PGI INC, PRER14A, 1997-10-30

PGI INC
PRER14A, 1997-10-30
OPERATIVE BUILDERS

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<PAGE> 1
PRELIMINARY PROXY
Dated October 30, 1997

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:

X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Sec.240.14a11(c) or Sec.240.14a12

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 14a6(i)(1) and 011.

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 011 (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
------------------------------------------------------

X Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 011(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> 2

PRELIMINARY PROXY
Dated October 30, 1997

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF PGI INCORPORATED
TO BE HELD NOVEMBER 25, 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, Tuesday, November 25, 1997 at 3:00 p.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 whollyowned
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
B 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

, 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> 3

PRELIMINARY PROXY
Dated October 30, 1997

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, Tuesday, November 25, 1997 at 3:00
p.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 whollyowned 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. 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 , 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 $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".

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PRELIMINARY PROXY
Dated October 30, 1997

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 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. The
Preferred Stockholders and the holders of the Company's outstanding Common
Stock are sometimes referred to collectively hereinafter as the
"Stockholders".

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 will obtain a
substantial financial benefit.

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.

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

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PRELIMINARY PROXY
Dated October 30, 1997

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.

Stockholders 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.

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.

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PRELIMINARY PROXY
Dated October 30, 1997

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 TOTAL
----------------
NAME COMMON STOCK PREFERRED COMMON PREFERRED PERCENT OF
---- ------------ STOCK STOCK STOCK TOTAL VOTING
----- ----- ----- 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%
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

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PRELIMINARY PROXY
Dated October 30, 1997

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 LPGI 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 LPGI. LPGI
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.

<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.
</TABLE>

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.

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PRELIMINARY PROXY
Dated October 30, 1997

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 twothirds
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 future bulk sales may be required to be submitted for shareholder
approval. The Board believes that eliminating the twothirds 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.

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 . . ." Abstentions and broker
non-votes will have the effect of a vote against Proposal Two.

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Dated October 30, 1997

proceeds from the sale, is assured of passage. 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 also 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.

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.

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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
whollyowned subsidiary of the Company, and LPGI (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 LPGI. 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 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.

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Dated October 30, 1997

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.
The obligations of the Company 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 October 31, 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 October 31, 1997.

For the purposes of this subsection only, the Company 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 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

[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.

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Dated October 30, 1997

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.

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.

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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.

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.

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. PGIP has informed the Company that if the
Shareholders do not approve the proposed sale of the Property,

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Dated October 30, 1997

PGIP will likely be forced to foreclose on the Property to satisfy the Company's
indebtedness to it.

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

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Dated October 30, 1997

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.

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.

LPGI 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.

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Dated October 30, 1997

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.

To induce PGIP to release its entire first mortgage on the
Property notwithstanding that the First Mortgage Indebtedness has not been
paid in full, the Company has offered to leave in place a 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"). As further inducement, the Company has offered to place the
Restricted Proceeds in an escrow with PGIP. The Company will pledge its
interest in the escrow and the Restricted Proceeds as additional collateral
for the First Mortgage Indebtedness.

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. To induce
Love-1989 to release its second mortgage on the Property, the Company will
grant to it 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, the Company has also agreed to grant a security interest 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.

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.

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Dated October 30, 1997

Assuming the amount of the gross proceeds from the sale of the Property
is approximately $14,759,335 and a sale closing date of November 30, 1997,
the use of proceeds is set forth in tabular form below. As stated under
"-- Summary of the Option Agreement, as Amended," the Exercise Price of
$14,759,335 is based upon the 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>
<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 LPGI
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 2,359,245

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, own 52% of LSHC, they could
be deemed to have "profited" by approximately $1,274,000. The amount of
profit to LSHC and Messrs. Love

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Dated October 30, 1997

and Schiffer is based on the current use of proceeds set forth above. It could
increase upon payment of the additional $1 million mortgage and interest and by
an uncertain amount based upon the incentive arrangements that PGIP has with its
investors. 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.

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, because the agreement requires such approval. The Company does
not believe that shareholder approval of the Option Agreement, as Amended, is
required by Florida law. Florida law 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. Because of the value of the Retained
Acreage, the Company does not necessarily believe that the sale of the
Property constitutes all or substantially all of its assets. It is not
required to reach this determination, however, in order to conclude that
Florida law does not require Shareholder approval of Proposal Three, 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

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Dated October 30, 1997

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.

The Company recognizes that the date of the Annual Meeting is
subsequent to October 31, 1997, the date that approval of the Company's
Shareholders had to be obtained under the terms of the Option Agreement, as
Amended. For various reasons, the Company was unable to hold the Annual
Meeting on or prior to October 31, 1997. The Company intends nevertheless to
submit Proposal Three to the vote of the Shareholders at the Annual Meeting
to be held November 25, 1997. The Company views the October 31, 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

The shareholder vote required to approve Proposal Three depends upon
whether Proposal Two is passed. Assuming Proposal Two is passed, the Company
may 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.

If Proposal Two is approved and the meeting is adjourned for the
purpose described above, the Florida Act will govern the shareholder vote
required to approve Proposal Three. Section 607.0725(3) of the Florida Act
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 exceeds the number of votes cast against it, unless the
articles of incorporation or the Florida Act requires a greater number of
affirmative votes. Abstentions and broker non-votes, because they are not
voted, will have no impact on the vote on Proposal Three.<F2>

[FN]
- ---------------------
<F2> Section 607.1205(5) of the Florida Act pertains to the sale of all or
substantially all of the assets of a corporation "otherwise 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 607.1205(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.

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If Proposal Two is not approved, passage of Proposal Three is
dependant upon the affirmative vote of at least 66-2/3% of the total issued
and outstanding Common Stock and Preferred Stock voting as a class.
Abstentions and broker non-votes would have the effect of votes cast against
Proposal Three.

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, if Proposal Two is approved, passage of
Proposal Three is assured because L-PGI controls enough of the total Company
vote on its own to approve Proposal Three. Nevertheless, because passage of
Proposal Two is not assured and because the Board believes the sale of the
Property and the related use of proceeds is in the best interests of all the
Shareholders, the Board recommends that the holders of the Common Stock and
the remaining Preferred Stock vote FOR Proposal Three. Shareholders should
note that if Proposal Three is approved and if 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 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.

INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE

Financial Statements for the Company's two most recent fiscal years
ended December 31, 1996, and for the six month period ended June 30, 1997 are
incorporated by reference from the Company's Form 10-KSB for the years ended
December 31, 1996, as amended by Form 10KSB/A-1, and Form 10-QSB/A for the
quarter ended June 30, 1997, respectively.

Appendix C sets forth the unaudited pro forma balance sheet and
statement of earnings of the Company giving effect to the consummation of the
proposed sale of the Property as if the closing were as of June 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

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Dated October 30, 1997

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.

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 LPGI, 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;

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PRELIMINARY PROXY
Dated October 30, 1997

8. Handle daytoday 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 onetenth of one percent of the book
value of the Company's assets, plus reasonable outofpocket 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 LPGI, 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 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

20
<PAGE> 23

PRELIMINARY PROXY
Dated October 30, 1997

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 LPGI. Love-1989 has since
repaid the debt to LPGI in full, in part by transferring a portion of the
Debentures held by Love-1989 to LPGI. 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 LPGI 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. The Company intends to grant a second
mortgage on the Retained Acreage to induce Love-1989 to release its second
mortgage on the 650 acres of the Property to be sold to the Conservancy and
to grant a security interest behind that held by PGIP in the escrow of the
Restricted Proceeds which will be under the control 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 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.

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.

21
<PAGE> 24

PRELIMINARY PROXY
Dated October 30, 1997

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 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 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
Nature Conservancy. PGIP accepted assignment of the Loan Documents, which
were in default and with respect to which

22
<PAGE> 25

PRELIMINARY PROXY
Dated October 30, 1997

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 (who are the Company's only executive officers and
directors) own approximately 52% of LSHC, they may be deemed to have
"profited" by 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 PGI, 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 PGI 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, and LREC will
not be in the best interests of the Shareholders of PGI. Messrs. Schiffer
and Love may even feel compelled to take actions in those capacities that
would be directly adverse to the best interests of PGI because those actions
would be advantageous for or in the best interests of L-PGI, Love-1989 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

23
<PAGE> 26

PRELIMINARY PROXY
Dated October 30, 1997

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.

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 , 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 outofpocket
and clerical expenses.

, 1997
- ---------------------------- ---

24
<PAGE> 27

PGI INCORPORATED

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON NOVEMBER 25, 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 Tuesday, November
25, 1997, at 3:00 p.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
(except as marked to to vote for all nominees
the contrary below) listed 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> 28

APPENDIX A

[SUMMARY OF OWNERSHIP OF PGI INCORPORATED GRAPH]

A-1
<PAGE> 29

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

A-2
<PAGE> 30

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 LOVEPGI 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 DSLapproved 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> 31

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 DSLapproved 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> 32

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 LOVEPGI
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.

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.

B-3
<PAGE> 33

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> 34

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

591440671
---------------------------------
F.E.I.D. No.

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

(CORPORATE SEAL)

LOVEPGI 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: /s/ 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> 35

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
STATE OF MISSOURI Name of Notary Public)
St. Louis CountyI
My Commission Expires: July 11, 1998
Commission No.: N/A
----------------

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

B-6
<PAGE> 36

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 LOVEPGI 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

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

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 nonprofit 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 Name
Notary Public of Notary Public)
STATE OF FLORIDA
My Commission CC588460
Expires Sep. 25, 2000 Commission No.:
------------------

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

B-7
<PAGE> 37

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 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 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> 38

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> 39

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/ Georgene R. Heinz
---------------------------------
Notary Public

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

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

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

B-10
<PAGE> 40

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> 41

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.

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.

9/29/92
--------------------------------------
Date signed by Seller

(CORPORATE SEAL)

B-12
<PAGE> 42

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 nonprofit 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> 43

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 Name 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 Name of
Notary Public)

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

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

<PAGE> 44

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 Name of
Notary Public)

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

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

B-14
<PAGE> 45

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 June 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 six months ended June 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> 46

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 June 30, 1997 and use of proceeds as described therein.

<TABLE>
PRO FORMA BALANCE SHEET (IN THOUSANDS)
<CAPTION>
AT PRO FORMA
JUNE 30, 1997 ADJUSTMENTS AS ADJUSTED

<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 25 $ -- $ 25
Restricted cash 1,134 2,948 <FA><FE> 4,082

Receivables on real estate sales - net 147 -- 147
Other receivables 32 -- 32
Land and improvement inventories 9,005 (7,626)<FB> 1,379
Property and equipment - net 23 -- 23
Other assets 757 -- 757
-------- -------- --------
$ 11,123 $ (4,678) $ 6,445
LIABILITIES
Accounts payable $ 140 $ -- $ 140
Other liabilities 1,537 751 <FA> 786
Accrued income taxes -- (70)<FC> 70
Accrued interest:
Primary lender 2,954 2,954 <FA> --
Debentures 7,544 -- 7,544
Other 1,536 -- 1,536
Credit agreements:
Primary lender 7,343 6,343 <FA> 1,000<FD>
Notes and mortgages payable 3,645 -- 3,645
Convertible debentures payable 9,059 -- 9,059
Convertible debentures payable 1,500 -- 1,500
-------- -------- --------
35,258 9,978 25,280

STOCKHOLDERS' DEFICIENCY

Preferred stock, par value $1.00 per share; authorized
5,000,000 shares; 2,000,000 Class A cumulative con-
vertible 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 out-
standing 532 -- 532

Paid-in capital 13,498 -- 13,498
Accumulated deficit (40,165) (5,300)<FB><FC> (34,865)
-------- -------- --------
(24,135) (5,300) (18,835)
-------- -------- --------
$ 11,123 $ 4,678 $ 6,445

</TABLE>

C-2
<PAGE> 47

PGI, INC.

FOOTNOTES

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

A. 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
June 30, 1997:

<TABLE>
(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 2,954
Payment to satisfy real estate tax assessments including
interest and penalties 751
-------

CASH AND CASH EQUIVALENTS $ 2,948

</TABLE>

B. To give effect of the reduction of the cost of 4,890 acres of
unimproved land as if the sale had taken place on June 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 $70,000).

C. 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 $70,000.

D. 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.

E. 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> 48

PGI, INC.

OPERATING INFORMATION

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

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997

<S> <C> <C>
Reduction in interest expense $ 788,000 $ 438,000
Pro forma net loss $(2,107,000) $ (1,185,000)
Pro forma net loss per share (.83) (.28)

</TABLE>

C-4
<PAGE> 49

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> 50

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> 51

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> 52

(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> 53

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.