PGI INC, DEF 14A, 1997-12-08

PGI INC
DEF 14A, 1997-12-08
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<PAGE> 1

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant X
Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12

PGI INCORPORATED
------------------------------------------------
(Name of Registrant as Specified in its Charter)

------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:
N/A

2) Aggregate number of securities to which transaction applies:
N/A

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:
----------------------------------------------------

5) Total fee paid:
$2,707.87
----------------------------------------------------

<PAGE> 2

X Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

N/A

1) Amount previously paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

<PAGE> 3

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF PGI INCORPORATED
TO BE HELD DECEMBER 22, 1997

TO THE HOLDERS OF THE COMMON STOCK AND THE CLASS A CUMULATIVE PREFERRED STOCK
OF PGI INCORPORATED:

The Annual Meeting of Shareholders of PGI Incorporated (the "Company"),
a Florida corporation, will be held at 212 South Central Avenue, Suite 100,
St. Louis, Missouri 63105, Monday, December 22, 1997 at 9:30 a.m., local
time, for the following purposes:

1. To elect directors;

2. To consider and act upon a proposal to rescind Article XII of the
Articles of Incorporation of the Company which would have the effect of
reducing to a simple majority of the capital stock outstanding the vote
required to approve certain significant corporate transactions, including the
sale, under certain circumstances, of all or substantially all of the assets
of the Company, which reduced vote requirement is consistent with the
corporate law of the state of Florida, the state in which the Company is
incorporated;

3. To consider and act upon a proposal to approve the Option
Agreement For Sale and Purchase as amended by the First Amendment and the
Second Amendment thereto, related to the sale by the Company's wholly-owned
subsidiary, Sugarmill Woods, Inc., of approximately 4,890 acres of
undeveloped real property located in Citrus County and Hernando County,
Florida to The Nature Conservancy, Inc., and approval of the Company's
intended use of proceeds from the sale; and

4. To transact such other business as may properly come before the
meeting and all adjournments thereof.

For the reasons stated in the Proxy Statement, the Company does not
believe the holders of the Company's common stock or the Class A Cumulative
Preferred Stock are entitled to dissenters' rights with respect to Proposal
Three. Nevertheless, attached to the Proxy Statement as Appendix D is a copy
of the applicable Florida statute pertaining to dissenters' rights. Appendix
D is being furnished only to comply with the Florida statute if dissenters'
rights are deemed to apply.

The Board of Directors has fixed October 29, 1997 as the record date for
the determination of the holders of the Company's common stock and the
holders of the Company's Class A Cumulative Preferred Stock entitled to
notice of, and to vote at, the Annual Meeting and all adjournments thereof.

By Order of the Board of Directors

Andrew S. Love, Jr.
Secretary

December 10, 1997

EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE. THE RETURN ENVELOPE DOES NOT REQUIRE POSTAGE
IF MAILED IN THE UNITED STATES. SHAREHOLDERS WHO ATTEND THE
MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY SO
DESIRE.

<PAGE> 4

PGI INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS

The enclosed proxy is solicited on behalf of the Board of Directors of
PGI Incorporated (the "Company"), for use at the annual meeting of its
shareholders (the "Annual Meeting") to be held at 212 South Central Avenue,
Suite 100, St. Louis, Missouri 63105, Monday, December 22, 1997 at 9:30
a.m., local time. Anyone giving such proxy may revoke it at any time before
it is exercised by (i) giving written notice of revocation to the Secretary
of the Company at the address indicated below, (ii) properly submitting to
the Company a duly executed proxy bearing a later date or (iii) appearing in
person at the Annual Meeting and voting in person.

If no contrary instructions are indicated on the form of proxy, the
proxy will be voted FOR the following: (i) the election of the two nominees
named herein as directors; (ii) the proposed amendment of the Company's
Articles of Incorporation as amended (the "Articles of Incorporation" or the
"Articles") to rescind Article XII thereof which would have the effect of
reducing to a simple majority of the Company's common stock and its Class A
Cumulative Preferred Stock outstanding the vote required to approve certain
significant corporate transactions, including the sale of all or
substantially all of the assets of the Company other than in the usual and
regular course of its business; and (iii) approval of an agreement for the
potential sale by the Company's wholly-owned subsidiary, Sugarmill Woods, Inc.
("Sugarmill Woods"), of approximately 4,890 acres of undeveloped real
property located in Citrus County and Hernando County, Florida (together with
the approximately 350 acres of undeveloped real property to be sold by
Love-PGI Partners, L.P., the "Property") to The Nature Conservancy, Inc.
Shareholders should note that if the sale of the Property as described herein
had closed on December 31, 1996, the Company would have incurred a pro
forma net loss from operations of approximately $1,885,000 for the nine month
period ending on September 30, 1997 as compared with the Company's actual net
loss from operations during that period of approximately $2,515,000. See the
"Consolidated Statements of Operations" for the Nine Months Ended September
30, 1997 contained in the Company's Form 10-QSB for the quarter ended
September 30, 1997, at page 4 of Form 10-QSB attached as Appendix F of this
Proxy Statement and the "Pro Forma Operating Information" at page C-4 of
Appendix C of this Proxy Statement. If matters other than those set forth above
properly come before the meeting, the proxy will be voted by the persons named
herein in a manner which they consider to be in the best interests of the
Company.

The Company's principal executive office is located at 212 South Central
Avenue, Suite 100, St. Louis, Missouri 63105 and its telephone number is
(314) 512-8650 and its telefax number is (314) 512-8687. The Proxy Statement
and the accompanying form of proxy are first being sent to the holders of the
common stock and the Class A Cumulative Preferred Stock (collectively, the
"Shareholders") on or about December 10, 1997.

VOTING

Only the holders of record of the Company's common stock, par value $.10
per share (the "Common Stock") and the Class A Cumulative Preferred Stock
having a liquidation value of

<PAGE> 5

$4.00 per share ("Preferred Stock") on October 29, 1997 (the "Record Date")
are entitled to notice of, and to vote, either in person or by proxy, at the
Annual Meeting and all adjournments thereof. At the close of business on that
date, 5,317,758 and 2,000,000 shares of Common Stock and Preferred Stock,
respectively, were issued and outstanding. Holders of the Common Stock and
Preferred Stock are entitled to one vote per share, voting together as a
class, on all matters to be submitted to shareholder vote at the Annual
Meeting. The Common Stock and the Preferred Stock are sometimes referred to
collectively hereinafter as the "Voting Capital Stock".

On May 15, 1997, the Board of Directors of the Company paid a dividend
in the amount of 2,000,203 shares of Common Stock to the holders of the
Preferred Stock (the "Preferred Stockholders"). As a result of such
issuance, the Preferred Stockholders collectively own 64.2% of the Voting
Capital Stock. See Footnotes 3, 4 and 5 to the table under "Security
Ownership of Certain Beneficial Owners and Management" for additional
information on the Preferred Stockholders and the aforementioned stock
dividend.

PROPOSAL ONE:

ELECTION OF DIRECTORS

Nominees; Voting on Election of Directors at the Annual Meeting

The Articles of Incorporation provide that the number of directors of
the Company may be increased or decreased in the manner set forth in the
Company's Bylaws. The Company's Bylaws provide that the number of directors
may be increased or decreased by resolution of the Company's Board of
Directors. The Board has set the number of directors at two. Consequently,
two directors are to be elected at the Annual Meeting, each of whom are to
serve for a term of one year or until their successors are duly elected and
qualified. The Board of Directors' nominees for election at the Annual
Meeting are Messrs. Andrew S. Love, Jr., and Laurence A. Schiffer, both of
whom are the two current directors of the Company and the Company's only
executive officers. The Company has no independent directors and as
disclosed in more detail under "Proposal Three: Option Agreement for Sale
and Purchase as Amended -- Use of Proceeds," Messrs. Love and Schiffer have
a substantial interest in the passage of Proposal Three such that if it is
passed and the Property is sold to the Conservancy, they may be deemed to
have "profited" by an aggregate of $1,274,000. See "Proposal Three: Option
Agreement for Sale and Purchase, As Amended -- Use of Proceeds."

The Certificate of Designation by which the Preferred Stock was created
(the "Certificate of Designation"), provides that if a default in the payment
of dividends on such shares exists, the holders of the Preferred Stock have
the right to increase the number of directors constituting the Board of
Directors by such number as shall equal a majority of the Board. These
additional directors are referred to as the "Preferred Directors." The
Company is in default in the payment of dividends on the Preferred Stock.
However, Love-PGI Partners, L.P., a Missouri limited partnership ("L-PGI")
which owns 93.75% of the issued and outstanding Preferred Stock, has
determined not to exercise its right to elect Preferred Directors because
Messrs. Love and Schiffer are the directors and controlling shareholders of
the general partner of L-PGI, and L-PGI believes that its interests in the
Company are therefore adequately represented.

2
<PAGE> 6

The Florida Business Corporation Act (the "Florida Act") provides that
unless otherwise set forth in a company's articles of incorporation, a
majority of the outstanding shares of capital stock, present in person or by
proxy, constitutes a quorum for the transaction of business at an annual
meeting or special meeting of stockholders. The Certificate of Designation
provides that at any annual or special meeting held at such time when there
exists a default in payment of the Preferred Stock dividends, the presence of
the holders of a majority of the outstanding shares of Preferred Stock shall
be required to constitute a quorum for the election of Preferred Directors,
regardless of the absence of a quorum of the holders of the Common Stock for
that purpose. However, because no Preferred Directors are to be elected,
this provision of the Certificate of Designation will have no impact on the
quorum requirements.

Shareholders do not have the right to cumulate their votes in the
election of directors. Shares represented by proxies which are marked to
"withhold authority" with respect to the election of one or more nominees for
election as directors will be counted for the purpose of determining the
presence or absence of a quorum at the Annual Meeting. The affirmative vote
of a plurality of the shares present in person or represented by proxy at the
Annual Meeting is required to elect directors. "Plurality" means that the
nominees who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be elected at the Annual
Meeting. Consequently, any shares represented at the Annual Meeting, but not
voted for any reason do not count as a vote against a director.

L-PGI owns or otherwise controls approximately 56.5% of the Company's
Voting Capital Stock. Therefore, it has the votes necessary to elect the
Board of Directors' slate of nominees. L-PGI has indicated its intent to
vote all of its shares of Common Stock and Preferred Stock for Messrs. Love
and Schiffer, the Board's nominees for election as directors. See Footnote 5
to "Security Ownership of Certain Beneficial Owners and Management" for a
discussion of the relationship between Messrs. Love and Schiffer and L-PGI.

The persons named in the enclosed form of proxy intend to vote such
proxy for the election of Messrs. Love and Schiffer as directors of the
Company unless the Shareholder indicates on the form of proxy that the vote
should be withheld or contrary directions are indicated. If the form of
proxy is signed and returned without any direction given, shares will be
voted for the election of Messrs. Love and Schiffer. The Board of Directors
has no reason to doubt the availability of either of the nominees and both
have indicated their willingness to serve if so elected.

Information Regarding the Nominees for Election as Directors

Andrew S. Love, Jr. .... Chairman of the Company's Board since May 1987;
Secretary since February 1994; Chairman of the Board of Love Real Estate
Company ("LREC") and Chairman and Secretary of Love Investment Company since
1973; Partner in the St. Louis based law firm of Bryan, Cave, McPheeters &
McRoberts until 1991; Director of Heartland Bank and Chairman of Love Savings
Holding Company ("LSHC"), the parent company of Heartland Bank since 1985;
Manager of PGIP, L.L.C. ("PGIP") since 1995; Age 54.

3
<PAGE> 7

Laurence A. Schiffer.... Director of the Company since April 1987; Vice
Chairman of the Company's Board of Directors since May 1987; President & CEO
since February 1994; President and CEO of LREC and Love Investment Company
since 1973; Member of the Real Estate Board of Metropolitan St. Louis and the
National Association of Real Estate Boards; Chairman of Heartland Bank and
President of LSHC since December 1985; Manager of PGIP since 1995; Age 58.

Information about the Board of Directors

The business of the Company is under the general management of the Board
of Directors, as provided by the laws of Florida, the state of the Company's
incorporation, and the Company's Bylaws. There were no official meetings of
the Board during the fiscal year ended December 31, 1996; all Board actions
were taken by unanimous written consent. Because of the size of the Board
and its limited operations, the Board has not found it necessary to establish
and delegate any of its responsibility to committees of the Board. Neither
Messrs. Schiffer nor Love received compensation for serving on the Board.
The Board currently has no independent directors.

EXECUTIVE COMPENSATION

The Company's Chief Executive Officer is Mr. Laurence A. Schiffer.
Because of the Company's impaired financial condition, it does not compensate
Mr. Schiffer or Mr. Love, the Company's only other executive officer.
Management services are provided to the Company by LREC pursuant to that
certain Management Consulting Agreement by and between the Company and LREC
dated March 25, 1987 (the "Management Agreement"). Although Mr. Schiffer
receives an annual salary from LREC, no part of that salary is directly
attributable to services he performs for the Company as an employee of LREC.
See "Certain Relationships and Related Transactions."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The table below provides certain information as of the Record Date
regarding the beneficial ownership of the Common Stock and the Preferred
Stock by each person known by the Company to be the beneficial owner of more
than five percent of either the Common Stock or the Preferred Stock, each
director of the Company (which persons are the two nominees comprising the
Board's slate of nominees and who are also the Company's only executive
officers), and by virtue of the foregoing, the directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
PERCENT OF
NAME COMMON PREFERRED COMMON PREFERRED TOTAL VOTING
---- STOCK STOCK STOCK STOCK POWER
----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Estate of Harold Vernon 998,777<F1><F2> -- 18.8% -- 13.6%

Alfred M. Johns 437,414<F3> 125,000<F3> 5.3% 6.3% 7.7%

4
<PAGE> 8

Love-PGI Partners, L.P. 2,260,706<F4><F5> 1,875,000<F5> 42.5% 93.8% 56.5%

Andrew S. Love, Jr. 2,260,706<F6> 1,875,000<F6> 42.5% 93.8% 56.5%

Laurence A. Schiffer 2,260,706<F7> 1,875,000<F7> 42.5% 93.8% 56.5%

<FN>
<F1> The shares of Common Stock owned by Mr. Vernon are currently in the
possession of the Federal Deposit Insurance Corporation ("FDIC")
which is the receiver for First American Bank and Trust, Lake
Worth, Florida ("First American"). First American previously made
a loan to Mr. Vernon which was secured by these shares. The loan
is in default and the Company understands that the FDIC has the
right, pursuant to a pledge agreement, to vote the shares at any
annual or special meeting of shareholders.

<F2> Information obtained from filings made with the Securities and Exchange
Commission.

<F3> Sole voting and investment power over 427,314 shares of Common Stock;
shares voting and investment power over 10,100 shares of Common
Stock included in the table which are owned by Mr. Johns' wife; sole
voting and investment power over the 125,000 shares of Preferred
Stock.

<F4> Under the Certificate of Designation for the Company's Preferred Stock,
holders of the Preferred Stock are entitled to cumulative annual
dividends at the rate of $.32 per share. The dividends are "earned"
as they accrue, and are payable on fixed quarterly payment dates as
specified in the Certificate of Designation. The accrued dividends
are an obligation of the Company to which the holders of the
Preferred Stock are entitled, and must be satisfied prior to any
dividends being paid or other distributions made upon the Common
Stock. Under the Certificate of Designation and corporate law,
however, the Board of Directors must "declare" the dividends prior
to actual payment. The Certificate of Designation also provides
that dividends due through April 25, 1995 are to be payable in the
form of the Company's Common Stock. Dividends due after that date
are to be payable in cash. Because of the Company's impaired
financial condition and because the Florida Act precluded payment
of dividends because of the Company's financial condition, the
Company had not been able to pay dividends on the Preferred Stock
since the last payment in 1989 and hence was in default of its
payment obligations. However, recent changes to the Florida Act
eliminated the restriction on the Company's ability to pay
dividends in the form of its Common Stock. Accordingly, on May 9,
1997, the Board of Directors declared the payment of the "earned"
but "unpaid" dividends through April 25, 1995 in accordance with
the terms of the Certificate of Designation and upon the written
demand by the holders of the Preferred Stock. The total amount of
earned and unpaid dividends through that date was $4,260,433. Under
the terms of the Certificate of Designation and based upon the
designated $2.13 per share conversion price, 2,000,203 shares of
Common Stock were issued to the holders of the Preferred Stock on
May 15, 1997. The $2.13 conversion rate is pursuant to the
Certificate of Designation, despite the fact that there has been no
public market for the shares since January 1991, and from January
1, 1991 to January 29, 1991 the high and low bid price and the high
and low offer price of the Common Stock was $.03 and $.10,
respectively.

<F5> The controlling general partner of L-PGI is Love Investment Company, a
Missouri corporation owned by Mr. Love, Love family members and
trusts, the Estate of Martha Love Symington and Mr. Schiffer.
Messrs. Love and Schiffer serve as the executive officers and
directors of Love Investment Company. These shares are pledged to
the FDIC, as successor in interest to Germania Federal Savings and
Loan ("Germania"), as security for a loan made by Germania to
L-PGI. L-PGI has the right to vote these shares.

<F6> These shares are the same shares owned by L-PGI. Mr. Love is an
indirect owner of L-PGI. See Footnote 5 above and "Certain
Relationships and Related Transactions" for more information.

5
<PAGE> 9

<F7> These shares are the same shares owned by L-PGI. Mr. Schiffer is an
indirect owner of L-PGI. See Footnote 5 above and "Certain
Relationships and Related Transactions" for more information.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

As of March 25, 1995, the rights of the holders of the Preferred Stock
to convert their shares into Common Stock expired pursuant to the terms of
the Certificate of Designation. The Preferred Stockholders failed to file
Forms 4 to reflect the change in beneficial ownership as a result of the
expiration of such conversion rights. The Preferred Stockholders and the
beneficial owners of the Preferred Stock filed Forms 4 in June 1997 to
reflect the expiration of this conversion right and other changes in
beneficial ownership.

PROPOSAL TWO:

RESCISSION OF ARTICLE XII TO THE ARTICLES OF INCORPORATION

Pursuant to Article XII of the Company's Articles of Incorporation, any
agreement or plan of merger or consolidation between the Company and any
other entity, or the sale of all or substantially all of the assets of the
Company to another entity, requires the approval of the holders of two-thirds
of the Company's outstanding capital stock entitled to vote at the
shareholders' meeting at which the transaction is considered. The Board of
Directors has approved the amendment of the Articles of Incorporation to
rescind Article XII.

If such amendment is approved, any agreement or plan of merger or
consolidation between the Company and any other entity, or the sale of all or
substantially all of the assets other than in its usual and regular course of
its business would require the affirmative vote of the holders of a simple
majority of all the outstanding capital stock entitled to vote at any meeting
during which such agreement or plan of merger or consolidation or sale is
submitted and at which a quorum is present.

The Board of Directors believes that the amendment of the Articles of
Incorporation to rescind Article XII is in the best interests of the Company
because it will give the Board the flexibility to direct and manage the
affairs of the Company in an efficient, timely and effective manner. As
discussed herein under "Proposal Three: Option Agreement for Sale and
Purchase as Amended," since 1994 the Company has concentrated its efforts on
disposing in bulk of its undeveloped, platted, residential real estate in
order to decrease its debt obligations. There is a substantial likelihood
that a future bulk sale of such undeveloped, platted, residential real estate
may constitute the sale of all or substantially all of the Company's assets
other than in the ordinary course of business which would require that such
sale be submitted to the Shareholders for approval. The Board believes that
eliminating the two-thirds requirement and relying instead on the simple
majority requirement as provided in the Florida Act, will enhance its ability
to complete such bulk sales and strengthen the Company's financial condition.

If approved by the Shareholders, such amendment will become effective
immediately upon the Company's filing of the Articles of Amendment of the
Articles of Incorporation with the Florida Secretary of State.

6
<PAGE> 10

The Articles provide that ". . . amendment or repeal of this Article
XII . . . shall require the approval of the holders of two-thirds (2/3) of
the outstanding stock entitled to vote at the shareholders' meeting at which
such amendment or repeal is submitted . . ." Therefore, abstentions and
broker non-votes will have the effect of a vote against Proposal Two.

Section 607.0725(3) of the Florida Act provides that in all matters
other than the election of directors, passage requires that the number of
votes cast in favor of a proposal exceed the number of votes cast against it,
unless the articles of incorporation or the Florida Act requires a greater
number of affirmative votes.

The Company views Proposal Two and Proposal Three to be independent of
each other. Shareholders should note carefully that for the reasons stated
under "Proposal Three: Option Agreement for Sale and Purchase, as Amended--
Shareholder Approval," the Company does not believe that the sale of the
Property to the Conservancy represents the sale of all or substantially
all of the assets of the Company (although the Company recognizes that a
court might find that the sale does, in fact, constitute the sale of all
or substantially all of the assets of the Company). Therefore, it does not
believe that Shareholder approval of the sale of the Property to the
Conservancy is required either under the Company's Articles of Incorporation
or the Florida Act. The Company is seeking the approval of the Shareholders
of the sale of the Property to the Conservancy only because the Option
Agreement, as Amended, requires such approval as a condition of closing - a
condition the Conservancy could waive. Even if the Shareholders do not approve
Proposal Two, the Company would sell that portion of the Property it owns to
the Conservancy if the Conservancy were willing to exercise the option and the
Company was thereafter able to deliver assurance of title satisfactory to the
Conservancy. The Company could effect the sale because passage of Proposal
Three is assured due to the Total Company Vote controlled by Messrs. Love
and Schiffer through their control of L-PGI. The Company recognizes that a
Shareholder who disagrees with the Company's position that the sale of the
Property to the Conservancy does not constitute the sale of substantially all
of its assets and would therefore violate Article XII of the Company's
Articles of Incorporation if Proposal Two is not passed, could file suit to
enjoin the sale, or in the alternative, for damages.

The portion of the property which the Company proposes to sell to the
Conservancy represents 93% of its total acreage. However, the Company believes
that the potential dollar

7
<PAGE> 11

value of the real estate it is not selling to the Conservancy (defined as the
"Retained Acreage" elsewhere herein) may substantially exceed the percentage
which the size of the Retained Acreage represents of the Company's total
acreage. See "Proposal Three: Option Agreement for Sale and Purchase, as
Amended - Prospects for the Retained Acreage" and "--Shareholder Approval," for
an expanded discussion of the reasons the Company does not believe the sale
of the Property to the Conservancy represents the sale of substantially all
of its assets (although the Company recognizes that a court might find that
the sale does in fact, constitute the sale of substantially all of its assets).

The Company is seeking the approval of the rescission of Article XII
because, as stated above, it believes rescission is in the Company's best
interest. The Company also believes that rescission of the two-thirds voting
requirement eliminates any potential argument that the requisite shareholder
approval was not obtained under Article XII (even though the Company believes
that the voting requirements of Article XII do not apply to the sale of the
Property to the Conservancy). This argument could only arise if the
Company's subsidiary were to sell the Property to the Conservancy after
approval of the Shareholders by the vote required by the Florida Act but
which Shareholder vote was less than the two-thirds approval required under
Article XII.

If the Property were ultimately sold as described in Proposal Three,
Messrs. Love and Schiffer, the Company's only two executive officers and
directors, could be deemed to have "profited" by $1,274,000. See "Proposal
Three: Option Agreement for Sale and Purchase as Amended - Use of Proceeds."
See also "Certain Relationships and Related Transactions." The Board
recommends that the holders of the Common Stock and the remaining Preferred
Stock approve the rescission of Article XII by voting FOR Proposal Two.
Finally, See "Conflicts of Interest" for a discussion of the Company's
recognition of the competing interests facing Messrs. Love and Schiffer.

PROPOSAL THREE:

OPTION AGREEMENT FOR SALE AND PURCHASE AS AMENDED

PGIP, L.L.C.

The following information is provided to assist Shareholders in better
understanding the relationship among the Company, PGIP, LSHC and Messrs. Love
and Schiffer, the Company's two directors and its only executive officers, as
it relates to Proposal Three. For an expanded discussion, see "Certain
Relationships and Related Transactions". See also Appendix A attached
hereto.

On March 28, 1996, the Company's former primary lender, First Union
National Bank of Florida ("First Union"), assigned to PGIP all of First
Union's right, title and interest in and to the loan documents evidencing and
securing First Union's credit agreements with the Company, and the Company's
subsidiaries, Sugarmill Woods, Burnt Store Marina, Inc., and Gulf Coast
Credit Corporation in exchange for approximately $5,548,000. At the time of
the assignment, the Company owed First Union $9,007,000 in principal and
accrued interest (the "First Mortgage Indebtedness"). Although First Union
would have been willing to accept repayment of a discounted amount in
exchange for cancellation of the First Mortgage Indebtedness, the Company was
unable to take advantage of this corporate opportunity because it did not
have the liquidity, borrowing power or ability to sell equity to raise the
money necessary to take advantage of it.

8
<PAGE> 12

PGIP was formed by Messrs. Love and Schiffer, the Company's only
directors and executive officers, to purchase the First Mortgage Indebtedness
and to accept the assignment from First Union of the first mortgage as
security for the repayment of the First Mortgage Indebtedness.

The largest investor in PGIP is LSHC which holds a 72% interest and is a
manager of PGIP. Andrew S. Love, Jr. and Laurence A. Schiffer own
approximately 52% of all the issued and outstanding voting stock of LSHC and
serve as the directors and officers of LSHC. Messrs. Love, Schiffer and LSHC
are the managers of PGIP. The holders of the remaining limited liability
company interests do not have any affiliation with PGI, LSHC, L-PGI, Love
Investment Company, Love Real Estate Company, Love Development and Investment
Company or Love 1989 Florida Partners, L.P.

As the purchaser of the loan documents, PGIP has a first mortgage on
the part of the Property owned by the Company and proposed to be sold under
the "Option Agreement, as Amended" (as that term is defined below). PGIP
accepted assignment of the credit agreements, which were in default and with
respect to which the maturity of the First Mortgage Indebtedness secured by
the first mortgage had been accelerated, and advised the Company that so long
as the Company were to market and sell its remaining undeveloped land with
satisfactory efforts and results, including payments out of sale proceeds to
PGIP, PGIP would not proceed with enforced collection of the principal and
interest comprising the First Mortgage Indebtedness. The bulk sale of the
Property is an integral part of the plan by which the Company intends to
repay PGIP. See "-- Use of Proceeds" for a discussion of the benefits which
may accrue to PGIP, LSHC and indirectly to Messrs. Love and Schiffer as
shareholders of LSHC which, as stated above, owns a majority of the limited
liability company interests in PGIP, if the sale to the Conservancy pursuant
to the Option Agreement, as Amended, is consummated.

Background of Option Agreement, As Amended

On January 31, 1997, Sugarmill Woods, a Florida corporation and a
wholly-owned subsidiary of the Company, and L-PGI (collectively the "Sellers"),
entered into an Option Agreement for Sale and Purchase with The Nature
Conservancy, Inc. (the "Conservancy"), for the sale and purchase of the
Property, which consists of approximately of 5,240 acres of certain
undeveloped real estate located in Citrus County and Hernando County,
Florida, of which approximately 4,890 acres are owned by the Company and 350
acres are owned by L-PGI. The Option Agreement for Sale and Purchase was last
amended on October 1, 1997. The amendment extended to October 31, 1997, the
date by which approval by the Shareholders of the agreement as so amended
must be obtained. The Option Agreement for Sale and Purchase as amended is
referred to hereinafter as the "Option Agreement, as Amended." See
"--Shareholder Approval" for a discussion of the Company's intent with respect
to the proposed sale of the Property to the Conservancy if Proposal Three is
passed, even though the Annual Meeting will take place after October 31,
1997.

Negotiations regarding the agreement began in January 1996 after the
Conservancy first contacted the Company in March 1994 about its interest in
acquiring real estate. The Conservancy is a not-for-profit corporation
organized under the laws of the District of Columbia

9
<PAGE> 13

which is structured to qualify as a tax exempt entity pursuant to Section
501(c)(3) of the Internal Revenue Code of 1986, as amended. The business
address of the Conservancy is 222 S. Westmonte Drive, Suite 300, Altamonte
Springs, Florida 32713, and its telephone number is (407) 682-3664. The
Conservancy acts as an intermediary for states and currently is sponsoring a
conservation project for Florida's Conservation and Recreation Land Program.

The Company has been informed that the Conservancy and the State of
Florida are interested in obtaining the Property, which is mostly an upland
sand dune area, in order to preserve the land and to protect the wildlife
thereon. In addition, the Company has been advised that the Florida
Department of Forestry is contemplating incorporating the Property into the
adjacent Withlacoochee State Forest.

Summary of the Option Agreement, as Amended

This summary of the Option Agreement, as Amended is qualified in its
entirety by reference to the Option Agreement for Sale and Purchase as
amended by Amendment No. 1 and Amendment No. 2 thereto all of which is
attached to this Proxy Statement as Appendix B.

The Option Agreement, as Amended, grants to the Conservancy the right
and option to purchase from the Company's wholly-owned subsidiary, Sugarmill
Woods, and from L-PGI, approximately 5,240 acres<F1> of undeveloped real estate
located in Citrus County and Hernando County, Florida. Exercise of the
option and the purchase of the Property is subject to the approval by the
Board of Governors of the Conservancy. The Conservancy may assign its rights
under the Option Agreement, as Amended, to the Board of Trustees (the
"Trustees") of the Internal Improvement Trust Fund of the State of Florida,
in which case the aforementioned approval would be required by the Trustees.
Pursuant to an oral amendment of the Option Agreement as Amended, the
obligations of Sugarmill Woods and L-PGI under the Option Agreement, as
Amended, are subject to the approval of the holders of the Voting Capital
Stock which must be obtained by November 30, 1997. See "--Shareholder
Approval" for a discussion of the Company's intent with respect to the
proposed sale of the Property to the Conservancy if Proposal Three is passed,
even though the Annual Meeting will take place after November 30, 1997.

For the purposes of this subsection only, the Company's subsidiary,
Sugarmill Woods and L-PGI are sometimes referred to collectively as the
"Seller" and the Conservancy and its permitted assigns are sometimes referred
to as the "Purchaser".

Under the terms of the Option Agreement, as Amended, the exercise price
for the real estate to be purchased is $14,759,335 (the "Exercise Price"),
subject to certain adjustments. The exercise price is based on the
approximately 5,240 acres comprising the Property, multiplied by

<FN>
- --------------------------------------
<F1> The number of acres comprising the Property as set forth in this Proxy
Statement is an approximation only. Under the terms Option Agreement,
as Amended, the Seller is obligated to furnish a boundary survey and
based upon the results of that survey, the number of acres being sold
may be increased or decreased.

10
<PAGE> 14

the price per acre set forth in the Option Agreement, as Amended, of $2,816.43
(the "Per Acre Price"). Because the number of acres used in this Proxy
Statement to describe the size of the Property is an approximation only, the
exercise price may be more or less than $14,759,335 after the pre-closing
survey required by the Option Agreement, as Amended and described below, is
completed.

A Florida statute limits the per acre price which the Purchaser may pay
for the Property to the maximum amount per acre to be determined by the
Division of State Lands of the Florida Department of Environmental Protection
(the "DSL"). The determination is to be made based upon a boundary survey of
the Property by a professional surveyor and mapper licensed by the State of
Florida which shall be certified to the Purchaser within 90 days of any
closing of the sale of the Property. If the survey uncovers title defects
which result in the maximum amount per acre as determined by the DSL being
less than the Per Acre Price, the aforementioned statute could result in a
required downward adjustment (the "DSL Adjustment") to the Exercise Price.
However, the Option Agreement, as Amended, provides that if the DSL
Adjustment results in a decrease of more than $100,000, the Company and L-PGI
may terminate their obligations thereunder. The Option Agreement, as
Amended, does not provide for an increase in the Exercise Price if the
maximum amount per acre as determined by the DSL is higher than the Per Acre
Price. The Purchaser is obligated to reimburse the Seller for up to the
lesser of one-half of the cost of the survey or $29,985.

Under the Option Agreement, as Amended, the Seller is obligated to
furnish and pay for a Phase I environmental site assessment of the Property
(the "Phase I") at least 15 days prior to the expiration date of the option.
If recommended in the Phase I, the Seller is obligated to furnish the
Purchaser with a Phase II environmental site assessment (the "Phase II")
provided that if the cost of the Phase II shall exceed $20,000, the Seller
may terminate the Agreement. If either the Phase I or the Phase II uncover
the presence of hazardous materials on the Property, the Seller is obligated
to commence a clean-up, provided that if the estimated cost of a clean-up
should exceed $100,000, the Seller may elect to terminate the Option
Agreement, as Amended. The Seller would be obligated to pay for all clean-up
costs of hazardous materials discovered on the Property after closing. The
Phase I has been commissioned, but the Company has not yet been furnished
with the results.

The Seller is obligated to furnish the Purchaser with a marketable title
insurance commitment within 45 days after the Purchaser's approval of the
Option Agreement, as Amended, to be followed by a standard owner's marketable
title insurance policy in the amount of the final purchase price. The Seller
also agrees to cure all defects of title unacceptable to the Purchaser
provided that the Seller may elect to terminate the Option Agreement, as
Amended, if the cost to cure or remove such defects exceeds $100,000. If the
Seller is unable to remove any defects within the time allowed, the Exercise
Price may be further adjusted as agreed between the parties, the Purchaser
can take the Property with the defects or the Option Agreement, as Amended,
may be terminated. There can be no assurance that the Seller will be able to
deliver to the Purchaser a marketable title insurance commitment. See the
discussion regarding Love-1989 Florida Partners, L.P., in "Certain
Relationships and Related Transactions."

11
<PAGE> 15

Under the Option Agreement, as Amended, the Seller is required, on or
before any closing, to cause applicable governmental authorities to release
the Property from all plat restrictions and to take all actions necessary to
allow the title insurer to delete all exceptions pertaining to the Sugarmill
Woods portion of the Property. If the Seller is unable, through no fault of
its own, to satisfy this closing condition, the Purchaser's remedies are
limited to reducing the exercise price based on the final DSL approved survey
by $100,000, decreasing the exercise price as mutually agreed by the parties,
or terminating the Option Agreement, as Amended. Additionally, the Seller is
required to cause the applicable governmental authority to release
approximately 76 acres of the Property from the requirement under the plat
governing it that those acres be used as a park. If the Seller is unable,
through no fault of its own, to satisfy this closing condition, the
Purchaser's remedies are limited to decreasing the exercise price by $50,000.
The exercise price reductions based upon the potential DSL Adjustment, the
potential reduction due to the Seller's failure to satisfy the closing
conditions described in this paragraph and any potential reduction based upon
the Seller's inability to cure any title defects, is limited to a total
exercise price adjustment of $100,000.

The Seller will be responsible for payment of all documentary revenue
stamp taxes, all other taxes associated with the conveyance, the cost of
recording the deed for the Property and the costs of all other required
recordings. All other expenses, including attorneys fees, are to be paid by
the party incurring them. All real estate taxes and assessments shall be
prorated between the Seller and the Purchaser up to the date of closing
unless the Option Agreement, as Amended, is assigned to the State of Florida
and then such taxes and assessments shall be paid by Seller at closing.

Under Florida law and the regulations of the Florida Division of Land
Sales, Condominiums and Mobile Homes (the "Florida Division"), the Company,
as a division registrant, is required to submit the proposed sale to the
Florida Division for its review and approval. The Company provided the
Florida Division with information and supporting documentation on April 8,
1997, but there can be no assurance that the approval of the Division will be
obtained or obtained in a timely manner.

The Option Agreement, as Amended, provides that the option may be
exercised during the period beginning with Purchaser's approval of the Option
Agreement, as Amended, and ending 120 days after the Trustees' approval of it
(the "Option Expiration Date") unless extended by other provisions of the
Option Agreement as Amended, if it is assigned to the Trustees. If the
Option Agreement, as Amended, is not approved by the Trustees on or before
March 3, 1998, or if it is not assigned to the Trustees, then the option
shall expire March 3, 1998, unless extended by other provisions of the Option
Agreement, as Amended. If the Purchaser does not have the funds to pay the
exercise price by the expiration date, the exercise period may be extended
until such funds become available, not to exceed 60 days after the Option
Expiration Date, by written notice to Seller. There can be no assurance that
the option to purchase the Property will be exercised even if the
Shareholders approve Proposal Three.

After Proposal Three is approved and the option to purchase the Property
is exercised, closing shall take place 15 days after the Purchaser exercises
the option unless defects in the marketability of title exist or other
necessary actions have not been taken by Seller.

12
<PAGE> 16

Reasons for Bulk Sale of Property

The Company discontinued most of its normal operations in 1994 to focus
on the disposition in bulk of its undeveloped, platted, residential real
estate. The plan in doing so was to reduce its debt obligations and to
improve its financial condition to eventually allow it to resume normal
operations and develop its currently undeveloped commercial real estate or to
sell the remainder in bulk and to thereafter use the proceeds to continue
operations, but perhaps in another venue. The potential sale to the
Conservancy is an integral part of that plan.

As stated above under "--PGIP, L.L.C.", although the First Mortgage
Indebtedness is currently in default, PGIP has agreed to forego foreclosure
if the Company implements a satisfactory program of land sales such that a
portion of the proceeds of such sales satisfactory in amount to PGIP, is used
to repay the First Mortgage Indebtedness. PGIP has informed the Company that it
would be willing to release its first mortgage on the Property owned by the
Company to allow it to be sold in bulk to the Conservancy provided that the
proceeds of such a sale are used to repay all or a major portion of the First
Mortgage Indebtedness.

If the Conservancy does not exercise its option and thereafter consummate
the purchase of the Property, PGIP currently intends to foreclose on the First
Mortgage. In such event, the Company believes this action would result in the
extinguishment of the Company's equity in the Property owned by it and in the
Retained Acreage (which is encumbered by the First Mortgage but which is not
part of the Property to be sold to the Conservancy). There is also the
possibility, depending upon the result of any foreclosure sale, that PGIP could
obtain a deficiency judgment against the Company. The extinguishment of the
Company's equity in the Property and the possible deficiency judgment would
substantially reduce the possibility of there being any recovery by the
Shareholders of any part of their investment in the Company.

The Company has concluded that it does not have any other reasonable
prospects to prevent foreclosure. Further, the Company does not view the
proposed sale of the Property to the Conservancy as a distress sale with
regard to the Exercise Price and terms but, rather, the Exercise Price
represents a fair price for the Property. The Company believes that the
Option Agreement, as Amended, and potential sale represents the Company's
best opportunity to obtain the liquidity necessary immediately to meet
certain of its other financial obligations and is consistent with the plan
described in the first paragraph of this subsection.

Further, the Company has concluded that selling the Property in bulk to
the Conservancy will provide the Shareholders greater value than continuing
to attempt to sell the Property to another real estate developer. It
believes that any real estate developer with the experience and financial
resources necessary to purchase the Property will continue to be uninterested
in purchasing the Property, recognizing that it would undoubtedly encounter
the same problems in attempting to develop, and resell the Property that the
Company did. Further serving to depress the value of the Property to a real
estate developer would be its recognition that the cost to acquire the
Property from the Company and to upgrade it would probably be much greater
than the cost to purchase existing improved property. Such developers know
that there are thousands of other individual lots and many developments of
bulk sale lots in the same general vicinity as

13
<PAGE> 17

the Property that are available at reasonable prices. These properties are
included in both golf and non-golf communities.

In addition, it is likely a developer would experience difficulty in
obtaining financing to purchase the Property from the Company, given the
problems past creditors of the Company experienced. Finally, there are
certain impediments facing developers of undeveloped real estate such as the
Property that makes it unattractive. Among these impediments are compliance
with environmental and conservation laws. In the final analysis, the Company
has concluded that a bulk sale is its only viable alternative.

Exercise Price Considerations

The Conservancy has advised the Company that it is prohibited by law
from allowing the Company to review the Conservancy's appraisals. The
Exercise Price is based on two appraisals (the "Conservancy Appraisals")
which are only available to the Conservancy and the State of Florida at this
time. The Company has been orally assured by the Conservancy however, that
the Exercise Price represents no less than 90% of the value of the Property
as contained in the Conservancy Appraisals. The Company has been further
advised that the Conservancy is prohibited by law from expending more to
purchase property than its appraised value. Because its expenses in
consummating a sale are included in the amount it is allowed to pay, the
Conservancy cannot pay the full amount of the Conservancy Appraisal.

Despite the fact that the Company cannot review the Conservancy
Appraisals, and that the Exercise Price may be ninety percent of the
Conservancy Appraisal, the Company is willing to sell the Property for the
Exercise Price because no other buyer has agreed to purchase the Property for
an amount even approaching the Exercise Price, although the Company has been
actively pursuing a bulk sale.

In exercising its business judgment as directors of the Company, Messrs.
Love and Schiffer, who themselves are experienced real estate professionals
who know the Florida real estate market, concluded that the Exercise Price
was reasonable even though they had not reviewed the Conservancy Appraisal.

Even though the Company has not reviewed the Conservancy Appraisal, the
Exercise Price was the result of intense and prolonged negotiations and the
Company is confident it received the highest price for the Property that the
Conservancy was willing to pay.

The Company has had access to other appraisals of the land of which the
Property is a part. In September 1995, PGIP contracted for an update to an
appraisal conducted seven years ago on the bulk acreage owned by the Company
and of which the Property is a part. The updated appraisal reflected a value
of approximately $4,855 per acre. In 1992, a predecessor of First Union, the
Company's former primary bank lender, obtained an appraisal reflecting a
value of approximately $2,930 per acre, and PGIP obtained another appraisal
in September 1995, which reflected a value of approximately $2,500 per acre.

14
<PAGE> 18

The Company acknowledges that the updated September 1995 appraisal
described in the immediately preceding paragraph reflects a higher value than
the Per Acre Price of $2,816.43 used to determine the Exercise Price for the
Property. Appraisals do not necessarily reflect what a real buyer is
actually willing to pay for a piece of real estate. Appraisals can vary
based on the appraiser's background and experience, the year in which the
appraisal is done, the contemplated use of the property being appraised, and
prices received for nearby properties. Recognizing that other appraisals
reflected a higher per acre price than $2,816.43, the Company believes that
the Per Acre Price of $2,816.43 reflects the most accurate valuation of the
Property, in view of the fact that there are no other interested purchasers
and is the best measure of the Property's value.

Pragmatically, the Company is of the view that appraisals aside, the
Option Agreement, as Amended, is the only viable offer the Company has
received or is likely to receive on the Property. The Exercise Price
represents the best prospect the Company has had to date to sell the Property
and to obtain a measure of liquidity required to reduce its indebtedness,
particularly the First Mortgage Indebtedness.

L-PGI received an appraisal dated April 30, 1997 from Lee Pallardy, Inc.,
an unaffiliated entity, which supports a value of $3,750 per acre for the 350
acres which it owns, based on its frontage on Highway 98. L-PGI will be
allocated that amount per acre, or an aggregate $1,312,500 for the 350 acres
being sold by it, such that approximately $13,446,835 of the Exercise Price
is allocated to the 4,890 acres of the Property being sold by the Company.
The Company believes the appraised per acre value of the 350 acres being sold
by L-PGI is greater than the Per Acre Price for the Property being sold by
the Company because of several factors, including the proximity of the 350
acres to other developments, and their amenities, and because such acres
front on Highway 98.

Use of Proceeds

If the Option Agreement, as Amended, is approved by the Shareholders and
the sale of the Property to the Conservancy is consummated, and assuming that
PGIP, the holder of the Company's First Mortgage Indebtedness, approves the
offer of the Company described in the next paragraph, the Company intends to
apply the net proceeds of the sale to retire all but $1 million dollars of
the First Mortgage Indebtedness. The net proceeds of the sale, including the
$1 million made available by leaving in place a portion of the First Mortgage
Indebtedness in like amount will be held in escrow and made available to the
Company on a restricted basis as described below. Such proceeds are
sometimes hereinafter referred to as the "Restricted Proceeds." The purpose
of the Restricted Proceeds is to provide the Company with funds sufficient to
meet operating expenses and its other obligations in order to maintain its
existence.

In their capacities as managers of PGIP, Messrs. Love and Schiffer have
agreed that PGIP will release its entire first mortgage on the Property
notwithstanding that the First Mortgage Indebtedness has not been paid in
full, and in their capacities as directors of the Company, Messrs. Love and
Schiffer have agreed to Leave in place the first mortgage in favor of PGIP on
the approximately 370 acres of real estate the Company will own after the
sale to the Conservancy is consummated (the "Retained Acreage"). In their
capacities as directors of PGI, Messrs. Love and Schiffer intend to place the
Restricted Proceeds in an escrow with PGIP,

15
<PAGE> 19

which escrow will be controlled, directly or indirectly, by Messrs. Love and
Schiffer. Messrs. Love and Schiffer will cause the Company to pledge its
interest in the escrow and the Restricted Proceeds to PGIP, which they also
control, as additional collateral for the First Mortgage Indebtedness.
Messrs. Love and Schiffer, as the managers of PGIP, will advance all or a
portion of the Restricted Proceeds to the Company based on their knowledge of
the Company's working capital needs, but using their best business judgment in
the exercise of their fiduciary duties to PGIP and its members, in protecting
PGIP's interest in the Company.

In addition to the First Mortgage Indebtedness, the portion of the
Property to be sold by the Company is also encumbered by a second mortgage in
favor of Love-1989 Florida Partners, L.P. ("Love-1989") securing the
indebtedness owed to Love-1989 represented by subordinated debentures issued
by the Company (the "Debentures"). See "Certain Relationships and Related
Transactions" for an expanded discussion of the Debentures and the
relationship of Messrs. Love and Schiffer with Love-1989. Messrs. Love and
Schiffer, who control Love-1989, will cause Love-1989 to release its second
mortgage on the Property and Messrs. Love and Schiffer, in their capacities
as directors of the Company, will cause the Company to grant to Love-1989 a
substitute second mortgage on the Retained Acreage, behind the First Mortgage
held by PGIP. However, because the Retained Acreage is approximately 280
acres less than the acreage which originally secured the Debentures, Messrs.
Love and Schiffer will cause the Company to grant a security interest to
Love-1989 behind that held by PGIP in the Restricted Proceeds which will be
under the control of PGIP. See "Prospects for the Retained Acreage."
Finally, See "Conflicts of Interest" for a discussion of the Company's
recognition of the competing interests facing Messrs. Love and Schiffer.
There can be no assurance that all parties who may have an interest in second
mortgage will agree to the release. This might adversely impact the ability
of the Company's subsidiary, Sugarmill Woods to be able to deliver marketable
title to the Property, even if Proposal Three is passed and the option to
purchase the Property is exercised.

Approximately $700,000 of the proceeds of the contemplated sale to the
Conservancy will be used to establish an escrow in favor of the Florida
Division. This escrow is required as consideration for the release by the
Florida Division of a mortgage granted to it on a portion of the Property the
Company intends to sell to the Conservancy which it was originally compelled
to grant in favor of the Florida Division to assure completion of certain
roads on property developed by the Company. See "Certain Relationships and
Related Transactions."

The remaining proceeds shall be used to pay the real estate taxes
(including interest and penalties) on the Property ($789,000 at November 30,
1997) with the balance to be applied to the expenses incurred in connection
with the contemplated sale, legal and accounting fees and payment of a
judgment against the Company, as set out in the table below.

Assuming the amount of the gross proceeds from the sale of the Property
is approximately $14,759,335 and if the sale to the Conservancy would have
closed on November 30, 1997, the use of proceeds is set forth in tabular form
below. A November 30, 1997 closing date is used because at the time the
Proxy Statement was prepared and at the time the Shareholders will vote on
Proposal Three, it was unknown when, if ever, the proposed sale will close,
and the amounts set forth below only represent educated approximations
anyway. As stated under "-- Summary of the Option Agreement, as Amended,"
the Exercise Price of $14,759,335 is based upon the

16
<PAGE> 20

approximately 5,240 acres comprising the Property, multiplied by the price per
acre set forth in the Option Agreement, as Amended. The actual number of
acres may be different after the pre-closing survey required by the Option
Agreement, as Amended. The Exercise Price may also be decreased if the Per
Acre Price is decreased pursuant to the determination of the DSL or for any of
the other reasons set forth under "-- Summary of the Option Agreement, as
Amended."

</TABLE>
<TABLE>
<CAPTION>

DESCRIPTION 11/30/97 AMOUNT
----------- ---------------
<S> <C>
Gross Sale Proceeds of 5,240 Acres $14,759,335
Amount Allocable to 350 Acres (1,312,500)
Owned by L-PGI
Expenses of Sale (500,000)
Delinquent Taxes, Penalties and Interest (617,000)
Accrued Tax Adjustment for 1997 (172,000)
Legal Fees Relating to Property (130,000)
And Sale Thereof -----------
Net Proceeds of Sale of Land by PGI $12,027,835

First Mortgage Principal ($7,343,516 (6,343,516)
Less: $1.0m remaining)
First Mortgage Interest (3,375,074)
-----------
Subtotal 2,309,245

Funds Required for Escrow to State (700,000)
Of Florida
Judgment (115,339)
-----------
Restricted Proceeds to be Held in Escrow by $ 1,493,906
PGIP for Contingencies, Expenses Related ===========
to Carrying Retained Acreage Until
Sold and Other Corporate Purposes of
PGI, All Subject to Approval of PGIP
</TABLE>

The use of proceeds as set forth above results in a payment of first
mortgage principal and interest to PGIP of $9,718,590. After payment of its
debts and liabilities, PGIP would make cash distributions to its members in
accordance with its Operating Agreement. LSHC, which holds 72% of the PGIP
limited liability company interests, would receive approximately $2,450,000
in excess of its investment in PGIP. Because Messrs. Love and Schiffer, the
Company's only directors and executive officers Together own 52% of LSHC,
they could be deemed to have "profited" by an aggregate of approximately
$1,274,000. The amount of profit to LSHC and Messrs. Love and Schiffer is
based on the current use of proceeds set forth above. It could increase upon
payment of the remaining $1 million mortgage amount and interest and by an
Additional amount up to ten percent of PGIP's profit over a specified minimum
rate of return based upon the incentive arrangements that PGIP has with its
members. Messrs. Love and Schiffer believe that the use of proceeds from the
proposed sale to the Conservancy as set

17
<PAGE> 21

forth above will be in the best interests of the unaffiliated holders of the
Company's Common Stock because such use repays a significant amount of Company
indebtedness to creditors of the Company who have priority in the assets of
the Company ahead of the holders of the Company's Common Stock.

Prospects for the Retained Acreage

If the proposed sale of the Property occurs, the Company's remaining
assets will consist primarily of the Retained Acreage. The Company intends
to decide after the proposed sale whether it will pursue the development and
sale of the Retained Acreage in accordance with its core business plan or
whether it will attempt to sell the Retained Acreage in bulk. That decision
will depend, in part, on whether the Company believes it can generate more
revenue by developing and selling individual lots or by selling in bulk.

The Company believes that the Retained Acreage may in the future prove
to be of greater value than the Property because the Retained Acreage's ratio
of acreage to frontage on the proposed Suncoast Expressway is greater than
the Property's ratio and because of the proximity of the Retained Acreage to
the proposed Suncoast Expressway and to the planned interchange between the
Suncoast Expressway and Highway 98. The Company acknowledges that completion
of the highway improvements could reasonably be expected to increase
materially the value of the Property. The Company fully recognizes, however,
that completion of the Suncoast Expressway, if it ever occurs, is still more
than five years away, and that any information or projections of enhanced
values are purely speculative.

Shareholder Approval

The Company is seeking Shareholder approval of the Option Agreement, as
Amended, only because the agreement requires such approval. The Company does
not believe that shareholder approval is required by Section 607.1202 of The
Florida Act, which pertains to the circumstances under which a sale of assets
by a company requires stockholder approval, nor is it required by Article XII
of the Company's Articles of Incorporation. Section 607.1202 of the Florida
Act only requires shareholder approval of a sale of assets when the assets
sold constitute all or substantially all of the assets of a company and the
sale is other than in the usual and regular course of a company's business.
Article XII only requires Shareholder approval of the sale of all or
substantially all of the assets of the Company. Because of the value of the
Retained Acreage, the Company does not believe that the sale of the Property
constitutes the sale of substantially all of its assets (although the Company
recognizes that a court might find that the sale does, in fact, constitute
the sale of substantially all of its assets). Further, the Company does not
believe that Section 607.1202 of the Florida Act applies to the proposed sale
to the Conservancy because the Company has concluded that the proposed sale
is in the usual and regular course of its business as set forth in the next
paragraph.

The sale of an undeveloped platted tract of land to a single purchaser
pursuant to the Option Agreement, as Amended, is consistent with the
Company's purpose of acquiring, owning, selling and conveying real property
and has the same goal and effect as the Company's historical bulk sales and
sales of homes and homesites to residential purchasers. Further, although
the proposed

18
<PAGE> 22

sale does involve a large percentage of the Company's assets, such sale will
not deprive the Company of its corporate purpose and the Company will retain
the valuable Retained Acreage.

Based on the foregoing, regardless of the outcome of the Shareholder
vote on Proposal Two, the Company intends to sell that portion of the
Property belonging to the Company to the Conservancy if the Conservancy
exercises the option, because passage of Proposal Three is assured, due to
the Total Company Vote controlled by Messrs. Love and Schiffer through their
control of L-PGI.

The Company recognizes that the date of the Annual Meeting is subsequent
to November 30, 1997, the date that approval of the Company's shareholders
had to be obtained pursuant to the oral amendment of the Option Agreement, as
Amended. For various reasons, the Company was unable to hold the Annual
Meeting on or prior to November 30, 1997. The Company intends nevertheless
to submit Proposal Three to the vote of the Shareholders at the Annual
Meeting to be held on December 18, 1997. The Company views the November 30,
1997 date as a condition of the Option Agreement, as Amended which the
Conservancy has the power to waive. In other words, if Proposal Three is
approved by the Shareholders, the Conservancy could close the purchase of the
Property regardless of when Shareholder approval is obtained.

It is possible that in seeking the waiver referred to above or in
attempting to obtain from the Conservancy another amendment to the Option
Agreement, as Amended to further extend the Shareholder approval date
requirement, the Company will have to agree to other changes to the Option
Agreement, as Amended. As stated above, the Company does not believe that
the Florida Act requires that Proposal Three be approved by the Shareholders;
Shareholder approval is only being sought because the Option Agreement, as
Amended requires it. Accordingly, a vote in favor of Proposal Three will be
deemed to be a vote in favor of the Option Agreement, as Amended, as it may
be further amended to, among other things, extend the date by which
Shareholder approval must be obtained, unless such future amendments result
in material changes to the Option Agreement, as Amended.

Voting

For reasons stated elsewhere herein, the Company believes that the
outcome on the Shareholder vote on Proposal Two has no bearing on the
Shareholder vote required to pass Proposal Three. The Company believes that
the Shareholder vote required to approve Proposal Three is governed by
Section 607.0725(3) of the Florida Act, which provides that in all matters
submitted to shareholder vote other than the election of directors, passage
requires that the number of votes cast in favor of the proposal exceed the
number of votes cast against it, unless the company's articles of
incorporation or the Florida Act requires a greater number of affirmative
votes. Nevertheless, assuming Proposal Two is passed, but Proposal Three
receives the approval of less than two-thirds of the issued and outstanding
Voting Capital Stock but the votes cast in favor of Proposal Three is greater
than the votes cast against it, The Company will adjourn the Annual Meeting
until such time as the amendment to the Articles of Incorporation has been
filed with the Florida Secretary of State and becomes effective.

19
<PAGE> 23

The Annual Meeting will then be reconvened and a vote taken on Proposal
Three. The proxies would then vote the shares of Voting Capital Stock on
Proposal Three in accordance with the instructions on the proxy cards, and
because of the Total Company Vote controlled by L-PGI, the votes cast on
Proposal Three would be sufficient to approve Proposal Three, even though the
total votes cast would represent less than two-thirds of the Voting Capital
Stock, which arguably was the vote required when the holders granted their
proxies.

The decision to adjourn and then reconvene the Annual Meeting as
described above is not a concession that the Shareholder vote required by
Article XII in any way governs the requisite Shareholder vote required to
approve the sale of the Property to the Conservancy. The reason for a
decision to adjourn and reconvene would be to eliminate any potential
argument that the requisite shareholder approval was not obtained under
Article XII.

Because the Company believes that the vote required by Section
607.0725(3) of the Florida Act governs the vote required for approval of
Proposal Three, abstentions and broker non-votes, because they are not voted,
will have no impact on the vote on Proposal Three.<F2>

L-PGI, which is controlled by Messrs. Love and Schiffer, the Company's
only two executive officers and directors, has informed the Board of its
intent to vote the shares of Preferred Stock and Common Stock owned or
controlled by it (which constitutes 56.5% of the total Company vote) in favor
of Proposal Three. Therefore, passage of Proposal Three is assured because
L-PGI controls enough of the total Company vote on its own to approve
Proposal Three. The Board recommends that the holders of the Common Stock and
the remaining Preferred Stock vote FOR Proposal Three. Shareholders should
note that if the option is exercised and the Property is thereafter sold and
the proceeds of the sale are applied as set forth in "--Use of Proceeds,"
Messrs. Love and Schiffer, the only two executive officers and directors of
the Company may be deemed to have "profited" by an aggregate of approximately
$1,274,000. See "--Use of Proceeds." See also "Certain Relationships and
Related Transactions."

Finally, See "Conflicts of Interest" for a discussion of the Company's
recognition of the competing interests facing Messrs. Love and Schiffer.

FINANCIAL STATEMENTS OF THE COMPANY

Financial Statements for the Company's two most recent fiscal years
ended December 31, 1996, and for the nine month period ended September 30,
1997 are contained in the Company's Form 10-KSB for the year ended December
31, 1996, as amended by Form 10-KSB/A, and

[FN]
- ----------------------------------------
<F2> Section 607.1202(5) of the Florida Act pertains to the sale of all or
substantially all of the assets of a corporation "other than in the
usual and regular course of business" and requires the approval of a
majority of all the votes entitled to be cast on the transaction. The
Company does not believe that Section 607.102(5) is applicable to the
sale of the Property for the reasons set forth in "Proposal Three: Option
Agreement for Sale and Purchase -- Shareholder Approval." Nevertheless,
if it were held to apply, abstentions and broker non-votes would have the
effect of a vote against Proposal Three.

20
<PAGE> 24

Form 10-QSB for the quarter ended September 30, 1997, respectively. Copies of
the Form 10-KSB/A and the Form 10-QSB are attached to this proxy statement as
Appendices E and F, respectively.

Appendix C sets forth the unaudited pro forma balance sheet and pro
forma operating information of the Company giving effect to the consummation
of the proposed sale of the Property as if the closing were as of September
30, 1997 and assuming the use of proceeds as described herein.

DISSENTERS' RIGHTS

Because the Company does not believe that the proposed transaction
involves a sale of all or substantially all of the Company's assets "other
than in the usual and regular course of its business," the Company does not
believe that Shareholders are entitled to dissenters' rights under Florida
law in connection with the Proposal Three. The Company is providing the
following discussion of dissenters' rights to allow Shareholders to protect
their rights in the event the proposed transaction represented by Proposal
Three is determined to involve a sale of all or substantially all of the
Company's assets other than in the usual and regular course of its business.
A copy of the relevant sections of the Florida Act regarding dissenters'
rights, which sets forth the procedures that must be followed to exercise the
right to dissent, is included as Appendix D to this Proxy Statement.

THE FOLLOWING DISCUSSION REPRESENTS ONLY A SUMMARY OF THE FLORIDA STATUTES
REGARDING THE RIGHTS OF DISSENTING SHAREHOLDERS AND DOES NOT PURPORT TO BE
COMPLETE. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS ARE
CONDITIONED ON STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE ACT
HEREINABOVE REFERRED TO. ANY SHAREHOLDERS WISHING TO EXERCISE SUCH RIGHTS
ARE ENCOURAGED TO REVIEW THE SECTIONS HEREINABOVE REFERRED TO OF THE ACT AND
TO CONSULT WITH THEIR OWN ATTORNEY. NOTHING HEREIN IS NOR SHALL IT BE DEEMED
AN ADMISSION BY THE COMPANY THAT DISSENTERS' RIGHTS APPLY TO ANY OF THE
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING.

Any Shareholder who wishes to attempt to exercise dissenters' rights
must deliver to the Secretary of the Company, before the Annual Meeting,
written notice of his or her intent to demand payment for his or her shares
in the event the proposed transaction is consummated. A Shareholder is only
entitled to exercise dissenters' rights if he or she does not vote in favor
of the proposed transaction. Shareholders are only entitled to exercise
dissenters' rights with respect to shares of Voting Capital Stock owned by
them. A Shareholder may dissent as to less than all shares registered in his
name. Any such Shareholder who has exercised dissenters' rights will not be
entitled to vote, be entitled to payment of dividends or distributions or be
entitled to exercise any other rights as a Shareholder with respect to those
shares of Voting Capital Stock as to which dissenters' rights were validly
perfected, unless such Shareholder withdraws the election to exercise
dissenters' rights.

21
<PAGE> 25

All correspondence to the Company should be sent to 212 South Central
Avenue, Suite 100, St. Louis, Missouri 63105, Attention: Andrew S. Love,
Jr., Secretary.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In order to conserve cash and permit management to concentrate on
achieving a sale of all or a portion of its real estate, in 1994 the Company
moved its administration and accounting offices to the offices of LREC in St.
Louis, Missouri. LREC, a Missouri corporation, is an affiliate of L-PGI, and
is located at 212 South Central Avenue, Suite 100, St. Louis, Missouri 63105.
A fee of $8,350 per month is paid to LREC for the following services:

1. Maintain books of original entry;
2. Prepare quarterly and annual SEC filings;
3. Coordinate the annual audit;
4. Assemble information for tax filing, review reports as prepared by
tax accountants and file same;
5. Track Shareholder records through transfer agent;
6. Maintain policies of insurance against property and liability
exposure;
7. Handle payroll and benefits for Sugarmill location;
8. Handle day-to-day accounting requirements; and
9. Provide telephone and computer services.

Although an amount is paid to LREC as reimbursement for expenses and as
a fee for providing management services to the Company, neither the Company
nor LREC maintain records which would allow them to attribute any portion of
the aforementioned $8,350 per month to reimbursement of particular expenses
or to payment for the management services performed for the Company by
individual employees of LREC, including Messrs. Love and Schiffer.

Effective as of March 25, 1987, the Company entered into the Management
Agreement with LREC. As a consultant to the Company and in addition to the
above services, LREC provides other services including, but not limited to,
strategic planning, marketing and financing as requested by the Company. In
consideration for these consulting services, the Company pays LREC a
quarterly consulting fee of one-tenth of one percent of the book value of the
Company's assets, plus reasonable out-of-pocket expenses. As of December 31,
1996 the book value of the Company's assets was approximately $11.0 million.
Consulting fees totaling $46,000 and $49,000 were accrued respectively during
1996 and 1995, of which $10,000 was paid in 1995. In July 1992 accrued
management fees were reduced by $1,042,000 as partial consideration for the
conveyance by the Company of 350 acres of real estate to L-PGI, which
conveyance is described in more detail in the paragraph below describing the
Debentures. These 350 acres comprise a portion of the Property to be sold to
the Conservancy pursuant to the Option Agreement, as Amended.

The Management Agreement will continue in effect until terminated upon
90 days prior written notice by a majority vote of the Company's directors
who have no financial interest in

22
<PAGE> 26

LREC or in any LREC affiliated entity. Currently all directors have a
financial interest in LREC or one of its affiliates.

Mr. Love receives a nominal salary from LREC. Although Mr. Schiffer
receives a salary from LREC, such salary compensates him for his services to
LREC, which provides consulting services for numerous other entities
affiliated with the Company, and none of the amount earned by LREC under the
Management Agreement is intended to be allocated or attributable to any
officer or employee, including Mr. Schiffer, of LREC. No part of Mr.
Schiffer's annual salary from LREC is directly attributable to the management
services he performs for the Company as an employee of LREC pursuant to the
Management Agreement.

In 1996 and 1995, an affiliate of L-PGI, Love Investment Company, made
uncollateralized loans to the Company, which at December 31, 1996 and 1995
had a total outstanding balance, excluding accrued interest, of $325,000 and
$60,000, respectively. Interest charged on these loans was $17,700 and $300
for 1996 and 1995 respectively.

In September, 1995, the Company sold promissory notes and mortgages with
principal balances of $180,000 to the Love Real Estate Company Profit Sharing
Plan (1994).

In 1989, the Company sold an aggregate $2,282,451 principal amount of
the Debentures in a private placement to Love-1989. The general partner of
Love-1989 is Love Investment Company, which is owned by Mr. Love, Love family
members and trusts, the Estate of Martha Love Symington and Mr. Schiffer.
The above purchase by Love-1989 of the Debentures was funded in part with a
loan from L-PGI. Love-1989 has since repaid the debt to L-PGI in full, in part
by transferring a portion of the Debentures held by Love-1989 to L-PGI. In
July 1992, as partial consideration for the Company's conveyance of 350 acres
of property to L-PGI, the Company retired $782,000 in principal amount of the
Debentures held by L-PGI together with $389,000 in accrued interest. The
maturity date on all of the remaining Debentures was extended to July 8, 1997
so that as of the date of this Proxy Statement, the Debentures are in
default.

The Debentures are in part collateralized by a second mortgage in favor
of Love-1989 on 650 acres of the Property owned by the Company which would be
sold to the Conservancy. The 350 acres transferred to L-PGI as described
above are also included in the Property proposed to be sold under the Option
Agreement, as Amended. Messrs. Love and Schiffer intend to cause the Company
to grant a second mortgage on the Retained Acreage to Love-1989 and in their
capacities as control persons of Love-1989, they will cause Love-1989 to
release its second mortgage on the 650 acres of the Property to be sold to
the Conservancy and they will cause the Company to grant a security interest
to Love-1989 behind that held by PGIP in the escrow of the Restricted
Proceeds which will be under the control of Messrs. Love and Schiffer since
they and a company they control are the managers of PGIP.

As of December 31, 1996, Love-1989 held $796,950 principal amount of the
Debentures with respect to which there was at that date accrued and unpaid
interest in the amount of $1,399,397. In 1990, $703,050 principal amount of
the Debentures were transferred by Love-1989 to one of its (now former)
limited partners. That former limited partner continues to

23
<PAGE> 27

hold such Debentures and as of December 31, 1996 there was accrued and unpaid
interest with respect thereto in the amount of $1,204,277.

There can be no assurance that the former limited partner of Love-1989
will agree to the release of the second mortgage referred to above. Without
conceding that this former limited partner has an independent interest in the
second mortgage which would require his consent to the release, a refusal to
consent might adversely impact the ability of the Company's subsidiary to be
able to deliver marketable title to the Property even if Proposal Three is
passed and the option to purchase the Property is exercised.

In 1985, a corporation owned by Alfred M. Johns, the former Chairman of
the Company, and his family made an uncollateralized loan to the Company
which at December 31, 1996 had an outstanding balance, excluding accrued
interest, of $176,000. Besides being a direct owner of Common and Preferred
Stock, Mr. Johns has no other direct or indirect affiliations with the
Company.

For the past several years, First Union, the Company's former primary
bank lender, had been threatening to foreclose on substantially all of the
Company's real estate. This would have forced a liquidation of the Company.
To prevent foreclosure, Messrs. Love and Schiffer, who control a large
portion of the Voting Capital Stock through their affiliation with L-PGI and
who are the Company's only directors and executive officers, formed PGIP in
August 1995 to purchase the Company's First Mortgage Indebtedness and to
accept the assignment from First Union of the first mortgage securing
repayment of the First Mortgage Indebtedness.

On March 28, 1996, First Union assigned to PGIP all of its right, title
and interest in and to the loan documents (i) evidencing First Union's credit
agreements with the Company and Company's subsidiaries, Sugarmill Woods,
Burnt Store Marina, Inc., and Gulf Coast Credit Corporation, and (ii)
securing such indebtedness with substantially all of the Company's real
estate (the "Loan Documents"). At the time of the assignment, the First
Mortgage Indebtedness was approximately $9,007,000 in principal and accrued
interest.

PGIP purchased the First Mortgage Indebtedness for a total purchase
price of approximately $5,548,000 (the "Purchase Price"), including amounts
paid by PGIP to First Union prior to the closing of the purchase, or
approximately 61.1% of the First Mortgage Indebtedness. The assignment of
the Loan Documents to PGIP was pursuant to the terms and conditions of that
certain Note and Loan Documents Purchase Agreement dated as of October 12,
1995, by and between First Union, PGIP, the Company and certain of its
subsidiaries, as amended by letter agreements dated November 10, 1995,
December 15, 1995, January 17, 1996 and February 16, 1996 and as further
amended by that certain Modification of Note and Loan Documents Purchase
Agreement dated as of March 28, 1996.

PGIP borrowed $3,249,521 of the Purchase Price from First Union
evidenced by notes executed in favor of First Union (the "PGIP Notes"). The
PGIP Notes bear interest at the prime rate as published in the Wall Street
Journal plus 1% and matured on June 1, 1997. First Union extended repayment
of the PGIP Notes to September 30, 1997. First Union has orally agreed to a
further extension to November 30, 1997. Interest on the PGIP Notes is payable
monthly. As

24
<PAGE> 28

security for payment of its obligations under the PGIP Notes, PGIP assigned
back to First Union all of its right, title and interest in and to the Loan
Documents.

While PGIP was negotiating with First Union regarding the purchase of
the First Mortgage Indebtedness, First Union and the Company entered into a
series of forbearance agreements, so that First Union would not foreclose on
the Company's real estate. As a condition to First Union's execution of the
forbearance agreement, Purchaser paid First Union multiple nonrefundable
forbearance fees totaling $168,000 on December 31, 1995 ($273,000 as of March
28, 1996), which were applied to the purchase price of the Loan Documents.
In addition, upon execution of the Note and Loan Documents Purchase
Agreement, PGIP paid First Union a nonrefundable initial loan purchase
installment of $241,617 (the "Initial Loan Purchase Payment") which was
applied against the Purchase Price which was paid at closing on March 28,
1996. The Initial Loan Purchase Payment paid to First Union was used by
First Union to pay the Company's 1993 property tax owed to Citrus and
Hernando Counties, Florida.

Although First Union would have been willing to accept repayment of a
discounted amount from the Company in exchange for cancellation of the First
Mortgage Indebtedness, the Company was unable to take advantage of this
corporate opportunity because it did not have the liquidity, borrowing power
or ability to sell equity to raise the money necessary to take advantage of
it. That is the reason Messrs. Love and Schiffer formed PGIP to purchase the
First Mortgage Indebtedness.

The largest investor in PGIP is LSHC which holds approximately a 72%
interest in, and is a manager of, PGIP. Messrs. Andrew S. Love, Jr. and
Laurence A. Schiffer together own approximately 52% of all the issued and
outstanding voting stock of LSHC and serve as the only directors and
executive officers of LSHC. Messrs. Love, Schiffer and LSHC are the managers
of PGIP.

As the purchaser of the Loan Documents, PGIP has a first mortgage on
the part of the Property owned by the Company and proposed to be sold to the
Conservancy. PGIP accepted assignment of the Loan Documents, which were in
default and with respect to which the maturity of the First Mortgage
Indebtedness had been accelerated. The Company has been advised by PGIP that
it will be the policy of PGIP not to proceed with collection of the principal
and interest evidenced and secured by the Loan Documents so long as the
Company pursues satisfactory efforts to market and sell the property. PGIP's
policy, but not its contractual obligation, will be to facilitate sales of
the property by agreeing to the release of property to be sold from the lien
of the Loan Documents against payments of the net sale proceeds therefrom,
after all expenses, closing costs and the like incurred by the Company in
connection with any such sale, in a manner to be agreed upon by PGIP and the
Company. The bulk sale of the Property to the Conservancy is an integral
part of the plan by which the Company intends to repay PGIP.

Pursuant to PGIP's operating agreement, all proceeds received from
repayment of the First Mortgage Indebtedness are to be distributed to its
members prorata with the percent of PGIP interests each owns. Because LSHC
owns approximately 72% of the PGIP interests, it will be entitled to
approximately 72% of any distributions PGIP makes to its members from
proceeds of the sale to the Conservancy received from the Company. Because
Messrs. Love and Schiffer

25
<PAGE> 29

(who are the Company's only executive officers and directors) together own
approximately 52% of LSHC, they may be deemed to have "profited" by an
aggregate of approximately 52% of the amount by which LSHC's prorata portion
of the distribution from PGIP exceeds the amount LSHC paid for its PGIP
interests, or by approximately $1,274,000, based on a closing of the sale of
the Property on November 30, 1997 and the immediate distribution of available
cash at that time. See "-- Use of Proceeds". Messrs. Love and Schiffer
believe that the use of proceeds from the proposed sale to the Conservancy as
set forth above will be in the best interests of the unaffiliated holders of
the Company's Common Stock because such use repays a significant amount of
Company indebtedness to creditors of the Company who have priority in the
assets of the Company ahead of the holders of the Company's Common Stock.

The Company believes that the foregoing transactions were on terms
comparable to those which would have been obtained from unaffiliated persons.

CONFLICTS OF INTEREST

Messrs. Schiffer and Love have fiduciary obligations to the Company,
L-PGI, Love-1989, LREC and PGIP, due to their managerial roles with each.
They also have varying degrees of personal financial stakes in each of those
entities due to their ownership of or their employment with each of those
entities. It will be virtually impossible for Messrs. Love or Schiffer,
acting in their official capacities with all of the aforementioned entities
or as controlling investors in them, to uniformly take actions that will be
in the best interests of the Company and each of those other entities. It is
possible that some actions which may in the future be taken by Messrs.
Schiffer and Love in their official capacities as fiduciaries of L-PGI,
Love-1989, PGIP and LREC will not be in the best interests of the
Shareholders of the Company. Messrs. Schiffer and Love may even feel
compelled to take actions in those capacities that would be directly adverse
to the best interests of the Company because those actions would be
advantageous for or in the best interests of L-PGI, Love-1989, PGIP or LREC.
To the extent possible, however, they will attempt to take actions that are
in the best interests of the constituencies of all the entities to which they
have fiduciary obligations. Messrs. Schiffer and Love believe that passage
of Proposals Two and Three are in, or are at least not opposed to, the best
interests of the Shareholders.

The relationship between Messrs. Love, Schiffer and the entities with which
they are affiliated is set forth in graphic form on Appendix A attached
hereto.

INDEPENDENT PUBLIC ACCOUNTANTS

The Company is presently utilizing the services of BDO Seidman, LLP, the
Company's independent auditor for the last three years, and the Company
anticipates that BDO Seidman, LLP will be the auditor for the current fiscal
year. Representatives of BDO Seidman, LLP will be present at the Annual
Meeting and will be available to make a statement and respond to appropriate
questions.

26
<PAGE> 30

SHAREHOLDERS' PROPOSALS

Any Shareholder proposals intended to be presented at the 1998 Annual
Meeting must be received by the Company at its principal executive offices
no later than August 12, 1998 in order to be considered for inclusion in the
Proxy Statement.

OTHER MATTERS

As stated elsewhere herein, the Board knows of no other matters to be
presented for consideration at the Annual Meeting by the Board or by
Shareholders who have requested inclusion of proposals in the Proxy
Statement. If any other matters shall properly come before the meeting, the
persons named in the accompanying form of proxy intend to vote on such
matters in accordance with their best judgment.

The cost of preparing and mailing this Proxy Statement and the
accompanying materials and the cost of any supplementary solicitations will
be borne by the Company. In addition to the use of the mails, proxies may be
solicited personally or by telephone or facsimile, by regular employees of
the Company, without additional compensation. Brokerage firms, banks,
nominees and others will be requested to forward proxy materials to the
beneficial owners of the Common Stock and Preferred Stock held by them of
record, and the Company will reimburse them for their reasonable out-of-pocket
and clerical expenses.

December 10, 1997

27
<PAGE> 31

PGI INCORPORATED

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 22, 1997

The undersigned hereby appoints Andrew S. Love, Jr. and Laurence
A.Schiffer, and each of them, with power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Shareholders of PGI Incorporated
(the "Company"), to be held at the offices of the Company at 212 South
Central Avenue, Suite 100, St. Louis, Missouri 63105, on Monday, December
22, 1997, at 9;30 a.m., local time, and all adjournments thereof, and there
to vote, as indicated below, the shares of Common Stock of the Company which
the undersigned is entitled to vote with all the powers the undersigned would
possess if present at the meeting.

1) ELECTION OF DIRECTORS / / FOR all nominees / / WITHHOLD AUTHORITY to vote
(except as marked for all nominees listed below
to the contrary
below)

Andrew S. Love, Jr. Laurence A. Schiffer

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME HERE.) ______________________________

2) To consider and act upon a proposal to rescind Article XII of the
Articles of Incorporation.

/ / FOR / / AGAINST / / ABSTAIN

3) To consider and act upon a proposal to approve the Option Agreement For
Sale and Purchase as Amended and the intended use of proceeds from the
sale.

/ / FOR / / AGAINST / / ABSTAIN

4) In their discretion, the proxies are authorized to vote the shares of
the undersigned for any nominee other than nominees with respect to whom
authority to vote has been withheld, and to vote upon such other business as
may properly come before the meeting and all adjournments thereof. This
proxy, when properly executed, will be voted in the manner directed herein by
the undersigned shareholder.

IF NO DIRECTION IS MADE, THE PROXY WILL BE FOR THE ELECTION OF
THE ABOVE NOMINEES AS DIRECTORS,
AND FOR PROPOSAL TWO AND FOR PROPOSAL THREE.

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

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby revokes all proxies heretofore given by the
undersigned for said meeting. This proxy may be revoked prior to its
exercise.

Dated: -----------------------, 1997

------------------------------------
Signature

Note: Please sign exactly as your
name or names appear hereon. When
signing as Attorney, Executor,
Trustee, Guardian, or Officer of a
Corporation, please give title as
such. For joint accounts, all named
holders should sign.

PLEASE VOTE, DATE, SIGN, AND PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED ENVELOPE.

NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES

<PAGE> 32

APPENDIX A

SUMMARY OF OWNERSHIP OF PGI INCORPORATED
[GRAPH]

A-1
<PAGE> 33

SUMMARY OF OWNERSHIP OF PGIP, L.L.C.
[GRAPH]

A-2
<PAGE> 34

APPENDIX B

OPTION AGREEMENT FOR SALE AND PURCHASE

THIS AGREEMENT is made this 31st day of January, 1997, between Sugarmill
Woods, Inc., a Florida corporation, and LOVE-PGI Partners, L.P., a Missouri
limited partnership whose address is 212 South Central, Suite 100, St. Louis,
MO 631053506, collectively referred to as "Seller" and The Nature
Conservancy, a nonprofit District of Columbia corporation, qualified as a
public charity pursuant to Section 501(c)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), and authorized to transact business in the
State of Florida as The Nature Conservancy, Inc., whose address is 222 S.
Westmonte Drive, Suite 300, Altamonte Springs, FL 32714, and its successors
and assigns as "Purchaser."

1. GRANT OF OPTION. Seller hereby grants to Purchaser and its successors
---------------
and assigns the exclusive option to purchase the real property located in
Citrus and Hernando counties, Florida, described in Exhibit "A", together
with all improvements, easements and appurtenances and riparian and littoral
rights, if any (the "Property"), in accordance with the provisions of this
Agreement. The legal description of the Property described in Exhibit "A" may
be modified prior to closing to match the final DSL-approved legal description
of the Property. This Agreement becomes legally binding on Seller upon
Seller's execution of the Agreement, but exercise of the option is subject to
approval by the Board of Governors of the Purchaser and/or by the Board of
Trustees of the Internal Improvement Trust Fund of the State of Florida (the
"Trustees"), whose address is Florida Department of Environmental Protection,
Division of State Lands, 3900 Commonwealth Blvd., Mail Station 115,
Tallahassee, Florida 32399, if this option is assigned to the Trustees, and
is effective only if Purchaser gives written notice of exercise to Seller. If
this option is assigned to the Trustees, the Trustees' agent in all matters
shall be the Division of State Lands of the Florida Department of
Environmental Protection ("DSL").

2. OPTION TERMS. The option payment is $100.00 ("Option Payment"), the
------------
receipt and sufficiency of which is hereby acknowledged by Seller. The option
may be exercised during the period beginning with Purchaser's approval of
this Agreement and ending 120 days after Trustees' approval of this Agreement
("Option Expiration Date"), unless extended by other provisions of this
Agreement, if this Agreement is assigned to the Trustees. If this Agreement
is not approved by the Trustees on or before May 28, 1997, or if the
Agreement is not assigned to the Trustees, then the Option Expiration Date
shall be May 28, 1997, unless extended by other provisions of this Agreement.
In the event Purchaser's funds in the amount of the Purchase Price (as
hereinafter defined in paragraph 3.A.) are not available by the Option
Expiration Date the period of exercise of the option may be extended until
such funds become available, not to exceed 60 days after the Option
Expiration Date, by written notice to Seller.

3.A. PURCHASE PRICE. The purchase price ("Purchase Price") for the Property
--------------
is Fourteen Million Seven Hundred Fifty-Nine Thousand Three Hundred
Thirty-Five Dollars ($14,759,335.00) which, after reduction by the amount of
the Option Payment, will be paid in cash (or, if this option is assigned to
the Trustees in accordance with paragraph 20., by state warrant) at closing
to Seller or Seller's designated agent who meets the requirements of Section
259.041(17), Florida Statutes. The Purchase Price is subject to adjustment in
accordance with paragraph 3.B. This Agreement is contingent upon approval of
the Purchase Price by Purchaser and upon confirmation that the final Purchase
Price is not in excess of the maximum value of the Property as determined in
accordance with Section 259.041(7), Florida Statutes ("DSL Approved Value").
The determination of the final DSL Approved Value and the final Purchase
Price can only be made after the completion and DSL's approval of the survey
required in paragraph 5.

3.B. ADJUSTMENT OF PURCHASE PRICE. The Purchase Price set out in paragraph
----------------------------
3.A. above is based on $2,816.43 per acre ("Acre Price") for an estimated
5,240.45 unsurveyed acres ("Acres"). For purposes of this Agreement, Acres
shall mean those lands located within the boundary of the final DSL approved
survey required by paragraph 5. hereof. The Purchase Price shall be adjusted
and the final Purchase Price shall be obtained by multiplying the lower of
the Acre Price or the final DSL approved maximum value per Acre permitted to
be paid under Section 259.041(7), Florida Statutes ("Final DSL Approved Acre
Value"), by the surveyed Acreage shown on the final DSL approved survey
required by paragraph 5. hereof. The Acre Price as set forth above in this
paragraph 3.B. will not decrease unless the Acre Price is in excess of the
Final DSL Approved Acre Value. If it is determined by DSL that the Acre Price
is in excess of the Final DSL Approved Acre Value, the Acre Price will be
reduced to the Final DSL Approved Acre Value. If the Final Adjusted Purchase
Price is decreased by more than $100,000.00 because of a reduction in the
Acre Price, Seller shall, in its sole discretion, have the right to terminate
this Agreement and neither party shall have any further obligations under
this Agreement. If Seller elects to terminate this Agreement, Seller shall
provide written notice to Purchaser of his election to terminate this
Agreement within 10 days after Seller's receipt of written notice from
Purchaser of the final adjusted Purchase Price. In the event Seller fails to
give Purchaser a written notice of termination within the aforesaid time
period from receipt of Purchaser's written notice, then Seller shall be
deemed to have waived any right to terminate this Agreement based upon a
reduction in the Purchase Price originally stated in paragraph 3.A. The
Seller acknowledges that the Acre Price and the estimated number of Acres may
vary substantially from the Final DSL Approved Acre Value and the surveyed
Acres as shown on the final DSL approved survey required by paragraph 5.
hereof.

Notwithstanding any provision herein to the contrary, the final adjusted
Purchase Price shall not exceed $14,759,335.00; even though this amount may
be less than the final DSL Approved Value of the Property.

4.A. ENVIRONMENTAL SITE ASSESSMENT. Seller shall, at his sole cost and
-----------------------------
expense and at least 15 days prior to the Option Expiration Date, furnish to
Purchaser a Phase I environmental site assessment of the Property, and, if
recommended in the Phase I environmental site assessment, a Phase II
environmental site assessment both of which meet the standards and
requirements of Purchaser. However, should the cost of the Phase II
environmental site assessment exceed $20,000, Seller may elect to terminate
this Agreement and neither party shall have any further obligations under
this Agreement. It is Seller's responsibility to ensure that the
environmental consultant contacts Purchaser regarding these standards and
requirements. Seller shall use the services of a competent, professional
consultant with expertise in the environmental site assessment process to
determine the existence and extent, if any, of Hazardous Materials on the
Property. For purposes of this Agreement "Hazardous Materials" shall mean any
hazardous or toxic substance, material or waste of any kind or any other
substance which is regulated by any Environmental Law (as hereinafter defined
in paragraph 4.B.). The environmental site assessment shall be certified to
Purchaser and the date of certification shall be within 45 days before the
date of closing, unless this 45 day time period is waived by DSL.

B-1
<PAGE> 35

4.B. HAZARDOUS MATERIALS. In the event that the environmental site
-------------------
assessment provided for in paragraph 4.A. confirms the presence of Hazardous
Materials on the Property, Purchaser, at its sole option, may elect to
terminate this Agreement and neither party shall have any further obligations
under this Agreement. Should Purchaser elect not to terminate this Agreement,
Seller shall, at his sole cost and expense and prior to the exercise of the
option and closing, promptly commence and diligently pursue any assessment,
clean up and monitoring of the Property necessary to bring the Property into
full compliance with any and all applicable federal, state or local laws,
statutes, ordinances, rules, regulations or other governmental restrictions
regulating, relating to, or imposing liability or standards of conduct
concerning Hazardous Materials ("Environmental Law"). However, should the
estimated cost of clean up of Hazardous Materials exceed $100,000, Seller may
elect to terminate this Agreement and neither party shall have any further
obligations under this Agreement. In the event that Hazardous Materials
placed on the Property prior to closing are discovered after closing, Seller
shall remain obligated hereunder, with such obligation to survive the closing
and delivery and recording of the deed described in paragraph 8. of this
Agreement and Purchaser's possession of the Property, to diligently pursue
and accomplish the clean up of Hazardous Materials in a manner consistent
with all applicable Environmental Laws and at Seller's sole cost and expense.

Further, in the event that neither party elects to terminate this Agreement
as provided above, Seller shall indemnify and save harmless and defend
Purchaser, its officers, servants, agents and employees from and against any
and all claims, suits, actions, damages, liabilities, expenditures or causes
of action of whatsoever kind arising from Hazardous Materials placed on the
Property prior to closing whether the Hazardous Materials are discovered
prior to or after closing. Seller shall defend, at his sole cost and expense,
any legal action, claim or proceeding instituted by any person against
Purchaser as a result of any claim, suit, or cause of action for injuries to
body, life, limb or property for which Hazardous Materials placed on the
Property prior to closing are alleged to be a contributing legal cause.
Seller shall save Purchaser harmless from and against all judgments, orders,
decrees, attorney's fees, costs, expenses and liabilities in and about any
such claim, suit, investigation or defense thereof, which may be entered,
incurred or assessed as a result of the foregoing.

The contractual limitation on Seller's contractual obligation to indemnify
Purchaser and clean up the Property as specified in this paragraph 4.B. shall
not be construed to limit Seller's legal liability under any Environmental
Law for Hazardous Materials located on the Property or to limit Purchaser's
legal and equitable remedies against Seller under any Environmental Laws for
Hazardous Materials located on the Property.

5. SURVEY. Seller shall, at his sole cost and expense and not less than
------
30 days prior to the Option Expiration Date, deliver to DSL a current boundary
survey of the Property prepared by a professional surveyor and mapper
licensed by the State of Florida which meets the standards and requirements
of DSL ("Survey"). It is Seller's responsibility to ensure that the surveyor
and mapper contacts the Bureau of Survey and Mapping in DSL regarding these
standards and requirements and the cost of the Survey prior to the
commencement of the Survey. The Survey shall be certified to Purchaser and
the title insurer and the date of certification shall be within 90 days
before the date of closing, unless this 90 day time period is waived by DSL
and by the title insurer for purposes of deleting the standard exceptions for
survey matters and easements or claims of easements not shown by the public
records from the owner's title policy. If the Survey shows any encroachment
on the Property or that improvements intended to be located on the Property
encroach on the land of others, the same shall be treated as a title defect.
Seller's vesting deed legal description has been reviewed without the benefit
of a field survey or comprehensive title research. The legal description of
the Property described in Exhibit "A" may be modified prior to closing to
match the final DSL-approved legal description of the Property. Purchaser
shall reimburse Seller for 50% of the DSL approved cost of Survey, not to
exceed $29,985.00, upon Seller's submission of the necessary documentation to
DSL which evidences payment in full of the Survey costs by Seller. This
reimbursement is contingent upon a sale of the Property to Purchaser.

6. TITLE INSURANCE. Seller shall, at his sole cost and expense and within
---------------
45 days of Purchaser's approval of this contract, furnish to Purchaser a
marketable title insurance commitment, to be followed by an owner's
marketable title insurance policy (ALTA Form "B") from a title insurance
company, approved by Purchaser, insuring marketable title of Purchaser to the
Property in the amount of the final Purchase Price. Seller shall require that
the title insurer delete the standard exceptions of such policy referring to:
(a) all taxes, (b) unrecorded rights or claims of parties in possession, (c)
survey matters, (d) unrecorded easements or claims of easements, and (e)
unrecorded mechanics' liens.

7. DEFECTS IN TITLE. If the title insurance commitment or Survey furnished
----------------
to Purchaser pursuant to this Agreement discloses any defects in title which
are not acceptable to Purchaser, Seller shall, within 90 days after notice
from Purchaser, remove said defects in title. Seller agrees to use diligent
effort to correct the defects in title within the time provided therefor,
including the bringing of necessary suits, but in no event shall Seller be
obligated to spend more than $100,000 to cure or remove such defects.
However, should the cost to cure or remove such defects in title exceed
$100,000, Seller may elect to terminate this Agreement and neither party
shall have any further obligations under this Agreement. If Seller is
unsuccessful in removing the title defects within said time Purchaser shall
have the option to either: (a) accept the title as it then is with a
reduction in the Purchase Price by an amount mutually agreed to by the
parties, (b) accept the title as it then is with no reduction in the Purchase
Price, (c) extend the amount of time that Seller has to cure the defects in
title, or (d) terminate this Agreement, thereupon releasing Purchaser and
Seller from all further obligations under this Agreement. If Seller fails to
make a diligent effort to remove the title defects, Seller shall be in
default and the provisions of paragraph 17. of this Agreement shall apply.

8. INTEREST CONVEYED. At closing, Seller shall execute and deliver to
-----------------
Purchaser a special warranty deed in a form acceptable to Purchaser,
conveying marketable title to the Property in fee simple free and clear of
all liens, reservations, restrictions, easements, leases, tenancies and other
encumbrances, except for those that are acceptable encumbrances, pursuant to
Paragraph 7, in the opinion of Purchaser and do not impair the marketability
of the title to the Property.

9. PREPARATION OF CLOSING DOCUMENTS. Upon execution of this Agreement,
--------------------------------
Seller shall submit to Purchaser a properly completed and executed beneficial
interest affidavit and disclosure statement as required by Sections 286.23,
375.031(1) and 380.08(2), Florida Statutes, on DSL forms provided by
Purchaser. Seller shall prepare the deed described in paragraph 8. of this
Agreement, Purchaser's and Seller's closing statements and the title,
possession and lien affidavit certified to Purchaser and title insurer in
accordance with Section 627.7842, Florida Statutes, and an environmental
affidavit on DSL forms provided by Purchaser. All prepared documents shall be
submitted to Purchaser for review and approval at least 15 days prior to the
Option Expiration Date.

B-2
<PAGE> 36

10. PURCHASER'S REVIEW FOR CLOSING. Purchaser will approve or reject each
------------------------------
item required to be provided by Seller under this Agreement within 30 days
after receipt of all of the required items. Seller will have 30 days
thereafter to cure and resubmit any rejected item. In the event Seller fails
to timely deliver any item, or Purchaser rejects any item after delivery,
Purchaser may in its discretion extend the Option Expiration Date.

11. EXPENSES. Seller will pay the documentary revenue stamp tax and all
--------
other taxes associated with the conveyance, the cost of recording the deed
described in paragraph 8. of this Agreement and any other recordable
instruments which Purchaser deems necessary to assure good and marketable
title to the Property. All other closing expenses, including without
limitation, attorney's fees shall be paid by the party incurring such
expenses.

12. TAXES AND ASSESSMENTS. If this option is not assigned to the Trustees,
---------------------
all real estate taxes and assessments which are or which may become a lien
against the Property shall be prorated between the parties to the date of
closing. Notwithstanding any provision herein to the contrary, if this option
is assigned to the Trustees, all real estate taxes and assessments which are
or which may become a lien against the Property shall be satisfied of record
by Seller at closing. If this option is assigned to the Trustees, and the
Trustees acquire fee title to the Property between January 1 and November 1,
Seller shall, in accordance with Section 196.295, Florida Statutes, place in
escrow with the county tax collector an amount equal to the current taxes
prorated to the date of transfer, based upon the current assessment and
millage rates on the Property. In the event the Trustees acquire fee title to
the Property on or after November 1, Seller shall pay to the county tax
collector an amount equal to the taxes that are determined to be legally due
and payable by the county tax collector.

13. CLOSING PLACE AND DATE. The closing shall be on or before 15 days
----------------------
after Purchaser exercises the option; provided, however, that if a defect
exists in the title to the Property, title commitment, Survey, environmental
site assessment, or any other documents required to be provided or completed
and executed by Seller, the closing shall occur either on the original closing
date or within 60 days after receipt of documentation curing the defects,
whichever is later. The date, time and place of closing shall be set by
Purchaser.

14. RISK OF LOSS AND CONDITION OF REAL PROPERTY. Seller assumes all risk of
-------------------------------------------
loss or damage to the Property prior to the date of closing and warrants that
the Property shall be transferred and conveyed to Purchaser in the same or
essentially the same condition as of the date of Seller's execution of this
Agreement, ordinary wear and tear and acts of God or other natural forces
excepted. However, in the event the condition of the Property is altered by
an act of God or other natural force beyond the control of Seller, Purchaser
may elect, at its sole option, to terminate this Agreement and neither party
shall have any further obligations under this Agreement. Seller represents
and warrants that, as of closing, there are no parties other than Seller in
occupancy or possession of any part of the Property. Seller agrees to clean
up and remove all abandoned personal property, refuse, garbage, junk,
rubbish, trash and debris from the Property to the satisfaction of Purchaser
prior to the exercise of the option by Purchaser.

15. RIGHT TO ENTER PROPERTY AND POSSESSION. Seller agrees that from the
--------------------------------------
date this Agreement is executed by Seller, Purchaser and its agents, upon
reasonable notice, shall have the right to enter the Property for all lawful
purposes in connection with this Agreement, subject to the rights,
privileges, terms and conditions in the following leases (collectively
referred to as the "Leases"): (a) Cattle Grazing and Farming Lease dated
October 30, 1993 by and between Sugarmill Woods, Inc. and Jesse Thomas; (b)
Cattle Grazing and Farming Lease, dated December 17, 1994 by and between
Sugarmill Woods, Inc. and Jesse Thomas, John Thomas and Jimmie Sunday; and
(c) Cattle Grazing and Farming Lease, dated December 17, 1994 between LOVE-PGI
Partners, L.P., a Missouri limited partnership, and Jesse Thomas, John Thomas
and Jimmie Sunday. The Leases will be terminated prior to closing. Seller
shall deliver possession of the Property to Purchaser at closing.

16. ACCESS. Seller warrants that there is legal ingress and egress for the
------
Property over public roads or valid, recorded easements for the use and
benefit of and as an appurtenance to the Property.

17. DEFAULT. If Seller defaults under this Agreement, Purchaser may waive
-------
the default and proceed to closing, seek specific performance, or refuse to
close and elect to receive the return of any money paid, each without waiving
any action for damages, or any other remedy permitted by law or in equity
resulting from Seller's default.

18. BROKERS. Each party represents that no persons, firms, corporations or
-------
other entities are entitled to a real estate commission or other fees as a
result of this Agreement or subsequent closing, except as accurately
disclosed on the disclosure statement required in paragraph 9. Seller shall
indemnify and hold Purchaser harmless from any and all such claims, whether
disclosed or undisclosed.

19. RECORDING. This Agreement, or notice of it, may be recorded by
---------
Purchaser in the appropriate county or counties. In the event Purchaser
records this Agreement and defaults under this Agreement and this transaction
does not close, Purchaser will execute and deliver a quit claim deed to
Seller which releases all Purchaser's interest in the Property.

20. ASSIGNMENT. This Agreement may be assigned by Purchaser only to the
----------
Trustees, in which event Purchaser will provide written notice of assignment
to Seller. This Agreement may not be assigned by Seller without the prior
written consent of Purchaser.

21. TIME. Time is of essence with regard to all dates or times set forth in
----
this Agreement. If the date for performance of any act hereunder falls on a
Saturday, Sunday or legal holiday, then the time for performance shall be
deemed extended to the next successive business day.

22. SEVERABILITY. In the event any of the provisions of this Agreement are
------------
deemed to be unenforceable, the enforceability of the remaining provisions of
this Agreement shall not be affected.

B-3
<PAGE> 37

23. SUCCESSORS IN INTEREST. Upon Seller's execution of this Agreement,
----------------------
Seller's successors and assigns will be bound by it. Upon Purchaser's
approval of this Agreement and Purchaser's exercise of the option, Purchaser
and Purchaser's successors and assigns will be bound by it. Whenever used,
the singular shall include the plural and one gender shall include all
genders.

24. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
----------------
the parties pertaining to the subject matter contained in it and supersedes
all prior and contemporaneous agreements, representations and understandings
of the parties. No supplement, modification or amendment to this Agreement
shall be binding unless executed in writing by the parties.

25. WAIVER. Failure of either party to insist upon strict performance of
------
any covenant or condition of this Agreement, or to exercise any right herein
contained, shall not be construed as a waiver or relinquishment for the
future of any such covenant, condition or right; but the same shall remain in
full force and effect.

26. AGREEMENT EFFECTIVE. This Agreement or any modification, amendment or
-------------------
alteration thereto, shall not be effective or binding upon any of the parties
hereto until it has been executed by all of the parties hereto.

27. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, but all such counterparts, when duly executed, shall constitute
one and the same Agreement.

28. ADDENDUM. Any addendum attached hereto that is signed by the parties
--------
shall be deemed a part of this Agreement.

29. NOTICE. Whenever either party desires or is required to give notice
------
unto the other, it must be given by written notice, and either delivered
personally by a nationally recognized overnight delivery service or mailed to
the appropriate address indicated on the first page of this Agreement, or
such other address as is designated in writing by a party to this Agreement.
Any notice delivered or mailed as herein provided shall be deemed effectively
given or received on the date of delivery if delivered by hand or delivery
service or on the date indicated on the return receipt if mailed.

30. SURVIVAL. The covenants, warranties, representations, indemnities and
--------
undertakings of Seller set forth in this Agreement shall survive the closing,
the delivery and recording of the deed described in paragraph 8. of this
Agreement and Purchaser's possession of the Property.

31. APPROVAL. All of Seller's obligations under this Agreement are
--------
contingent upon approval of this Agreement by the Shareholders of PGI, Inc.
by April 1, 1997. Seller shall provide written evidence of approval of this
Agreement by the Shareholders of PGI, Inc. by April 1, 1997. Either party may
terminate this Agreement if the requisite Shareholder approval is not
obtained, and thereafter neither party shall have any further obligations
under this Agreement.

THIS AGREEMENT IS INITIALLY TRANSMITTED TO THE SELLER AS AN OFFER. IF THIS
AGREEMENT IS NOT EXECUTED BY THE SELLER ON OR BEFORE JANUARY 20, 1997, THIS
OFFER WILL BE VOID UNLESS THE PURCHASER, AT ITS SOLE OPTION, ELECTS TO ACCEPT
THIS OFFER. IF THIS OPTION IS ASSIGNED TO THE TRUSTEES, THE EXERCISE OF THIS
OPTION IS SUBJECT TO: (1) APPROVAL OF THE PURCHASE PRICE AS SET FORTH IN
PARAGRAPH 3.A. BY THE TRUSTEES, (2) CONFIRMATION THAT THE FINAL ADJUSTED
PURCHASE PRICE IS NOT IN EXCESS OF THE DSL APPROVED VALUE OF THE PROPERTY,
AND (3) DSL APPROVAL OF ALL DOCUMENTS TO BE FURNISHED HEREUNDER BY SELLER.
THE STATE OF FLORIDA'S PERFORMANCE AND OBLIGATION TO PAY UNDER THIS AGREEMENT
IS CONTINGENT UPON AN ANNUAL APPROPRIATION BY THE LEGISLATURE.

THIS IS INTENDED TO BE A LEGALLY BINDING AGREEMENT ON SELLER UPON SELLER'S
EXECUTION OF THE AGREEMENT. IF NOT FULLY UNDERSTOOD, SEEK THE ADVICE OF AN
ATTORNEY PRIOR TO SIGNING.

B-4
<PAGE> 38

SELLER

SUGARMILL WOODS, INC.,
a Florida corporation

/s/ Terry Bopp By: /s/ Laurence A. Schiffer
- ------------------------------------ -----------------------------
Witness as to Seller
Name: Laurence A. Schiffer
--------------------------

/s/ Georgene R. Heinz
- ------------------------------------
Witness as to Seller Its: President
--------------------------------

59-1440671
-------------------------------
F.E.I.D. No.

January 14, 1997
-------------------------------
Date signed by Seller

(CORPORATE SEAL)

LOVE-PGI Partners, L.P., a
Missouri limited partnership

By: Love Investment Company,
----------------------------
a Missouri corporation
----------------------------

Its: Managing General Partner
---------------------------

By: /s/ Laurence A. Schiffer
----------------------------

/s/ Terry Bopp Name: Laurence A. Schiffer
- ------------------------------------ --------------------------------
Witness as to Seller

Its: President
---------------------------
/s/ Georgene R. Heinz
- ------------------------------------
Witness as to Seller
43-1441822
-------------------------------
F.E.I.D. No.

January 14, 1997
-------------------------------
Date signed by Seller

(CORPORATE SEAL)

B-5
<PAGE> 39

PURCHASER

THE NATURE CONSERVANCY, a
nonprofit District of Columbia
corporation authorized to
transact business in the
State of Florida as The Nature
Conservancy, Inc.

By: /s/ Robert Bendick, Jr.
----------------------------

/s/ Geoffrey Rich Name: Robert Bendick, Jr.
- ------------------------------------ --------------------------
Witness as to Purchaser
Its: Regional Director
---------------------------
/s/ Jeri Vetter
- ------------------------------------
Witness as to Purchaser
(CORPORATE SEAL)

53-62-42652
-------------------------------
F.E.I.D. No.

1/31/97
-------------------------------
Date signed by Purchaser

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Laurence A. Schiffer, as President of Sugarmill Woods,
Inc., a Florida corporation, on behalf of the corporation. Such person(s)
(Notary Public must check applicable box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced ------------------------ as identification.

/s/ Terry Bopp
-------------------------------------
(NOTARY PUBLIC SEAL) Notary Public

- --------------------
TERRY BOPP Terry Bopp
-------------------------------------
Notary Public - Notary Seal (Printed, Typed or Stamped
Name of Notary Public)
STATE OF MISSOURI
St. Louis County
My Commission Expires: July 11, 1998 Commission No.: N/A
----------------------

My Commission Expires: July 11, 1998
---------------

B-6
<PAGE> 40

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 14th day of
January, 1997, by Laurence A. Schiffer, as President of Love Investment
Company, a Missouri corporation, for and on behalf of the corporation as the
Managing General Partner of LOVE-PGI Partners, L.P., a Missouri limited
partnership. Such person(s) (Notary Public must check applicable box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced -------------------------- as identification.

/s/ Terry Bopp
-------------------------------------
(NOTARY PUBLIC SEAL) Notary Public

My Commission Expires: July 11, 1998
---------------

STATE OF FLORIDA )
)
COUNTY OF SEMINOLE )

The foregoing instrument was acknowledged before me this 31st day of
January, 1997, by Robert L. Bendick, Jr., as Regional Director of the Nature
Conservancy, a non-profit District of Columbia corporation authorized to
transact business in the State of Florida as The Nature Conservancy, Inc., on
behalf of the corporation. He is personally known to me.

(NOTARY PUBLIC SEAL) /s/ Jeri Vetter
SEAL -------------------------------------
Notary Public

-------------------------------------
JERI VETTER (Printed, Typed or Stamped
Notary Public Name of Notary Public)
STATE OF FLORIDA
My Commission CC588460 Commission No.:
----------------------
Expires Sep. 25, 2000
My Commission Expires:
---------------

B-7
<PAGE> 41

FIRST AMENDMENT TO OPTION AGREEMENT
FOR SALE AND PURCHASE

THIS FIRST AMENDMENT TO OPTION AGREEMENT FOR SALE AND
PURCHASE is made and entered into this day of ,
-------- -----------------
1997, by and between Sugarmill Woods, Inc., a Florida corporation, and
LOVE-PGI Partners, L.P., a Missouri limited partnership ("Seller") and The
Nature Conservancy, authorized to transact business in the State of Florida
as The Nature Conservancy, Inc., a non-profit District of Columbia
corporation, exempt from Federal income tax under Section 501(c)(3) of the
Internal Revenue Code, whose address is 222 S. Westmonte Dr., Ste. 300,
Altamonte Springs, FL 32714-4269, and its successors and assigns
("Purchaser").

WITNESSETH:

WHEREAS, Seller and Purchaser entered into that certain Option
Agreement for Sale and Purchase dated January 31, 1997 (the "Agreement") to
purchase certain real property located in Citrus and Hernando Counties,
Florida, more particularly described in Exhibit "A" of the Agreement (the
"Property"); and

WHEREAS, the parties' obligations under the Agreement were contingent
upon the shareholders of PGI, Inc. approving the Agreement by April 1, 1997;
and

WHEREAS, the Seller has requested an additional sixty days to obtain
the approval of the Agreement by the shareholders of PGI, Inc.; and

WHEREAS, the Purchaser has requested that the Sugarmill Woods plat
located within the boundaries of the Property be vacated prior to closing.

NOW THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Seller and Purchaser
agree as follows:

1. Paragraph 2 of the Agreement is deleted in its entirety and substituted
with the following:

2. OPTION TERMS. The option payment is $100.00 ("Option Payment"), the
------------
receipt and sufficiency of which is hereby acknowledged by Seller.
The option may be exercised during the period beginning with
Purchaser's approval of this Agreement and ending 120 days after
Trustees' approval of this Agreement ("Option Expiration Date"),
unless extended by other provisions of this Agreement, if this
Agreement is assigned to the Trustees. If this Agreement is not
approved by the Trustees on or before December 31, 1997, or if the
Agreement is not assigned to the Trustees, then the Option Expiration
Date shall be December 31, 1997, unless extended by other provisions
of this Agreement. In the event Purchaser's funds in the amount of
the Purchase Price (as hereinafter defined in paragraph 3.A.) are not
available by the Option Expiration Date the period of exercise of the
option may be extended until such funds become available, not to
exceed 60 days after the Option Expiration Date, by written notice to
Seller.

2. Paragraph 31 of the Agreement is deleted in its entirety and
substituted with the following:

31. APPROVAL. All of Seller's obligations under this Agreement
--------
are contingent upon approval of this Agreement by the
shareholders of PGI, Inc., by September 30, 1997. Seller shall
provide written evidence of approval of this Agreement by the
shareholders of PGI, Inc., by September 30, 1997. Either party
may terminate this Agreement if the requisite shareholder
approval is not obtained, and thereafter neither party shall
have any further obligations under this Agreement.

3. The following Paragraph 32 is hereby added and incorporated
into the Agreement:

32. PLAT VACATION. Prior to closing, Seller shall cause any
-------------
plat including, but not limited to, the plat of Sugarmill Woods
as recorded in Plat Book 9 at pages 88 through 150, inclusive,
Plat Book 10 at pages 1 through 150, inclusive, Plat Book 11 at
pages 1 through 16, inclusive, as amended in Plat Book 9, at
page 87A, all of the Public Records of Citrus County, Florida
and in Plat Book 14 at pages 1 through 101, inclusive, of the
Public Records of Hernando County, Florida which are located
within the boundaries of the Property (collectively the
"Plats"), to be vacated by the appropriate governmental entity,
contingent upon conveyance of the Property to Purchaser.
Seller shall also perform any other actions necessary for the
title insurer to delete all exceptions pertaining to the Plats
and the roadways, parks, easements, restrictions and other
matters depicted or referenced therein from the title insurance
commitment and title insurance policy. All vacated road rights
of way, parks and other rights or interests accruing to the
Seller as a result of the location of the Plats shall be deemed
to be part of the Property, and shall be included in the final
legal description of the Property, insured by the title insurer
as conveyed to the Purchaser at closing. In the event that the
requirements of this paragraph have not been satisfied by
Seller prior to closing, the closing shall be automatically
extended for a period of time sufficient to allow the Seller to
complete the vacation of the Plats and to satisfy all other
requirements of this paragraph. In the event that the Seller
is unable, through no fault of its own, to satisfy the
requirements of this paragraph, the Purchaser's remedies shall
be limited to the following: (i) decreasing the Purchase Price
to equal the final Adjusted Purchase Price, which is determined
by multiplying the Final DSL Approved Acre Value by the
surveyed acreage shown on the final DSL approved survey
required by paragraph 5. hereof, by an amount not to exceed
$100,000.00; and (ii) decreasing the Purchase Price by an
amount mutually agreed to by the parties; or (iii) terminating
this Agreement.

In the event that Seller is unable, through no fault of its own,
to vacate Tract PK, consisting of approximately 76.52 acres,
from the Plats, the Purchase Price shall be decreased by
$50,000.00. This remedy shall be in addition to the Purchase
Price reductions provided for in Paragraphs 3.B. and 32(i).

B-8
<PAGE> 42

Notwithstanding anything to the contrary in this Agreement, the
Purchase Price may only be decreased pursuant to Paragraphs
3.B. and 32. and Seller shall only be obligated to spend
pursuant to Paragraph 7 a total in the aggregate under this
Agreement of $100,000.00. The provisions of such paragraphs
are not cumulative.

4. All other provisions of the Agreement not specifically modified
or amended hereby shall remain in full force and effect. All
capitalized terms not otherwise defined herein shall have the same
meaning as in the Agreement.

SELLER:

SUGARMILL WOODS, INC.,
a Florida corporation

/s/ Terry Bopp By: /s/ Laurence A. Schiffer
- --------------------------------- -----------------------------------
Witness as to Seller

Name: Laurence A. Schiffer
---------------------------------

/s/ Jan Simpson
- --------------------------------- Its: President
Witness as to Seller ----------------------------------
59-1440671
---------------------------------------
F.E.I.D. No.
8/25/97
---------------------------------------
Date signed by Seller

(CORPORATE SEAL)

LOVE-PGI Partners, L.P., a Missouri
limited partnership

By: Love Investment Company, a Missouri
-----------------------------------
corporation
---------------------------------------

Its: Managing General Partner
----------------------------------

By: /s/ Laurence A. Schiffer
----------------------------------

/s/ Terry Bopp Name: Laurence A. Schiffer
- --------------------------------- --------------------------------
Witness as to Seller Its: President
----------------------------------

/s/ Jan Simpson 43-1441822
- --------------------------------- ---------------------------------------
Witness as to Seller F.E.I.D. No.
8/25/97
---------------------------------------
Date signed by Seller

(CORPORATE SEAL)

PURCHASER:
THE NATURE CONSERVANCY, a non-profit
District of Columbia corporation

/s/Jeri Vetter By: /s/ Robert L. Bendick, Jr.
- --------------------------------- -----------------------------------
Witness as to Purchaser Name: Robert L. Bendick, Jr.
---------------------------------
Its: Regional Director
----------------------------------
/s/ Teresa Coccia
- ---------------------------------
Witness as to Purchaser

(CORPORATE SEAL)

ATTEST:

/s/ Geoffrey Rich
- ---------------------------------
Assistant Secretary

B-9
<PAGE> 43

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 25th
day of August, 1997, by Laurence A. Schiffer, as President of
Sugarmill Woods, Inc., a Florida corporation, on behalf of the
corporation. Such person(s) (Notary Public must check applicable
box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced as identification.
------------------------

(NOTARY PUBLIC SEAL) /s/ Georgene R. Heinz
Notary Public ---------------------------------------

---------------------------------------
(Printed, Typed or Stamped
Name of Notary Public)

Commission No.:
------------------------

My Commission Expires:
-----------------

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 25th
day of August, 1997, by Laurence A. Schiffer, as President of Love
Investment Company, a Missouri corporation, for and on behalf of the
corporation as the Managing General Partner of LOVE-PGI Partners,
L.P., a Missouri limited partnership. Such person(s) (Notary Public
must check applicable box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced as identification.
------------------------

(NOTARY PUBLIC SEAL) /s/ George R. Heinz
---------------------------------------
Notary Public

---------------------------------------
(Printed, Typed or Stamped
Name of Notary Public)

Commission No.:
------------------------

My Commission Expires:
-----------------

B-10
<PAGE> 44

STATE OF FLORIDA )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 28th
day of August, 1997, by Robert L. Bendick, Jr., as Regional Director
of the Nature Conservancy, a non-profit District of Columbia
corporation authorized to transact business in the State of Florida
as The Nature Conservancy, Inc. on behalf of the corporation. He is
personally known to me.

(NOTARY PUBLIC SEAL) /s/ Jeri Vetter
---------------------------------------
Notary Public

---------------------------------------
(Printed, Typed or Stamped
Name of Notary Public)

Commission No.:
------------------------

My Commission Expires:
-----------------

B-11
<PAGE> 45

SECOND AMENDMENT TO OPTION AGREEMENT
------------------------------------
FOR SALE AND PURCHASE
---------------------

THIS SECOND AMENDMENT TO OPTION AGREEMENT FOR SALE AND PURCHASE
is made and entered into this 1st day of October, 1997, by and between
Sugarmill Woods, Inc., a Florida corporation, and LOVE-PGI Partners,
L.P., a Missouri limited partnership ("Seller") and THE NATURE
CONSERVANCY, authorized to transact business in the State of Florida
as The Nature Conservancy, Inc., a nonprofit District of Columbia
corporation, exempt from Federal income tax under Section 501(c) (3)
of the Internal Revenue Code, whose address is 222 S. Westmonte
Drive, Altamonte Springs, FL 32714, and its successors and assigns
("Purchaser").

W I T N E S S E T H:

WHEREAS, Seller and Purchaser have entered into that certain
Option Agreement for Sale and Purchase dated January 31, 1997 and the
First Amendment to Option Agreement for Sale and Purchase dated
August 28, 1997 (collectively the "Agreement"), relating to an option
to purchase certain real property located in Citrus and Hernando
Counties, Florida, more particularly described in Exhibit "A" of the
Agreement (the "Property"); and

WHEREAS, Seller and Purchaser wish to extend the Option
Expiration Date and the approval deadline for the shareholders of
PGI, Inc.

NOW THEREFORE, for and in consideration of the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, Seller and Purchaser agree as follows:

1. Paragraph 2 of the Agreement is deleted in its entirety and
substituted with the following:

2. OPTION TERMS. The option payment is $100.00 ("Option
------------
Payment"), the receipt and sufficiency of which is hereby
acknowledged by Seller. The option may be exercised during
the period beginning with Purchaser's approval of this
Agreement and ending 120 days after Trustees' approval of
this Agreement ("Option Expiration Date"), unless extended
by other provisions of this Agreement, if this Agreement
is assigned to the Trustees. If this Agreement is not
approved by the Trustees on or before March 3, 1998, or if
the Agreement is not assigned to the Trustee, then the
Option Expiration Date shall be March 3, 1998, unless
extended by other provisions of this Agreement. In the
event Purchaser's funds in the amount of the Purchase
Price (as hereinafter defined in paragraph 3.A) are not
available by the Option Expiration Date the period of
exercise of the option may be extended until such funds
become available, not to exceed 60 days after the option
Expiration Date, by written notice to Seller.

2. Paragraph 31 of the Agreement is deleted in its entirety and
substituted with the following:

31. APPROVAL. All of Seller's obligations under this
--------
Agreement are contingent upon approval of this Agreement
by the shareholders of PGI, Inc., by October 31, 1997.
Seller shall provide written evidence of approval of
this Agreement by the shareholders of PGI, Inc., by
October 31, 1997. Either party may terminate this
Agreement if the requisite shareholder approval is not
obtained, and thereafter neither party shall have any
further obligations under this Agreement.

3. All other provisions of the Agreement not specifically modified
or amended hereby shall remain in full force and effect.

All capitalized terms not otherwise defined herein shall have the
same meaning as in the Agreement.

SELLER:

SUGARMILL WOODS, INC.
a Florida corporation

/s/Robin L. Cunningham By: /s/Laurence A. Schiffer
- --------------------------------- ------------------------------------
Witness as to Seller
Name: Laurence A. Schiffer
-----------------------------
/s/Patricia L. Bly
- ---------------------------------
Witness as to Seller Its: President
------------------------------

59-1440671
-----------------------------------
F.E.I.D. No.

9/29/97
-----------------------------------
Date signed by Seller
(CORPORATE SEAL)

B-12
<PAGE> 46
LOVE-PGI Partners, L.P., a Missouri
limited partnership

By: Love Investment Company
--------------------------------
a Missouri corporation
------------------------------------

Its: Managing General Partner
------------------------------
/s/Robin L. Cunningham
- ---------------------------------
Witness as to Seller By: /s/Laurence A. Schiffer
-------------------------------

/s/Patricia L. Bly Name: Laurence A. Schiffer
- --------------------------------- -----------------------------
Witness as to Seller
Its: President
------------------------------

43-1441822
------------------------------------
F.E.I.D. No.

9/29/97
------------------------------------
Date signed by Seller
(CORPORATE SEAL)

PURCHASER:

THE NATURE CONSERVANCY,
a non-profit District of Columbia
corporation

/s/Jeri Vetter By: /s/Robert L. Bendick, Jr.
- --------------------------------- -------------------------------
Witness as to Purchaser
Its: Regional Director
------------------------------
/s/Teresa Coccia
- ---------------------------------
Witness as to Purchaser (CORPORATE SEAL)

ATTEST:
10/1/97
-----------------------------------
/s/Geoffrey Rich Date signed by Purchaser
- ---------------------------------

B-13
<PAGE> 47

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 29th
day of September, 1997, by Laurence A. Schiffer, as President of
Sugarmill Woods, Inc., a Florida corporation, on behalf of the
corporation. Such person(s) (Notary Public must check applicable
box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced -------------- as identification.

(NOTARY PUBLIC SEAL) /s/Georgene Heinz
----------------------------------------
Notary Public

----------------------------------
(Printed, Typed or Stamped
of Notary Public)

Commission No.:
-------------------

My Commission Expires:
------------

STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )

The foregoing instrument was acknowledged before me this 29TH day of
September, 1997, by Laurence A. Schiffer, as President of Love
Investment Company, a Missouri corporation, on behalf of the
corporation as the Managing General Partner of LOVE-PGI Partners,
L.P., a Missouri limited partnership.. Such person(s) (Notary Public
must check applicable box):

[X] is/are personally known to me.
[ ] produced a current driver license(s).
[ ] produced -------------- as identification.

(NOTARY PUBLIC SEAL) /s/Georgene Heinz
---------------------------------------
Notary Public

----------------------------------
(Printed, Typed or Stamped
of Notary Public)

Commission No.:
-------------------

My Commission Expires:
------------

STATE OF FLORIDA )
)
COUNTY OF SEMINOLE )

The foregoing instrument was acknowledged before me this 1st day
of October, 1997, by Robert L. Bendick, Jr., as Regional Director of
the Nature Conservancy, a non-profit District of Columbia corporation
authorized to transact business in the State of Florida as The Nature
Conservancy, Inc., on behalf of the corporation. He is personally
known to me.

(NOTARY PUBLIC SEAL) /s/Jerri Vetter
----------------------------------------
Notary Public

----------------------------------
(Printed, Typed or Stamped
of Notary Public)

Commission No.:
-------------------

My Commission Expires:
------------

B-14
<PAGE> 48

APPENDIX C

PGI, INC.

PRO FORMA FINANCIAL STATEMENT

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

The Company has entered into an option agreement to sell approximately 4,890
acres of unimproved land for approximately $13,446,835.

The accompanying pro forma financial statement illustrates the effects of the
sale. The pro forma balance sheet as of September 30, 1997 is based upon the
historical balance sheet of the Company as of that date and assumes the sale
took place on that date. The information about the statements of operations
for the year ended December 31, 1996 and for the nine months ended September
30, 1997 is based on the historical statements of operations of the Company
for those periods and assumes the sale took place at the beginning of the
period.

The pro forma financial statement may not be indicative of the actual effects
of the sale.

The accompanying pro forma financial statement should be read in connection
with the historical financial statements of the Company.

C-1
<PAGE> 49

The following sets forth the unaudited pro forma balance sheet of the Company
giving effect to the consummation of the proposed sale of the Property as if
the closing was September 30, 1997 and use of proceeds as described therein.

<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET (IN THOUSANDS)

AT PRO FORMA
SEPTEMBER 30, 1997 ADJUSTMENTS AS ADJUSTED
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 5 $ -- $ 5
Restricted cash 1,131 2,681<FA><FE> 3,812

Receivables on real estate sales - net 131 -- 131
Other receivables 35 -- 35
Land and improvement inventories 9,003 (7,626)<FB> 1,377
Property and equipment - net 21 -- 21
Other assets 763 -- 763
-------- ------- --------
$ 11,089 $(4,945) $ 6,144

LIABILITIES
Accounts payable $ 193 $ -- $ 193
Other liabilities 1,661 765<FA> 896
Accrued income taxes -- (84)<FC> 84
Accrued interest:
Primary lender 3,207 3,207<FA> --
Debentures 7,887 -- 7,887
Other 1,581 -- 1,581
Credit agreements:
Primary lender 7,343 6,343<FA> 1,000<FD>
Notes and mortgages payable 3,685 -- 3,685
Convertible debentures payable 9,059 -- 9,059
Convertible debentures payable 1,500 -- 1,500
-------- ------- --------
36,116 10,231 25,885

STOCKHOLDERS' DEFICIENCY

Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; 2,000,000 Class A
cumulative convertible shares issued and
outstanding; (liquidation preference of $4.00
per share or $8,000,000) 2,000 -- 2,000

Common stock, par value $.10 per share;
authorized 25,000,000 shares; 5,317,758 shares
issued and outstanding 532 -- 532

Paid-in capital 13,498 -- 13,498
Accumulated deficit (41,057) (5,286)<FB><FC> (35,771)
-------- ------- --------
(25,027) (5,286) (19,741)
-------- ------- --------
$ 11,089 $ 4,945 $ 6,144
</TABLE>

C-2
<PAGE> 50

PGI, INC.

FOOTNOTES

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

<FA> To give effect of closing the proposed sale of 4,890 acres of
unimproved land as of December 31, 1996 for $13,446,835 net of $450,000 of
estimated closing expenses, less estimated use of such proceeds as follows on
September 30, 1997:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Net proceeds from sale $12,996

Less:

Payment to reduce primary lender note payable 6,343

Payment to reduce accrued interest due to primary lender 3,207

Payment to satisfy real estate tax assessments including
interest and penalties 765
-------

CASH AND CASH EQUIVALENTS $2,681
</TABLE>

<FB> To give effect of the reduction of the cost of 4,890 acres of
unimproved land as if the sale had taken place on September 30, 1997 in the
amount of $7,626,000 resulting in a gain on sale of $5,370,000 (less the
provision for income taxes of $84,000).

<FC> To give effect of the estimated income tax liability arising from the
Alternative Minimum Tax due on the gain on sale. The estimated liability has
been adjusted for limitations on the utilization of the net operating loss
carryforward and net of a valuation allowance of $84,000.

<FD> Assumes that members of PGIP will approve a continued $1,000,000 first
mortgage on the approximately 370 acres of real estate remaining in Company
control.

<FE> To give effect of a $700,000 escrow to substitute for mortgage to
assure completion of necessary roads on property developed by the Company,
and establish the balance of proceeds as restricted cash under control of
managers of PGIP.

C-3
<PAGE> 51

PGI, INC.

OPERATING INFORMATION

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

The pro forma effect of the sale for the year ended December 31, 1996 and for
the nine months ended September 30, 1997 are as follows:

FOR THE YEAR ENDED FOR THE NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
<S> <C> <C>
Reduction in interest expense $ 788,000 $ 630,000

Pro forma net loss $(2,107,000) $(1,885,000)

Pro forma net loss per share (.83) (.55)
</TABLE>

C-4
<PAGE> 52

APPENDIX D

DISSENTERS' RIGHTS

607.1301. DISSENTERS' RIGHTS; DEFINITIONS

The following definitions apply to ss. 607.1302 and 607.1320:

(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.

(2) "Fair value," with respect to a dissenter's shares, means the
value of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.

(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in the
case of a merger pursuant to s. 607.1104, the day prior to the date on which
a copy of the plan of merger was mailed to each shareholder of record of the
subsidiary corporation.

607.1302. RIGHT OF SHAREHOLDERS TO DISSENT

(1) Any shareholder of a corporation has the right to dissent from,
and obtain payment of the fair value of his shares in the event of, any of
the following corporate actions:

(a) Consummation of a plan of merger to which the corporation
is a party:

1. If the shareholder is entitled to vote on the merger,
or

2. If the corporation is a subsidiary that is merged WITH
its parent under s. 607.1104, and the shareholders would have been entitled
to vote on action taken, except for the applicability of s. 607.1104;

(b) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to s. 607.1202, including a sale in dissolution but not
including a sale pursuant to a court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within 1 year after the date of sale;

(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be
acquired, if the shareholder is entitled to vote on the plan;

(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:

1. Altering or abolishing any preemptive rights attached
to any of his shares;

2. Altering or abolishing the voting rights pertaining TO
any of his shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or series of
shares;

3. Effecting an exchange, cancellation, or
reclassification of any of his shares, when such exchange, cancellation, or
reclassification would alter or abolish his voting rights or alter his
percentage of equity in the corporation, or effecting a reduction or
cancellation of accrued dividends or other arrearages in respect to such
shares;

4. Reducing the stated redemption price of any of his
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his shares, or making
any of his shares subject to redemption when they are not otherwise
redeemable;

5. Making noncumulative, in whole or in part, dividends
of any of his preferred shares which had theretofore been cumulative;

6. Reducing the stated dividend preference of any of his
preferred shares; or

D-1
<PAGE> 53

7. Reducing any stated preferential amount payable on any
of his preferred shares upon voluntary or involuntary liquidation; or

(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.

(2) A shareholder dissenting from any amendment specified
in paragraph (1)(e) has the right to dissent only as to those of his shares
which are adversely affected by the amendment.

(3) A shareholder may dissent as to less than all the
shares registered in his name. In that event, his rights shall be determined
as if the shares as to which he has dissented and his other shares were
registered in the names of different shareholders.

(4) Unless the articles of incorporation otherwise
provide, this section does not apply with respect to a plan of merger or
share exchange or a proposed sale or exchange of property, to the holders of
shares of any class or series which, on the record date fixed to determine
the shareholders entitled to vote at the meeting of shareholders at which
such action is to be acted upon or to consent to any such action without a
meeting, were either registered on a national securities exchange or held of
record by not fewer than 2,000 shareholders.

(5) A shareholder entitled to dissent and obtain payment
for his shares under this section may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.

607.1320. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

(1)(a) If a proposed corporate action creating dissenters' rights
under s. 607.1302 is submitted to a vote at a shareholders' meeting, the
meeting notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302,
and 607.1320. A shareholder who wishes to assert dissenters' rights shall:

1. Deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if the proposed
action is effectuated, and

2. Not vote his shares in favor of the proposed action.
A proxy or vote against the proposed action does not constitute such a notice
of intent to demand payment.

(b) If proposed corporate action creating dissenters' rights
under s. 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to
each shareholder simultaneously with any request for his written consent or,
if such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.

(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to,
the proposed action.

(3) Within 20 days after the giving of notice to him, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating his name and address, the number, classes, and series of
shares as to which he dissents, and a demand for payment of the fair value of
his shares. Any shareholder failing to file such election to dissent within
the period set forth shall be bound by the terms of the proposed corporate
action. Any shareholder filing an election to dissent shall deposit his
certificates for certificated shares with the corporation simultaneously with
the filing of the election to dissent. The corporation may restrict the
transfer of uncertificated shares from the date the shareholder's election to
dissent is filed with the corporation.

(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of
such shareholder to be paid the fair value of his shares shall cease, and he
shall be reinstated to have all his rights as a shareholder as of the filing
of his notice of election, including any intervening preemptive rights and
the right to payment of any intervening dividend or other distribution or, if
any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the

D-2
<PAGE> 54

board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the
interim, if:

(a) Such demand is withdrawn as provided in this section;

(b) the proposed corporate action is abandoned or rescinded or
the shareholders revoke the authority to effect such action;

(c) No demand or petition for the determination of fair value by
a court has been made or filed within the time provided in this section; or

(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this section.

(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10 days
after such corporate action is effected, whichever is later (but in no case
later than 90 days from the shareholders' authorization date), the
corporation shall make a written offer to each dissenting shareholder who has
made demand as provided in this section to pay an amount the corporation
estimates to be the fair value for such shares. If the corporate action has
not been consummated before the expiration of the 90-day period after the
shareholders' authorization date, the offer may be made conditional upon the
consummation of such action. Such notice and offer shall be accompanied by:

(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and

(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such 12-month period, for the
portion thereof during which it was in existence.

(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after
the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares.

(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within the
period of 30 days thereafter, then the corporation, within 30 days after
receipt of written demand from any dissenting shareholder given within 60
days after the date on which such corporate action was effected, shall, or at
its election at any time within such period of 60 days may, file an action in
any court of competent jurisdiction in the county in this state where the
registered office of the corporation is located requesting that the fair
value of such shares be determined. The court shall also determine whether
each dissenting shareholder, as to whom the corporation requests the court to
make such determination, is entitled to receive payment for his shares. If
the corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting shareholders (whether or not resident of this state), other than
shareholders who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting shareholder who is a resident of this state
in the manner provided by law for the service of a summons and complaint and
upon each nonresident dissenting shareholder either by registered or
certified mail and publication or in such other manner as is permitted by
law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to
judgment against the corporation for the amount of the fair value of their
shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment thereof. The
corporation shall pay each dissenting shareholder the amount found to be due
him within 10 days after final determination of the proceedings. Upon
payment of the judgment, the dissenting shareholder shall cease to have any
interest in such shares.

(8) The judgment may, at the discretion of the court, include a fair
rate of interest, to be determined by the court.

(9) The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or any
part of such costs and expenses may be apportioned and assessed as the court
deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding, to whom the corporation has made an offer to pay
for the shares, if the court finds that the action of such shareholders in
failing to accept such offer was arbitrary, vexatious, or not in good faith.
Such expenses shall include reasonable compensation for, and reasonable
expenses of, the appraisers, but shall exclude the fees and expenses of
counsel for, and experts employed by, any party. If the fair value of the
shares, as determined, materially exceeds the amount which the corporation
offered to pay therefor or if no offer was made, the court in its discretion
may award to any shareholder who is a party to the proceeding such sum as the
court determines to be reasonable compensation to any attorney or expert
employed by the shareholder in the proceeding.

D-3
<PAGE> 55

(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
in the case of other treasury shares, except that, in the case of a merger,
they may be held and disposed of as the plan of merger otherwise provides.
The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the
surviving corporation.

D-4
<PAGE> 56
APPENDIX

Pages A-1 and A-2 of the proxy statement are flow charts representing
summary ownership of PGI Incorporated and PGIP, L.L.C. Paper copies of these
charts are being submitted to the branch examiner.