountain........................ 184 3,639
Holiday Hills......................... 60 3,760
------
1,914 $4,113
====== =======
</TABLE>

9
<PAGE> 12

(b) Represents units included in the Company's master plan. This plan is subject
to change based upon various factors, including consumer demand, the
availability of financing, grant of governmental permits, and future
land-planning and site layout considerations. The following chart reflects
the status of certain planned units:

<TABLE>
<CAPTION>
GOVT.
GOVT. APPROVAL GOVT. APPROVAL APPROVAL
SHELL CURRENTLY IN PROCESS PROCESS PROCESS
COMPLETE CONSTRUCTION COMPLETE PENDING NOT STARTED TOTAL
-------- ------------ -------------- -------------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Holly Lake................ 4 -- 50 -- 50 104
The Villages.............. -- 12 114 152 110 388
Lake O' The Woods......... -- -- 16 -- -- 16
Piney Shores.............. -- 12 64 120 108 304
Hill Country.............. 3 12 82 42 153(f) 292
Ozark Mountain............ 12 -- 30 -- 36 78
Holiday Hills............. 14 -- 118 -- 70 202
-- -- --- --- --- -----
33 36 474 314 527 1,384
== == === === === =====
</TABLE>

The 33 "Shell Complete" units are currently devoted to such uses as a
general store, registration office, sales office, activity center,
construction office, or pro shop. The Company anticipates that these units
will continue to be used for such purposes during 1997, except for three
units at Hill Country Resort which will be finished-out for sale as
Vacation Intervals.

"Governmental Approval Process Complete" means either that (i) the Company
believes that it has obtained all necessary authorizations under current
law from the applicable local governmental authority with jurisdiction,
including the approval and filing of any required preliminary or final plat
and the issuance of building permit(s), in each case to the extent
applicable, or (ii) upon payment of any required filing or other fees, the
Company believes that it will under current law obtain such necessary
authorizations without further process. See "Risk Factors -- Development,
Construction and Property Acquisition Activities".

"Governmental Approval Process Pending" means that the Company has
commenced the process which the Company believes is required under current
law in order to obtain the necessary authorizations from the applicable
local governmental authority with jurisdiction, including submitting for
approval any architectural drawings, preliminary plats or other attendant
items as may be required.

(c) Principal amenities available to Silverleaf Owners at each resort are
indicated by the following symbols: B -- boating; F -- fishing; G -- golf
course; H -- horseback riding; M -- miniature golf; S -- swimming pool; and
T -- tennis.

(d) These figures are based on 50 one-week intervals per unit. In some
instances, the Company may be able to market 52 one-week intervals per unit.

(e) These figures are based on 52 one-week intervals per unit.

(f) This figure includes 132 planned units on land which the Company has the
right to acquire in June 1997 pursuant to a written agreement.

(g) Boating is available near the resort.

10
<PAGE> 13

CORPORATE BACKGROUND

The Company was incorporated in Texas in 1989 and has been owned by and
operated primarily under the direction of Robert E. Mead. Mr. Mead has more than
17 years of experience in timeshare resort acquisition, development, and
operations, and since 1995 has served as a director of ARDA, the primary trade
association for the timeshare industry. See "Management -- Directors and
Executive Officers".

Through the Company, Mr. Mead consolidated in one entity all of the
timeshare assets and operations he previously owned through various partnerships
and corporations affiliated with Mr. Mead. In May 1989, a partnership, of which
the Company was the general partner, acquired the Existing Resorts from a now
dissolved corporation which was also owned and controlled by Mr. Mead. In
December 1995 (i) through a merger of the partnership into the Company, the
Existing Resorts were transferred to the Company, (ii) the Company acquired
additional assets of the now dissolved corporation subject to certain
indebtedness owing by such corporation to Mr. Mead and his affiliates; and (iii)
the Company acquired Condominium Builders, Inc. ("CBI") and certain assets from
Mr. Mead (all of the acquisition and merger transactions in (i), (ii) and (iii)
are collectively referred to herein as the "Consolidation Transactions"). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Relationships and Related Transactions". The affiliated
corporations and partnership whose assets were acquired by the Company through
the Consolidation Transactions are sometimes collectively referred to herein as
the "Affiliated Companies" or individually as an "Affiliated Company".

The Company does business under the name "Silverleaf Vacation Club, Inc."
The Company's principal executive offices are located at 1221 Riverbend Drive,
Suite 120, Dallas, Texas 75247. The Company's telephone number is (214)
631-1166.

THE OFFERING

<TABLE>
<S> <C>
Issuer.................................... Silverleaf Resorts, Inc.
Offering.................................. 3,500,000 shares(1)
Shares outstanding after the Offering..... 11,211,517 shares(1)(2)(3)
Use of proceeds........................... Substantially all of the net proceeds of the
Offering will be used to repay outstanding
indebtedness of the Company. Approximately $9.9
million of the proceeds will be used to repay
indebtedness owed to Mr. Mead and his affiliates.
Additionally, approximately $4.5 million of the
proceeds (or $5.2 million if the Underwriters'
over-allotment option is exercised in full) will be
used to repay indebtedness owed to an affiliate of
the lead managing Underwriter. See "Risk
Factors -- Repayment of Indebtedness Owed to
Officer and Affiliates", and "-- Repayment of
Indebtedness Owed to Affiliate of Underwriter" and
"Use of Proceeds".
Dividend policy........................... The Company does not expect to pay any dividends in
the foreseeable future. See "Dividend Policy".
Proposed NYSE symbol...................... "SVR"
</TABLE>

- ---------------

(1) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting".

(2) Does not include 1,100,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1997 Stock Option Plan (as defined). See
"Management -- 1997 Stock Option Plan".

(3) Mr. Mead and another officer of the Company will collectively own 7,711,517
shares of Common Stock after the Offering. See "Risk Factors -- Voting Control
by Existing Shareholder".

11
<PAGE> 14

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL, OPERATING AND
PRO FORMA FINANCIAL INFORMATION

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The summary consolidated historical financial information set forth below
has been derived from the consolidated financial statements of the Company which
have been restated giving effect to the Consolidation Transaction utilizing the
historical cost basis of the combined entities so as to present the consolidated
financial condition and operations since these entities were under common
ownership and control. The consolidated financial statements of the Company for
1995 and 1996 included herein were audited by Deloitte & Touche LLP. The
consolidated financial statements for 1994 included herein were audited by James
Smith & Company, P.C. The consolidated financial statements for 1992 and 1993
are unaudited. In the opinion of management of the Company, the data presented
for the three months ended March 31, 1996 and 1997, which are derived from the
Company's unaudited consolidated financial statements, reflects all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the financial position and results of operation for such periods. Results for
the three months ended March 31, 1997 are not necessarily indicative of results
for the entire fiscal year.

The unaudited pro forma income statement data for the three months ended
March 31, 1996 and 1997 and for the year ended December 31, 1996 gives effect to
the Offering and the application of the proceeds therefrom to the payment of all
amounts due to affiliates and payment of $35.1 million of notes payable to third
parties at the beginning of the period presented, subject to the assumptions
stated in the related notes. The unaudited as adjusted balance sheet data at
March 31, 1997 gives effect to the Offering and the application of the proceeds
therefrom to the payment of debt as of the last day of the period presented,
subject to the assumptions stated in the notes. The unaudited pro forma income
statement and balance sheet data is not necessarily indicative of what the
actual results of operations or financial position of the Company would have
been, nor do they purport to represent the Company's results of operations or
financial position for future periods.

The Summary Consolidated Historical Financial, Operating and Pro Forma
Financial Information should be read in conjunction with the Consolidated
Financial Statements and notes thereto included herein, "Selected Consolidated
Historical Financial, Operating and Pro Forma Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
12
<PAGE> 15

<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Vacation Interval sales.......... $ 13,987 $ 19,607 $ 25,843 $ 35,885 $ 48,103 $ 12,590 $ 15,771
Less provision for uncollectible
notes.......................... (2,693) (3,249) (6,014) (9,144) (12,075) (3,243) (3,849)
---------- ---------- ---------- ---------- ---------- ----------- -----------
Net Vacation Interval sales:....... 11,294 16,358 19,829 26,741 36,028 9,347 11,922
Interest income.................. 542 1,029 1,633 3,968 6,297 1,312 1,933
Interest income from
affiliates..................... -- 70 252 393 377 128 107
Management fee income............ 2,265 3,613 2,394 2,478 2,187 552 499
Lease income..................... 428 512 1,137 1,310 1,717 456 485
Other income..................... 1,813 1,964 1,932 1,832 1,440 245 399
---------- ---------- ---------- ---------- ---------- ----------- -----------
Total revenues............. 16,342 23,546 27,177 36,722 48,046 12,040 15,345
Costs and Operating Expenses:
Cost of Vacation Interval
sales.......................... 3,876 2,094 2,648 3,280 2,805 224 1,221
Sales and marketing.............. 7,690 10,219 12,929 17,850 21,839 5,040 5,949
Operating, general and
administrative................. 2,475 6,109 5,336 8,062 8,970 2,343 1,945
Depreciation and amortization.... 288 477 590 863 1,264 277 331
Interest expense to affiliates... 383 664 885 1,403 880 228 225
Interest expense to unaffiliated
entities....................... 1,318 762 757 2,206 3,879 828 1,461
---------- ---------- ---------- ---------- ---------- ----------- -----------
Total costs and operating
expenses................. 16,030 20,325 23,145 33,664 39,637 8,940 11,132
---------- ---------- ---------- ---------- ---------- ----------- -----------
Income from continuing operations
before income taxes.............. 312 3,221 4,032 3,058 8,409 3,100 4,213
Income tax expense................. 266 1,376 1,677 1,512 3,140 1,156 1,559
---------- ---------- ---------- ---------- ---------- ----------- -----------
Income from continuing
operations....................... 46 1,845 2,355 1,546 5,269 $ 1,944 2,654
Income (loss) on discontinued
operations....................... -- (286) 568 (1,484) (295) (95) --
---------- ---------- ---------- ---------- ---------- ----------- -----------
Net income......................... $ 46 $ 1,559 $ 2,923 $ 62 $ 4,974 $ 1,849 $ 2,654
========== ========== ========== ========== ========== =========== ===========
Income per common share from:(b)...
Continuing operations............ $ 0.00 $ 0.24 $ 0.31 $ 0.20 $ 0.68 $ 0.25 $ 0.34
Discontinued operations.......... -- (0.03) 0.08 (0.19) (0.04) (0.01) --
---------- ---------- ---------- ---------- ---------- ----------- -----------
Net income per common share........ $ 0.00 $ 0.21 $ 0.39 $ 0.01 $ 0.64 $ 0.24 $ 0.34
========== ========== ========== ========== ========== =========== ===========
Weighted average number of shares
outstanding...................... 7,588,952 7,588,952 7,588,952 7,590,295 7,711,517 7,711,517 7,711,517
========== ========== ========== ========== ========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT AVERAGE PRICE OF VACATION INTERVALS SOLD)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
EBITDA(c)...................................... $ 2,301 $ 5,124 $ 6,264 $ 7,530 $ 14,432 $ 4,433 $ 6,230
Cash flows provided by (used in):
Operating activities......................... $ 1,672 $ 5,711 $ 2,496 $ 3,713 $ 6,375 3,443 2,747
Investing activities......................... (4,266) (6,121) (12,189) (19,604) (23,997) (6,199) (7,028)
Financing activities......................... 422 378 10,424 18,674 14,882 819 4,430
OPERATING DATA:
Number of Existing Resorts at period end....... 7 7 7 7 7 7 7
Number of Vacation Intervals sold (excluding
upgrades).................................... 1,983 2,582 3,705 4,831 6,054 1,419 1,539
Number of upgraded Vacation Intervals sold..... 884 1,378 1,290 1,921 1,914 440 860
Number of Vacation Intervals in inventory...... 7,218 5,615 5,943 6,600 6,732 6,172 6,024
Average price of Vacation Intervals sold
(excluding upgrades)(a)...................... $ 5,293 $ 5,554 $ 5,727 $ 5,881 $ 6,645 $ 6,605 $ 7,832
Average price of upgraded Vacation Intervals
sold (net of exchanged interval)............. $ 3,949 $ 3,822 $ 3,585 $ 3,885 $ 4,113 $ 4,041 $ 4,331
Average price of all Vacation Intervals sold
(including upgrades)......................... $ 7,054 $ 7,594 $ 6,975 $ 7,428 $ 7,946 $ 7,858 $ 10,254
</TABLE>

- ---------------

(a) Includes one and two bedroom units.

13
<PAGE> 16

SUMMARY PROFORMA FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PROFORMA(A)
------------------------------------------
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, --------------------------
1996 1996 1997
------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Vacation Interval sales............... $ 48,103 $ 12,590 $ 15,771
Less provision for uncollectible
notes............................... (12,075) (3,243) (3,849)
----------- ----------- -----------
Net Vacation Interval sales........... 36,028 9,347 11,922
Interest income....................... 6,297 1,312 1,933
Interest income from affiliates....... -- -- --
Management fee income................. 2,187 552 499
Lease income.......................... 1,717 456 485
Other income.......................... 1,440 245 399
----------- ----------- -----------
Total revenues................. 47,669 11,912 15,238
Costs and Operating Expenses:
Cost of Vacation Interval sales....... 2,805 224 1,221
Sales and marketing................... 21,839 5,040 5,949
Operating, general and
administrative...................... 9,720 2,531 2,133
Depreciation and amortization......... 1,264 277 331
Interest expense to affiliates........ -- -- --
Interest expense to unaffiliated
entities............................ 201 22 236
----------- ----------- -----------
Total costs and operating
expenses..................... 35,829 8,094 9,870
----------- ----------- -----------
Income from continuing operations before
income taxes.......................... 11,840 3,818 5,368
Income tax expense...................... 4,416 1,424 1,986
----------- ----------- -----------
Income from continuing operations....... $ 7,424 $ 2,394 $ 3,382
=========== =========== ===========
Income per common share from continuing
operations:(b)........................ $ 0.71 $ 0.24 $ 0.30
=========== =========== ===========
Weighted average number of shares
outstanding........................... 10,483,168 10,161,933 11,211,517
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------------
HISTORICAL AS ADJUSTED(D)
---------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (at end of period):
Cash and cash equivalents........................ $ 1,121 $ 1,121
Amounts due from affiliates...................... 6,494 1,667
Total assets..................................... 99,714 94,887
Amounts due to affiliates........................ 14,747 --
Notes payable and capital lease obligations...... 46,690 11,560
Total liabilities................................ 76,397 26,520
Shareholders' equity............................. 23,317 68,367
</TABLE>

- ---------------

(a) Assumes (i) the sale of 3,500,000 shares of Common Stock offered hereby at
an offering price of $14.50 per share, in the aggregate $50.7 million, less
the underwriting discounts and commissions and the payment by the Company of
the estimated offering expenses of $5.7 million; (ii) payment of all amounts
due to affiliates net of amounts due from affiliates and elimination of the
related interest; (iii) payment of $35.1 million of notes payable to third
parties and elimination of the related interest expense; (iv) estimated
annual additional costs to be incurred as a public company of $750,000; and
(v) adjustment of the provision for income taxes for the effect of these pro
forma adjustments.

(b) Gives retroactive effect to the pro forma Stock Split and increase in the
number of shares outstanding to 11,211,517 million Common Shares at period
end.

(c) As shown below, EBITDA represents net income from continuing operations
before interest expense, income taxes and depreciation and amortization.
EBITDA is presented because it is a widely accepted indicator of a company's
financial performance. However, EBITDA should not be construed as an
alternative to net income as a measure of the Company's operating results or
to cash flows from operating activities (determined in accordance with
generally accepted accounting principles) as a measure of liquidity. Since
revenues from Vacation Interval sales include promissory notes received by
the Company, EBITDA does not reflect cash

14
<PAGE> 17

flow available to the Company. The Company's management interprets trends in
EBITDA to be an indicator of the Company's financial performance, in
addition to net income and cash flows from operating activities (determined
in accordance with generally accepted accounting principles). The following
table reconciles EBITDA to net income from continuing operations:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income from continuing operations... $ 46 $1,845 $2,355 $1,546 $ 5,269 $1,944 $2,654
Interest expense........................ 1,701 1,426 1,642 3,609 4,759 1,056 1,686
Income tax expense...................... 266 1,376 1,677 1,512 3,140 1,156 1,559
Depreciation and amortization........... 288 477 590 863 1,264 277 331
------ ------ ------ ------ ------- ------ ------
EBITDA from continuing operations....... $2,301 $5,124 $6,264 $7,530 $14,432 $4,433 $6,230
====== ====== ====== ====== ======= ====== ======
</TABLE>

(d) As adjusted to give effect to the Offering and the application of the
proceeds therefrom as described in Note (a) as if the Offering and
application of the proceeds therefrom occurred at period end.

15
<PAGE> 18

RISK FACTORS

Prospective investors should carefully consider the following information
in conjunction with the other information contained in this Prospectus before
purchasing any of the shares of Common Stock offered hereby.

SENSITIVITY OF CUSTOMERS TO GENERAL ECONOMIC CONDITIONS

The Company focuses exclusively on the economy segment of the timeshare
industry and markets primarily to households with annual incomes between $25,000
and $50,000. The Company's targeted customers are generally more vulnerable to
deteriorating economic conditions than consumers in the luxury or upscale
markets. Any economic downturn could depress spending for Vacation Intervals,
limit the availability or increase the cost of financing for the Company and its
customers, and adversely affect the collectibility of the Company's loans to
Vacation Interval buyers. During past economic slowdowns and recessions,
Affiliated Companies experienced increased delinquencies in the payment of
Vacation Interval promissory notes and monthly Club dues and consequent
increased foreclosures and loan losses. During any future economic slowdown or
recession, the Company projects that increased delinquencies, foreclosures, and
loan losses are likely to occur. Similar adverse consequences could result from
significant increases in transportation costs. Any or all of the foregoing could
have a material adverse effect on the Company's results of operations, liquidity
and financial position.

LEVERAGE

The Company's future lending and development activities will likely be
financed with indebtedness obtained under the Company's existing credit
facilities or under credit facilities to be obtained by the Company in the
future. Such credit facilities are and would likely be collateralized by Company
assets and contain restrictive covenants. Among other consequences, terms of the
Company's debt instruments could impair the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, significant business opportunities that may arise, general
corporate purposes or other purposes. In addition, if the Company were to incur
additional indebtedness, this could increase its vulnerability to adverse
general economic and timeshare industry conditions and to increased competitive
pressures. Finally, creditors' claims against the Company will be paid in full
before the claims of shareholders in the event of a liquidation, bankruptcy or
winding up of the Company. Historically and currently at March 31, 1997, after
taking into account the amount of ineligible collateral and the 70% borrowing
base, the Company's borrowings have approached the maximum amount available
under its existing credit facilities. However, to the extent the Company
continues to generate additional customer notes receivable through its sales
efforts, such notes may be pledged to lenders under existing credit facilities
for additional borrowings, subject to the 70% advance rate. See "-- Financing
Customer Borrowings -- Borrowing Base, Business -- Existing Credit Facilities".

BORROWER DEFAULTS

The Company offers financing to the buyers of Vacation Intervals at the
Company's resorts. These buyers make a down payment of at least 10% of the
purchase price and deliver a promissory note to the Company for the balance; the
promissory notes generally bear interest at a fixed rate, are payable over a
seven year period, and are secured by a first mortgage on the Vacation Interval.
The Company bears the risk of defaults on these promissory notes, and this risk
is heightened inasmuch as the Company generally does not verify the credit
history of its customers and will provide financing if the customer is presently
employed and meets certain household income criteria.

16
<PAGE> 19

proceeding to determine the fair market value of the property foreclosed upon.
In such event, the Company may not recover a personal judgment against the
customer for the full amount of the deficiency, but may recover only to the
extent that the indebtedness owed to the Company exceeds the fair market value
of the property. Accordingly, the Company has generally not pursued this remedy.

Prior to 1996, the Company sold customer promissory notes and mortgages to
third parties, generally with recourse, as a means of financing its operations.
As a result, the Company may be required to repurchase customer promissory notes
previously sold which become delinquent. The Company takes these contingent
obligations into account in establishing its allowance for uncollectible notes.
At December 31, 1996, the Company had notes receivable (including notes
unrelated to Vacation Intervals) in the approximate principal amount of $67.7
million, was contingently liable with respect to approximately $11.0 million
principal amount of customer notes sold with recourse and had an allowance for
doubtful notes of approximately $11.9 million. There can be no assurance that
such reserves are adequate. See Note 4 of Notes to Consolidated Financial
Statements.

FINANCING CUSTOMER BORROWINGS

While the Company intends to use the proceeds of the Offering to pay off
approximately $45.0 million of existing indebtedness, it will be required to
continue to borrow to sustain operations.

Borrowing Base. The Company has entered into agreements with lenders to
borrow up to approximately $96 million collateralized by customer promissory
notes and mortgages. The Company's lenders typically lend the Company 70% of the
principal amount of performing notes, and Silverleaf Owners make payments on
their promissory notes directly to the lender's collection center, where
receipts are applied against the Company's loan balance. At December 31, 1996,
the Company had a portfolio of approximately 15,796 customer promissory notes in
the approximate principal amount of $66.8 million, of which approximately $7.9
million in principal amount of customer receivables were 60 days or more past
due and therefore ineligible as collateral. At such date, the Company had
borrowings from lenders in the approximate principal amount of $34.7 million
secured by the customer loans. Historically and currently, after taking into
account the amount of ineligible collateral and the 70% borrowing base, the
Company's borrowings have approached the maximum amount available under its
existing credit facilities. To the extent the Company generates additional
customer notes receivable through its sales efforts, such notes may be pledged
to lenders for additional borrowings, subject to the 70% advance rate.

Negative Cash Flow. The Company ordinarily receives only 10% of the
purchase price on the sale of a Vacation Interval but must pay in full the costs
of development, marketing, and sale of the interval. Maximum borrowings
available under the Company's current credit agreements may not be sufficient to
cover these costs, thereby straining capital resources, liquidity, and capacity
to grow.

Interest Rate Mismatch. At December 31, 1996, the Company's portfolio of
customer loans had a weighted average fixed interest rate of 14.7%. At such
date, the Company's borrowings (which bear interest at variable rates) against
the portfolio had a weighted average cost of funds of 10.8%. The Company has
historically derived net interest income from its financing activities because
the interest rates it charges its customers who finance the purchase of their
Vacation Intervals exceed the interest rates the Company pays to its lenders.
Because the Company's indebtedness bears interest at variable rates and the
Company's customer receivables bear interest at fixed rates, increases in
interest rates will erode the spread in interest rates that the Company has
historically enjoyed and could cause the interest expense on the Company's
borrowings to exceed its interest income on its portfolio of customer loans. The
Company does not currently engage in interest rate hedging transactions.
Therefore, any increase in interest rates, particularly if sustained, could have
a material adverse effect on the Company's results of operations, liquidity and
financial position.

To the extent interest rates decrease generally on loans available to the
Company's customers, the Company faces an increased risk that customers will
pre-pay their loans and reduce the Company's income from financing activities.
See "Business -- Customer Financing".

Maturity Mismatch. The Company typically provides financing to customers
over a seven year period which customer notes have an average maturity of 5.6
years. The Company's related revolving credit borrowings, however, mature
between October 1998 and August 2003, with most of such borrowings maturing in
1999. Accordingly, there is a mismatch between the Company's anticipated cash
receipts and cash disbursements.

17
<PAGE> 20

Although the Company has historically been able to secure financing sufficient
to fund its operations, it does not presently have agreements with its lenders
to extend the term of its existing funding commitments or to replace such
commitments upon their expiration. Failure to obtain such refinancing facilities
could require the Company to sell its portfolio of customer loans, probably at a
substantial discount, or to seek other alternatives to enable it to continue in
business. While the Company has been successful in obtaining financing to date,
there is no assurance it will be able to do so in the future. See
"-- Acceleration of Deferred Taxes; Alternative Minimum Taxes".

Impact on Sales. Limitations on the availability of financing would inhibit
sales of Vacation Intervals due to (i) the lack of funds to finance the initial
negative cash flow that results from sales that are financed by the Company, and
(ii) reduced demand if the Company is unable to provide financing to purchasers
of Vacation Intervals.

REPAYMENT OF INDEBTEDNESS OWED TO OFFICER AND AFFILIATES

Mr. Mead will realize benefits from the Offering that will not be received
by other persons participating in the Offering. Such benefits include the
repayment by the Company of indebtedness owed to Mr. Mead and his affiliates.
Thus, Mr. Mead has interests that conflict with the interests of persons
acquiring Common Stock in the Offering. Mr. Mead and his affiliates will receive
approximately $9.9 million of the net proceeds of the Offering for the repayment
of debt owed by the Company to him and his affiliates. See "Certain
Relationships and Related Transactions -- Repayment of Affiliated Debt",
"Principal Shareholders", and "Management -- Employment and Noncompetition
Agreements".

REGULATION OF MARKETING AND SALES OF VACATION INTERVALS AND RELATED LAWS

The Company's marketing and sales of Vacation Intervals and other
operations are subject to extensive regulation by the federal government and the
states and jurisdictions in which the Existing Resorts are located and in which
Vacation Intervals are marketed and sold. On a federal level, the Federal Trade
Commission has taken the most active regulatory role through the Federal Trade
Commission Act, which prohibits unfair or deceptive acts or competition in
interstate commerce. Other federal legislation to which the Company is or may be
subject includes the Truth-in-Lending Act and Regulation Z, the Equal
Opportunity Credit Act and Regulation B, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Telephone Consumer Protection Act, the Telemarketing and
Consumer Fraud and Abuse Prevention Act, the Fair Housing Act and the Civil
Rights Acts of 1964 and 1968.

In addition, many states, including Texas and Missouri (the only states in
which the Company currently owns resorts), have adopted specific laws and
regulations regarding the sale of Vacation Interval ownership programs. The laws
of most states, including Texas, require the Company to file with a designated
state authority for its approval a detailed offering statement describing the
Company and all material aspects of the project and the sale of Vacation
Intervals prior to selling to residents of that state. The laws of these states
require the Company to file numerous documents and supporting information with
the state agency responsible for the regulation of Vacation Intervals. When the
agency determines that a project may be sold, it will issue a public report for
the project. The Company is required to deliver an offering statement or public
report to all prospective purchasers of a Vacation Interval who are Texas
residents, together with certain additional information concerning the terms of
the purchase, regardless of whether the resort is located in Texas. In Missouri,
the Company is required to make certain disclosures in its sales documents. Laws
in each state where the Company currently sells Vacation Intervals generally
grant the purchaser of a Vacation Interval the right to cancel a contract of
purchase at any time within approximately five calendar days following the date
the contract was signed by the purchaser. Most states have other laws which
regulate the Company's activities and protect purchasers, such as real estate
licensure laws; travel sales licensure laws; anti-fraud laws; consumer
protection laws; telemarketing laws; prize, gift and sweepstakes laws; and other
related laws.

The Company believes it is in material compliance with federal, Texas, and
Missouri laws and regulations to which it is currently subject relating to the
sale and marketing of timeshare resorts. However, the Company is normally and
currently the subject of a number of consumer complaints generally relating to
marketing or sales

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<PAGE> 21

practices filed with relevant authorities, and there can be no assurance that
all of these complaints can be resolved without adverse regulatory actions or
other consequences. The Company expects some level of consumer complaints in the
ordinary course of its business as the Company targets audiences which generally
are less financially sophisticated and more susceptible to intensive sales
practices than more affluent customers. There can be no assurance that the costs
of resolving consumer complaints or of qualifying under Vacation Interval
ownership regulations in all jurisdictions in which the Company desires to
conduct sales will not be significant, that the Company is in material
compliance with applicable federal, Texas, Missouri, or other laws and
regulations, or that violations of law will not have adverse implications for
the Company, including negative public relations, potential litigation, and
regulatory sanctions. The expense, negative publicity, and potential sanctions
associated with the failure to comply with applicable laws or regulations could
have a material adverse effect on the Company's results of operations,
liquidity, or financial position. See "Business -- Governmental Regulation".

During the 1980's and to a lesser extent continuing through the present,
the timeshare industry has been and continues to be afflicted with negative
publicity and prosecutorial attention due, among other things, to marketing
practices which were widely viewed as deceptive or fraudulent. Among the many
timeshare companies which have been the subject of federal, state and local
enforcement actions and investigations were certain of the Affiliated Companies
and their affiliates. Some of the settlements, injunctions and decrees resulting
from litigation and enforcement actions (the "Orders") to which certain of the
Affiliated Companies consented purport to bind all successors and assigns, and
accordingly bind the Company. In addition, the Company was directly a party to
one such Order issued in Missouri. No past or present officers, directors or
employees of the Company or any Affiliated Company were named as subjects or
respondents in any of these Orders; however, each Order purports to bind
generically unnamed "officers, directors and employees" of certain Affiliated
Companies. Therefore, certain of these Orders may be interpreted to be
enforceable against the present officers, directors and employees of the Company
even though they were not individually named as subjects of the enforcement
actions which resulted in these Orders. These Orders require, among other
things, that all parties bound by the Orders, including the Company, refrain
from engaging in deceptive sales practices in connection with the offer and sale
of Vacation Intervals. In one case in 1988, an Affiliated Company pled guilty to
deceptive uses of the mails in connection with promotional sales literature
mailed to prospective timeshare purchasers and agreed to pay a judicially
imposed fine of $1.5 million and restitution of $100,000. The requirements of
the Orders are substantially what applicable state and federal laws and
regulation mandate, but the consequence of violating the Order may be that
sanctions (including possible financial penalties and suspension or loss of
licensure) may be imposed more summarily and may be harsher than would be the
case if the Orders did not bind the Company. In addition, the existence of the
Orders may be viewed negatively by prospective regulators in jurisdictions where
the Company does not now do business, with attendant risks of increased costs
and reduced opportunities.

In response to the fraudulent marketing practices which plagued the
timeshare industry in the 1980's, in the late 1980's and early 1990's, various
states enacted legislation aimed at curbing such abuses. While the Company
believes that such legislation has remedied many of the industry's past
problems, the Company believes abuses in the timeshare industry continue, albeit
on a much lower scale. Recently, the Company has been the subject of some
consumer complaints which have triggered governmental investigations into the
Company's affairs. In March 1997, the Company entered into an Assurance of
Voluntary Compliance with the Texas Attorney General, in which the Company
agreed to make additional disclosure to purchasers of Vacation Intervals
regarding the limited availability of its Endless Escape program during certain
periods. The Company paid $15,200 for investigatory costs and attorneys' fees of
the Attorney General in connection with this matter. Also, in March 1997, the
Company entered into an agreed order (the "Agreed Order") with the Texas Real
Estate Commission requiring the Company to comply with certain aspects of the
Texas Timeshare Act, Texas Real Estate License Act and Rules of the Texas Real
Estate Commission, with which it had allegedly been in non-compliance until mid-
1995. The allegations included (i) the Company's admitted failure to register
the Missouri Destination Resorts in Texas (due to its misunderstanding of the
reach of the Texas Timeshare Act); (ii) payment of referral fees for Vacation
Interval sales, the receipt of which was improper on the part of the recipients;
and (iii) miscellaneous other actions alleged to violate the Texas Timeshare
Act, which the Company denied. While the Agreed Order acknowledges that
Silverleaf independently resolved ten consumer complaints referenced in the
Agreed Order, discontinued the practices complained of, and had registered the
Destination Resorts during 1995 and 1996, the

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<PAGE> 22

Texas Real Estate Commission ordered Silverleaf to cease its discontinued
practices and enhance its disclosure to purchasers of Vacation Intervals. In the
Agreed Order, Silverleaf agreed to make a voluntary donation of $30,000 to the
State of Texas. The Agreed Order also directs Silverleaf to revise its training
manual for timeshare salespersons and verification officers. The Agreed Order
resolved all of the alleged violations contained in complaints received by the
Texas Real Estate Commission through December 31, 1996. See "Business --
Governmental Regulation".

CONCENTRATION IN TIMESHARE INDUSTRY

Because the Company's operations are conducted solely within the timeshare
industry, any adverse changes affecting the timeshare industry such as an
oversupply of timeshare units, a reduction in demand for timeshare units,
changes in travel and vacation patterns, changes in governmental regulations or
taxation of the timeshare industry, as well as negative publicity about the
timeshare industry, could have a material adverse effect on the Company's
results of operations, liquidity or financial position. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

COMPETITION

The timeshare industry is highly fragmented and includes a large number of
local and regional resort developers and operators. However, some of the world's
most recognized lodging, hospitality and entertainment companies, such as,
Marriott Ownership Resorts ("Marriott"), The Walt Disney Company ("Disney"),
Hilton Hotels Corporation ("Hilton") and Hyatt Corporation ("Hyatt"), have
recently entered the industry. Other companies in the timeshare industry,
including Signature Resorts, Inc. ("Signature"), Fairfield Communities, Inc.
("Fairfield"), Vacation Break USA, Inc. ("Vacation Break"), Vistana, Inc.
("Vistana") and Ramada Vacation Suites ("Ramada"), a subsidiary of Mego
Financial Corporation, are public companies with enhanced access to capital and
other resources.

Fairfield and Signature own timeshare resorts in or near Branson, Missouri,
which compete with the Company's Holiday Hills and Ozark Mountain Resorts, and
Signature owns a resort which is located near and competes with the Company's
Piney Shores Resort. Based on published industry data and reports, except for
Fairfield and Signature, the Company does not believe that any of the
competitors named above own timeshare resorts in Texas or Missouri and believes
that such competitors generally target consumers with higher annual incomes than
the Company. Nonetheless, competitors may possess significantly greater
financial, marketing, personnel and other resources than the Company, and there
can be no assurance that such competitors will not significantly reduce the
price of their Vacation Intervals or offer greater convenience, services or
amenities than the Company.

While the Company's principal competitors are developers of timeshare
resorts, the Company is also subject to competition from other entities engaged
in the commercial lodging business, including condominiums, hotels and motels;
others engaged in the leisure business; and, to a lesser extent, from
campgrounds, recreational vehicles, tour packages and second home sales. A
reduction in the product costs associated with any of these competitors, or an
increase in the Company's costs relative to such competitors' costs, could have
a material adverse effect on the Company's results of operations, liquidity and
financial position.

Numerous businesses, individuals and other entities will compete with the
Company in seeking properties for development and acquisition of resorts. Some
of these competitors will be larger and have greater financial resources than
the Company. Such competition may result in a higher cost for properties the
Company wishes to acquire or may cause the Company to be unable to acquire
suitable properties for the development of new resorts.

DEVELOPMENT, CONSTRUCTION AND PROPERTY ACQUISITION ACTIVITIES

The Company intends to selectively develop and acquire new resorts and
continue the expansion of the Existing Resorts. Acquiring and developing new
resorts will place substantial demands on the Company's liquidity and capital
resources, as well as on its personnel and administrative capabilities. Risks
associated with the Company's development and construction activities include
the following: construction costs or delays at a property may exceed original
estimates, possibly making the expansion or development uneconomical or

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<PAGE> 23

unprofitable; sales of Vacation Intervals at a newly completed property may not
be sufficient to make the property profitable; and financing may be unavailable
or may not be available on favorable terms for development of, or the continued
sales of Vacation Intervals at, a property. The Company projects that its
planned expansion at the Existing Resorts alone will cost in excess of $100
million. Additionally, the Company currently projects that it will cost in
excess of $47.6 million to acquire and fully develop its planned new drive-to
resorts in Missouri and Illinois. The Company also has plans to develop a tract
of land it currently owns in Mississippi as a new destination resort at an
estimated cost of $4.5 million. There can be no assurance the Company will
develop and acquire new resorts or expand the Existing Resorts. The Company does
not and upon the consummation of the Offering will not have the financing
available to complete all of its planned expansion as set forth in "Business --
Summary of the Company's Resorts, -- Growth Strategy -- Development of New
Resorts and Acquisitions".

In addition, the Company's development and construction activities, as well
as its ownership and management of real estate, are subject to comprehensive
federal, state and local laws regulating such matters as environmental and
health concerns, protection of endangered species, water supplies, zoning, land
development, land use, building design and construction, marketing and sales,
and other matters. Such laws and difficulties in obtaining, or failing to
obtain, the requisite licenses, permits, allocations, authorizations and other
entitlements pursuant to such laws could impact the development, completion, and
sale of the Company's projects. See "-- Regulation of Marketing and Sales or
Vacation Intervals and Related Laws". The enactment of "slow growth" or
"no-growth" initiatives or changes in labor or other laws in any area where the
Company's projects are located could also delay, affect the cost or feasibility
of, or preclude entirely the expansion planned at each of the Existing Resorts
or the development of other resorts.

The Company's resorts are located in rural areas, often requiring the
Company to provide public utility water and sanitation services in order to
proceed with development. Such activities are subject to permission and
regulation by governmental agencies, the denial or conditioning of which could
limit or preclude development. Operation of the utilities also subjects the
Company to risk of liability in connection with both the quality of fresh water
provided and the treatment and discharge of waste-water. See
"Business -- Government Regulation".

While the Company's construction activities typically are performed by
third-party contractors whose performance cannot be assured by the Company,
construction claims may be asserted against the Company for construction defects
and such claims may give rise to liabilities. Certain state and local laws may
impose liability on property developers with respect to construction defects
discovered or repairs made by future owners of such property.

See "Business -- Business Strategy" and "-- Acquisition and Development
Process", "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a large extent upon the experience and
abilities of Mr. Mead, Sharon K. Brayfield, and David T. O'Connor, the Company's
Chief Executive Officer, President, and Executive Vice President -- Sales,
respectively. The loss of the services of any one of these key individuals could
have a material adverse effect on the Company's results of operations, liquidity
or financial position. See "Management -- Employment and Noncompetition
Agreements". The Company's success is also dependent upon its ability to attract
and maintain qualified acquisition, development, marketing, management,
administrative and sales personnel. The ability to attract such personnel will
become particularly important as the Company grows and develops additional
resorts, and there can be no assurance that the Company will be successful in
attracting and/or retaining such personnel.

COSTS OF COMPLIANCE WITH LAWS GOVERNING ACCESSIBILITY OF FACILITIES TO DISABLED
PERSONS

A number of state and federal laws, including the Fair Housing Act and the
Americans with Disabilities Act (the "ADA"), impose requirements related to
access and use by disabled persons of a variety of public accommodations and
facilities. The ADA requirements did not become effective until after January 1,
1991. Although the Company believes the Existing Resorts are substantially in
compliance with laws governing the accessibility of its facilities to disabled
persons, the Company will incur additional costs of complying with such

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<PAGE> 24

laws. Additional federal, state and local legislation may impose further burdens
or restrictions on the Company, the Clubs, or the Master Club at the Existing
Resorts with respect to access by disabled persons. The ultimate cost of
compliance with such legislation is not currently ascertainable, and, while such
costs are not expected to have a material effect on the Company's results of
operations, liquidity or capital resources, such costs could be substantial.

GEOGRAPHIC CONCENTRATION WITHIN TEXAS AND MISSOURI

At March 31, 1997, all of the Company's resorts and substantially all of
the Company's customers and borrowers were located in Texas and Missouri. The
Company's performance and the value of its properties is affected by regional
factors, including local economic conditions (which may be adversely impacted by
business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and the local regulatory climate. The Company's current
concentration in the Texas and Missouri markets could make the Company more
susceptible to adverse events or conditions which affect these areas in
particular.

POSSIBLE ENVIRONMENTAL LIABILITIES

Under various federal, state and local laws, ordinances and regulations, as
well as common law, the owner or operator of real property generally is liable
for the costs of removal or remediation of certain hazardous or toxic substances
located on, in, or emanating from, such property, as well as related costs of
investigation and property damage. Such laws often impose liability without
regard to whether the owner knew of, or was responsible for, the presence of the
hazardous or toxic substances. The presence of such substances, or the failure
to properly remediate such substances, may adversely affect the owner's ability
to sell or lease a property or to borrow money using such real property as
collateral. Other federal and state laws require the removal or encapsulation of
asbestos-containing material when such material is in poor condition or in the
event of construction, demolition, remodeling or renovation. Other statutes may
require the removal of underground storage tanks. Noncompliance with these and
other environmental, health or safety requirements may result in the need to
cease or alter operations at a property. Further, the owner or operator of a
site may be subject to common law claims by third parties based on damages and
costs resulting from violations of environmental regulations or from
contamination associated with the site. Phase I environmental reports (which
typically involve inspection without soil sampling or ground water analysis)
were prepared in 1994 by independent environmental consultants for each Existing
Resort and did not reveal, nor is the Company aware of, any environmental
liability that would have, a material adverse effect on the Company's results of
operations, liquidity or financial position. No assurance, however, can be given
that these reports reveal all environmental liabilities or that no prior owner
created any material environmental condition not known to the Company.

Certain environmental laws impose liability on a previous owner of property
to the extent hazardous or toxic substances were present during the prior
ownership period. A transfer of the property may not relieve an owner of such
liability. Thus, the Company may have liability with respect to properties
previously sold by it or by its predecessors.

The Company owns its own water supply facilities and waste-water treatment
plant at several of its resorts. The Texas Natural Resources Conservation
Commission ("TNRCC") is the primary state umbrella agency regulating the
utilities at the Drive-to Resorts in Texas, and the Department of Natural
Resources and the Public Service Commission of Missouri are the primary state
umbrella agencies regulating such utilities at the Destination Resorts in
Missouri. As a result of an enforcement proceeding brought against the Company
by TNRCC in connection with a waste-water facility at the Holly Lake Resort, the
Company is in the process of expanding the existing waste-water facility. See
"Business -- Government Regulation".

The Company believes that it is in compliance in all material respects with
all federal, state and local ordinances and regulations regarding hazardous or
toxic substances. Other than in connection with the waste-water proceedings
mentioned above, the Company has not been notified by any governmental authority
or third party of any non-compliance, liability or other claim in connection
with any of its present or former properties. See "Business -- Governmental
Regulation -- Environmental Matters".

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<PAGE> 25

DEPENDENCE ON VACATION INTERVAL EXCHANGE NETWORKS; POSSIBLE INABILITY TO QUALIFY
RESORTS

The attractiveness of Vacation Interval ownership is enhanced by the
availability of exchange networks that allow Silverleaf Owners to exchange in a
particular year the occupancy right in their Vacation Interval for an occupancy
right in another participating network resort. According to ARDA, the ability to
exchange Vacation Intervals was cited by many buyers as an important reason for
purchasing a Vacation Interval. Several companies, including RCI, provide
broad-based Vacation Interval exchange services, and all of the Company's
Existing Resorts are currently qualified for participation in the RCI exchange
network. However, no assurance can be given that the Company will continue to be
able to qualify the Existing Resorts or future resorts for participation in the
RCI network or any other exchange network. If such exchange networks cease to
function effectively, or if the Company's resorts are not accepted as exchanges
for other desirable resorts, the Company's sales of Vacation Intervals could be
materially adversely affected. See "Business -- Participation in Vacation
Interval Exchange Networks".

RESALE MARKET FOR VACATION INTERVALS

Based on its experience at the Existing Resorts, the Company believes the
market for resale of Vacation Intervals by the owners of such intervals is very
limited and that resale prices are substantially below their original purchase
price. This may make ownership of Vacation Intervals less attractive to
prospective buyers. Also, attempts by buyers to resell their Vacation Intervals
compete with sales of Vacation Intervals by the Company. While Vacation Interval
resale clearing houses or brokers do not currently have a material impact, if
the secondary market for Vacation Intervals were to become more organized and
liquid, the availability of resale intervals at lower prices could materially
adversely affect the prices and number of sales of new Vacation Intervals by the
Company.

SEASONALITY AND VARIABILITY OF QUARTERLY RESULTS

Sales of Vacation Intervals have generally been lower in the months of
November and December. Cash flow and earnings may be impacted by the timing of
development, the completion of future resorts, and the potential impact of
weather or other conditions in the regions where the Company operates. The above
may cause significant variations in quarterly operating results. See "-- Natural
Disasters; Uninsured Loss" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

NATURAL DISASTERS; UNINSURED LOSS

There are certain types of losses (such as losses arising from floods and
acts of war) that are not generally insured because they are either uninsurable
or not economically insurable and for which neither the Company nor the Clubs,
nor the Master Club have insurance coverage. Should an uninsured loss or a loss
in excess of insured limits occur, the Company could lose its capital invested
in a resort, as well as the anticipated future revenues from such resort and
would continue to be obligated on any mortgage indebtedness or other obligations
related to the property. Any such loss could have a material adverse effect on
the Company's results of operations, liquidity or financial position. See
"Business -- Insurance, Legal Proceedings".

ACCELERATION OF DEFERRED TAXES

While the Company reports sales of Vacation Intervals as income currently
for financial reporting purposes (see Note 2 of Notes to Consolidated Financial
Statements), for regular federal income tax purposes the Company reports
substantially all Vacation Interval sales on the installment method. Under the
installment method, the Company recognizes income for tax on the sale of the
Vacation Interval when cash is received in the form of a down payment and as
payments on customer loans are received. The Company's December 31, 1996 balance
sheet reflected a liability for deferred taxes (i.e., taxes owed to taxing
authorities in the future in consequence of income previously reported in the
financial statements) of $4.8 million, primarily attributable to this method of
reporting Vacation Interval sales. This amount does not include accrued interest
on such deferred taxes which also will be payable when the taxes are due, the
amount of which is not now reasonably ascertainable. If the Company should sell
the installment notes or be required to factor them or if the notes were
foreclosed on by a lender of the Company or otherwise disposed of, the deferred
gain would be reportable for tax and the deferred taxes,

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<PAGE> 26

including interest on the taxes for the period the taxes were deferred, as
computed under Section 453 of the Internal Revenue Code of 1986, as amended (the
"Code"), would become due. There can be no assurance that the Company would have
sufficient cash resources to pay those taxes and interest. Furthermore, if the
Company's sales of Vacation Intervals should decrease in the future, the
Company's diminished operations may not generate either sufficient tax losses to
offset taxable income or funds to pay the deferred tax liability from prior
periods. See "-- Limitations on Use of Net Operating Loss From Ownership
Change".

ALTERNATIVE MINIMUM TAXES

The Company has also used the installment method for the calculation of
adjusted current earnings for federal alternative minimum tax purposes, although
the accrual method is required under the Code. This has resulted in current
income taxes payable of approximately $3.3 million which is included in the
Company's December 31, 1996 balance sheet within Income Taxes Payable. The
Company has submitted a request to the Internal Revenue Service for permission
to change to the accrual method for this computation. If granted, these current
estimated taxes of approximately $3.3 million will become payable during 1997
through 2000. Although the Company believes the Internal Revenue Service will
give its permission, there is no assurance that it will, and if not granted, the
Company will currently owe those taxes plus interest and potential penalties.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

LIMITATIONS ON USE OF NET OPERATING LOSS FROM OWNERSHIP CHANGE

The Company estimates that it had net operating loss carryforwards of
approximately $14 million at December 31, 1996, for regular federal income tax
purposes related primarily to losses associated with the deferral of installment
sale gains. In addition to the general limitations on the carryback and
carryforward of net operating losses under Section 172 of the Code, Section 382
of the Code imposes additional limitations on the utilization of a net operating
loss by a corporation following various types of ownership changes which result
in more than a 50 percentage point change in ownership of a corporation within a
three year period. Mr. Mead owned 100% of the stock of the Company until
December 29, 1995, at which time his ownership decreased to approximately 99%.
As a result of the Offering, Mr. Mead's ownership of the Company will decrease
such that he will own approximately 65% to 68% of the Company after the
Offering. Thereafter, Mr. Mead could transfer his shares and/or the Company
could issue additional shares or grant stock options, which could result in more
than a 50 percentage point change in his ownership of the Company. If such a
subsequent change occurs within a three year period, the limitations of Section
382 would apply and may limit or deny the future utilization of the net
operating loss by the Company, resulting in the Company paying substantial
additional federal and state taxes and interest for any periods following such
change in ownership. See "Acceleration of Deferred Taxes".

TAX RE-CLASSIFICATION OF INDEPENDENT CONTRACTORS AND RESULTING TAX LIABILITY

Although all on-site sales personnel are treated as employees of the
Company for payroll tax purposes, the Company does have independent contractor
agreements with certain sales, marketing, and architectural persons or entities.
The Company has not treated these independent contractors as employees;
accordingly, the Company does not withhold payroll taxes from the amounts paid
to such persons or entities. In the event the Internal Revenue Service or any
state or local taxing authority were to successfully classify such persons or
entities as employees of the Company, rather than as independent contractors,
and hold the Company liable for back payroll taxes, such action may have a
material adverse effect on the Company's results of operations, liquidity or
financial position.

VOTING CONTROL BY EXISTING SHAREHOLDER

Upon consummation of the Offering, Mr. Mead will hold a majority of the
Common Stock (approximately 65% to 68%), which will allow him to elect all of
the Company's directors and control the management and affairs of the Company.
Depending on the exact percentage, Mr. Mead may have sufficient voting power, in
general, to determine the outcome of various matters submitted to the
shareholders for approval, including mergers, consolidations, and the sale of
substantially all of the Company's assets. See "Principal Shareholders"

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<PAGE> 27

and "Description of Capital Stock". Such control may result in decisions which
are not in the best interest of the Company.

REPAYMENT OF INDEBTEDNESS OWED TO AFFILIATE OF UNDERWRITER

Credit Suisse First Boston Mortgage Capital, L.L.C., an affiliate of Credit
Suisse First Boston Corporation, the lead managing underwriter for the Offering,
will receive approximately $4.5 million of the net proceeds of the Offering (or
$5.2 million if the Underwriters' over-allotment option is exercised in full) as
repayment of indebtedness and related interest expected to be outstanding upon
consummation of the Offering. See "Underwriting".

ANTI-TAKEOVER EFFECT OF THE COMPANY'S CHARTER AND BYLAWS

Certain provisions of the Company's articles of incorporation (the
"Charter") and bylaws (the "Bylaws"), may be deemed to have anti-takeover
effects and may delay, defer or prevent a takeover attempt that a shareholder
might consider to be in the shareholder's best interest. For example, such
provisions may (i) deter tender offers for Common Stock, which offers may be
beneficial to shareholders, or (ii) deter purchases of large blocks of Common
Stock, thereby limiting the opportunity for shareholders to receive a premium
for their Common Stock over then-prevailing market prices. These provisions
include the following:

Preferred Shares. The Charter authorizes the Board of Directors to
issue Preferred Stock in one or more series and to establish the
preferences and rights (including the right to vote and the right to
convert into Common Stock) of any series of Preferred Stock issued. No
Preferred Stock will be issued or outstanding as of the consummation of the
Offering. See "Description of Capital Stock -- Preferred Stock".

Classified Board. The Board of Directors of the Company will have
three classes of directors, and directors will be elected for three year
terms, with approximately one-third of the directors elected each year. The
terms of the first, second and third classes will expire in 1998, 1999 and
2000, respectively. The affirmative vote of two-thirds of the outstanding
Common Stock is required to remove a director.

IMMEDIATE AND SUBSTANTIAL DILUTION; NO ANTICIPATED DIVIDENDS

Purchasers of Common Stock in the Offering will experience immediate
dilution in net tangible book value per share of Common Stock of $8.40 from the
initial public offering price per share. See "Dilution". In addition, the
Company does not anticipate that it will pay any dividends on its Common Stock
in the foreseeable future. See "Dividend Policy".

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, all the 3,500,000 shares of Common Stock
offered hereby will be eligible for public sale under the Securities Act of
1933, as amended (the "Securities Act"), without restriction, except for shares
acquired in the Offering by "affiliates" of the Company, as that term is defined
in Rule 144 promulgated under the Securities Act. In addition, all shares held
by affiliates will be eligible for public sale under Rule 144, subject to the
Rule's volume, manner of sale and other restrictions. In addition, the Company
has the authority to issue additional shares of Common Stock and shares of one
or more series of Preferred Stock. Pursuant to a Registration Rights Agreement
between the Company and Mr. Mead, upon Mr. Mead's request, the Company shall
register one-half of his Common Stock 180 days following the consummation of the
Offering and any of his remaining unregistered Common Stock one year after the
Offering. See "Shares Eligible for Future Sale". The Company intends to register
1,100,000 shares of Common Stock reserved for issuance pursuant to the Company's
1997 Stock Option Plan as soon as practicable following the consummation of the
Offering. The issuance of such shares could result in the dilution of voting
power of the shares of Common Stock purchased in the Offering and could have a
dilutive effect on earnings per shares. The Company currently has no plans to
designate and/or issue any shares of Preferred Stock. Future sales of
substantial amounts of Common Stock, or the potential for such sales, could
adversely affect prevailing market prices.

25
<PAGE> 28

The Company and its officers, directors and current shareholders each have
agreed that they will not, without the prior written consent of Credit Suisse
First Boston Corporation, offer, sell, contract to sell, grant any option to
purchase or otherwise dispose of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for such Common Stock or in any
other manner transfer all or a portion of the economic consequences associated
with the ownership of such Common Stock for a period of 180 days from the date
of this Prospectus.

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

There has been no prior public market for the Company's Common Stock.
Although the Common Stock has been approved for listing on The New York Stock
Exchange, subject to official notice thereof, there can be no assurance that a
viable public market for the Common Stock will develop or be sustained after the
Offering or that purchasers of the Common Stock will be able to resell their
Common Stock at prices equal to or greater than the initial public offering
price. The initial public offering price will be determined by negotiations
between the Company and the representative of the Underwriters and may not be
indicative of the prices that may prevail in the public market after the
Offering is completed. See "Underwriting". Numerous factors, including
announcements of fluctuations in the Company's or its competitors' operating
results and market conditions for hospitality and timeshare industry stocks in
general, could have a significant impact on the future price of the Common
Stock. In addition, the stock market in recent years has experienced significant
price and volume fluctuations that often have been unrelated or disproportionate
to the operating performance of companies. These broad fluctuations may
adversely affect the market price of the Common Stock.

26
<PAGE> 29

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,500,000 shares of
Common Stock offered by the Company hereby are estimated to be $45,050,000
million ($52,062,500 million if the Underwriters' over-allotment option is
exercised in full), based on the initial public offering price of $14.50 per
share, after deducting underwriting discounts and commissions and estimated
expenses of the Offering. The Company intends to use substantially all of the
approximately $45,050,000 in net proceeds of the Offering to repay outstanding
indebtedness and accrued interest, including $9.9 million to Mr. Mead and his
affiliates and $4.5 million (or $5.2 million if the Underwriters' over-allotment
option is exercised in full) to Credit Suisse First Boston Mortgage Capital,
L.L.C., an affiliate of Credit Suisse First Boston Corporation, the lead
managing underwriter for the Offering. See "Certain Relationships and Related
Transactions -- Repayment of Affiliated Debt" and "Underwriting". Indebtedness
to be repaid from the proceeds of the Offering to Mr. Mead and his affiliates
bears interest at fixed rates currently ranging from 8% to 12% per annum, plus
one indebtedness which bears interest at a floating rate of interest equal to
prime rate plus 3.5%. All such affiliated debt matures on December 31, 1997.
Indebtedness to be repaid out of the net proceeds from the Offering to lenders
unaffiliated with Mr. Mead bears interest at rates currently ranging from 6% to
11% per annum and matures between October 1998 and August 2003. Pending
negotiation of terms of repayment of certain of the Company's existing credit
facilities, the Company will invest the excess proceeds in commercial paper,
bankers' acceptances, other short-term investment-grade securities and
money-market accounts.

DIVIDEND POLICY

The Company does not intend to pay cash dividends on its Common Stock in
the foreseeable future. The Company currently intends to retain future earnings
to finance its operations and fund the growth of its business. Any payment of
future dividends will be at the discretion of the Board of Directors of the
Company and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, level of indebtedness, contractual
and other restrictions in respect of the payment of dividends, and other factors
that the Company's Board of Directors deems relevant. See "Business -- Existing
Credit Facilities".

27
<PAGE> 30

CAPITALIZATION

The following table sets forth at March 31, 1997, the consolidated
capitalization of the Company on an actual basis and as adjusted to give effect
to the Offering and the payment of all amounts due to affiliates and payment of
$35.1 million of notes payable to third parties with the proceeds thereof. This
table should be read in conjunction with "Use of Proceeds", the Consolidated
Financial Statements and the notes thereto, "Selected Consolidated Historical
Financial, Operating and Pro Forma Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED(a)
------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt:
Amounts due to affiliates (net of $4,827 due from
affiliates)............................................ $ 9,920 $ --
Notes payable and capital lease obligations............... 46,690 11,560
------- -------
Total indebtedness........................................ 56,610 11,560
Shareholders' equity:
Common Stock, $0.01 par value; 7,711,517 shares issued and
outstanding, and pro forma shares of 11,211,517 as
adjusted for the Offering(b)........................... 77 112
Additional paid-in capital................................ 13,470 58,485
Retained earnings......................................... 9,770 9,770
------- -------
Total shareholders' equity................................ 23,317 68,367
------- -------
Total capitalization.............................. $79,927 $79,927
======= =======
</TABLE>

- ---------------

(a) Adjusted to give effect to the sale of 3,500,000 shares of Common Stock
offered hereby at an offering price of $14.50 per share, in the aggregate
$50.7 million, less the underwriting discounts and commissions and the
payment by the Company of the estimated offering expenses of $5.7 million,
and the payment of all amounts due to affiliates and payment of $35.1
million of notes payable to third parties. See "Selected Consolidated
Historical Financial, Operating and Pro Forma Financial Information".

(b) Does not include an aggregate 1,100,000 shares of Common Stock reserved for
issuance pursuant to the Company's 1997 Stock Option Plan and 525,000
shares of Common Stock which the Underwriters may purchase pursuant to
their over-allotment option. See "Management -- 1997 Stock Option Plan" and
"Underwriting".

28
<PAGE> 31

DILUTION

The net tangible book value of the Company at March 31, 1997, was
approximately $23.3 million, or $3.02 per share of Common Stock. Net tangible
book value per share represents the Company's total tangible assets less its
total liabilities, divided by the total number of outstanding shares of Common
Stock. After giving effect to the sale of 3,500,000 shares of Common Stock
offered by the Company hereby and the application of the net proceeds therefrom,
the pro forma net tangible book value of the Company at March 31, 1997, would
have been approximately $68.4 million or $6.10 per share of Common Stock. This
represents an immediate increase in such net tangible book value of $3.08 per
share to the existing shareholders of the Company and an immediate dilution in
net tangible book value of $8.40 per share to purchasers of Common Stock in the
Offering. The following table illustrates this dilution on a per share basis:

<TABLE>
<S> <C> <C>
Public offering price per share............................. $14.50
Net tangible book value per share before the Offering..... $ 3.02
Increase per share attributable to new investors.......... 3.08
------
Pro forma net tangible book value per share after the
Offering.................................................. 6.10
------
Dilution per share to new investors......................... $ 8.40
======
</TABLE>

The following table sets forth, as of March 31, 1997, after giving effect
to the Offering, the number of shares of Common Stock purchased, the total
consideration paid therefor and the average price paid per share by the existing
shareholders of the Company and the purchasers of Common Stock in the Offering,
respectively. The following table does not give effect to an aggregate of
1,100,000 shares of Common Stock reserved for issuance pursuant to the Company's
1997 Stock Option Plan, and does not include 525,000 shares of Common Stock
which the Underwriters may purchase pursuant to their over-allotment option. See
"Management -- Executive Compensation" and "Underwriting".

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders............ 7,711,517 68.8% $13,547,219 21.1% $ 1.76
---------- ----- ----------- ----- --------
New investors.................... 3,500,000 31.2 50,750,000 78.9% $ 14.50
---------- ----- ----------- ----- --------
Total.................. 11,211,517 100.0% $64,297,219 100.0%
========== ===== =========== =====
</TABLE>

29
<PAGE> 32

SELECTED CONSOLIDATED HISTORICAL FINANCIAL, OPERATING AND
PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated historical financial information set forth below
has been derived from the consolidated financial statements of the Company which
have been restated giving effect to the Consolidation Transaction utilizing the
historical cost basis of the combined entities so as to present the consolidated
financial condition and operations since these entities were under common
ownership and control. The consolidated financial statements of the Company for
1995 and 1996 included herein were audited by Deloitte & Touche LLP. The
consolidated financial statements for 1994 included herein were audited by James
Smith & Company, P.C. The consolidated financial statements for 1992 and 1993
are unaudited. In the opinion of management of the Company, the data presented
for the three months ended March 31, 1996 and 1997, which are derived from the
Company's unaudited consolidated financial statements, reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the financial position and results of operations for such periods. Results
for the three months ended March 31, 1997 are not necessarily indicative of
results for the entire fiscal year.

The unaudited pro forma income statement data for the three months ended
March 31, 1996 and 1997 and for the year ended December 31, 1996 gives effect to
the Offering and the application of the proceeds therefrom to the payment of all
amounts due to affiliates and payment of $35.1 million of notes payable to third
parties at the beginning of the period presented, subject to the assumptions
stated in the related notes. The unaudited as adjusted balance sheet at March
31, 1997 gives effect to the Offering and the application of the proceeds
therefrom to the payment of debt as of the last day of the period presented
subject to the assumptions stated in the related notes. The unaudited pro forma
income statement and balance sheet data is not necessarily indicative of what
the actual results of operations or financial position of the Company would have
been, nor do they purport to represent the Company's results of operations or
financial position for future periods.

The Selected Consolidated Historical Financial, Operating and Pro Forma
Financial Information should be read in conjunction with the Consolidated
Financial Statements and notes thereto included herein and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

30
<PAGE> 33

<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Vacation Interval sales............. $ 13,987 $ 19,607 $ 25,843 $ 35,885 $ 48,103 $ 12,590 $ 15,771
Less provision for uncollectible
notes............................. (2,693) (3,249) (6,014) (9,144) (12,075) (3,243) (3,849)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Vacation Interval sales:.......... 11,294 16,358 19,829 26,741 36,028 9,347 11,922
Interest income..................... 542 1,029 1,633 3,968 6,297 1,312 1,933
Interest income from affiliates..... -- 70 252 393 377 128 107
Management fee income............... 2,265 3,613 2,394 2,478 2,187 552 499
Lease income........................ 428 512 1,137 1,310 1,717 456 485
Other income........................ 1,813 1,964 1,932 1,832 1,440 245 399
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues................ 16,342 23,546 27,177 36,722 48,046 12,040 15,345
Costs and Operating Expenses:
Cost of Vacation Interval sales..... 3,876 2,094 2,648 3,280 2,805 224 1,221
Sales and marketing................. 7,690 10,219 12,929 17,850 21,839 5,040 5,949
Operating, general and
administrative.................... 2,475 6,109 5,336 8,062 8,970 2,343 1,945
Depreciation and amortization....... 288 477 590 863 1,264 277 331
Interest expense to affiliates...... 383 664 885 1,403 880 228 225
Interest expense to unaffiliated
entities.......................... 1,318 762 757 2,206 3,879 828 1,461
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total costs and operating
expenses.................... 16,030 20,325 23,145 33,664 39,637 8,940 11,132
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing operations
before income taxes................. 312 3,221 4,032 3,058 8,409 3,100 4,213
Income tax expense.................... 266 1,376 1,677 1,512 3,140 1,156 1,559
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing operations..... 46 1,845 2,355 1,546 5,269 1,944 2,654
Income (loss) on discontinued
operations.......................... -- (286) 568 (1,484) (295) (95) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................ $ 46 $ 1,559 $ 2,923 $ 62 $ 4,974 $ 1,849 $ 2,654
========== ========== ========== ========== ========== ========== ==========
Income per common share from:(b)
Continuing operations............... $ 0.00 $ 0.24 $ 0.31 $ 0.20 $ 0.68 $ 0.25 $ 0.34
Discontinued operations............. -- (0.03) 0.08 (0.19) (0.04) (0.01) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income per common share........... $ 0.00 $ 0.21 $ 0.39 $ 0.01 $ 0.64 $ 0.24 $ 0.34
========== ========== ========== ========== ========== ========== ==========
Weighted average number of shares
outstanding......................... 7,588,952 7,588,952 7,588,952 7,590,295 7,711,517 7,711,517 7,711,517
========== ========== ========== ========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT AVERAGE PRICE
OF VACATION INTERVALS SOLD)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA(c).......................................... $ 2,301 $ 5,124 $ 6,264 $ 7,530 $ 14,432 $ 4,433 $ 6,230
Cash flows provided by (used in)
Operating activities............................. $ 1,672 $ 5,711 $ 2,496 $ 3,713 $ 6,375 $ 3,443 $ 2,747
Investing activities............................. (4,266) (6,121) (12,189) (19,604) (23,997) (6,199) (7,028)
Financing activities............................. 422 378 10,424 18,674 14,882 819 4,430
Number of Existing Resorts at period end........... 7 7 7 7 7 7 7
Number of Vacation Intervals sold (excluding
upgrades)........................................ 1,983 2,582 3,705 4,831 6,054 1,419 1,539
Number of upgraded Vacation Intervals sold......... 884 1,378 1,290 1,921 1,914 440 860
Number of Vacation Intervals in inventory.......... 7,218 5,615 5,943 6,600 6,732 6,172 6,024
Average price of Vacation Intervals sold (excluding
upgrades)........................................ $ 5,293 $ 5,554 $ 5,727 $ 5,881 $ 6,645 $ 6,605 $ 7,832
Average price of upgraded Vacation Intervals sold
(net of exchanged interval)...................... $ 3,949 $ 3,822 $ 3,585 $ 3,885 $ 4,113 $ 4,041 $ 4,331
Average price of all Vacation Intervals sold
(including upgrades)............................. $ 7,054 $ 7,594 $ 6,975 $ 7,428 $ 7,946 $ 7,858 $ 10,524
</TABLE>

31
<PAGE> 34

<TABLE>
<CAPTION>
PRO FORMA(a)
----------------------------------------
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------ -------------------------
1996 1996 1997
------------ ----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Vacation Interval sales................................... $ 48,103 $ 12,590 $ 15,771
Less provision for uncollectible notes.................... (12,075) (3,243) (3,849)
----------- ----------- -----------
Net Vacation Interval sales:................................ 36,028 9,347 11,922
Interest income........................................... 6,297 1,312 1,933
Interest income from affiliates........................... -- -- --
Management fee income..................................... 2,187 552 499
Lease income.............................................. 1,717 456 485
Other income.............................................. 1,440 245 399
----------- ----------- -----------
Total Revenues..................................... 47,669 11,912 15,238
Costs and Operating Expenses:
Cost of Vacation Interval sales........................... 2,805 224 1,221
Sales and marketing....................................... 21,839 5,040 5,949
Operating, general and administrative..................... 9,720 2,531 2,133
Depreciation and amortization............................. 1,264 277 331
Interest expense to affiliates............................ -- -- --
Interest expense to unaffiliated entities................. 201 22 236
----------- ----------- -----------
Total costs and operating expenses................. 35,829 8,094 9,870
----------- ----------- -----------
Income from continuing operations before income taxes....... 11,840 3,818 5,368
Income tax expense.......................................... 4,416 1,424 1,986
----------- ----------- -----------
Income from continuing operations........................... $ 7,424 $ 2,394 $ 3,382
=========== =========== ===========
Income per common share from continuing operations:(b)...... $ 0.71 $ 0.24 $ 0.30
=========== =========== ===========
Weighted average number of shares outstanding............... 10,483,168 10,161,933 11,211,517
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
HISTORICAL AS ADJUSTED
------------------------------------------------------------------- -----------
DECEMBER 31, MARCH 31,
----------------------------------------------- ----------------- MARCH 31,
1992 1993 1994 1995 1996 1996 1997 1997(d)
------- ------- ------- ------- ------- ------- ------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 228 $ 197 $ 929 $ 3,712 $ 973 $ 1,774 $ 1,121 $ 1,121
Amounts due from affiliates............... 1,485 2,391 4,559 4,342 6,237 4,491 6,494 1,667
Total assets.............................. 16,695 23,834 37,326 62,687 90,852 68,942 99,714 94,887
Amounts due to affiliates................. 5,690 8,704 14,613 14,263 14,765 14,323 14,747 --
Notes payable and capital lease
obligations............................. 2,054 533 11,887 23,363 41,986 25,360 46,690 11,560
Total liabilities......................... 11,788 18,062 29,340 46,999 70,190 51,404 76,397 26,520
Equity.................................... 4,907 7,292 10,123 15,689 20,662 17,538 23,317 68,367
</TABLE>

- ---------------

(a) Assumes (i) the sale of 3,500,000 shares of Common Stock offered hereby at
an offering price of $14.50 per share, in the aggregate $50.7 million, less
the underwriting discounts and commissions and the payment by the Company
of the estimated offering expenses of $5.7 million; (ii) payment of all
amounts due to affiliates net of amounts due from affiliates and
elimination of the related interest; (iii) payment of $35.1 million of
notes payable to third parties and elimination of the related interest
expense; (iv) estimate of additional costs to be incurred as a public
company of $750,000; (v) adjustment of the provision for income taxes for
the effect of the pro forma adjustments.

(b) Gives retroactive pro forma effect to the Stock Split and increase in the
number of shares outstanding to 11,211,517 million Common Shares at period
end.

(c) EBITDA represents net income from continuing operations before interest
expense, income taxes and depreciation and amortization. EBITDA is presented
because it is a widely accepted indicator of a company's financial
performance. However, EBITDA should not be construed as an alternative to
net income as a measure of the Company's operating results or to cash flows
from operating activities (determined in accordance with generally accepted
accounting principles) as a measure of liquidity. Since revenues from
Vacation Interval sales include promissory notes received by the Company,
EBITDA does not reflect cash

32
<PAGE> 35

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income, from continuing
operations................ $ 46 $1,845 $2,355 $1,546 $ 5,269 $1,944 $2,654
Interest expense............ 1,701 1,426 1,642 3,609 4,759 1,056 1,686
Income tax expense.......... 266 1,376 1,677 1,512 3,140 1,156 1,559
Depreciation and
amortization.............. 288 477 590 863 1,264 277 331
------ ------ ------ ------ ------- ------ ------
EBITDA, from continuing
operations................ $2,301 $5,124 $6,264 $7,530 $14,432 $4,433 $6,230
====== ====== ====== ====== ======= ====== ======
</TABLE>

33
<PAGE> 36

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the "Selected
Consolidated Historical Financial, Operating and Pro Forma Financial
Information" and the Consolidated Financial Statements and notes thereto
included elsewhere in this Prospectus.

OVERVIEW

Silverleaf Resorts, Inc. was formed in 1989 to acquire the Existing
Resorts. Certain additional assets and liabilities were subsequently acquired
from the Affiliated Companies in 1995 pursuant to the Consolidation
Transactions. See "Summary -- Corporate Background", "Certain Relationships and
Related Transactions", and Notes 1 and 10 of Notes to Consolidated Financial
Statements. The Consolidated Financial Statements of the Company include the
accounts of Silverleaf Resorts, Inc. and its subsidiaries, all of which are
wholly-owned. One such subsidiary, CBI, is treated as a discontinued operation.
See Note 12 of Notes to Consolidated Financial Statements. The historical
consolidated financial statements have been restated utilizing the historical
cost basis of the Affiliated Companies since these entities were under common
ownership and control.

The Company generates revenues primarily from the sale and financing of
Vacation Intervals at the Existing Resorts. Additional revenues are generated
from management fees from the Master Club, lease income from Sampler sales, and
resort and utility operations. The Company recognizes management fee income as
the lesser of 15% of revenue or 100% of net income of the Master Club. See
"Business -- Clubs/Master Club".

The Company recognizes Vacation Interval sales revenues on the accrual
basis. A sale is recognized after a binding sales contract has been executed,
the buyer has made a down payment of at least 10%, and the statutory rescission
period has expired. If a customer fails to make the first installment payment,
the Company reverses the sale and normally retains any payments received.
Approximately 6% of the Company's customers fail to make the first installment
payment. For further information concerning accounting for Vacation Interval
sales and accounting policies generally, see Note 2 of Notes to Consolidated
Financial Statements.

The Company accounts for uncollectible notes by recording a provision to
its Allowance for Doubtful Notes at the time revenue is recognized. Since 1993,
this provision has averaged approximately 22% of Vacation Interval sales. The
Company sets this provision at an amount sufficient to maintain the Allowance at
a level which management considers adequate to provide for anticipated losses
from customers' failure to fulfill their obligations under the notes. When
inventory is returned to the Company, any unpaid notes receivable balances are
charged against the previously established bad debt reserves net of the amount
at which the Vacation Interval is being restored to inventory.

Costs associated with the acquisition and development of the Existing
Resorts and the marketing and sale of Vacation Intervals (including land,
construction costs, furniture, interest, and taxes) are capitalized and included
in inventory. Vacation Interval inventory is segregated into three ratings based
on customer demand (see "Business -- Participation in Vacation Interval Exchange
Networks"), with greater costs apportioned to higher value ratings. As Vacation
Intervals are sold, these costs are deducted from inventory on a specific
identification basis.

Vacation Intervals may be reacquired as a result of (i) foreclosure (or
deed in lieu of foreclosure); (ii) trade-in, associated with the purchase of an
upgraded Vacation Interval; or (iii) the Company's program to reacquire Vacation
Intervals owned but not actively used by Silverleaf Owners. Vacation Intervals
reacquired are recorded in inventory at the lower of their original cost or
market value. Vacation Intervals which have been reacquired are relieved from
inventory on a specific identification basis when resold. Inventory obtained
through the Consolidation Transactions has a significantly lower average cost
basis than recently constructed inventory, contributing significantly to
historical operating margins. New inventory added through the Company's
construction and acquisition programs has a higher average cost than the
Company's existing inventory. Accordingly, cost of goods sold will increase as
sales of new inventory increases.

The Company recognizes interest income as earned. To the extent interest
payments become delinquent the Company ceases recognition of the interest income
until collection is assured.

34
<PAGE> 37

RESULTS OF OPERATIONS

The following table sets forth certain operating information for the
Company.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------
1994 1995 1996 1996 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
As a percentage of Total Revenues:
Vacation Interval sales.................. 95.1% 97.7% 100.1% 104.5% 102.7%
Less provision for uncollectible notes... (22.1%) (24.9%) (25.1%) (26.9%) (25.1%)
------ ------ ------ ------ ------
Net Vacation Interval sales.............. 73.0% 72.8% 75.0% 77.6% 77.6%
Interest income.......................... 6.9% 11.9% 13.9% 12.0% 13.3%
Management fee income.................... 8.8% 6.7% 4.6% 4.6% 3.3%
Lease income............................. 4.2% 3.6% 3.6% 3.8% 3.2%
Other income............................. 7.1% 5.0% 2.9% 2.0% 2.6%
------ ------ ------ ------ ------
Total Revenues........................... 100.0% 100.0% 100.0% 100.0% 100.0%
As a percentage of gross Vacation Interval
sales:
Provision for uncollectible notes........ 23.3% 25.5% 25.1% 25.8% 24.4%
Cost of Vacation Interval sales.......... 10.2% 9.1% 5.8% 1.8% 7.8%
Sales and marketing...................... 50.0% 49.7% 45.4% 40.0% 37.8%
As a percentage of Interest Income:
Interest expense......................... 87.1% 82.8% 71.3% 73.3% 82.6%
As a percentage of Total Revenues:
Operating, general and administrative.... 19.6% 22.0% 18.7% 19.5% 12.7%
Depreciation and amortization............ 2.2% 2.4% 2.6% 2.3% 2.2%
Total costs and operating expenses....... 85.2% 91.7% 82.5% 74.2% 72.5%
</TABLE>

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO THE THREE MONTHS
ENDED MARCH 31, 1996. Revenues in the first quarter 1997 were $15.3 million,
representing a $3.3 million or 27.5% increase over revenues of $12.0 million in
the first quarter 1996. The increase was primarily due to a $2.6 million
increase in net sales of Vacation Intervals and a $600,000 increase in interest
income.

In 1997, the number of Vacation Intervals sold, exclusive of sales upgraded
Vacation Intervals, increased 8.4% to 1,539 from 1,419 in 1996, and the average
price per interval increased 18.6% to $7,832 from $6,605. The increase in
Vacation Interval sales resulted from the Company's modernized electronic
telemarketing programs, increased sales force and enhanced lead generation
methods. The increase in average price per interval resulted from the Company's
increased sales of higher value rated intervals. In addition to increases in
sales of Vacation Intervals, the Company has increased revenues generated from
sales of upgraded intervals at its Existing Resorts through the continued
implementation of specifically designed marketing and sales programs focused on
selling such intervals to Silverleaf Owners. See "Business -- Strategy".

The provision for uncollectible notes as a percentage of Vacation Interval
sales decreased to 24.4% in 1997 from 25.8% in 1996 reflecting an increased
focus on collection efforts for notes receivable.

Interest income increased 41.7% to $2.0 million in 1997 from $1.4 million
in 1996. This increase resulted from a $20.9 million increase in notes
receivable, net of allowance for uncollectible notes, due to increased sales.

Management fee income decreased 9.5% to $499,000 in 1997 from $551,000 in
1996. This decrease was primarily the result of the Master Club's net income
being reduced by significant non-capital maintenance and refurbishment costs
incurred as a part of the Company's continuing facility improvement program and
increased operating costs.

Lease income, relating to the Company's Sampler program, remained
relatively unchanged in 1997 from 1996.

Other income increased 62.5% to $399,000 in 1997 from $245,000 in 1996.
This increase was due primarily to increased loan document preparation and
filing fee income and increased revenues from sales of undeveloped land.

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<PAGE> 38

Cost of sales as a percentage of gross Vacation Interval sales increased to
7.7% in 1997 from 1.8% in 1996. The increase is due to a decline in the volume
of sales of Vacation Intervals with a low cost basis. The Company obtained a
significant amount of low cost inventory in 1996 through its continuing program
to reacquire Vacation Intervals owned but not actively used by Silverleaf
Owners. As the Company has begun an extensive construction program to build new
inventory, the cost of sales average is expected to increase.

Sales and marketing costs as a percentage of gross Vacation Interval sales
declined to 37.7% in 1997 from 40.0% in 1996. This decline is due primarily to
the efficiencies resulting from the Company's telemarketing and sales force
areas and economies of scale.

Operating, general and administrative expenses as a percentage of gross
Vacation Interval sales declined to 12.3% in 1997 from 18.6% in 1996. The
decrease was due to a reduction of legal fees and bonus expense.

Interest expense as a percentage of interest income increased to 82.6% in
1997 from 73.3% in 1996. This increase was due to higher borrowing costs during
the period. This increase is mostly attributable to an increase in outstanding
indebtedness during the first quarter of 1997 compared to the first quarter of
1996.

Depreciation and amortization expense as a percentage of total revenue
remained relatively unchanged at 2.2% in 1997 versus 2.3% in 1996.

Income from continuing operations before income taxes increased 35.9% to
$4.2 million in 1997 from $3.1 million in 1996 as a result of the above
mentioned operating activities.

Income tax expense as a percentage of income from continuing operations
before income taxes remained relatively unchanged at 37.0% in 1997 versus 37.3%
in 1996.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996, TO THE YEAR ENDED DECEMBER
31, 1995. Revenues in 1996 were $48.0 million, representing a $11.3 million or
30.8% increase over revenues of $36.7 million in 1995. The increase was
primarily due to a $9.3 million increase in net sales of Vacation Intervals and
a $2.3 million increase in interest income.

In 1996, the number of Vacation Intervals sold, exclusive of sales of
upgraded Vacation Intervals, increased 25.3% to 6,054 from 4,831 in 1995 and the
average price per unit increased 13.0% to $6,645 from $5,881. The increase in
Vacation Interval sales resulted from the Company's modernized electronic
telemarketing programs, increased sales force and enhanced lead generation
methods. The increase in average price per interval resulted from the Company's
increased sales of higher value rated intervals. In addition to increases in
sales of Vacation Intervals, the Company has increased revenues generated from
sales of upgraded intervals at its Existing Resorts through the continued
implementation of specifically designed marketing and sales programs focused on
selling such intervals to Silverleaf Owners. See "Business -- Strategy".

The provision for uncollectible notes as a percentage of Vacation Interval
sales remained relatively unchanged at 25.1% in 1996 versus 25.5% in 1995.

Interest income increased 53.0% to $6.7 million in 1996 from $4.4 million
in 1995. This increase resulted from a $20.2 million increase in notes
receivable, net of allowance for uncollectible notes, due to increased sales.

Management fee income decreased 11.8% to $2.2 million in 1996 from $2.5
million in 1995. This decrease was primarily the result of the Master Clubs' net
income being reduced by significant non-capital maintenance and refurbishment
costs incurred as a part of the Company's continuing facility improvement
program and increased operating costs.

In 1996, lease income increased 31.1% to $1.7 million in 1996 from $1.3
million in 1995 due to increased sales under the Company's Sampler program. To
date, the Company has generally been successful in converting such customers to
purchasers of Vacation Intervals.

Other income decreased 21.4% to $1.4 million in 1996 from $1.8 million in
1995. This decrease was primarily due to a significant reduction in servicing
fee income due to discontinuation of factoring notes receivables, and, to a
lesser extent, the temporary closing of the Holiday Hills golf course for
remodeling.

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<PAGE> 39

Cost of sales as a percentage of gross Vacation Interval sales declined to
5.8% in 1996 from 9.1% in 1995. This decrease was due to a greater volume of
sales of Vacation Intervals with a low cost basis, and to a lesser extent, price
increases of Vacation Intervals sold. The Company obtained a significant amount
of low cost inventory in 1996 through its continuing program to reacquire
Vacation Intervals owned but not actively used by Silverleaf Owners.
Approximately 34% of the Vacation Intervals sold in 1996 had been acquired from
Silverleaf Owners. As the Company has begun an extensive construction program to
build new inventory, the cost of sales average is expected to increase.

Sales and marketing costs as a percentage of gross Vacation Interval sales
declined to 45.4% in 1996 from 49.7% in 1995. This decline is due primarily to
the efficiencies resulting from the Company's telemarketing and sales force
areas and economies of scale.

Operating, general and administrative expenses as a percentage of gross
Vacation Interval sales declined to 18.6% in 1996 from 22.5% in 1995 due to
realization of economies of scale and elimination of non-recurring expenses
incurred in 1995.

Interest expense as a percentage of interest income declined to 71.3% in
1996 from 82.8% in 1995. This decrease was due to lower borrowing cost during
the period.

Depreciation and amortization expense as a percentage of total revenue
increased to 2.6% in 1996 from 2.4% in 1995 primarily due to an increase in
property, plant and equipment made in 1996.

Income from continuing operations before income taxes increased 175.0% to
$8.4 million in 1996 from $3.1 million in 1995 as a result of the above
mentioned operating activities.

Income tax expense as a percentage of income from continuing operations
before income taxes declined to 37.3% in 1996 from 49.4% in 1995 due to
recognition in 1995, for tax purposes, of certain income which was not
recognized under generally accepted accounting principles. CBI operated as a
Subchapter S Corporation wholly-owned by the principal shareholder; accordingly,
the cumulative losses of CBI incurred prior to the transfer of the stock of CBI
to the Company were not available for utilization by the Company as an offset to
taxable income. Effective January 1, 1996, the Company converted CBI to a C
corporation and CBI will be included in the consolidated income tax return of
the Company.

COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995, TO THE YEAR ENDED DECEMBER
31, 1994. Revenues in 1995 were $36.7 million, representing a $9.5 million or
35.1% increase over revenues of $27.2 million in 1994. The increase was
primarily due to a $6.9 million increase in net sales of Vacation Intervals and
a $2.5 million increase in interest income.

In 1995, the number of Vacation Interval weeks sold, exclusive of sales of
upgraded Vacation Intervals, increased 30.4% to 4,831 from 3,705 in 1994 and the
average price per unit increased 2.7% to $5,881 from $5,727. The increase in
Vacation Interval sales resulted from the Company's bringing many lead
generation, telemarketing and sales programs in-house.

The provision for uncollectible notes as a percentage of Vacation Interval
sales increased to 25.5% in 1995 versus 23.3% in 1994 due to the impact of the
Company's aggressive inventory recovery policy.

Interest income increased 131.4% to $4.4 million in 1995 from $1.9 million
in 1994. This increase was the result of a $15.9 million increase in notes
receivable and the Company's decision to change its method of financing
operations. Prior to 1994, the Company had factored its customer notes
receivable to third parties. In 1994 the Company ceased factoring and began
retaining and borrowing against its notes. This change in the Company's method
of financing enabled it to retain the interest income on the notes.

Management fee income increased 3.5% to $2.5 million in 1995 from $2.4
million in 1994 due primarily to an increase in the number of dues paying
Silverleaf Owners resulting from increased sales during the period.

Lease income increased 15.2% to $1.3 million in 1995 from $1.1 million in
1994 due to emphasis of sales under the Company's Sampler program.

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<PAGE> 40

Other income decreased 5.1% to $1.8 million in 1995 from $1.9 million in
1994. This decrease was primarily due to servicing income of the Company's
factored notes as the Company ceased factoring of notes receivable.

Cost of sales as a percentage of gross Vacation Interval sales declined to
9.1% in 1995 from 10.2% in 1994. This decrease was due to a greater volume of
sales of Vacation Intervals with a low cost basis, and to a lesser extent, price
increases of Vacation Intervals sold. The Company obtained a significant amount
of low cost inventory in 1995 by commencing a program to reacquire Vacation
Intervals owned but not actively used by Silverleaf Owners.

Sales and marketing costs as a percentage of gross Vacation Interval sales
declined to 49.7% in 1995 from 50.0% in 1994. The Company's lead generation and
telemarketing programs were taken in house in mid-1994. Prior to that time,
outside marketers, who were paid on a production basis, had been used.

Operating, general and administrative expenses as a percentage of gross
Vacation Interval sales increased to 22.5% in 1995 from 20.6% in 1994. This
increase included nonrecurring expenses comprised of $1.0 million incurred in
connection with promoting the Company's Holiday Hills development; commissions
of $212,000 paid in connection with the inventory recovery program; salary and
bonus increases of $277,000; $80,000 related to the implementation of a customer
relations function, and other various increases primarily related to increased
volume.

Interest expense as a percentage of interest income declined to 82.8% in
1995 from 87.1% in 1994. This decrease was due to lower borrowing costs and an
increase in notes receivable.

Depreciation and amortization expense as a percentage of total revenue
increased to 2.4% in 1995 from 2.2% in 1994 primarily due to the impact of added
capital investments during 1995.

Income from continuing operations before income taxes declined 24.1% to
$3.1 million in 1995 from $4.0 million in 1994 as a result of the above
mentioned operating activities.

Income tax expense as a percentage of income from continuing operations
before income taxes increased to 49.4% in 1995 from 41.6% in 1994 due to
recognition in 1995, for tax purposes, of certain income which was not
recognized under generally accepted accounting principles.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash. The Company generates cash primarily from the sale of
Vacation Intervals, the financing of promissory notes from Silverleaf Owners,
management fees, Sampler sales, and resort and utility operations. During the
years ended December 31, 1994, 1995, and 1996 and the three months ended March
31, 1996 and 1997, cash provided by operations was $2.5 million, $3.7 million,
$6.4 million, $3.4 million and $2.7 million, respectively. The Company generates
cash from financing sales not only by borrowing against customer loans
receivable but also from the spread between interest paid on borrowings and
interest received on the related customer notes receivables. Because the Company
uses significant amounts of cash in the development and marketing of Vacation
Intervals, but collects the cash on the customer notes receivable over a long
period of time, borrowing against receivables is a necessary part of normal
operations. See "Risk Factors -- Financing Customer Borrowings" and
" -- Borrower Defaults".

For regular Federal income tax purposes, the Company reports substantially
all of the Vacation Interval sales it finances under the installment method.
Under the installment method, the Company does not recognize income on sales of
Vacation Intervals until the installment payments on customer receivables are
received by the Company. The deferral of income tax liability conserves cash
resources on a current basis. Interest will be imposed, however, on the amount
of tax attributable to the installment payments for the period beginning on the
date of sale and ending on the date the related tax is paid. If the Company is
otherwise not subject to tax in a particular year, no interest is imposed since
the interest is based on the amount of tax paid in that year. The consolidated
financial statements do not contain an accrual for any interest expense which
would be paid on the deferred taxes related to the installment method as the
interest expense is not estimable as of December 31, 1996. In addition, the
Company is subject to current alternative minimum tax ("AMT") as a result of the
deferred

38
<PAGE> 41

income which results from the installment sales treatment. Payment of AMT
reduces future regular tax liability in respect of installment sales, and
creates a deferred tax asset. As of December 31, 1996, the Company estimates its
total liability for AMT to be approximately $3.3 million which is included in
Income Taxes Payable. See "Risk Factors -- Acceleration of Deferred Taxes,
Alternative Minimum Taxes" and Note 6 of Notes to Consolidated Financial
Statements. The Company's net operating losses, which also may be used to offset
installment sale income, expire beginning in 2007 through 2011. Realization of
the deferred tax assets arising from net operating losses is dependent on
generating sufficient taxable income prior to the expiration of the loss
carryforwards and other factors. See "Risk Factors -- Limitations on Use of Net
Operating Loss from Ownership Change" and Note 6 of Notes to Consolidated
Financial Statements.

Financing activities have historically provided cash as a result of the
Company's financing of customer notes receivable. Net cash provided from
financing activities for the years ended December 31, 1994, 1995, and 1996 and
for the three months ended March 31, 1996 and 1997 was $10.4 million, $18.7
million, $14.9 million, $819,000 and $4.4 million, respectively. During the
three month period ended March 31, 1997, compared to the three month period
ended March 31, 1996, the $3.6 million increase in cash flow provided by
financing activities was due to the $4.6 increase in proceeds from borrowings
from unaffiliated entities offset in part by increased payments on borrowings to
unaffiliated entities. The Company has five revolving credit facilities with
four lenders providing for loans of up to $96 million. Approximately $34.7
million of principal and interest related to advances under these credit
facilities was outstanding at December 31, 1996. At March 31, 1997,
approximately $39.7 million of principal and interest related to advances under
existing credit facilities was outstanding. Under these credit facilities,
approximately $392,000, $7.3 million, $21.0 million, $5.6 million, and $5.4
million of the $39.7 million outstanding at March 31, 1997 is due in 1998, 1999,
2001, 2002, and 2003, respectively. During 1996, the weighted average cost of
funds for these borrowings was 10.8%.

Uses of Cash. Investing activities typically reflect a net use of cash
because of capital additions and loans to customers in connection with the
Company's Vacation Interval sales. Net cash used in investing activities for the
years ended December 31, 1994, 1995, and 1996 and for the three months ended
March 31, 1996 and 1997 was $12.2 million, $19.6 million, $24.0 million, $6.2
million and $7.0 million, respectively. Cash used in investing activities
increased significantly in the year ended December 31, 1996, over 1995 and in
the year ended December 31, 1995, over 1994 due to significant increases in
customer notes receivable and a major capital improvements program begun in 1995
to remodel the corporate headquarters and build new field sales offices.

The Company requires funds to finance the acquisitions of property for
future resort development and to further develop the Existing Resorts, as well
as to make capital improvements and support current operations. The Company has
budgeted capital expenditures of $6.8 million in 1997 for the development of
additional roads and utilities, amenities, and condominium units at the Existing
Resorts. The Company is also actively seeking sites for new resorts. The Company
has recently entered into an agreement to acquire three tracts of land in
Missouri, Illinois, and Tennessee for an aggregate purchase price of $3.2
million. See "Business -- Growth Strategy".

Customer defaults have significant impact on cash available to the Company
from financing customer notes receivable in that notes more than 60 days past
due are not eligible as collateral. As a result, the Company in effect must
repay borrowings against such notes. See "Risk Factors -- Borrower Defaults" and
"-- Financing Customer Borrowings".

CBI, which has historically required funding from the Company, was engaged
in the development and sale of full ownership condominiums, the investment in,
holding and sale of both real and personal properties, principally in Missouri,
and holding land in Mississippi. Subsequent to the acquisition of CBI, the
Company determined that CBI's condominium development and sale line of business
was not fully compatible with the Company's timeshare operations. Consequently,
CBI has ceased all development operations and adopted a plan of dissolution
effective December 31, 1996, whereby all remaining full ownership condominiums
will be sold by December 31, 1997. Accordingly, the condominium development and
sales operation of CBI is being treated as a discontinued operation for
financial reporting purposes. The income (loss), net of income taxes, from the
discontinued operations was $568,000, $(1.5) million, and $(295,000) for the
years ended December 31, 1994, 1995, and 1996, respectively. Anticipated future
costs of carrying and selling the remaining inventory of CBI have been accrued
as of December 31, 1996, in the amount of $201,000.

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<PAGE> 42

Credit Facilities. At March 31, 1997, the Company had available certain
revolving credit facilities for financing customer notes receivable and for
construction and development activities. See "Business -- Existing Credit
Facilities" and Note 7 of Notes to Consolidated Financial Statements. Some of
this debt will be paid with the proceeds of the Offering. See "Capitalization"
and "Use of Proceeds". The Company intends to maintain each of the facilities
and to utilize such facilities to finance its operations.

In accordance with its growth strategy, the Company intends to accelerate
the development of the Existing Resorts and to acquire new properties for
development. The Company intends to finance such development in part with
existing credit facilities. Additional financing will be required. Any failure
to renew existing credit facilities or obtain adequate financing under new
facilities could have a material adverse effect on the Company's financial
position, results of operations or liquidity, and could significantly reduce the
Company's plans to acquire new properties and expand the Existing Resorts.

In the future, the Company may negotiate additional credit facilities,
issue corporate debt, issue equity securities, or any combination of the above.
Any debt incurred or issued by the Company may be secured or unsecured, may bear
interest at fixed or variable rates of interest, and may be subject to such
terms as management deems prudent. There is no assurance that the Company will
be able to secure additional corporate debt or equity at or beyond current
levels. See "Risk Factors -- Leverage".

The Company believes available borrowing capacity, together with cash
generated from operations, will be sufficient to meet the Company's liquidity
and capital requirements for existing operations for at least the next 12
months.

INFLATION

Inflation and changing prices have not had a material impact on the
Company's revenues, operating income and net income during any of the Company's
three most recent fiscal years. However, to the extent inflationary trends
affect short-term interest rates, a portion of the Company's debt service costs
may be affected as well as the rates the Company charges on its customer
mortgages.

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<PAGE> 43

BUSINESS

OVERVIEW

The Company is a leading developer, marketer, and operator of timeshare
resorts in the economy segment of the timeshare industry. The Company currently
owns and operates five Drive-to Resorts in Texas and two Destination Resorts in
Missouri. The Drive-to Resorts are designed to appeal to value conscious
vacationers seeking comfortable and affordable accommodations in locations
convenient to their residences. The Drive-to Resorts are located proximate to
major metropolitan areas (currently Dallas-Fort Worth, Houston, San Antonio, and
Austin), facilitating more frequent "short stay" getaways, which the Company
believes is a growing vacation trend. The Destination Resorts, which are located
in the popular resort area of Branson, Missouri, offer Silverleaf Owners the
opportunity to upgrade into a higher quality destination resort area as their
lifestyles and travel budgets permit. The Existing Resorts are in rustic areas
and provide a quiet, relaxing vacation environment. The Company believes its
combination of Drive-to and Destination Resorts offers its customers within the
"economy segment" an economical alternative to commercial vacation lodging. The
average price for an annual one-week Vacation Interval for a two-bedroom unit at
the Existing Resorts was $6,799 in 1996 and $6,028 in 1995, which compares
favorably to an industry average price of $12,014 for a two-bedroom unit in
1995.

The Company offers benefits to Silverleaf Owners which are uncommon in the
timeshare industry. The benefits include (i) use of vacant lodging facilities at
the Existing Resorts at no extra cost through Silverleaf's "Endless Escape"
program; (ii) year-round access to the Existing Resorts' non-lodging amenities
such as fishing, boating, horseback riding, tennis or golf for little or no
additional charge; and (iii) the right of Silverleaf Owners to exchange their
Vacation Interval for a different time period or different Existing Resort
through Silverleaf's internal exchange program. The above benefits are subject
to availability. Silverleaf Owners also have the option to enroll in the world's
largest Vacation Interval exchange network operated by RCI.

OPERATIONS

Silverleaf's operations include (i) developing timeshare resorts; (ii)
marketing and selling Vacation Intervals to prospective first-time owners; (iii)
marketing and selling upgraded Vacation Intervals to existing Silverleaf Owners;
(iv) providing financing for the purchase of Vacation Intervals; and (v)
operating timeshare resorts. The Company has substantial in-house capabilities
which enable it to coordinate all aspects of expansion of the Existing Resorts
and the development of any new resorts, including site selection, design, and
construction pursuant to standardized plans and specifications. The Company also
performs substantially all marketing and sales functions internally, and has
made a significant investment in operating technology, including sophisticated
telemarketing and computer systems and proprietary software applications. The
Company identifies potential purchasers through internally developed marketing
techniques, and sells Vacation Intervals through on-site sales offices at
certain Drive-to Resorts. This practice allows the Company to avoid the more
expensive marketing costs of subsidized airfare and lodging which are typically
associated with the timeshare industry. The Company believes its marketing
program and operating systems enable it to market and sell Vacation Intervals at
a lower cost than its competitors in the timeshare industry.

During 1996, the Company sold 6,054 Vacation Intervals at the Existing
Resorts to new customers, compared to 4,831 and 3,705 during 1995 and 1994,
respectively. Total revenues for the same periods increased to $48.0 million in
1996 from $36.7 million and $27.2 million in 1995 and 1994, respectively. In the
first quarter of 1997, the Company sold 1,539 Vacation Intervals at the Existing
Resorts to new customers, compared to 1,419 in the first quarter of 1996. Total
revenues for the first quarter of 1997 were $15.3 million compared to $12.0
million for the first quarter of 1996. At March 31, 1997, the Company had an
existing inventory of 6,024 Vacation Intervals, and a master plan to construct
up to 70,740 additional Vacation Intervals at the Existing Resorts, subject to
demand and contingencies applicable to real estate development. See "Risk
Factors -- Development, Construction and Property Acquisition Activities".

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<PAGE> 44

December 31, 1996, the Company had a portfolio of approximately 15,796 customer
promissory notes totalling approximately $66.8 million with an average yield of
14.7% per annum, which compares favorably to the Company's weighted average cost
of borrowings of 10.8% per annum. At December 31, 1996, approximately $3.6
million in principal, or 5.9% of the Company's loans to Silverleaf Owners, were
60 to 120 days past due, and approximately $4.3 million in principal, or 7.2% of
the Company's loans to Silverleaf Owners, were more than 120 days past due. The
Company provides for uncollectible notes by reserving an amount which management
believes is sufficient to cover anticipated losses from customer defaults. In
1996 and 1995, the Company's provision for uncollectible notes exceeded actual
loan chargeoffs by $2.0 million and $467,000, respectively. See "Risk
Factors -- Borrower Defaults", and "-- Financing Customer Borrowings".

Each Existing Resort has a Club which has contracted with the Master Club
to manage the Existing Resorts. The Master Club has contracted with the Company
to perform the supervisory, management and maintenance functions at the Existing
Resorts on a collective basis. Costs of operating the Existing Resorts,
including management fees to the Company, are covered by monthly dues paid by
Silverleaf Owners to their respective Clubs, together with income generated by
the operation of certain amenities at the Existing Resorts. See
"Business -- Clubs/Master Club".

THE TIMESHARE INDUSTRY

The Market. The resort component of the leisure industry is serviced
primarily by two alternatives for overnight accommodations: commercial lodging
establishments and timeshare resorts. Commercial lodging consists of (i) hotels
and motels in which a room is rented on a nightly, weekly or monthly basis for
the duration of the visit, and (ii) rentals of privately-owned condominium units
or homes. For many vacationers, particularly those with families, a lengthy stay
at a quality commercial lodging establishment is not economical. In addition,
room rates and availability at such establishments are subject to change
periodically. Timeshare ownership presents an economical alternative to
commercial lodging for vacationers.

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<PAGE> 45

Worldwide Market. In 1995 (the most recent year for which statistics are
available), the worldwide timeshare industry experienced 206,000 first-time
buyers, sales of 600,000 Vacation Intervals, and sales volume of $5 billion.
First introduced in Europe in the mid-1960s, ownership of Vacation Intervals has
been one of the fastest growing segments of the hospitality industry over the
past two decades. As shown in the following charts, the worldwide timeshare
industry has expanded significantly since 1980 both in Vacation Interval sales
volume and number of Vacation Interval owners.

DOLLAR VOLUME OF VACATION INTERVAL SALES
(IN BILLIONS)

NUMBER OF VACATION INTERVAL OWNERS
(IN MILLIONS)

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<PAGE> 46

United States Market. The number of interval owners of U.S. timeshare
properties has also grown significantly as set forth in the following table:

NUMBER OF VACATION INTERVAL OWNERS
OF U.S. PROPERTIES
(IN MILLIONS)
[TRACOR BAR GRAPH]

Reasons for Growth. The Company believes that, based on published industry
data, the following factors have contributed to the increased acceptance of the
timeshare concept among the general public and the substantial growth of the
timeshare industry over the past 15 years:

- increased consumer confidence resulting from consumer protection
regulation of the timeshare industry and the entrance of brand name
national lodging companies to the industry;

- increased flexibility of timeshare ownership due to the growth of
exchange organizations such as RCI;

- improved quality and management of timeshare resorts and related
amenities;

- increased consumer awareness of the value and benefits of timeshare
ownership, including the cost savings relative to other lodging
alternatives; and

- improved availability of financing for purchasers of Vacation Intervals.

Despite the growth in the timeshare industry, Vacation Interval ownership
had only achieved an approximate 1.72% market penetration of all U.S. households
at December 31, 1994. This is comprised of a .39% penetration of households with
an annual income under $35,000, a 1.73% penetration of households earning
$35,000 to $49,999 per year, and a 3.70% penetration of households with yearly
earnings of $50,000 to $99,999. In 1995, 69.6% of all existing one-week
intervals were purchased for under $10,000.

The timeshare industry is highly fragmented, engaged in by a large number
of local and regional resort developers and operators. The Company believes that
one of the most significant factors contributing to the current awareness of the
timeshare industry is the entry into the market of some of the world's major
lodging, hospitality and entertainment companies, including Marriott, Disney,
Hilton, Hyatt, and Ramada. Certain other companies, such as Signature, Vistana,
and Vacation Break, have recently become public companies, which has also added
to the growth of the industry.

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<PAGE> 47

The Consumer. The median age of a Vacation Interval owner in the United
States in 1995 was 50 years. The median annual household income of a U.S.
Vacation Interval owner in 1995 was approximately $63,400. In 1995,
approximately 16.3% of all U.S. Vacation Interval owners had an annual household
income of less than $40,000, approximately 30.4% of such owners had an annual
household income of less than $50,000, approximately 34.7% of such owners had a
household income of $50,000 to $74,999, and approximately 34.8% of such owners
had household incomes that exceeded $75,000. In a 1990 report, the U.S. Census
Bureau estimated that 30.2% of all U.S. households in 1995 would have a
household income between $25,000 and $50,000, which represents the Company's
targeted market. The U.S. Census Bureau figures represent household incomes
throughout the United States, whereas the Company's customers currently live
primarily only in Texas and Missouri; accordingly, the estimates prepared by the
U.S. Census Bureau may not accurately reflect the annual incomes of the
Company's target customers. Based upon a sampling of approximately 13% of the
Company's customers who purchased a Vacation Interval in 1995 and 1996,
approximately 52% of such customers had an income of $25,000 to $50,000 and
approximately 16% of such customers had an annual income less than $25,000.

The Company believes that its growth strategy is well designed to take
advantage of the strong growth conditions in the timeshare market generally and
the sheer size of the economy segment of the industry particularly.

GROWTH STRATEGY

The Company believes it is the largest operator and developer in the
economy segment of the industry, and further believes this segment has
particularly attractive demographic and competitive characteristics. The Company
targets households with earnings between $25,000 and $50,000, which represented
30.2% of the U.S. population in 1995 based on a 1990 projection by the U.S.
Census Bureau; however, only 1% of these households owned a Vacation Interval.
The Company believes it is the only significant timeshare developer focused
solely on this segment. The Company intends to grow through the following
strategies:

- Increasing Development and Sales of Vacation Intervals at Existing
Resorts. The Company intends to capitalize on its significant expansion
capacity at the Existing Resorts by increasing marketing, sales and
development activities. At March 31, 1997, the Company owned
approximately 3,900 acres of land at the Existing Resorts, including
approximately 3,046 acres which are unsuitable for further development
due to deed restrictions and allowances for lakes or waterways. After
deducting such unsuitable acreage and acreage developed by the Company
through March 31, 1997, approximately 579 acres remain available for
further development of timeshare units and amenities under the Company's
master plan. The Company has broadened its marketing efforts, increased
its sales force, completed (in certain instances) the construction of new
sales offices, club houses, and other amenities, and commenced the
development of newer lodging facilities. Furthermore, the Company has
continued to emphasize its Endless Escape program designed to accommodate
shorter, "getaway" vacations and has broadened its product offerings to
include biennial (alternate year) intervals and Samplers which are
designed to accommodate more cost-conscious customers.

- Increasing Sales of Upgraded Intervals at Existing Resorts. The Company
has designed specific marketing and sales programs to sell upgraded
Vacation Intervals to Silverleaf Owners. Upgrades may include (i) an
interval in a newly designed and constructed standard unit, (ii) an
interval in a larger luxury or enhanced amenity unit, (iii) an interval
during a more desirable time period (week), (iv) an interval at a
different Drive-to Resort, (v) an interval at a Destination Resort, and
(vi) the purchase of an interval for an additional week by an existing
Silverleaf Owner. The Company generally develops higher quality, larger
standard and luxury units for sale as upgraded intervals. For example, at
Ozark Mountain Resort in Branson, Missouri, luxury "President's View"
units are offered for sale at prices ranging from $8,000 to $17,500 per
Vacation Interval. The Company is expanding the President's View units to
other Existing Resorts. To facilitate sales, an existing Silverleaf Owner
may apply the equity in his existing Vacation Interval against the price
of an upgraded Vacation Interval. Such purchase price is typically
financed in the same manner as sales of standard Vacation Intervals. In
1996, upgrade sales amounted to $7.9 million, or approximately 16.4% of
the Company's total revenues. There is no incremental cost to marketing
Vacation Intervals which are transferred to the Company upon upgrade
sales, however, the Company must

45
<PAGE> 48

incur additional sales commissions upon the resale of Vacation Intervals
reconveyed to the Company by purchasers of upgraded intervals.

- Development of New Resorts and Acquisitions. The Company believes there
is ample opportunity for development of new timeshare resorts with
characteristics similar to those of the Existing Resorts. The Company
plans to develop new Drive-to Resorts close to major metropolitan areas
and is considering various potential sites. In this regard, the Company
has recently entered into an agreement with an unrelated third party to
purchase three parcels of land in Illinois, Missouri, and Tennessee for
approximately $3.2 million. These tracts are being operated by the
current owner as membership campgrounds. The agreement allows the Company
approximately four months to inspect the properties and complete its due
diligence and is contingent upon the Company's satisfaction with the
results. Among other things, the agreement will require the Company (i)
to continue to operate and maintain existing campsites and recreational
facilities for the use of existing campground members, and (ii) to honor
the current owner's obligations to provide camping privileges to
campground members who have prepaid for such privileges for time periods
ranging from five to ten years. To secure these obligations to the
current owner, the agreement requires the Company to provide the current
owner letters of credit in the aggregate amount of $500,000. If the
Company elects to close this acquisition, the Company intends to develop
two of these properties located in Illinois and Missouri as new drive-to
resorts by constructing approximately 600 timeshare units on the two
properties over the next seven years. The two parcels of land in Illinois
and Missouri are located in proximity to Chicago and St. Louis.
Construction of units could begin as early as the fourth quarter of 1997.
However, no engineering, architectural or construction estimates have
been commenced by the Company and there can be no assurance that the
Company will either close the acquisition of these properties or, if
closed, commence development of these properties as new drive-to resorts.
The Company estimates that it will cost approximately $47.6 million to
acquire and develop these two properties as new drive-to resorts. If this
three property acquisition is closed, the Company intends to operate the
Tennessee property it currently has under contract as a membership
campground until the Company can fully assess the feasibility of
developing this property as a possible timeshare resort. Additionally,
the Company owns a parcel of land in Pass Christian, Mississippi, which
it plans to develop as a new destination resort. The Company estimates
that it will cost approximately $4.5 million to develop this property.
See "Risk Factors -- Development, Construction and Property Acquisition
Activities". In developing a new resort, the Company will use its
internal design, marketing, and sales capabilities to complete and market
such resorts in accordance with the Company's standard criteria and
incorporate them into its system. The Company will consider acquiring
other resorts and timeshare companies where it believes such acquisitions
would be advantageous to its business. There can be no assurance that the
Company will develop new resorts, locate suitable acquisition candidates
or successfully consummate any such acquisitions. See "Risk
Factors -- Development, Construction and Property Acquisition
Activities".

- Improvement of Operating Margins. The Company believes it can increase
sales without significantly increasing general and administrative costs
by capitalizing on recent investments in its marketing and administrative
systems and personnel, including approximately $2.5 million for
telemarketing equipment and computer hardware and software at the
Company's headquarters in Dallas, Texas. The Company also believes it can
improve margins by selling upgraded Vacation Intervals to existing
Silverleaf Owners since sales of upgraded intervals have significantly
lower sales and marketing costs. In addition, as a public company,
Silverleaf may be able to achieve lower borrowing costs and a lower cost
of capital, although there can be no assurance that as a public company
Silverleaf will be able to achieve such lower borrowing costs and costs
of capital.

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<PAGE> 49

COMPETITIVE ADVANTAGES

The Company believes the following characteristics provide Silverleaf with
competitive advantages in operating within the economy segment of the timeshare
industry:

- Lower Marketing and Sales Costs. With convenient locations and on-site
sales offices at certain Drive-to Resorts, the Company can invite
potential customers to tour the Drive-to Resorts without offering
subsidized airline tickets and lodging, a significant marketing expense
typically incurred by competitors in the industry. The Company has also
reduced marketing, operating, and administrative costs through
centralization and automation of many functions at its Dallas, Texas
headquarters.

- Convenient Drive-to Locations. The Company's Drive-to Resorts are located
within a two-hour drive of the target customers' residences, which
accommodates the demand for shorter, more frequent, close to home
vacations. This proximity facilitates use of the Company's Endless Escape
program which offers Silverleaf Owners up to six consecutive nights per
visit on an unlimited basis for no additional charge, subject to
availability and certain limitations. The Company believes it is the only
operator in the industry which offers its customers these benefits.
Silverleaf Owners can also conveniently enjoy non-lodging resort
amenities year-round.

- Substantial Internal Growth Capacity. At March 31, 1997, the Company had
an inventory of 6,024 Vacation Intervals and a master plan to construct
new units at the Existing Resorts which will result in up to 70,740
additional Vacation Intervals on land presently owned by the Company. The
Company is therefore less reliant on acquisitions and new development for
growth. As the Company builds new units and sells additional Vacation
Intervals at the Existing Resorts, the Company will need to add
additional amenities and infrastructure to the Existing Resorts.

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<PAGE> 50

THE EXISTING RESORTS

The following table sets forth certain information regarding each of the
Existing Resorts at March 31, 1997, unless otherwise indicated.

<TABLE>
<CAPTION>
VACATION INTERVALS AT VACATION
UNITS AT RESORTS RESORTS INTERVALS SOLD(a)
------------------------ --------------------- -----------------
INVENTORY INVENTORY IN
PRIMARY AT PLANNED AT PLANNED DATE SALES THROUGH 1996
RESORT/LOCATION MARKET SERVED 3/31/97 EXPANSION(b) 3/31/97 EXPANSION COMMENCED 3/31/97 ONLY
--------------- -------------- --------- ------------ --------- --------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DRIVE-TO RESORTS
Holly Lake Dallas- 130 104 595 5,200(d) 1982 6,110 1,376
Hawkins, TX Ft. Worth, TX
The Villages Dallas- 204 388 560 20,176(e) 1980 9,929 1,970
Flint, TX Ft. Worth, TX
Lake O' The Woods Dallas- 64 16 114 800(d) 1987 3,199 821
Flint, TX Ft. Worth, TX
Piney Shores Houston, TX 96 304 1,184 15,808(e) 1988 3,809 1,139
Conroe, TX
Hill Country Austin-San 113 292(f) 790 14,600(d) 1984 4,990 644
Canyon Lake, TX Antonio, TX
DESTINATION RESORTS
Ozark Mountain Branson, MO 124 78 2,432 4,056(e) 1982 3,864 95
Kimberling City, MO
Holiday Hills Branson, MO 24 202 349 10,100(d) 1984 823 9
Branson, MO
--- ----- ----- ------ ------ -----
TOTAL 755 1,384 6,024 70,740 32,724 6,054
=== ===== ===== ====== ====== =====

TOTAL $ 6,645
=======
</TABLE>

- ---------------

(a) These totals do not reflect sales of upgraded Vacation Intervals to
Silverleaf Owners. For 1996, upgrade sales at the Existing Resorts were as
follows:

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<PAGE> 51

<TABLE>
<CAPTION>
GOVT. GOVT. GOVT.
APPROVAL APPROVAL APPROVAL
SHELL CURRENTLY IN PROCESS PROCESS PROCESS
COMPLETE CONSTRUCTION COMPLETE PENDING NOT STARTED TOTAL
-------- ------------ -------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Holly Lake.............................. 4 -- 50 -- 50 104
The Villages............................ -- 12 114 152 110 388
Lake O' The Woods....................... -- -- 16 -- -- 16
Piney Shores............................ -- 12 64 120 108 304
Hill Country............................ 3 12 82 42 153(f) 292
Ozark Mountain.......................... 12 -- 30 -- 36 78
Holiday Hills........................... 14 -- 118 -- 70 202
-- -- --- --- --- -----
33 36 474 314 527 1,384
== == === === === =====
</TABLE>

(d) These figures are based on 50 one-week intervals per unit. In some
instances, the Company may be able to market 52 one-week intervals per unit.

(e) These figures are based on 52 one-week intervals per unit.

(f) This figure includes 132 planned units on land which the Company has the
right to acquire in June 1997 pursuant to a written agreement.

(g) Boating is available near the resort.

FEATURES COMMON TO ALL RESORTS

The Existing Resorts are located in rustic areas offering Silverleaf Owners
a quiet, relaxing vacation environment. Furthermore, the resorts offer different
vacation activities, including golf, fishing, boating, swimming, horseback
riding, tennis and archery. Features common to all resorts include the
following:

- Endless Escape Program. The Company's Endless Escape program offers
Silverleaf Owners a substantial benefit not typically enjoyed by many
other timeshare owners. In addition to the right to use his unit one week
per year, the Endless Escape program allows a Silverleaf Owner to also
use any of the Existing Resorts for up to six consecutive nights per
visit on an unlimited basis for no additional charge. The Endless Escape
program is limited based on the availability of units which include
unused intervals and unsold inventory. The Company believes this program
is important as many vacationers prefer shorter two to three day
vacations. Silverleaf Owners who have utilized the resort less frequently
are given priority to

49
<PAGE> 52

use the program and may only use an interval with an equal or lower
rating than his Vacation Interval. See "-- Participation in Vacation
Interval Exchange Networks".

- Year-Round Use of Amenities. Silverleaf Owners have unlimited year-round
use of the amenities located at the Existing Resorts, such as boating,
fishing, miniature golf, tennis, swimming, or hiking, for little or no
additional cost. Certain amenities, however, such as golf, horseback
riding or watercraft rentals, may require a usage fee.

- Exchange Privileges. Each Silverleaf Owner has certain exchange
privileges which entitle him on an annual basis to (i) exchange his
interval for a different interval (week) at the same resort so long as
the different interval is of an equal or lower rating; and (ii) exchange
his interval for the same interval (week) at any other of the Existing
Resorts. These intra-company exchange rights require an exchange fee,
which is currently $50, and are conditioned upon availability of the
desired interval or resort. In addition, for an additional annual fee of
approximately $74, a Silverleaf Owner may join the exchange program
administered by RCI. See "-- Participation in Vacation Interval Exchange
Networks".

- Deeded Ownership. The Company typically sells a Vacation Interval which
entitles the owner to use a specific unit for a designated one-week
interval each year. The Vacation Interval purchaser receives a recorded
deed which grants the purchaser a percentage interest in a specific unit
for a designated week. The Company also sells a biennial (alternate year)
Vacation Interval which allows the owner to use a unit for a one-week
interval every other year with reduced dues.

- Clubs/Master Club. Each of the Existing Resorts has a Club which has an
agreement with the Master Club to manage the Existing Resorts on a
centralized and collective basis. The Master Club has contracted with the
Company to perform the supervisory, management and maintenance functions
granted by the Clubs to the Master Club. Costs of these operations are
covered by monthly dues paid by Silverleaf Owners to their respective
Clubs together with income generated by the operation of certain
amenities at the Existing Resorts.

- On-Site Security. The Existing Resorts are patrolled by security
personnel who are either employees of the Master Club or personnel of
independent security service companies which have contracted with the
Clubs.

DESCRIPTION OF EXISTING RESORTS

Holly Lake Resort. Holly Lake is a family-oriented golf resort located in
the Piney Woods of East Texas, approximately 105 miles east of Dallas. The
timeshare portion of Holly Lake is part of a 4,300 acre mixed use development of
single-family lots and timeshare units with other third-party developers. The
Company owns approximately 2,740 acres within Holly Lake, of which approximately
2,667 may not be developed due to deed restrictions. At March 31, 1997,
approximately 27 acres were developed such that approximately 45 remaining acres
are currently planned by the Company to be used for future development.

The Holly Lake resort timeshare development has been planned for a total of
234 units, with 130 units completed as of March 31, 1997. Three different types
of units are offered at the resort: (i) two bedroom, two bath, wood siding and
stucco fourplexes; (ii) one bedroom, one bath, one sleeping loft, log
construction duplexes; and (iii) two bedroom, two bath, log construction
fourplexes. Each unit has a living room with sleeper sofa and full kitchen.
Other amenities within each unit include whirlpool tub, color television, and
vaulted ceilings. Certain units include interior ceiling fans, imported ceramic
tile, over-sized sliding glass doors, and rattan and pine furnishings.

Amenities at the resort include an 18-hole golf course with pro shop;
19th-hole private club and restaurant; Holly Lake Restaurant; Country Store;
indoor rodeo arena and stables; six tennis courts (four lighted); four different
lakes (one with sandy swimming beach and swimming dock, one with boat launch for
water skiing); two swimming pools with bathhouses; children's pool and pavilion;
recently completed hiking/nature trail; children's playground area; miniature
golf course; three picnic areas; activity center with big screen television;
gameroom with arcade games and pool tables; horseback trails; activity areas for
basketball, horseshoes, volleyball, shuffleboard, and archery; and camp sites
with electrical and water hookups. Silverleaf Owners can also rent

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<PAGE> 53

canoes, bicycles, and water trikes. Homeowners in neighboring subdivisions are
entitled to use the amenities at Holly Lake pursuant to easements or use
agreements.

At March 31, 1997, the resort contained 6,500 Vacation Intervals, of which
595 intervals remained available for sale. The Company plans to build an
additional 104 units, which would yield an additional 5,200 Vacation Intervals
available for sale. Vacation Intervals are currently priced from $6,000 to
$12,500 for one-week stays, 1,376 of which were sold in 1996. See "-- Summary of
Company Resorts" and "Risk Factors -- Development, Construction and Property
Acquisition Activities".

The Villages and Lake O' The Woods Resorts. The Villages and Lake O' The
Woods are sister resorts located on the shores of Lake Palestine, approximately
100 miles east of Dallas, Texas. The Villages, located approximately five miles
northwest of Lake O' The Woods, is an active sport resort popular for
water-skiing and boating. Lake O' The Woods is a quiet wooded resort where
Silverleaf Owners can enjoy the seclusion of dense pine forests less than two
hours from the Dallas-Fort Worth metroplex. The Villages is a mixed use
development of single-family lots and timeshare units, while Lake O' The Woods
has been developed solely as a timeshare resort. The two resorts contain
approximately 615 acres, of which approximately 379 may not be developed due to
deed restrictions. At March 31, 1997, approximately 47 acres were developed such
that approximately 189 remaining acres are currently planned by the Company to
be used for future development.

The timeshare development at these resorts has been planned for 672 units,
including 592 at The Villages and 80 at the Lake O' The Woods. At March 31,
1997, 204 units were completed at The Villages and 64 units were completed at
Lake O' The Woods. An additional 12 units at The Villages are scheduled for
completion by July 1997. There are four different types of units at these
resorts: (i) three bedroom, two and one-half bath, wood siding exterior duplexes
and fourplexes (two units); (ii) two bedroom, two bath, brick and siding
exterior fourplexes; (iii) two bedroom, two bath, siding exterior fourplexes;
and (iv) one bedroom, one bath with two-bed loft sleeping area, log construction
duplexes. Amenities within each unit include full kitchen, whirlpool tub, and
color television. Certain units include interior ceiling fans, ceramic tile,
and/or a fireplace.

Both resorts are situated on Lake Palestine, a 27,000 acre public lake.
Recreational facilities and improvements at The Villages include a full service
marina with convenience store, boat launch, water-craft rentals, covered and
locked rental boat stalls; two swimming pools; lighted tennis court; miniature
golf course; nature trails; camp sites; riding stables; soccer/softball field;
children's playground; RV sites; an activity center with reading room,
wide-screen television and pool table; and competitive sports facilities which
include horseshoe pits, archery range, and shuffleboard, volleyball, and
basketball courts. Silverleaf Owners at The Villages can also rent or use
bicycles, jet skis, motor boats, paddle boats, pontoon boats, and water trikes.
Neighboring homeowners are also entitled to use these amenities pursuant to a
use agreement.

Recreational facilities at Lake O' The Woods include swimming pool,
bathhouse, lighted tennis court, a recreational beach area with picnic areas, a
fishing pier on Lake Palestine, nature trails, soccer/softball field, children's
playground, RV sites, an activity center with wide-screen television and pool
table, horseshoe pits, archery range, putting green, miniature golf course, and
shuffleboard, volleyball, and basketball courts. Guests can also ride horses or
rent bicycles.

At March 31, 1997, the Villages contained 10,200 total Vacation Intervals,
of which 560 remained available for sale. In addition to the 12 units under
construction, the Company plans to build 376 additional units at the Villages,
which collectively would yield an additional 20,176 Vacation Intervals available
for sale. At March 31, 1997, Lake O' The Woods contained 3,200 total Vacation
Intervals, of which 114 remained available for sale. The Company plans to build
16 additional units at Lake O' The Woods, which would yield 800 additional
Vacation Intervals available for sale. Vacation Intervals at The Villages and
Lake O' The Woods are currently priced from $5,500 to $14,500 for one-week stays
(and start at $3,500 for biennial intervals). During 1996, 1,970 Vacation
Intervals were sold at The Villages and 821 Vacation Intervals were sold at Lake
O' The Woods. See "-- Summary of Company Resorts" and "Risk
Factors -- Development, Construction and Property Acquisition Activities".

Piney Shores Resort. Piney Shores is a quiet, wooded resort ideally located
for day-trips from metropolitan areas in the southeastern Gulf Coast area of
Texas. Piney Shores is located on the shores of Lake Conroe,

51
<PAGE> 54

approximately 40 miles north of Houston, Texas. The resort contains
approximately 116 acres, of which approximately 73 acres are planned by the
Company for future development.

At March 31, 1997, 96 units were completed, and an additional 12 units are
scheduled to be completed by July 1997. All units consist of two bedroom, two
bath units, configured in log cabin fourplexes which will comfortably
accommodate up to six people. Amenities include a living room with sleeper sofa
and full kitchen, whirlpool tub, color television, and interior ceiling fans.
The Company recently completed 24 new "lodge-style" units which feature stone
fireplaces, white-washed pine wall coverings, "age-worn" paint finishes, and
antique furnishings.

The primary recreational amenity at the resort is Lake Conroe, a 21,000
acre public lake. Other recreational facilities and improvements available at
the resort include a swimming pool with spa, a new bathhouse complete with
showers and restrooms, lighted tennis court, miniature golf course, stables,
horseback riding trails, children's playground, picnic areas, boat launch, beach
area for swimming, 1,500-square foot activity center with big-screen television,
covered wagon rides, and facilities for horseshoes, archery, shuffleboard, and
basketball. The resort also has a vintage moored paddle-wheeled riverboat which
is available for parties and receptions.

At March 31, 1997, the resort contained 4,800 Vacation Intervals, of which
approximately 1,184 remained available for sale. In addition to the 12 units
under construction, the Company intends to build 292 additional units, which
collectively would yield an additional 15,808 Vacation Intervals available for
sale. Vacation Intervals at Piney Shores are currently priced from $6,000 to
$14,500 for one-week stays (and start at $3,500 for biennial intervals). In
1996, 1,139 Vacation Intervals were sold. See "-- Summary of Company Resorts"
and "Risk Factors -- Development, Construction and Property Acquisition
Activities".

Hill Country Resort. Hill Country Resort is located near Canyon Lake in the
hill country of central Texas between Austin and San Antonio. Hill Country
Resort contains approximately 37 acres, of which approximately 13 acres are
currently planned by the Company to be used for future development. The Company
has recently entered into several contracts to purchase 23 additional acres on
which the Company plans to build 132 units.

At March 31, 1997, 113 units were completed, and an additional 292 units
are planned for development. Twenty units are single story, while all other
units are two-story structures in which the bedrooms and baths are located on
the second story. Each unit contains two bedrooms, two bathrooms, living room
with sleeper sofa, and full kitchen. Other amenities within each unit include
whirlpool tub, color television, and interior design details such as vaulted
ceilings. Certain units include interior ceiling fans, imported ceramic tile,
over-sized sliding glass doors, rattan and pine furnishings, and/or a fireplace.
The Company has recently completed 22 new units which feature the new "lodge
style".

Amenities at the resort include a registration center; an 1,150-square foot
activity center with electronic games, pool table, and wide-screen television;
miniature golf course; a children's playground area; barbecue and picnic areas;
enclosed swimming pool and heated spa; children's wading pool; newly-constructed
tennis court; archery range; and activity areas for shuffleboard, basketball,
horseshoes, and volleyball. Area sights and activities include water-tubing on
the nearby Guadalupe River, and visiting the River Walk or the Alamo in San
Antonio.

At March 31, 1997, the resort contained 5,650 total Vacation Intervals, of
which 790 remained for sale. In addition to the 12 units under construction, the
Company plans to build 280 additional units, which collectively would yield
14,600 additional Vacation Intervals available for sale. Vacation Intervals at
the resort are currently priced from $6,000 to $14,500 for one-week stays (and
start at $3,500 for biennial alternate year intervals), 644 of which were sold
in 1996. See "-- Summary of Company Resorts" and "Risk Factors -- Development,
Construction and Property Acquisition Activities".

Ozark Mountain Resort. Ozark Mountain Resort is a family-oriented resort
located on the shores of Table Rock Lake which features bass fishing. The resort
is located approximately 15 miles from Branson, Missouri, a country music
entertainment center, 233 miles from Kansas City, and 276 miles from St. Louis.
Ozark Mountain Resort is a mixed-use development of timeshare and condominium
units. The resort contains approximately 116 acres, of which approximately 82
acres are currently planned by the Company to be used for future development.

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<PAGE> 55

At March 31, 1997, 124 units were completed, and the Company plans to build
78 additional units. There are two types of units: (i) two bedroom, two bath,
one-story fourplexes; and (ii) two bedroom, two bath, three-story sixplexes.
Each standard unit includes two large bedrooms, two bathrooms, living room with
sleeper sofa, and full kitchen. Other amenities within each unit include
whirlpool tub, color television, and vaulted ceilings. Certain units contain
interior ceiling fans, imported ceramic tile, over-sized sliding glass doors,
rattan or pine furnishings, or fireplace. "President's View" units feature a
panoramic view of Table Rock Lake, a larger, more spacious floor plan (1,210
square feet), front and back screened verandas, washer and dryer, and a more
elegant decor.

The primary recreational amenity available at the resort is Table Rock
Lake, a 43,100 acre public lake. Other recreational facilities and improvements
at the resort include a swimming beach with dock, an activities center with pool
table, covered boat dock and launch ramp, olympic-sized swimming pool,
concession area with dressing facilities, lighted tennis court, nature trails,
horseback riding trails, two picnic areas, two playgrounds, miniature golf
course, and a competitive sports area accommodating volleyball, basketball,
tetherball, horseshoes, shuffleboard, and archery. Guests can also rent or use
canoes, paddle boats, or rowboats. Owners of neighboring condominium units
developed by the Company in the past are also entitled to use these amenities
pursuant to use agreements with the Company. Similarly, owners of Vacation
Intervals are entitled to use certain amenities of these condominium
developments, including a wellness center featuring a jacuzzi and exercise
equipment.

At March 31, 1997, the resort contained 6,224 Vacation Intervals, of which
approximately 2,432 remained available for sale. The Company plans to build 78
additional units which would yield an additional 4,056 Vacation Intervals
available for sale. Standard Vacation Intervals at the resort are currently
priced from $8,000 to $14,500 for one-week stays, while one-week "President's
View" intervals are priced at $8,000 to $17,500 depending on the value rating of
the interval. See "-- Summary of Company Resorts" and "Risk Factors --
Development, Construction and Property Acquisition Activities".

Holiday Hills Resort. Holiday Hills is a resort community located in Taney
County, Missouri, two miles east of Branson, Missouri. The resort is 224 miles
from Kansas City and 267 miles from St. Louis. The resort is heavily wooded by
cedar, pine, and hardwood trees, and is favored by Silverleaf Owners seeking
quality golf and nightly entertainment in nearby Branson. Holiday Hills is a
mixed-use development of single-family lots, condominiums and timeshare units.
The resort contains approximately 338 acres, of which approximately 177 acres
are currently planned by the Company to be used for future development.

The Company plans to build 202 new units, and 24 units were complete at
March 31, 1997. There are two types of timeshare units: (i) two bedroom, two
bath, one-story fourplexes; and (ii) one bedroom, one bath, with upstairs loft,
log construction duplexes. Each unit includes a living room with sleeper sofa,
full kitchen, whirlpool tub, color television, vaulted ceilings, and interior
ceiling fans.

Taneycomo Lake, a popular lake for trout fishing, is three miles away, and
Table Rock Lake is approximately ten miles away. The resort has an 18-hole golf
course which is undergoing an approximate $2.5 million renovation and is
scheduled for completion in mid-1997. Other amenities owned by the Company
include a pro shop, a swimming pool, miniature golf course, tennis court, picnic
area, camp sites, archery range, basketball court, and an activity area which
includes shuffleboard and horseshoes. Lot and condominium unit owners are also
entitled to use these amenities pursuant to use agreements between the Company
and certain homeowner associations.

At March 31, 1997, the resort contained 1,200 Vacation Intervals, of which
349 remained available for sale. The Company plans to build 202 additional
units, which would yield an additional 10,100 Vacation Intervals available for
sale. Intervals at the resort are currently priced from $8,000 to $14,500 for
one-week stays. See "-- Summary of Company Resorts" and "Risk
Factors -- Development, Construction and Property Acquisition Activities".

MARKETING AND SALES

Marketing is the process by which the Company attracts potential customers
to visit and tour an Existing Resort or attend a sales presentation. Sales is
the process by which the Company seeks to sell a Vacation Interval

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<PAGE> 56

to a potential customer once he arrives for a tour at an Existing Resort or
attends a sales presentation. The Company believes it has the marketing and
sales systems necessary to sell Vacation Intervals in the economy segment on a
low-cost basis. The Company also believes it is strategically positioned to
enter new markets and develop marketing programs for additional resorts it may
develop in the future at a lower cost than its competitors in the economy
segment.

Marketing. The Company's in-house marketing staff develops prospects
through a variety of marketing programs specifically designed to attract the
Company's target customers. Databases of new prospects are principally developed
through cooperative arrangements between Database Research, Inc., a subsidiary
of the Company, and other local businesses and special event sponsors. Under
these cooperative marketing programs, basic demographic information of potential
customers is solicited on a voluntary basis from individuals who patronize these
businesses or events. After entering this demographic information into its
permanent database, the Company utilizes its systems to identify prospects who
meet the Company's marketing criteria. Using the Company's automated dialing and
bulk mailing equipment, in-house marketing specialists conduct coordinated
telemarketing and direct mail procedures which invite prospects to tour one of
the Company's resorts and receive an incentive, such as a free gift.

Sales. The Company actively sells its Vacation Intervals primarily through
on-site salespersons at certain Existing Resorts. Upon arrival at an Existing
Resort for a scheduled tour, the prospect is met by a member of the Company's
on-site salesforce who conducts the prospect on a one to two hour tour of the
resort and its related amenities. At the conclusion of the tour, the sales
representative explains the benefits and costs of becoming a Silverleaf Owner.
The presentation also includes a description of the financing alternatives
offered by the Company. Prior to the closing of any sale, a verification officer
(a salaried employee of the Company) interviews each prospect to ensure
compliance with Company sales policies and regulatory agency requirements. No
sale becomes final until a statutory waiting period (which varies from state to
state) of up to five days has passed.

Sales representatives receive commissions ranging from 5-14% of the sales
price depending on established guidelines. Sales managers also receive
commissions from 4-6%, and are subject to commission chargebacks in the event
the purchaser fails to make his first required payment. Sales directors also
receive commissions of 2%, which are also subject to chargebacks.

Prospects who are interested in a lower priced product are offered biennial
(alternate year) intervals or Samplers, which entitle the prospect to sample a
resort for a specified number of nights. The prospect may apply the cost of a
Sampler against the down-payment on a Vacation Interval if purchased at a later
date. In addition, the Company actively markets upgraded Vacation Intervals to
existing Silverleaf Owners. See "-- Strategy". Although most upgrades are sold
by the Company's in-house sales staff, the Company has contracted with a third
party to assist in offsite marketing of upgrades at the Destination Resorts.
These upgrade programs have been well received by Silverleaf Owners and
accounted for 21% and 16%, respectively, of the Company's gross revenues from
Vacation Interval sales for 1995 and 1996. By offering Samplers and upgraded
Vacation Intervals, the Company believes it offers an affordable product for all
prospects in its target market. Also, by offering products with a range of
prices, the Company attempts to attract younger purchasers with its lower-priced
products and gradually upgrade such purchasers over time as their earnings
increase.

Because the Company's sales representatives are a critical component of the
sales and marketing effort, the Company continually strives to attract, train
and retain a dedicated salesforce. The Company provides intensive sales
instruction and training which, coupled with the representative's valuable local
knowledge, assist the sales representatives in acquainting prospects with the
resort's benefits. Each sales representative is an employee of the Company and
receives some employment benefits. At December 31, 1996, the Company employed
more than 200 sales representatives at its Existing Resorts.

CUSTOMER FINANCING

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notes, and this risk is heightened inasmuch as the Company generally does not
verify the credit history of its customers and will provide financing if the
customer is presently employed and meets certain household income criteria.

The Company's credit experience is such that in 1997 it plans to allocate
22% of the purchase price of each Vacation Interval to a bad debt reserve. If a
buyer of a Vacation Interval defaults, the Company generally must foreclose on
the Vacation Interval and attempt to resell it; the associated marketing,
selling, and administrative costs from the original sale are not recovered; and
such costs (approximately 40% of sales price) must be incurred again to resell
the Vacation Interval. Although the Company, in many cases, may have recourse
against a Vacation Interval buyer for the unpaid price, the State of Texas and
certain other states have laws which limit the Company's ability to recover
personal judgments against customers who have defaulted on their loans. For
example, under Texas law, if the Company were to pursue a post-foreclosure
deficiency claim against a customer, the customer may file a court proceeding to
determine the fair market value of the property foreclosed upon. In such event,
the Company may not recover a personal judgment against the customer for the
full amount of the deficiency, but may recover only to the extent that the
indebtedness owed to the Company exceeds the fair market value of the property.
Accordingly, the Company has generally not pursued this remedy.

The Company recognizes interest income as earned. If interest payments on
customer notes become delinquent, the Company ceases recognition of the interest
income until collection is assured. When inventory is returned to the Company,
any unpaid note receivable balances are charged against the allowance for
uncollectible notes net of the amount at which the Vacation Interval is being
restored to inventory.

While the Company intends to use the proceeds of the Offering to pay off
approximately $45.0 million of its existing indebtedness, it will be required to
continue to borrow to sustain operations. The Company has entered into
agreements with lenders to borrow up to approximately $96 million collateralized
by customer promissory notes and mortgages. The Company's lenders typically lend
70% of the principal amount of performing notes, and Silverleaf Owners make
payments on their promissory notes directly to the lender's collection center,
where receipts are applied against the Company's loan balance. At December 31,
1996, the Company had a portfolio of approximately 15,796 customer promissory
notes in the approximate principal amount of $66.8 million, of which
approximately $7.9 million in principal amount of customer receivables were 60
days or more past due and therefore ineligible as collateral. At such date, the
Company had borrowings from lenders in the approximate principal amount of $34.7
million secured by the customer loans. Historically and currently, after taking
into account the amount of ineligible collateral and the 70% borrowing base, the
Company's borrowings have approached the maximum amount available under its
existing credit facilities. To the extent the Company generates additional
customer notes receivable through its sales efforts, such notes may be pledged
to lenders for additional borrowings, subject to the 70% advance rate.

At December 31, 1996, the Company's portfolio of customer loans had an
average yield of 14.7%. At such date, the Company's borrowings, which bear
interest at variable rates, had a weighted average cost of 10.8%. The Company
has historically derived net interest income from its financing activities
because the interest rates it charges its customers who finance the purchase of
their Vacation Intervals exceed the interest rates the Company pays to its
lenders. Because the Company's indebtedness bears interest at variable rates and
the Company's customer receivables bear interest at fixed rates, increases in
interest rates will erode the spread in interest rates that the Company has
historically enjoyed and could cause the interest expense on the Company's
borrowings to exceed its interest income on its portfolio of customer loans. The
Company does not engage in interest rate

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hedging transactions. Therefore, any increase in interest rates, particularly if
sustained, could have a material adverse effect on the Company's results of
operations, liquidity and financial position.

Limitations on availability of financing would inhibit sales of Vacation
Intervals due to (i) the lack of funds to finance the initial negative cash flow
that results from sales that are financed by the Company, and (ii) reduced
demand if the Company is unable to provide financing to purchasers of Vacation
Intervals. The Company ordinarily receives only 10% of the purchase price on the
sale of a Vacation Interval but must pay in full the costs of development,
marketing, and sale of the Interval. Maximum borrowings available under the
Company's current credit agreements may not be sufficient to cover these costs,
thereby straining capital resources, liquidity, and capacity to grow. In
addition, to the extent interest rates decrease generally on loans available to
the Company's customers, the Company faces an increased risk that customers will
pre-pay their loans and reduce the Company's income from financing activities.

The Company typically provides financing to customers over a seven year
period which customer notes have an average maturity of 5.6 years. The Company's
related revolving credit borrowings, however, mature between October 1998 and
August 2003, with most of such borrowings maturing in 1999. Accordingly, there
is a mismatch between the Company's cash receipts and the Company's cash
disbursement obligations. Although the Company has historically been able to
secure financing sufficient to fund its operations, it does not presently have
agreements with its lenders to extend the term of its existing funding
commitments or to replace such commitments upon their expiration. Failure to
obtain such refinancing facilities could require the Company to sell its
portfolio of customer loans, probably at a substantial discount, or to seek
other alternatives to enable it to continue in business. While the Company has
been successful in obtaining financing to date, there is no assurance it will be
able to do so in the future. See "Risk Factors -- Acceleration of Deferred
Taxes, Alternative Minimum Taxes".

EXISTING CREDIT FACILITIES

The Company has five revolving credit facilities with four lenders
providing for loans up to $96 million, approximately $39.7 million of which was
outstanding at March 31, 1997, maturing between October 1998 and August 2003.
These credit facilities are collateralized by customer notes receivables, and
one of these credit facilities is also collateralized by unsold Vacation
Intervals. The Company also has one term loan which is collateralized by
condominium units, certain acreage, and customer notes receivable. Collectively,
the credit agreements contain numerous covenants including requiring the Company
to (i) preserve and maintain the collateral securing the loans; (ii) pay all
taxes and other obligations relating to the collateral; and (iii) refrain from
selling or transferring the collateral or permitting any encumbrances on the
collateral. Such credit facilities also contain operating covenants requiring
the Company to (i) maintain an aggregate minimum tangible net worth ranging from
$6.0 million to $17.5 million; (ii) maintain its legal existence and be in good
standing in any jurisdiction where it conducts business; (iii) remain in the
active management of the Existing Resorts; (iv) ensure that sales and marketing
expenses incurred in connection with marketing the Vacation Intervals do not
exceed 50% of the net sales revenue realized from the sale of the Vacation
Intervals, and (v) refrain from modifying or terminating certain timeshare
documents. See Note 7 of Notes to Consolidated Financial Statements.

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DEVELOPMENT AND ACQUISITION PROCESS

The Company believes there is substantial opportunity to develop and
acquire resorts, although such activities have not contributed to the Company's
growth in recent years. As part of its current growth strategy, the Company
intends to develop and selectively acquire new resorts with characteristics
similar to the Existing Resorts. The Company has recently entered into an
agreement to acquire three tracts of land, two of which it plans to develop as
new drive-to timeshare resorts. See " -- Growth Strategy -- Development of New
Resorts and Acquisitions". The Company estimates it will cost $47.6 million to
develop these two tracts in Illinois and Missouri as timeshare projects. The
Company also has plans to develop a tract of land it owns in Mississippi as a
new destination resort at an estimated cost of $4.5 million for 50 units. See
"Risk Factors -- Development, Construction, and Property Acquisition
Activities".

In evaluating a potential site for a Drive-to Resort, the Company generally
seeks locations within 100 miles of a large metropolitan area. For both Drive-to
Resorts and Destination Resorts, the Company seeks rustic settings with
amenities such as golf courses or water frontage. The Company also seeks
locations offering an absence of competing properties within the economy
timeshare segment, ease of development with respect to zoning and land-use
issues, and ease of compliance with governmental regulations concerning
timeshare sales and operations.

Before committing capital to a site, the Company tests the market using
certain marketing techniques developed by the Company. The Company also explores
the zoning and land-use laws applicable to the potential site and the regulatory
issues pertaining to licenses and permits for timeshare sales and operations.
The Company will also contact various governmental entities and review
applications for necessary governmental permits and approvals. If the Company is
satisfied with its market and regulatory review, it will prepare a conceptual
layout of the resort, including building site plans and resort amenities. After
the Company applies its standard lodging unit design and amenity package, the
Company prepares a budget which estimates the cost of developing the resort,
including costs of lodging facilities, infrastructure and amenities, as well as
projected sales, marketing, and general and administrative costs. Once a budget
has been prepared, the Company will enter into a contract for the site. Such
contract may provide for additional due diligence by the Company, including
obtaining an environmental report by an environmental consulting firm, a survey
of the property, and a title commitment. If recommended by an environmental
consulting firm, the Company may either conduct additional testing or abandon
the proposed site. The Company employs legal counsel to review such documents
and to also review pertinent legal issues. If the Company continues to be
satisfied with the site after the environmental and legal review, the Company
will complete the purchase of the property.

The Company has a contract with an outside architectural firm which
supervises construction of new units. All construction activities are contracted
out to third parties, subject to completion guarantees. The Company seeks
initial completion of the development of a new resort's basic infrastructure and
models within one year, with additional units to be added within 150 days based
on demand. See "Risk Factors -- Development, Construction and Property
Acquisition Activities". An integral part of the development process is the
establishment of a functional sales office at the new resort.

CLUBS/MASTER CLUB

Upon purchasing a Vacation Interval at an Existing Resort, the purchaser
automatically becomes a member of the Club for that particular resort. The
Company has the right to appoint the directors of the Clubs. The Silverleaf
Owners are obligated to pay monthly dues to their respective Clubs, which
obligation is secured by a lien on their Vacation Interval in favor of the Club.
If a Silverleaf Owner fails to pay his monthly dues, the Club may foreclose on
the delinquent Silverleaf Owner's Vacation Interval.

Each of the Clubs has entered into a Master Club Agreement with the Master
Club. The Master Club, a non-profit corporation, has no shareholders or members,
and its directors are elected by a majority vote of the directors of the Clubs.
The Master Club Agreement authorizes the Master Club to manage the Existing
Resorts on a centralized and collective basis. As the Company develops new
resorts, their clubs are expected to be added to the Master Club Agreement. The
consolidation of resort operations through the Master Club permits: (i) a
centralized reservation system for the Existing Resorts; (ii) substantial cost
savings by purchasing goods and services for the Existing Resorts on a group
basis, which generally results in a lower cost of goods and services

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than if such goods and services were purchased by each resort on an individual
basis; (iii) centralized management for the entire resort system; (iv)
centralized legal, accounting and administrative services for the entire resort
system; and (v) uniform implementation of various rules and regulations
governing the Existing Resorts. All furniture, furnishings, recreational
equipment and other personal property used in connection with the operation of
the Existing Resorts are owned by the Master Club, rather than the Company.

One officer of the Company is also an officer of the Master Club. Prior to
1997, a large portion of her salary was paid by the Master Club. At December 31,
1996, the Master Club had 340 full-time employees and is solely responsible for
their salaries. The Master Club is also responsible for the direct expenses of
operating the Existing Resorts, while the Company is responsible for the direct
expenses of new development and all marketing and sales activities. To the
extent the Master Club provides payroll, administrative and other services that
directly benefit the Company, the Company reimburses the Master Club for such
services. See "Certain Relationships and Related Transactions -- Other
Affiliated Transactions" and Note 10 of Notes to Consolidated Financial
Statements.

The Master Club collects dues, currently $49.98 per month ($24.99 for
biennial (alternate year) Vacation Intervals), from Silverleaf Owners, plus
certain other amounts assessed against the Silverleaf Owners from time to time,
together with all income generated by the operation of certain amenities at the
Existing Resorts. Such amounts are placed in a common account and are used by
the Master Club to pay the costs of operating the Existing Resorts and the
management fees owing to the Company pursuant to a Management Agreement between
the Company and the Master Club. This Management Agreement authorizes the
Company to manage and operate the resorts and provides for a management fee
equal to 15% of Master Club gross revenues, but the Company's right to receive
such fee on an annual basis is limited to the amount of the Master Club's net
income. Due to anticipated refurbishment of units at the Existing Resorts,
together with the operational and maintenance expenses associated with the
Company's current expansion and development plans, the Company believes its 1997
management fee will be subject to the net income limitation. For financial
reporting purposes, management fees from the Master Club are recognized based on
the lower of (i) 15% of Master Club's gross revenues, or (ii) Master Club net
income. See Note 10 of Notes to Consolidated Financial Statements. The
Management Agreement was entered into in March 1990, has a ten year term, and
will continue year-to-year thereafter unless cancelled by either party.

OTHER OPERATIONS

Operation of Amenities. The Company owns, operates, and receives the
revenues from the marina at The Villages and the golf course and pro shop at
Holiday Hills. Although the Company owns the golf course at Holly Lake, a
homeowners association in the development operates the golf course. In general,
the Master Club receives revenues from the various amenities which require a
usage fee, such as watercraft rentals, horseback rides, and restaurants.

Unit Leasing. The Company also realizes revenues from sales of Samplers
which allow prospective Vacation Interval purchasers to sample a resort for a
specified number of nights. A five night Sampler package currently sells for
$795. For the years ended December 31, 1995 and 1996, the Company realized $1.31
million and $1.72 million, respectively, in revenues from Sampler sales. See
"Management Discussion and Analysis of Financial Condition and Results of
Operation".

Utility Services. The Company owns its own water supply facilities at Piney
Shores Resort, The Villages, Hill Country Resort, Holly Lake, Ozark Mountain
Resort, and Holiday Hills Resort. The Company also currently owns its own
waste-water treatment facilities at Piney Shores Resort and Ozark Mountain
Resort, and has entered into an agreement with the local public utility company
to transfer ownership of the waste-water treatment facilities at Holiday Hills.
TNRCC is the primary state umbrella agency regulating the utilities at the
Drive-to Resorts in Texas, and the Department of Natural Resources and Public
Service Commission of Missouri are the primary state umbrella agencies
regulating such utilities at the Destination Resorts in Missouri. The Company
has rate case permits to supply and charge third parties for the water supply
facilities at The Villages and Holly Lake and the waste-water facility at
Holiday Hills Resort, and has applied for rate case permits which would allow it
to charge third-parties for water supply at Piney Shores Resort and Hill Country
Resort and the waste-water facility

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at Holly Lake. The Company plans to build a waste-water facility at The Villages
in 1997, which facility should be completed by mid-1998. As a result of an
enforcement proceeding brought by TNRCC, the Company is in the process of
expanding its waste-water facility at Holly Lake, which the Company believes
will be completed within the time schedule mandated by TNRCC.

Other Property. The Company owns an undeveloped five-acre tract of land on
the Gulf Coast in Mississippi. See "-- Development and Acquisition Process". As
of December 31, 1996, it also owned 28 lots at Holiday Hills Resort and 282 lots
at The Villages. At December 31, 1996, the Company also owned 18 condominium
units which are in the process of being sold. See Note 12 of Notes to
Consolidated Financial Statements. Additionally, the Company owns approximately
45 acres in Mississippi, and the Company is entitled to 85% of any profits from
this land. An affiliate of a proposed director owns a 10% net profits interest
in this land. See "Management -- Certain Relationships and Other Transactions".

Other Operations. The Company provides management services for certain
condominium homeowners' associations at the Existing Resorts.

PARTICIPATION IN VACATION INTERVAL EXCHANGE NETWORKS

Internal Exchanges. Each purchaser of a Vacation Interval from the Company
has certain exchange privileges which entitle such purchaser to: (i) exchange
his interval for a different interval (week) at the same resort so long as the
different interval is of an equal or lower rating; and (ii) exchange his
interval for the same interval at any other of the Existing Resorts. These
intra-company exchange rights require an exchange fee, which is currently $50,
and are conditioned upon availability of the desired interval or resort.

RCI Exchanges. The Company believes that its Vacation Intervals are made
more attractive by the Company's participation in Vacation Interval exchange
networks operated by RCI. Approximately one-third of Silverleaf Owners
participate in RCI's exchange network. Membership in RCI allows participating
Silverleaf Owners to exchange their occupancy right in a unit in a particular
year for an occupancy right at the same time or a different time of the same or
lower color rating in another participating resort, based upon availability and
the payment of a variable exchange fee. A member may exchange his Vacation
Interval for an occupancy right in another participating resort by listing his
Vacation Interval as available with the exchange organization and by requesting
occupancy at another participating resort, indicating the particular resort or
geographic area to which the member desires to travel, the size of the unit
desired and the period during which occupancy is desired.

RCI has assigned a rating of either "red", "white", or "blue" to each
Vacation Interval for each Existing Resort, based upon a number of factors,
including the location and size of the unit, the quality of the resort and the
period during which the Vacation Interval is available, and attempts to satisfy
exchange requests by providing an occupancy right in another Vacation Interval
with a similar rating. Owners of a red Vacation Interval may exchange their
interval for a red, white, or blue interval. Owners of a white Vacation Interval
may exchange only for a white or blue interval, and owners of a blue interval
may exchange only for a blue interval. If RCI is unable to meet the member's
initial request, it suggests alternative resorts based on availability. RCI has
assigned either red or white ratings to all Vacation Intervals at the Company's
Ozark Mountain and Holiday Hills resorts.

RCI has more than 2,900 participating resort facilities and over 2.0
million members worldwide. During 1995 RCI processed over 1.5 million Vacation
Interval exchanges. The cost of the annual membership fee in RCI, which is at
the option and expense of the owner of the Vacation Interval, is currently $74
per year. Exchange rights require an additional fee of approximately $103 for
domestic exchanges and $133 for foreign exchanges.

COMPETITION

The timeshare industry is highly fragmented and includes a large number of
local and regional resort developers and operators. However, some of the world's
most recognized lodging, hospitality and entertainment companies, such as,
Marriott, Disney, Hilton and Hyatt have recently entered the industry. Other
companies in the timeshare industry, including Signature, Fairfield, Vacation
Break, Vistana, and Ramada are public companies, with the enhanced access to
capital and other resources that public ownership implies.

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While the Company's principal competitors are developers of timeshare
resorts, the Company is also subject to competition from other entities engaged
in the commercial lodging business, including condominiums, hotels and motels;
others engaged in the leisure business; and, to a lesser extent, from
campgrounds, recreational vehicles, tour packages and second home sales. A
reduction in the product costs associated with any of these competitors, or an
increase in the Company's (or its customers') costs relative to such
competitors' (or their customers') costs, could have a material adverse effect
on the Company's results of operations, liquidity and financial position.

Numerous businesses, individuals and other entities will compete with the
Company in seeking properties for acquisition and development and new resorts.
Some of these competitors will be larger and have greater financial resources
than the Company. Such competition may result in a higher cost for properties
the Company wishes to acquire or may cause the Company to be unable to acquire
suitable properties for the development of new resorts.

GOVERNMENTAL REGULATION

General. The Company's marketing and sales of Vacation Intervals and other
operations are subject to extensive regulation by the federal government and the
states and jurisdictions in which the Existing Resorts are located and in which
Vacation Intervals are marketed and sold. On a federal level, the Federal Trade
Commission has taken the most active regulatory role through the Federal Trade
Commission Act, which prohibits unfair or deceptive acts or competition in
interstate commerce. Other federal legislation to which the Company is or may be
subject includes the Truth-in-Lending Act and Regulation Z, the Equal
Opportunity Credit Act and Regulation B, the Interstate Land Sales Full
Disclosure Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Telephone Consumer Protection Act, the Telemarketing and
Consumer Fraud and Abuse Prevention Act, the Fair Housing Act and the Civil
Rights Acts of 1964 and 1968.

In addition, many states, including Texas and Missouri (the only states in
which the Company currently owns resorts), have adopted specific laws and
regulations regarding the sale of Vacation Interval ownership programs. The laws
of most states, including Texas, require the Company to file with a designated
state authority for its approval a detailed offering statement describing the
Company and all material aspects of the project and the sale of Vacation
Intervals prior to selling to residents of that state. The laws of these states
require the Company to file numerous documents and supporting information with
the state agency responsible for the regulation of Vacation Intervals. When the
agency determines that a project may be sold, it will issue a public report for
the project. The Company is required to deliver an offering statement or public
report to all prospective purchasers of a Vacation Interval who are Texas
residents, together with certain additional information concerning the terms of
the purchase, regardless of whether the resort is located in Texas. In Missouri
the Company is required to make certain disclosures in its sales documents. Laws
in each state where the Company currently sells Vacation Intervals generally
grant the purchaser of a Vacation Interval the right to cancel a contract of
purchase at any time within approximately five calendar days following the date
the contract was signed by the purchaser. Most states have other laws which
regulate the Company's activities and protect purchasers, such as real estate
licensure laws; travel sales licensure laws; anti-fraud laws; consumer
protection laws; telemarketing laws; prize, gift and sweepstakes laws; and other
related laws.

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normally and currently the subject of a number of consumer complaints generally
relating to marketing or sales practices filed with cognizant authorities, and
there can be no assurance that all of these complaints can be resolved without
adverse regulatory actions or other consequences. The Company expects some level
of consumer complaints in the ordinary course of its business as the Company
targets audiences which generally are less financially sophisticated and more
susceptible to intensive sales practices than more affluent customers. There can
be no assurance that the costs of resolving consumer complaints or of qualifying
under Vacation Interval ownership regulations in all jurisdictions in which the
Company desires to conduct sales will not be significant, that the Company is in
material compliance with applicable federal, Texas, Missouri, or other laws and
regulations, or that violations of law will not have adverse implications for
the Company, including negative public relations, potential litigation, and
regulatory sanctions. The expense, negative publicity, and potential sanctions
associated with the failure to comply with applicable laws or regulations could
have a material adverse effect on the Company's results of operations,
liquidity, or financial position.

During the 1980's and to a lesser extent continuing through the present,
the timeshare industry has been and continues to be afflicted with negative
publicity and prosecutorial attention due, among other things, to marketing
practices which were widely viewed as deceptive or fraudulent. Among the many
timeshare companies which have been the subject of federal, state and local
enforcement actions and investigations were certain of the Affiliated Companies
and their affiliates. Some of the settlements, injunctions and decrees resulting
from litigation and enforcement actions (the "Orders") to which certain of the
Affiliated Companies consented purport to bind all successors and assigns, and
accordingly bind the Company. In addition, the Company was directly a party to
one such Order issued in Missouri. No past or present officers, directors or
employees of the Company or any Affiliated Company were named as subjects or
respondents in any of these Orders; however, each Order purports to bind
generically unnamed "officers, directors and employees" of certain Affiliated
Companies. Therefore, certain of these Orders may be interpreted to be
enforceable against the present officers, directors and employees of the Company
even though they were not individually named as subjects of the enforcement
actions which resulted in these Orders. These Orders require, among other
things, that all parties bound by the Orders, including the Company, refrain
from engaging in deceptive sales practices in connection with the offer and sale
of Vacation Intervals. In one case in 1988 an Affiliated Company pled guilty to
deceptive uses of the mails in connection with promotional sales literature
mailed to prospective timeshare purchasers and agreed to pay a judicially
imposed fine of $1.5 million and restitution of $100,000. The requirements of
the Orders are substantially what applicable state and federal laws and
regulation mandate, but the consequence of violating the Order may be that
sanctions (including possible financial penalties and suspension or loss of
licensure) may be imposed more summarily and may be harsher than would be the
case if the Orders did not bind the Company. In addition, the existence of the
Orders may be viewed negatively by prospective regulators in jurisdictions where
the Company does not now do business, with attendant risks of increased costs
and reduced opportunities.

The Company has been the subject of some consumer complaints which have
triggered governmental investigations into the Company's affairs. In March 1997,
the Company entered into an Assurance of Voluntary Compliance with the Texas
Attorney General, in which the Company agreed to make additional disclosure to
purchasers of Vacation Intervals regarding the limited availability of its
Endless Escape program during certain periods. The Company paid $15,200 for
investigatory costs and attorneys' fees of the Attorney General in connection
with this matter. Also, in March 1997, the Company entered into an agreed order
(the "Agreed Order") with the Texas Real Estate Commission requiring the Company
to comply with certain aspects of the Texas Timeshare Act, Texas Real Estate
License Act and Rules of the Texas Real Estate Commission, with which it had
allegedly been in non-compliance until mid-1995. The allegations included (i)
the Company's admitted failure to register the Missouri Destination Resorts in
Texas (due to its misunderstanding of the reach of the Texas Timeshare Act);
(ii) payment of referral fees for Vacation Interval sales, the receipt of which
was improper on the part of the recipients; and (iii) miscellaneous other
actions alleged to violate the Texas Timeshare Act, which the Company denied.
While the Agreed Order acknowledges that Silverleaf independently resolved ten
consumer

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complaints referenced in the Agreed Order, discontinued the practices complained
of, and had registered the Destination Resorts during 1995 and 1996, the Texas
Real Estate Commission ordered Silverleaf to cease its discontinued practices
and enhance its disclosure to purchasers of Vacation Intervals. In the Agreed
Order, Silverleaf agreed to make a voluntary donation of $30,000 to the State of
Texas. The Agreed Order also directs Silverleaf to revise its training manual
for timeshare salespersons and verification officers. The Agreed Order resolved
all of the alleged violations contained in complaints received by the Texas Real
Estate Commission through December 31, 1996. See "Business -- Governmental
Regulation".

The Company employs the following methods in training sales and marketing
personnel as to legal requirements. With regard to direct mailings, a designated
compliance employee of the Company reviews all mailings to determine if they
comply with applicable state legal requirements. With regard to telemarketing,
the Company's Vice President -- Marketing prepares a script for telemarketers
based upon applicable state legal requirements. All telemarketers receive
training which includes, among other things, directions to adhere strictly to
the Company approved script. Telemarketers are also monitored by their
supervisors to ensure that they do not deviate from the Company approved script.
With regard to sales functions, the Company distributes sales manuals which
summarize applicable state legal requirements. Additionally, such sales
personnel receive training as to such applicable legal requirements. The Company
has a salaried employee at each sales office who reviews the sales documents
prior to closing a sale to review compliance with legal requirements.
Additionally, a member of the corporate office staff calls each purchaser within
48 hours after the sale to verify information. Periodically, the Company is
notified by regulatory agencies to revise its disclosures to consumers and to
remedy other alleged inadequacies regarding the sales and marketing process. In
such cases, the Company revises its direct mailings, telemarketing scripts, or
sales disclosure documents, as appropriate, in an attempt to comply with such
requests.

Environmental Matters. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate and clean up hazardous or toxic
substances or petroleum product releases at such property, and may be held
liable to a governmental entity or to third parties for property damage and tort
liability and for investigation and clean-up costs incurred by such parties in
connection with the contamination. Such laws typically impose clean-up
responsibility and liability without regard to whether the owner or operator
knew of or caused the presence of the contaminants, and the liability under such
laws has been interpreted to be joint and several unless the harm is divisible
and there is a reasonable basis for allocation of responsibility. The cost of
investigation, remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly remediate the
contamination on such property, may adversely affect the owner's ability to sell
such property or to borrow using such property as collateral. Persons who
arrange for the disposal or treatment of hazardous or toxic substances at a
disposal or treatment facility also may be liable for the costs of removal or
remediation of a release of hazardous or toxic substances at such disposal or
treatment facility, whether or not such facility is owned or operated by such
person. In addition, some environmental laws create a lien on the contaminated
site in favor of the government for damages and costs it incurs in connection
with the contamination. Finally, the owner or operator of a site may be subject
to common law claims by third parties based on damages and costs resulting from
environmental contamination emanating from a site or from environmental
regulatory violations. In connection with its ownership and operation of its
properties, the Company may be potentially liable for such claims.

Certain Federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACMs") when such materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a building. Such laws may
impose liability for release of ACMs and may provide for third parties to seek
recovery from owners or operators of real properties for personal injury
associated with ACMs. In connection with its ownership and operation of its
properties, the Company may be potentially liable for such costs. In 1994, the
Company conducted a limited asbestos survey at each of the Existing Resorts,
which surveys did not reveal material potential losses associated with ACM's at
the Existing Resorts.

In addition, recent studies have linked radon, a naturally-occurring
substance, to increased risks of lung cancer. While there are currently no state
or federal requirements regarding the monitoring for, presence of, or exposure
to, radon in indoor air, the EPA and the Surgeon General recommend testing
residences for the presence

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<PAGE> 65

of radon in indoor air, and the EPA further recommends that concentrations of
radon in indoor air be limited to less than 4 picocuries per liter of air
(Pci/L) (the "Recommended Action Level"). The presence of radon in
concentrations equal to or greater than the Recommended Action Level in one or
more of the Company's properties may adversely affect the Company's ability to
sell Vacation Intervals at such properties and the market value of such
property. Recently-enacted federal legislation will eventually require the
Company to disclose to potential purchasers of Vacation Intervals at the
Company's resorts that were constructed prior to 1978 any known lead-paint
hazards and will impose treble damages for failure to so notify.

Electric transmission lines are located in the vicinity of the Company's
properties. Electric transmission lines are one of many sources of
electromagnetic fields ("EMFs") to which people may be exposed. Research into
potential health impacts associated with exposure to EMFs has produced
inconclusive results. Notwithstanding the lack of conclusive scientific
evidence, some states now regulate the strength of electric and magnetic fields
emanating from electric transmission lines, while others have required
transmission facilities to measure for levels of EMFs. In addition, the Company
understands that lawsuits have, on occasion, been filed (primarily against
electric utilities) alleging personal injuries resulting from exposure as well
as fear of adverse health effects. In addition, fear of adverse health effects
from transmission lines has been a factor considered in determining property
value in obtaining financing and in condemnation and eminent domain proceedings
brought by power companies seeking to construct transmission lines. Therefore,
there is a potential for the value of a property to be adversely affected as a
result of its proximity to a transmission line and for the Company to be exposed
to damage claims by persons exposed to EMFs.

In 1994, the Company conducted Phase I environmental assessments at each of
its Existing Resorts in order to identify potential environmental concerns.
These Phase I assessments have been carried out in accordance with accepted
industry practices and consisted of non-invasive investigations of environmental
conditions at the properties, including a preliminary investigation of the sites
and identification of publicly known conditions concerning properties in the
vicinity of the sites, physical site inspections, review of aerial photographs
and relevant governmental records where readily available, interviews with
knowledgeable parties, investigation for the presence of above ground and
underground storage tanks presently or formerly at the sites, a limited asbestos
survey, and the preparation and issuance of written reports. The Company's
assessments of its properties have not revealed any environmental liability that
the Company believes would have a material adverse effect on the Company's
business, assets or results of operations, nor is the Company aware of any such
material environmental liability. Nevertheless, it is possible that the
Company's assessments do not reveal all environmental liabilities or that there
are material environmental liabilities of which the Company is unaware. The
Company's Phase I assessments of the properties have not revealed any
environmental liability that the Company believes would have a material adverse
effect on the Company's business, assets or results of operations taken as a
whole; nor is the Company aware of any such material environmental liability.
Nevertheless, it is possible that the Company's Phase I assessments do not
reveal all environmental liabilities or that there are material environmental
liabilities of which the Company is unaware. Moreover, there can be no assurance
that (i) future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
properties will not be affected by the condition of land or operations in the
vicinity of the properties (such as the presence of underground storage tanks)
or by third parties unrelated to the Company. The Company does not believe that
compliance with applicable environmental laws or regulations will have a
material adverse effect on the Company or its financial condition, results of
operations, or liquidity.

The Company believes that its properties are in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
regarding hazardous or toxic substances. The Company has not been notified by
any governmental authority or any third party, and is not otherwise aware, of
any material noncompliance, liability or claim relating to hazardous or toxic
substances or petroleum products in connection with any of its present
properties.

Utility Regulation. The Company owns its own water supply and waste-water
treatment facilities at several of the Existing Resorts, which are regulated by
various governmental agencies. See "-- Other Operations". TNRCC is the primary
state umbrella agency regulating utilities at the Drive-to Resorts in Texas, and
the Missouri Department of Natural Resources and Public Service Commission of
Missouri are the primary state umbrella agencies regulating utilities at the
Destination Resorts in Missouri. These agencies regulate the rates and

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<PAGE> 66

charges for the services (allowing a reasonable rate of return in relation to
invested capital and other factors), the size and quality of the plants, the
quality of water supplied, the efficacy of waste-water treatment, and many other
aspects of the utilities' operations. The agencies have approval rights
regarding the entity owning the utilities (including its financial strength) and
the right to approve a transfer of the applicable permits upon any change in
control of the entity holding the permits. Other federal, state, regional and
local environmental, health and other agencies also regulate various aspects of
the provision of water and waste-water treatment services.

Other Regulations. Under various state and federal laws governing housing
and places of public accommodation, the Company is required to meet certain
requirements related to access and use by disabled persons. Many of these
requirements did not take effect until after January 1, 1991. Although
management of the Company believes that its facilities are substantially in
compliance with present requirements of such laws, the Company will incur
additional costs of compliance. Additional legislation may impose further
burdens or restrictions on owners with respect to access by disabled persons.
The ultimate amount of the cost of compliance with such legislation is not
currently ascertainable, and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial. Limitations or
restrictions on the completion of certain renovations may limit application of
the Company's growth strategy in certain instances or reduce profit margins on
the Company's operations. See "Risk Factors -- Cost of Compliance with Laws
Governing Availability of Facilities to Disabled Persons".

EMPLOYEES

At December 31, 1996, the Company employed approximately 595 full-time
employees. The Company believes that employee relations are good. None of the
these employees is represented by a labor union.

INSURANCE; LEGAL PROCEEDINGS

The Company carries comprehensive liability, fire, hurricane and storm
insurance with respect to the Company's resorts, with policy specifications,
insured limits and deductibles customarily carried for similar properties which
the Company believes are adequate. There are, however, certain types of losses
(such as losses arising from floods and acts of war) that are not generally
insured because they are either uninsurable or not economically insurable.
Should an uninsured loss or a loss in excess of insured limits occur, the
Company could lose its capital invested in a resort, as well as the anticipated
future revenues from such resort and would continue to be obligated on any
mortgage indebtedness or other obligations related to the property. Any such
loss could have a material adverse effect on the Company. The Company
self-insures for property damage to certain vehicles and heavy equipment. See
"Risk Factors -- Natural Disasters; Uninsured Loss".

The Company is currently subject to litigation and claims respecting tort,
contract, and consumer disputes, among others. In the judgment of management,
none of such pending lawsuits or claims against the Company, either individually
or in the aggregate, is likely to have a material adverse effect on the Company
or its business. See "Risk Factors -- Regulation of Marketing and Sales of
Vacation Intervals and Related Laws".

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<PAGE> 67

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each person
who is a director or executive officer of the Company or upon the consummation
of the Offering will become a director of the Company. Concurrently with or
shortly following the Offering, the Company will add an additional director who
will be a Non-Employee Director within the meaning of Rule 16b-3 of the Exchange
Act (an "Independent Director").

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert E. Mead.................... 50 Chairman of the Board and Chief Executive Officer
Sharon K. Brayfield............... 36 Director and President
David T. O'Connor................. 55 Executive Vice President -- Sales
Joe W. Conner..................... 40 Chief Financial Officer, Treasurer
Larry H. Fritz.................... 45 Vice President -- Marketing
Ioannis N. Gioldasis.............. 47 Vice President -- Promotions
Robert G. Levy.................... 49 Vice President -- Resort Operations
Sandra G. Cearley................. 35 Secretary
James B. Francis, Jr.............. 48 Proposed Director
Michael A. Jenkins................ 55 Proposed Director
</TABLE>

ROBERT E. MEAD founded the Company, has served as its Chairman of the Board
since its inception, and has served as its Chief Executive Officer since May
1990. Mr. Mead began his career in hotel and motel management and also operated
his own construction company. Mr. Mead currently serves as a trustee on the
Board of Directors of ARDA and has over 17 years of experience in the timeshare
industry, with special expertise in the areas of consumer finance, hospitality
management and real estate development.

SHARON K. BRAYFIELD has served as the President of the Company since 1992
and manages all of the Company's day to day activities. Ms. Brayfield began her
career with an Affiliated Company in 1982 as the Public Relations Director of
Ozark Mountain Resort. In 1989, she was promoted to Executive Vice President of
Resort Operations for an Affiliated Company and in 1991 was named Chief
Operations Officer of the Company. During 1996, Ms. Brayfield also oversaw
operations of the Master Club.

DAVID T. O'CONNOR has over 20 years of experience in real estate and
timeshare sales and has worked periodically with Mr. Mead over the past 14
years. Since 1991, Mr. O'Connor has served as the Company's Executive Vice
President -- Sales, directing all field sales, including the design and
preparation of all training materials, incentive programs, and follow-up sales
procedures. For the past five years until May 12, 1997, Mr. O'Connor has been an
employee of Recreational Consultants, Inc., which was an independent contractor
of the Company. See "Certain Relationships and Related Transactions".

JOE W. CONNER joined the Company in February 1997 as Chief Financial
Officer and has responsibility for all accounting, financial reporting and
taxation issues. From 1995 to 1997, Mr. Conner served as Vice President of
Finance and Chief Financial Officer of the Jacobsen Division of Textron, Inc.
From 1993 to 1995, Mr. Conner was Executive Vice President and Chief Financial
Officer for Furr's/Bishop's, Inc. Mr. Conner worked for Club Corporation of
America from 1985 to 1993, and last served as Sr. Vice President, Chief
Financial Officer and Director. Mr. Conner is a certified public accountant.

LARRY H. FRITZ has been employed by the Company (or an Affiliated Company)
periodically over the past nine years and has served in various marketing
management positions. Since 1991, Mr. Fritz has served as the Company's chief
marketing officer, with responsibility for daily marketing operations, and
currently serves as the Company's Vice President-Marketing.

IOANNIS N. GIOLDASIS has been with the Company since May of 1993 and
currently serves as Vice President -- Promotions. Mr. Gioldasis is responsible
for the design and implementation of marketing strategies and promotional
concepts for lead generation in Texas and other markets. Prior to joining the
Company, Mr. Gioldasis was a national field director for Resort Property
Consultants, Inc.

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<PAGE> 68

ROBERT G. LEVY was appointed to Vice President-Operations in February 1997
and administers the Company's Management Agreement with the Master Club. Since
1989, Mr. Levy has held a variety of managerial positions with the Master Club
including Project Manager, General Manager, Texas Regional Manager, and Director
of Operations. Prior to joining the Company, Mr. Levy spent 18 years in hotel,
motel, and resort management, and was associated with the Sheraton, Ramada Inn,
and Holiday Inn hotel chains.

SANDRA G. CEARLEY has served as Secretary of the Company since its
inception. Ms. Cearley maintains corporate minute books, oversees regulatory
filings, and coordinates legal matters with the Company's attorneys.

JAMES B. FRANCIS, JR. has consented to become a Director of the Company
upon the consummation of the Offering. During 1996, Mr. Francis' company,
Francis Enterprises, Inc., served as a consultant to the Company in connection
with governmental and public affairs. From 1980 to 1996, Mr. Francis was a
partner in the firm of Bright & Co., which managed various business investments,
including the Dallas Cowboys Football Club. During his tenure with Bright & Co.,
Mr. Francis served as a director and a member of the audit committees of Bright
Insurance Company, State Bank & Trust, and Bright Truck Leasing Corporation.

MICHAEL A. JENKINS has consented to become a Director of the Company upon
the consummation of the Offering. In 1971, Mr. Jenkins founded and became the
President of Leisure and Recreation Concepts, Inc., which has planned and
designed over 850 theme parks, resorts, retail areas, and major attractions
worldwide. Mr. Jenkins has more than 35 years in the leisure industry, and has
served on the Board of Directors of Leisure and Recreational Concepts, Inc.,
International Broadcasting Corporation, and the International Association of
Amusement Parks and Attractions. Prior to forming Leisure and Recreational
Concepts, Inc., Mr. Jenkins served as Vice President of Six Flags Over Texas,
Inc., and assisted in the development of all major Six Flags projects throughout
the United States.

COMMITTEES OF THE BOARD OF DIRECTORS

Executive Committee. Concurrently with the consummation of the Offering,
the Board of Directors will establish an executive committee (the "Executive
Committee"), which will be granted such authority as may be determined from time
to time by a majority of the Board of Directors. The Company expects that the
Executive Committee will include at least one Independent Director. All actions
by the Executive Committee will require a majority vote of its members.

Audit Committee. Concurrently with the consummation of the Offering, the
Board of Directors will establish an audit committee (the "Audit Committee"),
which will consist of two or more Independent Directors. The Audit Committee
will be established to make recommendations concerning the engagement of
independent public accountants, review the plans and results of the audit
engagement, approve professional services provided by the independent public
accountants, review the independence of the independent public accountants and
the adequacy of the Company's internal accounting controls, and consider the
range of audit and non-audit fees.

Compensation Committee. Concurrently with the consummation of the Offering,
the Board of Directors will establish a compensation committee (the
"Compensation Committee"), which will consist of two or more Independent
Directors to determine compensation for the Company's senior executive officers
and to administer the Company's 1997 Stock Option Plan.

The Board of Directors of the Company initially will not have a nominating
committee or any other committee. The membership of the committees of the Board
of Directors will be established after the consummation of the Offering.

CLASSIFIED BOARD OF DIRECTORS

The Company's Board of Directors is divided into three classes serving
staggered terms. Upon the consummation of the Offering, the Board of Directors
will be comprised of one Class I director (presently not identified), two Class
II directors (Ms. Brayfield and Mr. Jenkins) and two Class III directors (Mr.
Mead and Mr. Francis). At each annual meeting of shareholders, a class of
directors will be elected for a three-year term to succeed the directors of the
same class whose terms are then expiring. The terms of the initial Class I
directors, Class II directors and Class III directors will expire upon the
election and qualification of successor directors at

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<PAGE> 69

the annual meeting of shareholders held in calendar years 1998, 1999 and 2000,
respectively. The classification of directors makes it more difficult for a
significant shareholder to change the composition of the Board of Directors in a
relatively short period of time.

DIRECTOR COMPENSATION

Upon the consummation of the Offering, the Company will grant to each
Independent Director, as directors' fees, options to purchase 40,000 shares of
Common Stock at the initial public offering price. Such options shall vest in
three equal portions over a term of three years, with the first vesting period
occurring on the first anniversary of the Company's annual 1997 shareholders'
meeting. The options shall expire on the tenth anniversary of the Company's 1997
annual shareholders' meeting. In addition to such option grants, the Independent
Directors will be reimbursed for expenses of attending each meeting of the Board
of Directors. Officers of the Company who are directors will not be paid any
director fees but will be reimbursed for expenses of attending meetings of the
Board of Directors.

INDEMNIFICATION

The Charter provides for the indemnification of the Company's officers and
directors against certain liabilities to the fullest extent permitted under
applicable law. The Charter also provides that the directors and officers of the
Company be exculpated from monetary damages to the fullest extent permitted
under applicable law. Additionally, the Company has entered into written
Indemnification Agreements with its directors and officers. It is the position
of the Securities and Exchange Commission (the "Commission") that
indemnification of directors and officers for liabilities arising under the
Securities Act is against public policy and unenforceable under the Securities
Act.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the annual base
salary and other annual compensation that the Company paid in 1996 to the
Company's Chief Executive Officer and each of the other executive officers whose
cash compensation (salary and bonus) on an annualized basis exceeded $100,000
(the "Named Executive Officers"). During the past three fiscal years, none of
such persons received compensation in the form of restricted stock awards, stock
options, stock appreciation rights, or long-term incentive plans.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND ----------------------
PRINCIPAL POSITION YEAR SALARY BONUS(1)
------------------ ---- -------- --------
<S> <C> <C> <C>
Robert E. Mead,...................................... 1996 $400,015 $ 37,731
Chief Executive Officer
Sharon K. Brayfield,................................. 1996 16,074(2) 366,499(3)
President
David T. O'Connor,................................... 1996 538,768(4)
Executive Vice President -- Sales
Larry H. Fritz,...................................... 1996 70,000 67,913
Vice President -- Marketing
</TABLE>

- ---------------

(1) See "-- Employment and Noncompetition Agreements" for a discussion of
certain bonuses.

(2) During 1996, Ms. Brayfield also received $100,000 in salary paid by the
Master Club. Beginning in 1997, Ms. Brayfield will no longer receive a
salary from the Master Club, and the Company will pay her a salary of
$133,101. See "-- Employment and Noncompetition Agreements".

(3) Approximately $77,000 of such amount is for forgiveness of a loan by the
Company to Ms. Brayfield.

(4) These amounts were paid as sales commissions to Recreational Consultants,
Inc., a corporation of which Mr. O'Connor is the principal. See "Certain
Relationships and Affiliated Transactions".

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<PAGE> 70

1997 STOCK OPTION PLAN

The Company has established a stock option plan (the "1997 Stock Option
Plan" or "Plan") to attract and retain directors, officers, and key employees of
the Company and to provide them incentives to maximize the Company's
performance. The 1997 Stock Option Plan provides for the award to directors,
officers, and key employees of nonqualified stock options and provides for the
grant to salaried key employees of options intended to qualify as "incentive
stock options" under Section 422 of the Code.

The 1997 Stock Option Plan will be administered by the Compensation
Committee which will select the individuals to whom options are to be granted
and to determine the number of shares to be subject thereto and the terms and
conditions thereof. The Compensation Committee is also authorized to adopt,
amend and rescind rules relating to the administration of the 1997 Stock Option
Plan.

Promptly after the consummation of the Offering, the Company estimates that
it will issue to officers and Independent Directors options to purchase 422,000
shares of Common Stock pursuant to the 1997 Stock Option Plan, including options
on 200,000 shares to Mr. O'Connor. A maximum of 1,100,000 shares are reserved
for issuance under the 1997 Stock Option Plan. The Company will file a
Registration Statement to register such shares. See "Shares Eligible for Future
Sale".

Nonqualified stock options will provide for the right to purchase Common
Stock at a specified price which may be less than fair market value on the date
of grant (but not less than par value). Nonqualified stock options may be
granted for any term and upon such conditions determined by the Compensation
Committee.

Incentive stock options will be designed to comply with the provisions of
the Code and will be subject to restrictions contained therein, including
exercise prices equal to at least 100% of fair market value of Common Stock on
the grant date and a ten year restriction on their term; however, incentive
stock options granted to any person owning more than 10% of the voting power of
the stock of the Company shall have exercise prices equal to at least 110% of
the fair market value of the Common Stock on the grant date and shall not be
exercisable after five years from the date the option is granted.

Under the 1997 Stock Option Plan, the Board of Directors of the Company
reserves the right to exercise the powers and functions of the Compensation
Committee. Also, the Board of Directors reserves the right to amend the Plan at
any time; however, the Board of Directors may not without the approval of the
shareholders of the Company (i) increase the total number of shares reserved for
options under the Plan (other than for certain changes in the capital structure
of the Company), (ii) reduce the required exercise price of any incentive stock
options, or (iii) modify the provisions of the Plan regarding eligibility.

DISCRETIONARY PERFORMANCE AWARDS

Performance awards, including bonuses, may be granted by the Compensation
Committee on an individual or group basis. Generally, these awards will be based
upon specific agreements or performance criteria and will be paid in cash.

EMPLOYMENT AND NONCOMPETITION AGREEMENTS

Effective January 1, 1997, Mr. Mead entered into a three year employment
agreement with the Company which provides for an annual base salary of $500,000,
a company vehicle, and other fringe benefits such as employee health insurance,
vacation, and sick leave as determined by the Board of Directors of the Company
from time to time. Either party may terminate the agreement upon 30 days notice
to the other.

Effective January 1, 1997, Ms. Brayfield entered into a three year
employment agreement which provides for an annual base salary of $133,101, a
company vehicle, and other fringe benefits such as employee health insurance,
vacation, and sick leave as determined by the Board of Directors of the Company
from time to time. Ms. Brayfield's agreement with the Company also provides for
an incentive bonus equal to .35% of the Company's net sales from Vacation
Intervals. Either party may terminate the agreement upon 30 days notice to the
other. Ms. Brayfield and the Company have an agreement that she may not transfer
her stock in the Company

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<PAGE> 71

without first offering it for sale to the Company; this agreement will terminate
upon the consummation of the Offering.

Effective May 12, 1997, the Company entered into an employment agreement
with David T. O'Connor with a term through December 31, 1999. Pursuant to the
agreement, Mr. O'Connor will receive commissions equal to 1.35% of the Company's
net sales from Vacation Intervals, plus additional commissions based on weekly
sales volume and revenue per guest. The Company will also provide Mr. O'Connor
with a company vehicle and health insurance. Either party may terminate the
agreement upon 30 days notice to the other. See "Certain Relationships and
Related Transactions".

Each of the three agreements discussed above provides that such person will
not directly or indirectly compete with the Company in any county in which it
conducts its business or markets its products for a period of two years
following the termination of the agreement. The agreements also provide that
such persons will not (i) influence any employee or independent contractor to
terminate its relationship with the Company, or (ii) disclose any confidential
information of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

REPAYMENT OF AFFILIATED DEBT

Approximately $9.9 million of the net proceeds from the Offering will be
used to repay outstanding debt to Mr. Mead and affiliated persons or entities.
Mr. Mead, Chairman of the Board and Chief Executive Officer of the Company, will
simultaneously repay his debt to the Company, as will STG, an affiliate of Mr.
Mead. Affiliated debt is explained below:

<TABLE>
<CAPTION>
COMPONENTS OF AMOUNT AT
AFFILIATED DEBT OF THE COMPANY MARCH 31, 1997
------------------------------ -----------------
(IN THOUSANDS)
<S> <C>
Debt of CBI to Mr. Mead (a)................................. $ 6,012
Debt of Silverleaf to Mr. Mead and affiliates (b)........... 8,194
Debt of Silverleaf to Pace, STG and Ralph Brotherton (c),
(d), (e).................................................. 541
-------
Total............................................. 14,747
Less:
Receivable from Mr. Mead (a)........................... (4,591)
Receivable from STG and Pace (f)....................... (236)
-------
Net Affiliated Party Debt of Silverleaf........... $ 9,920
=======
</TABLE>

- ---------------

(a) Prior to the Consolidation Transactions, Mr. Mead owned 100% of the stock
of CBI. During this period, Silverleaf made loans to Mr. Mead who
simultaneously made loans of similar amounts to CBI to finance its
operations. The Silverleaf loans to Mr. Mead bear interest at 8% per annum,
and the loans by Mr. Mead to CBI bear interest at 9% per annum. As a result
of the Consolidation Transactions, the debt of Mr. Mead to CBI and of CBI
to Mr. Mead has been consolidated on the Company's financial statements.
The above table reflects, on a consolidated basis, the remaining debt due
to Mr. Mead from the Company and the remaining receivable from Mr. Mead at
March 31, 1997.

(b) Mr. Mead owned 100% of the stock of Freedom Financial Corporation ("FFC")
prior to the Consolidation Transactions. As a part of the Consolidation
Transactions, the Company acquired certain assets held by FFC and the
Company assumed certain liabilities associated with these assets. See Note
9 of Notes to Consolidated Financial Statements. Liabilities assumed were
approximately $8.9 million consisting primarily of notes payable to Mr.
Mead and his affiliates of $7.6 million. The affiliates of Mr. Mead include
certain family partnerships and trusts. The notes payable to Mr. Mead and
his affiliates originated from loans of $1.1 million and asset sales of
$1.6 million made by Mr. Mead and his affiliates to FFC during 1987 and
1988. The $8.2 million debt at March 31, 1997 consists of principal of $2.7
million and accrued interest of $5.5 million, computed at a weighted
average rate of 11.9% through March 31, 1997.

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<PAGE> 72

(c) Includes approximately $399,000 owed to Pace Finance Company ("Pace"), a
Texas corporation wholly owned by Mr. Mead. Pace loaned the Company
approximately $648,000, $541,000 and $655,000, in 1994, 1995, and 1996,
respectively. The Company secured such loans by pledging notes secured by
Vacation Intervals with an aggregate principal balance of approximately
$1.1 million, $901,000, and $1.1 million, in 1994, 1995, and 1996,
respectively. The Company made payments to Pace of approximately $395,0000,
$636,000, and $863,000, in 1994, 1995, and 1996, respectively, and
approximately $355,000 in the first quarter of 1997.

(d) Includes approximately $84,000 owed to S.T.G. Investments ("STG"), a Texas
general partnership owned by trusts beneficially owned by Mr. Mead's
children.

(e) Includes approximately $58,000 owing to Ralph Brotherton, who serves as a
trustee of trusts for the children of Mr. Mead. This debt arose from the
1995 redemption of Mr. Brotherton's equity interest in Equal Investment
Company ("EIC") in exchange for a $100,000 note from EIC. Subsequently, EIC
was merged into the Company and the Company became liable for the note to
Mr. Brotherton. The note to Mr. Brotherton does not bear interest.

(f) At March 31, 1997, STG and Pace owed Silverleaf approximately $169,000 and
$37,000, respectively, relating to cash payments on notes receivable of
Silverleaf collected and held by STG and Pace on behalf of Silverleaf.

TRANSACTIONS WITH RELATED ENTITIES

FFC loaned the Company approximately $3.2 million and $555,000 in 1994 and
1995. To secure such loans, the Company pledged to FFC in 1994 and 1995 notes
secured by Vacation Intervals with an aggregate principal balance of
approximately $4.3 million and $740,000, respectively. The Company made
principal and interest payments to FFC of approximately $1.3 million and
$871,000, in 1994 and 1995.

During 1994, the Company transferred to FFC notes with an aggregate
principal balance of $216,094 secured by Vacation Intervals as a partial payment
of interest on a note from the Company to FFC (the "FFC Note"). The Company also
set off the amount of $121,032 in 1994 against the FFC Note, for servicing fees
to administer certain notes owned by FFC. FFC paid the Company $144,000 during
1994 in fees for providing administrative personnel, equipment, supplies and
other overhead items to FFC.

Prior to the Consolidation Transactions in December, 1995, Silverleaf
engaged in various transactions with entities affiliated with Mr. Mead. As a
result of the Consolidation Transactions, all transactions between Silverleaf
and the entities which were parties to the Consolidation Transactions were
eliminated through consolidation and restatement of the Company's financial
statements, and are therefore not specifically discussed herein. See Note 1 of
Notes to Consolidated Financial Statements.

Prior to the Consolidation Transactions, Pace purchased delinquent notes
secured by Vacation Intervals from an Affiliated Company. From time to time,
Pace sold these delinquent notes to the Company, generally at a price of $200
per note. The Company then reacquired through foreclosure the underlying
Vacation Intervals for resale. Pace's note sales to the Company equaled $47,400
in 1994 and $24,200 in 1996. In February 1997, Pace sold its remaining inventory
of notes to the Company for a consideration of $16,400.

STG loaned the Company approximately $558,000 and $272,000 in 1994 and
1995, respectively. As security, the Company pledged to STG notes secured by
Vacation Intervals with an aggregate principal balance of approximately $870,000
and $454,000 in 1994 and 1995, respectively. The Company made principal and
interest payments to STG of approximately $380,000, $533,000 and $247,000, in
1994, 1995, and 1996, respectively. These loans were repaid in full by the
Company in 1996.

TRANSACTIONS WITH RELATED INDIVIDUALS

In March 1997, Mr. Mead entered into a lease agreement with the Company
which grants Mr. Mead the exclusive right to use approximately 500 acres
adjoining an Existing Resort for hunting purposes. This land is subject to deed
restrictions which prohibit the construction of new units, and most of this land
is located in a flood plain. The land will remain available to Silverleaf Owners
for hiking and nature trails. In exchange for these

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<PAGE> 73

lease rights, Mr. Mead has agreed to pay the annual property taxes for this land
which are estimated at approximately $5,000. This lease agreement has a ten-year
term and may be renewed by Mr. Mead for four additional ten-year terms.

Upon the consummation of the Offering, Mr. Mead has agreed to purchase a
condominium in Mexico and a residential property in Texas from the Company. The
Company's acquisition cost of these properties in 1995 was approximately
$420,000. Mr. Mead has proposed to pay the Company the higher of its acquisition
cost plus an additional 15% per annum (approximately $464,000), or the appraised
fair market value of these properties.

Prior to the consummation of the Offering, the Company will enter into a
Registration Rights Agreement with Mr. Mead with respect to all of his shares
(7,625,000) of Common Stock. See "Shares Eligible for Future Sale".

With regard to each of the above-referenced transactions with Mr. Mead, the
remaining disinterested member of the Board of Directors has reviewed the terms
of such transactions and has determined that they are fair to the Company.

During 1995, the Company loaned $15,000 to Ms. Brayfield at 8.5% interest
per annum. Due to a previous loan balance and the accrual of interest, her
aggregate debt to the Company was $71,000 at December 31, 1995. Her largest
outstanding loan balances in 1995 and 1996 were approximately $71,000 and
$77,000, respectively. The Company forgave this loan effective December 31,
1996. See "Management -- Executive Compensation".

During 1996, the Company was a party to a consulting agreement with Francis
Enterprises, Inc. ("FEI"), a Texas corporation which is wholly owned by a
proposed director of the Company. FEI received approximately $201,000 (and the
Company expensed approximately $208,000) in 1996 under this agreement. FEI
provided advice to the Company in connection with governmental and public
affairs. This consulting agreement was terminated in February 1997. An affiliate
of this proposed director owns a 10% net profits interest in a 45 acre tract of
land in Mississippi owned by the Company. See "Management -- Directors and
Executive Officers" and "Business -- Other Operations".

The Company paid Recreational Consultants, Inc., an entity of which Mr.
O'Connor is the principal, approximately $321,000, $430,000, and $552,000 in
sales commissions in 1994, 1995, and 1996, respectively. The Company paid
Recreational Consultants, Inc. approximately $148,000 in the first quarter of
1997. See "Management -- Executive Compensation".

Mr. O'Connor was indebted to the Company during 1994 and 1995 for advances
by the Company on his behalf, which debt bears interest at approximately 8% per
annum. The largest outstanding balance during 1994 and 1995 was approximately
$145,000 and $156,000, respectively. This debt was satisfied at the end of 1995.

TRANSACTIONS WITH THE MASTER CLUB

Prior to May 1997, Ms. Brayfield, an officer and director of the Company,
was the principal executive officer of the Master Club. In May 1997, Robert G.
Levy, an officer of the Company, was elected as President of the Master Club.
The Company manages the Existing Resorts under a management agreement with the
Master Club. The Company is entitled to a management fee equal to 15% of the
Master Club's gross revenues, but the Company's right to receive such fee on an
annual basis is limited to the amount of the Master Club's net income. If the
management fee is limited due to the Master Club's net income in a given year,
such deficiency may be recovered from the Master Club in subsequent years,
subject to the net income limitation. Accordingly, receivables for unpaid
management fee deficiencies from the Master Club due to the net income
limitation are not accrued on the books of the Company. In 1994, 1995, and 1996,
the Company reported management fees from the Master Club of approximately $2.4
million, $2.5 million and $2.2 million, respectively. The management fees
amounted to approximately $499,000 during the first quarter of 1997. The Master
Club bears and pays all expenses of operating the Existing Resorts, while the
Company bears the expense of new development and all marketing and sales
activities. To the extent the Master Club pays for payroll or other general and
administrative expenses that relate to the Company's development, marketing, or
sales activities, the Master Club allocates and charges such expenses to the
Company. During 1994, 1995 and 1996, the Master Club charged the Company
approximately $1.5 million, $1.9 million, and $2.1 million, respectively, for
expenses attributable to the

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<PAGE> 74

Company. During the first quarter of 1997, such expenses amounted to
approximately $755,000. Also, during 1996, the Company advanced on behalf of the
Master Club approximately $940,000 for expenditures related to refurbishment of
the Existing Resorts. After netting management fees earned, expenses charged
back, and the advance for refurbishment expenditures, the Company owed the
Master Club approximately $429,000 at the end of 1995, and the Master Club owed
the Company approximately $1.1 million and $1.5 million at the end of 1996 and
March 1997, respectively. See "Business -- Clubs/Master Club".

PRINCIPAL SHAREHOLDERS

The information in the following table sets forth information regarding the
beneficial ownership of the Common Stock of the Company, as adjusted to reflect
the sale of shares offered hereby, with respect to (i) each person known by the
Company to beneficially own 5% or more of the outstanding shares of Common
Stock, (ii) each person who is a director, proposed director or Named Executive
Officer of the Company and (iii) all directors, proposed directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING AFTER THE OFFERING
NAME AND ADDRESS OF ------------------------- -------------------------
BENEFICIAL OWNER(A) SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Robert E. Mead(b)........................ 7,625,000(c) 99% 7,625,000 68.0%
Sharon K. Brayfield(b)................... 86,517(c) 1% 86,517 .8%
Joe W. Conner(b)......................... -- -- -- --
Larry H. Fritz(b)........................ -- -- -- --
Ioannis N. Gioldasis(b).................. -- -- -- --
Robert G. Levy(b)........................ -- -- -- --
Sandra G. Cearley(b)..................... -- -- -- --
James B. Francis, Jr.(d)................. -- -- -- --
Michael A. Jenkins(e).................... -- -- -- --
--------- --- --------- ----
All directors, proposed directors and
executive officers as a group (9
persons)............................... 7,711,517(c) 100% 7,711,517 68.8%
</TABLE>

- ---------------

(a) Except as otherwise indicated, each beneficial owner has the sole power to
vote, as applicable, and to dispose of all shares of Common Stock owned by
such beneficial owner.

(b) The address of such person is 1221 Riverbend Drive, Suite 120, Dallas,
Texas 75247.

(c) In May 1997, the Company declared a 719.97204 for one stock dividend.
Immediately prior to such stock dividend, Mr. Mead and Ms. Brayfield owned
10,576 shares and 120 shares, respectively, for a total of 10,696 issued
and outstanding shares.

(d) The address of such person is 8300 Douglas Avenue, Suite 800, Dallas, Texas
75225.

(e) The address of such person is 2151 Fort Worth Avenue, Dallas, Texas
75211-1812.

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<PAGE> 75

DESCRIPTION OF CAPITAL STOCK

Upon the consummation of the Offering the authorized capital stock of the
Company will consist of (i) 100,000,000 shares of Common Stock, par value $0.01
per share, 11,211,517 shares of which will be outstanding after the Offering
(without the over-allotment option), and (ii) 10,000,000 shares of Preferred
Stock, par value $0.01 per share, none of which will be outstanding after the
Offering. The following summary description of the capital stock of the Company
is qualified in its entirety by reference to the Charter and Bylaws of the
Company, copies of which are filed as exhibits to the Registration Statement of
which this Prospectus is a part. See "Additional Information".

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters voted on by shareholders, including elections of directors, and, except
as otherwise required by law or provided in any series of Preferred Stock, the
holders of shares of Common Stock exclusively possess all voting power. The
Charter prohibits cumulative voting in the election of directors. Subject to any
preferential rights of any outstanding series of Preferred Stock, the holders of
Common Stock are entitled to such distributions as may be declared from time to
time by the Board of Directors from funds available therefor, and upon
liquidation are entitled to receive pro rata all assets of the Company available
for distribution to such holders. All shares of Common Stock issued in the
Offering will be fully paid and nonassessable and the holders thereof will not
have preemptive rights.

PREFERRED STOCK

Preferred Stock may be issued from time to time, in one or more series, as
authorized by the Board of Directors. Prior to issuance of shares of each class,
the Board of Directors is required by the Texas Business Corporation Act
("TBCA") and the Company's Charter to fix for each such series, the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption, as are permitted by Texas law. The Board of Directors
could authorize the issuance of Preferred Stock with terms and conditions which
could have the effect of discouraging a takeover or other transaction which
holders of some, or a majority, of the Company's outstanding shares might
believe to be in their best interests or in which holders of some, or a
majority, of shares might receive a premium for their shares over the market
price of such shares. No Preferred Stock will be outstanding following the
consummation of the Offering.

TRANSFER AGENT AND REGISTRAR

The Company has appointed ChaseMellon Shareholder Services, L.L.C. as its
transfer agent and registrar.

CERTAIN PROVISIONS OF THE COMPANY'S CHARTER AND BYLAWS

The following paragraphs summarize certain provisions of the Company's
Charter and Bylaws that may be deemed to have anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a shareholder
may consider to be in the best interests of the Company or its shareholders,
including those attempts that may result in a premium over the then current
market price for the Common Stock. The following summary does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Charter and Bylaws, copies of which are exhibits to the Registration
Statement of which this Prospectus is a part, as described in "Additional
Information".

CLASSIFICATION OF THE BOARD OF DIRECTORS

The Company's Charter provides that the number of directors of the Company
shall be established by the Bylaws but shall not be less than the minimum number
required by the TBCA, which is one. The Bylaws provide that upon the
consummation of the Offering the Board of Directors will consist of not fewer
than five nor more than 13 members. Any vacancy on the Board of Directors will
be filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the remaining directors, except that a vacancy
resulting from an increase in the number of directors will be filled by a
majority of the entire board of directors. The Charter provides for a staggered
Board of Directors consisting of three classes as nearly equal in size as
practicable. One

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<PAGE> 76

class will hold office initially for a term expiring at the annual meeting of
shareholders to be held in 1998, another class will hold office initially for a
term expiring at the annual meeting of shareholders to be held in 1999 and
another class will hold office initially for a term expiring at the annual
meeting of shareholders to be held in 2000. As the term of each class expires,
directors in that class will be elected for a term of three years and until
their successors are duly elected and qualify. The Company believes that
classification of the Board of Directors will help to assure the continuity and
stability of the Company's business strategies and policies as determined by the
Board of Directors.

The classified director provision could have the effect of making the
removal of incumbent directors more time-consuming and difficult, which could
discourage a third party from making a tender offer or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its shareholders. At least two annual meetings of
shareholders, instead of one, will generally be required to effect a change in a
majority of the Board of Directors. Thus, the classified board provision could
increase the likelihood that incumbent directors will retain their positions.
Holders of shares of Common Stock will have no right to cumulative voting for
the elections of directors. Consequently, at each annual meeting of
shareholders, the holders of a majority of outstanding shares of Common Stock
present at such meeting (so long as a quorum exists) will be able to elect all
of the successors of the class of directors whose term expires at that meeting.

REMOVAL OF DIRECTORS

The Charter provides that a director may be removed with or without cause
by the affirmative vote of at least two-thirds of the votes entitled to be cast
in the election of directors. This provision precludes shareholders from
removing incumbent directors except upon a substantial affirmative vote, and the
Bylaws preclude the shareholders from filling the vacancies created by such
removal with their own nominees.

AMENDMENT TO THE COMPANY'S CHARTER AND BYLAWS

The Company's Charter, including its provisions on classification of the
Board of Directors and removal of directors, may be amended only by the
affirmative vote of the holders of at least 66 2/3% of the capital stock
entitled to vote. The Company's Bylaws may be amended by the affirmative vote of
holders of a majority of the capital stock entitled to vote on the matter.
Subject to the right of shareholders as set forth in the preceding sentence, the
Board of Directors is authorized to adopt, alter or repeal the Bylaws.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS

The Bylaws of the Company provide that (i) with respect to an annual
meeting of shareholders, nominations of persons for election to the Board of
Directors and the proposal of business to be considered by shareholders may be
made only (a) pursuant to the Company's notice of the meeting, (b) by the Board
of Directors, or (c) by a shareholder who is entitled to vote at the meeting and
has complied with the advance notice procedures set forth in the Bylaws, and
(ii) with respect to special meetings of shareholders, only the business
specified in the Company's notice of meeting may be brought before the meeting
of shareholders, or provided that the Board of Directors has determined that
directors shall be elected at such meeting, nominations of persons for election
to the Board of Directors may be made by a shareholder who is entitled to vote
at the meeting and has complied with the advance notice provisions set forth in
the Bylaws.

SHAREHOLDER MEETINGS AND ACTION BY WRITTEN CONSENT

In order for shareholders to call special meetings, the Bylaws require the
written request of holders of shares entitled to cast not less than 25% of all
votes entitled to be cast at such meeting. Such provisions do not, however,
affect the ability of shareholders to submit a proposal to the vote of all
shareholders of the Company in accordance with the Bylaws, which provide for the
additional notice requirements for shareholder nominations and proposals at the
annual meetings of shareholders as described above.

The Bylaws provide that any action required or permitted to be taken at a
meeting of shareholders may be taken without a meeting by unanimous written
consent, if such consent sets forth such action and is signed by each
shareholder entitled to vote on the matter and a written waiver of any right to
dissent is signed by each shareholders entitled to notice of the meeting but not
entitled to vote at it.

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<PAGE> 77

LIMITATION OF LIABILITY AND INDEMNIFICATION

The Company's Charter limits the liability of the Company's directors and
officers to the Company and its shareholders to the fullest extent permitted
from by law. The TBCA presently permits the liability of directors and officers
to a corporation or its shareholders for money damages to be limited, except (i)
if the director or officer is found liable on the basis that he improperly
received a personal benefit, or (ii) if the officer or director is found liable
to the Company by a court of competent jurisdiction after exhaustion of all
appeals therefrom. This provision does not limit the ability of the Company or
its shareholders to obtain other relief, such as an injunction or rescission.

The Company's Charter and Bylaws require the Company to indemnify its
directors, officers and certain other parties to the fullest extent permitted
from time to time by law. The TBCA presently permits a corporation to indemnify
its directors, officers and certain other parties against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party, only if (i)
the indemnified party conducted himself in good faith, (ii) if a director, his
conduct was in the corporation's best interest, or, if not a director, his
conduct was not opposed to the corporation's best interests, and (iii) in the
case of any criminal proceeding, the indemnified party had no reasonable cause
to believe his conduct was unlawful. Indemnification may be made against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by the director or officer in connection with the proceeding; provided,
however, if the director or officer has been adjudged to be liable to the
corporation or is found liable on the basis that personal benefit was improperly
received, indemnification (1) is limited to reasonable expenses actually
incurred by such person in the proceeding, and (2) shall not be made in respect
of any proceeding in which the person shall have been found liable for willful
or intentional misconduct in the performance of his duty to the corporation. The
termination of any proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, is not itself determinative
that the director or officer did not meet the requisite standard of conduct
required for indemnification to be permitted. The Company has applied for
directors and officers insurance which will become effective upon the
effectiveness of the Registration Statement.

DISSOLUTION OF THE COMPANY

The dissolution of the Company must be approved by the affirmative vote of
holders of not less than two-thirds of the votes entitled to be cast on the
matter.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering the Company will have outstanding
11,211,517 shares of Common Stock. Of these shares, the 3,500,000 shares sold in
the Offering plus any additional shares sold upon exercise of the Underwriters'
over-allotment option will be freely tradable in the public market without
restriction or further registration under the Securities Act.

The remaining 7,711,517 outstanding shares of Common Stock are "restricted
securities" as that term is defined under Rule 144 and may be sold only pursuant
to registration under the Securities Act or pursuant to an exemption therefrom,
such as that provided by Rule 144. In general, under Rule 144 as recently
amended, if one year has elapsed since the later of (i) the date of acquisition
of shares of Common Stock from the Company (as is the case with respect to all
shares of Common Stock owned immediately prior to the consummation of the
Offering), or (ii) the date of acquisition of shares of Common Stock from any
"affiliate" of the Company (as that term is defined under the Securities Act),
the acquiror or subsequent holder is entitled to sell within any three-month
period a number of shares of Common Stock that does not exceed the greater of 1%
of the then-outstanding shares of Common Stock or the average weekly trading
volume of shares of Common Stock on all exchanges and reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain restrictions on
the manner of sales, notice requirements and the availability of current public
information about the Company. If two years have elapsed since the date of
acquisition of shares of Common Stock from the Company or from any "affiliate"
of the Company, and the acquiror or subsequent holder thereof is deemed not to
have been an affiliate of the company at any time during the 90 days preceding a

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<PAGE> 78

sale, such person would be entitled to sell such shares of Common Stock in the
public market under Rule 144(i) without regard to the volume limitations, manner
of sale provisions, public information requirements or notice requirements.

The Company has entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with Mr. Mead pursuant to which the Company is
obligated to register his 7,625,000 shares under the Securities Act at specified
times and in specified amounts. Specifically, the Company, subject to certain
exceptions and limitations, will, upon request, be required (i) at any time
after 180 days following consummation of the Offering, to register up to 50% of
the Common Stock owned by Mr. Mead, and (ii) at any time after the first
anniversary of the Offering, to register all of the Common Stock owned by Mr.
Mead which has not been previously registered.

After the first anniversary of the consummation of the Offering, under the
Registration Rights Agreement, subject to certain exception and limitations, if
the Company proposes to register any of its securities under the Securities Act
for its own account or the account of another person pursuant to an
underwriting, Mr. Mead may require the Company to include in such registration
all or part of the shares of Common Stock held by him after completion of the
Offering.

The Company is required to pay all expenses incident to the performance of
its obligations under the Registration Rights Agreement, other than any
underwriting discounts and commissions, or transfer taxes relating to shares of
Common Stock registered pursuant thereto.

Mr. Mead has agreed, if requested by an underwriter in an underwritten
offering of the Company's securities (whether for the account of the Company or
otherwise), not to effect any public sale or distribution of any shares of
Common Stock or other Company equity securities, including a sale pursuant to
Rule 144, during the ten day period prior to, and during the 90-day period
beginning on, the closing date of such underwritten offering.

After the completion of the Offering, the Company intends to file a
Registration Statement on Form S-8 under the Securities Act to register all of
the shares of Common Stock reserved for issuance under the Plan. After the date
of such filing, such shares when issued will be immediately eligible for sale in
the public market, provided that shares owned by "affiliates" of the Company (as
defined in Rule 144 under the Securities Act), will be subject to the volume
limitations, manner of sale provisions, and public information and notice
requirements of Rule 144.

Prior to the Offering, there has been no public market for the Common Stock
and the effect, if any, that future market sales of Common Stock or the
availability of such Common Stock for sale will have on the market price of the
Common Stock prevailing from time to time cannot be predicted. Nevertheless,
sales of substantial amounts of Common Stock in the public market (or the
perception that such sales could occur) might adversely affect market prices for
the Common Stock.

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated May , 1997 (the "Underwriting Agreement"), the Underwriters
named below (the "Underwriters"), for whom Credit Suisse First Boston
Corporation, EVEREN Securities, Inc., and McDonald & Company Securities, Inc.
are acting as representatives (the "Representatives"), have severally but not
jointly agreed to purchase from the Company the following respective numbers of
shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation......................
EVEREN Securities, Inc......................................
McDonald & Company Securities, Inc. ........................
---------
Total............................................. 3,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Common Stock

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<PAGE> 79

offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides that,
in the event of a default by an Underwriter, in certain circumstances, the
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of this Prospectus, to purchase
up to 525,000 additional shares at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares of Common
Stock as it was obligated to purchase pursuant to the Underwriting Agreement.

The Company has been advised by the Representative that the Underwriters
propose to offer the shares of Common Stock to the public initially at the
public offering price set forth on the cover page of this Prospectus and,
through the Representative, to certain dealers at such price less a concession
of $ per share, and the Underwriters and such dealers may allow a discount
of $ per share on sales to certain other dealers. After the initial public
offering, the public offering price and concession and discount to dealers may
be changed by the Representative.

The Representatives have informed the Company that they do not expect
discretionary sales by the Underwriters to exceed 5% of the number of shares
being offered hereby.

The Company and its shareholders, officers and directors have agreed that
they will not offer, sell, contract to sell, announce their intention to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act relating to, any additional shares of Common Stock or securities convertible
or exchangeable into or exercisable for any shares of Common Stock without the
prior written consent of Credit Suisse First Boston Corporation for a period of
180 days after the date of this Prospectus.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriters may be required to make in respect thereof.

The shares of Common Stock have been approved for listing on The New York
Stock Exchange, subject to notice of issuance.

Prior to the Offering, there has been no public market for the Common
Stock. The initial price to the public for the shares of Common Stock has been
negotiated among the Company and the Representatives. Such initial price is
based on, among other things in addition to prevailing market conditions, the
Company's financial and operating history and condition, its prospects and the
prospects for its industry in general, the management of the Company and the
market prices for securities of companies in businesses similar to that of the
Company.

The Representatives, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Common Stock in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Representatives to reclaim a selling concession from a
syndicate member when the Common Stock originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Common Stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on The New York Stock Exchange or otherwise and, if commenced, may be
discontinued at any time.

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<PAGE> 80

Credit Suisse First Boston Mortgage Capital, L.L.C. ("CSFBMC"), an
affiliate of Credit Suisse First Boston Corporation, currently has a lending
relationship with the Company and its affiliate, CBI. In October of 1996, CSFBMC
entered into two loan agreements which provide for borrowings up to $45.4
million: a revolving loan commitment for up to $40.0 million of borrowings
secured by notes receivable from Silverleaf Owners and a $5.4 million term loan
secured by condominium units, certain undeveloped acreage at the Ozark Mountain
and Holiday Hills Resorts, and the golf course at Holiday Hills Resort. At March
31, 1997, the Company was indebted to CSFBMC in the amount of $5.3 million.
Interest continues to accrue on this debt at the rate of 10.25% per annum.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of Common Stock are effected. Accordingly, any resale of the Common
Stock in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".

RIGHT OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
Company or such persons. All or a substantial portion of the assets of the
Company and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the Company or such persons in
Canada or to enforce a judgment obtained in Canadian courts against the Company
or such persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this Offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.

78
<PAGE> 81

TAXATION AND ELIGIBILITY FOR INVESTMENT

Canadian purchasers of Common Stock should consult their own legal and tax
advisers with respect to the tax consequences of an investment in the Common
Stock in their particular circumstances and with respect to the eligibility of
the shares for investment by the purchaser under relevant Canadian legislation.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P. ("Meadows
Owens"), Dallas, Texas. Certain matters of Missouri real estate and timeshare
law will be passed upon for the Company by Armstrong, Teasdale, Schlafy & Davis,
Kansas City, Missouri. Certain matters will be passed upon for the Underwriters
by Latham & Watkins, Los Angeles, California, in reliance, as to matters of
Texas law, on the opinion of Meadows Owens.

EXPERTS

The combined financial statements of Silverleaf Resorts, Inc. at December
31, 1994 and for the year then ended included in this Prospectus have been
audited by James Smith & Company, P.C., Dallas, Texas, independent auditors, as
stated in its report appearing herein, and are included in reliance upon the
report of such firm given upon its authority as experts in accounting and
auditing.

The consolidated financial statements of the Company at December 31, 1995
and 1996 and for the years then ended included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. Upon the effectiveness of the Registration Statement, the
Company will become subject to the reporting requirements of the Exchange Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to such Registration
Statement and the exhibits and schedules thereto. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete and in each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. Copies of the
Registration Statement may be obtained from the Commission's principal office at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained from the public reference section of the Commission at
its Washington address upon payment of the fees prescribed by the Commission or
may be examined without charge at the offices of the Commission. The Commission
maintains a web site that contains reports, proxy statements and other
information filed with the Commission; the address of this site is
http://www.sec.gov. Copies of such material may also be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.

The Company intends to furnish its shareholders with annual reports
containing consolidated financial statements audited by an independent public
accounting firm. The shares of Common Stock offered for sale herein have been
approved for listing on The New York Stock Exchange, subject to official notice
of issuance.

79
<PAGE> 82

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Reports............................... F-2
Financial Statements (amounts at March 31, 1997 and for the
three months ended March 31, 1996 and 1997 are unaudited)
Consolidated Balance Sheets at December 31, 1995 and 1996,
and March 31, 1997..................................... F-4
Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996, and the three months
ended March 31, 1996 and 1997.......................... F-5
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1994, 1995 and 1996, and the
three months ended March 31, 1997...................... F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996, and the three months
ended March 31, 1996 and 1997.......................... F-7
Notes to Consolidated Financial Statements................ F-8
</TABLE>

F-1
<PAGE> 83

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Silverleaf Resorts, Inc.

We have audited the accompanying consolidated balance sheets of Silverleaf
Resorts, Inc. and subsidiaries (the "Company") as of December 31, 1995 and 1996
and the related consolidated statements of income, shareholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Silverleaf Resorts, Inc. and
subsidiaries as of December 31, 1995 and 1996 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Dallas, Texas

March 10, 1997 (May 15, 1997

as to the first paragraph of Note 9)

F-2
<PAGE> 84

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Silverleaf Resorts, Inc.

We have audited the accompanying consolidated statements of income,
shareholders' equity, and cash flows for the year ended December 31, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of Silverleaf
Resorts, Inc. and subsidiaries for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.

JAMES SMITH AND COMPANY, P.C.

Dallas, Texas

December 1, 1995 (May 15, 1997 as

to the first paragraph of Note 9)

F-3
<PAGE> 85

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents........................... $ 3,711,571 $ 972,510 $ 1,120,790
Notes receivable, net of allowance for uncollectible
notes of approximately $9,861,000 and $11,894,000
at December 31, 1995 and 1996, respectively, and
$12,808,000 at March 31, 1997..................... 35,567,224 55,793,996 62,483,113
Amounts due from affiliates......................... 4,341,888 6,237,023 6,493,909
Inventory........................................... 4,453,914 10,300,475 11,390,250
Land, equipment and utilities, net.................. 8,947,848 12,633,119 12,641,882
Land held for sale.................................. 1,016,132 466,133 466,133
Prepaid and other assets............................ 1,599,801 2,859,956 3,990,200
Net assets of discontinued operations............... 3,048,795 1,589,212 1,127,453
----------- ----------- -----------
TOTAL ASSETS.............................. $62,687,173 $90,852,424 $99,713,730
=========== =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Accounts payable and accrued expenses............. $ 2,761,731 $ 3,155,335 $ 3,334,838
Amounts due to affiliates......................... 14,262,627 14,765,135 14,746,814
Unearned revenues................................. 1,089,334 1,790,269 1,572,828
Income taxes payable.............................. 2,654,000 3,650,000 3,996,000
Deferred income taxes, net........................ 2,868,000 4,843,000 6,056,000
Notes payable and capital lease obligations....... 23,362,867 41,986,269 46,690,413
----------- ----------- -----------
Total Liabilities......................... 46,998,559 70,190,008 76,396,893
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, par value $0.01 per share,
100,000,000 shares authorized 7,711,517 shares
issued and outstanding......................... 77,115 77,115 77,115
Additional paid-in capital........................ 13,470,104 13,470,104 13,470,104
Retained earnings................................. 2,141,395 7,115,197 9,769,618
----------- ----------- -----------
Total Shareholders' Equity................ 15,688,614 20,662,416 23,316,837
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY.................................. $62,687,173 $90,852,424 $99,713,730
=========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 86

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Vacation Interval sales............ $25,842,774 $35,885,181 $ 48,103,161 $12,590,776 $15,770,509
Provision for uncollectible
notes............................ (6,013,783) (9,144,251) (12,075,097) (3,243,324) (3,848,514)
----------- ----------- ------------ ----------- -----------
Net Vacation Interval sales........ 19,828,991 26,740,930 36,028,064 9,347,452 11,921,995
Interest income.................... 1,632,649 3,968,332 6,296,578 1,312,099 1,932,735
Interest income from affiliates.... 252,083 392,713 377,090 127,830 107,614
Management fee income.............. 2,394,475 2,478,181 2,186,903 551,484 498,925
Lease income....................... 1,136,853 1,309,670 1,717,207 456,289 485,462
Other income....................... 1,931,668 1,832,374 1,440,798 245,395 398,667
----------- ----------- ------------ ----------- -----------
Total revenues.............. 27,176,719 36,722,200 48,046,640 12,040,549 15,345,398
COSTS AND OPERATING EXPENSES:
Cost of Vacation Interval sales.... 2,648,170 3,279,533 2,805,063 224,346 1,221,110
Sales and marketing................ 12,929,231 17,850,161 21,838,577 5,039,930 5,948,944
Operating, general and
administrative................... 5,335,960 8,061,534 8,970,233 2,342,574 1,945,025
Depreciation and amortization...... 589,847 863,149 1,263,816 277,365 330,596
Interest expense to affiliates..... 884,668 1,403,309 880,488 228,009 225,580
Interest expense to unaffiliated
entities......................... 757,060 2,206,091 3,879,253 827,874 1,460,722
----------- ----------- ------------ ----------- -----------
Total costs and operating
expenses.................. 23,144,936 33,663,777 39,637,430 8,940,098 11,131,977
----------- ----------- ------------ ----------- -----------
Income from continuing operations
before income taxes................ 4,031,783 3,058,423 8,409,210 3,100,451 4,213,421
Income tax expense................... 1,677,000 1,512,000 3,140,000 1,156,000 1,559,000
----------- ----------- ------------ ----------- -----------
INCOME FROM CONTINUING OPERATIONS.... 2,354,783 1,546,423 5,269,210 1,944,451 2,654,421
DISCONTINUED OPERATIONS:
Income (loss) from operations (less
applicable income taxes of $0 in
1994 and 1995 and a benefit of
$99,000 in 1996)................. 568,592 (1,484,414) (168,408) (94,774) --
Loss on disposal including
provision for operating losses
during the phase out period (less
applicable income taxes of $0 in
1994 and 1995 and a benefit of
$74,000 in 1996)................. -- -- (127,000) -- --
----------- ----------- ------------ ----------- -----------
Total income (loss) from discontinued
operations......................... 568,592 (1,484,414) (295,408) (94,774) --
----------- ----------- ------------ ----------- -----------
NET INCOME........................... $ 2,923,375 $ 62,009 $ 4,973,802 $ 1,849,677 $ 2,654,421
=========== =========== ============ =========== ===========
INCOME (LOSS) PER COMMON SHARE FROM:
Continuing Operations.............. $ 0.31 $ 0.20 $ 0.68 $ 0.25 $ 0.34
Discontinued Operations............ 0.08 (0.19) (0.04) (0.01) --
----------- ----------- ------------ ----------- -----------
NET INCOME PER COMMON SHARE.......... $ 0.39 $ 0.01 $ 0.64 $ 0.24 $ 0.34
=========== =========== ============ =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING........................ 7,588,952 7,590,295 7,711,517 7,711,517 7,711,517
=========== =========== ============ =========== ===========
PRO FORMA INCOME FROM CONTINUING
OPERATIONS (UNAUDITED)............. $ 7,424,000 $ 2,394,000 $ 3,382,000
============ =========== ===========
PRO FORMA INCOME PER COMMON SHARE
FROM CONTINUING OPERATIONS
(UNAUDITED)........................ $ 0.71 $ 0.24 $ 0.30
============ =========== ===========
PRO FORMA WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING (UNAUDITED)..... 10,483,168 10,161,933 11,211,517
============ =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 87

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------- NET
NUMBER OF $0.01 UNREALIZED ADDITIONAL
SHARES PAR GAINS PAID-IN RETAINED
ISSUED VALUE (LOSSES) CAPITAL EARNINGS TOTAL
--------- ------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1994.............. 7,588,952 $75,889 $ -- $ 8,006,331 $ (843,989) $ 7,238,231
Unrealized loss on
investments available
for sale................ -- -- (44,675) -- -- (44,675)
Net income................. -- -- -- -- 2,923,375 2,923,375
--------- ------- ------- ----------- ---------- -----------
DECEMBER 31, 1994............ 7,588,952 75,889 (44,675) 8,006,331 2,079,386 10,116,931
Contributions.............. 209,082 2,091 -- 5,562,908 -- 5,564,999
Repurchase and retirement
of common stock......... (86,517) (865) -- (99,135) -- (100,000)
Realized loss on
investments available
for sale................ -- -- 44,675 -- -- 44,675
Net income................. -- -- -- -- 62,009 62,009
--------- ------- ------- ----------- ---------- -----------
DECEMBER 31, 1995............ 7,711,517 77,115 -- 13,470,104 2,141,395 15,688,614
Net income................. -- -- -- -- 4,973,802 4,973,802
--------- ------- ------- ----------- ---------- -----------
DECEMBER 31, 1996............ 7,711,517 77,115 $ -- 13,470,104 7,115,197 20,662,416
Net income (unaudited)..... -- -- -- -- 2,654,421 2,654,421
--------- ------- ------- ----------- ---------- -----------
MARCH 31, 1997 (unaudited)... 7,711,517 $77,115 $ -- $13,470,104 $9,769,618 $23,316,837
========= ======= ======= =========== ========== ===========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 88

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................... $ 2,923,375 $ 62,009 $ 4,973,802 $ 1,849,675 $ 2,654,421
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization.......... 589,847 863,149 1,263,816 277,365 330,596
Discontinued operations................ (3,530,342) 1,476,057 3,794,138 99,002 523,939
Loss on investment in joint venture.... -- 151,035 -- -- --
(Gain) Loss on disposal of land,
equipment and utilities.............. (4,580) 116,373 64,721 -- --
Loss on sale of marketable
securities........................... -- 8,578 -- -- --
Deferred tax provision................. 861,000 871,000 1,975,000 760,000 1,213,000
Increase (decrease) in cash from
changes in assets and liabilities
(exclusive of amounts contributed):
Amounts due from affiliates.......... (383,366) 452,181 (1,733,402) (148,949) (256,886)
Inventory............................ 205,389 (379,868) (5,846,561) (1,416,891) (1,089,775)
Prepaid and other assets............. (650,692) 42,084 (1,558,753) (60,795) (1,130,244)
Accounts payable and accrued
expenses.......................... 473,188 160,866 393,604 931,032 179,503
Amounts due to affiliates............ 836,029 (711,597) 114,013 495,437 194,050
Interest payable to affiliates....... 410,376 (41,392) 1,238,035 -- --
Unearned revenues.................... (49,731) 23,259 700,935 260,841 (217,441)
Income taxes payable................. 816,000 619,000 996,000 396,000 346,000
----------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities...................... 2,496,493 3,712,734 6,375,348 3,442,717 2,747,163
INVESTING ACTIVITIES:
Proceeds from sale of marketable
securities............................. -- 58,907 -- -- --
Issuance of notes receivable from
affiliates............................. (1,783,871) (237,453) (207,668) -- --
Proceeds from sales of land, equipment
and utilities.......................... 593,164 -- -- -- --
Proceeds from sales of land held for
sale................................... -- 733,279 599,999 -- --
Purchase of land held for sale........... (744,203) -- -- -- --
Purchases of land, equipment and
utilities.............................. (1,701,402) (4,497,328) (4,162,069) (159,877) (339,359)
Notes receivable, net.................... (8,552,693) (15,661,786) (20,226,772) (6,039,335) (6,689,117)
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities...................... (12,189,005) (19,604,381) (23,996,510) (6,199,212) (7,028,476)
FINANCING ACTIVITIES:
Proceeds from borrowings from
unaffiliated entities.................. 4,454,544 22,667,898 26,647,776 3,600,476 8,231,605
Payments on borrowings to unaffiliated
entities............................... (1,134,053) (4,004,385) (8,938,788) (1,602,985) (3,527,461)
Proceeds from borrowings from
affiliates............................. 6,417,057 2,467,791 619,564 100,042 --
Payments on borrowings to affiliates..... (1,800,925) (1,116,954) (1,111,896) (535,346) (212,371)
Discontinued operations.................. 2,487,685 (1,340,053) (2,334,555) (743,392) (62,180)
----------- ----------- ----------- ----------- -----------
Net cash provided by financing
activities...................... 10,424,308 18,674,297 14,882,101 818,795 4,429,593
NET INCREASE (DECREASE) IN CASH............ 731,796 2,782,650 (2,739,061) (1,937,700) 148,280
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD...................... 197,125 928,921 3,711,571 3,711,571 972,510
----------- ----------- ----------- ----------- -----------
END OF PERIOD............................ $ 928,921 $ 3,711,571 $ 972,510 $ 1,773,871 $ 1,120,790
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid............................ $ 1,545,916 $ 2,462,179 $ 3,713,796 $ 792,156 $ 1,184,156
Income taxes paid........................ -- 17,000 -- -- --
Assets contributed....................... -- 14,489,000 -- -- --
Liabilities assumed with contributed
assets................................. -- 8,924,000 -- -- --
Equipment acquired under capital
leases................................. 726,847 408,655 814,414 -- 29,985
Repurchase of common stock through
issuance of debt....................... -- 100,000 -- -- --
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 89

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND

UNAUDITED INTERIM INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997

1. NATURE OF BUSINESS

Silverleaf Resorts, Inc., a Texas Corporation (the "Company" or
"Silverleaf"), formerly known as Ascension Capital Corporation ("ACC"), operates
as Silverleaf Vacation Club, Inc. Silverleaf's principal activities consist of
(i) developing and operating timeshare resorts; (ii) marketing and selling
one-week vacation intervals ("Vacation Intervals") to new prospective owners;
(iii) marketing and selling upgraded Vacation Intervals to existing Silverleaf
Owners; and (iv) providing financing for the purchase of Vacation Intervals. The
Company has in-house sales, marketing, financing, and property management
capabilities and coordinates all aspects of expansion of its seven existing
resorts (the "Existing Resorts") and the development of any new timeshare
resort, including site selection, design, and construction. The Company operates
its Existing Resorts under a management agreement with a non-profit corporation,
Master Club ("Master Club"), which bears the costs of operating, maintaining,
and refurbishing the resorts from monthly dues paid by the Vacation Interval
owners. The Company receives a management fee from Master Club to compensate it
for the services it provides. In addition to Vacation Interval sales revenues,
interest income derived from its financing activities and the management fee
received from Master Club, the Company generates additional revenue from leasing
of unsold intervals, utility operations related to the resorts and other
sources. All of the operations are directly related to the resort real estate
development industry. Sales of Vacation Intervals are marketed to individuals
primarily through direct mail and telephone solicitation.

The consolidated financial statements of the Company as of and for the year
ended December 31, 1996, reflect the operations of the Company and its wholly
owned subsidiaries, Condominium Builders, Inc. ("CBI"), Villages Land, Inc.
("VLI"), Silverleaf Travel, Inc., and Database Research, Inc.

The Company was formed as a result of the combination of ACC, Equal
Investment Corporation ("EIC"), CBI, and Holly Ranch Water Company, Inc.
("HRWCI") on December 29, 1995 (HRWCI was liquidated in 1995). ACC and EIC were
the 99% general partner and 1% limited partner, respectively, of Ascension
Resorts, Ltd. ("ARL"). The historical consolidated financial statements have
been restated utilizing the historical cost basis of the combined entities so as
to present the consolidated financial condition, operations, equity and cash
flows since these entities were under common ownership and control.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -- The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

Interim Financial Statements (Unaudited) -- The accompanying financial
statements for the interim periods ended March 31, 1996 and 1997 and related
disclosures are unaudited. These unaudited condensed interim financial
statements do not include all of the disclosures provided in the annual
consolidated financial statements and have been prepared in accordance with
Article 10 of Regulation S-X. The interim financial statements should be read in
conjunction with the accompanying annual audited financial statements and
footnotes thereto. In the opinion of the Company, all adjustments necessary to
fairly present the financial position, results of operations, and cash flows
have been reflected in the financial statements for the periods ended March 31,
1996 and 1997. Results for the interim period 1997 are not necessarily
indicative of the results to be expected for the year ending December 31, 1997.

Revenue and Expense Recognition -- A substantial portion of Vacation
Interval sales are made in exchange for mortgage notes receivable, which are
secured by a deed of trust on the Vacation Interval sold. The Company recognizes
the sale of a Vacation Interval under the accrual method. Revenues are
recognized after a binding sales contract has been executed, a 10% minimum down
payment has been received, construction is substantially

F-8
<PAGE> 90

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

complete and the statutory rescission period has expired. If all criteria are
met except that construction is not substantially complete, revenues are
recognized on the percentage-of-completion basis. If a customer fails to make
the first installment payment when due, the Company reverses the sale and the
recovered property is placed back into inventory at its original historical cost
basis and any payments made by the customer during the period which are not
refunded are recorded as other revenues. In addition to sales of Vacation
Intervals to new prospective owners the Company sells upgraded Vacation
Intervals to existing Silverleaf owners. Revenues are recognized on these
upgrade Vacation Interval sales when the criteria described above are satisfied.
The revenue recognized is the net of the incremental increase in the upgrade
sales recognized price and cost of sales is the incremental increase in the cost
of the Vacation Interval purchased.

The Company recognizes interest income as earned. To the extent interest
payments become delinquent the Company ceases recognition of the interest income
until collection is assured. When inventory is returned to the Company any
unpaid note receivable balances are charged against the previously established
bad debt reserve net of the amount at which the Vacation Interval is being
restored to inventory.

Revenues related to one-time Sampler contracts, which entitles the
prospective owner to sample a resort for various periods, are recorded as lease
income and deferred until earned.

The Company receives fees for management services provided to Master Club.
These revenues are recognized on an accrual basis in the period the services are
provided.

Utilities, services and other income is recognized on an accrual basis in
the period service is provided.

Sales and marketing costs are expensed as incurred.

Cash and Cash Equivalents -- Cash and cash equivalents consist of all
highly liquid investments with a remaining maturity at the date of purchase of
three months or less. Cash and cash equivalents consist of cash, certificates of
deposit and money market funds.

Provision for Uncollectible Notes -- The Company records a provision for
uncollectible notes at the time revenue is recognized. Such provision is
recorded in an amount sufficient to maintain the allowance at a level considered
adequate to provide for anticipated losses resulting from customers' failure to
fulfill their obligations under the terms of their notes. The allowance for
doubtful notes takes into consideration both notes held by the Company and those
sold with recourse. Such allowance for doubtful notes is adjusted based upon
periodic analysis of the portfolio, historical credit loss experience and
current economic factors. The allowance for uncollectible notes is reduced by
actual cancellations and losses experienced, including losses related to
previously sold notes receivable which were reacquired pursuant to the recourse
obligations discussed herein. Recourse to the Company on sales of notes
receivable is governed by the agreements between the purchasers and the Company.

Inventory -- Inventory is stated at the lower of cost or market. Cost
includes amounts for land construction materials, direct labor and overhead,
taxes and capitalized interest incurred in the construction or through the
acquisition by purchase of resort dwellings held for timeshare sale. These costs
are capitalized as inventory and are allocated to Vacation Intervals based upon
their relative sales values. Upon sale of a Vacation Interval these costs are
charged to cost of sales on a specific identification basis. Vacation Intervals
reacquired through repossession, recaptured through mutual release of deed or
received as part of the upgrade program are placed back into inventory at the
lower of its original historical cost basis or market value. Company management
routinely reviews the carrying value of its inventory on an individual project
basis to determine that the carrying value does not exceed market.

Land Held for Sale -- Land held for sale represents undeveloped land and is
recorded at the lower of cost or fair value less costs to sell.

F-9
<PAGE> 91

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Impairment -- In March, 1995, the FASB issued Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of ("SFAS No. 121"), which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. SFAS No. 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company adopted SFAS No. 121 on January 1, 1996, with no material impact to the
Company's operations or financial position.

Land, Equipment and Utilities -- Land, equipment (including equipment under
capital lease), and utilities are stated at cost, which includes amounts for
construction materials, direct labor and overhead and capitalized interest. When
assets are disposed of, the cost and related accumulated depreciation are
removed, and any resulting gain or loss is reflected in income for the period.
Maintenance and repairs are charged to operations as incurred; significant
betterments and renewals are capitalized. Depreciation is calculated using the
straight-line method over the estimated useful life of the asset, ranging from 3
to 10 years.

Discontinued Operations -- The Company has adopted a plan to discontinue
its development and sale of condominiums by CBI. Accordingly, these operations
have been reported as a separate component of operations and the assets and
liabilities have been combined and included in net assets of discontinued
operations on the balance sheet.

Income Taxes -- Deferred income taxes are recorded for temporary
differences between the bases of assets and liabilities as recognized by tax
laws and their carrying value as reported in the financial statements. Provision
is made or benefit recognized for deferred taxes relating to temporary
differences in the recognition of expense and income for financial reporting
purposes. To the extent a deferred tax asset does not meet the criteria of "more
likely than not" for realization, a valuation allowance is recorded.

Earnings per Share -- Earnings per share amounts are based on the weighted
average number of shares outstanding. The weighted average shares outstanding
for all periods presented give retroactive effect to the 1995 and 1997 stock
dividends (see Note 9). Fully diluted earnings per share amounts are not
presented as there are no common stock equivalents.

Pro Forma Earnings per Share (unaudited) -- Unaudited pro forma earnings
per share amounts are based on the weighted average number of shares outstanding
assuming; (i) the historical shares as adjusted for the stock dividend were
outstanding for all periods presented; and (ii) an additional number of shares
were outstanding at any time only in an amount sufficient to retire the
outstanding debt as of that date.

Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from such
estimates.

Environmental Remediation Costs -- The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. Accruals for estimated losses from
environmental remediation obligations generally are recognized no later than
completion of the remedial feasibility study. Such accruals are adjusted as
further information develops or circumstances change. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable. Company management is not aware of any
environmental remediation obligations which would materially affect the
operations, financial position or cash flow of the Company.

New Accounting Standards -- Statement of Financial Standards ("SFAS") No.
128, "Earnings Per Share" specifies new computation, presentation and disclosure
requirements. The statement will be effective for both interim and annual
periods ending after December 15, 1997. Management believes that the adoption of
this statement will not have a material impact on the earnings per share
presented.

F-10
<PAGE> 92

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SFAS No. 125 -- "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities," requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred
and to derecognize financial assets when control has been surrendered. The
Company will apply the new rules of SFAS No. 125 prospectively to transactions
beginning in 1997. Based on current activities, the Company believes the
adoption of SFAS No. 125 will not have a material impact on the Company's
results of operations or financial position.

SFAS No. 123 -- "Accounting for Stock-Based Compensation," which was
effective for fiscal years beginning after December 15, 1995, requires that an
employer's financial statements include certain disclosures about stock-based
employee compensation arrangements regardless of the method used to account for
them. Management expects to measure compensation costs using APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and will therefore include
disclosures in the notes to the financial statements of pro forma net income and
pro forma earnings per share as if the fair value based accounting method in
SFAS No. 123 had been used to account for stock-based compensation cost in
future financial statement presentations. No awards or grants existed as of
December 31, 1996.

3. CONCENTRATIONS OF RISK

Credit Risk -- The Company is exposed to on-balance sheet credit risk
related to its notes receivable. The Company is exposed to off-balance sheet
credit risk related to loans sold under recourse provisions.

The Company offers financing to the buyers of Vacation Intervals at the
Company's resorts. These buyers make a down payment of at least 10% of the
purchase price and deliver a promissory note to the Company for the balance; the
promissory notes generally bear interest at a fixed rate are payable over a
seven year period and are secured by a first mortgage on the Vacation Interval.
The Company bears the risk of defaults on these promissory notes, and this risk
is heightened inasmuch as the Company generally does not verify the credit
history of its customers and will provide financing if the customer is presently
employed and meets certain household income criteria.

If a buyer of a Vacation Interval defaults, the Company generally must
foreclose on the Vacation Interval and attempt to resell it; the associated
marketing, selling, and administrative costs from the original sale are not
recovered; and such costs must be incurred again to resell the Vacation
Interval. Although the Company in many cases may have recourse against a
Vacation Interval buyer for the unpaid price, Texas and certain other states
have laws which limit the Company's ability to recover personal judgments
against customers who have defaulted on their loans. Accordingly, the Company
has generally not pursued this remedy. (See Note 4)

Interest Rate Risk -- The Company has historically derived net interest
income from its financing activities because the interest rates it charges its
customers who finance the purchase of their Vacation Intervals exceed the
interest rates the Company pays to its lenders. Because the Company's
indebtedness bears interest at variable rates and the Company's customer
receivables bear interest at fixed rates, increases in interest rates will erode
the spread in interest rates that the Company has historically obtained and
could cause the rate on the Company's borrowings to exceed the rate at which the
Company provides financing to its customers. The Company does not engage in
interest rate hedging transactions. Therefore, any increase in interest rates,
particularly if sustained, could have a material adverse effect on the Company's
results of operations, cash flows and financial position.

Availability of Funding Sources -- The Company funds substantially all of
the notes receivable, timeshare inventory and land inventory which it originates
or purchases with borrowings through its financing facilities and internally
generated funds. These borrowings are in turn repaid with the proceeds received
by the Company from repayments of such notes receivable. To the extent that the
Company is not successful in maintaining or replacing existing financings, it
would have to curtail its operations or sell assets, thereby having a material
adverse effect on the Company's results of operations, cash flows and financial
condition.

F-11
<PAGE> 93

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Geographic Concentration -- The Company's notes receivable are primarily
originated in Texas and Missouri. The risk inherent in such concentrations is
dependent upon regional and general economic stability which affects property
values and the financial stability of the borrowers. The Company's Vacation
Interval inventories are concentrated in Texas and Missouri. The risk inherent
in such concentrations is in the continued popularity of the resort
destinations, which affects the marketability of the Company's products and the
collection of notes receivable.

4. NOTES RECEIVABLE

The Company provides financing to the purchasers of Vacation Intervals
which are collateralized by their interest in such Vacation Intervals. The notes
receivable generally have initial terms of up to seven years. The average yield
on outstanding notes receivable at December 31, 1996 was approximately 14.7%.

In connection with the its Sampler program the Company routinely enters
into notes receivable with terms of 10 months. These notes receivable total
$1,089,334 at December 31, 1995, and $1,568,051 at December 31, 1996, and are
typically non-interest bearing. These notes receivable have not been discounted
as management has determined the effects would not be material to the
consolidated financial statements of the Company.

Notes receivable are scheduled to mature as follows at December 31, 1996:

<TABLE>
<S> <C>
1997........................................................ $ 8,130,195
1998........................................................ 9,054,037
1999........................................................ 9,430,225
2000........................................................ 10,254,382
2001........................................................ 10,691,275
Thereafter.................................................. 20,128,168
------------
67,688,282
Less allowance for uncollectible notes...................... (11,894,286)
------------
Notes receivable, net....................................... $ 55,793,996
============
</TABLE>

The following schedule summarizes the original principal amount of notes
receivable sold with recourse to third parties and affiliates during the years
ended December 31, 1994, 1995, and 1996:

<TABLE>
<CAPTION>
1994 1995 1996
---------- -------- --------
<S> <C> <C> <C>
Unaffiliated third parties........................ $5,406,102 $564,664 $ --
Affiliates........................................ -- -- --
---------- -------- --------
Total notes receivable sold............. $5,406,102 $564,664 $ --
========== ======== ========
</TABLE>

The following schedule summarizes outstanding principal maturities of notes
receivable sold with recourse as of December 31, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Unaffiliated third parties................................ $11,735,864 $ 9,693,317
Affiliates................................................ 2,033,386 1,355,387
----------- -----------
Total outstanding notes receivable sold with
recourse...................................... $13,769,250 $11,048,704
=========== ===========
</TABLE>

F-12
<PAGE> 94

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Management considers both pledged and sold-with-recourse notes receivable
in the Company's allowance for uncollectible notes. The activity in the
allowance for uncollectible notes is as follows for years ended December 31,
1994, 1995, and 1996:

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- ------------
<S> <C> <C> <C>
Balance, beginning of year.................. $ 7,953,164 $ 9,394,490 $ 9,861,458
Provision................................... 6,013,783 9,144,251 12,075,097
Receivables charged off..................... (4,572,457) (8,677,283) (10,042,269)
----------- ----------- ------------
Balance, end of year........................ $ 9,394,490 $ 9,861,458 $ 11,894,286
=========== =========== ============
</TABLE>

Receivables charged off is inclusive of current year and previous year
sales which were charged against the provision during the respective year.

5. LAND, EQUIPMENT AND UTILITIES

The Company's land, equipment and utilities consist of the following at
December 31, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Land.................................... $ 875,472 $ 1,345,774
Vehicles and equipment.................. 1,872,087 2,066,470
Utility plant and facilities............ 2,345,494 3,397,689
Office furniture and equipment.......... 2,977,905 4,012,727
Improvements............................ 3,559,376 5,551,074
----------- -----------
11,630,334 16,373,734
Less accumulated depreciation........... (2,682,486) (3,740,615)
----------- -----------
Net land, equipment and utilities....... $ 8,947,848 $12,633,119
=========== ===========
</TABLE>

Depreciation and amortization expense for the years ended December 31,
1994, 1995 and 1996, was $589,847, $863,149 and $1,263,816 respectively.

6. INCOME TAXES

Prior to December 29, 1995, CBI operated as a Subchapter S Corporation
wholly-owned by the principal shareholder of the Company. The cumulative losses
of CBI incurred prior to the transfer of the stock of CBI to the Company have
been reported on the individual income tax return of its then sole shareholder.
Upon transfer the Company recorded deferred taxes for the difference between the
tax and book basis of the assets, which was not material. Effective January 1,
1996, the Company converted CBI to a C corporation and, accordingly, CBI will be
included in the consolidated income tax return of the Company (See Note 12).

Income tax expense (benefit) consists of the following components for the
years ended December 31, 1994, 1995 and 1996:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal............................... $ 751,000 $ 618,000 $ 992,000
State................................. 65,000 17,000 --
---------- ---------- ----------
Total current tax expense..... 816,000 635,000 992,000
Deferred tax expense.................... 861,000 877,000 1,975,000
---------- ---------- ----------
Total income tax expense...... $1,677,000 $1,512,000 $2,967,000
========== ========== ==========
</TABLE>

F-13
<PAGE> 95

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of income taxes on reported pretax income at statutory
rates to actual income tax expense for the years ended December 31, 1994, 1995,
and 1996, is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
----------------- ----------------- -----------------
DOLLARS RATE DOLLARS RATE DOLLARS RATE
---------- ---- ---------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
Income tax at statutory rates........... $1,371,000 34% $1,040,000 34% $2,700,000 34%
State income taxes, net of Federal Tax
benefit............................... 121,000 3% 92,000 3% 238,000 3%
Other................................... 185,000 5% 380,000 12% 29,000 1%
---------- -- ---------- -- ---------- --
Total income tax expense...... $1,677,000 42% $1,512,000 49% $2,967,000 38%
========== ========== ==========
Income tax expense attributable to:
Continuing operations................. $1,677,000 $1,512,000 $3,140,000
Discontinued operations............... -- -- (173,000)
---------- ---------- ----------
Total income tax expense...... $1,677,000 $1,512,000 $2,967,000
========== ========== ==========
</TABLE>

Amounts for deferred tax assets and liabilities as of December 31, 1995 and
1996, are as follows:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Deferred tax liabilities:
Installment sales income................................ $10,143,000 $16,056,000
Other................................................... 54,000 34,000
----------- -----------
Total deferred tax liabilities.................. 10,197,000 16,090,000
----------- -----------
Deferred tax assets:
Accrued interest payable to related party............... 1,963,000 2,287,000
Alternative minimum tax credit.......................... 2,654,000 3,650,000
Net operating loss carryforward......................... 2,712,000 5,310,000
----------- -----------
Total deferred tax assets....................... 7,329,000 11,247,000
----------- -----------
Net deferred tax liability................................ $ 2,868,000 $ 4,843,000
=========== ===========
</TABLE>

The Company reports substantially all Vacation Interval sales which it
finances on the installment method for Federal income tax purposes. Under the
installment method, the Company does not recognize income on sales of Vacation
Intervals until the installment payments on customer receivables are received by
the Company. Interest will be imposed, however, on the amount of tax
attributable to the installment payments for the period beginning on the date of
sale and ending on the date the related tax is paid. If the Company is otherwise
not subject to tax in a particular year, no interest is imposed since the
interest is based on the amount of tax paid in that year. The consolidated
financial statements do not contain an accrual for any interest expense which
would be paid on the deferred taxes related to the installment method. The
amount of interest expense is not estimatable as of December 31, 1996.

The Company is subject to Alternative Minimum Tax ("AMT") as a result of
the deferred income which results from the installment sales treatment of
Vacation Interval sales for regular tax purpose. The AMT liability creates a
deferred tax asset which can be used to offset any future tax liability from
regular Federal income tax. This deferred tax asset has an unlimited carryover
period.

The net operating losses expire beginning in 2007 through 2011. Realization
of the deferred tax assets arising from net operating losses is dependent on
generating sufficient taxable income prior to the expiration of

F-14
<PAGE> 96

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the loss carryforwards. The amount of the deferred tax asset considered
realizable could be decreased if estimates of future taxable income during the
carryforward period are reduced.

The following are the expiration dates and the approximate net operating
loss carryforwards at December 31, 1996:

<TABLE>
<CAPTION>
EXPIRATION DATES
- ----------------
<S> <C> <C>
2007............................................................. $ 261,000
2008............................................................. --
2009............................................................. 1,493,000
2010............................................................. 5,454,000
2011............................................................. 7,142,000
-----------
$14,350,000
===========
</TABLE>

7. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable and capital lease obligations related to continuing
operations at December 31, 1995 and 1996, consist of the following:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
$25 million revolving loan agreement ($15 million at
December 31, 1995), which contains certain financial
covenants, due January 2, 2001, principal and interest
payable from the proceeds obtained from timeshare notes
receivable which are pledged as collateral for the note,
at an interest rate as defined in the agreement (10.28%
at December 31, 1996).................................... $ 9,026,337 $20,139,365
$12 million revolving loan agreement which contains certain
financial covenants, due May 8, 2003, principal and
interest payable from the proceeds obtained from
timeshare notes receivable which are pledged as
collateral for the note, at an interest rate of Base plus
2.75% (11.00% at December 31, 1996)...................... 7,324,323 6,004,061
$7.5 million revolving line of credit, which contains
certain financial covenants, due December 31, 1999,
secured by certain assets of the Company, with monthly
interest payments at Base plus 2.75% (10.75% at December
31, 1996)................................................ 4,000,000 4,000,000
$40 million revolving loan agreement, which contains
certain financial covenants, due October 9, 1998,
principal and interest payable from the proceeds obtained
on timeshare notes receivable pledged as collateral for
the note, at an interest rate of LIBOR plus 4% (9.53% at
December 31, 1996)....................................... -- 277,694
$15 million ($5 million at December 31, 1995) revolving
loan agreement which contains certain financial
covenants, due November 30, 2002, principal and interest
payable from the proceeds obtained from timeshare notes
receivable which are pledged as collateral for the note,
at an interest rate of Prime plus 2%..................... 661,778 4,278,484
</TABLE>

F-15
<PAGE> 97

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
$5.4 million note payable, which contain certain financial
covenants, due October 9, 1999, secured by certain assets
of the Company, interest only payments due through April
1, 1998, with payments of principal and interest due
monthly thereafter until maturity on October 9, 1999, at
interest rate of Prime plus 2%........................... -- 5,200,920
Various notes, due from November, 1997, through October,
2002, collateralized by various assets with interest
rates ranging from 6% to 11%............................. 1,635,479 1,022,203
----------- -----------
Total notes payable.............................. 22,647,917 40,922,727
Capital lease obligations.................................. 714,950 1,063,542
----------- -----------
Total notes payable and capital lease
obligations.................................... $23,362,867 $41,986,269
=========== ===========
</TABLE>

Prime rate at December 31, 1996, was 8.25%.

As of December 31, 1995, the Company had additional notes payable to
unaffiliated entities totaling $2,334,555 which are included in net liabilities
of discontinued operations on the balance sheet. These notes payable to
unaffiliated parties were collateralized by various assets and had interest
rates which were generally based on prime plus 2% to 3%. During 1996, all of
these notes were repaid. (See note 12)

Certain of the above debt agreements include restrictions on the Company's
ability to pay dividends based on minimum levels of net income and cash flow.
The debt agreements contain additional covenants including requirements that the
Company (i) preserve and maintain the collateral securing the loans; (ii) pay
all taxes and other obligations relating to the collateral; and (iii) refrain
from selling or transferring the collateral or permitting any encumbrances on
the collateral. Such credit facilities also contain operating covenants
requiring the Company to (i) maintain an aggregate minimum tangible net worth
ranging from $6 million to $17.5 million; (ii) maintain its legal existence and
be in good standing in any jurisdiction where it conducts business; (iii) remain
in the active management of the Resorts; (iv) ensure that sales and marketing
expenses incurred in connection with marketing the Vacation Intervals do not
exceed 50% of the net sales revenue realized from the sale of the Vacation
Intervals, and (v) refrain from modifying or terminating certain timeshare
documents.

Principal maturities of notes payable and capital lease obligations are as
follows at December 31, 1996:

<TABLE>
<CAPTION>
YEAR ENDING CONTINUING AFFILIATES
DECEMBER 31: OPERATIONS (SEE NOTE 10) TOTAL
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
1997...................................... $10,225,282 $8,201,445 $18,426,727
1998...................................... 11,702,713 33,333 11,736,046
1999...................................... 12,868,669 -- 12,868,669
2000...................................... 2,971,033 -- 2,971,033
2001...................................... 3,304,037 -- 3,304,037
Thereafter................................ 914,535 -- 914,535
----------- ---------- -----------
Total..................................... $41,986,269 $8,234,778 $50,221,047
=========== ========== ===========
</TABLE>

Total interest expense for 1994, 1995 and 1996 was $1,641,728, $3,609,400
and $4,759,741, respectively. Interest of $0, $515,751 and $711,070 was
capitalized during 1994, 1995 and 1996, respectively.

Substantially all assets of the Company are pledged as collateral.

F-16
<PAGE> 98

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business the Company has been named a defendant
in certain lawsuits. It is the opinion of the Company's management that the
outcome of the suits now pending will not have a material, adverse effect on the
operations, cash flows or the consolidated financial position of the Company.

Prior to 1996, the Company sold certain of its notes receivable with
recourse to third parities and affiliated parties. The Company has contingent
liability for the notes receivable sold with recourse. The total amount of
contingent liability is equal to the uncollected balance of the notes as of
December 31, 1996. The Company's management considers both pledged and sold with
recourse notes receivable in the Company's allowance for doubtful notes. (see
Note 4)

The Company has entered into noncancelable operating leases covering office
and storage facilities and small equipment which will expire at various dates
through 2001. The total rental expense incurred during the years ended December
31, 1994, 1995 and 1996, was $674,501, $309,894 and $480,801, respectively. The
Company has also acquired equipment by entering into capital leases. The future
minimum annual commitments for the noncancelable lease agreements are as
follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31 LEASES LEASES
- ----------------------- ---------- ---------
<S> <C> <C> <C>
1997...................................................... $ 551,182 $ 185,937
1998...................................................... 448,708 161,376
1999...................................................... 190,932 116,704
2000...................................................... 3,549 68,725
2001...................................................... -- 22,037
Thereafter................................................ -- --
---------- ---------
Total minimum future lease payments....................... 1,194,371 $ 554,779
=========
Less amounts representing interest........................ (130,829)
----------
Present value of future minimum lease payments............ $1,063,542
==========
</TABLE>

Equipment acquired under capital leases consists of the following as of
December 31, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Amount of equipment under capital leases.................... $1,190,224 $2,240,366
Less accumulated depreciation............................... (218,727) (599,224)
---------- ----------
$ 971,497 $1,641,142
========== ==========
</TABLE>

9. EQUITY

On March 27, 1997 the Board of Directors of the Company increased the
number of common shares authorized to 100,000,000 shares and in May 1997 the
Board of Directors declared a common stock dividend to existing shareholders
which resulted in an increase in the number of shares of common stock
outstanding. The weighted average shares outstanding for all periods presented
give retroactive effect to the split of common shares.

On December 27, 1995, the principal shareholder contributed certain assets
and the Company assumed certain liabilities associated with these assets which
had been held in a dormant entity. These assets and liabilities were recorded by
the Company at their historical cost basis at the date of the transaction. The
historical cost basis of the assets contributed was approximately $14,489,000
which included a note receivable from the Company of $10,869,000. Upon receipt
of this asset, the Company retired the corresponding obligation which had been
recorded in the Company's financial statements. Liabilities assumed had a
historical cost basis of approximately

F-17
<PAGE> 99

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$8,924,000 consisting primarily of notes payable to affiliates of $7,631,000.
These amounts are included within the financial statements of the Company. The
net excess of assets contributed over liabilities assumed is reflected as an
equity contribution to the Company.

During December 1995, the Company re-acquired a former officers equity
interest in EIC in exchange for a $100,000 promissory. As of December 31, 1996
the amount owed under this agreement was $66,667 and is included in amounts due
to affiliates.

10. RELATED PARTY TRANSACTIONS

The Company has entered into certain financing and operating transactions
with affiliate entities of the Company or its shareholders and officers. Pace
Finance Company ("Pace") and Capital Ventures I are entities owned or controlled
by the Company's principal shareholder; STG Investments is a partnership, the
partners of which include certain trusts which benefit the family of the
Company's principal shareholder.

Each timeshare owners association has entered into an agreement with Master
Club, formerly Master Endless Escape Club, a Texas nonprofit corporation which
authorizes Master Club to manage the resorts on a centralized and collective
basis. Master Club, in turn, has entered into a management agreement with the
Company. Under this agreement, the Company manages the operations of the
resorts. Pursuant to the management agreement, the Company receives a management
fee equal to the lesser of 15% of Master Club's gross revenues, or the net
income of Master Club; however, if the Company does not receive 15% of Master
Club's gross revenues, such deficiency is deferred for payment in succeeding
year(s), subject again to the net income limitation. The management agreement
expires in March, 2000, but will continue year-to-year thereafter unless
canceled by either party. During the years ending December 31, 1994, 1995 and
1996 and for the three months ended March 31, 1996 and 1997, the Company
recorded management fees from Master Club of $2,394,475, $2,478,181, $2,186,903,
$551,484 and $498,925, respectively, in management fee income.

The direct expenses of operating the resorts are paid by Master Club. To
the extent Master Club provides payroll, administrative and other services that
directly benefit the Company, a separate allocation charge is generated and paid
by the Company to Master Club. During the years ended December 31, 1994, 1995
and 1996 and for the three months ended March 31, 1996 and 1997, the Company
incurred $1,483,510, $1,911,285, $2,107,347, $526,837 and $754,816,
respectively, of expenses under this agreement.

At December 31, 1995 the net amount payable to Master Club totaled $429,449
and at December 31, 1996 and March 31, 1997 the net receivable from Master Club
totalled $1,133,178 and $1,479,261, respectively. The amounts are included in
amounts due to/from affiliates.

The Company incurred and made payments to Recreational Consultants, Inc.,
an entity of which an officer of the Company is the principal. Amounts paid
under this agreement totaled $320,581, $429,747 and $552,377, during the years
ended December 31, 1994, 1995, and 1996, respectively, and $103,538 and $147,836
for the three months ended March 31, 1996 and 1997.

Prior to 1995, Pace purchased from an affiliate of the Company certain
delinquent notes receivable executed by purchasers of Vacation Intervals. During
1996, the Company purchased notes from Pace for $24,200. During 1997 the Company
and subsidiaries purchased the remainder of Pace's inventory of notes receivable
at a cash price of $16,400.

F-18
<PAGE> 100

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following schedule represents amounts due from affiliates at December
31, 1995 and 1996 and March 31, 1997:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ -----------
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes receivable from the principal
shareholder, due December 31, 1997, bearing
interest at rates ranging from 8.0%-9.0%..... $4,025,038 $4,128,343 $4,108,343
Notes receivable from the other shareholder,
which bore interest at 8%, such Note being
forgiven and included in compensation expense
during 1996.................................. 64,537
Receivable from other affiliated parties....... 168,900 235,628
Interest on shareholders notes receivables..... 89,698 370,764 482,660
---------- ---------- ----------
4,179,273 4,668,007 4,826,631
Timeshare owners associations and other, net... 162,615 435,838 188,017
Amount due from Master Club.................... 1,133,178 1,479,261
---------- ---------- ----------
Total amounts due from affiliates.... $4,341,888 $6,237,023 $6,493,909
========== ========== ==========
</TABLE>

The following schedule represents outstanding amounts due to affiliates at
December 31, 1995 and 1996 and March 31, 1997:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------------- -----------
1995 1996 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to Capital Venture I, due
December 31, 1997, bearing interest at
12.0%..................................... $ 1,570,118 $ 1,570,118 $ 1,570,118
Note payable to principal shareholder, due
December 31, 1997, bearing interest at
9.0%...................................... 809,640 809,640 809,640
Note payable to Pace Finance Company due
December 31, 1997, bearing interest at
prime plus 3.5% (11.75% at December 31,
1996)..................................... 539,168 361,515 156,551
Notes payable to principal shareholder, due
December 31, 1997, bearing interest at
8.0%...................................... 5,152,642 5,152,642 5,152,642
Other affiliated entities (see below),
bearing interest at 9.0%.................. 451,969 340,863 333,456
Accrued interest payable to Capital Venture
I......................................... 2,529,493 2,671,190 2,706,034
Accrued interest payable to principal
shareholder............................... 2,488,806 3,178,849 3,352,718
Accrued interest payable to other affiliated
entities (see below)...................... 291,342 394,064 406,522
Accounts payable to other affiliated
entities.................................. 286,254 259,133
Amount due to Master Club................... 429,449
----------- ----------- -----------
Total notes payable to
affiliates...................... $14,262,627 $14,765,135 $14,746,814
=========== =========== ===========
</TABLE>

Notes payable and interest payable to other affiliated entities represent
amounts payable to entities owned or controlled by the Company's principal
shareholder.

The Company has a consulting agreement with a proposed director of the
Company. During 1996, $208,000 was expensed by the Company under this agreement.
This agreement was canceled during 1997.

F-19
<PAGE> 101

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has agreed to sell to the principal shareholder the Company's
interest in a condominium, two vehicles and a residential dwelling at a price in
excess of the Company's carrying value. As of December 31, 1996, the carrying
value of these assets totaled approximately $450,000.

The Company has entered into a ten year lease agreement with the principal
shareholder for personal use of flood plain land adjacent to one of the
Company's resorts in exchange for an annual payment equal to the property taxes
attributable to the land.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required to interpret market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current
market exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

The carrying value of cash and cash equivalents, other receivables, amounts
due from or to affiliates, and accounts payable and accrued expenses
approximates fair value due to the relatively short term nature of the financial
instruments. The carrying value of the notes receivable approximates fair value
because the weighted average interest rate on the portfolio of notes receivable
approximates current interest rates to be received on similar current notes
receivable. The carrying amount reported on the balance sheet of notes
receivable and payable to affiliates and notes payable and capital lease
obligation approximates their fair value because the interest rates on these
instruments are adjustable or approximate current interest rates charged on
similar current borrowings.

12. DISCONTINUED OPERATIONS

The Company adopted a plan on December 31, 1996, to discontinue its
development and sale of condominiums by CBI. Based on the formal plan adopted by
the Company, all assets will be sold and liabilities repaid by December 31,
1997. All anticipated future costs of carrying and selling the remaining
inventory of CBI has been accrued as of December 31, 1996. The net assets of the
subsidiary as of December 31, 1995 and 1996 were as follows:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Inventory of unsold condominiums............................ $4,740,892 $1,939,194
Other Assets................................................ 1,137,330 49,856
Accounts payable and accrued expenses....................... (494,872) (198,486)
Notes payable............................................... (2,334,555) --
Reserve for losses on discontinued operations............... -- (201,352)
---------- ----------
Net assets of discontinued operations............. $3,048,795 $1,589,212
========== ==========
</TABLE>

Gross revenues applicable to the discontinued operations were $14,569,597,
$8,556,278, and $7,459,141 for the years ended December 31, 1994, 1995 and 1996,
respectively. The income from discontinued operations was $568,592 for the year
ended December 31, 1994, and the loss from discontinued operations was
$1,484,414 and $295,408 for the years ended December 31, 1995 and 1996, net of
income tax benefit of $173,000 in 1996. There was no tax affect applicable to
the years ended December 31, 1994 and 1995, since the discontinued operations
were contained in an S-Corporation, and taxable income and losses were passed
directly through to its shareholder.

F-20
<PAGE> 102

SILVERLEAF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. SUBSEQUENT EVENTS

The Company has proposed an initial public offering for the sale of common
stock. In preparation for this offering the Company entered into the following
contracts and agreements.

The Company has established a stock option plan (the "1997 Stock Option
Plan" or "Plan"). The 1997 Stock Option Plan provides for the award to
directors, officers, and key employees of nonqualified stock options and
provides for the grant to salaried key employees of incentive stock options.
Nonqualified stock options will provide for the right to purchase Common Stock
at a specified price which may be less than fair market value on the date of
grant (but not less than par value). Nonqualified stock options may be granted
for any term and upon such conditions determined by the board of directors of
the Company. The Company has reserved 1,100,000 shares of common stock for
issuance pursuant to the Company's 1997 Stock Option Plan.

Effective January 1, 1997, the Company entered into three year employment
agreements with two executive employees which provides for minimum annual base
salaries, bonuses based on the operating results of the Company and other fringe
benefits as determined by the Board of Directors of the Company from time to
time. Either party may terminate the agreement upon 30 days notice to the other.

The Company entered into an employment agreement with an executive officer
of the Company with a term through December 31, 1999. Pursuant to the agreement,
such officer will receive commissions equal to 1.35% of the Company's net sales
from Vacation Intervals, plus additional commissions based on weekly sales
volume and revenue per guest. Either party may terminate the agreement upon 30
days notice to the other.

Each of the employment agreements provide that such person will not
directly or indirectly compete with the Company in any county in which it
conducts its business or markets its products for a period of two years
following the termination of the agreement. The agreements also provide that
such persons will not influence any employee or independent contractor to
terminate its relationship with the Company, or disclose any confidential
information of the Company.

F-21
<PAGE> 103

CAPTION: "OPERATING TECHNOLOGIES"

1. First Picture -- Photo of the exterior of Silverleaf's corporate
headquarters in Dallas, Texas. Caption: "Silverleaf Resorts, Inc. Corporate
Headquarters -- Dallas, Texas."

2. Second Picture -- Photo of the telemarketing department at
Silverleaf's corporate headquarters depicting employees at work and
telemarketing equipment. Caption: "Sophisticated Telemarketing Technology
at Corporate Headquarters -- Dallas, Texas."

CAPTION: "RESORT ACTIVITIES."

3. Third Picture -- Photo of people in mule-drawn covered wagon at
Piney Shores. Caption: "Covered Wagon Rides -- Piney Shores, Texas."

4. Fourth Picture -- Photo of two people floating down Guadalupe River
near Hill Country Resort. Caption: "Tubing the Guadalupe River near Hill
Country Resort."

<PAGE> 104

- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 5
Risk Factors.......................... 16
Use of Proceeds....................... 27
Dividend Policy....................... 27
Capitalization........................ 28
Dilution.............................. 29
Selected Consolidated Historical
Financial, Operating and Pro Forma
Financial Information............... 30
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 34
Business.............................. 41
Management............................ 65
Certain Relationships and Related
Transactions........................ 69
Principal Shareholders................ 72
Description of Capital Stock.......... 73
Certain Provisions of the Company's
Charter and Bylaws.................. 73
Shares Eligible for Future Sale....... 75
Underwriting.......................... 76
Notice to Canadian Residents.......... 78
Legal Matters......................... 79
Experts............................... 79
Additional Information................ 79
Index to Combined Financial
Statements.......................... F-1
</TABLE>

---------------------
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- ------------------------------------------------------

LOGO

SILVERLEAF RESORTS, INC.

3,500,000 Shares

Common Stock

($0.01 par value)

PROSPECTUS
CREDIT SUISSE FIRST BOSTON

EVEREN SECURITIES, INC.

MCDONALD & COMPANY SECURITIES, INC.

- ------------------------------------------------------
<PAGE> 105

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, in connection with the sale and
distribution of the shares of Common Stock being registered hereby.

<TABLE>
<S> <C>
Commission Registration Fee................................. $ 21,467
NASD filing fee............................................. 8,000
Accounting fees and expenses................................ 670,000
Blue Sky fees and expenses.................................. 20,000
Legal fees and expenses..................................... 975,000
Printing and engraving expenses............................. 275,000
Transfer Agent fees......................................... 5,000
Miscellaneous expenses...................................... 173,033
----------
TOTAL............................................. $2,147,500
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Texas corporation. Article 2.02-1 of the Texas Business
Corporation Act empowers the Company to indemnify, subject to the standards set
forth therein, any person who is a party in any action in connection with any
action, suit or proceeding brought or threatened by reason of the fact that the
person was a director, officer, employee or agent of such company, or is or was
serving as such with respect to another entity at the request of such company.
The Texas Business Corporation Act also provides that the Company may purchase
insurance on behalf of any such director, officer, employee or agent and the
Company will maintain liability insurance for the benefit of its directors and
officers.

The Company's Charter and Bylaws provide in effect for the indemnification
by the Company of each director and officer of the Company to the fullest extent
permitted by applicable law.

Upon the consummation of the Offering, the Company will enter into
agreements to indemnify its directors and officers, in addition to the
indemnification provided for in the Company's Articles of Incorporation and By-
Laws. These agreements provide, among other things, that the Company will
indemnify its directors and officers for all direct and indirect expenses and
costs (including, without limitation, all reasonable attorneys' fees and related
disbursements, other out-of-pocket costs and reasonable compensation for time
spent by such persons for which they are not otherwise compensated by the
Company or any third person) and liabilities of any type whatsoever (including,
but not limited to, judgments, fines and settlement fees) actually and
reasonably incurred by such person in connection with either the investigation,
defense, settlement or appeal of any threatened, pending, or completed action,
suit or other proceeding, including the corporation, arising out of such
person's services as a director, employee or other agent of the Company, any
subsidiary of the Company or any other company or enterprise to which the person
provides services at the request of the Company. The Company believes that these
provisions and agreements are necessary to attract and retain talented and
experienced directors and officers. Upon the consummation of the Offering, the
Company expects to have in place certain insurance which insures the directors
and officers against certain acts and omissions in the course of their duties.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

None.

II-1
<PAGE> 106

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+1.1 -- Form of Underwriting Agreement between Silverleaf
Resorts, Inc. and Credit Suisse First Boston Corporation.
*2.1 -- Acquisition Agreement between Ascension Capital
Corporation and Robert E. Mead, executed December 27,
1995, effective December 29, 1995.
*2.2 -- Articles of Merger (Holly Ranch Water Co., Inc. into
Ascension Capital Corporation).
*2.3 -- Plan and Agreement of Reorganization between Ascension
Capital Corporation and Freedom Financial Corporation,
dated December 27, 1995.
*2.4 -- Plan and Agreement of Reorganization by Merger of Equal
Investment Company and Ascension Resorts, Ltd. with and
into Ascension Capital Corporation, which is renamed
"Silverleaf Vacation Club, Inc.", dated December 29,
1995.
+3.1 -- Charter of Silverleaf Resorts, Inc.
+3.2 -- Bylaws of Silverleaf Resorts, Inc.
+4.1 -- Form of Stock Certificate of Silverleaf Resorts, Inc.
+5.1 -- Form of Opinion of Meadows, Owens, Collier, Reed, Cousins
& Blau, L.L.P. regarding the validity of the Common Stock
being registered (including consent).
+10.1 -- Form of Registration Rights Agreement between Silverleaf
Resorts, Inc. and Robert E. Mead.
*10.2.1 -- Employment Agreement between Silverleaf Resorts, Inc. and
Robert E. Mead.
+10.2.2 -- Employment Agreement between Silverleaf Resorts, Inc. and
David T. O'Connor.
*10.2.3 -- Employment Agreement between Silverleaf Resorts, Inc. and
Sharon K. Brayfield.
+10.3 -- 1997 Stock Option Plan of Silverleaf Resorts, Inc.
*10.4 -- Master Club Agreement between the Master Club and the
resort clubs named therein.
*10.5 -- Management Agreement between Silverleaf Resorts, Inc. and
the Master Club.
*10.6 -- Revolving Loan and Security Agreement, dated October
1996, by CS First Boston Mortgage Capital Corp.
("CSFBMCC") and Silverleaf Vacation Club, Inc.
*10.7 -- Amendment No. 1 to Revolving Loan and Security Agreement,
dated November 8, 1996, between CSFBMCC and Silverleaf
Vacation Club, Inc.
*10.8 -- Inventory and Development Loan and Security Agreement,
dated October 9, 1996, among Condominium Builders, Inc.,
CSFBMCC, and Silverleaf Vacation Club, Inc.
*10.9 -- Loan and Security Agreement among Textron Financial
Corporation ("Textron"), Ascension Resorts, Ltd. and
Ascension Capital Corporation, dated August 15, 1995.
*10.10 -- First Amendment to Loan and Security Agreement, dated
December 28, 1995, between Textron and Silverleaf
Vacation Club, Inc.
*10.11 -- Second Amendment to Loan and Security Agreement, dated
October 31, 1996, executed by Textron and Silverleaf
Vacation Club, Inc.
*10.12 -- Restated and Amended Loan and Security Agreement, dated
December 27, 1995, between Heller Financial, Inc.
("Heller") and Ascension Resorts, Ltd.
*10.13 -- Loan and Security Agreement, dated December 27, 1995,
executed by Ascension Resorts, Ltd. and Heller.
*10.14 -- Amendment to Restated and Amended Loan and Security
Agreement, dated August 15, 1996, between Heller and
Silverleaf Vacation Club, Inc.
</TABLE>

II-2
<PAGE> 107

<TABLE>
<C> <S>
*10.15 -- Loan and Security Agreement, between Greyhound Financial Corporation and Ascension
Resorts, Ltd., dated August 12, 1994.
*10.16 -- Amendment No. 1 to Loan and Security Agreement between FINOVA Capital Corporation and
Ascension Resorts, Ltd., dated July 24, 1995.
*10.17 -- Amendment No. 2 to Loan and Security Agreement among Ascension Resorts, Ltd., Ascension
Capital Corporation, and Finova Capital Corporation, dated December 13, 1995.
*10.18 -- Form of Indemnification Agreement (between Silverleaf Resorts, Inc. and all officers,
directors, and proposed directors).
*10.19 -- Resort Affiliation and Owners Association Agreement between Resort Condominiums
International, Inc., Ascension Resorts, Ltd., and Hill Country Resort Condoshare Club,
dated July 29, 1995. (similar agreements for all other Existing Resorts).
*10.20 -- Agreement for Professional Services between Silverleaf Vacation Club, Inc. and Hudson
and Company, Inc., dated November 12, 1996.
*10.21 -- Shareholder's Agreement between Silverleaf Vacation Club, Inc. and Sharon K. Brayfield,
dated December 29, 1995.
+10.22 -- First Amendment to Master Club Agreement, dated March 28, 1990, among Master Club,
Ozark Mountain Resort Club, Holiday Hills Resort Club, the Holly Lake Club, The
Villages Condoshare Association, The Villages Club, Piney Shores Club, and Hill Country
Resort Condoshare Club.
+10.23 -- First Amendment to Management Agreement, dated January 1, 1993, between Master Endless
Escape Club and Ascension Resorts, Ltd.
+10.24 -- Contract of Sale, dated May 2, 1997, between Silverleaf Resorts, Inc. and third-party.
+10.25 -- Amendment to Loan Documents, dated December 27, 1996, among Silverleaf Vacation Club,
Inc., Ascension Resorts, Ltd., and Heller Financial, Inc.
*21.1 -- Subsidiaries of Silverleaf Resorts, Inc.
+23.1 -- Consent of Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P. (included as part of
Exhibit 5.1)
+23.2 -- Consent of James Smith & Company.
+23.3 -- Consent of Deloitte & Touche LLP.
**23.4 -- Consent of Director Nominee James B. Francis, Jr.
**23.5 -- Consent of Director Nominee Michael A. Jenkins.
*24.1 -- Power of Attorney (included as part of page II-3 of this Registration Statement).
*27.1 -- Financial Data Schedule
+99 -- Supplement to Filed Exhibits
</TABLE>

- ---------------

* Previously filed

** To be filed by Amendment

+ Filed herewith

(b) Financial Statement Schedules

None. Schedules are omitted because of the absence of the conditions under
which they are required or because the information required by such omitted
schedules is set forth in the financial statements or the notes thereto.

II-3
<PAGE> 108

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by registrant is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(b) The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(c) The registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

II-4
<PAGE> 109

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
Silverleaf Resorts, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on May 16, 1997.

SILVERLEAF RESORTS, INC.

By: /s/ ROBERT E. MEAD
----------------------------------
Name: Robert E. Mead
Title: Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Robert
E. Mead and Joe W. Conner, and each of them, with full power to act without the
other, such person's true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign this Registration Statement, and any
and all amendments thereto (including pre- and post-effective amendments) or any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with exhibits and schedules thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ ROBERT E. MEAD Chairman of the Board and Chief May 16, 1997
- ----------------------------------------------------- Executive Officer (Principal
Robert E. Mead Executive Officer)

/s/ SHARON K. BRAYFIELD Director and President May 16, 1997
- -----------------------------------------------------
Sharon K. Brayfield

/s/ JOE W. CONNER Chief Financial Officer and May 16, 1997
- ----------------------------------------------------- Treasurer (Principal Financial
Joe W. Conner and Accounting Officer)
</TABLE>

II-5
<PAGE> 110

INDEX TO EXHIBITS

<PAGE> 111

- ---------------

* Previously filed

** To be filed by Amendment

+ Filed herewith

<PAGE> 1
EXHIBIT 1.1

3,500,000 SHARES

SILVERLEAF VACATION CLUB

COMMON STOCK

UNDERWRITING AGREEMENT

May ___, 1997

CREDIT SUISSE FIRST BOSTON CORPORATION
EVEREN SECURITIES
MCDONALD & COMPANY SECURITIES, INC.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629

Dear Sirs:

1. Introductory. Silverleaf Resorts, Inc., a Texas corporation
("Company"), proposes to issue and sell 3,500,000 shares ("Firm Securities") of
its Common Stock ("Securities") and also proposes to issue and sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
525,000 additional shares ("Optional Securities") of its Securities as set
forth below. The Firm Securities and the Optional Securities are herein
collectively called the "Offered Securities". The Company hereby agrees with
the several Underwriters named in Schedule A hereto ("Underwriters") as
follows:

2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:

(a) A registration statement (No. 333-24273) relating to
the Offered Securities, including a form of prospectus, has been filed
with the Securities and Exchange Commission ("Commission") and either
(i) has been declared effective under the Securities Act of 1933
("Act") and is not proposed to be amended or (ii) is proposed to be
amended by amendment or post-effective amendment. If such registration
statement ("initial registration statement") has been declared
effective, either (i) an additional registration statement
("additional registration statement") relating to the Offered
Securities may have been filed with the Commission pursuant to Rule
462(b) ("Rule 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (ii) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and
will become effective upon filing pursuant to such Rule and upon such
filing the Offered Securities will all have been duly registered under
the Act pursuant to the initial registration statement and such
additional registration statement. If the Company does not propose to
amend the initial registration statement or if an additional
registration statement has been filed and the Company does not propose
to amend it, and if any post- effective amendment to either such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment
(if any) to each such registration statement has been declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c) ("Rule 462(c)") under the Act or, in the case
of the additional
<PAGE> 2
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement
or, if filed prior to the execution and delivery of this Agreement,
the additional registration statement means (i) if the Company has
advised the Representatives that it does not propose to amend such
registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (ii) if the Company
has advised the Representatives that it proposes to file an amendment
or post- effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement
has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all information
contained in the additional registration statement (if any) and deemed
to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement". The Initial Registration Statement and the Additional
Registration Statement are herein referred to collectively as the
"Registration Statements" and individually as a "Registration
Statement". The form of prospectus relating to the Offered Securities,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter
referred to as the "Prospectus". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.

(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(i) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) on the date of this Agreement, the Initial Registration
Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement,
the Additional Registration Statement each conforms, and at the time
of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act and the Rules and Regulations,
and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act
and the Rules and Regulations, neither of such documents will include
any untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The

2
<PAGE> 3
two preceding sentences do not apply to statements in or omissions
from a Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(b) hereof.

(c) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Texas, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification.

(d) Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and each subsidiary of the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock of each
subsidiary owned by the Company, directly or through subsidiaries, is
owned free from liens, encumbrances and defects.

(e) Each of Master Club, Hill Country Resort Club, Holly
Lake Resort Club, Piney Shores Resort Club, Villages Resort Club, The
Villages Club, Holiday Hills Resort Club, Ozark Mountain Resort Club,
Holiday Hills Condominium Association, Inc., The Bluffs at Holiday
Hills Condominium Association, Inc., The Lakes at Holiday Hills
Condominium Association, Inc., the Oaks at Holiday Hills Condominium
Association, Inc., The Pinnacle at Holiday Hills Condominium
Association, Inc., Ozark Mountain Condominium Association, Inc., The
Coves at Waters Bluff Condominium Association, Inc., Streamside at
Ozark Mountain Condominium Association, Inc., Waters Bluff at Ozark
Mountain Condominium Association, Inc., Holly Lake Ranch Association,
The Villages Home Owners' Association, Inc., Holiday Hills Property
Owners Association, Inc. and The Ozark Mountain Boat Dock Association
(collectively, the "Clubs") has been duly formed and is an existing
nonprofit corporation or unincorporated association and is in good
standing under the laws of the jurisdiction of its formation, with
power and authority to own its properties and conduct its business as
described in the Prospectus; and each Club is duly qualified to do
business and in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification.

(f) The Offered Securities and all other outstanding
shares of capital stock of the Company have been duly authorized; all
outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with
this Agreement on each Closing Date (as defined below), such Offered
Securities will have been, validly issued, fully paid and
nonassessable and will conform to the description thereof contained in
the Prospectus; and the stockholders of the Company have no preemptive
rights with respect to the Securities.

(g) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.

(h) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.

3
<PAGE> 4
(i) The Offered Securities have been approved for listing
on The New York Stock Exchange subject to notice of issuance.

(j) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the Offered
Securities by the Company, except such as have been obtained and made
under the Act and such as may be required under state securities laws.

(k) The execution, delivery and performance of this
Agreement, and the issuance and sale of the Offered Securities will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation
or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, any subsidiary of the
Company or any Club or any of their properties, or any agreement or
instrument to which the Company, any such subsidiary or any such Club
is a party or by which the Company, any such subsidiary or any such
Club is bound or to which any of the properties of the Company, any
such subsidiary or any such Club is subject, or the charter or by-laws
of the Company, any such subsidiary or any such Club, and the Company
has full power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement.

(l) This Agreement has been duly authorized, executed and
delivered by the Company.

(m) Deloitte & Touche LLP and James A. Smith & Company
are independent public accountants with respect to the Company as
required by the Act.

(n) Except as disclosed in the Prospectus, the Company,
its subsidiaries and the Clubs have good and marketable title to all
real properties and all other properties and assets owned by them, in
each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Prospectus, the Company, its subsidiaries and the Clubs hold any
leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made
or to be made thereof by them.

(o) The Company, its subsidiaries and the Clubs possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company, any
of its subsidiaries or any of the Clubs, would individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole.

(p) No labor dispute with the employees of the Company,
any subsidiary or any Club exists or, to the knowledge of the Company,
is imminent that might have a material adverse effect on the Company
and its subsidiaries taken as a whole.

(q) The Company, its subsidiaries and the Clubs own,
possess or can acquire on reasonable terms, adequate trademarks, trade
names and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company, any of its
subsidiaries or the Clubs, would individually or in the aggregate have
a material adverse effect on the Company and its subsidiaries taken as
a whole.

(r) Except as disclosed in the Prospectus, neither the
Company, any of its subsidiaries nor any Club is in violation of any
statute, any rule, regulation, decision or order of any governmental
agency

4
<PAGE> 5
or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole; and the Company is not aware of any
pending investigation which might lead to such a claim.

(s) Except as disclosed in the Prospectus, there are no
pending actions, suits, proceedings, inquiries, arbitrations,
investigations, litigation or governmental proceedings against or
affecting the Company, any of its subsidiaries, any of the Clubs or
any of their respective properties that, if determined adversely to
the Company, any of its subsidiaries or any of the Clubs, would
individually or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits, proceedings, inquiries, arbitrations,
investigations, litigation or governmental proceedings are threatened
or, to the Company's knowledge, contemplated. None of the Company,
any of its subsidiaries or any of the Clubs is a party or subject to
the provisions of any injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental
body which would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.

(t) The financial statements included in each
Registration Statement and the Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries as of the
dates shown and their results of operations and cash flows for the
periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the
United States applied on a consistent basis; and the schedules
included in each Registration Statement present fairly the information
required to be stated therein and the assumptions used in preparing
the pro forma financial statements included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting
the significant effects directly attributable to the transactions or
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma columns
therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.

(u) Except as disclosed in the Prospectus, since the date
of the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.

(v) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940.

(w) Except as disclosed in the Prospectus, the Company,
its subsidiaries and the Clubs have and maintain liability, property
and casualty insurance (insured by insurers of recognized financial
responsibility) in favor of the Company, its subsidiaries and the
Clubs with respect to each of the timeshare resorts operated by the
Company ("Resorts") in an amount and on such terms as is reasonable
and customary for businesses of the type proposed to be conducted by
the Company, its subsidiaries and the Clubs, including, among other
things, insurance against theft, damage, destruction and acts of
vandalism. None of the Company, any of its subsidiaries or any of the
Clubs has received from any insurance company notice of any material
defects or deficiencies affecting the insurability of any such Resort.

5
<PAGE> 6
(x) Title insurance in favor of the Company, is in force
with respect to each of the Resorts in an amount reasonably acceptable
to the Representatives.

(y) Except as disclosed in the Prospectus, all
entitlements necessary for development of the Resorts have been
obtained, and no further governmental or regulatory approvals are
necessary for additional development of the Resorts.

(z) The mortgages and deeds of trust encumbering the
Resorts are not convertible and such mortgages and deeds of trust are
not cross-defaulted or cross-collateralized to any Resort not owned
directly or indirectly by the Company.

(aa) No environmental engineering firm which prepared
Phase I environmental assessment reports (or other similar reports)
with respect to the Resorts as set forth in the Registration Statement
was employed for such purpose on a contingent basis or has any
substantial interest in the Company, any of its subsidiaries or any
Club.

(ab) Except as disclosed in the Prospectus, the Company,
its subsidiaries and the Clubs are in compliance with all federal,
state, local and foreign laws and regulations regarding the marketing,
advertising, offers to sell and sales of vacation intervals in each
state in which the Company, its subsidiaries and the Clubs are doing
business, including but not limited to the Federal Trade Commission
Act, Regulation Z (the truth-in-lending act), Equity Opportunity
Credit Act and Regulation B, Interstate Land Sales Full Disclosure
Act, Real Estate Standards Practices Act, Telephone Consumer
Protection Act, Telemarketing and Consumer Fraud and Abuse Prevention
Act, Fair Housing Act and Civil Rights Acts of 1964 and 1968, in each
case except as would not have a material adverse effect on the Company
and its subsidiaries taken as a whole. Except as disclosed in the
Prospectus, the Company, its subsidiaries and the Clubs have filed all
required documents and supporting information in compliance with
federal, state, local and foreign laws and regulations, and the
Company, its subsidiaries and the Clubs are in compliance with all
licensure, anti-fraud, telemarketing, price, gift and sweepstakes and
labor laws to which they are or may become subject, in each case
except as would not have a material adverse effect on the Company and
its subsidiaries taken as a whole. The Company, its subsidiaries and
the Clubs have all permits and licenses which are required to sell
vacation intervals in each state and foreign jurisdiction where they
conduct business, in each case except as would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.

(ac) The timeshare interests ("Vacation Intervals") do not
constitute "securities" under the Act. Neither the offer, the sale
nor the issuance of Vacation Intervals by the Company or any of the
subsidiaries required registration under the Act or under the
securities laws of the state of Texas or under any other state
securities laws nor does the fact that such interests are outstanding
require registration under the Securities Act of 1934.

(ad) No person has an option or right of first refusal to
purchase all or part of any of the Resorts or any interest therein.
Each of the Resorts complies with all applicable codes, laws and
regulations (including, without limitation, building and zoning codes
and laws relating to handicapped access), except as would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole. Except as disclosed in the Prospectus, the Company has no
knowledge of any pending or threatened condemnation proceedings,
zoning changes, or other proceedings or actions that will in any
manner affect the size of, number of Vacation Intervals planned for,
the use of any improvements on, or access to, the Resorts.

(ae) The Company will apply the net proceeds from the
offering of the Offered Securities in the manner set forth under "Use
of Proceeds" in the Prospectus, and the Company will file timely and
accurate reports on Form SR with the Commission in accordance with
Rule 463 under the Act or any successor provision.

6
<PAGE> 7
3. Purchase, Sale and Delivery of Offered Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Company, at a purchase price of $ per
share, the respective numbers of shares of Firm Securities set forth opposite
the names of the Underwriters in Schedule A hereto.

The Company will deliver the Firm Securities to the Representatives
for the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by official bank check or checks or wire transfer to
an account at a bank acceptable to Credit Suisse First Boston Corporation
("CSFBC") drawn to the order of at the office of
, at A.M., New York time, on
, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "First Closing Date". For purposes of Rule 15c6-1
under the Securities Exchange Act of 1934, the First Closing Date (if later
than the otherwise applicable settlement date) shall be the settlement date for
payment of funds and delivery of securities for all the Offered Securities sold
pursuant to the offering. The certificates for the Firm Securities so to be
delivered will be in definitive form, in such denominations and registered in
such names as CSFBC requests and will be made available for checking and
packaging at the office of at least 24 hours prior to the
First Closing Date.

In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the Prospectus,
the Underwriters may purchase all or less than all of the Optional Securities
at the purchase price per Security to be paid for the Firm Securities. The
Company agrees to sell to the Underwriters the number of shares of Optional
Securities specified in such notice and the Underwriters agree, severally and
not jointly, to purchase such Optional Securities. Such Optional Securities
shall be purchased for the account of each Underwriter in the same proportion
as the number of shares of Firm Securities set forth opposite such
Underwriter's name bears to the total number of shares of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall
be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company.

Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment
of the purchase price therefor in Federal (same day) funds by official bank
check or checks or wire transfer to an account at a bank acceptable to CSFBC
drawn to the order of , at the office of .
The certificates for the Optional Securities being purchased on each
Optional Closing Date will be in definitive form, in such denominations and
registered in such names as CSFBC requests upon reasonable notice prior to such
Optional Closing Date and will be made available for checking and packaging at
the office of at a reasonable time in advance of
such Optional Closing Date.

4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.

5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:

(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (1) (or, if applicable and if
consented to by CSFBC, subparagraph (4)) of Rule 424(b) not later than
the earlier of (A) the second business day following the execution and
delivery

7
<PAGE> 8
of this Agreement or (B) the fifteenth business day after the
Effective Date of the Initial Registration Statement.

The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a
portion of the Offered Securities under the Act but the Effective Time
thereof has not occurred as of such execution and delivery, the
Company will file the additional registration statement or, if filed,
will file a post-effective amendment thereto with the Commission
pursuant to and in accordance with Rule 462(b) on or prior to 10:00
P.M., New York time, on the date of this Agreement or, if earlier, on
or prior to the time the Prospectus is printed and distributed to any
Underwriter, or will make such filing at such later date as shall have
been consented to by CSFBC.

(b) The Company will advise CSFBC promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, the Additional Registration Statement
(if any) or the Prospectus and will not effect such amendment or
supplementation without CSFBC's consent; and the Company will also
advise CSFBC promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of
a Registration Statement or the Prospectus and of the institution by
the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.

(c) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and
will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement
or omission or an amendment which will effect such compliance.
Neither CSFBC's consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.

(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of
the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.

(e) The Company will furnish to the Representatives
copies of each Registration Statement (four of which will be signed
and will include all exhibits), each related preliminary prospectus,
and, so long as a prospectus relating to the Offered Securities is
required to be delivered under the Act in connection with sales by any
Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to
3:00 P.M., New York time, on the business day following the later of
the execution and delivery of this Agreement or the Effective Time of
the Initial Registration Statement. All other documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.

8
<PAGE> 9
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates and will continue such qualifications in effect so
long as required for the distribution.

(g) During the period of five years hereafter, the
Company will furnish to the Representatives and, upon request, to each
of the other Underwriters, as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Representatives (i) as soon
as available, a copy of each report and any definitive proxy statement
of the Company filed with the Commission under the Securities Exchange
Act of 1934 or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CSFBC may reasonably
request.

(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing
fees and other expenses (including fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities
for sale under the laws of such jurisdictions as CSFBC designates and
the printing of memoranda relating thereto, for the filing fee
incident to, and the reasonable fees and disbursements of counsel to
the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. of the Offered Securities, for
any travel expenses of the Company's officers and employees and any
other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities and for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.

(i) For a period of 180 days after the date of the
initial public offering of the Offered Securities, the Company will
not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Act relating to, any additional shares of its
Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of CSFBC except grants of employee
stock options pursuant to the terms of a plan in effect on the date
hereof, issuances of Securities pursuant to the exercise of such
options or the exercise of any other employee stock options
outstanding on the date hereof or issuances of Securities pursuant to
the Company's dividend reinvestment plan.

6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities to be
purchased on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions precedent:

(a) The Representatives shall have received a letter,
dated the date of delivery thereof (which, if the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of each of Deloitte & Touche
LLP and James A. Smith & Company confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect
that:

(i) in their opinion the financial statements and
schedules examined by them and included or incorporated by
reference in the Registration Statements comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;

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<PAGE> 10
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
the Registration Statements;

(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:

(A) the unaudited financial data included in
the Registration Statements do not comply as to form
in all material respects with the applicable
accounting requirements of the Act and the related
published Rules and Regulations or any material
modifications should be made to such unaudited
financial statements for them to be in conformity
with generally accepted accounting principles;

(B) the unaudited consolidated net sales, net
operating income, net income and net income per share
amounts for the three-month periods ended March 31,
1996 and March 31, 1997 included in the Prospectus do
not agree with the amounts set forth in the unaudited
consolidated financial statements for those same
periods or were not determined on a basis
substantially consistent with that of the
corresponding amounts in the audited statements of
income;

(C) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net current assets or net assets, as
compared with amounts shown on the latest balance
sheet included in the Prospectus; or

(D) for the period from the closing date of
the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year and with
the period of corresponding length ended the date of
the latest income statement included in the
Prospectus, in consolidated net sales, net operating
income, or in the total or per share amounts of
consolidated net income,

except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and

(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter.

For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "Registration Statements" shall mean the
initial

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<PAGE> 11
registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective
Time, (ii) if the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement but the
Effective Time of the Additional Registration is subsequent to such
execution and delivery, "Registration Statements" shall mean the
Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective
Time, and (iii) "Prospectus" shall mean the prospectus included in the
Registration Statements.

(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later
date as shall have been consented to by CSFBC. If the Effective Time
of the Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time
of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing Date, no stop
order suspending the effectiveness of a Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or the Representatives,
shall be contemplated by the Commission.

(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company or its subsidiaries which, in the judgment of a majority
in interest of the Underwriters including the Representatives, is
material and adverse and makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and
payment for the Offered Securities; (ii) any downgrading in the rating
of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market's National Market, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of
any securities of the Company on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by U.S.
Federal, New York or Texas authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the judgment of
a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.

(d) The Representatives shall have received an opinion,
dated as of such Closing Date, of Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P., counsel for the Company, to the effect that:

(i) The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the
State of Texas, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to do business
as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification;

(ii) The Offered Securities delivered on such
Closing Date and all other outstanding shares of the Common
Stock of the Company have been duly authorized and validly
issued, are

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<PAGE> 12
fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of
the Company have no preemptive rights with respect to the
Securities;

(iii) Except as disclosed in the Prospectus, there
are no contracts, agreements or understandings known to such
counsel between the Company and any person granting such
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the
Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act;

(iv) The Company is not and, after giving effect
to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940;

(v) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance
or sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act and such as may
be required under state securities laws;

(vi) The execution, delivery and performance of
this Agreement and the issuance and sale of the Offered
Securities will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the
Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject,
or the charter or by-laws of the Company or any such
subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as
contemplated by this Agreement;

(vii) The Initial Registration Statement was
declared effective under the Act as of the date and time
specified in such opinion, the Additional Registration
Statement (if any) was filed and became effective under the
Act as of the date and time (if determinable) specified in
such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was
included in the Initial Registration Statement or the
Additional Registration Statement (as the case may be), and,
to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or
any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form
in all material respects with the requirements of the Act and
the Rules and Regulations; such counsel have no reason to
believe that any part of a Registration Statement or any
amendment thereto, as of its effective date or as of such
Closing Date, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing
Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading; the descriptions
in the Registration Statements and Prospectus of statutes,
rules, regulations, orders, injunctions, decrees, judgments,
legal and governmental proceedings and contracts and other
documents are accurate and complete and fairly present the
information required to be shown; and such counsel do not know
of any legal or governmental proceedings required to be
described in a Registration Statement or the Prospectus which
are not described as

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<PAGE> 13
required or of any contracts or documents of a character
required to be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a Registration
Statement which are not described and filed as required; it
being understood that such counsel need express no opinion as
to the financial statements or other financial data contained
in the Registration Statements or the Prospectus;

(viii) This Agreement has been duly authorized,
executed and delivered by the Company;

(ix) The Company, its subsidiaries and the Clubs
have obtained the material approvals and permits from all
federal, state and local regulators necessary to offer for
sale and sell timeshare interests and offer purchase money
financing in connection with such sales in accordance with the
applicable laws and regulations governing the marketing and
sale of timeshare interests in real property;

(x) All of the permits and/or approvals issued by
regulators of states other than the state where each
applicable Resort is located ("Foreign State") for the
offering for sale and sale of timeshare interests in such
Resort constitute the material approvals and permits necessary
to be issued by such Foreign State to permit the offering for
sale and sale of timeshare interests in such Resort in
accordance with the laws and regulations of the Foreign State
specifically governing the offering for sale and sale of
timeshare interests in real property located outside of the
Foreign State;

(xi) Except as disclosed in the Prospectus, to
such counsel's knowledge and based upon its review of
certificates and letters from federal, state and local
regulators, the Company and other pertinent parties
(collectively, "Reliance Certificates and Letters"), except as
disclosed in the Prospectus, the Company has not received any
notice from any regulatory authority that it is in violation
of any applicable federal or state law or regulation regarding
the offering for sale and sale of timeshare interests in the
Resorts, the violation of which would have a material adverse
effect on the ownership or operation of the Resorts;

(xii) To such counsel's knowledge and based upon
such counsel's review of Reliance Certificates and Letters,
there are no real estate or timeshare related governmental
actions, governmental suits or governmental proceedings
pending or threatened against the Company with respect to the
business and property relating to the Resorts except (a) those
which have been disclosed in the Prospectus, and (b) those
which would not have a material adverse effect on the Company
and its subsidiaries taken as a whole; and

(xiii) The Vacation Intervals do not constitute
"securities" under the Act. Neither the offer, the sale nor
the issuance of Vacation Intervals by the Company or any
subsidiary required registration under the Act or under the
securities laws of the state of Texas or under the state
securities laws of any other state in which the Company is
currently qualified to do business, nor does the fact that
such interests are outstanding require registration under the
Securities Act of 1934. Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P. may rely upon the opinion of Armstrong,
Teasdale, Schlafly & Davis for certain matters regarding
Missouri law.

(e) The Representatives shall have received an opinion,
dated such Closing Date, of Armstrong, Teasdale, Schlafly, Davis &
Dicus, counsel for the Company, to the effect that:

(i) The execution, delivery and performance of
this Agreement and the issuance and sale of the Offered
Securities will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
any Missouri statute, any rule, regulation or order of any
governmental agency or body or any court within the State of
Missouri having jurisdiction over the Company or any
subsidiary of the Company or any of their properties;

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<PAGE> 14
(ii) The Company, its subsidiaries and the Clubs
have obtained the material approvals and permits from all
federal, state and local regulators necessary to offer for
sale and sell in Missouri timeshare interests and offer
purchase money financing in connection with such sales in
accordance with the applicable laws and regulations governing
the marketing and sale of timeshare interests in real
property;

(iii) All of the permits and/or approvals issued by
Missouri regulators for the offering for sale and sale of
timeshare interests in a Resort located outside of Missouri
constitute the material approvals and permits necessary to
permit the offering for sale and sale of timeshare interests
in such Resort in accordance with the laws and regulations of
Missouri specifically governing the offering for sale and sale
of timeshare interests in real property located outside of
Missouri;

(iv) To such counsel's knowledge and based upon
its review of Reliance Certificates and Letters, except as
disclosed in the Prospectus, the Company has not received any
notice from any regulatory authority that it is in violation
of any applicable federal or state law or regulation regarding
the offering for sale and sale of timeshare interests in the
Resorts, the violation of which would have a material adverse
effect on the ownership or operation of the Resorts;

(v) To such counsel's knowledge and based upon
such counsel's review of Reliance Certificates and Letters,
there are no real estate or timeshare related governmental
actions, governmental suits or governmental proceedings
pending or threatened against the Company with respect to the
business and property relating to the Resorts except (a) those
which have been disclosed in the Registration Statement, and
(b) those which would not have a material adverse effect on
the Company and its subsidiaries taken as a whole.

(f) The Representatives shall have received from Latham &
Watkins, counsel for the Underwriters, such opinion or opinions, dated
such Closing Date, with respect to the incorporation of the Company,
the validity of the Offered Securities delivered on such Closing Date,
the Registration Statements, the Prospectus and other related matters
as the Representatives may require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, Latham & Watkins may rely as to the incorporation of the
Company and all other matters governed by Texas law upon the opinion
of Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P. referred to
above and upon the opinion of Armstrong, Teasdale, Schlafly & Davis,
for matters of Missouri Law.

(g) The Representatives shall have received a
certificate, dated as of such Closing Date, of the Chief Executive
Officer and a principal financial or accounting officer of the Company
in which such officers, to the best of their knowledge after
reasonable investigation, shall state that: the representations and
warranties of the Company in this Agreement are true and correct; the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to such
Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission;
the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing
fee in accordance with Rule 111(a) or (b) under the Act, prior to the
time the Prospectus was printed and distributed to any Underwriter;
and, subsequent to the date of the most recent financial statements in
the Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as
described in such certificate.

(h) The Representatives shall have received letters,
dated as of such Closing Date, of Deloitte & Touche LLP and James A.
Smith & Company which meet the requirements of subsection (a) of this

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<PAGE> 15
Section, except that the specified date referred to in such subsection
will be a date not more than three days prior to such Closing Date for
the purposes of this subsection.

(i) The Representatives shall have received on or before
the First Closing Date with respect to each Resort:

(i) A standard ALTA Owner's Title Insurance
Policy naming the Company or its predecessor- in-interest as
named insured and insuring such party that it owns fee title
to the real property described therein in an amount of the
original purchase price thereof, subject only to any material
exceptions to title as are described in the Prospectus, and
such exceptions which do not adversely affect the current or
potential use to be made of the Resort (the "Permitted
Exceptions");

(ii) An updated (i.e., within 90 days of the date
of this Agreement) Title Commitment for a standard ALTA
Owner's Title Insurance Policy issued by a reputable title
insurance company reasonably acceptable to the Representatives
(the "Title Company") and showing fee title to the property
described therein vested in the Company, subject only to the
Permitted Exceptions. Such Title Commitment(s) for each of
the Resorts shall cover at least the following portions of
each of the Resorts: amenity areas, current areas under
development and those areas with each of the Resorts which the
Company intends to develop and which are necessary to
construct the projected units described in the Prospects;

(iii) Policies or certificates of insurance
relating to the Resort evidencing coverages and in amounts
customarily obtained by owners of similar Resorts, together
with a letter of opinion from a nationally or regionally
recognized insurance broker approved by the Representatives
stating, in substance, that the coverage limits and companies
underwriting such insurance for the Company are within the
realm of reasonableness given the Company's business,
operations and claims history;

(iv) UCC, judgment and tax lien searches
confirming that the personal property comprising a part of the
Resort is subject to no liens other than Permitted Exceptions;

(v) Such affidavits, certificates and instruments
of indemnification as shall reasonably be required to induce
the Title Company to issue the policy contemplated in item (i)
above;

(vi) A check or wire transfer for the Title
Company in payment of the Title Company's premium, search and
examination charges, survey costs and any other amounts due in
connection with the issuance of its policy;

(vii) An opinion letter from an architectural firm
reasonably acceptable to the Representatives stating in
substance that (1) such firm designed and has overseen the
construction of all improvements at the Resorts, (2) such firm
is generally aware of the condition of such improvements, (3)
except for ordinary wear and tear there are no existing
material structural defects to any of the improvements
(including foundation or roof) at the Resorts and (4) the
Company and the Improvements at the Resorts are in material
compliance with federal and state regulations relating to
access by the disabled, including the Americans with
Disabilities Act;

(viii) If such Resort is subject to a mortgage, deed
of trust or similar financing (an "Existing Mortgage") which,
as described in the Prospectus, is to remain of record and not
be repaid with the proceeds of the offering, a letter dated
not earlier than 10 days prior to the First Closing Date from
the holder of such Existing Mortgage indicating that the
mortgagor or grantor under such Existing Mortgage is not then
in default and indicating the principal amount required to
satisfy all amounts then secured by such Existing Mortgage and
the additional amount required for each day after the date of
such letter necessary to satisfy all obligations secured
thereby,

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<PAGE> 16
together with all documentation and consents necessary to
permit the repayment of all amounts owed and the release of
the Existing Mortgage; and

(ix) A recent Phase I Environmental Report in form
and substance acceptable to the Representatives.

The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. CSFBC may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters
hereunder, whether in respect of an Optional Closing Date or otherwise.

7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in subsection (b) below.

(b) Each Underwriter will severally and not jointly
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through the Representatives specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the following information in the Prospectus furnished on behalf of each
Underwriter: the last paragraph at the bottom of the cover page concerning the
terms of the offering by the Underwriters, the legend concerning
over-allotments and stabilizing on the inside front cover page, the concession
and reallowance figures appearing in the fourth paragraph under the caption
"Underwriting" and the information contained in the fifth paragraph under the
caption "Underwriting".

(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) above. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the

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<PAGE> 17
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.

(d) If the indemnification provided for in this Section
is unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.

(e) The obligations of the Company under this Section
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.

8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing
Date, CSFBC may make arrangements satisfactory to the Company for the purchase
of such Offered Securities by other persons, including any of the Underwriters,
but if no such arrangements are made by such Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements

17
<PAGE> 18
satisfactory to CSFBC and the Company for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9
(provided that if such default occurs with respect to Optional Securities after
the First Closing Date, this Agreement will not terminate as to the Firm
Securities or any Optional Securities purchased prior to such termination). As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.

9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Underwriters is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 and the respective obligations of the Company and the Underwriters
pursuant to Section 7 shall remain in effect, and if any Offered Securities have
been purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect; provided, however, if
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason, the Company will not be required to reimburse the Underwriters
for their out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities in an amount in excess of $100,000 (unless otherwise agreed to by the
Company).

10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives, c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment
Banking Department--Transactions Advisory Group, or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at 1221 Riverbend
Drive, Suite 120, Dallas, TX 75247, Attention: Robert E. Mead, with a copy to
Robert Don Collier, Esq., Meadows, Owens, Collier, Reed, Cousins & Blau,
L.L.P., 901 Main Street, Suite 3700, Dallas, Texas 75202; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.

11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.

12. Representation of Underwriters. The Representatives will act
for the several Underwriters in connection with this financing, and any action
under this Agreement taken by the Representatives jointly or by CSFBC will be
binding upon all the Underwriters.

13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.

The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

18
<PAGE> 19
If the foregoing is in accordance with the Representatives
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.

Very truly yours,

SILVERLEAF RESORTS, INC.

By . . . . . . . . . . . . . . . . . . .
Title:

The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.

Acting on behalf of itself and as the
Representative of the several
Underwriters.

CREDIT SUISSE FIRST BOSTON CORPORATION
EVEREN SECURITIES
MCDONALD & COMPANY SECURITIES, INC.

By CREDIT SUISSE FIRST BOSTON CORPORATION

By........................................
Title:

19
<PAGE> 20
SCHEDULE A

Underwriter

<TABLE>
<CAPTION>
Number of
Firm Securities
---------------
<S> <C>
Credit Suisse First Boston Corporation . . . . . . . . . . .

Everen Securities . . . . . . . . . . . . . . . . . . . . . .

McDonald & Company Securities, Inc. . . . . . . . . . . . . .

-----------------

Total . . . . . . . . . . . . . . . . . . .
=================
</TABLE>

<PAGE> 1
EXHIBIT 3.1

SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION

SILVERLEAF RESORTS, INC.

Silverleaf Resorts, Inc., a Texas corporation (the "Corporation"),
pursuant to the provisions of Article 4.07 of the Texas Business Corporation
Act (the "Act"), hereby adopts these Second Amended and Restated Articles of
Incorporation of the Corporation which accurately copy the Articles of
Incorporation of the Corporation and all amendments thereto that are in effect
to date and as further amended hereby as hereinafter set forth and which
contain no other change in any provision thereof.

ARTICLE I

The name of the Corporation is Silverleaf Resorts, Inc.

ARTICLE II

The Articles of Incorporation of the Corporation are amended by these
Second Amended and Restated Articles of Incorporation as follows: current
ARTICLE FOUR B(2)(a) is amended to read as set forth in ARTICLE FOUR of ARTICLE
V below so as to prohibit cumulative voting.

ARTICLE III

Each such amendment made by these Second Amended and Restated Articles
of Incorporation has been effected in conformity with the provisions of the Act
and these Amended and Restated Articles of Incorporation and each amendment
effected hereby was duly adopted by the shareholders of the Corporation on the
_____ day of May, 1997.

ARTICLE IV

The number of shares of the Corporation outstanding at the time of
such adoption was 10,696 shares of Common Stock and the number of shares
entitled to vote on the Second Amended and Restated Articles of Incorporation
was 10,696 shares. All of the shareholders have signed a written consent to
the adoption of such Second Amended and Restated Articles of Incorporation
pursuant to Article 9.10 of the Act and any written notice required by Article
9.10 has been given.

ARTICLE V

The Articles of Incorporation of the Corporation and all amendments
thereto pursuant to that certain Amended and Restated Articles of Incorporation
are hereby superseded by the
<PAGE> 2
following Second Amended and Restated Articles of Incorporation, which
accurately copy the entire text thereof and as amended as set forth above:

AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SILVERLEAF RESORTS, INC.

ARTICLE ONE

The name of the corporation ("Corporation") is Silverleaf Resorts, Inc.

ARTICLE TWO

The period of its duration is perpetual.

ARTICLE THREE

The purpose for which the corporation is organized is to transact any
or all lawful business for which corporations may be incorporated under the
Act.

ARTICLE FOUR

A. The aggregate number of shares that the Corporation shall have
authority to issue is One Hundred Ten Million (110,000,000) shares. Such
shares shall be issued in two (2) classes of stock to be designated "Common
Stock" and "Preferred Stock." The number of shares of Common Stock authorized
is One Hundred Million (100,000,000) shares having a par value of $0.01 per
share. The number of shares of Preferred Stock authorized is Ten Million
(10,000,000) shares having a par value of $0.01 per share.

B. The designations and the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the shares of each class of capital stock
of the Corporation are as follows:

(1) PREFERRED STOCK. The Preferred Stock may be authorized for
issuance from time to time by the Board of Directors in one or more separately
designated series. The designation of each such series, the number of shares
to be included in each such series, and the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and terms and
conditions of redemption shall be as set forth in resolutions adopted by the
Board of Directors and included in a statement filed as required by law from
time to time prior to the issuance of any shares of such series. Subject to
the express limitations, if any, of any series of Preferred Stock of which
shares are outstanding at the time, the Board of Directors is authorized, by
the adoption of resolutions, to increase or decrease (but not below the number
of shares of Preferred Stock of such series then outstanding) the number of
shares of Preferred

2
<PAGE> 3
Stock of such series and to alter the designation of or, classify or
reclassify, any unissued shares of Preferred Stock of any series from time to
time, by setting or changing the preferences, conversion or other rights,
voting powers restrictions, limitations as to dividends or other distributions
qualifications or terms and conditions of redemption of such series.

(2) COMMON STOCK. Subject to all rights of Preferred Stock, as
expressly provided herein, by law or by the Board of Directors pursuant to this
Article Four, the Common Stock of the Corporation shall have all rights and
privileges afforded to capital stock by applicable law in the absence of any
express grant of rights or privileges in the Corporation's charter, including,
but not limited to, the following rights and privileges:

(a) The holders of shares of Common Stock shall have the
right to vote for the election of directors and on all other matters requiring
stockholder action, each share of Common Stock being entitled to one vote. No
holder of Common Stock shall have the right to cumulate his votes at any
election for directors of the Corporation.

(b) Dividends may be declared and paid or set apart for
payment upon shares of Common Stock out of any assets or funds of the
Corporation legally available for the payment of dividends.

(c) Upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, the net assets of the Corporation
shall be distributed pro rata to the holders of shares of Common Stock in
accordance with their respective rights and interests.

ARTICLE FIVE

The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00) consisting of money, labor done, or property actually received.

ARTICLE SIX

The street address of the registered office of the Corporation is 1221
Riverbend Drive, Suite 120, Dallas, Texas 75247 and the name of the registered
agent at such address is Sandra Cearley.

ARTICLE SEVEN

The business and affairs of the Corporation shall be managed by a
Board of Directors which may exercise all of the powers of the Corporation
except those conferred on or reserved to the stockholders by law. The number
of directors of the Corporation is currently two (2), which number may be
increased or decreased pursuant to the Bylaws of the Corporation but in no
event shall be less than the minimum number required by the Act. Each director
shall hold office for the term determined as specified below and until his or
her successor shall have been

3
<PAGE> 4
elected and qualified. The names and addresses of the persons serving as the
current directors are:

Robert E. Mead, Class 1221 Riverbend Drive, Suite 120
III Director Dallas, Texas 75247

Sharon K. Brayfield, Class 1221 Riverbend Drive, Suite 120
II Director Dallas, Texas 75247

The following provisions shall apply to the directors of the
Corporation:

A. The directors of the Corporation (other than any directors who may be
elected solely by holders of any series of Preferred Stock) shall be divided
into three classes, designated "Class I," "Class II," and "Class III,"
respectively. The number of directors in each class shall be as nearly equal
as possible. Each director shall serve for a term ending on the date of the
third Annual Meeting of Stockholders following the Annual Meeting at which such
director was elected, provided, however, that each initial director in Class I,
as determined by the directors, shall serve for a term ending on the date of
the Annual Meeting held in 1998; each initial director in Class II, as
determined by the directors, shall serve for a term ending on the date of the
Annual Meeting held in 1999; and each initial director in Class III, as
determined by the directors, shall serve for a term ending on the date of the
Annual Meeting held in 2000.

B. In the event of any increase or decrease in the authorized number of
directors: (i) each director then serving shall nevertheless continue as
director of the class of which such director is a member until the expiration
of such director's term or such director's prior death, retirement, resignation
or removal; and (ii) except to the extent that an increase or decrease in the
authorized number of directors occurs in connection with the rights of holders
of Preferred Stock to elect additional directors, the newly created or
eliminated directorships resulting from any increase or decrease shall be
apportioned by the Board of Directors among the three classes so as to keep the
number of directors in each class as nearly equal as possible.

C. Anything in this Article Seven to the contrary notwithstanding, each
director shall serve until such director's successor is elected and qualified,
or until such director's earlier death, retirement, resignation or removal.

D. A director may be removed from office with or without cause only by
the affirmative vote of the holders of at least two-thirds of the votes
entitled to be cast in the election of directors.

ARTICLE EIGHT

The following provisions are hereby adopted for the purposes of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:

4
<PAGE> 5
A. The Board of Directors shall have power from time to time and in its
sole discretion: (a) to determine in accordance with sound accounting practice
what constitutes annual or other net profit, earnings, surplus or net assets in
excess of capital; (b) to fix and vary from time to time the amount to be
reserved as working capital, or determine that retained earnings or surplus
shall remain in the hands of the Corporation; (c) to set apart out of any funds
of the Corporation such reserve or reserves in such amount or amounts and for
such proper purposes as it shall determine and to abolish or redesignate any
such reserve or any part thereof; (d) to borrow or raise money upon any terms
for any Corporate purposes; (e) to distribute and pay distributions or
dividends in stock, cash or other securities or property, out of surplus or any
other funds or amounts legally available therefore, at such times and to the
stockholders of record on such dates as it may from time to time, determine;
and (f) to determine whether and to what extent and at what times and places
and under what conditions and regulations the books, accounts and documents of
the Corporation or any of them shall be open to the inspections of
stockholders, except as otherwise provided by statute or by the Bylaws of the
Corporation, and, except as so provided no stockholder shall have the right to
inspect any book, account or document of the Corporation unless authorized so
to do by resolution of the Board of Directors.

B. The liability of the directors and officers of the Corporation to the
Corporation or its stockholders for money damages shall be limited to the
fullest extent permitted under Texas law, including the Act now or hereafter in
force, and the directors and officers of the Corporation shall have no
liability whatsoever to the Corporation or its stockholders for money damages
except to the extent which such liability cannot be limited or restricted under
Texas law now or hereafter in force. Neither the amendment nor repeal of the
foregoing sentence of this Section B of Article Eight nor the adoption nor
amendment of any other provision of the Articles or Bylaws of the Corporation
inconsistent with the foregoing sentence shall apply to or affect in any manner
the applicability of the foregoing sentence with respect to any act or omission
of any director or officer occurring prior to any such amendment, repeal or
adoption.

C. The Corporation shall indemnify, in the manner and to the fullest
extent permitted by law, any person who is or was a party to or is threatened
to be made a party to, any threatened pending or completed action, suit or
proceeding, whether or not by or in the right of the Corporation and whether
civil, criminal, administrative, investigative or otherwise, by reason of the
fact that such person is or was a director or officer of the Corporation or
that such person, while an officer or director of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner or
trustee of another corporation, partnership, trust, employee benefit plan or
other enterprise. To the fullest extent permitted by law, the indemnification
provided herein shall include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement and any such expenses may be paid by the
Corporation in advance of the final disposition of any such action, suit or
proceeding. Upon authorization by the Board of Directors, the Corporation may
indemnify employees and/or agents of the Corporation to the same extent
provided herein for directors and officers. Any repeal or modification of any
of the foregoing sentences of this Section C of Article Eight shall be
prospective in operation and effect only, and shall not adversely affect any
right to

5
<PAGE> 6
indemnification or advancement of expenses hereunder existing at the time of
any such repeal or modification.

D. No holders of shares of stock of the Corporation of any class shall
have preemptive rights or preferential right to purchase, subscribe for or
otherwise acquire any shares of stock of the Corporation of any class now or
hereafter authorized or any securities convertible into or exchangeable for
shares of stock of the Corporation of any class now or hereafter authorized or
any warrants, options or other instrument evidencing rights to purchase,
subscribe for or otherwise acquire shares of stock of the Corporation of any
class now or hereafter authorized, other than such preferential rights, if any,
as the Board of Directors in its sole discretion may determine, and at such
price as the Board of Directors in its sole discretion may fix.

E. The Board of Directors shall have the power, in its sole discretion
and without limitation, to authorize the issuance at any time and from time to
time shares of stock of the Corporation with or without par value, of any class
now or hereafter authorized and of securities convertible into or exchangeable
for shares of the stock of the Corporation, with or without par value, of any
class now or hereafter authorized, for such consideration (irrespective of the
value or amount of such consideration) and in such manner and by such means as
said Board of Directors may deem advisable.

F. The Board of Directors shall have the power, in its sole discretion
and without limitation to classify or reclassify any unissued shares of stock,
whether now or hereafter authorized, by setting, altering or eliminating in any
one or more respects, from time to time before the issuance of such shares, any
feature of such shares, including but not limited to the designation,
preferences, conversion or other rights, voting powers, qualifications, and
terms and conditions of redemption of, and limitations as to dividends and any
restrictions on, such shares.

The enumeration and definition of particular powers of the Board of
Directors included in the foregoing shall in no way be limited or restricted by
reference to or inference from the terms of any other clause of this or any
other Article of the Corporation's articles of incorporation, or construed as
or deemed by inference or otherwise in any manner to exclude or limit any
powers conferred upon the Board of Directors under the Laws of the State of
Texas now or hereafter in force.

IN WITNESS WHEREOF, and in accordance with Article 4.07D of the Act,
the undersigned has executed these Second Amended and Restated Articles of
Incorporation as of the 14th day of May, 1997.

By: /s/ ROBERT E. MEAD
-----------------------------------
Robert E. Mead,
Chief Executive Officer

6
<PAGE> 7
STATE OF TEXAS )
)
COUNTY OF DALLAS )

The foregoing instrument was sworn to and acknowledged before me by
Robert E. Mead, Chief Executive Officer of Silverleaf Resorts, Inc. on the
14th day of May, 1997.

(SEAL) /s/ SANDRA CEARLEY
---------------------------------------
Notary Public, State of Texas

My Commission Expires: Printed or Stamped Name:

Sandra G. Cearley
---------------------------------------
Notary Public
State of Texas
Comm. exp. 08/14/98

<PAGE> 1
EXHIBIT 3.2

================================================================================

- --------------------------------------------------------------------------------

AMENDED AND RESTATED BYLAWS

SILVERLEAF RESORTS, INC.

- --------------------------------------------------------------------------------

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1 - ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 - SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3 - NOTICE OF MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4 - NOMINATION AND SHAREHOLDER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Annual Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 5 - QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6 - VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 7 - VOTING OF STOCK BY CERTAIN HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 8 - PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 9 - PLACE OF MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 10 - INFORMAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE II
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1 - POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2 - NUMBER AND TENURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3 - VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4 - REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5 - SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6 - NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7 - QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8 - MANNER OF ACTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 9 - COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10 - INFORMAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 11 - MEETING BY CONFERENCE TELEPHONE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12 - REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 13 - RESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE III
COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1 - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2 - MINUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3 - INFORMAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1 - NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 2 - ELECTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3 - REMOVAL; RESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4 - VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5 - CHIEF EXECUTIVE OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6 - CHIEF OPERATING OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7 - CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8 - CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9 - PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10 - VICE PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11 - SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12 - ASSISTANT SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 13 - TREASURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 14 - ASSISTANT TREASURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 15 - OTHER OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 16 - SALARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 17 - SPECIAL APPOINTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1 - CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2 - LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3 - CHECKS, DRAFTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4 - DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE VI
ISSUE AND TRANSFER OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1 - ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2 - TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3 - STOCK LEDGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VII
FIXING DATE FOR DETERMINATION
OF SHAREHOLDERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE IX
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

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<PAGE> 4
SILVERLEAF RESORTS, INC.

AMENDED AND RESTATED BYLAWS

ARTICLE I
SHAREHOLDERS

Section 1 - ANNUAL MEETING

The annual meeting of the shareholders of the Corporation shall be
held in May of each year at the time and place as shall be designated by the
Board of Directors by resolution and stated in the notice of the meeting. The
business to be transacted at the annual meeting shall include the election of
directors and any other corporate business as may come before the meeting.

Section 2 - SPECIAL MEETING

At any time in the intervals between annual meetings, a special
meeting of the shareholders may be called by the Chief Executive Officer or by
the Board of Directors, and shall be called by the Chief Executive Officer at
the request in writing of shareholders owning twenty five percent (25%) in
amount of the entire capital stock of the Corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. No business shall be transacted at a special meeting save
that specially named in the notice.

Section 3 - NOTICE OF MEETING

Not less than thirty (30) days nor more than ninety (90) days before
the date of every shareholders' meeting, the Secretary shall give to each
shareholder entitled to vote at such meeting and to each shareholder not
entitled to vote who is entitled to notice by statute, written or printed
notice stating the date, time and place of the meeting and in the case of a
special meeting, the purpose or purposes for which the meeting is called,
either by presenting it to the shareholder personally or by leaving it at the
shareholder's residence or usual place of business or by mailing it to the
shareholder at the shareholder's address as it appears on the records of the
Corporation. Notice which is mailed in accordance with the preceding sentence
shall be deemed to be given at the time when the same shall be deposited in the
United States mail with postage thereon prepaid. Any shareholder may waive
notice of any meeting by written waiver filed with the records of the meeting,
either before or after the holding thereof. The attendance of a shareholder at
a meeting shall constitute a waiver of notice of such meeting, except where a
shareholder attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. No business shall be transacted at a special meeting save that
specially named in the notice.
<PAGE> 5
Section 4 - NOMINATION AND SHAREHOLDER BUSINESS

(a) Annual Meeting of Shareholders

(1) Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by shareholders may be made at an
annual meeting of shareholders (i) pursuant to the Corporation's notice of the
meeting, (ii) by or at the direction of the Board of Directors or (iii) by any
shareholder of the Corporation who was a shareholder of record at the time of
giving of notice provided for in this Section 4(a) who is entitled to vote at
the meeting and who has complied with the notice procedure set forth in this
Section 4(a).

(2) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (iii) of paragraph
(a)(l) of this Section 4, the shareholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more than
30 days or delayed by more than 60 days from such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is first made.
Such shareholder's notice shall set forth (i) as to each person whom the
shareholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934 as amended ("The Exchange Act") (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected); (ii) as to any other business that the shareholder proposes to
bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and of
the beneficial owner, if any, on whose behalf the proposal is made; and (iii)
as to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made, (x) the name and address of
such shareholder, as they appear on the Corporation's books, and of such
beneficial owner and (y) the class and number of shares of stock of the
Corporation which are owned beneficially and of record by such shareholder and
such beneficial owner.

(3) Notwithstanding anything in the second sentence of Paragraph
(a)(2) of this Section 4 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
shareholder's notice required by this Section 4(a) shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, it shall be delivered to the

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<PAGE> 6
Secretary at the principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.

(b) Special Meetings of Shareholders

Only such business shall be conducted at a special meeting of
shareholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of shareholders at which
directors are to be elected (i) pursuant to the Corporation's notice of
meeting; (ii) by or at the direction of the Board of Directors; or (iii)
provided that the Board of Directors has determined that directors shall be
elected at such special meeting, by any shareholder of the corporation who is a
shareholder of record at the time of giving of notice provided for in this
Section 4(b) who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 4(b). In the event the Corporation
calls a special meeting of shareholders for the purpose of electing one or more
directors to the Board of Directors, any such shareholder may nominate a person
or persons (as the case may be) for election to such position as specified in
the Corporation's notice of meeting, if the shareholder's notice required by
paragraph (a)(2) of this Section 4 shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the tenth day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected at
such meeting.

(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 4 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 4. The presiding officer of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in accordance with
the procedures set forth in this Section 4 and if any proposed nomination of
business in not in compliance with this Section 4, to declare that such
defective nomination or proposal be disregarded.

(2) For purposes of this Section 4, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this
Section 4, a shareholder shall also comply with all applicable requirements of
state law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 4. Nothing

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<PAGE> 7
in this Section 4 shall be deemed to affect any rights of shareholders to
request inclusion of proposals in the Corporation's proxy statement pursuant to
Rule l4a-8 under the Exchange Act.

Section 5 - QUORUM

At any meeting of shareholders the presence in person or by proxy of
shareholders entitled to cast a majority of the votes thereat shall constitute
a quorum; but this section shall not affect any requirement under any statute
or the Articles of Incorporation (the "Articles") of the Corporation for the
vote necessary for the adoption of any measure. A majority of the votes cast
at a meeting of shareholders, duly called and at which a quorum is present,
shall be sufficient to take or authorize action upon any matter which may
properly come before the meeting unless more than a majority of votes is
required by statute, by the Articles of the Corporation or by these Bylaws.

In the absence of a quorum, a majority of the shares represented in
person or by proxy may adjourn the meeting from time to time not more than one
hundred twenty (120) days without further notice other than by announcement at
such meeting. At such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
originally called. If the adjournment is for more than thirty (30) days or if
after adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder entitled to
vote at the meeting.

Section 6 - VOTING

Each share of Common Stock shall be entitled to one (1) vote.

Section 7 - VOTING OF STOCK BY CERTAIN HOLDERS

Stock registered in the name of a corporation, partnership, trust or
other entity if entitled to be voted may be voted by the president or vice
president, a general partner, or trustee thereof as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the
board of directors of such corporation or other entity presents a certified
copy of such bylaw or resolution, in which case such person may vote such
stock. Any director or other fiduciary may vote stock registered in the name
of such fiduciary, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time
unless they are held by it in a fiduciary capacity in which case they may be
voted and shall be counted in determining the total number of outstanding
shares at any given time.

The Board of Directors may adopt, by resolution, a procedure by which
a shareholder may certify, in writing to the Corporation that any shares of
stock registered in the name of the

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<PAGE> 8
shareholder are held for the account of a specified person other than a
shareholder. The resolutions shall set forth: (i) the class of shareholders
who may make the certification, (ii) the purpose for which the certification
may be made, (iii) the form of certification and the information to be
contained in it, (iv) if the certification is with respect to a record date of
closing of the stock transfer books, the time after the record date of the
Stock transfer books within which the certification must be reviewed by the
Corporation, and (v) any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the shareholder of record of
the specified stock in place of the shareholder who makes certificates.

Section 8 - PROXIES

At all meetings of shareholders, a shareholder may vote the shares
owned of record by the shareholder either in person or by proxy executed in
writing by the shareholder or by the shareholder's duly authorized attorney in
fact. Such proxy shall be filed with the Secretary of the Corporation before
or at the time of the meeting. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided in the proxy.

Section 9 - PLACE OF MEETING

The Board of Directors may designate any place, either within or
without the state of Texas, as the place of meeting for any annual or special
meeting of shareholders. If no designation is made, or if a special meeting be
otherwise called, the place of the meeting shall be the principal office of the
Corporation.

Section 10 - INFORMAL ACTION

Any action required or permitted to be taken at a meeting of
shareholders may be taken without a meeting if there is filed with the records
of shareholders meetings a unanimous written consent which sets forth the
action and is signed by each shareholder entitled to vote on the matter and a
written waiver of any right to dissent signed by each shareholder entitled to
notice of the meeting but not entitled to vote thereat.

ARTICLE II
DIRECTORS

Section 1 - POWERS

The business and affairs of the Corporation shall be managed by its
Board of Directors, which may exercise all of the powers of the Corporation,
except such as are by statute or by the Articles or Bylaws of the Corporation
expressly conferred upon or reserved to the shareholders.

5
<PAGE> 9
Section 2 - NUMBER AND TENURE

A. Prior to an Initial Public Offering.

Prior to an initial public offering of any of the
Corporation's shares of Common Stock, at any regular meeting or at any special
meeting called for that purpose, a majority of the entire Board of Directors
may establish, increase or decrease the number of directors, provided that the
number thereof shall not be less than one (1), and further provided that the
tenure of office of a director shall not be affected by any decrease in the
number of directors. As of the effective date of these Amended and Restated
Bylaws, the number of authorized directors shall be two (2), and the persons
serving as directors are Robert E. Mead and Sharon K. Brayfield. Each director
shall hold office for the term for which the director is elected and until the
director's successor is elected and qualified, or until the director's
resignation, removal (in accordance with the Articles and these Bylaws) or
death.

B. After an Initial Public Offering.

After an initial public offering of any of the Corporation's
shares of Common Stock, at any regular meeting or at any special meeting called
for that purpose, a majority of the entire Board of Directors may establish,
increase or decrease the number of directors, provided that the number thereof
shall not be less than five (5), nor more than thirteen (13), and further
provided that the tenure of office of a director shall not be affected by any
decrease in the number of directors. Pursuant to the Articles, the Board of
Directors has been divided into three classes with staggered terms of three
years per class. Each director shall serve for a term ending on the date of
the third annual meeting of shareholders following the annual meeting at which
such director was elected, provided, however, that each initial director in
Class I, as determined by the directors, shall serve for a term ending on the
date of the annual meeting of shareholders held in 1998; each initial director
in Class II, as determined by the directors, shall serve for a term ending on
the date of the annual meeting of shareholders held in 1999; and each initial
director in Class III, as determined by the directors, shall serve for a term
ending on the date of the annual meeting of shareholders held in 2000. Each
director shall hold office for the term for which the director is elected and
until the director's successor is elected and qualified, or until the
director's resignation, removal (in accordance with the Articles and these
Bylaws) or death.

Section 3 - VACANCIES

Any vacancy occurring on the Board of Directors shall be filled by the
election by the remaining directors at any regular or special meeting, except
that a vacancy resulting from an increase in the number of directors shall be
filled by a majority vote of the entire Board of Board Directors. A director
elected to fill a vacancy shall be elected for the unexpired term of the
director's predecessor in office, provided that a director elected to fill a
vacancy resulting from an increase in the number of directors shall be elected
to serve until the next annual meeting of shareholders and until the director's
successor is elected and qualifies.

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Section 4 - REGULAR MEETINGS

The Board of Directors shall meet for the purpose of the election of
officers and the transaction of other business as soon as practicable after
each annual meeting of shareholders. Other regular meetings of the Board of
Directors shall be held at such times and such places, either within or without
the State of Texas, as may be designated from time to time by the Chief
Executive Officer or by the Board of Directors.

Section 5 - SPECIAL MEETING

Special meetings of the Board of Directors may be called by the Chief
Executive Officer or by a majority of the directors. The person or persons
authorized to call special meetings of the Board of Directors may fix any
place, either within or without the State of Texas, as the place for holding
the special meeting of the Board of Directors called by such person or persons.

Section 6 - NOTICE

Notice of every regular or special meeting of the Board shall be given
to each director at least two (2) days prior thereto either by written notice
delivered personally or mailed or telegrammed to the director's last known
business or residence address or by personal telephone call. Notice which is
mailed in accordance with the preceding sentence shall be deemed to be given at
the time when the same shall be deposited in the United States mail with
postage thereon prepaid. Any director may waive notice of any meeting by
written waiver filed with the records of the meeting, either before or after
the holding thereof. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.

Section 7 - QUORUM

A majority of the Board of Directors shall constitute a quorum for the
transaction of business, but if less than such quorum is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice other than announcement at the meeting, until a quorum
shall be present.

Section 8 - MANNER OF ACTING

The action of a majority of the directors present at a meeting at
which a quorum is present shall constitute action of the Board of Directors
unless the concurrence of a greater proportion is required for such action by
statute, by the Articles of the Corporation or by these Bylaws.

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<PAGE> 11
Section 9 - COMPENSATION

By resolution of the Board of Directors a fixed sum and expenses, if
any, of attendance at each regular or special meeting of the Board of Directors
or of committees hereof, and other compensation for their services as such or
on committees of the Board of Directors, may be paid to the directors. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor, pursuant to a resolution of the
Board of Directors.

Section 10 - INFORMAL ACTION

Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if a written consent to such
action is signed by all members of the Board of Directors and such written
consent is filed with the minutes of proceedings of the Board of Directors.

Section 11 - MEETING BY CONFERENCE TELEPHONE

Members of the Board of Directors may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participating in a meeting by such means constitutes presence in person at a
meeting.

Section 12 - REMOVAL

A director may be removed, with or without cause, upon the affirmative
vote of not less than two-thirds (2/3) of the votes entitled to be cast in the
election of members of the Board of Directors.

Section 13 - RESIGNATION

A director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon the
receipt thereof by the Board of Directors or such officer and the acceptance of
such resignation shall not be necessary to make it effective.

ARTICLE III
COMMITTEES

Section 1 - COMMITTEES

The Board of Directors may appoint from among its members an executive
committee and other committees composed of two (2) or more directors and
delegate to these committees in the intervals between meetings of the Board of
Directors any of the powers of the Board of

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<PAGE> 12
Directors, except the power to declare dividends or distributions on stock,
approve any merger or share exchange which does not require shareholder
approval, amend the Bylaws, issue stock other than as permitted by statute, or
recommend to the shareholders any action which requires shareholder approval.
Each committee may fix rules of procedure for its business. A majority of the
members of a committee shall constitute a quorum for the transaction of
business and the act of a majority of those present at a meeting at which a
quorum is present shall be the act of the committee. The members of a
committee present at any meeting, whether or not they constitute a quorum, may
appoint a director to act in place of an absent member. The members of a
committee may conduct any meeting thereof by conference telephone in accordance
with the provisions of Article II, Section 11.

Section 2 - MINUTES

Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.

Section 3 - INFORMAL ACTION

Any action required or permitted to be taken at any committee meeting
may be taken without a meeting if a written consent to such action is signed by
all of the members of the committee and such written consent is filed with the
minutes of proceedings of the Board of Directors.

ARTICLE IV
OFFICERS

Section 1 - NUMBER

The officers of the Corporation shall include a Chief Executive
Officer, President, any number of Vice Presidents, a Secretary, any number of
Assistant Secretaries, a Treasurer, any number of Assistant Treasurers and may
include a Chairman of the Board (or one or more Chairmen of the Board), a Vice
Chairman of the Board, a Chief Operating Officer, a Chief Financial Officer and
such other officers as the Board of Directors may elect. Any two (2) offices
may be held by the same person, except those of President and Vice President,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required to be executed, acknowledged or
verified by any two (2) or more officers. In addition, the Board of Directors
may from time to time appoint such other officers with such powers and duties
as they "shall deem necessary or desirable."

Section 2 - ELECTION AND VENUE

The officers of the Corporation shall be elected by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders, or as soon after such first meeting as may be
convenient, except that the Chief Executive Officer may

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appoint one or more vice presidents, assistant secretaries and assistant
treasurers. Each officer shall hold office until the officer's successor shall
have been duly elected and shall have qualified, or until the officer's death
or until the officer shall resign or shall have been removed in the manner
hereinafter provided.

The Board of Directors may, at any time, and from time to time,
authorize the making or adoption by the Corporation of special contracts with
an officer or officers for services of such officer or officers for a fixed
period and on such terms and conditions, and with such powers, duties and
compensation, as may be fixed by such contract, and may elect such officer or
officers for such term or terms as may be specified by such contract.

Section 3 - REMOVAL; RESIGNATION

Any officer or agent of the Corporation may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. An officer may resign at any time by
giving written notice to the Board of Directors, the President or the Secretary
of the Corporation. Unless otherwise specified in the notice, the resignation
shall take effect upon the receipt thereof by the Board of Directors or such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.

Section 4 - VACANCIES

A vacancy in an office may be filled by the Board of Directors for the
unexpired portion of the term.

Section 5 - CHIEF EXECUTIVE OFFICER

The Board of Directors shall designate a Chief Executive Officer. In
the absence of such designation, the Chairman of the Board (or, if more than
one, the co-chairmen of the Board in the order designated at the time of their
election or, in the absence of any designation, then, in the order of their
election) shall be the Chief Executive Officer of the Corporation. The Chief
Executive Officer shall have general responsibility for implementation of the
policies of the Corporation, as determined by the Board of Directors, and for
the management of the business and affairs of the Corporation. In addition, the
Chief Executive Officer, together with the President, shall have the power to
determine the cash compensation of employees of the Corporation other than its
Senior Executive Officers.

Section 6 - CHIEF OPERATING OFFICER

The Board of Directors may designate a Chief Operating Officer. The
Chief Operating Officer shall have the responsibilities and duties as set forth
by the Board of Directors or the Chief Executive Officer.

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Section 7 - CHIEF FINANCIAL OFFICER

The Board of Directors may designate a Chief Financial Officer. The
Chief Financial Officer shall have the responsibilities and duties as set forth
by the Board or Directors or the Chief Executive Officer.

Section 8 - CHAIRMAN OF THE BOARD

The Board of Directors may designate a Chairman of the Board (or one
or more co-chairmen of the Board). The Chairman of the Board shall preside
over the meeting of the Board of Directors and of the shareholders at which the
Chairman of the Board shall be present. If there be more than one, the
co-chairmen designated by the Board of Directors will perform such duties. The
Chairman of the Board shall perform such other duties as may be assigned to the
Chairman of the Board or the co-chairmen by the Board of Directors.

Section 9 - PRESIDENT

The President shall, in general, supervise and administer all of the
business and affairs of the Corporation, subject to the control of the Board of
Directors or the Chief Executive Officer. The President may sign and execute
all authorized bonds, contracts or other obligations in the name of the
Corporation. In general, the President shall have all powers and shall perform
all duties incident to the office of President and such as may from time to
time be prescribed by the Board of Directors or the Chief Executive Officer.

Section 10 - VICE PRESIDENT

In the absence or incapacity of the President, or in the event of a
vacancy in the office of President, the Vice President, if one (or in the event
there be more than one, the Vice Presidents in the order designated by the
Board of Directors, or, in the absence of such designation, then in the order
of their election), shall have the powers and perform the duties of President.
A Vice President shall also have such powers and perform such duties as may
from time to time be prescribed by the Board of Directors or by the President.
A Vice President may have such additional descriptive designations, if any, in
the Vice President's title as may be assigned by the Board of Directors.

Section 11 - SECRETARY

The Secretary shall attend all meetings of the Board of Directors and
all meetings of the shareholders and record all the proceedings of the meetings
thereof in a book to be kept for that purpose and shall perform like duties for
the standing committees when required. The Secretary shall give, or cause to
be given, notice of all meetings of the shareholders of the Board of Directors,
and shall perform such other duties incident to the office of Secretary as from
time to time may be prescribed by the Board of Directors or by the President,
under whose supervision the Secretary shall be. The Secretary shall have
general charge of the stock ledger

11
<PAGE> 15
and custody of the corporate records and of the seal of the Corporation and the
Secretary, or an Assistant Secretary, shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be attested by the
Secretary's signature or by the signature of such Assistant Secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by the officer's signature.

Section 12 - ASSISTANT SECRETARY

The Assistant Secretary, if one (1) (or if there be more than one (1),
the Assistant Secretaries in the order determined by the Board of Directors,
or, in the absence of such determination, then in the order of their election)
shall, in the absence of the Secretary or in the event of the Secretary's
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from tine to time prescribe.

Section 13 - TREASURER

The Treasurer shall have general charge of the financial affairs of
the Corporation. The Treasurer shall in general have all powers and perform
all duties incident to the office of Treasurer and such as may from time to
time be prescribed by the Board of Directors or by the President.

If required by the Board of Directors, the Treasurer shall give the
Corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of the Treasurer's office and for
the restoration to the Corporation, in case of the Treasurer's death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the Treasurer's possession or
under the Treasurer's control belonging to the Corporation.

Section 14 - ASSISTANT TREASURER

The Assistant Treasurer, if one (1) (or if there shall be more than
one (1), the Assistant Treasurers in the order determined by the Board of
Directors, or if there be no such determination, then in the order of their
election), shall in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.

Section 15 - OTHER OFFICERS

Such other officers as may be elected by the Board of Directors shall
have such powers and perform such duties as the Board may from time to time
prescribe.

12
<PAGE> 16
Section 16 - SALARIES

The salaries of the officers shall be fixed from time to time by the
Board of Directors, and no officer shall be prevented from receiving such
salary by reason of the fact that the officer is also a director of the
Corporation.

Section 17 - SPECIAL APPOINTMENTS

In the absence or incapacity of any officer, or in the event of a
vacancy in any office, the Board of Directors may designate any person to fill
any such office pro tempore or for any particular purpose.

ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1 - CONTRACTS

The Board of Directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances.

Section 2 - LOANS

No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.

Section 3 - CHECKS, DRAFTS, ETC.

All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation, shall be
signed by such officer or officers of the Corporation and in such manner as
shall from time to time be determined by resolution of the Board of Directors.

Section 4 - DEPOSITS

All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select.

13
<PAGE> 17
ARTICLE VI
ISSUE AND TRANSFER OF STOCK

Section 1 - ISSUE

Certificates representing shares of the Corporation shall be in such
form as shall be determined by the Board of Directors. Each certificate shall
be signed by the Chief Executive Officer, the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary, or the Treasurer or
an Assistant Treasurer, and shall be sealed with the corporate seal. The
signatures may be either manual or facsimile signatures, and the seal may be
the actual corporate seal or a facsimile of it or in any other form. All
certificates surrendered to the Corporation for transfer shall be cancelled,
and no new certificates shall be issued until the former certificate or
certificates for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, stolen, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board of Directors may prescribe.

Section 2 - TRANSFER OF SHARES

Transfer of shares of the Corporation shall be made only on its stock
transfer books by the holder of record thereof, or by the holder's attorney
thereunto authorized by power of attorney duly executed and filed with the
secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed to be the owner thereof for all
purposes.

Section 3 - STOCK LEDGER

The Corporation shall maintain a stock ledger which contains the name
and address of each shareholder and the number of shares of stock of each class
which the shareholder holds. The stock ledger may be in written form or in any
form which can be converted within a reasonable time into written form for
visual inspection. The original or a duplicate of the stock ledger shall be
kept at the principal office or the principal executive offices of the
Corporation in the State of Texas.

ARTICLE VII
FIXING DATE FOR DETERMINATION
OF SHAREHOLDERS' RIGHTS

The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining shareholders entitled to notice of, or to vote
at, any meeting of shareholders, or shareholders entitled to receive payment of
any dividend or the allotment of any rights or in order to make a determination
of shareholders for any other proper purpose. Only shareholders of record on
such date shall be entitled to notice of, and to vote at, such meeting or to
receive such dividends or rights, as the case may be, notwithstanding any
transfer of any stock on the

14
<PAGE> 18
books of the Corporation after such record date fixed as aforesaid. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting,
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.

ARTICLE VIII
AMENDMENTS

Subject to applicable law and the Articles of the Corporation, by
affirmative vote of the holders of not less than a majority of the shares of
stock entitled to vote, the shareholders shall have the right to adopt, alter
and repeal Bylaws. Subject to the right of the shareholders provided in the
preceding sentence, the Board of Directors shall have the power to adopt, alter
and repeal Bylaws.

ARTICLE IX
FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.

ARTICLE X
INDEMNIFICATION

The Corporation shall indemnify, in the manner and to the fullest
extent permitted by law, any person who is or was a party to, or is threatened
to be made a party to, any threatened, pending or completed action, suit or
proceeding, whether or not by or in the right of the Corporation and whether
civil, criminal, administrative, investigative or otherwise, by reason of the
fact that such person is or was a director or officer of the Corporation, or
that such person, while an officer or director of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner or
trustee of another corporation, partnership, trust, employee benefit plan or
other enterprise. To the fullest extent permitted by law, the indemnification
provided herein shall include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement and any such expenses may be paid by the
Corporation in advance of the final disposition of any such action, suit or
proceeding. Upon authorization by the Board of Directors, the Corporation may
indemnify employees and/or agents of the Corporation to the same extent
provided herein for directors and officers. Any repeal or modification of any
of the foregoing sentences of this Article X shall be prospective in operation
and effect only, and shall not adversely affect any right to indemnification or
advancement of expenses hereunder existing at the time of any such repeal or
modification.

The indemnification and reimbursement of expenses provided herein
shall not be deemed to limit the right of the Corporation to indemnify any
other person against any liability and expenses to the fullest extent permitted
by law, nor shall it be deemed exclusive of any other right to which any person
seeking indemnification from the Corporation may be entitled under any
agreement, the Articles, a vote of the shareholders or disinterested directors,
or otherwise,

15
<PAGE> 19
both as to action in such person's official capacity as an officer or director
of the Corporation and as to action in another capacity at the request of the
Corporation, while acting as an officer or director of the Corporation.

CERTIFICATE

I, Sandra G. Cearley, hereby certify that I am the Secretary of
Silverleaf Resorts, Inc., a Texas corporation (the "Corporation"); and that the
foregoing Amended and Restated Bylaws were adopted as the Bylaws of the
Corporation effective the 14th day of May, 1997, by the unanimous written
consent of all of the Directors of the Corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of the Corporation this 14th day of May, 1997.

(S E A L) /s/ SANDRA G. CEARLEY
------------------------------
Sandra G. Cearley, Secretary

<PAGE> 1
EXHIBIT 4.1

NUMBER SHARES

INCORPORATED UNDER THE LAWS COMMON STOCK
OF THE STATE OF TEXAS $.01 Par Value

[VIGNETTE]

SILVERLEAF RESORTS, INC.

THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 828395 10 3
DALLAS, TEXAS AND NEW YORK, NEW YORK SEE REVERSE FOR CERTAIN RESTRICTIONS
ON PREEMPTIVE AND OTHER RIGHTS.

This Certifies that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF

SILVERLEAF RESORTS, INC.

(hereinafter referred to as the "Corporation") transferable on the books of the
Corporation by the holder hereof, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed or accompanied by a proper
assignment. This certificate is not valid until countersigned and registered
by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

DATED:

Secretary [SEAL] President

COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR

BY
AUTHORIZED SIGNATURE
<PAGE> 2
SILVERLEAF RESORTS, INC.

THE ARTICLES OF INCORPORATION OF THE CORPORATION ON FILE IN THE OFFICE
OF THE SECRETARY OF STATE OF TEXAS SET FORTH (A) THE AMOUNTS, DESIGNATIONS,
PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF EACH CLASS OF CAPITAL STOCK
THAT THE CORPORATION IS AUTHORIZED TO ISSUE, INCLUDING ONE OR MORE SERIES OF
PREFERRED STOCK, (B) A STATEMENT OF THE AUTHORITY VESTED IN THE BOARD OF
DIRECTORS OF THE CORPORATION TO ESTABLISH ONE OR MORE SERIES OF PREFERRED STOCK
AND TO DETERMINE THE PREFERENCES, CONVERSION RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS AND OTHER TERMS OF ANY SERIES OF PREFERRED STOCK SO
ESTABLISHED, (C) A DENIAL OF PREEMPTIVE RIGHTS OF THE SHAREHOLDERS TO ACQUIRE
UNISSUED OR TREASURY SHARES OF THE CORPORATION, AND (D) A DENIAL OF THE RIGHT
OF CUMULATIVE VOTING BY SHAREHOLDERS. THE CORPORATION WILL FURNISH A COPY OF
THE FOREGOING PROVISIONS TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE CORPORATION AT ITS REGISTERED OFFICE.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______ Custodian _______
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of survivorship Under Uniform Gifts to Minors
and not as tenants in common Act
-------------------------
(State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, _______________________ hereby sell, assign and transfer
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.

Dated
----------------------------

X
---------------------------------------
(SIGNATURE)

NOTICE: THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
<PAGE> 3

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
RULE 174d-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Signature(s) Guaranteed

By:
------------------------------------------------

<PAGE> 1
EXHIBIT 5.1

(FORM OF OPINION)

[MEADOWS, OWENS, COLLIER, REED, COUSINS, AND BLAU, LLP LETTERHEAD]

June ___, 1997

Mr. Robert E. Mead
Chief Executive Officer
Silverleaf Resorts, Inc.
1221 Riverbend, Suite 120
Dallas, Texas 75247

Re: Silverleaf Resorts, Inc., a Texas corporation (the "Company")-
Registration Statement on Form S-1 (File No. 333-24273)

Ladies and Gentlemen:

In connection with the registration of up to a maximum of 4,025,000
shares of the Company's Common Stock, par value $0.01 per share (the "Shares"),
under the Securities Act of 1933, as amended (the "Act"), by the Company on
Form S-1 filed with the Securities and Exchange Commission (the "Commission")
on or about March 31, 1997 (the "Registration Statement"), you have requested
our opinion with respect to the matters set forth below.

We have acted as counsel for the Company in connection with the matters
described herein. In our capacity as counsel to the Company, we have reviewed
and are familiar with proceedings taken and proposed to be taken by the Company
in connection with the authorization, issuance and sale of the Shares, and for
purposes of this opinion have assumed such proceedings will be timely completed
in the manner presently proposed. In addition, we have relied upon certificates
and representations from the officers of the Company upon which we believe we
are justified in relying and on various certificates from, and the documents
recorded with, the Secretary of State of Texas, including the Articles of
Incorporation of the Corporation, including the Second Amended and Restated
Articles of Incorporation filed with the Secretary of State on May 15, 1997(the
"Charter"). We have also examined the Bylaws of the Company adopted as of May
14, 1997 (the

<PAGE> 2

[MEADOWS, OWENS, COLLIER, REED, COUSINS, & BLAU, LLP LETTERHEAD]

Silverleaf Resorts, Inc.
June ___, 1997
Page 2

"Bylaws") and Resolutions of the Board of Directors of the Company adopted on
or before _____ _____, 1997 and remain in full force and effect on ____ __,
1997; and such laws, records, documents, certificates, opinions and instruments
as we deem necessary to render this opinion.

We have assumed the genuineness of all signatures and the authenticity
of all documents submitted to us as originals and the conformity to the
originals of all documents submitted to us as certified, photostatic or
conformed copies. In addition, we have assumed that each person executing
any instrument, document or certificate referred to herein on behalf of
any party is duly authorized to do so.

Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of
this letter, the Shares have been duly authorized by all necessary corporation
action on the part of the Company, and the Shares will, upon issuance and
delivery in accordance with the terms and conditions described in the
Registration Statement against payment of the purchase price therefore as
determined by the Board of Directors of the Company or a committee thereof, be
validly issued, fully paid and nonassessable.

We consent to your filing this opinion as an exhibit to the
Registration Statement. We also consent to the identification of our firm as
counsel to the Company in the section of the Prospectus (which is part of the
Registration Statement) entitled "Legal Matters."

The opinions expressed herein are limited to the laws of the state of
Texas and we express no opinion concerning any laws other than the laws of the
State of Texas. Furthermore, the opinions presented in this letter are limited
to the matters specifically set forth herein and no other opinion shall be
inferred beyond the matters expressly stated.

The opinions expressed in this letter are solely for your use and may
not be relied upon by any other person without our prior written consent.

Very truly yours,

<PAGE> 1
EXHIBIT 10.1

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the "Agreement") is entered into
effective as of this _________ day of May, 1997, by and between Silverleaf
Resorts, Inc., a Texas corporation (the "Company"), and Robert E. Mead
("Holder").

WHEREAS, Holder currently owns 7,625,000 shares of Common Stock of the
Company (the "Common Shares"), all of which were offered and sold to Holder
pursuant to one or more exemptions from registration under the Securities Act
of 1933, as amended (the "Securities Act");

WHEREAS, the Company proposes to issue approximately 3,500,000 shares
of its common stock in a public offering, and in connection therewith has filed
a form S-1 Registration Statement with the Securities and Exchange Commission
(the "SEC");

WHEREAS, Holder has requested, and the Company has agreed to provide
Holder and certain of his assignees, as described herein, with the registration
rights set forth in Section 2 hereof;

NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as set forth herein.

1. Certain Definitions.

As used in this Agreement, the following capitalized defined terms
shall have the following meanings.

"Common Shares" shall have the meaning set forth above in the recitals
hereto and, in addition, shall include any equity securities of the Company or
any corporate successor of the Company into or for which Common Shares are
converted or exchanged.

"Company" shall have the meaning set forth above in the recitals
hereto.

"NASD" shall mean the National Association of Securities Dealers, Inc.

"Person" shall mean an individual, partnership, corporation, trust, or
unincorporated organization, or a government agency or political subdivision
thereof.

"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and
by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.

"Registrable Shares" shall mean any Common Shares issued to Holder.
<PAGE> 2
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange or NASD registration and filing fees;
(ii) all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualification of any of the Registrable
Shares and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD; (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Shares on any securities exchange or exchanges pursuant to Section 2(c) hereof,
and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
"cold comfort" letters required by or incident to such performance and
compliance. Registration Expenses shall specifically exclude those items
specified in Section 4 as expenses to be paid by Holder.

"Registration Statement" shall mean any registration statement of the
Company and any other entity required to be a registrant with respect to such
registration statement pursuant to the requirements of the Securities Act which
covers any of the Registrable Shares, and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
materials incorporated by reference therein.

"S-1 Registration Statement" shall mean the S-1 Registration Statement
filed by the Company with the SEC on March 31, 1997, and any amendments
thereto.

"SEC" shall have the meaning set forth above in the recitals hereto.

2. Registration of Shares. The provisions relating to the Holder's and
the Company's rights and obligations with regard to registration of Registrable
Shares are set forth in this Section 2.

(a) At any time 180 days after, but less than one year after, the
consummation of the public offering contemplated by the S-1 Registration
Statement, upon written request by Holder, the Company shall file, and shall
use its best efforts to cause to become effective on, or as soon as practicable
following such written request, a Registration Statement for the Registrable
Shares, not to exceed one-half of the Registrable Shares owned by Holder. At
any time after the first anniversary of the consummation of the public offering
contemplated by the S-1 Registration Statement, upon written request by Holder,
the Company shall file, and shall use its best efforts to cause to become
effective on, or as soon as practicable following such written request, a
Registration Statement for any Registrable Shares which have not previously
been registered pursuant to this Agreement. The Company shall use its best
efforts to maintain the effectiveness of any such Registration Statement until
there are no longer any Registrable Shares held by Holder. Notwithstanding
anything to the contrary contained herein, the Company shall not be obligated
to file more than two (2) Registration Statements pursuant to this Section
2(a).

-2-
<PAGE> 3
Notwithstanding the foregoing, the Company shall not be
obligated, but shall have the right, to take any action to effect any such
registration, qualification or compliance pursuant to this Section 2(a):

(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance, unless
the Company is already subject to service of process in such
jurisdiction, and except as may be required by the Securities Act; or

(ii) if such Registration Statement cannot be filed on
Form S-3 or any successor form substantially similar to such Form.

(b) Notice of Effectiveness. The Company shall notify Holder of
the effectiveness of the Registration Statement and shall furnish to Holder
such number of copies of the Registration Statement (including any amendments,
supplements and exhibits), the Prospectus contained therein (including each
preliminary prospectus and all related amendments and supplements), and any
documents incorporated by reference in the Registration Statement or such other
documents as the Holder may reasonably request in order to facilitate its sale
of the Registrable Shares in the manner described in the Registration
Statement.

(c) Amendments and Supplements to Registration Statement: Listing.
The Company shall prepare and file with the SEC from time to time such
amendments and supplements to the Registration Statement and prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of the Shares subject to such Registration Statement until
such time as all of such Shares have been disposed of in accordance with the
intended methods of disposition by the Holder as set forth in the Registration
Statement. Upon five business days' notice, the Company shall file any
supplement or post-effective amendment to the Registration Statement with
respect to the plan of distribution of such Holder's Registrable Shares that is
necessary to permit the sale of the Holder's Registrable Shares pursuant to
such Registration Statement, including supplements or post-effective amendments
required to give effect to the designation of any underwriter or underwriting
syndicate specified by such Holder. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Registrable Shares registered under any Registration Statement to be then
listed or quoted on the primary exchange or quotation system on which shares of
the Company's common stock are then listed or quoted.

(d) SEC Requests. The Company shall notify Holder of any request
by the SEC for amendments or supplements to the Registration Statement or the
Prospectus related thereto or for additional information. In addition, the
Company shall notify Holder of the filing of the Registration Statement or any
Prospectus, amendment or supplement related thereto or any post-effective
amendment to the Registration Statement and the effectiveness of any
post-effective amendment.

(e) Prospectus Delivery. At any time when a Prospectus relating
to a Registration Statement is required to be delivered under the Securities
Act, the Company shall immediately notify Holder of the happening of any event
as a result of which (i) the Prospectus included in

-3-
<PAGE> 4
the Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) an amendment
to a Registration Statement is a requirement (an "Event Notice"). In such
event, the Company shall promptly prepare and furnish to Holder a reasonable
number of copies of a supplement to such Prospectus (or, after declaration of
effectiveness by the SEC, of any amendment to the Prospectus required to be
filed as an amendment to the Registration Statement) as may be necessary so
that, as thereafter delivered to the purchasers of Registrable Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Company will, if necessary, amend the Registration
Statement of which such Prospectus is a part to reflect such amendment or
supplement and use its best efforts promptly to obtain an effectiveness order
for such amendment from the SEC. From and after the date of any Event Notice,
Holder shall not offer or sell any Registrable Shares until such time as the
Company delivers any such Prospectus supplement or amendment to the Holder.

(f) "Piggy-Back" Rights. If, at any time after the first
anniversary of this Agreement, the Company shall determine to file a
Registration Statement under the Securities Act on Form S-3 (or other
appropriate form for the general registration of securities) for the
registration of any shares of the Company, the Company shall provide notice of
such determination to the Holder. Upon the written request of Holder given to
the Company within ten days after such notice by the Company, the Company shall
cause the Registrable Shares owned by Holder to be included in such Registration
Statement, subject to the limitations set forth below. Notwithstanding the
foregoing, the Company may delay, withdraw or suspend the preparation or filing
of any Registration Statement described in this paragraph 2(f).

3. State Securities Laws.

Subject to the conditions set forth in this Agreement, the Company
shall, in connection with the filing of any Registration Statement hereunder,
file such documents as may be necessary to register or qualify the Registrable
Shares subject to such Registration Agreement under the securities or "Blue
Sky" laws of such states as Holder may reasonably request, and the Company
shall use its best efforts to cause such filings to become effective; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such state in which it is not
then qualified or to file any general consent to service of process in any such
state, provided that the Company shall file a Uniform Consent to Service of
Process on Form U-2 or its successor in any state that requires such a filing
in connection with the offering of the Registrable Shares and in which the
Holder proposes to offer Registrable Shares. Once effective, the Company shall
use its best efforts to keep such filings effective until the earliest of (i)
such time as the Registrable Shares have been sold, or (ii) in the case of a
particular state, Holder has notified the Company that it no longer requires an
effective filing in such state in accordance with its original request for
filing. The Company shall promptly notify Holder of, and confirm in writing,
the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Shares for sale under the securities or
"Blue Sky" laws of any jurisdiction or the initiation or threat of any
proceeding for such purpose.

-4-
<PAGE> 5
4. Expenses.

The Company shall bear all Registration Expenses incurred in
connection with the registration of the Registrable Shares pursuant to this
Agreement. Holder shall be responsible for any brokerage or underwriting
discounts and commissions and taxes of any kind (including, without limitation,
transfer taxes) with respect to any disposition, sale or transfer of
Registrable Shares sold by Holder.

5. Cooperation.

Holder hereby agrees (i) to cooperate with the Company and to furnish
to the Company in a timely manner all information that the Company may
reasonably request in connection with the preparation of any Registration
Statement and any filings with any state securities commissions, including
information concerning Holder's plan of distribution and ownership interests
with respect to its Registrable Shares or any other securities of the Company
or any of its affiliates and (ii) to deliver or cause delivery of the
Prospectus contained in any Registration Statement to any purchaser of the
shares covered by the Registration Statement from the Holder except to the
extent provided to the contrary in Section 2(e) above.

6. Suspension of Registration Requirement.

(a) The Company shall promptly notify Holder of the issuance by
the SEC of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose. Holder agrees
not to effect any sales from the date of such notice until the Company obtains
the withdrawal of any such order suspending the effectiveness of such
Registration Statement. The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement and shall promptly notify Holder of any such withdrawal.

(b) If any Registrable Shares are covered by a Registration
Statement filed pursuant to Section 2 hereof, Holder agrees, if requested by
the Company in the case of a Company-initiated non-underwritten offering or if
requested by the managing underwriter or underwriters in a Company-initiated
underwritten offering, not to effect any public sale or distribution of any of
the securities of the Company of any class included in such Registration
Statement (or any security the value of which is determined with reference to
the value of such securities), including a sale pursuant to Rule 144A or Rule
144 under the Securities Act (except as part of such Company-initiated
registration), during the 10 day period prior to, and during the 90-day period
beginning on the date of effectiveness of each such Registration Statement;
provided, however, that such 90-day period shall be extended by the number of
days from (and including) the date of any notice pursuant to Section 2(d) or
(e) hereof to (and including) the date when each seller of Registrable Shares
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 2(e) hereof.

7. Additional Shares.

The Company, at its option, may register, under any registration
statement and any filings with any state securities commissions filed pursuant
to this Agreement, any number of

-5-
<PAGE> 6
shares of unissued common stock or other securities of the Company or any
shares of common stock or other securities of the Company owned by any other
shareholder or shareholders of the Company.

8. Indemnification.

(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless Holder as follows:

(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto) pursuant to
which the Registrable Shares were registered or offered under the
Securities Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and

(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or
(ii) above;

provided, however, that the indemnity provided pursuant to this Section 8 shall
not apply to Holder with respect to any loss, liability, claim, damage or
expense, which arises in whole or in part, out of (x) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by Holder
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) or (y) Holder's failure
to deliver an amended or supplemental Prospectus if such loss, liability,
claim, damage or expense would not have arisen had such delivery occurred.

-6-
<PAGE> 7
(b) Indemnification by Holder. Holder agrees to indemnify and
hold harmless the Company and its directors and officers (including each
director and officer of the Company who signed the Registration Statement), and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, to the same extent as the indemnity contained in Section
(a) hereof (except that any settlement described in Section 8(a)(ii) shall be
effected with the written consent of Holder), for any such loss, claim, damage
or expense that arises out of or is based upon, in whole or in part, (x) any
untrue statements or omissions made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any Registration Statement (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by Holder and used in such
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto) or (y) Holder's failure to deliver an amended
or supplemental Prospectus if such loss, liability, claim, damage or expense
would not have arisen had such delivery occurred.

(c) Conduct of Indemnification Proceedings. The indemnified party
shall give reasonably prompt notice to the indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure so to notify the indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in paragraphs (a) or (b) of this Section 8, unless and to the extent
it did not otherwise learn of such action and the lack of notice by the
indemnified party results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to the indemnified party other than the
indemnification obligation provided under paragraphs (a) or (b) of this Section
8. If the indemnifying party so elects within a reasonable time after receipt
of such notice, the indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by the
indemnifying party and approved by the indemnified party, which approval shall
not be unreasonably withheld; provided, however, that, if the indemnified party
reasonably determines that a conflict of interest exists and that it is
necessary that the indemnified party be represented by separate counsel or
that, upon advice of counsel, there may be legal defenses available to it which
are different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume such defense, and
the indemnified party shall be entitled to separate counsel at the indemnifying
party's expense. If the indemnifying party is not entitled to assume the
defense of such action or proceeding as a result of the provisions of the
preceding sentence, the indemnifying party's counsel shall be entitled to
conduct the indemnifying party's defense and counsel for the indemnified party
shall be entitled to conduct the defense of the indemnified party, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If the
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party will pay the
reasonable fees and expenses of counsel for the indemnified party. In such
event, however, the indemnifying party will not be liable for any settlement
effected without the written consent of the indemnifying party, with such
consent not to be unreasonably withheld. If an indemnifying party is entitled
to assume, and assumes, the defense of such action or proceeding in accordance
with this paragraph, the indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified party incurred thereafter in
connection with such action or proceeding, subject to the proviso set forth in
the second sentence of this paragraph (c).

-7-
<PAGE> 8
9. Contribution.

In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 is for
any reason held to be unenforceable although applicable in accordance with its
terms, the Company and Holder shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and Holder, in such proportion as
is appropriate to reflect the relative fault of and benefits to the Company on
the one hand and Holder on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits to the indemnifying party and indemnified party shall be determined by
reference to, among other things, the total proceeds received by the
indemnifying party and the indemnified party in connection with the offering to
which such losses, claims, damages, liabilities or expenses relate. The
relative fault of the indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to,
information supplied by, the indemnifying party or the indemnified party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action.

The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9, Holder shall be required to
contribute the amount of any damages which Holder is required to pay by reason
of such untrue statement or omission.

Notwithstanding the foregoing, no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each director of
the Company, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.

10. No Other Obligation to Register,

Except as otherwise expressly provided in this Agreement, the Company
shall have no obligation to Holder to register the Registrable Shares under the
Securities Act.

11. Holder Representations, Warranties and Agreements.

Holder represents and warrants to, and agrees with, the Company, that:

(a) Holder, if not a natural person, is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Holder has all requisite power and authority to execute, deliver
and perform this Agreement. All necessary proceedings of Holder, if not a
natural person, have been duly taken to authorize the execution, delivery, and

-8-
<PAGE> 9
performance of this Agreement by Holder. This Agreement has been duly executed
and delivered by Holder, and is the legal, valid and binding obligation of
Holder, and is enforceable as to Holder in accordance with its terms. No
consent, authorization, approval, order, license, certificate or permit of or
from, or declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal is required by Holder for
the execution, delivery or performance of this Agreement (except filings under
the Securities Act which will be made and such consents consisting only of
consents under Blue Sky or state securities laws which will be obtained) by
Holder. No consent of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which Holder is a party, or to which
any of Holder's properties or assets are subject, is required for the
execution, delivery and performance of this Agreement which has not been
obtained, and the execution, delivery and performance of this Agreement will
not violate, result in a breach of, conflict with or (with or without giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement or understanding, or, if Holder is not a natural person, violate or
result in a breach of, or conflict with, any law, rule, regulation, order,
judgment or decree binding on Holder or to which any of Holder's operations,
business, properties or assets are subject, which, in any of such events, would
prohibit, impair or restrict the ability of Holder to execute and deliver this
Agreement, perform in accordance with the terms hereof or consummate the
transactions contemplated hereby, or would adversely affect the rights or
benefits, or both, hereunder of any other party hereto.

(b) Neither Holder nor any of Holder's affiliates (as defined in
the regulations under the Securities Act), will take, directly or indirectly,
during the term of this Agreement, any action designed to stabilize (except as
may be permitted by applicable law) or manipulate the price of any security of
the Company.

(c) Holder shall promptly furnish to the Company any and all
information as may be required by, or as may be necessary or advisable to
comply with the provisions of, the Securities Act, the Exchange Act, and the
rules and regulation of the SEC thereunder in connection with the preparation
and filing of any Registration Statement pursuant hereto, or any amendment or
supplement thereto, or any Preliminary Prospectus or Prospectus included
therein. All information to be furnished to the Company by or on behalf of
Holder expressly for use in connection with the preparation of any Preliminary
Prospectus, the Prospectus, the Registration Statement, or any amendment or
supplement thereto, will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.

12. Underwritten Registration.

Holder may not participate in any underwritten registration hereunder
unless Holder (i) executes and delivers the underwriting agreement or similar
documents relating thereto pursuant to which Holder shall agree to sell, upon
the terms and subject to the conditions therein set forth, Holder's Registrable
Securities on the basis provided therein, and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, custodial or escrow agreements
and such other documents as may be necessary, advisable or required pursuant to
the terms thereof

-9-
<PAGE> 10
or as may be from time to time reasonably requested by the underwriter or
underwriters named therein, the Company, or their respective legal counsel, in
connection therewith.

In the event of any conflict between the indemnification and
contribution terms as herein set forth and as set forth in any underwriting
agreement entered pursuant hereto, the underwriting agreement shall control.

13. Survival of Representations and Agreements.

All representations, warranties, covenants and agreements contained in
this Agreement shall be deemed to be representations, warranties, covenants and
agreements at the effective date of each Registration Statement contemplated by
this Agreement, and such representations, warranties, covenants and agreements,
including the indemnity and contribution agreements contained in Sections 8 and
9 hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, Holder or any Person which
is entitled to be indemnified under Section 8 hereof, and shall survive
termination of this Agreement.

14. Amendments and Waivers.

The provisions of this Agreement may not be amended, modified,
supplemented or waived without the prior written consent of the Company and the
Holder.

15. Notices.

Except as set forth below, all notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by telex or telecopier,
registered or certified mail (return receipt requested), postage prepaid, or
courier or overnight delivery service to the respective parties at the
following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof), and further provided that in case of
directions to amend the Registration Statement pursuant to Section 2(c), Holder
must confirm such notice in writing by overnight express delivery with
confirmation of receipt:

If to the Company: Silverleaf Resorts, Inc.
1221 Riverbend Drive
Suite 120
Dallas, Texas 75247
Attn: Sharon K. Brayfield, President
Telephone: (214) 631-1166
Telecopier: (214) 905-0514

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<PAGE> 11
with a copy to: Meadows, Owens, Collier, Reed, Cousins
& Blau, L.L.P.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Attn: David N. Reed, Esq.
Telephone: (214) 749-2428
Telecopier: (214) 747-3732

If to Holder: Mr. Robert E. Mead
9863 Rockbrook
Dallas, Texas 75247
Telephone: (214) 631-1166
Telecopier: (214) 905-0514

In addition to the manner of notice permitted above, notices given pursuant to
Sections 2 and 6 hereof may be effected telephonically and confirmed in writing
thereafter in the manner described above.

16. Successors and Assigns.

This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto.

17. Counterparts.

This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

18. Governing Law.

This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas applicable to contracts made and to be performed
wholly within said State.

19. Severability.

In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.

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<PAGE> 12
20. Entire Agreement.

This Agreement is intended by the parties as a final expression of
their agreement and intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
such subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

21. No Shareholder Liability.

No shareholder or other equity owner of the Company assumes any
personal liability for the obligations listed herein or for the Company's
performance of such obligations.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

SILVERLEAF RESORTS, INC.

By:
-------------------------------------------
Sharon K. Brayfield, President

"HOLDER"

----------------------------------------------
Robert E. Mead

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<PAGE> 1
EXHIBIT 10.2.2

EMPLOYMENT AGREEMENT
WITH SILVERLEAF RESORTS, INC.

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made between SILVERLEAF
RESORTS, INC., a Texas corporation ("Silverleaf"), and DAVID T. O'CONNOR (the
"Employee").

R E C I T A L S:

A. Employee is a key executive officer of Silverleaf; and

B. Silverleaf desires to employ the Employee and to agree on the
terms of Employee's employment .

NOW, THEREFORE, in consideration of the premises and terms hereinafter
set forth, the parties agree as follows:

A G R E E M E N T:

SECTION 1. EMPLOYMENT. Employee is hereby employed as Executive
Vice-President of Sales of Silverleaf, effective as of the Effective Date and
through December 31, 1999 (the "Term"), unless sooner terminated pursuant to
the termination provisions of this Agreement. Employee may not engage in other
employment while he or she is in the employ of Silverleaf pursuant to this
Agreement.

SECTION 2. DUTIES. Employee agrees to devote such time, attention
and energies as are necessary to fulfill his or her duties as specified by the
Board of Directors of Silverleaf from time to time. Employee further agrees
that he or she will promote the best interests and welfare of Silverleaf and
shall perform any and all duties to the best of his or her abilities. The
Employee shall:

(a) NON-COMPETITION: Not render to others, during his or her
employment with Silverleaf, service of any kind for compensation or
promote, participate or engage in any other business activity which
would conflict or interfere with the performance of his or her duties or
loyalty under this Agreement, including, but not limited to,
participating in the promotion or sale of products or services for a
competitor of Silverleaf or otherwise engage in business with such
competitor;

(b) REGULATORY LAWS: Abide by all applicable statutes, rules
and regulations of each State in which services may be rendered; and

(c) SILVERLEAF RULES: Abide by all rules and regulations
issued by Silverleaf, which are pertinent to Employee's duties and
obligations.
<PAGE> 2
SECTION 3. COMPENSATION. As compensation for the services rendered
pursuant to this Agreement:

(a) BASE COMPENSATION: Employee shall be paid weekly
commissions equal to 1.35 percent ( 1.35 %) of
Silverleaf's net sales from timeshare and vacation contracts from
Silverleaf's resorts for which Employee is directly responsible for
management of the sales personnel. For this purpose, net sales mean
only sales on which Silverleaf has received a full down payment and
which have not been cancelled as of the due date of the payment of this
base compensation. The payment of this base compensation shall be made
as follows and shall be subject to the following chargebacks:

[1] The base compensation payable on net sales for each
week shall be paid on the second Friday thereafter; and

[2] If the first monthly installment due under the
contract for a net sale is not made and the contract is
subsequently cancelled, the base compensation paid to Employee on
the contract shall be charged back to Employee. For this
purpose, Silverleaf shall maintain a $2,000 reserve out of
Employee's base compensation, against which the chargebacks shall
be deducted. The reserve shall be established and replenished on
a regular basis by Silverleaf deducting, to the extent required,
ten percent (10%) of the base compensation otherwise due
Employee.

(b) INCENTIVE COMPENSATION FOR UPGRADE SALES: Employee shall
be paid additional weekly incentive compensation, payable on the second
Friday after each week, based on the weekly volume of upgrade net sales
as a percentage of the total weekly volume of all net sales from
timeshare and vacation contracts from Silverleaf's resorts for which
Employee is directly responsible for management of the sales personnel,
according to the following scale:

<TABLE>
<CAPTION>
Weekly Volume Incentive Compensation
------------- ----------------------
<S> <C>
15% of Total Volume $1,000.00
16% of Total Volume $1,250.00
17% of Total Volume $1,500.00
</TABLE>

The weekly volumes and the incentive compensation shall be subject to
adjustment from time to time in the sole discretion of Silverleaf.

(c) INCENTIVE COMPENSATION FOR APG: Employee shall also be
paid monthly incentive compensation based on the monthly average price
per guest ("APG") computed on only vacation ownership and bi-annual
ownership contracts and sampler sales, and the commissions paid thereon
for the month, according to the following scale:

2
<PAGE> 3
<TABLE>
<CAPTION>
APG Incentive Compensation
--- ----------------------
<S> <C>
$800-$849 5% of Commissions Paid
$850-$900 10% of Commissions Paid
$901-$949 15% of Commissions Paid
$950 or more 20% of Commissions Paid
</TABLE>

The APG amounts and this incentive compensation shall also be subject to
adjustment from time to time by Silverleaf in its sole discretion.

(d) OTHER INCENTIVE COMPENSATION: Employee shall be entitled
to participate in any other bonus, incentive, stock option or other
compensation plans of Silverleaf only to the extent the Board of
Directors of Silverleaf may deem appropriate from time to time.

(e) COMPANY VEHICLE: Silverleaf shall furnish Employee a
company owned vehicle for use by Employee in performing his or her
duties, and Silverleaf shall pay all expenses associated therewith.

(f) FRINGE BENEFITS: Silverleaf shall provide Employee health
insurance under its group plan as it may exist from time to time. The
cost of any coverage of any of the Employee's family members under
Silverleaf's group plan shall be paid by the Employee. The Employee
shall also be entitled to such vacation time, sick leave and other
fringe benefits as may be specified by the Board of Directors of
Silverleaf from time to time for its executive personnel.

(g) TERMINATION: Employee shall be entitled to no termination
pay. At the Termination of this Agreement, the payment to Employee of
compensation earned to date shall be in full satisfaction of all claims
against Silverleaf under this Agreement, and payment is contingent upon
return of all Silverleaf's property as outlined below.

SECTION 4. CONFIDENTIALITY.

(a) NONDISCLOSURE AND NONUSE: Employee acknowledges that
during his or her employment with Silverleaf, he or she may have access
to and become acquainted with Silverleaf Confidential Information, as
defined below. Except as Employee's duties during his or her employment
with Silverleaf may require or Silverleaf may otherwise consent in
writing, Employee agrees that he or she shall not at any time disclose
or use, directly or indirectly, either during or subsequent to his or
her employment with Silverleaf, any Silverleaf Confidential Information.

(b) CONFIDENTIAL INFORMATION: For purposes of the foregoing
provisions, "Silverleaf Confidential Information" shall mean (1) any and
all confidential and proprietary business information and trade secrets
concerning the business and affairs of Silverleaf and its affiliates,
including but not limited to all marketing, sales and lead

3
<PAGE> 4
generation techniques, know-how and studies, customer and lead lists,
current and anticipated customer requirements, price lists, business
plans, training programs, computer software and programs, and computer
software and data-base technologies, systems, structures and
architectures (and related processes, formulae, compositions,
improvements, devices, know-how, inventions, discoveries, concepts,
ideas, designs, methods and information), (2) any and all information
concerning the business and affairs of Silverleaf and its affiliates
(including but not limited to their historical financial statements,
financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key
personnel, personnel training and techniques and materials, however
documented), and (3) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for Silverleaf and its
affiliates containing or based, in whole or in part, on any information
included in the foregoing.

SECTION 5. NON-INTERFERENCE. Employee further agrees that during
his or her employment and at all times thereafter, Employee shall not, either
on his or her own account or jointly with or as a manager, agent, officer,
employee, consultant, partner, joint venturer, owner or shareholder or
otherwise on behalf of any other person, firm or corporation: (1) carry on or
be engaged or interested directly or indirectly in, or solicit, the manufacture
or sale of goods or provision of services to any person, firm or corporation
which, at any time during his or her employment has been or is a customer or in
the habit of dealing with Silverleaf or its affiliates in their business, (2)
endeavor, directly or indirectly, to canvas or solicit in competition with
Silverleaf or its affiliates or to interfere with the supply of orders for
goods or services from or by any person, firm or corporation which during this
or her employment has been or is a supplier of goods or services to Silverleaf
or its affiliates, or (3) directly or indirectly solicit or attempt to solicit
away from Silverleaf or its affiliates any of its officers, employees or
independent contractors or offer employment to any person who, on or during the
6 months immediately preceding the date of such solicitation or offer, is or
was an officer, employee or independent contractor of Silverleaf or its
affiliates.

SECTION 6. NONCOMPETITION.

(a) COVENANT: Employee covenants and agrees that he or she
shall not, for a period of two (2) years from and after the effective
date of any Termination, working alone or in conjunction with one or
more other persons or entities, for compensation or not, permit his or
her name to be used by or engage in or carry on, directly or indirectly,
either for himself or herself or as a member of a partnership or other
entity or as a stockholder, investor, officer or director of a
corporation or as an employee, agent, associate or contractor of any
person, partnership, corporation or other entity, any business in
competition with the business of Silverleaf or its affiliates, as
carried on by Silverleaf or its affiliates immediately prior to the
effective date of any Termination, but only for as long as such
business is carried on by (1) Silverleaf or its affiliates or (2) any
person, corporation, partnership, trust or other organization or entity
deriving title from Silverleaf or its affiliates to the assets and
goodwill of the business being carried on by Silverleaf or its
affiliates immediately prior to the effective date of any Termination,
in any county of any state of the United States in which Silverleaf or
its affiliates conducts

4
<PAGE> 5
such business or markets the products of such business immediately prior
to the effective date of any Termination.

(b) TOLLING. If Employee violates any covenant contained in
this Section, then the term of such violated covenant shall be tolled
for the period commencing on the commencement of such violation and
ending upon the earlier of (1) such time as such violation shall be
cured by Employee to the reasonable satisfaction of Silverleaf, (2)
final adjudication (including appeals) of any action filed for
injunctive relief or damages arising out of such violation, and (3) the
expiration of 24 months after Termination during which no violation of
the covenant has occurred.

(c) REFORMATION. If, in any judicial proceeding, the court
shall refuse to enforce any covenant contained in this Section because
the time limit is too long, it is expressly understood and agreed
between Silverleaf and Employee that for purposes of such proceeding
such time limitation shall be deemed reduced to the extent necessary to
permit enforcement of such covenant. If, in any judicial proceeding,
the court shall refuse to enforce any covenant contained in this Section
because it is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and
goodwill of Silverleaf and/or its affiliates, it is expressly understood
and agreed between Silverleaf and Employee that for purposes of such
proceeding the geographic area, scope of business or other aspect shall
be deemed reduced to the extent necessary to permit enforcement of such
covenant.

SECTION 7. INJUNCTIVE RELIEF. Employee acknowledges that a breach of
Sections 4, 5 or 6 hereof would cause irreparable damage to Silverleaf and/or
its affiliates, and in the event of Employee's breach of the provisions of
Sections 4, 5 or 6 hereof, Silverleaf shall be entitled to a temporary
restraining order and an injunction restraining Employee from breaching such
Sections without the necessity of posting bond or proving irreparable harm,
such being conclusively admitted by Employee. Nothing shall be construed as
prohibiting Silverleaf from pursuing any other available remedies for such
breach, including the recovery of damages from Employee. Employee acknowledges
that the restrictions set forth in Sections 4, 5 and 6 hereof are reasonable in
scope and duration, given the nature of the business of Silverleaf and its
affiliates. Employee agrees that issuance of an injunction restraining
Employee from breaching such Sections in accordance with their terms will not
pose an unreasonable restriction on Employee's ability to obtain employment or
other work following the effective date of any Termination.

SECTION 8. EMPLOYEE INVESTMENTS. Anything to the contrary herein
notwithstanding, Employee: (1) shall not be prohibited from investing his or
her assets in such form or such manner as will not, in the aggregate, detract
from the performance by Employee of his or her duties hereunder and will not
violate the provisions of Sections 4, 5 or 6 hereof; and (2) shall not be
prohibited from purchasing stock in any publicly traded company solely as a
stockholder so long as Employee does own (together or separately or through his
or her affiliates) more than two percent (2%) of the stock in any company,
other than Silverleaf, which is engaged in the timeshare business.

5
<PAGE> 6
SECTION 9. EMPLOYEE'S REPRESENTATIONS. Employee represents and
warrants that he or she is free to enter into and perform each of the terms and
conditions hereof, and that his or her execution and performance of this
Agreement does not and will not violate or breach any other Agreement between
Employee and any other person or entity.

SECTION 10. TERMINATION. This Agreement shall terminate upon the
expiration of its Term, or prior thereto: (1) upon written notice by either
party, at any time and for any or no reason whatsoever, at least thirty (30)
days prior to the effective date of the termination; or (2) as of the end of
the month of Employee's death or incapacity due to Employee's physical or
mental illness as determined in Silverleaf's sole discretion (the
"Termination").

SECTION 11. RETURN OF MATERIALS AND VEHICLES. Employee understands
and agrees that any training manuals, sales and promotional material, vehicles
or other equipment provided to him or her by Silverleaf in connection with this
Agreement shall remain the sole property of Silverleaf, and shall be used by
the Employee exclusively for Silverleaf's benefit. Upon termination of this
Agreement, any such material, vehicles or other equipment shall be immediately
returned to Silverleaf.

SECTION 12. NON-BINDING ALTERNATE DISPUTE RESOLUTION. Except for
actions brought by Silverleaf pursuant to Section 7 hereof:

(a) AGREEMENT TO UTILIZE: The parties shall attempt to
settle any claim or controversy arising from this Agreement through
consultation and negotiation in good faith and a spirit of mutual
cooperation prior to the commencement of any legal action. If such
attempts fail, then the dispute shall be mediated by a mutually-accepted
mediator to be chosen by the parties within forty-five (45) days after
written notice demanding mediation is sent by one party to the other
party. Neither party may unreasonably withhold consent to the selection
of a mediator, and the parties shall share the costs of the mediation
equally. By mutual written agreement, however, the parties may postpone
mediation until they have completed some specified but limited discovery
regarding the dispute. The parties may also agree to replace mediation
with any other form of alternate dispute resolution ("ADR") available in
Texas, such as a mini-trial or arbitration.

(b) FAILURE TO RESOLVE: Any dispute which the Parties cannot
resolve through negotiation, mediation or any other form of ADR, within
six (6) months of the date of the initial demand for mediation, may then
be submitted to the appropriate court for resolution. The use of
negotiation, mediation, or any other form of ADR procedures will not be
construed under the doctrines of laches, waiver or estoppel to affect
adversely the rights of either party.

SECTION 13. WAIVER. Silverleaf's failure at any time to require
performance by Employee of any of the provisions hereof shall not be deemed to
be a waiver of any kind nor in any way affect the rights of Silverleaf
thereafter to enforce the provisions hereof. In the event that either party to
this Agreement waives any provision of this Agreement or any rights

6
<PAGE> 7
concerning any breach or default of the other party hereto, such waiver shall
not constitute a continuing waiver of any such provision or breach or default
of the other party hereto.

SECTION 14. SUCCESSORS, ASSIGNS, BENEFIT.

(a) SILVERLEAF SUCCESSORS: The provisions of this Agreement
shall inure to the benefit of and be binding upon Silverleaf, its
successors, assigns and other affiliated entities, including, but not
limited to, any corporation which may acquire all or substantially all
of Silverleaf's assets or with or into which Silverleaf may be
consolidated, merged or reorganized. Upon any such merger,
consolidation or reorganization, the term "Silverleaf" as used herein
shall be deemed to refer to any such successor corporation.

(b) NO ASSIGNMENT BY EMPLOYEE: The parties hereto agree that
Employee's services hereunder are personal and unique, and that
Silverleaf is executing this Agreement in reliance thereon. This
Agreement shall not be assignable by Employee.

SECTION 15. SEVERABILITY. If one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but shall be deemed
stricken and severed from this Agreement and the remaining terms of this
Agreement shall continue in full force and effect.

SECTION 16. GOVERNING LAW AND VENUE. This Agreement shall be deemed
to have been made and entered into in the State of Texas and its validity,
construction, breach, performance and operation shall be governed by the laws
of that state. The obligations hereunder of Silverleaf shall be performable in
Dallas County, Texas, and venue for any suit involving this Agreement shall lie
exclusively in Dallas County, Texas.

SECTION 17. ENTIRE UNDERSTANDING. This Agreement sets forth the
entire understanding between the parties with respect to the employment of
Employee, and no other representations, warranties or agreements whatsoever
have been made by Silverleaf to Employee. Additionally, this Agreement hereby
supersedes as of the Effective Date that certain Independent Contractor
Agreement between Silverleaf and Recreational Consultants, Inc., dated
effective January 1, 1997, which is hereby declared to be cancelled as of the
Effective Date, except for the payment of compensation due or to become due
thereunder for services performed prior to the Effective Date. Further, this
Agreement may not be modified or amended except by another instrument in
writing executed by both of the parties.

SECTION 18. NOTICES. All notices and communications under this
Agreement shall be sent to the parties at the following addresses or such other
addresses that the parties may subsequently designate in writing.

7
<PAGE> 8
(a) SILVERLEAF:

Silverleaf Resorts, Inc.
Attention: Robert E. Mead
1221 Riverbend, Suite 120
Dallas, Texas 75247

(b) EMPLOYEE:

David T. O'Connor
620 Elmridge Drive
Tyler, Texas 75703

SECTION 19. SECTION HEADINGS. Section and paragraph headings are
inserted herein only for convenience and shall not be used to interpret any of
the provisions hereof.

SECTION 20. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same original.

SECTION 21. EFFECTIVE DATE. This Agreement is executed on the date
set forth below, but shall be effective as of May 12 , 1997 (the
"Effective Date").

Executed this 14th day of May, 1997.

"SILVERLEAF"

SILVERLEAF RESORTS, INC.

By: /s/ ROBERT E. MEAD
------------------------------
Authorized Officer

"EMPLOYEE"

/s/ DAVID T. O'CONNOR
-------------------------------------
DAVID T. O'CONNOR

<PAGE> 1
EXHIBIT 10.3

================================================================================

1997 STOCK OPTION PLAN

FOR

SILVERLEAF RESORTS, INC.

================================================================================
<PAGE> 2
<TABLE>
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<S> <C>
ARTICLE I
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.1 Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Separate Inducement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Types of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
AMOUNT OF STOCK SUBJECT TO THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 2.1 Aggregate Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Source of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE III
EFFECTIVE DATE AND TERM OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 3.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Duration of Plan and Granting of Options . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.3 Parent and Subsidiary Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.4 Participant Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE IV
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 4.1 Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.2 Quorum and Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.3 Removal and Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.4 Actions by Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.5 Authority of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.6 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.7 Discretion of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.8 Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.9 No Liability for Good Faith Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE V
ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 5.1 Non-Qualified Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.2 Incentive Option Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>

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<TABLE>
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Section 5.3 Retired Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE VI
LIMITATION ON EXERCISE OF INCENTIVE OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 6.1 Excessive Incentive Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6.2 Definitions for Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE VII
OPTIONS: PRICE AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 7.1 Purchase Price of Non-Qualified Options . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.2 Purchase Price of Incentive Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.3 Fair Market Value of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

(a) National Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Public Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) No Public Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Committee's Decision is Conclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 7.4 Payment Upon Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE VIII
TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 8.1 Term of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8.2 Acceleration of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8.3 Expiration of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.4 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.5 Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.6 Nontransferability of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.7 Exercise by Participant's Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.8 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.9 Restrictions on Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

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<TABLE>
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ARTICLE IX
TERMINATION OF DIRECTORSHIP, OFFICE OR EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 9.1 Expiration of Options Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 9.2 Natural Expiration of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9.3 Voluntary or For Cause Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9.4 "For Cause" Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9.5 Employment Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9.6 Transfer of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 9.7 Right to Terminate Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE X
ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 10.1 Adjustments to Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 10.2 Change in Control Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 10.3 Expiration Upon Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE XI
ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 11.1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11.2 Endorsements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11.3 Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11.4 Shares Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11.5 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE XII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 12.1 Listing of Shares and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.2 Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.3 Termination or Suspension of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.5 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.6 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>

(iii)
<PAGE> 5
1997 STOCK OPTION PLAN
FOR
SILVERLEAF RESORTS, INC.

This 1997 Stock Option Plan (the "Plan") is established by Silverleaf
Resorts, Inc. (the "Company"), a Texas corporation, and adopted by the Company
as of the _____ day of ___________, 1997, and approved by the Shareholders of
the Company as of the ____ day of ___________, 1997.

ARTICLE I
GENERAL PROVISIONS

SECTION 1.1 PURPOSE OF THE PLAN. The Company desires to afford
certain of its directors, officers and key employees and the directors,
officers and key employees of any subsidiary corporation or parent corporation
of the Company who are responsible for the continued growth of the Company, an
opportunity to acquire a proprietary interest in the Company, and thus to
create in such directors, officers and key employees an increased interest in
and a greater concern for the welfare of the Company. The Company, by means of
the Plan, seeks to retain the services of persons now holding key positions and
to secure the services of persons capable of filling such positions.

SECTION 1.2 SEPARATE INDUCEMENT. The stock options ("Options")
offered pursuant to the Plan are a matter of separate inducement and are not in
lieu of any salary or other compensation for the services of any director,
officer or key employee.

SECTION 1.3 TYPES OF OPTIONS. The Options granted under the Plan
are intended to be either incentive stock options ("Incentive Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or options that do not meet the requirements for Incentive
Options ("Non-Qualified Options"), but the Company makes no warranty as to the
qualification of any Option as an Incentive Option.

ARTICLE II
AMOUNT OF STOCK SUBJECT TO THE PLAN

SECTION 2.1 AGGREGATE NUMBER OF SHARES. The total number of
shares of common stock of the Company which may be purchased pursuant to the
exercise of Options granted under the Plan shall not exceed, in the aggregate,
1,100,000 shares of the authorized common stock, $0.01 par value per share, of
the Company (the "Shares").

SECTION 2.2 SOURCE OF SHARES. Shares which may be acquired under
the Plan may be either authorized but unissued Shares, Shares of issued stock
held in the Company's treasury, or both, at the discretion of the Company. If
and to the extent that Options granted under the Plan expire or terminate
without having been exercised, new Options may be granted with
<PAGE> 6
respect to the Shares covered by such expired or terminated Options, provided
that the grant and the terms of such new Options shall in all respects comply
with the provisions of the Plan.

ARTICLE III
EFFECTIVE DATE AND TERM OF THE PLAN

SECTION 3.1 EFFECTIVE DATE. The Plan shall become effective on
the date (the "Effective Date') on which it is adopted by the board of
directors of the Company (the "Board of Directors"); provided, however, that if
the Plan is not approved by a vote of the shareholders of the Company within
twelve (12) months before or after the Effective Date, the Plan and any Options
granted thereunder shall terminate.

SECTION 3.2 DURATION OF PLAN AND GRANTING OF OPTIONS. The
Company may, from time to time during the period beginning on the Effective
Date and ending on the earlier of such date as is 10 years after the Effective
Date or is 10 years after the Plan is approved by the Shareholders (the
"Termination Date"), grant to persons eligible to participate in the Plan
Options under the terms of the Plan. Options granted prior to the Termination
Date may extend beyond that date, in accordance with the terms thereof.

SECTION 3.3 PARENT AND SUBSIDIARY DEFINED. As used in the Plan,
the terms "subsidiary corporation" and "parent corporation" shall have the
meanings ascribed to such terms, respectively, in Sections 424(f) and 424(e) of
the Code.

SECTION 3.4 PARTICIPANT DEFINED. An employee, officer or
director to whom Options are granted hereunder may be referred to herein as a
"Participant."

ARTICLE IV
ADMINISTRATION

SECTION 4.1 COMPENSATION COMMITTEE. The Board of Directors shall
designate a Compensation Committee (the "Committee"), which shall consist of no
fewer than three directors, two of whom shall be "non-employee directors"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to administer the Plan.

SECTION 4.2 QUORUM AND MAJORITY. A majority of the members of
the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee shall be the act of the Committee.

SECTION 4.3 REMOVAL AND VACANCIES. Any member of the Committee
may be removed at any time either with or without cause by resolution adopted
by the Board of Directors, and any vacancy on the Committee may at any time be
filled by resolution adopted by the Board of Directors.

2
<PAGE> 7
SECTION 4.4 ACTIONS BY BOARD. Any or all powers and functions of
the Committee may at any time and from time to time be exercised by the Board
of Directors. Any reference in the Plan to the Committee shall be deemed also
to refer to the Board of Directors, to the extent that the Board of Directors
is exercising any of the powers and functions of the Committee.

SECTION 4.5 AUTHORITY OF COMMITTEE. Subject to the express
provisions of the Plan, the Committee shall have the authority, in its
discretion, to:

(a) determine the directors, officers and employees to
whom Options shall be granted, the time when such Options shall be
granted, the number of Shares which shall be subject to each Option,
the purchase price or exercise price of each Share which shall be
subject to each Option, the period(s) during which such Options shall
be exercisable (whether in whole or in part), and the other terms and
provisions of the respective Options (which need not be identical);

(b) construe the Plan and Options granted thereunder;

(d) make all other determinations necessary or advisable
for administering the Plan.

SECTION 4.6 NONCOMPETITION. Without limiting the foregoing, the
Committee also shall have the authority to require, in its discretion, as a
condition of the granting of any Option, that the Participant agree that in the
event of termination of directorship, office or employment of such Participant,
other than as a result of dismissal without cause, such Participant will not,
for a period to be fixed at the time of the grant of the Option, enter into any
employment or participate directly or indirectly in any business or enterprise
which is competitive with the business of the Company or any subsidiary
corporation or parent corporation of the Company, or enter into any employment
in which such employee will be called upon to utilize special knowledge
obtained through directorship, office or employment with the Company or any
subsidiary corporation or parent corporation thereof.

SECTION 4.7 DISCRETION OF COMMITTEE. The determination of the
Committee on matters referred to in this Article IV shall be conclusive.

SECTION 4.8 CONSULTANTS. The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company.

3
<PAGE> 8
SECTION 4.9 NO LIABILITY FOR GOOD FAITH DECISIONS. No member or
former member of the Committee or of the Board of Directors shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option.

ARTICLE V
ELIGIBILITY

SECTION 5.1 NON-QUALIFIED PARTICIPANTS. Non-Qualified Options
may be granted only to directors, officers and other salaried key employees of
the Company, or of any subsidiary corporation or parent corporation of the
Company now existing or hereafter formed or acquired, except as hereinafter
provided.

SECTION 5.2 INCENTIVE OPTION PARTICIPANTS. An Incentive Option
may be granted only to salaried key employees of the Company or any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, and not to any director or officer who is not also an
employee.

SECTION 5.3 RETIRED EMPLOYEES. Any person who shall have retired
from active employment by the Company, although such person shall have entered
into a consulting contract with the Company, shall not be eligible to receive
an Option.

ARTICLE VI
LIMITATION ON EXERCISE OF INCENTIVE OPTIONS

SECTION 6.1 EXCESSIVE INCENTIVE OPTIONS. Except as otherwise
provided under the Code, to the extent that the aggregate fair market value of
Shares with respect to which Incentive Options are exercisable for the first
time by an employee during any calendar year (under all stock options plans of
the Company and any parent corporation or subsidiary corporation of the
Company) exceeds $100,000.00, such Options shall be treated as Non-Qualified
Options.

SECTION 6.2 DEFINITIONS FOR LIMITATION. For purposes of the
limitation set forth in Section 6.1:

(a) the fair market value of Shares is determined as of
the time the Option is granted;

(b) the limitation will be applied by taking into account
Options in the order in which they were granted; and

4
<PAGE> 9
ARTICLE VII
OPTIONS: PRICE AND PAYMENT

SECTION 7.1 PURCHASE PRICE OF NON-QUALIFIED OPTIONS. The
purchase price for each Share purchasable under any Non-Qualified Option
granted hereunder shall be such amount as the Committee shall deem appropriate,
but not less than the par value thereof, if any.

SECTION 7.2 PURCHASE PRICE OF INCENTIVE OPTIONS. The purchase
price for each Share purchasable under any Incentive Option granted hereunder
shall be such amount as the Committee shall, in its best judgment, determine to
be not less than one hundred percent (100%) of the fair market value per Share
on the date the Option is granted; provided, however, that in the case of an
Incentive Option granted to a Participant who, at the time such Incentive
Option is granted, owns stock of the Company or any subsidiary corporation or
parent corporation of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, the purchase price
for each Share shall be such amount as the Committee shall, in its best
judgment, determine to be not less than one hundred ten percent (110%) of the
fair market value per Share at the date the Option is granted. For purposes of
determining such ownership, the attribution rules of Section 424(d) of the Code
shall apply.

SECTION 7.3 FAIR MARKET VALUE OF SHARES.

(a) NATIONAL EXCHANGE: If the Shares are listed on a
national securities exchange in the United States on any date on which
the fair market value per Share is to be determined, the fair market
value per Share shall be deemed to be the average of the high and low
quotations at which such Shares are sold on such national securities
exchange on such date. If the Shares are listed on a national
securities exchange in the United States on such date but the Shares
are not traded on such date, or such national securities exchange is
not open for business on such date, the fair market value per Share
shall be determined as of the closest preceding date on which such
exchange shall have been open for business and the Shares were traded.
If the Shares are listed on more than one national securities exchange
in the United States on the date any such Option is granted, the
Committee shall, in good faith, determine which national securities
exchange shall be used for the purpose of determining the fair market
value per Share.

(b) PUBLIC MARKET: If a public market exists for the
Shares on any date on which the fair market value per Share is to be
determined but the Shares are not listed on a national securities
exchange in the United States, the fair market value per Share shall
be deemed to be the mean between the closing bid and asked quotations
in the over-the-counter market for the Shares on such date. If there
are no bid and asked quotations for the Shares on such date, the fair
market value per Share shall be deemed to be the mean between the
closing bid and asked quotations in the over-the-counter market for
the Shares on the closest date preceding such date for which such
quotations are available.

5
<PAGE> 10
(c) NO PUBLIC MARKET: If no public market exists for the
Shares on any date on which the fair market value per Share is to be
determined, the Committee shall, in its sole discretion and best, good
faith judgment, determine the fair market value of a Share.

(d) COMMITTEE'S DECISION IS CONCLUSIVE: For purposes of
this Plan, the determination by the Committee of the fair market value
of a Share shall be conclusive.

SECTION 7.4 PAYMENT UPON EXERCISE. Upon the exercise of an
Option, the Company shall cause the purchased Shares to be issued only when it
shall have received the full purchase price for the Shares in cash or by
certified check; provided, however, that in lieu of cash or certified check the
Participant may, if and to the extent the terms of the Option so provide and to
the extent permitted by applicable law, exercise an Option in whole or in part,
by delivering to the Company shares of common stock of the Company (in proper
form for transfer and accompanied by all requisite stock transfer tax stamps or
cash in lieu thereof) owned by such Participant having a fair market value
equal to the purchase price of the Shares as to which the Option is being
exercised. The fair market value of the stock so delivered shall be determined
as of the date immediately preceding the date on which the Option is exercised,
or as may be required in order to comply with or to conform to the requirements
of any applicable laws or regulations.

SECTION 7.5 USE OF PROCEEDS. The cash proceeds of the sale of
Shares subject to Options are to be added to the general funds of the Company
and used for its general corporate purposes as the Board of Directors shall
determine.

ARTICLE VIII
TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE

SECTION 8.1 TERM OF OPTIONS. Any Option shall be exercisable at
such times, in such amounts and during such period or periods as the Committee
shall determine at the date of the grant of such Option; provided, however,
that an Incentive Option shall not be exercisable after the expiration of ten
(10) years from the date such Option is granted; and provided further that, in
the case of an Incentive Option granted to a Participant who, at the time such
Option is granted, owns stock of the Company or any subsidiary corporation or
parent corporation of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, such Option shall
not be exercisable after the expiration of five (5) years from the date such
Option is granted. For purposes of determining such ownership, the attribution
rules of Section 424(d) of the Code, shall apply.

SECTION 8.2 ACCELERATION OF TERMS. Subject to the provisions of
Section 12.2, the Committee shall have the right to accelerate, in whole or in
part, from time to time, conditionally or unconditionally, rights to exercise
any Option.

6
<PAGE> 11
SECTION 8.3 EXPIRATION OF OPTIONS. To the extent that an Option
is not exercised within the period of exercisability specified therein, it
shall expire as to the then unexercised part.

SECTION 8.4 NO FRACTIONAL SHARES. In no event shall an Option
granted hereunder be exercisable for a fraction of a Share.

SECTION 8.5 EXERCISE OF OPTIONS. Any Option shall be exercised
by the Participant holding such Option as to all or part of the Shares covered
by such Option by giving written notice of such exercise to the Corporate
Secretary of the Company at the principal business office of the Company,
specifying the number of Shares to be purchased and specifying a business day
not more than fifteen (15) days from the date such notice is given, for the
payment of the purchase price against delivery of the Shares being purchased.
Subject to the terms of Sections 8.8, 11.5, and 12.1 of this Plan, the Company
shall cause certificates for the Shares so purchased to be delivered to the
Participant at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.

SECTION 8.6 NONTRANSFERABILITY OF OPTIONS. No Option shall be
transferable, whether by operation of law or otherwise, other than by will or
the laws of descent and distribution, and any Option shall be exercisable,
during the lifetime of the Participant, only by such Participant.

SECTION 8.7 EXERCISE BY PARTICIPANT'S ESTATE. If an Option shall
be exercised by the legal representative of a deceased Participant, or by a
person who acquired an Option by bequest or inheritance or by reason of the
death of any Participant, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of
such legal representative or other person to exercise such Option.

SECTION 8.8 PURCHASE FOR INVESTMENT. Except as hereafter
provided, a Participant shall, upon any exercise of an Option, execute and
deliver to the Company a written statement, in form satisfactory to the
Company, in which such Participant represents and warrants that such
Participant is purchasing or acquiring the Shares acquired thereunder for such
Participant's own account, for investment only and not with a view to the
resale or distribution thereof, and agrees that any subsequent offer for sale
or sale or distribution of any of such Shares shall be made only pursuant to
either (a) a Registration Statement on an appropriate form under the Securities
Act of 1933, as amended (the "Securities Act"), which Registration Statement
has become effective and is current with regard to the Shares being offered or
sold, or (b) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the holder shall, if so
requested by the Company, prior to any offer for sale or sale of such Shares,
obtain a prior favorable written opinion, in form and substance satisfactory to
the Company, from counsel for or approved by the Company, as to the
applicability of such exemption thereto. The foregoing restriction shall not
apply to (i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof is
current or (ii) reofferings of Shares by affiliates of the Company (as defined
in Rule 405 or any successor rule or regulation promulgated under the
Securities Act) if the Shares being reoffered are registered under the
Securities Act and a prospectus in respect thereof is current.

7
<PAGE> 12
SECTION 8.9 RESTRICTIONS ON TRANSFER OF STOCK. No Shares
acquired by a Participant pursuant to an Incentive Option granted under this
Plan shall be "disposed of", within the meaning of Section 424(c) of the Code,
by the Participant within two (2) years from the date of granting of the option
nor within one year after the transfer of such Shares to such Participant. No
Shares acquired by a Participant pursuant to a Non-Qualified Option shall be
sold or otherwise disposed of within a period of six (6) months following the
date of acquisition of such Shares, unless either the grant of the
Non-Qualified Option is approved by the Board of Directors, or a committee of
the Board of Directors that is composed solely of two or more non-employee
directors as defined in Rule 16b-3 of the Exchange Act, or the grant of the
Non-Qualified Option is approved or ratified, in compliance with section 14 of
the Exchange Act, by either: the affirmative votes of the holders of a
majority of the securities of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the
state or other jurisdiction in which the Company is incorporated, or the
written consent of the holders of a majority of the securities of the Company
entitled to vote, provided that such ratification occurs no later than the date
of the next annual meeting of the shareholders.

ARTICLE IX
TERMINATION OF DIRECTORSHIP, OFFICE OR EMPLOYMENT

SECTION 9.1 EXPIRATION OF OPTIONS UPON TERMINATION. Upon
termination of the directorship, office or employment of any Participant with
the Company and all subsidiary corporations and parent corporations of the
Company, any Option previously granted to the Participant, unless otherwise
specified by the Committee in the Option, shall, to the extent not theretofore
exercised, terminate and become null and void, provided that:

(a) if the Participant shall die while serving as a
director, officer or while in the employ of such corporation or during
either the three (3) month or one (1) year period, whichever is
applicable, specified in clause (b) below and at a time when such
Participant was entitled to exercise an Option as herein provided, the
legal representative of such Participant, or such person who acquired
such Option by bequest or inheritance or by reason of the death of the
Participant, may, not later than one (1) year from the date of death,
exercise such Option, to the extent not theretofore exercised, in
respect of any or all of such number of Shares as specified by the
Committee in such Option; and

(b) if the directorship, office or employment of any
Participant to whom such Option shall have been granted shall
terminate by reason of the Participant's retirement (at such age or
upon such conditions as shall be specified by the Committee),
disability (as described in Section 22(e)(3) of the Code) or dismissal
by the employer other than for cause (as defined below), and while
such Participant is entitled to exercise such Option as herein
provided, such Participant shall have the right to exercise such
Option, to the extent not theretofore exercised, in respect of any or
all of such number of Shares as specified by the Committee in such
Option, at any time up to and including (i) three (3) months after the
date of such termination of directorship, office or employment in the
case of termination by reason of retirement or dismissal other than
for cause and (ii) one

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<PAGE> 13
(1) year after the date of termination of directorship, office or
employment in the case of termination by reason of disability.

SECTION 9.2 NATURAL EXPIRATION OF OPTION. In no event, however,
shall any person be entitled to exercise any Option after the expiration of the
period of exercisability of such Option as specified therein.

SECTION 9.3 VOLUNTARY OR FOR CAUSE TERMINATION. If a Participant
voluntarily terminates his directorship, office or employment, or is discharged
for cause, any Option granted hereunder shall, unless otherwise specified by
the Committee in the Option, forthwith terminate with respect to any
unexercised portion thereof.

SECTION 9.4 "FOR CAUSE" DEFINED. For the purposes of the Plan,
the term "for cause" shall mean (i) with respect to an employee who is a party
to a written agreement with, or, alternatively, participates in a compensation
or benefit plan of the Company or a subsidiary corporation or parent
corporation of the Company, which agreement or plan contains a definition of
"for cause" or "cause" (or words of like import) for purposes of termination of
employment thereunder by the Company or such subsidiary corporation or parent
corporation of the Company, "for cause" or "cause" as defined in the most
recent of such agreements or plans, or (ii) in all other cases, as determined
by the Board of Directors, in its sole discretion, (a) the willful commission
by a Participant of a criminal or other act that causes or probably will cause
substantial economic damage to the Company or a subsidiary corporation or
parent corporation of the Company or substantial injury to the business
reputation of the Company or a subsidiary corporation or parent corporation of
the Company; (b) the commission by a Participant of an act of fraud in the
performance of such Participant's duties on behalf of the Company or a
subsidiary corporation or parent corporation of the Company; (c) the continuing
willful failure of a Participant to perform the duties of such Participant to
the Company or a subsidiary corporation or parent corporation of the Company
(other than such failure resulting from the Participant's incapacity due to
physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the Participant by the Board of
Directors; or (d) the order of a court of competent jurisdiction requiring the
termination of the Participant's employment, directorship or office. For
purposes of the Plan, no act, or failure to act, on the Participant's part
shall be considered "willful" unless done or omitted to be done by the
Participant not in good faith and without reasonable belief that the
Participant's action or omission was in the best interest of the Company or a
subsidiary corporation or parent corporation of the Company.

SECTION 9.5 EMPLOYMENT DEFINED. For the purposes of the Plan, an
employment relationship shall be deemed to exist between an individual and a
corporation if, at the time of the determination, the individual was an
"employee" of such corporation for purposes of Section 422(a) of the Code. If
an individual is on maternity, military, or sick leave or other bona fide leave
of absence, such individual shall be considered an "employee" for purposes of
the exercise of an Option and shall be entitled to exercise such Option during
such leave if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the individual's right to reemployment with his employer is
guaranteed either by statute or by contract. If the period of leave exceeds
ninety (90) days, the employment relationship shall be deemed to have
terminated

9
<PAGE> 14
on the ninety-first (91) day of such leave, unless the individual's right to
reemployment is guaranteed by statute or contract.

SECTION 9.6 TRANSFER OF EMPLOYMENT. A termination of employment
shall not be deemed to occur by reason of (i) the transfer of a Participant
from employment by the Company to employment by a subsidiary corporation or a
parent corporation of the Company or (ii) the transfer of a Participant from
employment by a subsidiary corporation or a parent corporation of the Company
to employment by the Company or by another subsidiary corporation or parent
corporation of the Company.

SECTION 9.7 RIGHT TO TERMINATE EMPLOYMENT. The Plan shall not
impose any obligation on the Company or on any subsidiary corporation or parent
corporation thereof to continue the employment of any Participant; and it shall
not impose any obligation on the part of any Participant to remain in the
employ of the Company or of any subsidiary corporation or parent corporation
thereof.

ARTICLE X
ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS

SECTION 10.1 ADJUSTMENTS TO CAPITAL STRUCTURE. In the event of
any change in the outstanding Shares through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination or exchange of shares, or other like change in
capital structure of the Company, an adjustment shall be made to each
outstanding Option such that each such Option shall thereafter be exercisable
for such securities, cash and/or other property as would have been received in
respect of the Shares subject to such Option had such Option been exercised in
full immediately prior to such change, and such an adjustment shall be made
successively each time any such change shall occur. The term "Shares" after
any such change shall refer to the securities, cash and/or property then
receivable upon exercise of an Option. In addition, in the event of any such
change, the Committee shall make any further adjustment as may be appropriate
to the maximum number of Shares subject to the Plan, the maximum number of
Shares, if any, for which Options may be granted to any one employee, and the
number of Shares and price per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Committee as to these matters shall be conclusive.
Notwithstanding the foregoing, (i) each such adjustment with respect to an
Incentive Option shall comply with the rules of Section 424(a) of the Code, and
(ii) in no event shall any adjustment be made which would render any Incentive
Option granted hereunder other than an "incentive stock option" for purposes of
Section 422 of the Code.

SECTION 10.2 CHANGE IN CONTROL DEFINED. For purposes of the Plan,
a "change in control" of the Company occurs if: (a) any "person" (defined as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, as
amended), other than Robert E. Mead, is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors; or (b) during any period of two
consecutive years, individuals who

10
<PAGE> 15
at the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof; or (c) the Board of Directors
shall approve the sale of all or substantially all of the assets of the company
or any merger, consolidation, issuance of securities or purchase of assets, the
result of which would be the occurrence of any event described in clause (a) or
(b) above.

SECTION 10.3 EXPIRATION UPON CHANGE IN CONTROL. In the event of a
change in control of the Company (defined above), the Committee, in its
discretion, may determine that, upon the occurrence of a transaction described
in the preceding paragraph, each Option outstanding hereunder shall terminate
within a specified number of days after notice to the holder, and such holder
shall receive, with respect to each Share subject to such Option, an amount of
cash equal to the excess of the fair market value of such Share immediately
prior to the occurrence of such transaction over the exercise price per Share
of such Option. The provisions contained in the preceding sentence shall be
inapplicable to an Option granted within six (6) months before the occurrence
of a transaction described above if the holder of such Option is a director or
officer of the Company or a beneficial owner of the Company who is described in
Section 16(a) of the Exchange Act, unless such holder dies or becomes disabled
(within the meaning of Section 22(e)(3) of the Code) prior to the expiration of
such six-month period. Alternatively, the Committee may determine, in its
discretion, that all then outstanding Options shall immediately become
exercisable upon a change of control of the Company.

ARTICLE XI
ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES

SECTION 11.1 CERTIFICATES. Upon any exercise of an Option and
payment of the purchase price, a certificate or certificates for the Shares as
to which the Option has been exercised shall be issued by the Company in the
name of the person exercising the Option and shall be delivered to or upon the
order of such person or persons.

SECTION 11.2 ENDORSEMENTS. The Company may endorse such legend or
legends upon the certificates for Shares issued upon exercise of an Option
granted hereunder and may issue such "stop transfer" instructions to its
transfer agent in respect of such Shares as, in its discretion, it determines
to be necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, (ii)
implement the provisions of the Plan and any agreement between the Company and
the optionee with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, within the meaning of
Section 421(b) of the Code, of Shares transferred upon exercise of an Incentive
Option granted under the Plan.

SECTION 11.3 TAXES AND FEES. The Company shall pay all issue or
transfer taxes with respect to the issuance or transfer of Shares, as well as
all fees and expenses incurred by the Company in connection with such issuance
or transfer.

SECTION 11.4 SHARES FULLY PAID. All Shares issued as provided
herein shall be fully paid and non-assessable to the extent permitted by law.

11
<PAGE> 16
SECTION 11.5 WITHHOLDING TAXES. The Company may require an
employee exercising a Non-Qualified Option granted hereunder, or disposing of
Shares acquired pursuant to the exercise of an Incentive Option in a
disqualifying disposition (within the meaning of Section 421(b) of the Code),
to reimburse the corporation that employs such employee for any taxes required
by any government to be withheld or otherwise deducted or paid by such
corporation in respect of the issuance or disposition of such Shares. In lieu
thereof, the employer corporation shall have the right to withhold the amount
of such taxes from any other sums due or to become due from such corporation to
the employee upon such terms and conditions as the Committee shall prescribe.
The employer corporation may, in its discretion, hold the stock certificate to
which such employee is entitled upon the exercise of an Option as security for
the payment of such withholding tax liability, until cash sufficient to pay
that liability has been accumulated.

ARTICLE XII
MISCELLANEOUS PROVISIONS

SECTION 12.1 LISTING OF SHARES AND RELATED MATTERS. If at any
time the Board of Directors shall determine in its discretion that the listing,
registration or qualification of the Shares covered by the Plan upon any
national securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of Shares under the
Plan, no Shares shall be issued unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board of
Directors.

SECTION 12.2 AMENDMENT OF THE PLAN. The Board of Directors or the
Committee may, from time to time, amend the Plan, provided that,
notwithstanding anything to the contrary herein, no amendment shall be made,
without the approval of the shareholders of the Company, that will (i) increase
the total number of Shares reserved for Options under the Plan (other than an
increase resulting from an adjustment provided for in Article X), (ii) reduce
the exercise price of any Incentive Option granted hereunder below the price
required by Article VII, or (iii) modify the provisions of the Plan relating to
eligibility. The Board of Directors or the Committee shall be authorized to
amend the Plan and the Options granted thereunder to permit the Incentive
Options granted thereunder to qualify as "incentive stock options" within the
meaning of Section 422 of the Code. The rights and obligations under any
Option granted before amendment of the Plan or any unexercised portion of such
Option shall not be adversely affected by amendment of the Plan or the Option
without the consent of the holder of the Option.

SECTION 12.3 TERMINATION OR SUSPENSION OF THE PLAN. The Board of
Directors or the Committee may at any time and for any or no reason suspend or
terminate the Plan. The Plan, unless sooner terminated under Article III or by
action of the Board of Directors, shall terminate at the close of business on
the Termination Date. An Option may not be granted while the Plan is suspended
or after it is terminated. Options granted while the Plan is in effect shall
not be altered or impaired by suspension or termination of the Plan, except
upon the consent of the person to whom the Option was granted. The power of
the Committee under Article IV to

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<PAGE> 17
construe and administer any Options granted prior to the termination or
suspension of the Plan shall continue after such termination or during such
suspension.

SECTION 12.4 GOVERNING LAW. The Plan, such Options as may be
granted thereunder and all related matters shall be governed by, and construed
and enforced in accordance with, the laws of the State of Texas from time to
time obtaining.

SECTION 12.5 PARTIAL INVALIDITY. The invalidity or illegality of
any provision herein shall not be deemed to affect the validity of any other
provision.

SECTION 12.6 SUCCESSORS. This Plan shall be binding on the
Company, its successors and assigns.

ADOPTED this 15th day of May, 1997.

SILVERLEAF RESORTS, INC.

By: /s/ ROBERT E. MEAD
-----------------------------------------
Robert E. Mead, Chief Executive Officer

ATTESTED BY: /s/ SANDRA CEARLEY
--------------------------------
Sandra Cearley, Secretary

<PAGE> 1
EXHIBIT 10.22

FIRST AMENDMENT TO MASTER CLUB AGREEMENT

THIS FIRST AMENDMENT TO MASTER CLUB AGREEMENT (this "Amendment") is
entered into as of the 28th day of March, 1990, by and between Master Endless
Escape Club, a Texas non-profit corporation (the "Master Club"), and Ozark
Mountain Resort Club, a Missouri non-profit corporation, Holiday Hills Resort
Club, a Missouri non-profit corporation, The Holly Lake Club, a Texas
non-profit unincorporated association, The Villages Condoshare Association, a
Texas non-profit unincorporated association, The Villages Club, an
unincorporated association, Piney Shores Club, a Texas non-profit
unincorporated association, and Hill Country Resort Condoshare Club, a Texas
non-profit unincorporated association (collectively the "Clubs" and individually
a "Club").

R E C I T A L S :

WHEREAS, the Master Club and the Clubs entered into a certain Master
Club Agreement, as of the 28th day of March, 1990 (the "Master Club
Agreement"), for the purpose of implementing the administrating the Endless
Escape Program; and

WHEREAS, the Master Club and the Clubs now desire to clarify the
provisions of paragraph 2 of the Master Club Agreement without making any
substantive changes thereto;

NOW, THEREFORE, for and in consideration of TEN AND NO/100 DOLLARS
($10.00), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Master Club and the Clubs
hereby agree as follows:

A. Paragraph 2 of The Master Club Agreement is hereby deleted in
its entirety and replaced with the following new paragraph 2:

2. In order to enable the Master Club to perform the
responsibilities and duties described hereinabove, each
Club agrees to pay to the Master Club the following
amounts as a fee to the Master Club for the services
rendered by the Master Club for the benefit of each
Club: (i) all dues, assessments, late charges and
other amounts levied against its respective members
pursuant to the Declaration of Restrictions, Covenants
and Conditions and the By-Laws of such respective Club,
plus (ii) all other income generated by its respective
Resort, all such amounts being subject to any subsequent
adjustment for bad debts arising therefrom. The Master
Club will use its fee from the Clubs to pay (i) the
individual common expenses of each Resort, and (ii) the
system-wide costs and expenses of administering and
maintaining the Program and operating and managing the
Resorts including, but not limited to expenses for
accounting, legal services, administration, payroll and
management of the entire resort system.

B. Except as expressly amended hereby, the original terms and
conditions of the Master Club Agreement are hereby ratified and
confirmed by the Master Club and each of the Clubs. This
Amendment inures to the benefit, and is binding upon, the Master
Club and each of the Clubs and their respective successors,
legal representatives and assigns.
<PAGE> 2

C. This Amendment may be signed in any number of
counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and
hereto were upon the same instrument, and all such
counterparts shall be deemed one and the same
instrument.

Executed this ______ day of December, 1991.

MASTER CLUB:

MASTER ENDLESS ESCAPE CLUB, a Texas
non-profit corporation

By: /s/ SHARON K. BRAYFIELD
-----------------------------------
Its: PRESIDENT
-----------------------------------

CLUBS:

OZARK MOUNTAIN RESORT CLUB, a Missouri
non-profit corporation

By: /s/ DEBORAH ATCHISON
-----------------------------------
DEBORAH ATCHISON, Governor

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ ORVILLE GARRISON
-----------------------------------
ORVILLE GARRISON, Governor

By: /s/ BONNIE GRAF
-----------------------------------
BONNIE GRAF, Governor

By: /s/ MARTIN HIGLEY
-----------------------------------
MARTIN HIGLEY, Governor

HOLIDAY HILLS RESORT CLUB, a Missouri
non-profit corporation

By: /s/ BONNIE GRAF
-----------------------------------
BONNIE GRAF, Governor

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ DEBORAH ATCHISON
-----------------------------------
DEBORAH ATCHISON, Governor

By: /s/ DELBERT WILKENS
-----------------------------------
DELBERT WILKENS, Governor

By: /s/ GUY WILKERSON
-----------------------------------
GUY WILKERSON, Governor

2
<PAGE> 3
THE HOLLY LAKE CLUB, a Texas non-profit
unincorporated association

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ WILLIAM HUFF
-----------------------------------
WILLIAM HUFF, Governor

By: /s/ JEAN HUNTER
-----------------------------------
JEAN HUNTER, Governor

By: /s/ ROBERT LEVY
-----------------------------------
Robert Levy, Governor

By: /s/ JANETTE PERRY
-----------------------------------
JANETTE PERRY, Governor

THE VILLAGES CONDOSHARE ASSOCIATION, a
Texas non-profit unincorporated
association

By: /s/ GLORIA ANDERSON
-----------------------------------
GLORIA ANDERSON, Governor

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ MICHAEL MCFERREN
-----------------------------------
MICHAEL MCFERREN, Governor

By: /s/ RAYMOND LEWIS
-----------------------------------
RAYMOND LEWIS, Governor

By: /s/ ROBERT LEVY
-----------------------------------
Robert Levy, Governor

THE VILLAGES CLUB, a Texas non-profit
unincorporated association

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Director

By: /s/ MICHAEL MCFERREN
-----------------------------------
MICHAEL MCFERREN, Director

By: /s/ GRACE CASEY
-----------------------------------
GRACE CASEY, Director

3
<PAGE> 4

By: /s/ ROBERT LEVY
-----------------------------------
Robert Levy, Director

By: /s/ SALLY TURNER
-----------------------------------
SALLY TURNER, Director

PINEY SHORES CLUB, a Texas non-profit
unincorporated association

By: /s/ GEORGE BISHOP
-----------------------------------
GEORGE BISHOP, Governor

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ ANITA MOORE
-----------------------------------
ANITA MOORE, Governor

By: /s/ PATSY ANDERSON
-----------------------------------
PATSY ANDERSON, Governor

By: /s/ ROBERT LEVY
-----------------------------------
Robert Levy, Governor

HILL COUNTRY RESORT CONDOSHARE CLUB, a
Texas non-profit unincorporated
association

By: /s/ OBIE BINNICKER
-----------------------------------
OBIE BINNICKER, Governor

By: /s/ JANA BLEVINS
-----------------------------------
JANA BLEVINS, Governor

By: /s/ MARGARET COWAN
-----------------------------------
MARGARET COWAN, Governor

By: /s/ MIKE FENLON
-----------------------------------
MIKE FENLON, Governor

By: /s/ ROBERT LEVY
-----------------------------------
Robert Levy, Governor

<PAGE> 1
EXHIBIT 10.23

FIRST AMENDMENT TO MANAGEMENT AGREEMENT

THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment") is
entered into as of the 1st day of January, 1993, by and between MASTER ENDLESS
ESCAPE CLUB, a Texas non-profit corporation ("Master Club"), and ASCENSION
RESORTS, LTD., a Texas limited partnership ("Manager").

R E C I T A L S:

WHEREAS, the Master Club and Manager entered into a certain Management
Agreement as of the 28th day of March, 1990, (the "Management Agreement"), for
purposes of Manager providing management services to the Master Club and
certain Resorts, as designated in the Management Agreement (the "Resorts"); and

WHEREAS, the Master Club and Manager now desire to amend the provisions
of paragraph 7 of the Management Agreement to further limit the compensation
payable to Manager under the Management Agreement and to amend certain other
provisions of the Management Agreement;

A. Paragraph 7 of the Management Agreement is hereby deleted in its
entirety and replaced with the following new paragraph 7:

7. Compensation to Manager. As compensation for Manager's
services hereunder, Manager is entitled to retain for its own
account during each calendar year during the term of this
Agreement an amount equal to the lesser of (a) fifteen percent
(15%) of the Gross Revenues (as defined hereinbelow) for the year
or (b) the amount by which the Gross Revenues for the year exceed
the total of (i) all accrued expenses of any kind whatsoever
("Expenses") incurred by the Resorts during the year (exclusive
of any fees paid or payable to the Master Club by the Resorts)
and incurred by the Master Club during the year in performing its
duties and obligations under the Master Club Agreement and (ii)
the total of all unpaid Shortfalls for any preceding years
commencing after December 31, 1992 (as defined hereinbelow). If
in any year commencing after December 31, 1992, the compensation
paid to Manager pursuant to this Agreement (exclusive of any
amounts for prior Shortfalls) does not equal fifteen percent
(15%) of the Gross Revenues for the year then an additional
amount equal to the difference between (x) 15% of the Gross
Revenues for such year and (y) the amount of compensation
actually paid to Manager (exclusive of any amounts for prior
Shortfalls) for such year (the "Shortfall") shall be payable to
Manager in any subsequent year or years in which the Gross
Revenues for such year or years are more than sufficient to pay
all Expenses and all prior unpaid Shortfalls, until such
Shortfall is fully paid out of such excess Gross Revenues. As
used herein, the term Gross Revenues shall mean the amount of all
dues, assessments, late charges and any other amounts accrued by
Manager from the members of the Club pursuant to paragraph 4(a)
hereinabove, plus (ii) the amount of income generated by the
Resorts and accrued by Manager pursuant to paragraph 4(b)
hereinabove.
<PAGE> 2
Such accruals shall be determined by Manager in its reasonable
discretion using its normal accounting practices. The amount
payable hereunder to Manager shall be paid in approximately equal
monthly installments throughout the year based on the annual
budget of the Master Club, as adjusted from time to time
throughout the year, with final adjustments being made as of
December 31 of the year to determine the exact amount due and
payable to Manager for the year under the preceding provisions.
After such final adjustments are made, any balance due Manager
shall be promptly paid, and any overpayment shall be promptly
repaid by Manager.

B. Prior to the effective date of this Amendment, Manager was owed
the sum of $400,719.05 as of December 31, 1992, for unpaid compensation
under the then terms of the Management Agreement. The Master Club and
Manager agree that such amount shall be paid to Manager during 1993,
that such amount shall be in addition to the compensation otherwise
payable to Manager for 1993 under restated Paragraph 7, above, and that
such amount shall not be treated as compensation or as a Shortfall for
purposes of such restated Paragraph 7.

C. Except as expressly amended hereby, the original terms and
conditions of the Management Agreement are hereby ratified and confirmed
by the Master Club and Manager. This Amendment inures to the benefit
of, and is binding upon, the Master Club and Manager and their
respective successors, legal representatives and assignees.

D. This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were up on the same instrument, and all such
counterparts shall be deemed one in the same instrument.

EXECUTED the 28th day of December, 1993.

MASTER CLUB:

MASTER ENDLESS ESCAPE CLUB,
a Texas non-profit corporation

By: /s/ SHARON K. BRAYFIELD
-------------------------------
Its: President
--------------------------------

MANAGER:

ASCENSION RESORTS, LTD., a Texas
limited partnership

By: ASCENSION CAPITAL CORPORATION,
a Texas corporation,
General Partner

By: /s/ ROBERT E. MEAD
---------------------------
Its: Chief Executive Officer
---------------------------

<PAGE> 1

Exhibit 10.24

CONTRACT OF SALE

This Agreement is entered into by and between THOUSAND TRAILS, INC., a
Delaware corporation ("Seller"), and SILVERLEAF RESORTS, INC., a Texas
corporation ("Purchaser").

W I T N E S S E T H :

FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:

ARTICLE I

PROPERTY

The conveyance by Seller, or Seller's subsidiary corporation that
holds title, to Purchaser shall include the following described tracts or
parcels of land, together with all and singular the rights and appurtenances
pertaining to such land including any right, title and interest of Seller in
and to adjacent strips or gores, streets, alleys, or rights-of-way and all
rights of ingress and egress thereto:

Parcel 1: Those certain tracts of land located in LaSalle
County, Illinois, commonly known as the "Fox River Resort," in the
aggregate amount of approximately 178 acres, including (i) five (5)
tracts of land more particularly described in Exhibit "A" attached
hereto and made a part hereof for all purposes, which aggregate
approximately 138 acres, and (ii) a sixth tract of approximately 40
acres which will be surveyed and described prior to closing;

Parcel 2: Those certain tracts of land located in Jefferson
County, Missouri, commonly known as the "Jefferson Resort," and being
more particularly described in Exhibit "B" attached hereto and made a
part hereof for all purposes; and

Parcel 3: That certain tract of land located in Hardeman
County, Tennessee, commonly known as "Cherokee Landing Resort" and
being more particularly described in Exhibit "C" attached hereto and
made a part hereof for all purposes.

Hereafter the aforesaid real property is referred to collectively as the
"Land."

The conveyance by Seller to Purchaser shall also include all buildings
and other improvements on the Land, including specifically, without limitation,
all campsites, recreational
<PAGE> 2
and community facilities, comfort centers, lakes and parks located thereon (the
foregoing property is herein referred to collectively as the "Improvements").

The conveyance by Seller to Purchaser shall also include all fixtures
and personal property, tangible or intangible, of any kind whatsoever owned by
Seller and used in connection with the Land and/or Improvements, including but
not limited to, the following items:

a. All machinery, equipment, fixtures, furniture and
other personal property of every kind and character owned by Seller
and located on or used in connection with the operation of the Land
and Improvements;

b. The names "Fox River Resort," "Jefferson Resort," and
"Cherokee Landing Resort," as used in the ownership or operation of
the Land and Improvements;

c. All outstanding membership contracts which have been
generated from the sale of memberships at the campsites being operated
by Seller on the Land (except for Gold Card memberships), together
with certain receivables, hereinafter mentioned, which are payable to
Seller and which represent the unpaid portion of the purchase price
for such memberships;

d. All licenses, franchises and permits used in or
relating to the ownership, occupancy or operation of the resorts being
operated by Seller on the Land including, in particular, any water
permits or other utility permits; and

e. Any developer's, declarant's, or owner's interests
under any operating agreements or reciprocal easement agreements or
other similar agreements affecting and/or benefiting the Land.

The foregoing items are hereinafter collectively referred to as the "Resort
Assets."

Hereinafter all property being conveyed to Purchaser by Seller
pursuant to this Contract including the Land, the Improvements and the Resort
Assets are sometimes referred to collectively as the "Subject Property."

ARTICLE II

PURCHASE PRICE

The purchase price to be paid by Purchaser to Seller for the Subject
Property (less the receivables described in Article I, c.) shall be as
follows:

<TABLE>
<S> <C>
Fox River Resort $1,512,500.00
Jefferson Resort $1,100,000.00
Cherokee Landing Resort $ 570,000.00
-------------

Total Purchase Price $3,182,500.00
</TABLE>

The purchase price shall be payable all in cash at the closing.

- 2 -
<PAGE> 3
ARTICLE III

EARNEST MONEY

Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Twenty-Five Thousand and No/100 Dollars ($25,000.00) to Safeco Land Title of
Dallas, 5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn:
Bobbie Irwin (the "Title Company"). The Title Company shall immediately cash
the earnest money check and deposit the proceeds thereof in an interest bearing
account, the earnings from which shall accrue to the benefit of Purchaser
(hereinafter the proceeds of the earnest money check shall be referred to as
the "earnest money"). If Purchaser does not terminate this Contract during the
Inspection Period (as defined in Article VI hereinbelow), then, within two (2)
business days after the expiration of the Inspection Period, Purchaser will
deposit with the Title Company the additional sum of Seventy-Five Thousand and
No/100 Dollars ($75,000.00) in cash, which sum shall be added to and become a
part of the earnest money. Upon receipt of the second earnest money deposit
from Purchaser, the Title Company shall immediately disburse the entire
$100,000.00 earnest money deposit to Seller; upon such disbursement the
$100,000.00 earnest money deposit shall be non-refundable to the Purchaser
except in the event of a default by Seller hereunder, but, if this Contract
closes, then the entire $100,000.00 earnest money deposit shall be applied in
partial satisfaction of the purchase price payable at closing.

In the event that this Contract is not closed, then the earnest money
shall be disbursed in the manner provided for elsewhere herein.
Notwithstanding the foregoing or anything to the contrary contained elsewhere
in this Contract, it is understood and agreed that One Hundred Dollars
($100.00) of the earnest money shall in all events be delivered to Seller as
valuable consideration for the Inspection Period described in Article VI
hereinbelow and the execution of this Contract by Seller.

- 3 -
<PAGE> 4
ARTICLE IV

PRE-CLOSING OBLIGATIONS OF SELLER AND PURCHASER

Within thirty (30) days from the date of execution of this Contract,
Seller shall furnish to Purchaser, each of the following (a-g) (collectively,
the "Due Diligence Items"):

a. A current commitment (the "Title Commitment") for the
issuance of an owner's policy of title insurance to the Purchaser from
the Title Company, together with good and legible copies of all
documents constituting exceptions to Seller's title as reflected in
the Title Commitment;

b. Copies of the most recent appraisals of each parcel
included within the Land that are in the possession of Seller, if any;

c. A schedule showing (i) all members of the resorts
being operated on the Land by Seller, and (ii) the date through which
monthly membership dues have been paid by each such member; provided,
however, that such schedule need not include the name, address and
phone number of each such member;

d. Copies of all licenses, permits, applications,
authorizations, certificates of occupancy, governmental approvals and
other entitlements relating to the Subject Property and the operation
thereof in the possession of Seller, if any, including, in particular,
copies of all permits relating to utilities;

e. A schedule of all current or pending litigation with
respect to the Subject Property or any part thereof, if any, together
with a brief description of each proceeding;

f. An accurate and complete schedule reflecting with
respect to each resort being operated by Seller on the parcels
comprising the Land for the calendar year ending immediately preceding
the date of this Contract: (i) ad valorem taxes, (ii) expenses
incurred for such period for water, electricity, natural gas and other
utility charges, (iii) total dues collected from members for such year
and (iv) all other income or expenses of operation of each resort
being operated on the Land by Seller. Said operating schedule shall
be accompanied by Seller's statement that said operating schedule is
true, complete and correct as of the date provided; and

g. All information of any kind whatsoever in the
possession of Seller concerning possible development of the Subject
Property including, but not limited to, any and all plans for the
development of the Subject Property, any engineering studies of the
Subject Property, any information relating to obtaining the approval
of local governing bodies for the development of the Subject Property,
any information as to when construction on the Subject Property may
commence, any information regarding present or future zoning of the
Subject Property, and any information concerning the availability of
utilities.

During the Inspection Period (defined hereinbelow), Purchaser shall
obtain and deliver to Seller copies of the following (collectively, the
"Purchaser Due Diligence Items"):

h. Updated surveys of each parcel of land included
within the Subject Property dated subsequent to the date of execution
of this Contract and prepared by a licensed professional engineer or
surveyor acceptable to Purchaser, which surveys shall: (a) include a
metes and bounds legal description of each parcel comprising the Land;
(b) accurately show all improvements, encroachments and uses and
accurately show all easements and encumbrances visible or listed on
the Title Commitments (identifying each by recording reference if
applicable); (c) recite the number of gross acres included within

- 4 -
<PAGE> 5
each parcel of land comprising the Land; (d) state whether any portion
of the Land lies within a flood zone, or flood prone area or is
designated as "wetlands," and identify the exact number of square
feet, if any, that lies within a flood zone or flood prone area or is
designated as "wetlands"; and (e) contain a certificate verifying that
each survey was made on the ground, that the survey is correct, that
there are no improvements, encroachments, easements, uses or
encumbrances except as shown on the survey plat, that the area
represented for each parcel comprising the Land has been certified by
the surveyor as being correct, that no portion of the Land lies within
any flood zone or flood prone area, except as indicated thereon, and
that each parcel comprising the Land has access to public streets as
indicated thereon. Unless otherwise agreed by Seller and Purchaser,
the metes and bounds descriptions contained in the Surveys shall be
the legal descriptions employed in the documents of conveyance of the
Subject Property provided that the Title Company accepts such
descriptions; and

i. A Phase I Environmental Report for each resort
included within the Subject Property.

ARTICLE V

TITLE INSPECTION PERIOD

Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser
pursuant to the provisions of Article IV hereinabove reflects or discloses any
defect, exception or other matter affecting the Subject Property ("Title
Defects") that is unacceptable to Purchaser, then prior to the expiration of
the Title Review Period Purchaser shall provide Seller with written notice of
Purchaser's objections. Seller may, at its sole option, elect to cure or
remove the objections raised by Purchaser; provided, however, that Seller shall
have no obligation to do so. Should Seller elect to attempt to cure or remove
the objections, Seller shall have ten (10) days from the date of Purchaser's
written notice of objections (the "Cure Period") in which to accomplish the
cure. In the event Seller either elects not to cure or remove the objections
or is unable to accomplish the cure prior to the expiration of the Cure Period,
then Seller shall so notify Purchaser in writing specifying which objections
Seller does not intend to cure, and then Purchaser shall be entitled, as
Purchaser's sole and exclusive remedies, either to terminate this Agreement by
providing written notice of termination to Seller within ten (10) days from the
date on which Purchaser receives Seller's no-cure notice or waive the
objections and close this transaction as otherwise contemplated herein. If
Purchaser shall fail to notify Seller in writing of any objections to the state
of Seller's title to the Subject Property as shown by the Survey and

- 5 -
<PAGE> 6
Title Commitment, then Purchaser shall be deemed to have no objections to the
state of Seller's title to the Subject Property as shown by the Survey and
Title Commitment, and any exceptions to Seller's title which have not been
objected to by Purchaser and which are shown on the Survey or described in the
Title Commitment shall be considered to be "Permitted Exceptions." It is
further understood and agreed that any Title Defects which have been objected
to by Purchaser and which are subsequently waived by Purchaser shall be
Permitted Exceptions.

ARTICLE VI

INSPECTION PERIOD

Purchaser, at Purchaser's sole expense, shall have the right to
conduct a feasibility, environmental, engineering and physical study of the
Subject Property for a period of time commencing on the date of execution of
this Contract and expiring one hundred twenty (120) days from the date on which
Purchaser receives the last of the due diligence items to be provided to
Purchaser by Seller pursuant to Article IV hereinabove (the "Inspection
Period"). Purchaser and Purchaser's duly authorized agents or representatives
shall be permitted to enter upon the Subject Property at all reasonable times
during the Inspection Period in order to conduct engineering studies, soil
tests and any other inspections and/or tests that Purchaser may deem necessary
or advisable; provided, however, that no drilling or other ground penetrations
or physical sampling in any building shall be done without Seller's prior
written consent, which consent shall not be unreasonably withheld or delayed.
Purchaser further agrees to indemnify and hold Seller harmless from any claims
or damages, including reasonable attorneys' fees, resulting from Purchaser's
inspection of the Subject Property. In the event that the review and/or
inspection conducted by this paragraph shows any fact, matter or condition to
exist with respect to the Subject Property that is unacceptable to Purchaser,
in Purchaser's sole discretion, or if for any reason Purchaser determines that
purchase of the Subject Property is not feasible, then Purchaser shall be
entitled, as Purchaser's sole remedy, to cancel this Contract by providing
written notice of cancellation to Seller prior to the expiration of the
Inspection Period. If Purchaser shall provide written notice of cancellation
prior to the expiration of the Inspection Period, then this Contract shall be
cancelled, all earnest money (less $100.00) shall be

- 6 -
<PAGE> 7
immediately returned to Purchaser by the Title Company, and thereafter neither
Seller nor Purchaser shall have any continuing obligations one unto the other.
If no notice of cancellation is provided by Purchaser prior to the expiration
of the Inspection Period, then this Contract shall remain in full force and
effect.

ARTICLE VII

REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER

Seller represents and warrants to Purchaser that at closing Seller, or
a direct or indirect wholly-owned subsidiary of Seller, will have good and
indefeasible fee simple title to the Subject Property free and clear of all
liens, encumbrances, covenants, restrictions, rights-of-way, easements, and any
other matters affecting title to the Subject Property except for the Permitted
Exceptions, and at closing, Seller or its subsidiaries will be in a position to
convey the Subject Property to Purchaser (free and clear of all liens,
encumbrances, and other such matters affecting title except for the Permitted
Exceptions).

Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, neither Seller nor its subsidiaries shall sell,
assign, or convey any right, title, or interest whatsoever in or to the Subject
Property, or create or permit to exist any lien, security interest, easement,
encumbrance, charge, or condition affecting the Subject Property (other than
the Permitted Exceptions) without promptly discharging the same prior to
closing.

Seller hereby further represents and warrants to Purchaser, to the
best of Seller's knowledge, as follows:

a. There are no actions, suits, or proceedings pending
or, to the best of Seller's knowledge, threatened against Seller or
otherwise affecting any portion of the Subject Property, at law or in
equity, or before or by any federal, state, municipal, or other
governmental court, department, commission, board, bureau, agency, or
instrumentality, domestic or foreign;

b. The execution by Seller of this Contract and the
consummation by Seller of the sale contemplated hereby have been duly
authorized, and do not, and, at the closing date, will not, result in
a breach of any of the terms or provisions of, or constitute a default
under any indenture, agreement, instrument, or obligation to which
Seller is a party or by which the Subject Property or any portion
thereof is bound, and do not, and at the closing date will not,
constitute a violation of any regulation affecting the Subject
Property;

c. Seller has not received any notice of any violation
of any ordinance, regulation, law, or statute of any governmental
agency pertaining to the Subject Property

- 7 -
<PAGE> 8
or any portion thereof except with respect to Cherokee Landing and Fox
River; Seller hereby advises Purchaser that in 1985 Cherokee Landing
entered into an assurance of voluntary compliance with the State of
Tennessee the details of which will be disclosed to Purchaser and that
in 1988 Seller entered into a consent judgment with the State of
Illinois the details of which will also be disclosed to Purchaser;

d. The Subject Property and the current operation
thereof comply in all material respects with all laws, regulations,
ordinances, rules, orders and other requirements of all governmental
authorities having jurisdiction over the Subject Property or affecting
all or any part thereof or bearing on its construction or operation,
and with all private covenants or restrictions;

e. From the date of execution of this Contract through
the date of closing, Seller shall continue to maintain the Subject
Property in its present condition, subject to ordinary wear and tear
and Article XV hereof, and shall continue to manage the Subject
Property in the same manner as it is currently being managed; Seller
shall not remove any fixtures, equipment, furnishings or other
personal property from the Subject Property unless replaced with items
of equal or greater quality and quantity, nor shall Seller in any
manner neglect the Subject Property; and

f. That, at closing, there will be no unpaid bills,
claims, or liens in connection with any construction or repair of the
Subject Property except for ones which will be paid in the ordinary
course of business or which have been bonded around or the payment of
which has otherwise been adequately provided for to the complete
satisfaction of Purchaser.

All of the foregoing representations and warranties of Seller are made by
Seller both as of the date hereof and as of the date of the closing hereunder.
Notwithstanding the foregoing or anything to the contrary contained herein, it
is understood and agreed that the representations and warranties set forth
hereinabove shall survive the closing of this Contract only for a period of two
(2) years following the closing date, but not thereafter, and Seller shall have
no liability of any kind whatsoever for any breach thereof except to the extent
a claim is asserted against Seller within such two (2) year period.

Purchaser agrees that, having had the opportunity to inspect the
Subject Property for defects and having had the right to terminate this
Contract in the event any defects are found, Purchaser will accept at closing
the Subject Property in an "as is, where is" condition, and, except for the
representations and warranties set forth hereinabove, Seller shall not be
required to give any further representations or warranties at closing with
respect to the condition of the Subject Property or the income that may be
generated by the Subject Property.

- 8 -
<PAGE> 9
ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING

The obligation of Purchaser to close this Contract shall, at the
option of Purchaser, be subject to the following conditions precedent:

a. All of the representations, warranties and agreements
of Seller set forth in this Contract shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Contract;

b. There shall be no change in the matters reflected in
the Title Commitment, and there shall not exist any encumbrance or
title defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions;

c. There shall be no changes in the matters reflected in
the Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with
respect to the Subject Property not shown on the Survey; and

d. No material and substantial change shall have
occurred with respect to the Subject Property which would in any way
affect the findings made in the inspection of the Subject Property
described in Article VI hereinabove.

If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser by the Title Company and thereafter neither Seller nor Purchaser
shall have any continuing obligations one unto the other.

ARTICLE IX

CLOSING

The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before thirty (30) days from the date
of expiration of the Inspection Period. Purchaser shall notify Seller at least
five (5) days in advance of the exact time and date of closing. Seller and
Purchaser hereby agree that Purchaser shall have the right to obtain one (1)
ninety (90) day extension of the deadline for closing hereunder by delivering
to Seller an additional One Hundred Thousand Dollars ($100,000) in earnest
money. If Purchaser exercises this right, then the deadline for closing of
this Contract shall be extended by ninety (90) days; the additional $100,000
earnest money deposit that must be made by Purchaser in order to extend the
deadline for closing of this Contract by ninety (90) days shall be
non-refundable to

- 9 -
<PAGE> 10
Purchaser except in the event of a default by Seller hereunder, but, if this
Contract closes, shall be applied in partial satisfaction of the purchase price
payable hereunder.

ARTICLE X

SELLER'S OBLIGATIONS AT CLOSING

At the closing, Seller shall do the following:

a. Deliver, or cause its subsidiary to deliver, to
Purchaser a deed covering the Subject Property, duly signed and
acknowledged by Seller, or its subsidiary, which deed shall be in form
reasonably acceptable to Purchaser for recording and shall convey to
Purchaser good and marketable title to the Subject Property, free and
clear of all liens, rights-of-way, easements, and other matters
affecting title to the Subject Property, except for the Permitted
Exceptions.

b. Deliver or cause to be delivered to Purchaser an ALTA
Standard Owner Policy of Title Insurance (the "Title Policy") insuring
Purchaser in the amount of the purchase price that Purchaser has
acquired good and marketable title to the Subject Property, subject
only to the standard printed exceptions and the Permitted Exceptions.
Purchaser shall be entitled to request the Title Company to provide at
Purchaser's sole cost and expense, such endorsements (or amendments)
to the Title Policy as Purchaser may reasonably require so long as
such endorsements or amendments are at no cost to Seller nor impose
additional liability on Seller nor delay the closing. Purchaser shall
be responsible for paying the cost of the Title Policy.

c. Deliver a bill of sale and a blanket assignment in
form reasonably acceptable to Purchaser, duly executed and
acknowledged by Seller or its subsidiary, conveying and/or assigning
to Purchaser the Resort Assets.

d. Deliver such evidence or other documents that may be
reasonably required by the Title Company evidencing the status and
capacity of Seller and the authority of the person or persons who are
executing the various documents on behalf of Seller in connection with
the sale of the Subject Property.

e. Deliver a non-withholding statement that will satisfy
the requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase
price for payment to the Internal Revenue Service.

f. Deliver to Purchaser any other documents or items
necessary or convenient in the reasonable judgment of Purchaser to
carry out the intent of the parties under this Contract.

ARTICLE XI

PURCHASER'S OBLIGATIONS AT CLOSING

At the closing, Purchaser shall deliver to Seller the purchase price
in cash.

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<PAGE> 11
ARTICLE XII

COSTS AND ADJUSTMENTS

At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:

a. Any real estate transfer taxes or sales taxes payable
in connection with the sale of the Subject Property shall be paid in
full by Purchaser.

b. Ad valorem taxes for the Subject Property for the
current calendar year shall be prorated as of the date of closing, and
Seller shall pay to Purchaser in cash at closing Seller's pro rata
portion of such taxes. Seller's pro rata portion of such taxes shall
be based upon taxes actually assessed for the current calendar year
or, if for any reason such taxes for the Subject Property have not
been actually assessed, such proration shall be based upon the amount
of such taxes for the immediately preceding calendar year, and
adjusted by cash settlement when exact amounts are available.
However, anything herein to the contrary notwithstanding, any tax
abatement or refund for a period of time prior to closing shall belong
to Seller.

c. Purchaser shall pay Seller in cash at closing an
amount equal to seventy percent (70%) of the then outstanding
principal balance of all receivables for the purchase of campground
memberships which are not then thirty-one (31) days or more past due
and which are being transferred to Purchaser by Seller at closing.

d. Membership dues which have already been collected by
Seller for the current calendar year shall be prorated as of the date
of closing, and Seller shall pay to Purchaser in cash at closing the
amount of any such dues which have already been paid to Seller by
members of the Subject Property for a period subsequent to the closing
date.

e. Purchaser shall have the right to collect all
membership dues which are past due as of the closing date; provided,
however, that Purchaser shall pay to Seller in cash at closing (i) an
amount equal to the full amount of all membership dues which are 365
days or less past due as of the date of closing, plus (ii) an amount
equal to twenty-one percent (21%) of all membership dues which are
more than 365 days past due as of the date of closing.

f. All other closing costs, including but not limited
to, recording and escrow fees shall be divided equally between Seller
and Purchaser; provided, however, that Seller and Purchaser shall each
be responsible for the fees and expenses of their respective
attorneys.

Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property,
and all expenses related thereto, including, but not limited to, court costs
and attorneys' fees.

Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties

- 11 -
<PAGE> 12
and based on events occurring subsequent to the date of closing and which are
in any way related to the ownership, maintenance or operation of the Subject
Property, and all expenses related thereto, including, but not limited to,
court costs and attorneys' fees.

Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.

ARTICLE XIII

ENTRY ON PROPERTY

Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior
to closing for the purpose of inspecting the Subject Property and conducting
such engineering and mechanical tests as Purchaser may deem necessary or
advisable, any such inspections and tests to be made at Purchaser's sole
expense. Purchaser agrees to indemnify and hold Seller harmless from and
against any and all losses, damages, costs, or expenses incurred by Seller as a
result of any inspections or tests made by Purchaser.

ARTICLE XIV

POSSESSION OF PROPERTY

Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions which shall include the rights
of existing members, shall be delivered to Purchaser at closing.

ARTICLE XV

DAMAGE OR DESTRUCTION PRIOR TO CLOSING

In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:

a. Less than One Hundred Thousand Dollars ($100,000.00)
per resort, then at Purchaser's option, either (i) the Seller shall
repair such damage as promptly as is reasonably possible, restoring
the damaged property at least to its condition immediately prior to
such damage; and, in the event such repairs have not been completed
prior to

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<PAGE> 13
closing, then the closing shall nevertheless proceed as scheduled, and
Purchaser may have the Title Company withhold from Seller the funds
necessary to make such repairs until Seller has repaired such damage
pursuant to the provisions hereof, at which time such funds shall be
distributed to Seller or (ii) Purchaser may take an assignment of
Seller's insurance proceeds and repair such damage itself;

or if said cost is:

b. greater than One Hundred Thousand Dollars
($100,000.00) per resort, then, at Purchaser's election, Seller shall
pay to Purchaser, at closing, all insurance proceeds payable for such
damage, and the sale shall be closed without Seller's repairing such
damage, or, if Purchaser does not elect to accept such insurance
proceeds, then either Seller or Purchaser may elect to terminate this
Contract, in which case the earnest money (less $100.00) shall be
returned to Purchaser and thereafter neither party shall have any
further obligations one unto the other.

ARTICLE XVI

NOTICES

All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions
of this paragraph. All notices shall be in writing and delivered to the person
to whom the notice is directed, either in person, by facsimile transmission, or
by United States Mail, as a registered or certified item, return receipt
requested. Notices delivered by mail shall be deemed given when deposited in a
post office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed as
follows:

Seller: Thousand Trails, Inc.
------ 2711 LBJ Freeway, Suite 200
Dallas, Texas 75234
Attn: Kenneth E. Hendrycy, Vice President
Telephone No.: (972) 243-2228
Facsimile No.: (972) 488-5030

Purchaser: Silverleaf Resorts, Inc.
--------- 1221 Riverbend Drive
Suite 120
Dallas, Texas 75247
Attn: Robert E. Mead
Telephone No.: (214) 631-1166
Facsimile No.: (214) 905-0514

- 13 -
<PAGE> 14

With Required Copy to: Meadows, Owens, Collier, Reed,
--------------------- Cousins & Blau, L.L.P.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Attn: George R. Bedell, Esq.
Telephone No.: (214) 749-2448
Facsimile No.: (214) 747-3732

ARTICLE XVII

REMEDIES

In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, such failure shall be an event
of default and Purchaser shall have the option (i) to terminate this Contract
by providing written notice thereof to Seller, in which event the earnest money
(less $100.00) shall be returned immediately to Purchaser and the parties
hereto shall have no further liabilities or obligations one unto the other;
(ii) to waive any defect or requirement and close this Contract; or (iii) to
sue Seller for specific performance. Except as otherwise set forth herein, in
no event shall Purchaser have the right to sue Seller for damages.

In the event that Purchaser fails to timely comply with all
conditions, covenants, and obligations Purchaser has hereunder, such failure
shall be an event of default, and Seller's sole remedy shall be to receive the
earnest money. The earnest money is agreed upon by and between the Seller and
Purchaser as liquidated damages due to the difficulty and inconvenience of
ascertaining and measuring actual damages, and the uncertainty thereof, and no
other damages, rights, or remedies shall in any case be collectible,
enforceable, or available to the Seller other than in this paragraph defined,
and Seller shall accept the earnest money as Seller's total damages and relief.

- 14 -
<PAGE> 15
ARTICLE XVIII

ASSIGNMENT

Purchaser shall not, without Seller's prior written consent, assign
this Contract. Notwithstanding the foregoing, the consent of Seller need not
be obtained for an assignment of this Contract made in connection with the
merger, consolidation or a combination of Purchaser into or with any other
corporation or entity, whether by operation of law or otherwise; however,
Purchaser agrees to furnish Seller with prior written notice thereof, and
provided further that any such assignee must abide by the covenants appearing
in this Contract.

XIX

INTERPRETATION AND APPLICABLE LAW

This Agreement shall be construed and interpreted in accordance with
the laws of the State of Texas. Where required for proper interpretation, words
in the singular shall include the plural; the masculine gender shall include
the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.

AMENDMENT

This Contract may not be modified or amended, except by an agreement
in writing signed by the Seller and the Purchaser. The parties may waive any
of the conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.

ARTICLE XXI

AUTHORITY

Each person executing this Contract warrants and represents that he is
fully authorized to do so.

- 15 -
<PAGE> 16
ARTICLE XXII

ATTORNEYS' FEES

In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.

ARTICLE XXIII

DESCRIPTIVE HEADINGS

The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

ARTICLE XXIV

ENTIRE AGREEMENT

This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract
shall be binding upon the parties hereto or shall affect or be effective to
interpret, change, or restrict the provisions of this Contract.

ARTICLE XXV

MULTIPLE ORIGINALS ONLY

Numerous copies of this Contract may be executed by the parties
hereto. Each such executed copy shall have the full force and effect of an
original executed instrument.

- 16 -
<PAGE> 17

ARTICLE XXVI

ACCEPTANCE

Seller shall have until 5:00 o'clock p.m., May 5, 1997, to execute and
return a fully executed original of this Contract to Purchaser, otherwise this
Contract shall become null and void. Time is of the essence of this Contract.
The date of execution of this Contract by Seller shall be the date of execution
of this Contract. If the final date of any period falls upon a Saturday,
Sunday, or legal holiday under the laws of the State of Texas, then in such
event the expiration date of such period shall be extended to the next day
which is not a Saturday, Sunday, or legal holiday under the laws of the State
of Texas.

ARTICLE XXVII

REAL ESTATE COMMISSION

Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction, and that Seller
has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due and payable to any other party
with respect to the transaction contemplated hereby. Purchaser hereby
represents and warrants to Seller that Purchaser has not contracted or entered
into any agreement with any real estate broker, agent, finder, or any other
party in connection with this transaction, and that Purchaser has not taken any
action which would result in any real estate broker's, finder's, or other fees
or commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or
expense (including reasonable attorneys' fees) resulting to the other party by
reason of a breach of the representation and warranty made by such party
herein. Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XXVII shall survive the closing.

- 17 -
<PAGE> 18
ARTICLE XXVIII

POST-CLOSING OBLIGATIONS OF SELLER AND PURCHASER

Seller and Purchaser hereby agree that following the closing hereunder
Purchaser will (i) take over responsibility for the operation and maintenance
of the existing campsites and recreational facilities currently located at each
of the three resorts being sold to Purchaser hereunder, and (ii) assume
responsibility for the performance of all of Seller's obligations under the
outstanding membership contracts pertaining to these three resorts, except for
Seller's obligation to provide its "Gold Card" members with access to resorts
other than the three resorts being sold to Purchaser hereunder. Purchaser
hereby warrants and represents that at all times following the closing the
standard of operation and maintenance of the facilities at these three resorts
shall never be lower than the standard of operation and maintenance that is in
effect at these three resorts as of the date of this Contract, and Purchaser
agrees to indemnify and hold harmless Seller from any loss incurred by Seller
due to a breach of this warranty which is caused by Purchaser. At all times
following closing hereunder, at Purchaser's election, (i) Purchaser shall be
entitled to collect all of the dues that are payable by members of these three
resorts except for that portion of such dues which is paid by "Gold Card"
members in order to have access to other resorts in Seller's system, or (ii)
Seller shall collect the dues that are payable by members of these three
resorts and will remit to Purchaser on a regular and timely basis all of such
dues except for that portion of the dues which is paid by "Gold Card" members
in order to have access to other resorts in Seller's system; if Purchaser
elects to have Seller collect the dues, then Purchaser will pay Seller a
reasonable fee to cover the costs that will be incurred by Seller in collecting
the dues, the exact amount of such fee to be mutually agreed upon by and
between Seller and Purchaser. Purchaser further agrees that Purchaser will
accept reservations for the use of the campsites at the Fox River Resort from
any of Seller's system members provided that Purchaser is given the same
advance written notice of any such reservation that Seller currently requires
from its members. The obligations of Purchaser under this paragraph shall
survive closing and shall continue in full force and effect (i) for a period of
five (5) years thereafter with respect to the Jefferson and Cherokee Landing
Resorts, and (ii) for

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<PAGE> 19
a period of ten (10) years thereafter with respect to the Fox River Resort (and
for an additional ten (10) years if Purchaser extends the term of the License
described below).

Seller agrees to permit any existing Fox River Resort member (who is a
member as of the date of closing hereunder) to become a "Gold Card" member of
Seller provided that said member pays Seller the then required fees and
executes Seller's "Gold Card" contract. Both Seller and Purchaser also agree
to honor the usage rights of NACO Resort Club members.

Seller hereby agrees that for a period of one (1) year following the
date of closing hereunder, Seller will not hire any of the existing employees
at the resorts being purchased by Purchaser hereunder to work at other resorts
owned and operated by Seller.

Within thirty (30) days after the closing hereunder, both Purchaser
and Seller shall write a joint letter to all members of Jefferson Resort and
Cherokee Landing Resort advising of the sale and giving these members the
following options going forward: (i) for their membership to remain unchanged,
(ii) to become a member of Seller's entire campground system, in which case the
member must pay Seller the dues being charged by Seller for said system
membership, or (iii) to become a member of both Seller's campground system and
of the Jefferson or Cherokee Resort, in which case the member must pay Seller
the dues being charged by Seller for the system membership and must pay
Purchaser the dues being charged by Purchaser for membership at Jefferson or
Cherokee.

In order to secure performance of Purchaser's obligation to operate
and maintain the facilities at the three resorts in accordance with the
standards of operation and maintenance that are currently in effect, Purchaser
shall deliver to Seller at closing three (3) irrevocable and unconditional
letters of credit; the letter of credit for Fox River Resort shall be in the
amount of $300,000, and the letters of credit for the Jefferson and Cherokee
Landing Resorts shall each be in the amount of $100,000. The letters of credit
must be issued by a national banking association or other financial institution
satisfactory to Seller, must be payable directly to Seller and must expire no
earlier than (i) five (5) years from the date of closing in the case of the
letters of credit for the Jefferson and Cherokee Landing Resorts, and (ii) ten
(10) years from the date of closing in the case of the letter of credit for the
Fox River Resort, and must provide that the funds evidenced thereby will be
disbursed to Seller upon presentation of a draft therefor and

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<PAGE> 20
a statement that Purchaser has defaulted in the performance of its obligations
regarding the operation and maintenance of the facilities at the applicable
resort. Seller hereby agrees that, if Purchaser ever breaches its obligations
regarding the operation and maintenance of the facilities at one of the
resorts, before drawing upon the letter of credit pertaining to that resort,
Seller will provide Purchaser with written notice specifying the alleged breach
and will allow Purchaser thirty (30) days from the date of the written notice
in which to cure the breach or, if the breach is curable but cannot be cured
within thirty (30) days, will allow Purchaser sufficient time to cure the
breach provided that Purchaser promptly commences cure of such breach within
the thirty (30) day period and continuously thereafter pursues the cure until
the breach is remedied.

At closing, Seller and Purchaser shall enter into a license agreement
(the "License") pursuant to which Seller will grant Purchaser a non-exclusive
license to use the name "Thousand Trails" in connection with the promotion and
operation of the campground facilities at the Fox River Resort. The License
shall endure for a term of ten (10) years; provided, however, Purchaser shall
have the option to extend such License for an additional ten (10) year period
by delivering to Seller written notice thereof within the ninety (90) day
period prior to the expiration of the original ten (10) year term. In return
for the right to use the name "Thousand Trails" in connection with its
operation of the campground facilities at Fox River Resort, Purchaser shall pay
Seller throughout the term (including the additional term, if applicable) of
the License annually in advance a fee of $30,000. The License shall be on the
terms and conditions and in form and substance identical to the License
Agreement attached hereto and made a part hereof for all purposes as Exhibit
"D." Upon the expiration of the License, the existing members will be required
by Seller to elect either (i) to be a member of Seller's entire campground
system, in which case the member must pay Seller the dues being charged by
Seller for system membership, (ii) to be a member of the Fox River Resort only,
in which case the member must pay Purchaser the dues being charged by Purchaser
for membership at that Resort, or (iii) to be a member both of Seller's entire
campground system and of the Fox River Resort, in which case the member must
pay Seller the dues being charged by Seller for system

- 20 -
<PAGE> 21
membership and must pay Purchaser the dues being charged by Purchaser for
membership at Fox River Resort.

EXECUTED on this 2nd day of May, 1997.

SELLER:

THOUSAND TRAILS, INC., a Delaware corporation

By: /s/ W. J. SHAW
-------------------------------------------
Name: W. J. Shaw
Its: C.E.O.

EXECUTED on this 1st day of May, 1997.

PURCHASER:

SILVERLEAF RESORTS, INC., a Texas corporation

By: /s/ ROBERT MEAD
-------------------------------------------
Name: Robert Mead
Its: C.E.O.

RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:

TITLE COMPANY:

SAFECO LAND TITLE OF DALLAS

By: /s/ BOBBIE IRWIN
---------------------------
Name: BOBBIE IRWIN
-------------------------
Its: V.P.
--------------------------

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<PAGE> 22
LIST OF EXHIBITS

Exhibit "A" Legal Description of Parcel 1, commonly known as "Fox River
Resort"

Exhibit "B" Legal Description of Parcel 2, commonly known as "Jefferson
Resort"

Exhibit "C" Legal Description of Parcel 3, commonly known as "Cherokee
Landing Resort"

Exhibit "D" Form of License Agreement

The above-listed exhibits are omitted from this filing. Registrant
agrees to furnish supplementally a copy of any exhibit to the Commission upon
request.

- 22 -

<PAGE> 1
EXHIBIT 10.25

AMENDMENT TO LOAN DOCUMENTS

This Amendment to Loan Documents ("AMENDMENT") is made as of the 27th
day of December, 1996, by and among SILVERLEAF VACATION CLUB, INC., a Texas
corporation, whose address is 1221 Riverbend Drive, Dallas, Texas 75247, f/k/a
ASCENSION RESORTS, LTD., doing business as SILVERLEAF RESORTS, LTD.
("BORROWER") AND HELLER FINANCIAL, INC., a Delaware corporation whose address
is 500 West Monroe Street, 17th Floor, Chicago, Illinois 60661 ("LENDER").

R E C I T A L S

A. Lender and Borrower have heretofore entered into that certain
Loan and Security Agreement dated December 27, 1995 (the "LOAN AGREEMENT"),
pursuant to which Lender agreed to loan Borrower an aggregate sum not to exceed
at any one time Four Million and 00/100 Dollars ($4,000,000.00) (the "LOAN").
Those certain documents shown on the attached Table of Contents as incorporated
as Exhibit A hereto and made a part hereof by this reference were executed in
connection with the Loan. Said documents, all as amended by this Amendment and
the Amended and Restated Promissory Note No. 1 dated of even date herewith in
the principal amount of $7,500,000 attached hereto as Exhibit B and made a part
hereof by this reference ("AMENDED NOTE") are hereinafter collectively referred
to as the "LOAN DOCUMENTS."

B. In consideration of Borrower's ratification and confirmation of
the Loan Documents, Lender has been induced by Borrower to amend and modify
certain terms and conditions of the Loan Documents as set forth hereinbelow:

NOW, THEREFORE, for Ten ($10.00) dollars and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by
Borrower and Lender, said parties agree as follows:

1. The recitals above set forth are true and correct and are
incorporated within this Amendment as though set forth herein at length. All
defined terms used herein and not otherwise defined shall have the meanings set
forth in the Loan Documents.

2. Borrower acknowledges the validity, enforceability, and due
execution and delivery of each and every of the Loan Documents executed by
Borrower or delivered on behalf of said party. Borrower hereby further warrants
and represents to Lender that in addition to having no defense to non-
performance of any of the covenants, agreements, warranties or any defense to
any failure or omission in terms of any representation made in any of the Loan
Documents, that Lender has performed in each and every respect under said Loan
Documents and that said Loan Documents are binding and enforceable in
accordance with their terms against Borrower.

3. Section 1.1 of the Loan Agreement is amended so that the
following defined terms shall have the indicated meanings:

<PAGE> 2
AMENDED NOTE. That certain Amended and Restated Promissory Note No. 1
dated December 27, 1996 made by Borrower payable to the order of Lender in the
original principal sum of $7,500,000.

AMENDMENT. That certain Amendment to Loan Documents, dated December
27, 1996, among Borrower and Lender.

AVAILABILITY PERIOD. The period commencing from the date hereof and
ending June 30, 1998.

LOAN. The Seven Million Five Hundred Thousand Dollar ($7,500,000.00)
Revolving Timeshare Interval Inventory Loan described in this Amendment as
amended by the Amended Note and by the Amendment.

MATURITY DATE. December 31, 1999, or any earlier date on which the
Loan shall be required to be paid in full, whether by acceleration or otherwise.

REVOLVING RECEIVABLES LOAN. The Twenty-Five Million Dollar
($25,000,000.00) loan advanced from Lender to Borrower from time to time since
October 11, 1999.

TITLE INSURANCE POLICY. An American Land Title Association Loan
Policy, as last revised, issued to Lender by the Title Insurer in an amount of
not less than $7,500,000, insuring that the Deed of Trust is a first lien upon
the "Property" (as said term is defined in the Deed of Trust) subject only to
the Permitted Exceptions. Said policy shall contain a variable Rate endorsement
and be in form and substance otherwise acceptable to Lender.

4. Each and every reference in the Loan Agreement and each and
every other of the Loan Documents to (a) Four Million ($4,000,000) Dollars
shall be and are amended to Seven Million Five Hundred Thousand ($7,500,000)
Dollars, and (b) the Note shall be deemed a reference to the Amended Note.

5. Borrower shall pay Lender an additional Commitment Fee in the
amount of $43,750 as consideration for Lender's increasing the Loan to
$7,500,000, which Commitment Fee shall be deemed earned in full upon the
execution of this Amendment by Borrower and Lender. The Commitment Fee shall be
payable out of the next Advance made on or after the date of this Amendment.

6. Each reference to $1,000 in Section 2.1, with the exception of
the last sentence shall be amended to $1,200.

7. Section 2.4(a) of the Loan Agreement is amended to add the
following language:

"Commencing July 31, 1998, and on the last day of each
month thereafter through and including December 31, 1999,
Borrower

2
<PAGE> 3
shall pay Lender the amount, if any, by which (i) 1/18 of the
outstanding principal balance of the Loan as of June 30, 1998,
exceeds (ii) the aggregate total of Interval release payments
made to Lender during such month in accordance with
Section 2.6(d) hereof."

8. Section 2.6(d) of the Loan Agreement shall be amended in its
entirety as follows:

"At the time of release, Borrower shall pay to Lender, in cash
or immediately available funds, a release price of (i) $1,200
for each Interval to be released during the Availability
Period, and (ii) $1,500 for each Interval to be released after
the Availability Period, and (iii) said payments shall be
applied in reduction of the unpaid principal balance of the
Note in the order due and payable thereunder. The payment of
the aforesaid release price in accordance with these terms and
provisions shall not preclude the payment of additional monies
(at the option of the Borrower) in connection with any release."

The Deed of Trust recorded in Missouri and Texas shall be amended to
incorporate the above references to the increased amount of the Loan and the
revised release provisions and certain other changes that the Lender may
require to carry out the provisions of the Loan Agreement as amended.

9. Section 5.1 of the Loan Agreement shall be amended in its
entirety as follows:

"5.1 ORGANIZATION, STANDING, QUALIFICATION, BORROWER EXISTENCE.
Borrower is, and will remain at all times, a corporation duly
formed, validly existing and in good standing under the laws of
the State of Texas, with its principal place of business at
1221 Riverbend, Suite 120, Dallas, Texas 75247. Borrower is in
good standing under the laws of the State of Missouri and is
authorized to transact business in the State of Missouri."

10. Section 11.1 of the Loan Agreement shall be amended in part to
provide that Notices to Borrower shall be directed to Silverleaf Vacation Club,
Inc., attention Robert Mead, 1221 Riverbend, Suite 120, Dallas, Texas 75247,
Telecopy No. (214) 905-0514. Notices to Lender shall be directed to Heller
Financial, Inc., Sales Finance Division, Attention: Portfolio Manager, 500 West
Monroe Street, 17th Floor, Chicago, Illinois 60661, Telecopy No. (312)
441-7924. All other notice provisions shall remain without change.

11. Borrower shall provide Lender with such other documents and
take such actions as Lender and its counsel deem reasonably necessary to
preserve Lender's security and priority and enforceability of the Loan
Documents and shall reconfirm and redeliver any document,

3
<PAGE> 4
instrument and information set forth in Schedule 4.2 of the Loan Agreement
prior to any Advance, at Lender's request.

12. This Amendment shall control and prevail in the event of any
conflict or inconsistency between any of the Loan Documents and this Amendment.

13. (a) Borrower does hereby acknowledge, confirm and agree to the
prompt and immediate payment of all sums due Lender from Borrower and of all
indebtedness of Borrower to Lender, and for the immediate performance and
prompt compliance by Borrower of all obligations of Borrower.

(b) Borrower does hereby waive, discharge and release forever
any and all existing claims, counterclaims, defenses, demands, and rights of
set-off that it or they may have against Lender or with regard to Loan
Documents as modified thereby, or which may affect the validity or
enforceability by Lender of its various rights and remedies under the Loan
Documents, and each further acknowledges and agrees that the waiver, discharge
and release herein contained represent an essential part of the consideration
bargained for and received by Lender in consideration of its agreements
hereunder.

(c) Borrower represents and warrants that the Loan Documents,
as modified herein, constitute a good and valid lien on the Collateral as more
particularly described in the Loan Documents.

(d) As additional consideration for Lender's agreements
hereunder, Borrower does hereby reconfirm and does re-grant to Lender a
security interest in the personal property making up the Collateral, if any, as
security for all indebtedness now or hereafter due from Borrower to Lender
under the Loan Documents and the Collateral for the Loan.

(e) The terms, conditions, covenants, and agreements hereof
shall be binding upon the heirs, personal representatives, successors, and
assigns of the parties hereto and shall inure to the benefit of the successors
and assigns of Lender.

(f) Borrower hereby acknowledges that under no circumstances
is Lender obligated to make additional financing available, for any purpose,
after the Availability Period.

(g) Borrower shall pay all costs and expenses, including
attorneys fees, incurred for the preparation, recording and implementation of
this Amendment.

(h) This Amendment shall be governed by and shall be construed
in accordance with the laws of the State of Illinois.

(i) Whenever the singular number is used herein, the same
shall include the plural, and the masculine and/or feminine and the natural
and/or artificial persons shall include all genders, whenever and wherever the
context so requires or admits.

<PAGE> 5
(j) Lender may, at any time and from time to time, waive any
one or more of the provisions of this Amendment, but any such waiver shall be
deemed to be made in pursuance of this Amendment and not in modification
thereof, and any such waiver in any instance or under any particular
circumstances shall not be considered a waiver of such condition in any other
instance or other circumstances.

(k) Any waiver or modification of the terms of this
Amendment by Lender shall be in writing and shall be signed by an authorized
officer of Lender. No delay or omission of the part of Lender in exercising any
right hereunder shall operate as a waiver of that right or of any other right
thereunder or hereunder.

(l) Time is of the essence under this Amendment with respect
to Borrower's performance hereunder.

(m) In the event any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall, at the
option of the Lender, not affect any provisions herein, but this Amendment shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.

(n) This Amendment may be executed in any number of
counterparts, each of which shall be an original, but such shall together
constitute but one and the same instrument.

(o) In the event governmental entities, agencies or
departments determine that this Amendment requires that additional documentary
or intangible stamps taxes are necessary, Borrower hereby agrees to immediately
pay such taxes. Borrower shall further pay any interest or penalties which may
accrue due to the requirement of additional documentary or intangible stamp
taxes and shall indemnify, defend and save and hold harmless Lender from and
against any and all claims or liabilities arising from the requirements of such
additional taxes. Failure on the part of Borrower to pay these additional taxes
when due shall be constitute an additional default under the Loan Documents.

(p) Waiver of Jury Trial. LENDER AND BORROWER HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT ANY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AMENDMENT TO LOAN DOCUMENTS AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OR CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO
THIS AMENDMENT TO LOAN DOCUMENTS.

14. The execution, delivery and performance by Borrower of the
Amendment and ratification of the Loan Documents has been duly authorized by
all necessary corporate action

<PAGE> 6
and does not and will not (i) violate any provision of the Borrower's Articles
of Incorporation or By-Laws or any agreement, law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
to which Borrower is a party or is subject; (ii) result in, or require the
creation or imposition of, any lien upon or with respect to any asset of
Borrower other than liens and security interests in favor of Lender; and (iii)
result in a breach of, or constitute a default of Borrower under, any indenture,
loan or credit agreement or any other agreement, document, instrument or
certificate to which Borrower is a party or by which it or any of its assets are
bound or affected.

Except as above expressly amended, the terms and conditions of the
Loan Documents remain in continuing full force and effect and are ratified and
confirmed by Borrower and Lender.

Executed as of the 27th day of December, 1996.

BORROWER:

SILVERLEAF VACATION CLUB, INC.,
a Texas corporation

By: /s/ ROBERT MEAD
---------------------------------
ROBERT MEAD
Chief Executive Officer
(Corporate Seal)

LENDER:

HELLER FINANCIAL, INC.,
a Delaware corporation

By: /s/ DAWN GRATON
----------------------------------
DAWN GRATON
Assistant Vice President
(Corporate Seal)

<PAGE> 7
LIST OF EXHIBITS

Exhibit A Table of Contents of Loan Documents

Exhibit B Amended and Restated Promissory Note No. 1

The above-listed exhibits are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted exhibit to the Commission upon
request.

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in this Registration Statement of Silverleaf Resorts,
Inc. on Amendment No. 1 to Form S-1 (Registration No. 333-24273) of our report
dated December 1, 1995 (May 15, 1997 as to the first paragraph of Note 9),
appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the headings "Summary
Consolidated Historical Financial, Operating and Pro Forma Financial
Information," "Selected Consolidated Historical Financial, Operating and Pro
Forma Financial Information" and "Experts" in such Prospectus.

/s/ JAMES SMITH & COMPANY, P.C.

James Smith & Company, P.C.

Dallas, Texas

May 15, 1997

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in this Registration Statement of Silverleaf Resorts,
Inc. on Amendment No. 1 to Form S-1 (Registration No. 333-24273) of our report
dated March 10, 1997 (May 15, 1997 as to the first paragraph of Note 9),
appearing in the Prospectus, which is part of this Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP

Dallas, Texas

May 15, 1997

<PAGE> 1

EXHIBIT 99

We hereby submit a one-page addendum to each of Exhibit nos. 10.8,
10.9, 10.11, 10.13, and 10.17, which addenda note that schedules to such
exhibit nos. are not included, but will be provided to the Commission
upon request.

<PAGE> 2
LIST OF EXHIBITS TO EXHIBIT 10.8

Exhibit A Permitted Exceptions

Exhibit B Release Fee Schedule (Ozark)

Exhibit C-1 Release Fee Schedule (Holiday Hills)

Exhibit C-2 Release Fee Schedule (Holiday Hills)

Exhibit C Form of Request for Advance

Exhibit D Form of Note

Exhibit E Form of Deed of Trust

The above-listed exhibits are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted exhibit to the Commission upon
request.

<PAGE> 3
LIST OF EXHIBITS TO EXHIBIT 10.9

Exhibit "A" Form of Borrower's Certificate and Request
for Advance

Exhibit "B" [Intentionally omitted]

Exhibit "C" Loan Documents:

- Form of Secured Promissory Note
- Form of Guaranty and Subordination
Agreement
- Form of Collateral Assignment of
Notes Receivable and Interval
Mortgages
- Form of Subordination Agreement
among Ascension Resorts, Ltd.,
Freedom Financial Corporation and
Textron Financial Corporation
- Form of Subordination Agreement
among Ascension Resorts, Ltd., Pace
Finance Company and Textron
Financial Corporation
- Form of Subordination Agreement
among Ascension Resorts, Ltd., STG
Investments and Textron Financial
Corporation
- Form of Lockbox Agreement
- Form of Borrower's Certificate and
Request for Advance

Exhibit "D" Operating Contracts

Schedule 1.1(n) Declarations

Schedule 1.1(xx) Description of Resorts

Schedule 1.1(eee) Timeshare Owner's Associations

Schedule 5 Applicable Recording Offices

Schedule 6.9 Environmental Matters

Schedule 6.19 Timeshare Regime Report

The above-listed exhibits are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted exhibit to the Commission upon
request.

<PAGE> 4
LIST OF EXHIBITS TO EXHIBIT 10.11

Exhibit A Form of Borrower's Certificate and Request for
Advance

Exhibit E Borrower's Inventory, Sales and Assignment Procedures

The above-listed exhibits are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted exhibit to the Commission upon
request.

<PAGE> 5
LIST OF EXHIBITS TO EXHIBIT 10.13

Exhibit A Permitted Exceptions

Exhibit B Legal Description for the Resorts

Exhibit C Form of Request for Advance

Exhibit D Form of Revolving Promissory Note

Exhibit E Form of Deed of Trust

The above-listed exhibits are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted exhibit to the Commission upon
request.

<PAGE> 6
LIST OF EXHIBITS TO EXHIBIT 10.17

Exhibit A Form of Borrower's Counsel's Opinion Letter

The above-listed exhibit is omitted from this filing. Registrant agrees to
furnish supplementally a copy of this exhibit to the Commission upon request.