Bluegreen Corp – ‘424B1’ on 6/23/98

As of:  Tuesday, 6/23/98   ·   Accession #:  950144-98-7651   ·   File #:  333-50717

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Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Bluegreen Corp. Rule 424(B)(1)                       196   1.21M 

Document Table of Contents

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PROSPECTUS                                      FILED PURSUANT TO RULE 424(b)(1)
                                                      REGISTRATION NO. 333-50717

OFFER TO EXCHANGE UP TO $110,000,000 OF 10 1/2% 
SENIOR SECURED NOTES DUE 2008, SERIES B OF BLUEGREEN CORPORATION, 
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING 10 1/2% SENIOR SECURED NOTES DUE 2008

(BLUEGREEN CORPORATION LOGO)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JULY 23, 1998, UNLESS EXTENDED 
------------------------
Bluegreen Corporation, a Massachusetts corporation ("Bluegreen" or the  
"Company"), hereby offers, upon the terms and subject to the conditions set     
forth in this Prospectus (as the same may be amended or supplemented from time  
to time, this "Prospectus") and the accompanying letter of transmittal (the     
"Letter of Transmittal," and together with this Prospectus, the "Exchange       
Offer"), to exchange up to an aggregate amount of $110,000,000 of the Company's 
10 1/2% Senior Secured Notes Due 2008, Series B (the "Exchange Notes"), which   
have been registered under the Securities Act of 1933, as amended (the          
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, which Exchange Notes shall be guaranteed (the "Exchange Guarantees"),
jointly and severally, by each of the Subsidiary Guarantors (as defined) for a  
like principal amount of the Company's outstanding 10 1/2% Senior Secured Notes 
due 2008 (the "Outstanding Notes"), of which $110,000,000 in aggregate principal
amount was issued on April 1, 1998 and is outstanding as of the date hereof,    
which Outstanding Notes have been guaranteed by the Subsidiary Guarantors (the  
"Outstanding Guarantees"). The form and terms of the Exchange Notes and the     
Exchange Guarantees are identical in all material respects to the terms of the  
Outstanding Notes and the Outstanding Guarantees, except that (i) the Exchange  
Notes will bear a Series B designation and will have been registered under the  
Securities Act and, therefore, will not bear legends restricting their transfer 
and will not contain certain provisions relating to an increase in the interest 
rate which were included in the terms of the Outstanding Notes in certain       
circumstances relating to the timing of the Exchange Offer and (ii) holders of  
the Exchange Notes will not be entitled to certain rights of the holders of the 
Outstanding Notes under the Exchange and Registration Rights Agreement dated    
April 1, 1998 (the "Registration Rights Agreement"), which rights shall         
terminate upon the consummation of the Exchange Offer. See "The Exchange        
Offer -- Purpose and Effect of Exchange Offer." The Exchange Notes will evidence
the same indebtedness as the Outstanding Notes (which they replace) and will be 
issued pursuant to, and entitled to the benefits of, the Indenture, dated as of 
April 1, 1998, between the Company, the Subsidiary Guarantors and SunTrust Bank,
Central Florida, National Association, as trustee (the "Notes Trustee"),        
governing the Outstanding Notes. The Exchange Notes and the Outstanding Notes   
are hereinafter sometimes collectively referred to as the "Notes" and the       
Outstanding Guarantees and the Exchange Guarantees are hereinafter sometimes    
collectively referred to as the "Note Guarantees." See "The Exchange Offer" and 
"Description of Notes."                                                         

    The Exchange Notes will bear interest at the same rate and on the same terms
as the Outstanding Notes. Consequently, the Exchange Notes will bear interest at
the rate of 10 1/2% per annum and the interest thereon will be payable          
semi-annually on April 1 and October 1 of each year, commencing October 1, 1998.
The Exchange Notes will bear interest from the date of the last interest payment
on the Outstanding Notes or, if no interest has been paid, from the date of     
original issuance of the Outstanding Notes. Holders whose Outstanding Notes are 
accepted for exchange will be deemed to have waived the right to receive any    
interest accrued on the Outstanding Notes.                                      

The Outstanding Notes were sold in an aggregate principal amount of $110
million by the Company on April 1, 1998 (the "Issue Date") to NatWest Capital   
Markets Limited and McDonald & Company Securities, Inc. (the "Initial           
Purchasers") in a transaction (the "Note Offering") not registered under the    
Securities Act in reliance upon an exemption under the Securities Act. The      
Initial Purchasers subsequently placed the Outstanding Notes with qualified     
institutional buyers within the meaning of and in reliance upon Rule 144A under 
the Securities Act. Accordingly, the Outstanding Notes may not be reoffered,    
resold or otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration          
requirements of the Securities Act is available. The Exchange Notes are being   
offered hereunder in order to satisfy the obligations of the Company and the    
Subsidiary Guarantors under the Registration Rights Agreement.                  

Based on no-action letters issued by the staff of the Securities and    
Exchange Commission (the "Commission") to third parties, the Company believes   
that Exchange Notes to be issued pursuant to the Exchange Offer may be offered  
for resale, resold and otherwise transferred by any holder thereof (other than  
(i) a broker-dealer who purchasers such Exchange Notes from the Company to      
resell pursuant to Rule 144A or any other available exemption under the         
Securities Act or (ii) any such holder that is an "affiliate" of the Company    
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,      
provided that such Exchange Notes are acquired in the ordinary course of such   
holder's business and such holder has no arrangement or understanding with any  
person to participate in the distribution of such Exchange Notes. However, the  
Company has not sought and does not intend to seek its own no-action letter in  
connection with the Exchange Offer and there can be no assurance that the       
Commission would make a similar determination with respect to the Exchange      
Offer. Eligible holders of Outstanding Notes wishing to accept the Exchange     
Offer must represent to the Company that such conditions have been met. Each    
broker-dealer (a "Participating Broker-Dealer") that receives Exchange Notes for
its account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such                              
                                                        (Continued on next page)
------------------------
     SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF OUTSTANDING NOTES AND PROSPECTIVE       
PURCHASES OF EXCHANGE NOTES.                                                    
------------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS 
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A 
CRIMINAL OFFENSE. 

The date of this Prospectus is June 19, 1998.                                   

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(Continued from previous page)                                                  

Exchange Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to    
admit that it is an "underwriter" within the meaning of the Securities Act. A   
broker-dealer may nonetheless be deemed to be an "underwriter" under the        
Securities Act notwithstanding such disclaimer. This Prospectus, as it may be   
amended or supplemented from time to time, may be used by a Participating       
Broker-Dealer in connection with resales of Exchange Notes received in exchange 
for Outstanding Notes where such Outstanding Notes were acquired by such        
Participating Broker-Dealer as a result of marketing making activities or other 
trading activities, provided such Outstanding Notes do not constitute any       
portion of an unsold allotment from the original sale of the Outstanding Notes. 
The Company has agreed that, for a period of 180 days after the Expiration Date,
it will make this Prospectus available to any Participating Broker-Dealer for   
use in connection with any such resale. See "Plan of Distribution."             

 Holders of Outstanding Notes whose Outstanding Notes are not tendered and
accepted in the Exchange Offer will continue to hold such Outstanding Notes and 
will be entitled to all the rights and benefits and will be subject to the      
limitations applicable thereto under the Indenture. Following the consummation  
of the Exchange Offer, the holders of Outstanding Notes will continue to be     
subject to the existing restrictions on the transfer thereof and the Company    
will have no further obligation to such holders to provide for the registration 
under the Securities Act of the Outstanding Notes held by them. The Company will
not receive any proceeds from, and has agreed to pay all the expenses incurred  
by it incident to, the Exchange Offer. No underwriter is being used in          
connection with this Exchange Offer. See "The Exchange Offer."                  

   Prior to the Exchange Offer, there has been no public market for the Notes.
The Company does not intend to list the Outstanding Notes or Exchange Notes on  
any securities exchange or to seek approval for quotation through any automated 
quotation system. To the extent that a market for the Notes does develop, the   
market value of the Notes will depend on market conditions (including yields on 
alternative investments), general economic conditions, the Company's financial  
condition and other factors. Such conditions might cause the Notes, to the      
extent that they are traded, to trade at a significant discount from face value.
See "Risk Factors -- Lack of a Public Market for the Notes; Restrictions on     
Resales." Moreover, to the extent that Outstanding Notes are tendered and       
accepted in the Exchange Offer, the trading market for untendered and tendered  
but unaccepted Outstanding Notes could be adversely affected. No assurances can 
be given as to the liquidity of the trading market for either the Outstanding   
Notes or the Exchange Notes.                                                    

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT    
SURRENDERS FOR EXCHANGES FROM, HOLDERS OF OUTSTANDING NOTES IN ANY JURISDICTION 
IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.                      

  The Exchange Notes will be available initially only in book-entry form and
the Company expects that the Exchange Notes issued pursuant to the Exchange     
Offer will be issued in the form of a Global Note (as defined herein), which    
will be deposited with, or on behalf of, the Depository Trust Company ("DTC")   
and registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Note representing the Exchange Notes will be shown on,  
and transfers thereof will be effected through, records maintained by DTC and   
its participants. So long as DTC or its nominee is the registered owner or      
holder of the Global Note, DTC or such nominee, as the case may be, will be     
considered the sole owner or holder of the Notes represented by such Global Note
for all purposes under the Indenture. Payments of the principal of, premium (if 
any), and interest on the Global Note will be made to DTC or its nominee, as the
case may be, as the registered owners thereof. None of the Company, the Notes   
Trustee or any Paying Agent will have any responsibility or liability for any   
aspect of the records relating to or payments made on account of beneficial     
ownership interests in the Global Note or for maintaining, supervising or       
reviewing any records relating to such beneficial ownership interest. After the 
initial issuance of the Global Note, Exchange Notes in certificated form will be
issued in exchange for the Global Note only under the limited circumstances set 
forth in the Indenture.                                                         

 Except as described herein, the Company may not redeem the Notes prior to
April 1, 2003. On or after such date, the Company may redeem the Notes, in whole
or in part, in cash, at any time, at the redemption prices set forth herein,    
together with accrued and unpaid interest, if any, to the date of redemption. In
addition, at any time and from time to time on or prior to April 1, 2001, the   
Company may, subject to certain requirements, redeem up to 35% of the aggregate 
principal amount of the Notes with the cash proceeds of one or more Equity      
Offerings (as defined) at a redemption price equal to 110.5% of the principal   
amount to be redeemed, together with accrued and unpaid interest, if any, to the
date of the redemption, provided that, with respect to any such redemption of   
the Notes, at least $65 million of the aggregate principal amount of the Notes  
remains outstanding immediately after each such redemption. The Notes will not  
be subject to any sinking fund requirement. Upon the occurrence of a Change of  
Control (as defined), the Company will be required to make an offer to          
repurchase the Notes at a price equal to 101% of the principal amount thereof,  
together with accrued and unpaid interest, if any, to the date of repurchase.   
See "Description of the Notes -- Optional Redemption" and "-- Change of         
Control."                                                                       

   The Outstanding Notes are and the Exchange Notes will be senior obligations
of the Company. The Outstanding Notes rank and the Exchange Notes will rank pari
passu in right of payment with all existing and future Senior Indebtedness (as  
defined) of the Company. The Outstanding Notes rank and the Exchange Notes will 
rank senior in right of payment to all Subordinated Obligations (as defined) of 
the Company. The Outstanding Notes are and the Exchange Notes will be           
unconditionally guaranteed (the "Note Guarantees"), jointly and severally, by   
each of the Subsidiary Guarantors (as defined). The Note Guarantees are and will
be senior obligations of each Subsidiary Guarantor and rank and will rank pari  
passu in right of payment with all existing and future Senior Indebtedness of   
each such Subsidiary Guarantor and senior in right of payment to all existing   
and future Subordinated Obligations of each such Subsidiary Guarantor. The Note 
Guarantees of certain of the Subsidiary Guarantors are and will be secured by a 
Mortgage (as defined) on certain real property owned by such Subsidiary         
Guarantors (the "Pledged Properties"). Except for such secured Note Guarantees, 
the Notes and the Note Guarantees are and will be effectively subordinated to   
any Secured Indebtedness (as defined) of the Company and the Subsidiary         
Guarantors to the extent of the assets serving as security therefor. See        
"Description of Notes."                                                         

   The Company will accept for exchange any and all Outstanding Notes that are
validly tendered and not withdrawn on or prior to 5:00 p.m., New York City time,
on the date the Exchange Offer expires, which will be July 23, 1998, unless the 
Exchange Offer is extended by the Company in its sole discretion (the           
"Expiration Date"). Tenders of Outstanding Notes may be withdrawn at any time   
prior to the Expiration Date. Outstanding Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is not conditioned upon any minimum     
principal amount of Outstanding Notes being tendered for exchange. However, the 
Exchange Offer is subject to certain customary conditions. See "The Exchange    
Offer -- Conditions."                                                           

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   THE INITIAL PURCHASERS WHO PARTICIPATED IN THE NOTE OFFERING MAY, SUBJECT
TO LEGAL AND REGULATORY LIMITATIONS, ENGAGE IN TRANSACTIONS THAT STABILIZE,     
MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY, THE INITIAL  
PURCHASERS MAY BID FOR AND PURCHASE NOTES IN THE OPEN MARKET.                   

The Company has agreed to obtain certain title insurance policies in  
connection with the mortgaging of the Pledged Properties (as defined). If all   
such title insurance policies are not obtained by June 1, 1998, the interest    
rate on the Notes will increase and any additional interest resulting from such 
increase will be payable on the interest payment dates set forth herein. See    
"Description of Notes -- Security."                                             

 EACH PROSPECTIVE PURCHASER OF THE NOTES MUST COMPLY WITH ALL APPLICABLE
LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH IT PURCHASES, OFFERS 
OR SELLS NOTES, OR POSSESSES OR DISTRIBUTES THIS PROSPECTUS AND MUST OBTAIN ANY 
CONSENT, APPROVAL OR PERMISSION REQUIRED OF IT FOR THE PURCHASE, OFFER OR SALE  
BY IT OF THE NOTES UNDER THE LAW AND REGULATIONS IN FORCE IN ANY JURISDICTION TO
WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND   
NEITHER THE COMPANY NOR THE INITIAL PURCHASERS SHALL HAVE ANY RESPONSIBILITY    
THEREFOR.                                                                       

IN MAKING AN INVESTMENT DECISION REGARDING THE EXCHANGE NOTES OFFERED 
HEREBY, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE     
TERMS OF THE EXCHANGE OFFER, INCLUDING THE MERITS AND RISKS INVOLVED. THE       
CONTENTS OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, INVESTMENT,       
BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN        
ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS, TAX, FINANCIAL
AND RELATED ADVICE. NEITHER THE COMPANY NOR THE INITIAL PURCHASERS ARE MAKING   
ANY REPRESENTATION TO ANY OFFEREE OR PURCHASER OF THE NOTES REGARDING THE       
LEGALITY OF AN INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPROPRIATE
LEGAL, INVESTMENT OR SIMILAR LAWS.                                              

FORWARD-LOOKING STATEMENTS

  The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. Certain statements in this
Prospectus under the captions "Prospectus Summary," "Use of Proceeds," "Risk    
Factors," "Management's Discussion and Analysis of Results of Operations and    
Financial Condition" and "Business" and elsewhere, including the information    
incorporated by reference, constitute "forward-looking statements" within the   
meaning of Section 27A of the Securities Act and Section 21E of the Securities  
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking     
statements (including, without limitation, information concerning estimated     
remaining life-of-project sales and estimated remaining life-of-project field   
operating profit, planned development, anticipated future efficiencies and/or   
cost savings and liquidity) are subject to a number of risks and uncertainties, 
many of which are beyond the Company's control, that could cause the actual     
results, performance or achievements of the Company, or industry results, to    
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Given these uncertainties,       
prospective investors are cautioned not to place undue reliance on such         
forward-looking statements and no assurances can be given that the plans,       
estimates and expectations reflected in such statements will be achieved. Such  
risks, uncertainties and other important factors include, among others, the     
following factors (as well as the other factors referred to in "Risk Factors"   
and elsewhere herein): (a) changes in national, international or regional       
economic conditions that can affect the real estate and timeshare markets, which
is cyclical in nature and highly sensitive to such changes, including, among    
other factors, levels of employment and discretionary disposable income,        
consumer confidence, available financing and interest rates; (b) the imposition 
of additional compliance costs on the Company as the result of changes in any   
environmental, zoning or other laws and regulations that govern the acquisition,
subdivision and sale of real estate and various aspects of the                  

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Company's financing operation; (c) risks associated with a large investment in  
real estate and timeshare inventory at any given time (including risks that     
inventories will decline in value due to changing market and economic conditions
and that the development and carrying costs of inventories may exceed those     
anticipated); (d) risks associated with an inability to locate suitable         
inventory for acquisition; (e) risks associated with delays in bringing the     
Company's inventories to market due to, among other things, changes in          
regulations governing the Company's operations, adverse weather conditions or   
changes in the availability of development financing on terms acceptable to the 
Company; (f) changes in applicable usury laws or the availability of interest   
deductions or other provisions of federal or state tax law; (g) a decreased     
willingness on the part of banks to extend direct customer lot financing, which 
could result in the Company receiving less cash in connection with the sales of 
real estate and/or lower sales; (h) the inability of the Company to find        
external sources of liquidity on favorable terms to support its operations,     
acquire, carry and develop residential land and timeshare inventories and       
satisfy its debt and other obligations; (i) the inability of the Company to find
sources of capital on favorable terms for the pledge of land and timeshare notes
receivable; (j) an increase in prepayment rates, delinquency rates or defaults  
with respect to Company-originated loans or an increase in the costs related to 
reacquiring, carrying and disposing of properties reacquired through foreclosure
or deeds in lieu of foreclosure; (k) costs to develop inventory for sale and/or 
selling, general and administrative expenses exceed those anticipated; and (l)  
an increase or decrease in the number of residential land or resort properties  
subject to percentage of completion accounting which requires deferral of profit
recognition on such projects until development is substantially complete. See   
"Risk Factors." All forward-looking statements contained in this Prospectus     
speak only as of the date of this Prospectus, and the Company expressly         
disclaims any obligation or undertaking to disseminate any updates or revisions 
to any forward-looking statement contained herein to reflect any change in the  
Company's expectations with regard thereto or any change in events, conditions  
or circumstances on which any such statement is based.                          

NOTICE TO NEW HAMPSHIRE RESIDENTS 

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY     
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A  
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER
CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR   
THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A        
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE    
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,   
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY   
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH 
THE PROVISIONS OF THIS PARAGRAPH.                                               

INDUSTRY DATA 

     Market and industry data used throughout this Prospectus were obtained from
internal company surveys, industry publications, unpublished industry data and  
estimates, discussions with industry sources and currently available            
information. The sources for this data include, without limitation, the American
Resort Development Association ("ARDA"), a non-profit industry organization.    
Industry publications generally state that the information contained therein has
been obtained from sources believed to be reliable, but there can be no         
assurance as to the accuracy and completeness of such information. The Company  
has not independently verified such market data. Similarly, internal Company    
surveys, while believed by the Company to be reliable, have not been verified by
any independent sources. Accordingly, no assurance can be given that any such   
data are accurate.                                                              

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CERTAIN DEFINED TERMS 

As used herein, the "Company" or "Bluegreen" refers to Bluegreen      
Corporation and its subsidiaries, and "RDI" refers to RDI Group, Inc. and Resort
Title Agency, Inc. and their subsidiaries, in each case, unless the context     
otherwise requires; "EBITDA" refers to net income before interest expense,      
income taxes, depreciation and amortization; "estimated remaining               
life-of-project sales" assumes sales of the existing, currently under           
construction or development, and planned Timeshare Interests (as defined below) 
or residential lots, as the case may be, at current retail prices; "estimated   
remaining life-of-project field operating profit" is equal to the estimated     
remaining life-of-project sales multiplied by average timeshare or residential  
lot operating margins (gross profit less field selling, general and             
administrative expenses, prior to the allocation of corporate overhead, as a    
percentage of sales), as the case may be, for the nine-month period ended on the
applicable measurement date; "RDI Acquisition" means the Company's acquisition  
effective September 30, 1997 of all of the issued and outstanding capital stock 
of RDI; and "Aruba Transaction" means the December 15, 1997 acquisition by      
Bluegreen Properties NV ("BG Aruba"), an Aruban limited liability company in    
which the Company owns a 50% equity interest, of unsold Timeshare Interest      
inventory (approximately 8,000 Timeshare Interests) of the La Cabana All Suite  
Beach Resort & Racquet Club in Aruba (the "Aruba Resort"). Other capitalized    
terms used in this Prospectus but not otherwise defined shall have the meanings 
assigned to them in "Description of Notes -- Certain Definitions" beginning on  
page 97. The Company's fiscal year ends on the Sunday closest to March 31.      
Fiscal years are identified according to the calendar year in which they end.   
For example, the fiscal year ended March 30, 1997 is referred to as "fiscal     
1997." Unless the context otherwise requires, financial information for the     
Company for the nine-month period ended December 28, 1997 includes financial    
information for RDI and BG Aruba from September 30, 1997 and December 15, 1997, 
respectively. See "Business -- Recent Acquisitions."                            

AVAILABLE INFORMATION 

    The Company and the Subsidiary Guarantors have filed with the Commission a
Registration Statement on Form S-4 (herein, together with all amendments,       
exhibits and schedules thereto, the "Registration Statement") pursuant to the   
Securities Act, and the rules and regulations promulgated thereunder, covering  
the Exchange Notes being offered hereby. This Prospectus does not contain all   
the information set forth in the Registration Statement. For further information
with respect to the Company and the Exchange Offer, reference is made to the    
Registration Statement. Statements made in this Prospectus, or in any document  
incorporated by reference herein, as to the contents of any contract, agreement 
or other document referred to are not necessarily complete and, in each         
instance, reference is made to the copy of such contract, agreement or other    
document filed as an exhibit to the Exchange Offer Registration Statement for a 
more complete description of the document or matter involved, and each such     
statement shall be deemed qualified in its entirety by such reference.          

  The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy or information statements
and other information with the Commission. Such reports, proxy statements and   
other information may be inspected and copies at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street N.W., Room    
1024, Washington, D.C. 20549, and at the following Regional Offices of the      
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; and the 
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,       
Illinois 60661. Copies of such reports and other information may be obtained    
from the Public Reference Section of the Commission at Judiciary Plaza, 450     
Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees. The
Commission maintains a site on the World Wide Web at http://www.sec.gov that    
contains reports, proxy and information statements and other information        
regarding registrants, such as the Company, that file electronically with the   
Commission through the Commission's Electronic Data Gathering, Analysis and     
Retrieval (EDGAR) system.                                                       

     The Company has agreed that, if at any time while the Notes are "restricted
securities" within the meaning of the Securities Act, the Company is not subject
to the informational requirements of the Exchange Act, the Company will furnish 
to holders of the Notes, and to prospective purchasers designated by such       

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holders, the information required to be delivered pursuant to Rule 144A(d)(4)   
under the Securities Act to permit compliance with Rule 144A in connection with 
resales of the Notes.                                                           

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

    All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering made hereby shall be deemed to be incorporated  
by reference in this Prospectus and to be a part hereof from the date of filing 
of such documents. The Company's Exchange Act file number is 0-19292.           

   Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein 
or in any subsequently filed document that is incorporated by reference herein  
modifies or supersedes such statement. Any such statement so modified or        
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Prospectus.                                           

    The Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Bluegreen will provide, without charge, to each   
person to whom this Prospectus is delivered, on the written or oral request of  
such person, a copy of any or all of the documents incorporated herein by       
reference (other than exhibits thereto, unless such exhibits are specifically   
incorporated by reference into such documents). Written requests for such copies
should be directed to John F. Chiste, Chief Financial Officer and Treasurer of  
the Company. Telephone inquiries may be directed to (561) 912-8000.             

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PROSPECTUS SUMMARY

  The following is a summary of certain information contained elsewhere in
this Prospectus. Reference is made to, and this summary is qualified in its     
entirety by, the more detailed information and the financial statements,        
including the notes thereto, appearing elsewhere or incorporated by reference in
this Prospectus. This Prospectus contains forward-looking statements which      
involve risks and uncertainties. The Company's actual results may differ        
significantly from the results discussed in the forward-looking statements.     
Factors that might cause such a difference include, but are not limited to,     
those discussed in "Risk Factors."                                              

THE COMPANY 

 The Company is a leading marketer of vacation and residential lifestyle
choices through its resorts and residential land businesses. The Company's      
resorts business (the "Resorts Division") strategically acquires, develops and  
markets Timeshare Interests in resorts generally located in popular high-volume,
"drive-to" vacation destinations. Timeshare Interests typically entitle the     
buyer to a fully-furnished vacation residence for an annual one-week period in  
perpetuity ("Timeshare Interests"), as well as access to over 1,500 resorts     
worldwide through the Company's participation in timeshare exchange networks.   
The Company currently markets and sells Timeshare Interests in eight resorts    
located in the United States and the Caribbean. Prior to investing in new       
timeshare projects, the Company performs extensive market research and testing  
and, prior to completion of development, pre-sells a significant portion of its 
Timeshare Interests inventory. The Company's residential land business (the     
"Residential Land Division") strategically acquires, develops and subdivides    
property and markets the subdivided residential lots to retail customers seeking
to build a home in a high quality residential setting. The Residential Land     
Division's strategy is to locate its projects near major metropolitan centers   
outside the perimeter of intense subdivision development or in popular          
retirement areas. The Company has focused the Residential Land Division's       
activities in certain proven, core markets in which the Company has developed   
substantial marketing expertise and has a strong track record of success. Prior 
to acquiring residential land, the Company typically utilizes market research,  
conducts due diligence and, in the case of new project locations, engages in    
pre-marketing techniques to evaluate market response and price acceptance. Once 
a parcel of property is acquired, the Company pre-sells a significant portion of
its planned residential lots on such property prior to extensive capital        
investment as a result of the Company's ability to bond its projects to         
completion. The Company also generates significant interest income through its  
financing of individual purchasers of Timeshare Interests and, to a lesser      
extent, land sold by the Residential Land Division. For the nine-month period   
ended December 28, 1997, the Company had aggregate revenues of approximately    
$131.8 million and EBITDA of approximately $21.4 million.                       

   The Resorts Division.  The Company's Resorts Division was founded in 1994
to capitalize on the consistent growth of the timeshare industry. According to  
ARDA and other industry sources, timeshare industry sales and the number of     
Timeshare Interest owners grew at compound annual rates of approximately 16% and
22%, respectively, from 1980 to 1997 (see charts on page 2). The Company        
currently markets and sells Timeshare Interests in eight resorts located in the 
Smoky Mountains of Tennessee; Myrtle Beach, South Carolina; Orlando, Florida;   
Branson, Missouri; Wisconsin Dells, Wisconsin; and Aruba. The Company also      
manages 33 timeshare resorts (including seven of its own resorts) with an       
aggregate of approximately 70,000 members, which the Company believes makes it  
the second largest manager of timeshare resorts in North America (based on the  
number of resorts managed). For the nine-month period ended December 28, 1997,  
the Company sold 4,903 Timeshare Interests, an increase of 90.1%, compared to   
2,579 Timeshare Interests sold for the comparable period in 1996. The Company's 
estimated remaining life-of-project sales and estimated remaining               
life-of-project field operating profit with respect to the Resorts Division     
increased to approximately $674.6 million and $65.4 million, respectively, as of
December 28, 1997 from approximately $260.4 million and $11.2 million,          
respectively, as of December 29, 1996. These increases are a direct result of   
new projects developed by the Company in fiscal 1998, the RDI Acquisition and   
the Aruba Transaction, which the Company believes will result in a significant  
increase in revenues and field operating profit in fiscal 1999.                 

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The Resorts Division utilizes a variety of techniques to attract      
prospective purchasers of Timeshare Interests, including targeted mailings,     
direct mail mini-vacations, kiosks in retail locations, marketing to current    
owners of Timeshare Interests and referrals. The majority of the Company's      
Timeshare Interests are sold through on-site sales presentations. The Company   
believes its ability to effectively implement and manage these marketing        
activities has resulted in the generation of a predictable and increasing supply
of sales prospects. To support its marketing and sales efforts, the Company has 
developed and continues to enhance its database to track its timeshare marketing
and sales programs. Management believes that, as the Company's timeshare        
operations grow, this database will become an increasingly significant asset,   
enabling it to take advantage of, among other things, less costly marketing and 
referral opportunities.                                                         

   According to ARDA, the primary reason cited by consumers for purchasing a
Timeshare Interest is the ability to exchange a Timeshare Interest for          
accommodations at other resorts through worldwide exchange networks. Each of the
Company's timeshare resorts is affiliated with either Interval International    
("II") or Resorts Condominium International, Inc. ("RCI"), the two largest      
worldwide timeshare exchange companies. Participation in an exchange network    
entitles owners to exchange their annual Timeshare Interests for occupancy at   
over 1,500 participating II resorts or over 3,200 participating RCI resorts     
worldwide. To further enhance the ability of its Timeshare Interest owners to   
customize their vacation experience, the Company also intends to expand the     
points-based vacation club system it acquired in the RDI Acquisition which, when
completed, will permit its Timeshare Interest owners to purchase an annual      
allotment of points which can be redeemed for occupancy rights at all           
Company-owned and participating managed resorts.                                

    Prior to acquiring property for resorts, the Resorts Division undertakes a
full property review, including an environmental assessment, which is presented 
for approval to the Company's investment committee ("Investment Committee"),    
which was established in 1990 and consists of certain key members of senior     
management. During the review process, acquisition specialists analyze market,  
tourism and demographic data as well as the quality and diversity of the        
location's existing amenities and attractions to determine the potential        
strength of the timeshare market in such area and the availability of a variety 
of recreational opportunities for prospective Timeshare Interest purchasers.    

     The Company has historically provided financing to approximately 89% of its
timeshare customers, who are required to make a downpayment of at least 10% of  
the Timeshare Interest sales price and who typically finance the balance of the 
sales price over a period of seven to ten years. As of December 28, 1997, the   
Company had a timeshare receivables portfolio totaling approximately $66.5      
million in principal amount, with a weighted average contractual yield of       
approximately 15.8% per annum. The Company is currently negotiating with a      
financial institution to provide the Company with a combined timeshare warehouse
financing and receivables purchase facility and a separate timeshare acquisition
and development facility. See "Management's Discussion and Analysis of Results  
of Operations and Financial Condition."                                         

    Set forth below is certain information relating to the timeshare industry.

(Timeshare Graphs)

Source: ARDA (includes, with respect to 1995, 1996 and 1997, unpublished
estimates provided by ARDA) 

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  The Residential Land Division.  The Residential Land Division is focused
primarily on land projects located in states in which the Company has developed 
substantial marketing expertise and has a strong track record of success, such  
as Texas, the Carolinas, New Mexico, Virginia, Tennessee and Arizona. The       
Company believes no other company in the United States of comparable size or    
financial resources markets and sells residential land to retail customers. For 
the nine-month period ended December 28, 1997, the Residential Land Division had
revenues of approximately $78.8 million, an increase of 44.4% compared to       
revenues of approximately $54.6 million for the comparable period in 1996. The  
Company's estimated remaining life-of-project sales and estimated remaining     
life-of-project field operating profit with respect to the Residential Land     
Division increased to approximately $224.5 million and $47.6 million,           
respectively, as of December 28, 1997 from approximately $209.3 million and     
$32.4 million, respectively, as of December 29, 1996.                           

    The Residential Land Division utilizes its proven marketing techniques and
proprietary Sales Information Management System ("SIMS") and other residential  
land databases maintained by the Company to target families seeking a quality   
lifestyle improvement which is generally unavailable in traditional suburban    
developments. Based on the Company's extensive experience in marketing and      
selling residential lots to its target customers, the Company has been able to  
develop a comprehensive marketing and sales program that generates a significant
number of on-site sales presentations to potential prospects through low-cost,  
high-yield newspaper advertising. In addition, SIMS and the other Residential   
Land Division databases enable the Company to compile, process and maintain     
comprehensive information concerning future sales prospects within each of its  
operating regions. The Company currently has over 250,000 potential sales       
prospects in its Residential Land Division databases. Through the Company's     
targeted sales and marketing program, the Company believes that it has been able
to achieve a high conversion ratio of sales to prospects receiving on-site sales
presentations. The conversion ratio of sales to on-site sales presentations for 
the ten-month period ended January 31, 1998 was approximately 20%.              

  The Residential Land Division acquires and develops land in two markets:
(i) near major metropolitan centers outside the perimeter of intense subdivision
development; and (ii) popular retirement areas. Prior to acquiring undeveloped  
land, the Company researches market depth and forecasts market absorption. In   
new market areas, the Company typically supplements its research with a         
structured classified ad test marketing system that evaluates market response   
and price acceptance. The Company's sales and marketing efforts begin as soon as
practicable after the Company enters into an agreement to acquire a parcel of   
land. The Company's ability to bond projects to completion allows it to sell a  
significant portion of its residential land inventory on a pre-development      
basis, thereby reducing the Company's need for external capital to complete     
improvements. The Company believes that its pre-acquisition research and test   
marketing allow it to market its residential lots at predictable margins. As is 
the case with the Resorts Division, all acquisitions of residential land are    
subject to Investment Committee approval.                                       

    In fiscal 1997, the Company began construction of its first daily-fee golf
course as part of its long-term plan to participate in the growing daily-fee    
golf market. The Company believes that because the demographics of this market  
are similar to those of the Residential Land Division, daily-fee golf courses   
are an attractive amenity that will increase the marketability of the Company's 
adjacent residential lots in certain projects. The Company's first golf course, 
the Carolina National Golf Club, is located near Southport, North Carolina, just
30 miles north of Myrtle Beach, South Carolina, one of the nation's most popular
golf destinations, and was designed by Masters Champion Fred Couples. Also, as  
part of the RDI Acquisition, the Company acquired a daily-fee golf course       
located in Wisconsin Dells, Wisconsin.                                          

    The Company's Common Stock is listed on the New York Stock Exchange and on
the Pacific Stock Exchange under the symbol "BXG." The Company's executive      
offices are currently located at 4960 Blue Lake Drive, Boca Raton, Florida      
33431. The Company's telephone number at such address is (561) 912-8000.        

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COMPETITIVE STRENGTHS 

SUBSTANTIAL INTERNAL GROWTH CAPACITY                                            

  The Company believes its substantial investment in resort infrastructure
and core residential land holdings will allow it to convert current and planned 
inventory into positive and sustainable revenues and cash flow. As of December  
28, 1997, the Company had existing completed inventory of 19,659 Timeshare      
Interests at its resorts, 7,900 Timeshare Interests under construction or       
development, and plans to develop approximately 53,300 additional Timeshare     
Interests at existing resorts. Based on the foregoing, the Resorts Division's   
estimated remaining life-of-project sales and estimated remaining               
life-of-project field operating profit were approximately $674.6 million and    
$65.4 million, respectively, at December 28, 1997. The aggregate carrying amount
of Residential Land Division inventory at December 28, 1997 was $51.7 million.  
The Residential Land Division's estimated remaining life-of-project sales and   
estimated remaining life-of-project field operating profit were approximately   
$224.5 million and $47.6 million, respectively, at December 28, 1997.           

ATTRACTIVE LOCATIONS AND HIGH QUALITY LIFESTYLE PRODUCTS                        

    The Company seeks to maximize sales penetration and cash flow by marketing
and selling high quality lifestyle products in attractive locations possessing  
positive demographic and population attributes. The Resorts Division generally  
markets Timeshare Interests in popular "drive-to" locations providing a high    
quality, cost-effective vacation alternative to its buyers. The Resorts Division
also provides its customers, through its participation in II and RCI, access to 
over 1,500 and 3,200 participating resorts worldwide, respectively. The         
Residential Land Division markets residential lots (typically two to five       
acres), which are larger than those generally available in traditional suburban 
developments. These lots are often near attractive amenities and are located    
near major metropolitan centers outside the perimeter of intense subdivision    
development or in popular retirement areas.                                     

STRONG INDUSTRY FUNDAMENTALS                                                    

The timeshare industry is one of the fastest growing segments of the  
hospitality industry with a compound annual sales growth rate from 1980 to 1997 
of approximately 16%. In addition, the number of timeshare resorts worldwide    
increased 167.4% from 1,550 in 1984 to over 4,100 in 1994 (the most recent date 
for which ARDA statistics are available). The Company believes that several     
factors have contributed to this sustained industry growth including: (i)       
increased flexibility of ownership due to the growth in the international       
exchange programs and points-based vacation club systems; (ii) increased        
consumer awareness of the economic values and benefits of timeshare ownership;  
(iii) improvement in both the quality and management of the resorts; (iv) an    
influx of brand-name national lodging companies to the timeshare industry; (v)  
implementation of consumer protection regulations; (vi) availability of consumer
financing; and (vii) improvement in inventory management systems. The Company   
believes that, despite the industry's growth, timeshare ownership has achieved  
only an approximate 5% market penetration among United States households with   
income above $50,000 per year.                                                  

RISK MANAGEMENT THROUGH PRE-SELLING AND RIGOROUS INTERNAL CONTROLS              

   The Company's acquisition and development strategies for both its Resorts
and its Residential Land Divisions are designed to reduce capital risk. Prior to
acquiring timeshare projects or residential land, the Company typically utilizes
market research and conducts due diligence. In addition, in the case of new     
Residential Land Division locations, the Company engages in pre-marketing       
techniques prior to acquiring residential land. The Company typically develops  
its projects in phases, and its ability to bond projects to completion allows it
to sell a significant portion of Timeshare Interests or planned residential lots
on a pre-development basis prior to full capital investment. All acquisitions   
must be approved by the Investment Committee.                                   

ATTRACTIVE MARKET DEMOGRAPHICS                                                  

 Both the Resorts and Residential Land Divisions target customers in the
40-55 year old age group. The Company's target group, which is one of the       
fastest growing segments in the U.S., seeks to use its growing                  

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earning power to effect quality lifestyle improvements. The Company believes    
that its products will allow it to effectively capitalize on the anticipated    
growth and objectives of this target market.                                    

SOPHISTICATED SALES INFORMATION MANAGEMENT SYSTEM                               

     The Company's significant investment in its sales and marketing information
systems has enabled both its Resorts Division and its Residential Land Division 
to compile, process and maintain comprehensive, valuable data regarding future  
sales prospects. The Company currently has over 250,000 potential prospective   
buyers in its databases. The Company believes that the ability to access this   
information allows the Company to more accurately target its prospective        
customers and, thus, reduce marketing costs and increase closing rates.         

SUPERIOR SALES AND MARKETING PERSONNEL                                          

     The success of the Company's sales and marketing efforts depends heavily on
the knowledge and experience of its marketing and commission-based sales        
personnel. The Company believes its marketing and sales personnel are among the 
most experienced in the timeshare and residential land industries. The Company  
has expended considerable resources in training such personnel in the effective 
use of the Company's databases and sales marketing systems, site attributes and 
surrounding area amenities. The Company enhances this sales and marketing       
expertise through the Bluegreen Institute, a mandatory training program designed
to instill the Company's marketing and customer service philosophy in middle-   
and lower-level management.                                                     

COST EFFICIENCIES THROUGH MULTI-SITE OPERATIONS AND RESORT MATURATION           

As the Resorts Division grows, the Company believes it has significant
opportunities to realize economies of scale through the operation of a          
multi-resort management system and the reduction of fixed operating costs as a  
percentage of sales. In addition, the Company believes that, as its existing    
resorts mature, a greater percentage of Timeshare Interests will be sold through
less expensive marketing techniques such as referrals and upgrade sales to      
existing Timeshare Interest owners.                                             

EXPERIENCED MANAGEMENT TEAM                                                     

The Company's five senior executive officers have over 100 years of   
industry-related experience. The Company has employment agreements with each of 
these executive officers, which expire in March 2001.                           

BUSINESS STRATEGY 

In order to further enhance its market positions and to maximize      
profitability and cash flow, the Company's principal strategic objectives are as
follows:                                                                        

CAPITALIZE ON SIGNIFICANT GROWTH OPPORTUNITIES IN THE TIMESHARE INDUSTRY        

    The Resorts Division was founded in 1994 to capitalize on the rapid growth
of the timeshare industry. The Company intends to continue to aggressively      
market and sell its existing and planned Timeshare Interest inventory through   
the further development of in-house sales and marketing programs, exchange      
program synergies and the use of technology and database management systems. The
Company's goal is to continue to increase sales of Timeshare Interests as a     
percentage of the Company's total consolidated revenue, further diversifying the
Company's base of revenue.                                                      

IMPROVEMENT OF MARGINS IN RESORTS DIVISION                                      

The Company believes that increased efficiency and a multi-resort     
management system will reduce operating costs as a percentage of sales and allow
the Company to experience increased margins at its existing resorts by spreading
operating and corporate overhead costs over a larger revenue base. In addition, 
the Company expects operating margins at its resorts to improve over time as a  
greater percentage of Timeshare Interests are sold through more efficient, less 
costly marketing techniques, such as referrals and sales of additional Timeshare
Interests to existing customers. The Company also believes that it will reduce  
the Resorts Division's sales and marketing expenses, as a percentage of sales,  
over time by targeting more                                                     

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potential buyers through its Resorts Division database system and through lead  
generation assistance and cross-marketing and selling from the Residential Land 
Division.                                                                       

ACQUISITIONS OF TIMESHARE RESORT ASSETS                                         

The Company intends to continue to grow the Resorts Division through  
acquisitions in destinations that will complement the Company's current resort  
locations. Because the timeshare industry is highly fragmented, the Company     
believes that significant opportunities exist to make selected acquisitions at  
attractive valuations. Acquisitions the Company may consider include acquiring  
additional Timeshare Interest inventory, operating companies, management        
contracts, Timeshare Interest mortgage portfolios and properties or other       
timeshare-related assets which may be integrated into the Company's operations. 

FOCUS ON RESIDENTIAL LAND BUSINESS CORE MARKETS                                 

   The Company intends to continue to focus the Residential Land Division on
those regions where the market for its products is strongest, such as the       
Southeast, Southwest, Rocky Mountain and Western regions of the United States   
and to replenish its residential land inventory in such regions as existing     
projects are sold-out. The Company believes that its in-depth knowledge of these
markets, together with the current strong economic growth and favorable         
demographic trends in these regions, will enable it to continue to maintain     
favorable operating margins and cash flows.                                     

DEVELOPMENT OF POINTS-BASED VACATION CLUB SYSTEM                                

     The Company intends to expand the points-based vacation club system that it
acquired in the RDI Acquisition. The Company's objective in expanding its       
points-based vacation club system is to create, in conjunction with its         
participation in worldwide timeshare exchange networks, a Bluegreen timeshare   
system that maximizes the vacation flexibility of its current and prospective   
Timeshare Interest owners.                                                      

INTERNATIONAL EXPANSION                                                         

    The Company intends to selectively add timeshare resort locations in areas
outside the United States. Through the Aruba Transaction, the Company has       
obtained Timeshare Interest inventory in the Caribbean. The Company intends to  
continue to focus on the Caribbean region, as well as Central and South America,
as possible locations for additional resort properties.                         

GOLF COURSE DEVELOPMENT                                                         

In fiscal 1997, the Company began construction of its first 27 hole   
daily-fee golf course as part of its long-term strategy to participate in the   
growing daily-fee golf market. Management believes that the demographics of this
market are similar to those of the Company's Residential Land Division. As a    
result, management believes that daily-fee golf courses are an attractive       
amenity that will increase the marketability of the Company's adjacent          
residential lots in certain projects.                                           

CROSS UTILIZATION OF DATABASES                                                  

The Company intends to cross-utilize information contained in its     
Residential Land Division and Resorts Division databases. Because the           
Residential Land and Resorts Divisions target similar geographic markets and    
demographics classes, the Company believes that such cross-utilization will     
significantly enhance its sales and marketing efforts for each division.        

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THE EXCHANGE OFFER

Issuer.....................  Bluegreen Corporation                              

Outstanding Notes..........  The Outstanding Notes were sold by the Company on  
                          April 1, 1998 to NatWest Capital Markets Limited
                 and McDonald & Company Securities, Inc.
                           (collectively, the "Initial Purchasers") pursuant
                            to a Purchase Agreement, dated March 26, 1998 (the
                       "Purchase Agreement"). The Initial Purchasers
                      subsequently resold the Outstanding Notes to
                         qualified institutional buyers pursuant to Rule
        144A under the Securities Act.

Registration Rights                                                             
Agreement..................  Pursuant to the Purchase Agreement, the Company and
                 the Initial Purchasers entered into the
                         Registration Rights Agreement, which grants the
                           holders of the Outstanding Notes certain exchange
                        and registration rights. The Exchange Offer is
                            intended to satisfy such exchange and registration
                             rights which terminate upon the consummation of the
Exchange Offer.       

Securities Offered.........  $110,000,000 aggregate principal amount of 10 1/2% 
                      Senior Secured Notes due 2008, Series B (the
"Exchange Notes").    

The Exchange Offer.........  The Company is offering to exchange $1,000         
                            principal amount of Exchange Notes for each $1,000
                        principal amount of Outstanding Notes that are
                          properly tendered and accepted. The Company will
                       issue Exchange Notes on or promptly after the
                          Expiration Date. As of the date hereof, there is
                    $110,000,000 aggregate principal amount of
                         Outstanding Notes outstanding. The terms of the
                      Exchange Notes are identical in all material
                            respects to the terms of the Outstanding Notes for
                     which they may be exchanged pursuant to the
                            Exchange Offer, except that (i) the Exchange Notes
                             will bear a Series B designation and will have been
                             registered under the Securities Act and, therefore,
                          will not bear legends restricting their transfer
                             and will not contain certain provisions relating to
                     an increase in the interest rate which were
                           included in the terms of the Outstanding Notes in
                             certain circumstances relating to the timing of the
                         Exchange Offer and (ii) holders of the Exchange
                             Notes will not be entitled to certain rights of the
                    holders of the Outstanding Notes under the
                           Registration Rights Agreement, which rights shall
                         terminate upon the consummation of the Exchange
                             Offer. See "The Exchange Offer." The Exchange Offer
                       is not conditioned upon any minimum aggregate
                     principal amount of Outstanding Notes being
tendered for exchange.

                           Based on no-action letters issued by the staff of
                         the Commission to third parties with respect to
                             similar transactions, the Company believes that the
                        Exchange Notes issued pursuant to the Exchange
                        Offer in exchange for Outstanding Notes may be
                  offered for resale, resold and otherwise
                          transferred by holders thereof (other than (i) a
                         broker-dealer who purchases such Exchange Notes
                             from the Company to resell pursuant to Rule 144A or
                            any other available exemption under the Securities
                             Act, or (ii) a person that is an "affiliate" of the
                       Company within the meaning of Rule 405 of the
                     Securities Act) without compliance with the
                           registration and prospectus delivery requirements
                            of the Securities Act, provided that such Exchange
                           Notes are acquired in the ordinary course of such
                            holders' business and such holders are not engaged
                           in, have no arrangement or understanding with any
                        person to participate in, and do not intend to
                            engage in, any distribution of the Exchange Notes.
                          However, the Company has not sought and does not
    intend to seek a no-action
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                             letter with respect to the Exchange Offer and there
                   can be no assurance that the staff of the
                            Commission would make a similar determination with
                       respect to the Exchange Offer. Each holder of
                         Exchange Notes other than a broker-dealer, must
                          represent that such conditions have been met. In
                             addition, each broker-dealer that receives Exchange
                            Notes for its own account pursuant to the Exchange
                       Offer must acknowledge that it will deliver a
                          prospectus in connection with any resale of such
Exchange Notes.       

                     The Letter of Transmittal accompanying this
                           Prospectus states that by so acknowledging and by
                           delivering a prospectus, a broker-dealer will not
                        be deemed to admit that it is an "underwriter"
                     within the meaning of the Securities Act. A
                          broker-dealer may nonetheless be deemed to be an
                "underwriter" under the Securities Act
                           notwithstanding such disclaimer. This Prospectus,
                           as it may be amended or supplemented from time to
                            time, may be used by a broker-dealer in connection
                             with resales of Exchange Notes received in exchange
                            for Outstanding Notes where such Outstanding Notes
                            were acquired by such broker-dealer as a result of
                   market-making activities or other trading
                         activities. Pursuant to the Registration Rights
                        Agreements, the Company has agreed that, for a
                          period of 180 days after the Expiration Date, it
                    will make this Prospectus available to any
                           broker-dealer for use in connection with any such
                        resale. See "The Exchange Offer -- Purpose and
                    Effect of the Exchange Offer" and "Plan of
Distribution."        

                           Any holder who tenders in the Exchange Offer with
                             the intention to participate, or for the purpose of
                          participating, in a distribution of the Exchange
                           Notes could not rely on the position of the staff
                           of the Commission enunciated in no-action letters
                         and, in the absence of an applicable exemption,
                          must comply with the registration and prospectus
                        delivery requirements of the Securities Act in
                            connection with any resale transaction. Failure to
                            comply with such requirements in such instance may
                             result in such holder incurring liability under the
                    Securities Act for which the holder is not
     indemnified by the Company.

Expiration Date............  5:00 p.m., New York City time, on July 23, 1998,   
                           unless the Exchange Offer is extended in the sole
                           discretion of the Company, in which case the term
                             "Expiration Date" means the latest date and time to
                        which the Exchange Offer is extended. See "The
                        Exchange Offer -- Expiration Date; Extensions;
Amendments."          

Accrued Interest on the                                                         
  Exchange Notes...........  Each Exchange Note will bear interest from the most
                            recent date to which interest has been paid on the
                            Outstanding Notes or, if no interest has been paid
                        on such Outstanding Notes, from April 1, 1998.
                          Holders whose Outstanding Notes are accepted for
                             exchange will be deemed to have waived the right to
                         receive any interest accrued on the Outstanding
Notes.                

Exchange Date..............  As soon as practicable after the close of the      
                     Exchange Offer, the Company will accept for
                          exchange all Outstanding Notes properly tendered
                           and not validly withdrawn prior to 5:00 p.m., New
                          York City time, on the Expiration Date. See "The
                   Exchange Offer -- Withdrawal of Tenders."

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Conditions to the Exchange                                                      
Offer......................  The Exchange Offer is subject to customary         
                           conditions, certain of which may be waived by the
                    Company. The Company reserves the right to
                           terminate or amend the Exchange Offer at any time
                             prior to the Expiration Date upon the occurrence of
                       any such condition. The Exchange Offer is not
                        conditioned on any minimum aggregate principal
                        amount of Outstanding Notes being tendered for
                           exchange. See "The Exchange Offer -- Conditions."

Consequences of Failure to                                                      
 Exchange.................  Any Outstanding Notes not tendered pursuant to the
                             Exchange Offer will remain outstanding and continue
                         to accrue interest. Such Outstanding Notes will
                             remain "restricted securities" under the Securities
                             Act, subject to the transfer restrictions described
                             herein and contained in the Indenture. As a result,
                          the liquidity of the market for such Outstanding
                           Notes could be adversely affected upon completion
          of the Exchange Offer. See "Risk
                             Factors -- Consequences of Failure to Exchange" and
                           "The Exchange Offer -- Consequences of Failure to
Exchange."            

Certain Federal Income Tax                                                      
 Considerations...........  The exchange of the Outstanding Notes for Exchange
                            Notes by tendering holders should not be a taxable
                            exchange for U.S. Federal income tax purposes, and
                            such holders should not recognize any taxable gain
                           or loss for U.S. Federal income tax purposes as a
                            result of such exchange. See "Certain U.S. Federal
     Income Tax Considerations."

Use of Proceeds............  There will be no cash proceeds to the Company from 
                    the Exchange Offer. See "Use of Proceeds."

PROCEDURES FOR TENDERING OUTSTANDING NOTES

Tendering Outstanding                                                           
Notes......................  Each beneficial owner owning interests in          
                          Outstanding Notes ("Beneficial Owner") through a
                             DTC Participant (as defined) must instruct such DTC
                      Participant to cause Outstanding Notes to be
                        tendered in accordance with the procedures set
                        forth in this Prospectus and in the applicable
                  Letter of Transmittal. See "The Exchange
                          Offer -- Procedures for Tendering -- Outstanding
  Notes held through DTC."

                       Each participant (a "DTC Participant") in the
                  Depository Trust Company ("DTC") holding
                Outstanding Notes through DTC must (i)
                       electronically transmit its acceptance to DTC
                        through the DTC Automated Tender Offer Program
                     ("ATOP"), for which the transaction will be
                            eligible, and DTC will then verify the acceptance,
                       execute a book-entry delivery to the Exchange
                             Agent's (as defined herein) account at DTC and send
                       an Agent's Message (as defined herein) to the
                           Exchange Agent for its acceptance, or (ii) comply
                           with the guaranteed delivery procedures set forth
                 in this Prospectus and in the Letter of
                     Transmittal. By tendering through ATOP, DTC
                            Participants will expressly acknowledge receipt of
                             the accompanying Letter of Transmittal and agree to
                            be bound by its terms and the Company will be able
                    to enforce such agreement against such DTC
                             Participants. See "The Exchange Offer -- Procedures
                         for Tendering -- Outstanding Notes held through
          DTC" and "-- Guaranteed Delivery
                            Procedures -- Outstanding Notes held through DTC."

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                            Each Holder must (i) complete and sign a Letter of
                         Transmittal, and mail or deliver such Letter of
                          Transmittal, and all other documents required by
                  the Letter of Transmittal, together with
                  certificate(s) representing all tendered
                         Outstanding Notes, to the Exchange Agent at its
                         address set forth in this Prospectus and in the
                        Letter of Transmittal, or (ii) comply with the
                          guaranteed delivery procedures set forth in this
                           Prospectus. See "The Exchange Offer -- Procedures
                 for Tendering," "-- Exchange Agent" and
                          "-- Guaranteed Delivery Procedure -- Outstanding
 Notes held by Holders."

                         By tendering, each holder will represent to the
                            Company that, among other things, (i) the Exchange
                       Notes are to be acquired by the holder or the
                          person receiving such Exchange Notes, whether or
                        not such person is the holder, in the ordinary
                         course of business, (ii) the holder or any such
                           other person (other than a broker-dealer referred
                           to in the next sentence) is not engaging and does
                          not intend to engage, in the distribution of the
                            Exchange Notes, (iii) the holder or any such other
                             person has no arrangement or understanding with any
                          person to participate in the distribution of the
                         Exchange Notes, (iv) neither the holder nor any
                            such other person is an "affiliate" of the Company
                             within the meaning of Rule 405 under the Securities
                          Act, and (v) the holder or any such other person
                          acknowledges that if such holder or other person
                            participates in the Exchange Offer for the purpose
                           of distributing the Exchange Notes it must comply
                       with the registration and prospectus delivery
                          requirements of the Securities Act in connection
                     with any resale of the Exchange Notes. Each
                           broker-dealer participating in the Exchange Offer
                             that receives Exchange Notes for its own account in
                         exchange for Outstanding Notes must acknowledge
                         that it will deliver a prospectus in connection
                          with any resale of such Exchange Notes. See "The
                      Exchange Offer -- Procedures for Tendering."

Guaranteed Delivery                                                             
Procedures.................  DTC Participants holding Outstanding Notes through 
                             DTC who wish to cause their Outstanding Notes to be
                             tendered, but who cannot transmit their acceptances
                        through ATOP prior to the Expiration Date, may
                           effect a tender in accordance with the procedures
                           set forth in this Prospectus and in the Letter of
                            Transmittal. See "The Exchange Offer -- Guaranteed
                          Delivery Procedures." Holders who wish to tender
                           their Outstanding Notes but (i) whose Outstanding
                             Notes are not immediately available and will not be
                         available for tendering prior to the Expiration
                            Date, or (ii) who cannot deliver their Outstanding
                       Notes, the Letter of Transmittal or any other
                           required documents to the Exchange Agent prior to
                     the Expiration Date, may effect a tender in
                          accordance with the procedures set forth in this
                           Prospectus. See "The Exchange Offer -- Guaranteed
Delivery Procedures." 

Withdrawal Rights..........  The tender of Outstanding Notes pursuant to the    
                           Exchange Offer may be withdrawn at any time prior
                             to 5:00 p.m., New York City time, on the Expiration
                           Date, in accordance with the procedures set forth
               in this Prospectus. See "The Exchange
          Offer -- Withdrawal of Tenders."

Exchange Agent.............  SunTrust Bank, Central Florida, National           
                     Association is serving as Exchange Agent in
                      connection with the Exchange Offer. See "The
            Exchange Offer -- Exchange Agent."

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Shelf Registration                                                              
Statement..................  Under certain circumstances described in the       
                           Registration Rights Agreement, certain holders of
                          Outstanding Notes (including holders who are not
                           permitted to participate in the Exchange Offer or
                           who may not freely resell Exchange Notes received
                           in the Exchange Offer) may require the Company to
                         file and use its reasonable efforts to cause to
                          become effective, a shelf registration statement
                             under the Securities Act, which would cover resales
                        of Outstanding Notes by such holders. See "The
                     Exchange Offer -- Purpose and Effect of the
Exchange Offer."      

THE EXCHANGE NOTES

Securities Offered.........  $110,000,000 aggregate principal amount of 10 1/2% 
                           Senior Secured Notes due 2008, Series B that have
                       been registered under the Securities Act. See
 "Description of Notes."

Maturity Date..............  April 1, 2008.                                     

Interest Payment Dates.....  April 1 and October 1 of each year, commencing     
October 1, 1998.      

Optional Redemption........  The Notes will be redeemable at the option of the  
                            Company, in whole or in part, in cash, on or after
                           April 1, 2003, at the redemption prices set forth
                            herein, together with accrued and unpaid interest,
                         if any, to the date of redemption. In addition,
                           prior to April 1, 2001, the Company may redeem up
                         to 35% of the aggregate principal amount of the
                       Notes with the proceeds of one or more Equity
                             Offerings, at a redemption price equal to 110.5% of
                        the principal amount thereof, plus accrued and
                             unpaid interest, if any, to the date of redemption,
                             provided that at least $65 million principal amount
                     of Notes remains outstanding after any such
             redemption. See "Description of the
        Notes -- Optional Redemption."

Ranking....................  The Outstanding Notes are and the Exchange Notes   
                        will be senior obligations of the Company. The
                            Outstanding Notes rank and the Exchange Notes will
                      rank pari passu in right of payment with all
                        existing and future Senior Indebtedness of the
                     Company. The Outstanding Notes rank and the
                             Exchange Notes will rank senior in right of payment
                             to all existing and future Subordinated Obligations
                         of the Company. None of the assets of Bluegreen
                           Corporation will secure its obligations under the
                  Notes, and the Notes will be effectively
                             subordinated to Secured Indebtedness of the Company
                            to any third party to the extent of assets serving
                             as security therefor. As of December 28, 1997, on a
                         pro forma basis after giving effect to the Note
                          Offering and the application of the net proceeds
                        therefrom and excluding the Notes, the Company
                           would have approximately $25.9 million of Secured
                       Indebtedness outstanding. See "Description of
Notes -- Ranking."    

Guarantees.................  The Outstanding Notes are and the Exchange Notes   
                         will be unconditionally guaranteed, jointly and
                          severally, by each of the Subsidiary Guarantors.
                    The Note Guarantees are and will be senior
                           obligations of each Subsidiary Guarantor and rank
                           and will rank pari passu in right of payment with
                             all existing and future Senior Indebtedness of each
                          such Subsidiary Guarantor and senior in right of
                         payment to all existing and future Subordinated
                             Indebtedness of each such Subsidiary Guarantor. See
                    "Description of Notes -- Note Guarantees."

Security...................  The Note Guarantees of certain Subsidiary          
                       Guarantors are and will be secured by a first
                       (subject to customary exceptions) mortgage or
similar               
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                        instrument (each, a "Mortgage") on the Pledged
                          Properties of such Subsidiary Guarantors. Absent
                           the occurrence and the continuance of an Event of
                        Default, the Notes Trustee will be required to
                       release its lien on the Pledged Properties as
                          property is sold and the Trustee will not have a
                      lien on the proceeds of any such sale. As of
                         January 25, 1998, the Pledged Properties had an
                     aggregate book value of approximately $46.1
                           million. The Company has agreed to obtain certain
                  title insurance policies for the Pledged
                          Properties. If all such title insurance policies
                             are not obtained by June 1, 1998, the interest rate
                         on the Notes will increase. See "Description of
                         Notes -- Security." Except to the extent of the
                  assets serving as security for such Note
                            Guarantees, the Note Guarantees of each Subsidiary
                            Guarantor are and will be effectively subordinated
                        to the Secured Indebtedness of each Subsidiary
                          Guarantor to the extent of the assets serving as
                security therefor. See "Description of
Notes -- Security."   

Change of Control..........  Upon the occurrence of a Change of Control, the    
                      Company will be required to make an offer to
                          repurchase the Notes at a price equal to 101% of
                             the principal amount thereof, together with accrued
                     and unpaid interest, if any, to the date of
                           repurchase. See "Description of Notes -- Optional
                 Redemption" and "-- Change of Control."

Restrictive Covenants......  The indenture under which the Outstanding Notes    
                         were and the Exchange Notes will be issued (the
                             "Indenture") contains certain covenants that, among
                        other things, will limit (i) the incurrence of
                        additional indebtedness by the Company and its
                        Restricted Subsidiaries (as defined), (ii) the
                             payment of dividends on, and redemption of, capital
                            stock of the Company and the redemption of certain
                        Subordinated Obligations of the Company, (iii)
                          investments, (iv) sales of assets and subsidiary
                          stock, (v) transactions with affiliates and (vi)
                         consolidations, mergers and transfers of all or
                          substantially all the assets of the Company. The
                          Indenture also prohibits certain restrictions on
                     distributions from Restricted Subsidiaries.
                            However, all of these limitations and prohibitions
                             are subject to a number of important qualifications
             and exceptions. See "Description of
      Notes -- Certain Covenants."

Exchange Offer and Absence                                                      
of a Public Market for the                                                      
Notes....................  The Exchange Notes will generally be freely      
                             transferable (subject to the restrictions discussed
                          elsewhere herein) but will be new securities for
                         which there will not initially be a market. The
                            Outstanding Notes have been designated for trading
                           in the PORTAL market. The Company does not intend
                             to apply for a listing of the Exchange Notes on any
                        securities exchange or on any automated dealer
                        quotation system. See "Plan for Distribution."

FOR MORE COMPLETE INFORMATION REGARDING THE NOTES, SEE "DESCRIPTION OF NOTES."  

RISK FACTORS

   Prospective acquirors of the Exchange Notes should consider carefully all
of the information set forth in this Prospectus and, in particular, should      
evaluate the specific factors set forth under "Risk Factors" for risks involved 
with an acquisition of the Exchange Notes.                                      

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

 The summary consolidated financial data presented below for each of the
five years in the period ended March 30, 1997 are derived from the Company's    
audited consolidated financial statements. The summary consolidated financial   
data presented below for the nine month periods ended December 29, 1996 and     
December 28, 1997 have been derived from unaudited financial statements. The    
unaudited financial statements include all adjustments, consisting of normal    
recurring accruals, which the Company considers necessary for a fair            
presentation of its financial position and the results of operations for these  
periods. Operating results for the nine months ended December 28, 1997 are not  
necessarily indicative of the results that may be expected for the entire fiscal
year ended March 29, 1998. The summary consolidated financial data should be    
read in conjunction with the Consolidated Financial Statements, related notes,  
and other financial information appearing elsewhere or incorporated by reference
herein.                                                                         

                                                        [Enlarge/Download Table]

                                                                                                   AS OF OR FOR THE NINE    
                                                   AS OF OR FOR THE YEAR ENDED,                        MONTHS ENDED,        
                                     --------------------------------------------------------   --------------------------- 
                                     MARCH 28,   MARCH 27,   APRIL 2,   MARCH 31,   MARCH 30,   DECEMBER 29,   DECEMBER 28, 
                                       1993        1994        1995       1996        1997          1996           1997     
                                     ---------   ---------   --------   ---------   ---------   ------------   ------------ 
                                     (DOLLARS IN THOUSANDS, EXCEPT AVERAGE SALES PRICE DATA AND SELECTED STATISTICAL DATA)  
                                                                                                                            
STATEMENT OF OPERATIONS DATA:                                                                                               
Revenues:                                                                                                                   
Sales of real estate and                                                                                                    
  services.........................  $ 53,349    $ 63,389    $ 91,922   $113,422    $109,722      $ 81,712       $124,487   
Interest income and other(1).......    10,191       7,952       7,264      7,388       6,159         4,577          7,324   
                                     --------    --------    --------   --------    --------      --------       --------   
    Total revenues.................    63,540      71,341      99,186    120,810     115,881        86,289        131,811   
Cost of sales......................    28,450      30,773      45,106     59,393      57,091        41,384         56,786   
Selling, general and administrative                                                                                         
  expenses.........................    22,652      26,444      36,521     43,735      51,441        38,051         55,526   
                                     --------    --------    --------   --------    --------      --------       --------   
Operating income...................    12,438      14,124      17,559     17,682       7,349         6,854         19,499   
Interest expense...................     7,284       6,551       6,737      6,276       5,459         3,916          6,512   
Provisions for losses..............     1,550         795         792        612       9,539         9,101          1,349   
Other income.......................     1,727       1,175         372        122         259           184            120   
Provision (benefit) for income                                                                                              
  taxes............................     1,874       3,022       4,265      4,449      (3,030)       (2,451)         4,774   
                                     --------    --------    --------   --------    --------      --------       --------   
Net income (loss)..................  $  3,457    $  4,931    $  6,137   $  6,467    $ (4,360)     $ (3,528)      $  6,984   
                                     ========    ========    ========   ========    ========      ========       ========   
OTHER DATA AND CREDIT STATISTICS:                                                                                           
EBITDA(2)..........................  $ 14,172    $ 16,164    $ 18,522   $ 18,978    $  8,291      $  7,366       $ 21,396   
EBITDA to senior interest expense                                                                                           
  (as adjusted)(3).................        --          --          --         --          --            --            2.4x  
EBITDA to interest expense (as                                                                                              
  adjusted)(3).....................        --          --          --         --          --            --            1.9x  
Total senior debt to EBITDA (as                                                                                             
  adjusted)(4).....................        --          --          --         --          --            --            4.1x  
Total debt to EBITDA (as                                                                                                    
  adjusted)(4).....................        --          --          --         --          --            --            5.5x  
Weighted average interest rate on                                                                                           
  notes receivable at period end...      11.0%       10.9%       12.4%      12.4%       13.3%         14.4%          15.0%  
RESIDENTIAL LAND STATISTICS:                                                                                                
Gross margin on sales of real                                                                                               
  estate(5)........................      46.7%       51.5%       50.9%      47.6%       48.0%         49.4%          55.0%  
Average sales price of land parcels                                                                                         
  sold(6)..........................  $ 21,368    $ 25,511    $ 30,969   $ 34,856    $ 38,572      $ 37,207       $ 47,449   
Number of land parcels sold........     2,560       2,489       2,397      2,347       2,057         1,498          1,740   
RESORTS STATISTICS:                                                                                                         
Number of resorts at period                                                                                                 
  end(7)...........................         0           1           2          3           4             3              8   
Average sales price of timeshare                                                                                            
  intervals sold(6)................  $     --    $     --    $  7,119   $  7,325    $  8,362      $  8,342       $  8,695   
Number of timeshare intervals                                                                                               
  sold(6)..........................        --          --         952      1,865       3,195         2,579          4,903   

BALANCE SHEET DATA:                                                                                                         
Notes receivable, net..............  $ 35,653    $ 44,203    $ 40,311   $ 37,014    $ 34,619      $ 31,873       $ 73,116   
Inventory, net.....................    28,245      38,793      62,345     73,595      86,661        81,108        112,297   
Total assets.......................   122,853     139,617     152,222    154,963     169,627       158,301        254,808   
Lines-of-credit, notes payable and                                                                                          
  receivable-backed notes                                                                                                   
  payable..........................    26,602      37,297      39,946     37,011      56,961        50,896         89,621(8)
Convertible debt...................    34,739      34,739      34,739     34,739      34,739        34,739         40,739   
Shareholders' equity...............    46,868      51,854      58,040     64,698      59,243        60,041         66,649   

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

(1) Interest income for fiscal 1993, 1994, 1995, 1996 and 1997 includes a       
  $695,000 gain, a $238,000 loss, a $411,000 loss, a $1.1 million gain and a
$96,000 loss, respectively, from sales of notes receivable in connection
   with private placement REMIC transactions. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition."             
(2) EBITDA represents net income before interest expense, income taxes,         
    depreciation and amortization and, in the case of fiscal 1997, the provision
   for non-recurring costs described below. EBITDA should not be considered in
   isolation or construed as a substitute for the Company's net income, income
from operations, cash flows from operating activities or liquidity in   
 analyzing the Company's operating performance, financial position or cash
flows. EBITDA is not necessarily comparable to other similarly titled   
  captions of other companies due to potential inconsistencies in the method
    of calculation. The Company has included EBITDA herein to provide additional
   information related to the Company's ability to incur and service debt. The
following table reconciles EBITDA to net income (loss) (amounts in      
thousands):                                                             

                                                        [Enlarge/Download Table]

                                                                                            FOR THE NINE MONTHS    
                                                FOR THE YEAR ENDED,                               ENDED,           
                              --------------------------------------------------------  ---------------------------
                              MARCH 28,   MARCH 27,   APRIL 2,   MARCH 31,   MARCH 30,  DECEMBER 29,   DECEMBER 28,
                                1993        1994        1995       1996        1997         1996           1997    
                              ---------   ---------   --------   ---------   ---------  ------------   ------------
                                                                                                                   
Net income (loss)...........   $ 3,457     $ 4,931    $ 6,137     $ 6,467     $(4,360)    $(3,528)       $ 6,984   
Interest expense............     7,284       6,551      6,737       6,276       5,459       3,916          6,512   
Capitalized interest expense                                                                                       
  included in cost of real                                                                                         
  estate sold...............        --          --         82         149         956         422          1,781   
Income taxes................     1,874       3,022      4,265       4,449      (3,030)     (2,451)         4,774   
Provision for non-recurring                                                                                        
  costs (a).................        --          --         --          --       8,200       8,200             --   
Depreciation and                                                                                                   
  amortization..............     1,557       1,660      1,301       1,637       1,066         807          1,345   
                               -------     -------    -------     -------     -------     -------        -------   
EBITDA......................   $14,172     $16,164    $18,522     $18,978     $ 8,291     $ 7,366        $21,396   
                               =======     =======    =======     =======     =======     =======        =======   

 (a) The provision for non-recurring costs, which is included in Provision
      for losses on the Consolidated Statement of Operations, represents the
     Company's $8.2 million write-down of certain Communities Division and
   Residential Land Division properties in the first quarter of fiscal
1997. See Note 4 to the Consolidated Financial Statements and   
  "Management's Discussion and Analysis of Results of Operations and
Financial Condition."                                           
(3) Interest expense is pro forma after giving effect to the Note Offering and  
   the application of net proceeds therefrom assuming the Note Offering closed
 on April 1, 1997, and includes amounts capitalized into inventory and pro
forma interest expense on the Notes. Senior interest expense excludes   
  interest expense on the Public Debentures (as defined) and the Convertible
Notes (as defined).                                                     
(4) Total debt is pro forma after giving effect to the Note Offering and the    
application of net proceeds therefrom and excludes $15.4 million of     
   non-recourse indebtedness incurred by BG Aruba in connection with the Aruba
Transaction and $8.4 million of RDI debt related to notes receivable    
previously sold with recourse to financial institutions. See            
"Business -- Recent Acquisitions." Total senior debt also excludes the  
Public Debentures and the Convertible Notes.                            
(5) Gross margin is computed as the difference between the sales price and the  
    related cost of inventory (including the cost of improvements, amenities and
    in certain cases capitalized interest and real estate taxes), divided by the
sales price.                                                            
(6) Average sales price and unit sales data include those sales made during the 
applicable period where recognition of revenue is deferred under the    
    percentage of completion method of accounting. See "Contracts Receivable and
   Revenue Recognition" under Note 1 to the Consolidated Financial Statements.
(7) The number of resorts at December 28, 1997 includes the two resorts acquired
in the RDI Acquisition and the Aruba Resort. See "Business -- Recent    
Acquisitions."                                                          
(8) Excludes $15.4 million of non-recourse indebtedness incurred by BG Aruba in 
  connection with the Aruba Transaction and $8.4 million of RDI debt related
    to notes receivable previously sold with recourse to financial institutions.
See "Business -- Recent Acquisitions."                                  

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RISK FACTORS

  The following risk factors should be considered carefully in addition to
the other information contained in this Prospectus before purchasing the Notes  
offered hereby. Unless otherwise indicated, references in this section to real  
estate and inventories collectively encompass the Resorts Division, the         
Residential Land Division and the Company's other operations.                   

REAL ESTATE MARKET AND GENERAL ECONOMIC CONDITIONS; INVENTORY CONCENTRATION     

    Real estate markets are cyclical in nature and highly sensitive to changes
in national and regional economic conditions, including, among other factors,   
levels of employment and discretionary disposable income, consumer confidence,  
available financing and interest rates. A downturn in the economy in general or 
in the market for residential land or timeshare property could have a material  
adverse effect on the Company's business, operating results and financial       
condition. In addition, concentration in a given region may increase the        
Company's susceptibility to a downturn in such region. The Company has in recent
years been dedicating greater resources to more capital intensive residential   
land and timeshare projects and the level of its inventory has increased        
materially. The Company will be required to make material capital expenditures  
to develop its existing inventory as currently planned. There are substantial   
risks associated with a large investment in residential land and timeshare      
property inventory at any given time. These include the risks that (i)          
residential land and timeshare property inventories will decline in value due to
changing market and economic conditions, (ii) development and carrying costs may
exceed those anticipated, (iii) there may be delays in bringing inventories to  
market due to, among other things, changes in regulations, adverse weather      
conditions or changes in the availability of development financing on terms     
acceptable to the Company and (iv) banks and other lenders will cease financing 
residential land and timeshare property sold by the Company with respect to     
which the Company does not provide financing. No assurances can be given that   
the Company will be able to continue sales at their current levels or that its  
gross margins will not decline. See "Management's Discussion and Analysis of    
Results of Operations and Financial Condition" and "Business."                  

 With respect to the Company's timeshare operations, any adverse changes
affecting the timeshare industry such as an oversupply of Timeshare Interests, a
reduction in demand for Timeshare Interests, changes in travel and vacation     
patterns, changes in governmental regulations of the timeshare industry and     
increases in construction costs or taxes, as well as negative publicity for the 
timeshare industry, could have a material adverse effect on the Company's       
business, operating results and financial condition. See "Management's          
Discussion and Analysis of Results of Operations and Financial Condition."      

LEVERAGE; ABILITY TO SERVICE DEBT AND LIQUIDITY AND FINANCING REQUIREMENTS      

Following the Note Offering and the Exchange Offer, the Company will  
continue to have significant interest expense and principal repayment           
obligations under its indebtedness. As of December 28, 1997, after giving effect
to the Note Offering and the application of the net proceeds therefrom, the     
Company and its consolidated subsidiaries would have had total indebtedness of  
approximately $181.1 million, including total secured indebtedness (other than  
the Notes), of approximately $25.9 million. See "Selected Consolidated Financial
Data" and "Capitalization." Moreover, the Company is required to seek external  
sources of liquidity to support its operations, finance the acquisition and     
development of residential land and timeshare property inventory, finance a     
substantial percentage of its sales and satisfy its debt and other obligations. 
The Company anticipates that it will continue to require external sources of    
liquidity to support its operations in the future. The Indenture permits the    
Company to incur material additional indebtedness. See "Description of Notes."  
The Company's ability to service or to refinance its indebtedness (including the
Notes) or to obtain additional financing (including its ability to consummate   
future notes receivable securitizations) depends on its future performance,     
which is subject to a number of factors, including the Company's business,      
results of operations, leverage, financial condition and business prospects, the
performance of its receivables, prevailing interest rates, general economic     
conditions and perceptions about the residential land and timeshare industries. 
The Company is currently negotiating certain credit facilities for (i) the      
financing and sale of its timeshare receivables, (ii) the financing of its      
acquisition and development of timeshare properties and (iii) the acquisition   
and development of residential land properties. No assurances can be given that 
such credit                                                                     
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facilities will be entered into or that funding will be provided on the terms   
discussed herein, if at all, or that the Company will be able to obtain         
sufficient external sources of liquidity on attractive terms, or at all. The    
Company's existing credit facilities and its proposed facilities, if            
consummated, will include, among other things, various representations and      
warranties, conditions to funding, eligibility requirements for collateral,     
affirmative, negative and financial covenants and events of default. See        
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition -- Liquidity and Capital Resources," "Business," "Description of Other
Indebtedness" and "Description of Notes."                                       

     The Company's level of debt and debt service requirements will have several
important effects on its future operations, including the following: (i) the    
Company will have significant cash requirements to service debt, reducing funds 
available for operations and future business opportunities and increasing the   
Company's vulnerability to adverse economic and industry conditions; (ii) the   
Company's leveraged position will increase its vulnerability to competitive     
pressures; (iii) the financial covenants and other restrictions contained in the
Indenture, the Credit Agreements and other agreements relating to the Company's 
indebtedness will require the Company to meet certain financial tests and will  
restrict its ability to, among other things, borrow additional funds, dispose of
assets or pay cash dividends on, or repurchase, preferred or common stock; and  
(iv) funds available for working capital, capital expenditures, acquisitions and
general corporate purposes may be limited. Certain of the Company's competitors 
operate on a less leveraged basis and will have greater operating and financial 
flexibility than the Company.                                                   

In addition to its other debt service obligations, the Company will be
required to redeem a specified amount of its 8 1/4% Convertible Subordinated    
Debentures due 2012 (the "Public Debentures"), if not sooner converted into     
Common Stock of the Company, annually commencing in 2003 and, if not sooner     
converted into Common Stock of the Company, to repay in 2002 the $6 million     
aggregate principal amount of convertible subordinated note indebtedness (the   
"Convertible Notes") incurred in connection with the RDI Acquisition owed to one
of its directors and an affiliate of another of its directors. Absent an Event  
of Default, the Indenture permits the making of scheduled payments on such      
subordinated indebtedness. The Company's ability to make scheduled principal    
payments, or to refinance its obligations, with respect to such indebtedness,   
other existing indebtedness and future indebtedness, and to pay interest        
thereon, will depend on its financial and operating performance, which, in turn,
is subject to prevailing economic conditions and to certain financial, business,
industry and other factors beyond its control. If the Company's cash flow and   
capital resources are insufficient to fund its debt service obligations and     
support its operations, the Company, among other consequences, may be forced to 
reduce or delay planned capital expenditures, reduce its financing of sales,    
sell assets, obtain additional equity capital or refinance or restructure its   
debt. There can be no assurance that the Company's cash flow and capital        
resources will be sufficient for payment of its indebtedness in the future. If  
the Company is not able to satisfy its debt service obligations, it could       
default on its indebtedness, including the Notes, which would entitle the       
holders of such indebtedness to, among other things, accelerate the maturity    
thereof. Any default under the documents governing indebtedness of the Company  
could have a material adverse effect on the market value of the Notes. See      
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition -- Liquidity and Capital Resources" and "Description of Certain       
Indebtedness."                                                                  

ACQUISITION STRATEGY                                                            

   A principal component of the Company's strategy is to continue to grow by
acquiring the land on which to develop additional timeshare projects or acquire 
existing resorts from third party operators. Since the end of fiscal 1997, the  
Resorts Division has acquired the land and begun development of its Harbour     
Lights Resort in Myrtle Beach, South Carolina, acquired The Falls Village Resort
in Branson, Missouri and consummated the RDI Acquisition and the Aruba          
Transaction. The Company's future growth and financial success will depend upon 
a number of factors, including its ability to identify attractive resort        
acquisition opportunities, consummate the acquisitions on favorable terms,      
develop the resort and profitably sell Timeshare Interests at such resorts.     
There can be no assurance that the Company will be successful with respect to   
such factors. Currently, there are numerous potential buyers of resort real     
estate which are better capitalized than the Company competing to acquire resort
properties which the Company may consider attractive acquisition                

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opportunities. There can be no assurance that the Company will be able to       
compete against such other buyers successfully.                                 

  Moreover, to successfully implement its business strategies, the Company
must integrate the newly acquired or developed resorts into its existing sales  
and marketing programs. During the start-up phase of a new resort, the Company  
expects to experience lower operating margins at that resort until the resort's 
operations mature. The lower margins could be substantial and could negatively  
impact the Company's cash flow. No assurances can be given that the Company's   
operating margins will be maintained or improved as its resorts achieve maturity
or that new resorts will not reduce the Company's over-all operating margins.   

  Acquisitions involve certain risks and uncertainties. Such risks include
undisclosed liabilities, potential claims against the seller for which          
indemnification will not be available (by virtue of caps or otherwise),         
uncertainty as to future financial results, the failure of the seller of a      
property or project to comply with applicable law in connection with such       
property or project or otherwise (including the risks of monetary liabilities   
and governmental liens and forfeiture), integrating distinct business operations
and projects, the increased demands acquisitions place on management resources  
and other similar factors. No assurance can be given that past or future        
acquisitions will be profitable. See "Business -- Recent Acquisitions."         

RISKS RELATED TO DEVELOPMENT ACTIVITIES                                         

     The Company's growth strategy involves certain inherent risks including the
following: (i) the Company will be required to make material capital            
expenditures to develop its residential land and timeshare property inventory   
(the Company estimates that the total cash required to complete preparation for 
the sale of its residential land and timeshare property inventory as of December
28, 1997 was approximately $186.0 million), (ii) planned development may be     
delayed or abandoned and development and carrying costs may exceed those        
anticipated, possibly making the project uneconomical or unprofitable, (iii) the
Company may experience a fluctuation in quarterly results due to an increase or 
decrease in the number of residential land or timeshare projects subject to     
percentage of completion accounting which requires net profit on such projects  
to be recognized on a pro rata basis as development is completed, (iv) the      
period between acquisition and sale of property may increase and the Company may
experience delays in bringing inventories to market, resulting in decreased     
revenues and increased interest expense and carrying charges and (v) inventories
may decline in value due to changing market and economic conditions. Certain    
inventories with a carrying value of $23.2 million were written-down by $8.2    
million during the first quarter of fiscal 1997, in recognition of the change in
the Company's focus towards expansion of the Residential Land Division and the  
Resorts Division in certain locations. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition" and "Business." There can be  
no assurance that the Company will complete planned development activities or be
able to acquire additional properties on attractive terms.                      

    In addition, the Company's construction activities typically are performed
by third-party contractors, and, accordingly, the timing, quality and completion
of such activities cannot be controlled by the Company. Nevertheless,           
construction claims may be asserted against the Company for construction defects
and such claims may give rise to liabilities. New development activities,       
regardless of whether or not they are ultimately successful, typically require a
substantial portion of management's time and attention. Development activities  
are also subject to risks relating to the inability to obtain, or delays in     
obtaining, all necessary zoning, land-use, building, occupancy and other        
required governmental permits and authorizations, the ability of the Company to 
coordinate construction activities with the process of obtaining such permits   
and authorizations, and the ability of the Company to obtain the financing      
necessary to complete the necessary acquisition, construction, and/or conversion
work at its projects and resorts. In addition, certain states and local laws may
impose liability on property developers with respect to construction defects    
discovered or repairs made by future owners of such property.                   

RISKS ASSOCIATED WITH CUSTOMER FINANCING AND RECEIVABLES                        

The Company offers financing of up to 90% of the purchase price to all
purchasers of its residential land properties or Timeshare Interests, as the    
case may be, who qualify for such financing. Such loans are                     

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collateralized by liens on the underlying property and Timeshare Interest.      
Currently, approximately 89% of the Company's timeshare buyers finance with the 
Company, while approximately eight percent of the Company's residential land    
customers use Company financings. As noted above, the Company requires external 
sources of liquidity in order to offer financing to its customers. The          
receivables arising from sales of Timeshare Interests and residential land      
generally are pledged to institutional lenders or, in the case of residential   
land receivables, sold in connection with private placement REMIC financings.   
Under the pledged receivables facilities, the Company is typically advanced 90% 
of the principal balance of eligible pledged receivables. The Company is        
required to replace receivables that become delinquent or to pay down the loan  
secured by such receivables to remain within required loan to value ratios. To  
the extent the Company's receivables bear interest at a fixed rate and its      
borrowings bear interest at a variable rate, the Company bears the risk of      
increases in interest rates. The terms of REMIC financings require the Company  
to repurchase or replace mortgage loans to the extent the Company has breached  
any representations and warranties at the time of sale of its receivables to the
REMIC trust, and the Company, as servicer, is also required to make advances on 
delinquent payments to the extent deemed recoverable. The Company is currently  
negotiating with a financial institution to provide the Company with a combined 
timeshare warehouse financing and receivables purchase facility and a timeshare 
acquisition and development facility. See "Description of Other Indebtedness."  
No assurances can be given that the Company will be able to obtain such         
facilities on favorable terms, or at all. See "Management's Discussion and      
Analysis of Results of Operations and Financial Condition."                     

The Company bears the risk of delinquencies and defaults by buyers who
finance through the Company the purchase of their Timeshare Interests or        
residential land. General economic conditions have an impact on the ability of  
borrowers to repay loans. Loss of earnings, illness and other similar factors   
may lead to an increase in delinquencies. As of December 28, 1997, approximately
4.5% or $3.0 million principal amount of timeshare receivables and approximately
7.9% or $1.2 million principal amount of residential land receivables which were
held by the Company or by third parties under sales transactions where the      
Company had a recourse liability were more than 30 days past due compared to    
approximately 1.8% or $424,000 principal amount of timeshare receivables and    
approximately 11.9% or $1.5 million principal amount of residential land        
receivables as of March 30, 1997. Included in the above percentages are loans   
with respect to which a foreclosure proceeding or other legal process had       
commenced. The Company ceases to carry a receivable upon a foreclosure or when  
it receives a deed in lieu of foreclosure, at which time the property goes back 
into inventory. Historically, delinquencies on timeshare receivables have been  
greater than those on land receivables. If the real estate market should        
experience an overall decline in values such that the outstanding balances of   
the Company's notes receivable are greater than the value of the mortgaged      
properties, the actual rates of delinquencies, foreclosures and losses could be 
materially higher than those now experienced. An increase in delinquency rates  
or defaults on the Company's receivables could have a material adverse effect on
the Company's business, operating results and financial condition. The Company  
may incur substantial costs and delays in connection with its servicing of      
receivables, including costs in foreclosing or realizing on its collateral and  
additional marketing and sales costs with respect to reacquired property. No    
assurances can be given that reacquired property will be sold at a profit.      
During fiscal 1997 and the nine-month period ended December 28, 1997, the       
Company charged $1.3 million and $568,000, respectively, to its provision for   
loan losses to reflect the difference between the unpaid principal balance of   
the non-performing receivables and the estimated net realizable value of the    
reacquired property. See "Business -- Customer Financing."                      

The majority of the Company's residential land sales are currently not
financed by the Company but rather with local banks. A decrease in the          
willingness of such lenders to extend direct customer lot financing could cause 
a decline in the level of the Company's sales and/or require material additional
credit facilities in order to enable the Company to provide financing to such   
customers.                                                                      

 A portion of the Company's revenues historically has comprised gains on
sales of loans, and, although no assurances can be given, assuming the proposed 
timeshare receivables purchase facility that the Company is currently           
negotiating is consummated, it is anticipated that the portion of the Company's 
revenues comprising such gains on sales is expected to increase significantly.  
The gains are recorded in the Company's revenues and on its balance sheet (as   
retained interests on loan sales) at the time of sale, and the amount of gains  
recorded is based in part on management's estimates of future prepayment and    
default rates and other considerations in                                       

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light of then-current conditions. If actual prepayments with respect to loans   
occur more quickly than was projected at the time such loans were sold, as can  
occur when interest rates decline, interest would be less than expected and     
earnings would be charged in the current period. If actual defaults with respect
to loans sold are greater than estimated, charge-offs would exceed previously   
estimated amounts and earnings would be charged in the current period. See      
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition."                                                                     

RISKS ASSOCIATED WITH TIMESHARE INTEREST EXCHANGE NETWORKS                      

    The attractiveness of Timeshare Interests is enhanced significantly by the
availability of exchange networks that allow owners of Timeshare Interests to   
exchange their occupancy right granted by their Timeshare Interests during a    
particular year for an occupancy right granted at another participating network 
resort. Several companies, including II and RCI, provide broad-based Timeshare  
Interests exchange services. RDI's timeshare resorts (and its vacation club) are
currently qualified for participation in the RCI exchange network while the     
Company's other timeshare resorts (and the Aruba Resort) are currently qualified
for participation in the II exchange network. No assurance can be given that the
Company's existing resorts and vacation club will continue to qualify, or its   
future resorts will be able to qualify, for participation in either the RCI or  
the II network or any other exchange network, or that the Company's customers   
will continue to be satisfied with RCI's or II's exchange network. If such      
exchange networks cease to function effectively, if the Company's resorts are   
not accepted as exchanges for other desirable resorts, or if II or RCI ceases to
be a leading Timeshare Interest exchange network, the Company's sales of        
Timeshare Interests could be materially adversely affected. The Company entered 
into a five year agreement with II in May 1995, pursuant to which the Company   
agreed to include in II's exchange network all vacation ownership resorts that  
have been or will be acquired, developed or controlled by the Company. In       
December 1993, and prior to its acquisition by the Company, RDI and its         
point-based vacation club entered into a six year agreement with RCI pursuant to
which RDI agreed to include in RCI's exchange network the RDI point-based       
vacation club. In connection with the RDI Acquisition, the Company has advised  
each of II and RCI of the existence of its agreement with the other timeshare   
interest exchange network and of the potential conflict. Although no assurances 
can be given, based on its relationships with the exchange networks and its     
discussions with such exchange networks to date, the Company believes that it   
will be able to enter into a satisfactory resolution of this situation with each
of II and RCI. See "Business -- Industry Overviews -- Resorts                   
Division -- Participation in Timeshare Interest Exchange Networks."             

HOLDING COMPANY STRUCTURE                                                       

     The Notes will be obligations exclusively of the Company and the Subsidiary
Guarantors. Because a significant portion of the operations of the Company      
currently are conducted through subsidiaries, the cash flow of the Company and  
its ability to service its debt, including the Notes, are dependent upon the    
cash flows of such subsidiaries and the distribution of those cash flows to the 
Company, or upon loans or other payments of funds by such subsidiaries to the   
Company. The Company's subsidiaries are separate and distinct legal entities    
and, except pursuant to the Note Guarantees, have no obligation, contingent or  
otherwise, to pay any amounts due pursuant to the Notes or to make any funds    
available therefor, whether by dividends, loans or other payments. In addition, 
the payment of dividends and certain loans and advances to the Company by such  
subsidiaries may be subject to certain statutory or contractual restrictions,   
are contingent upon the earnings of such subsidiaries and are subject to various
business considerations and legal restrictions. The Notes will be effectively   
subordinated to all Indebtedness and other liabilities and commitments          
(including trade payable and lease obligations) of the Company's subsidiaries   
that are not Subsidiary Guarantors and to all Secured Indebtedness of the       
Company and its subsidiaries (except to the extent of any Mortgages on the      
Pledged Properties securing certain of the Note Guarantees). Any right of the   
Company to receive assets of any such subsidiary upon the liquidation or        
reorganization of such subsidiary (and the consequent right of the holders of   
the Notes to participate in those assets) will be effectively subordinated to   
the claims of those subsidiary's creditors, except to the extent that the       
Company or the Notes Trustee, on behalf of the holders of Notes, pursuant to the
Note Guarantees, is itself recognized as a creditor of such subsidiary, in which
case the claims of the Company or the Notes Trustee, on behalf of the holders of
Notes, would still be subordinate to any                                        
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security in the assets of such subsidiary and any Indebtedness of such          
subsidiary senior to that held by the Company.                                  

LIMITATION ON REPURCHASE OF NOTES UPON A CHANGE OF CONTROL                      

    Upon a Change of Control (as defined in the Indenture), each holder of the
Notes will have certain rights, at the holder's option, to require the Company  
to repurchase all or a portion of such holder's Notes. If a Change of Control   
were to occur, there can be no assurances the Company would have sufficient     
financial resources, or would be able to arrange financing, to repay the        
repurchase price for all Notes tendered by the holders thereof. Certain events  
involving a Change of Control may constitute an event of default under the      
Company's other credit agreements and other debt instruments (including the     
Credit Agreements). Moreover, the exercise by the holders of their right to     
require the Company to repurchase the Notes as a result of the occurrence of a  
Change of Control may create an event of default under the Company's credit     
agreements and other debt instruments, and could create an event of default     
under other future Credit Agreements or other debt instruments. Any such event  
of default could effectively block the repurchase of the Notes. See "Description
of the Notes -- Change of Control."                                             

FRAUDULENT CONVEYANCE CONSIDERATIONS                                            

  The issuance by the Subsidiary Guarantors of the Note Guarantees and the
grant of a Mortgage by certain Subsidiary Guarantors on the Pledged Properties  
owned by such Subsidiary Guarantors to secure their Note Guarantees could be    
subject to review under applicable federal and state fraudulent transfer or     
conveyance laws in a bankruptcy proceeding or a lawsuit by or on behalf of      
unpaid creditors of a Subsidiary Guarantor or a representative of such          
creditors, such as a trustee or a Subsidiary Guarantor as debtor-in-possession. 
Under such laws, if a court were to find that, at the time a Subsidiary         
Guarantor issued the Note Guarantee or granted a Mortgage, either (i) the       
Subsidiary Guarantor issued such Note Guarantee or granted such Mortgage with   
the intent of hindering, delaying or defrauding creditors, or (ii) the          
Subsidiary Guarantor received less than a reasonably equivalent value or fair   
consideration for issuing such Note Guarantee or granting such Mortgage, and the
Subsidiary Guarantor (a) was insolvent or rendered insolvent by reason of the   
issuance of such Note Guarantee or the granting of such Mortgage, (b) was       
engaged in a business or a transaction, or was about to engage in a business or 
a transaction, for which the assets remaining with the Subsidiary Guarantor     
after giving effect to the issuance of such Note Guarantee or the granting of   
such Mortgage, constituted an unreasonably small amount of capital, or (c)      
intended to incur, or believed that it would incur, debts beyond its ability to 
pay as they matured, such court could void the Subsidiary Guarantor's           
obligations under such Note Guarantee and any Mortgage securing such Note       
Guarantee and direct the repayment of any amounts paid thereunder to the        
Subsidiary Guarantor or to a fund for the benefit of the Subsidiary Guarantor's 
creditors, or take other action detrimental to the holders of the Notes.        

     The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, an 
entity will be considered insolvent for purposes of the foregoing if the sum of 
its debts is greater than all of its property at a fair valuation, or if the    
present fair saleable value of its assets is less than the amount that will be  
required to pay its probable liabilities on its existing debts as they become   
absolute and matured or if it could not pay its debts as they were due. Based   
upon management's analysis of internal cash flow projections and other financial
information and estimated values of assets and liabilities of the Company's     
subsidiaries which are Subsidiary Guarantors, the Company believes that,        
immediately after issuance of the Notes and assuming no Event of Default exists 
under the Indenture, the Subsidiary Guarantors will be solvent, and will have   
sufficient capital to carry on their businesses and that the Subsidiary         
Guarantors will be able to pay their debts as they mature. No assurance can be  
given, however, as to what standard a court could apply in making such          
determinations or that a court would reach the same conclusions with regard to  
these issues.                                                                   

RISK OF INABILITY TO REALIZE UPON MORTGAGES; INSUFFICIENT COLLATERAL            

The Note Guarantees of six Subsidiary Guarantors will be secured by a 
Mortgage on the Pledged Properties of each such Subsidiary Guarantor. The       
ability of the Trustee to foreclose on such collateral upon the occurrence of an
Event of Default under the Indenture will be subject to legal requirements,     
potential                                                                       

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delays and practical problems associated with realization upon mortgages and    
security interests in real property generally. Foreclosures are regulated by law
and are subject to a court's equitable powers. In certain circumstances, the    
liens of the Trustee could become junior to certain governmental or other liens,
including, without limitation, liens for unpaid taxes or assessments or certain 
environmental remediation liabilities. See "Description of Notes -- Security."  

  The proceeds of any sale of the Pledged Properties following an Event of
Default under the Indenture would not be sufficient to repay the Notes in full. 
No appraisals were obtained on the Pledged Properties in connection with the    
Note Offering or the Exchange Offer. As of January 25, 1998, the real property  
comprising the Pledged Properties had an aggregate book value of approximately  
$46.1 million. As noted below, inventory has been sold from the Pledged         
Properties since such date. No assurances can be given that the property subject
to the Mortgages could be sold for such amount in the event of a foreclosure or 
other comparable proceeding realizing on the Mortgages or that the property will
not decline in value. If a bankruptcy proceeding were to be commenced by or     
against the Company and/or the Subsidiary Guarantors and the bankruptcy court   
concluded that the applicable Subsidiary Guarantees were not adequately secured,
the holders of the Notes would have only an unsecured deficiency claim with     
respect to the applicable Note Guarantee to the extent of such deficiency, and  
would not be entitled to post-petition interest or reimbursement of costs of    
collection (including attorney's fees). Any deficiency claim of the holder of   
the Notes with respect to the Subsidiary Guarantors who executed Mortgages would
rank pari passu with any deficiency claims of all other general unsecured       
creditors of the Company and/or the Subsidiary Guarantors. In addition, the     
ability of the holders of the Notes to effect a sale of the Pledged Properties  
may be subject to certain bankruptcy limitations in the event of a bankruptcy   
proceeding involving the Company and/or the Subsidiary Guarantors, including    
without limitation, the so called "automatic stay" under Section 362 of the     
United States Bankruptcy Code, 11 U.S.C. sec. 101 et. seq., as amended from time
to time.                                                                        

     Pursuant to the terms of the Indenture and the Mortgages, the Notes Trustee
shall be required to release the lien of the Mortgages with respect to the sale 
of any property covered thereby unless an Event of Default shall have occurred  
and be continuing. Absent such an Event of Default, the Notes Trustee shall not 
have a lien on the proceeds from a sale of the Pledged Properties. Consequently,
the value of the collateral covered by the Mortgages will diminish over time as 
Pledged Properties are sold. Lots are currently being sold at each of the       
Pledged Properties. Although no assurances can be given and the Pledged         
Properties may be sold more quickly, the Company currently estimates based on   
historical sales that the Pledged Properties will be sold-out over a one to     
three year period. Except for the Mortgages on the Pledged Properties, neither  
the Company nor any of its subsidiaries including the Subsidiary Guarantors has 
provided or is required to provide any security for its obligations under the   
Notes or the Note Guarantees, as applicable.                                    

DEPENDENCE ON KEY PERSONNEL                                                     

   The Company's success depends to a significant extent upon the experience
and abilities of the Company's senior management. The loss of the services of   
one or more members of senior management could have a material adverse effect on
the Company and its business prospects. Although the Company has entered into   
employment agreements with certain members of senior management, no assurances  
can be given the Company will be able to retain the services of such            
individuals. The Company's continued success is also dependent upon its ability 
to hire, train and retain qualified marketing, sales, development, acquisition, 
finance, management and administrative personnel. Such personnel are in         
substantial demand and the cost of attracting or retaining such key personnel   
could escalate over time. There can be no assurance that the Company will be    
successful in attracting or retaining such personnel. See "Management."         

VARIABILITY OF QUARTERLY RESULTS                                                

   The Company's earnings may be impacted by, among other things, the timing
of the completion of the acquisition and development of its timeshare resorts   
and residential land projects, a shortage of ready-for-sale inventory in its key
market areas, inventory write-downs, levels of loan losses, and the potential   
impact of adverse weather and other natural disasters at the Company's resorts. 
Material fluctuations in operating results may also occur due to the requirement
that the Company use of the percentage of completion method of accounting. See  
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition."                                                                     

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CONSEQUENCES OF FAILURE TO EXCHANGE                                             

    The Outstanding Notes have not been registered under the Securities Act or
any state securities laws, and therefore, may not be offered, sold or otherwise 
transferred except in compliance with the registration requirements of the      
Securities Act and any other applicable securities laws, or pursuant to an      
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions, including the right  
of the Company and the Notes Trustee (as defined) in certain cases to require   
the delivery of opinions of counsel, certifications and other information prior 
to any such transfer. Outstanding Notes that remain outstanding after the       
consummation of the Exchange Offer will continue to bear a legend reflecting    
such restrictions on transfer. In addition, upon consummation of the Exchange   
Offer, holders of Outstanding Notes that remain outstanding will not be entitled
to any rights to have such Outstanding Notes registered under the Securities Act
or to any similar rights under the Registration Rights Agreement (subject to    
certain limited exceptions). The Company currently intends to register under the
Securities Act Outstanding Notes that remain outstanding after consummation of  
the Exchange Offer only if such Outstanding Notes are held by Initial Purchasers
or persons ineligible to participate in the Exchange Offer (other than due      
solely to the status of such holder as an "affiliate" of the Company within the 
meaning of Rule 405 under the Securities Act). If Outstanding Notes are tendered
and accepted in the Exchange Offer, the market for untendered Outstanding Notes 
is likely to diminish; accordingly, holders who do not tender their Outstanding 
Notes may encounter difficulties in selling such notes following the Exchange   
Offer. The Exchange Notes and any Outstanding Notes that remain outstanding     
after consummation of the Exchange Offer will constitute a single series of debt
securities under the Indenture and, accordingly, will vote together as a single 
class for purposes of determining whether holders of the requisite percentage in
outstanding principal amount of the Notes have taken certain actions or         
exercised certain rights under the Indenture.                                   

ABSENCE OF PUBLIC MARKET                                                        

The Outstanding Notes were issued to, and the Company believes are    
currently owned by, a relatively small number of beneficial owners. The         
Outstanding Notes have not been registered under the Securities Act and will be 
subject to restrictions on transferability to the extent that they are not      
exchanged for Exchange Notes. See "-- Consequences of Failure to Exchange."     
Although the Exchange Notes will generally be permitted to be resold or         
otherwise transferred by the holders (who are not affiliates of the Company)    
without compliance with the registration and prospectus delivery requirements   
under the Securities Act, they will constitute a new issue of securities with no
established trading market. If the Exchange Notes are traded after their initial
issuance, they may trade at a discount from their initial offering price,       
depending upon prevailing interest rates, the market for similar securities and 
other factors including general economic conditions and the financial condition 
of the Company. The Company does not intend to apply for a listing or quotation 
of the Exchange Notes on any securities exchange or stock market. Accordingly,  
there can be no assurance as to the development or liquidity of any market for  
the Exchange Notes. The liquidity of, and trading market for, the Notes also may
be adversely affected by general declines in the market for similar securities. 
Such a decline may adversely affect such liquidity and trading markets          
independent of the financial performance of, and prospects for, the Company.    

Each broker-dealer that receives Exchange Notes for its own account in
exchange for Outstanding Notes, where such Outstanding Notes were acquired by   
such broker-dealer as a result of market-making activities or other trading     
activities, must acknowledge that it will deliver a prospectus meeting the      
requirements of the Securities Act in connection with any resale of such        
Exchange Notes. Subject to certain provisions set forth in the Registration     
Rights Agreement, the Company has agreed that, for a period of up to 180 days   
after the consummation of the Exchange Offer, it will make this Prospectus      
available to any Participating Broker-Dealer for use in connection with any such
resale. However, under certain circumstance, the Company has the right to       
require that Participating Broker-Dealers suspend the resale of Exchange Notes  
pursuant to this Prospectus. Notwithstanding that the Company may cause the     
resale of Exchange Notes pursuant to this Prospectus to be suspended, the       
Company has no obligation to extend the 180-day period referred to above        

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during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with such resales. See "The Exchange Offer -- Resale of the Exchange 
Notes."                                                                         

REGULATION                                                                      

    The Company is subject to extensive and complex federal, state, local and,
as a result of the Aruba Transaction, foreign regulation, and is required to    
comply with various federal, state, local and foreign environmental, zoning,    
land use, consumer protection, anti-fraud, labor, usury, truth-in-lending, equal
opportunity, timeshare registration, land sales, licensing and other laws and   
regulations which govern its operations. Existing or future regulations may have
a material adverse impact on the Company's operations by, among other things,   
imposing additional compliance costs, delaying the period in which projects are 
brought to market and limiting the interest rate which the Company may charge to
customers who utilize its financing. The Company believes that it is in material
compliance with all applicable laws and regulations to which it is currently    
subject. However, no assurances can be given that the costs of future compliance
will not be significant or that the Company is in fact in compliance with all   
applicable laws and regulations. In addition, there can be no assurance that    
laws and regulations applicable to the Company in any specific jurisdiction will
not be revised or that other laws or regulations (including without limitation  
with respect to tax matters) will not be adopted which could increase the       
Company's cost of compliance or prevent the Company from marketing or selling   
its residential land or timeshare properties or conducting other operations in  
such jurisdictions or otherwise have a material adverse impact on the Company's 
operations. Any failure of the Company to comply with applicable laws or        
regulations or any increase in the costs of compliance could have a material    
adverse effect on the Company's business, operating results and financial       
condition. See "Business -- Regulation" and "-- Litigation."                    

COMPETITION                                                                     

The real estate industry is highly competitive. The Company's Resorts 
Division competes with various high profile and well-established timeshare      
resort operators. Many of the world's most recognized lodging, hospitality and  
entertainment companies have begun to develop and sell Timeshare Interests in   
resort properties. Major companies that now operate or are developing or        
planning to develop timeshare resorts include Marriott Ownership Resorts        
("Marriott"), The Walt Disney Company ("Disney"), Hilton Hotels Corporation     
("Hilton"), Hyatt Corporation ("Hyatt"), Four Seasons Hotels & Resorts ("Four   
Seasons") and Inter-Continental Hotels and Resorts ("Inter-Continental"). The   
Company also competes with other publicly-traded timeshare companies, including 
Signature Resorts, Inc. ("Signature"), Vistana, Inc. ("Vistana"), Fairfield     
Communities, Inc. ("Fairfield") and Silverleaf, Inc. ("Silverleaf"), as well as 
numerous other owners and operators of timeshare resorts. The Company's         
Residential Land Division competes with builders, developers and others for the 
acquisition of property and with local, regional and national developers,       
homebuilders and others with respect to the sale of residential lots. Many of   
the Company's competitors are larger and possess greater financial, marketing,  
personnel and other resources than the Company. Although the Company believes it
can effectively compete in its market areas, no assurances can be given as to   
the Company's future ability to locate, develop and sell attractive properties  
in the markets in which it wishes to operate or that the entrance of high       
profile and well-established operators into the Company's market areas will not 
have a material adverse effect on the Company's operations. The development and 
operation of additional timeshare resorts in the Company's markets could have a 
material adverse impact on the demand for the Company's Timeshare Interests and 
the Company's results of operations. In addition, with respect to its timeshare 
business, the Company's management believes that industry competition will be   
increased by recent and possible future consolidation in the timeshare industry 
as the Company's competitors get larger. With respect to its finance operations,
the Company competes with banks, mortgage companies, other financial            
institutions and government agencies offering financing of real estate. In      
recent years, the Company has experienced increased competition with respect to 
the financing of residential land sales as evidenced by the low percentage of   
residential land sales financed by the Company since 1995. See                  
"Business -- Competition."                                                      

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RISKS OF DEVELOPMENT OF POINTS-BASED VACATION CLUB                              

  The Company intends to actively pursue the expansion of the points-based
vacation club system currently operated by RDI to include the Company's other   
existing and future timeshare resorts. However, there can be no assurance that  
the Company will complete the expansion of RDI's points-based vacation club     
system in this manner, if at all, or that, if completed, such expansion will be 
successful. Risks associated with the Company's expansion of RDI's points-based 
vacation club system include the risks that such expansion may be substantially 
delayed or abandoned; the RDI points-based vacation club system cannot be       
legally and efficiently combined or operated with the Company's current and     
future timeshare operations; and points-based vacation club systems may be or   
become subject to extensive regulation by federal, state and local              
jurisdictions, possibly making such points-based system uneconomical or         
unprofitable. In particular, the expansion will require the approval of various 
regulators, homeowners' associations and others. No assurance can be given that 
the necessary approvals will be obtained.                                       

RISKS RELATED TO ARUBA TRANSACTION AND INTERNATIONAL OPERATIONS                 

    The unsold Timeshare Interests acquired in the Aruba Transaction are owned
by BG Aruba, an Aruban limited liability company in which the Company has a     
fifty percent equity interest and over which the Company exercises operational  
control. Property ownership through a joint venture involves additional risks,  
including the requirement of consents for certain decisions. If a dispute arises
between the Company and the holder of the other equity interest in BG Aruba, an 
adverse resolution could have a material adverse effect on the Company's        
investment in BG Aruba. In addition, the Company will be subject to certain     
fiduciary obligations with respect to holders of other equity interest in BG    
Aruba which may obligate it to act in a manner which is not necessarily in the  
best interests of the Company. The Aruba Resort is managed and operated by an   
unaffiliated third party. Sales of the unsold Timeshare Interest inventory      
acquired by BG Aruba could be materially adversely affected by other            
developments at the Aruba Resort, including without limitation any past or      
future failure by the Aruba Resort and its owners (or the entity which sold the 
Timeshare Interest inventory to BG Aruba) to comply with applicable laws and the
applicable agreements governing the Aruba Resort, which are outside of BG       
Aruba's control. See "Business -- Recent Acquisitions."                         

As a result of the Aruba Transaction, the Company is now subject to a 
number of risks related to international operations, including, among other     
things, difficulties relating to administering its business globally and        
managing foreign operations. These risks could have a material adverse effect on
the Company's business, results of operations and financial condition.          
Additionally, part of the Company's strategy is to acquire additional timeshare 
properties outside the United States. Changes in inflation, interest rates,     
currencies, taxation, regulation or other social, political, economic, legal,   
regulatory or diplomatic developments affecting the countries in which the      
Company has (or intends to have) international operations could have a material 
adverse effect on the Company's business, operating results and financial       
condition.                                                                      

RISKS ASSOCIATED WITH RESORT MANAGEMENT                                         

    The Company currently provides homeowners' association management services
at its existing timeshare resorts other than the Aruba Resort and intends to    
provide the same services at its future timeshare resorts pursuant to management
agreements with the homeowners' associations at such resorts. In addition, RDI  
also manages 26 timeshare resorts located in Florida, Alabama, Georgia, Virginia
and South Carolina. The Company's management agreements are generally for annual
terms and require the approval of the homeowners' association for renewal. If   
the Company is unable to manage a resort in a manner which maintains            
satisfaction among the homeowners, applicable law may give the homeowners'      
association rights to terminate the management agreement. For the three months  
ended December 28, 1997, the Company's revenues derived from fees paid by       
homeowners' associations pursuant to the management agreements were             
approximately $859,000. The Company did not derive any material management fees 
prior to September 30, 1997, as the resort management business was acquired as  
part of the RDI Acquisition. There can be no assurance that any homeowners'     
association will not terminate its management agreement with the Company. Any   
such termination could have a material adverse effect on the results of the     
Company's resort management                                                     

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operations and revenues. In addition, as is the case with any manager of a      
resort, the Company may become subject to disputes with members who are not     
satisfied with the resort or its management.                                    

NATURAL DISASTERS; UNINSURED LOSS                                               

  Certain of the Company's timeshare resorts and residential land projects
are located in areas that are susceptible to tropical storms and hurricanes. The
Company's resorts and residential land projects could suffer significant damage 
as a result of wind storms, hurricanes, floods and other natural disasters. Any 
such damage could impair the Company's ability to sell Timeshare Interests at   
its resorts or residential lots at its residential land projects, and to collect
on outstanding notes receivable and adversely affect the Company's business,    
operating results and financial condition.                                      

  There are certain types of losses that are not generally insured because
they are either uninsurable or not economically feasible to insure and for which
the Company does not have insurance coverage. Should an uninsured loss or a loss
in excess of insured limits occur, the Company could lose its investment in a   
timeshare resort or any improvements at a residential land project as well as   
the anticipated future revenues from such timeshare resort or residential land  
project, and would continue to be obligated on any mortgage indebtedness or     
other obligations related to the timeshare resort or residential land project.  

LIMITED RESALE MARKET FOR TIMESHARE INTERESTS                                   

  The Company sells Timeshare Interests to buyers for leisure purposes and
not for investment. The Company believes that the market for resale of Timeshare
Interests by such buyers is presently limited and that any resales of Timeshare 
Interests are typically at prices substantially less than the original purchase 
price. These factors may make ownership of Timeshare Interests less attractive  
to prospective buyers. In addition, attempts by buyers to resell their Timeshare
Interests may compete with sales of Timeshare Interests by the Company and could
depress the market price of Timeshare Interests sold by the Company.            

POSSIBLE ENVIRONMENTAL LIABILITIES                                              

  Under various federal, state and local laws, ordinances and regulations,
the current or previous owner, manager or operator of real property may be      
liable for the costs of removal or remediation of certain hazardous or toxic    
substances located on or in, or emanating from, such property, as well as       
related costs of investigation and property damage. Such laws often impose such 
liability without regard to whether the owner, manager or operator knew of, or  
was responsible for, the presence of such hazardous or toxic substances. Under  
the Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), a lender may be liable either to the government 
or to private parties for cleanup costs on property securing a loan, even if the
lender does not cause or contribute to the contamination. Certain states impose 
a statutory lien for associated costs on property that is the subject of a      
cleanup action by the state on account of hazardous wastes or hazardous         
substances released or disposed of on the property. Such a lien will generally  
have priority over all subsequent liens on the property and, in certain of these
states, will have priority over prior recorded liens including the lien of a    
mortgage or deed of trust. In addition, under federal environmental legislation 
and possibly under state law in a number of states, a secured party which takes 
a deed in lieu of foreclosure or acquires a mortgaged property at a foreclosure 
sale or otherwise is deemed an "owner" or "operator" of the property and may be 
liable for the full costs of cleaning up a contaminated site. Such costs could  
be substantial and are not limited to the value of property. The Company        
believes that it is in compliance in all material respects with all federal,    
state and local laws, ordinances and regulations regarding hazardous or toxic   
substances, but no assurance can be given that hazardous or toxic substances    
will not be found on its property or properties that it previously owned.       

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COMPLIANCE WITH LAWS GOVERNING ACCESS                                           

    A number of state and federal laws, including the Fair Housing Act and the
Americans with Disabilities Act, impose requirements related to access and use  
by disabled persons of a variety of public accommodations and facilities.       
Although the Company believes that its timeshare resorts are in compliance with 
these laws in all material respects, the Company may incur additional costs of  
complying with such laws and no assurances can be given that the Company is in  
fact in compliance with such laws. The ultimate amount of the cost of compliance
with such legislation is not currently ascertainable, and, while such costs are 
not expected to have a material effect on the Company, such costs could be      
substantial.                                                                    

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USE OF PROCEEDS 

 The Company will not receive any of the proceeds of the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes  
as contemplated in this Prospectus, the Company will receive in exchange        
Outstanding Notes in like principal amount. The issuance of the Exchange Notes  
in exchange for the surrender of the Outstanding Notes will not result in any   
increase in the indebtedness of the Company.                                    

     The net proceeds to the Company from the sale of the $110 million aggregate
principal amount of Outstanding Notes, after deducting discounts and estimated  
expenses of the Note Offering, were approximately $105.7 million.               

The Company used the net proceeds of the Note Offering to retire      
approximately $91.8 million of existing indebtedness of the Company. The        
indebtedness repaid consisted of approximately $88.1 million in aggregate       
principal amount, approximately $1,028,000 in accrued interest and approximately
$2.7 million in costs associated with early extinguishment of debt. The         
remainder of the net proceeds were used for working capital and to repay other  
obligations of the Company. The Company will continue to require external       
sources of capital to finance new property purchases and development, fund      
operations, satisfy debt obligations and provide financing to purchasers of its 
Timeshare Interests and residential land. See "Management's Discussion and      
Analysis of Results of Operations and Financial Condition -- Liquidity and      
Capital Resources."                                                             

  The indebtedness to be repaid out of the proceeds from the Note Offering
bore interest at a weighted average interest rate of approximately 9.6% per     
annum and had maturities ranging between April 1998 and November 2019.          
Indebtedness repaid that was incurred within the year prior to April 1, 1998,   
which included indebtedness advanced by the Initial Purchasers, was incurred for
inventory and acquisitions and development of residential land projects and     
resorts, to finance the Company's operations and for working capital and general
corporate purposes. See "Plan of Distribution." None of the proceeds from the   
Note Offering were used to pay any delinquent indebtedness.                     

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CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 28, 1997, and the pro forma capitalization at such date as adjusted to 
give effect to the Note Offering and the application of the net proceeds        
therefrom. See "Use of Proceeds." This table should be read in conjunction with 
the Consolidated Financial Statements of the Company, including the notes       
thereto, included elsewhere in this Prospectus. The amounts are in thousands,   
except per share data.                                                          

                                                        [Enlarge/Download Table]

                                                              AT DECEMBER 28, 1997    
                                                             -----------------------  
                                                              ACTUAL     AS ADJUSTED  
                                                             --------    -----------  
                                                                   (UNAUDITED)        
                                                                                      
Cash and cash equivalents (including restricted cash of                               
  $13,300).................................................. $ 25,124     $  44,996(1)
                                                             ========     =========   
Senior Debt:                                                                          
  Lines-of-credit and notes payable......................... $ 46,463     $   1,910   
  10 1/2% Senior Secured Notes, due 2008....................       --       110,000   
  Receivable-backed notes payable(2)........................   51,536        13,033   
  Non-recourse Aruba Debt...................................   15,446        15,446   
                                                             --------     ---------   
          Total senior debt.................................  113,445       140,389   
Subordinated debt:                                                                    
  8.00% convertible subordinated notes payable to related                             
     parties, due 2002......................................    6,000         6,000   
  8.25% convertible subordinated debentures, due 2012.......   34,739        34,739   
                                                             --------     ---------   
          Total debt........................................  154,184       181,128   
Minority interest...........................................      250           250   
Total shareholders' equity(3)...............................   66,649        64,502(4)
                                                             --------     ---------   
          Total capitalization.............................. $221,083     $ 245,880   
                                                             ========     =========   

---------------                                                                 
(1) Includes approximately $5.9 million of net proceeds from the Note Offering  
 which were used to retire additional indebtedness incurred after December
28, 1997 but prior to the closing of the Note Offering and approximately
$13.9 million of net proceeds from the Note Offering which were used for
working capital and to repay other obligations of the Company.          
(2) Includes $8.4 million of RDI debt related to notes receivable previously    
sold with recourse to financial institutions.                           
(3) Common Shares outstanding were approximately 20,743,000 actual and as       
    adjusted and do not include an aggregate of 2,287,190 shares of Common Stock
 reserved for issuance under the Company's stock benefit and option plans,
4,215,898 shares of Common Stock issuable upon conversion of the Public 
   Debentures and 1,530,612 shares of Common Stock issuable upon conversion of
the Convertible Notes. See "Management -- Executive Compensation" and   
"Description of Other Indebtedness."                                    
(4) Includes the approximately $2,147,000 after tax effect of $2,700,000 of     
estimated prepayment penalties and $878,000 of debt issuance costs      
anticipated to be written off due to the early extinguishment of debt.  

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BLUEGREEN CORPORATION                                                           
INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION          
(UNAUDITED)                                                                     

The following pro forma condensed consolidated financial information  
consists of a Pro Forma Condensed Consolidated Balance Sheet as of December 28, 
1997 and Pro Forma Condensed Consolidated Statements of Operations for the Year 
Ended March 30, 1997 and the Nine Months Ended December 28, 1997 (collectively, 
"the Pro Forma Statements"). The Pro Forma Condensed Consolidated Balance Sheet 
gives effect to the Note Offering as if it had occurred on December 28, 1997.   
The Pro Forma Condensed Consolidated Statements of Operations give effect to the
Note Offering as if it had occurred at the beginning of the periods presented.  

The pro forma adjustments to the Pro Forma Statements are based on the
assumptions and adjustments described in the accompanying notes to the Pro Forma
Statements.                                                                     

  The pro forma information for the Note Offering assumes the repayment of
certain indebtedness of the Company using a portion of the net proceeds received
from the Note Offering as if the Note Offering and the repayment had occurred as
of the beginning of the respective period.                                      

  The pro forma adjustments are based upon currently available information
and upon certain assumptions that management of the Company believes are        
reasonable under the circumstances. The Pro Forma Statements do not purport to  
be indicative of what the Company's financial position or results of operations 
would actually have been if the aforementioned transactions in fact had occurred
on such date or at the beginning of the period indicated or to project the      
Company's financial position or results of operations at any future date or for 
any future period. The Pro Forma Condensed Consolidated Financial Information   
should be read in conjunction with the Company's Consolidated Financial         
Statements and related notes thereto included elsewhere herein.                 

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BLUEGREEN CORPORATION 

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 28, 1997 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                       PRO FORMA                  
                                                                      ADJUSTMENTS                 
                                                                        FOR NOTE                  
                                                        HISTORICAL      OFFERING       PRO FORMA  
                                                       DECEMBER 28,    AND USE OF     DECEMBER 28,
                                                           1997         PROCEEDS          1997    
                                                       ------------   ------------    ------------
                                                                                                  
                                               ASSETS                                             
Cash and cash equivalents............................    $ 25,124       $ 19,872(D)     $ 44,996  
Contracts receivable, net............................      12,646             --          12,646  
Notes receivable, net................................      73,115             --          73,115  
Investment in securities.............................      10,600             --          10,600  
Inventory, net.......................................     112,297             --         112,297  
Property and equipment, net..........................      11,147             --          11,147  
Debt issuance costs, net.............................       1,783          4,275(B)               
                                                                            (878)(C)       5,180  
Other assets.........................................       8,096             --           8,096  
                                                         --------       --------        --------  
          Total assets...............................    $254,808       $ 23,269        $278,077  
                                                         ========       ========        ========  
                                LIABILITIES AND SHAREHOLDERS' EQUITY                              
Accounts payable.....................................    $  4,590       $     --        $  4,590  
Deferred income......................................       8,322             --           8,322  
Accrued liabilities and other........................      14,101            (97)(B)              
                                                                          (1,431)(C)      12,573  
Lines-of-credit and notes payable....................      61,909        (44,553)(B)      17,356  
Deferred income taxes................................       6,712             --           6,712  
Receivable-backed notes payable......................      51,536        (38,503)(B)      13,033  
10.50% senior secured notes payable..................          --        110,000(A)      110,000  
8.00% convertible notes payable to related parties...       6,000             --           6,000  
8.25% convertible subordinated debentures............      34,739             --          34,739  
                                                         --------       --------        --------  
          Total liabilities..........................     187,909         25,416         213,325  
Minority interest....................................         250             --             250  
                                        SHAREHOLDERS' EQUITY                                      
Common stock.........................................         208             --             208  
Capital-in-excess of par value.......................      71,844             --          71,844  
Accumulated deficit..................................      (4,179)        (2,147)(C)      (6,326) 
Treasury stock.......................................      (1,389)            --          (l,389) 
Net unrealized gains.................................         165             --             165  
                                                         --------       --------        --------  
          Total shareholders' equity.................      66,649         (2,147)         64,502  
                                                         --------       --------        --------  
          Total liabilities and shareholders'                                                     
            equity...................................    $254,808       $ 23,269        $278,077  
                                                         ========       ========        ========  

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

(A)  Issuance of the Notes.                                                     

(B)  Extinguishment of existing debt of the Company and related accrued         
   interest. Also includes payment of $4.275 million of debt issuance costs.
(C)  Payment of prepayment penalties of $2.7 million and write-off of debt      
issuance costs on extinguished debt of $878,000, and related impact on
accumulated deficit.                                                  
(D)  Includes $5.9 million of assumed net proceeds from the Note Offering which 
   will be used to retire additional indebtedness anticipated to be incurred
   after December 28, 1997 but prior to the closing of the Note Offering and
    approximately $13.9 million of assumed net proceeds from the Note Offering
  which will be used for working capital and to repay other obligations of
the Company.                                                          

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BLUEGREEN CORPORATION 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED DECEMBER 28, 1997 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                    PRO FORMA                  
                                                      HISTORICAL   ADJUSTMENTS     PRO FORMA   
                                                     NINE MONTHS    FOR NOTE      NINE MONTHS  
                                                        ENDED       OFFERING         ENDED     
                                                     DECEMBER 28,  AND USE OF     DECEMBER 28, 
                                                         1997       PROCEEDS          1997     
                                                     ------------  -----------    ------------ 
                                                                                               
REVENUES:                                                                                      
Sales of real estate................................   $122,902      $    --        $122,902   
Other resort services revenue.......................      1,585                        1,585   
Interest income and other(1)........................      7,324                        7,324   
                                                       --------      -------        --------   
                                                        131,811           --         131,811   
COST AND EXPENSES:                                                                             
Cost of real estate sold............................     55,277                       55,277   
Cost of other resort services.......................      1,509                        1,509   
Selling, general and administrative expense.........     55,526                       55,526   
Interest expense                                          6,512       (2,701)(A)               
                                                                       8,663(B)                
                                                                         321(C)                
                                                                        (419)(D)      12,376   
Provisions for losses...............................      1,349                        1,349   
                                                       --------      -------        --------   
                                                        120,173        5,864         126,037   
                                                       --------      -------        --------   
Income from operations..............................     11,638       (5,864)          5,774   
                                                             --                           --   
Other income........................................        120                          120   
                                                       --------      -------        --------   
Income before income taxes..........................     11,758       (5,864)          5,894   
Provision for income taxes..........................      4,774       (2,416)(E)       2,358   
                                                       --------      -------        --------   
Income before extraordinary item....................   $  6,984      $(3,448)       $  3,536   
                                                       ========      =======        ========   
EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM:                                                  
  Basic.............................................   $   0.35                     $   0.18   
                                                       ========                     ========   
  Diluted...........................................   $   0.33                     $   0.17   
                                                       ========                     ========   
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON                                                   
  EQUIVALENT SHARES:                                                                           
  Basic.............................................     20,193                       20,193   
                                                       ========                     ========   
  Diluted...........................................     25,467                       20,553(F)
                                                       ========                     ========   

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

(1) Interest income excludes $1.8 million of estimated interest income that     
  would have been earned on net proceeds from the Note Offering in excess of
historical debt that would have been repaid as of March 31, 1997.       
(A)  Elimination of historical interest expense incurred during the period on   
debt assumed to be retired by the Note Offering.                      
(B)  Pro forma interest expense on the Notes.                                   
(C)  Amortization of the pro forma $4.275 million of debt issuance costs        
incurred in connection with the Note Offering.                        
(D)  Elimination of historical amortization of debt issuance costs on debt      
retired in connection with the Note Offering.                         
(E)  Adjustment to the provision for income taxes for the above pro forma       
adjustments.                                                          
(F)  Pro Forma Diluted Weighted Average Number of Common and Common Equivalent  
     Shares is less than the historical amount, as the assumed conversion of the
    Company's 8.00% convertible notes payable and 8.25% convertible debentures
 would have an anti-dilutive effect on earnings per share on a pro forma
basis.                                                                

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BLUEGREEN CORPORATION 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 30, 1997 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                      PRO FORMA               
                                                                     ADJUSTMENTS              
                                                         HISTORICAL   FOR NOTE      PRO FORMA 
                                                         YEAR ENDED   OFFERING      YEAR ENDED
                                                         MARCH 30,   AND USE OF     MARCH 30, 
                                                            1997      PROCEEDS         1997   
                                                         ----------  -----------    ----------
                                                                                              
REVENUES:                                                                                     
Sales for real estate..................................   $109,721    $     --       $109,721 
Interest income and other(1)...........................      6,159          --          6,159 
                                                          --------    --------       -------- 
                                                           115,880          --        115,880 
COST AND EXPENSES:                                                                            
Cost of real estate sold...............................     57,090          --         57,090 
Selling, general and administrative expense............     51,441          --         51,441 
Interest expense.......................................      5,459      (1,414)(A)            
                                                                        11,550(B)             
                                                                           428(C)             
                                                                          (199)(D)     15,824 
Provisions for losses..................................      9,539          --          9,539 
                                                          --------    --------       -------- 
                                                           123,529      10,365        133,894 
                                                          --------    --------       -------- 
Loss from operations...................................     (7,649)    (10,365)       (18,014)
Other income...........................................        260          --            260 
                                                          --------    --------       -------- 
Loss before income taxes...............................     (7,389)    (10,365)       (17,754)
Benefit for income taxes...............................     (3,029)     (4,072)(E)     (7,101)
                                                          --------    --------       -------- 
Loss before extraordinary item.........................   $ (4,360)   $ (6,293)      $(10,653)
                                                          ========    ========       ======== 
LOSS PER SHARE BEFORE EXTRAORDINARY ITEM:                                                     
  Basic................................................   $  (0.21)                  $  (0.52)
                                                          ========                   ======== 
  Diluted..............................................   $  (0.21)                  $  (0.52)
                                                          ========                   ======== 
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT                                       
  SHARES:                                                                                     
  Basic................................................     20,319                     20,319 
                                                          ========                   ======== 
  Diluted..............................................     20,319                     20,319 
                                                          ========                   ======== 

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

(1) Interest income excludes $3.2 million of estimated interest income that     
  would have been earned on net proceeds from the Note Offering in excess of
historical debt that would have been repaid as of April 1, 1996.        
(A)  Elimination of interest expense incurred during the period on debt assumed 
to be retired by the Note Offering.                                   
(B)  Pro forma interest expense on the Notes.                                   
(C)  Amortization of the pro forma $4.275 million of debt issuance costs        
incurred in connection with the Note Offering.                        
(D)  Elimination of historical amortization of debt issuance costs on debt      
retired in connection with the Note Offering.                         
(E)  Adjustment to the provision for income taxes for the above pro forma       
adjustments.                                                          

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SELECTED CONSOLIDATED FINANCIAL DATA

  The selected consolidated financial data presented below for each of the
five years in the period ended March 30, 1997 are derived from the Company's    
audited consolidated financial statements, which have been audited by Ernst &   
Young LLP, independent certified public accountants. The selected consolidated  
financial data presented below for the nine month periods ended December 29,    
1996 and December 28, 1997 have been derived from unaudited financial           
statements. The unaudited financial statements include all adjustments,         
consisting of normal recurring accruals, which the Company considers necessary  
for a fair presentation of its financial position and the results of operations 
for these periods. Operating results for the nine months ended December 28, 1997
are not necessarily indicative of the results that may be expected for the      
entire fiscal year ended March 29, 1998. The selected consolidated financial    
data should be read in conjunction with the Consolidated Financial Statements,  
related notes, and other financial information appearing elsewhere or           
incorporated by reference herein.                                               

                                                        [Enlarge/Download Table]

                                                                                                      AS OF OR FOR THE NINE    
                                                     AS OF OR FOR THE YEAR ENDED,                         MONTHS ENDED,        
                                       --------------------------------------------------------   -----------------------------
                                       MARCH 28,   MARCH 27,   APRIL 2,   MARCH 31,   MARCH 30,   DECEMBER 29,     DECEMBER 28,
                                         1993        1994        1995       1996        1997          1996             1997    
                                       ---------   ---------   --------   ---------   ---------   ------------     ------------
                                        (DOLLARS IN THOUSANDS, EXCEPT AVERAGE SALES PRICE DATA AND SELECTED STATISTICAL DATA)  
                                                                                                                               
STATEMENT OF OPERATIONS DATA:                                                                                                  
Revenues:                                                                                                                      
Sale of real estate................... $ 53,349    $ 63,389    $ 91,922   $113,422    $109,722      $ 81,712         $122,902  
Other resort services revenue.........       --          --          --         --          --            --            1,585  
Interest income and other(1)..........   10,191       7,952       7,264      7,388       6,159         4,577            7,324  
                                       --------    --------    --------   --------    --------      --------         --------  
    Total revenues....................   63,540      71,341      99,186    120,810     115,881        86,289          131,811  
Cost of real estate sold..............   28,450      30,773      45,106     59,393      57,091        41,384           55,277  
Cost of other resort services.........       --          --          --         --          --            --            1,509  
Selling, general and administrative                                                                                            
  expenses............................   22,652      26,444      36,521     43,735      51,441        38,051           55,526  
Interest expense......................    7,284       6,551       6,737      6,276       5,459         3,916            6,512  
Provisions for losses.................    1,550         795         792        612       9,539         9,101            1,349  
                                       --------    --------    --------   --------    --------      --------         --------  
    Total expenses....................   59,936      64,563      89,156    110,016     123,530        92,452          120,173  
                                       --------    --------    --------   --------    --------      --------         --------  
Income (loss) from operations.........    3,604       6,778      10,030     10,794      (7,649)       (6,163)          11,638  
Other income..........................    1,727       1,175         372        122         259           184              120  
Provision (benefit) for income                                                                                                 
  taxes...............................    1,874       3,022       4,265      4,449      (3,030)       (2,451)           4,774  
                                       --------    --------    --------   --------    --------      --------         --------  
Net income (loss)..................... $  3,457    $  4,931    $  6,137   $  6,467    $ (4,360)     $ (3,528)        $  6,984  
                                       ========    ========    ========   ========    ========      ========         ========  

OTHER DATA AND CREDIT STATISTICS:                                                                                              
EBITDA(2)............................. $ 14,172    $ 16,164    $ 18,522   $ 18,978    $  8,291      $  7,366         $ 21,396  
EBITDA to senior interest expense (as                                                                                          
  adjusted)(3)........................       --          --          --         --          --            --              2.4x 
EBITDA to interest expense (as                                                                                                 
  adjusted)(3)........................       --          --          --         --          --            --              1.9x 
Total senior debt to EBITDA (as                                                                                                
  adjusted)(4)........................       --          --          --         --          --            --              4.1x 
Total debt to EBITDA (as                                                                                                       
  adjusted)(4)........................       --          --          --         --          --            --              5.5x 
Weighted average interest rate on                                                                                              
  notes receivable at period end......     11.0%       10.9%       12.4%      12.4%       13.3%         14.4%            15.0% 
Ratio of earnings to fixed                                                                                                     
  charges(5)..........................      1.7x        2.2x        2.4x       2.1x        nmf           nmf              2.3x 
Pro forma ratio of earnings to fixed                                                                                           
  charges(5)                                 --          --          --         --         nmf            --              1.4x 

RESIDENTIAL LAND STATISTICS:                                                                                                   
Gross margin on sales of real                                                                                                  
  estate(6)...........................     46.7%       51.5%       50.9%      47.6%       48.0%         49.4%            55.0% 
Average sales price of land parcels                                                                                            
  sold(7)............................. $ 21,368    $ 25,511    $ 30,969   $ 34,856    $ 38,572      $ 37,207         $ 47,449  
Number of land parcels sold...........    2,560       2,489       2,397      2,347       2,057         1,498            1,740  

RESORTS STATISTICS:                                                                                                            
Number of resorts at period end(8)....       --           1           2          3           4             3                8  
Average sales price of timeshare                                                                                               
  intervals sold(7)................... $     --    $     --    $  7,119   $  7,325    $  8,362      $  8,342         $  8,695  
Number of timeshare intervals                                                                                                  
  sold(7).............................       --          --         952      1,865       3,195         2,579            4,903  

BALANCE SHEET DATA:                                                                                                            
Notes receivable, net................. $ 35,653    $ 44,203    $ 40,311   $ 37,014    $ 34,619      $ 31,873         $ 73,116  
Inventory, net........................   28,245      38,793      62,345     73,595      86,661        81,108          112,297  
Total assets..........................  122,853     139,617     152,222    154,963     169,627       158,301          254,808  
Lines-of-credit, notes payable and                                                                                             
  receivable-backed notes payable.....   26,602      37,297      39,946     37,011      56,961        50,896          113,445  
8.00% convertible subordinated notes                                                                                           
  to related parties..................       --          --          --         --          --            --            6,000  
8.25% convertible subordinated                                                                                                 
  debentures..........................   34,739      34,739      34,739     34,739      34,739        34,739           34,739  
Shareholders' equity..................   46,868      51,854      58,040     64,698      59,243        60,041           66,649  

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

(1) Interest income for fiscal 1993, 1994, 1995, 1996 and 1997 includes a       
  $695,000 gain, a $238,000 loss, a $411,000 loss, a $1.1 million gain and a
$96,000 loss, respectively, from sales of notes receivable in connection
   with private placement REMIC transactions. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition."             
(2) EBITDA represents net income before interest expense, income taxes,         
   depreciation and amortization and in the case of fiscal 1997, the provision
   for non-recurring costs described below. EBITDA should not be considered in
   isolation or construed as a substitute for the Company's net income, income
from operations, cash flows from operating activities or liquidity in   
 analyzing the Company's operating performance, financial position or cash
flows. EBITDA is not necessarily comparable to other similarly titled   
  captions of other companies due to potential inconsistencies in the method
    of calculation. The Company has included EBITDA herein to provide additional
   information related to the Company's ability to incur and service debt. The
following table reconciles EBITDA to net income (loss) (amounts in      
thousands):                                                             

                                                        [Enlarge/Download Table]

                                                      FOR THE YEAR ENDED,                     FOR THE NINE MONTHS ENDED, 
                                    --------------------------------------------------------  ---------------------------
                                    MARCH 28,   MARCH 27,   APRIL 2,   MARCH 31,   MARCH 30,  DECEMBER 29,   DECEMBER 28,
                                      1993        1994        1995       1996        1997         1996           1997    
                                    ---------   ---------   --------   ---------   ---------  ------------   ------------
                                                                                                                         
Net income (loss)..................  $ 3,457     $ 4,931    $ 6,137     $ 6,467    $ (4,360)    $ (3,528)      $  6,984  
Interest expense...................    7,284       6,551      6,737       6,276       5,459        3,916          6,512  
Capitalized interest expense                                                                                             
  included in cost of real estate                                                                                        
  sold.............................       --          --         82         149         956          422          1,781  
Income taxes.......................    1,874       3,022      4,265       4,449      (3,030)      (2,451)         4,774  
Provision for non-recurring                                                                                              
  costs(a).........................       --          --         --          --       8,200        8,200             --  
Depreciation and amortization......    1,557       1,660      1,301       1,637       1,066          807          1,345  
                                     -------     -------    -------     -------    --------     --------       --------  
EBITDA.............................  $14,172     $16,164    $18,522     $18,978    $  8,291     $  7,366       $ 21,396  
                                     =======     =======    =======     =======    ========     ========       ========  

   (a) The provision non-recurring costs, which is included in Provision for
    losses on the Consolidated Statement of Operations, represents the
       Company's $8.2 million write-down of certain Communities Division and
     Residential Land Division properties in the first quarter of fiscal
1997. See Note 4 to the Consolidated Financial Statements and 
    "Management's Discussion and Analysis of Results of Operations and
Financial Condition."                                         
(3) Interest expense is pro forma after giving effect to the Note Offering and  
the application of the net proceeds therefrom assuming the Note Offering
    closed on April 1, 1997, and includes amounts capitalized into inventory and
 pro forma interest expense on the Notes. Senior interest expense excludes
the interest expense on the Public Debentures and the Convertible Notes.
(4) Total debt is pro forma after giving effect to the Note Offering and the    
application of the net proceeds therefrom and excludes $15.4 million of 
   non-recourse indebtedness incurred by BG Aruba in connection with the Aruba
Transaction and $8.4 million of RDI debt related to notes receivable    
previously sold with recourse to financial institutions. See            
"Business -- Recent Acquisitions." Total senior debt also excludes the  
Public Debentures and the Convertible Notes.                            
(5) The pro forma ratios of earnings to fixed charges for the year ended March  
   30, 1997 and for the nine months ended December 28, 1997 give effect to the
   Note Offering as if it occurred at the beginning of each applicable period.
  For fiscal 1997, pro forma fiscal 1997 and for the nine-month period ended
December 29, 1996, the Company's fixed charges exceeded earnings by $9.4
million, $19.8 million and $7.8 million, respectively.                  
(6) Gross margin is computed as the difference between the sales price and the  
    related cost of inventory (including the cost of improvements, amenities and
    in certain cases capitalized interest and real estate taxes), divided by the
sales price.                                                            
(7) Average sales price and unit sales data include those sales made during the 
applicable period where recognition of revenue is deferred under the    
    percentage of completion method of accounting. See "Contracts Receivable and
   Revenue Recognition" under Note 1 to the Consolidated Financial Statements.
(8) The number of resorts at December 28, 1997 includes the two resorts acquired
in the RDI Acquisition and the Aruba Resort. See "Business -- Recent    
Acquisitions."                                                          

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

The following discussion of the results of operations and financial   
condition of the Company should be read in conjunction with the Company's       
Consolidated Financial Statements and related Notes and the other financial     
information included elsewhere in this Prospectus. Unless otherwise indicated in
this discussion, references to "real estate" and to "inventories" collectively  
encompass the Resorts Division, Residential Land Division and the Company's     
other inventories held for sale.                                                

GENERAL                                                                         

    Real estate markets are cyclical in nature and highly sensitive to changes
in national and regional economic conditions, including, among other factors,   
levels of employment and discretionary disposable income, consumer confidence,  
available financing and interest rates. A downturn in the economy in general or 
in the market for real estate could have a material adverse effect on the       
Company.                                                                        

   The Company recognizes revenue on residential land and Timeshare Interest
sales when a minimum of 10% of the sales price has been received in cash, the   
refund or rescission period has expired, collectibility of the receivable       
representing the remainder of the sales price is reasonably assured and the     
Company has completed substantially all of its obligations with respect to any  
development relating to the real estate sold. In cases where all development has
not been completed, the Company recognizes revenue in accordance with the       
percentage of completion method of accounting. Under this method of revenue     
recognition, income is recognized as work progresses. Measures of progress are  
based on the relationship of costs incurred to date to expected total costs. The
Company has been dedicating greater resources to more capital intensive         
residential land and timeshare projects. As a result, the results for fiscal    
1997 and the nine months ended December 28, 1997 reflect an increased amount of 
revenue deferred under the percentage of completion method of accounting. See   
"Contracts Receivable and Revenue Recognition" under Note 1 to the Consolidated 
Financial Statements.                                                           

    Costs associated with the acquisition and development of timeshare resorts
and residential land properties, including carrying costs such as interest and  
taxes, are capitalized as real estate and development costs and allocated to    
cost of real estate sold as the respective revenue is recognized.               

   The RDI Acquisition closed effective September 30, 1997 and was accounted
for using the purchase method of accounting and, accordingly, the results of    
operations of RDI have been included in the Company's consolidated financial    
statements from September 30, 1997. The Company, through BG Aruba, acquired     
approximately 8,000 unsold Timeshare Interests inventory at the Aruba Resort on 
December 15, 1997. The Company has a controlling interest in BG Aruba and has   
therefore included the accounts of BG Aruba in its consolidated financial       
statements as of and for the 13 days period ended December 28, 1997. Operations 
for BG Aruba were not material for such 13-day period. See "Business -- Recent  
Acquisitions."                                                                  

The Company has historically experienced and expects to continue to   
experience seasonal fluctuations in its gross revenues and net earnings in the  
third fiscal quarter. This seasonality may cause significant fluctuations in the
quarterly operating results of the Company. As the Company's timeshare revenues 
grow as a percentage of total revenues, the Company believes that the           
fluctuations in revenues due to seasonality may be mitigated. In addition, other
material fluctuations in operating results may occur due to the timing of       
development and the Company's use of the percentage of completion method of     
accounting. Management expects that the Company will continue to invest in      
projects that will require more substantial development (with greater capital   
requirements) than in years prior to fiscal 1997. No assurances can be given    
that the amount of revenue deferred under the percentage of completion          
accounting method will not increase.                                            

The Company believes that inflation and changing prices have not had a
material impact on its revenues and results of operations during any of fiscal  
1995, 1996 or 1997 or the nine months ended December 28, 1997. Based on the     
current economic climate, the Company does not expect that inflation and        
changing prices will have a material impact on the Company's revenues or results
of operations. To the extent inflationary trends                                

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affect short-term interest rates, a portion of the Company's debt service costs 
may be affected as well as the rate the Company charges on its new receivables. 

  During the periods covered by this discussion, the Company's real estate
operations were managed under three divisions and much of this discussion is    
organized by such divisions. The Resorts Division manages the Company's         
timeshare operations and the Residential Land Division acquires large tracts of 
real estate which are subdivided, improved and sold, typically on a retail      
basis. The Company's Communities Division, markets factory-built manufactured   
homes and lot packages and undeveloped lots. In the first quarter of fiscal 1997
(June 1996), the Company decided to focus on the expansion of the Resorts       
Division and the Residential Land Division in certain locations. Consistent with
this strategy, the Company does not intend to acquire any additional communities
related inventories and present Communities Division inventories are being      
liquidated through a combination of bulk sales and retail sales. As of and for  
the nine month period ended December 28, 1997, the Communities Division         
comprised approximately 3% of consolidated inventory and sales of real estate.  
Therefore, no separate discussion with respect to the Communities Division is   
contained herein relative to the nine month period ended December 28, 1997 due  
to immateriality.                                                               

    Inventory is carried at the lower of cost, including costs of improvements
and amenities, incurred subsequent to acquisition, or fair value, net of costs  
to dispose. See Note 1 of Notes to Consolidated Financial Statements. During the
first quarter of fiscal 1997, management changed its focus for marketing certain
of the Company's inventories in conjunction with a plan to accelerate the sale  
of properties managed under the Communities Division and certain properties     
managed under the Residential Land Division. This decision was largely the      
result of management's focus on expansion of the Resort Division and Residential
Land Division in certain locations. Because of the strategy to accelerate sales,
management determined that inventories with a carrying value of $23.2 million   
should be written-down by $8.2 million during the first quarter of fiscal 1997. 
The $8.2 million in provisions included $4.8 million for certain Communities    
Division inventories and $3.4 million for certain Residential Land Division     
inventories. Management adopted a plan to aggressively pursue opportunities for 
the bulk sale of a portion of the written-down assets and has reduced retail    
prices on others to increase sales activity. At the time of the write-down, the 
Company's Communities Division primarily consisted of three North Carolina      
properties acquired in 1988. The Company began marketing home/lot packages in   
1995 to accelerate sales at the properties. However, the projects had been slow 
moving and yielded low gross profits and little to no operating profits. A      
majority of the Residential Land Division parcels subject to write-down were    
scattered lots acquired through foreclosure or deedback in lieu of foreclosure, 
odd lots from former projects or properties located in parts of the country     
where the Company has no plans for expansion. As of December 28, 1997,          
approximately 73% (as measured by historical cost basis) of the inventories     
subject to write-down had been sold. See Note 4 of Notes to Consolidated        
Financial Statements.                                                           

 A portion of the Company's revenues historically has comprised gains on
sales of loans, and, although no assurances can be given, assuming the proposed 
timeshare receivables facility that the Company is currently negotiating is     
consummated, the portion of the Company's revenues comprising such gains on     
sales is expected to increase significantly. The gains are recorded in the      
Company's revenues and on its balance sheet (as retained interests on loan      
sales) at the time of sale, and the amount of gains recorded is based in part on
management's estimates of future prepayment and default rates and other         
considerations in light of then-current conditions. If actual prepayments with  
respect to loans occur more quickly than was projected at the time such loans   
were sold, as can occur when interest rates decline, interest would be less than
expected and earnings would be charged in the current period. If actual defaults
with respect to loans sold are greater than estimated, charge-offs would exceed 
previously estimated amounts and earnings would be charged in the current       
period.                                                                         

   For purposes of the following discussion, gross margin is computed as the
difference between the sales price and the related cost of inventory (including 
the costs of improvements, amenities and in certain cases capitalized interest) 
divided by the sales price.                                                     

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RESULTS OF OPERATIONS                                                           

NINE MONTHS ENDED DECEMBER 29, 1996 AND DECEMBER 28, 1997                       

    Sales.  Consolidated sales of real estate increased 50% from $81.7 million
for the nine month period ended December 29, 1996 (the "1996 Period") to $122.9 
million for the nine month period ended December 28, 1997 (the "1997 Period").  
Increases in residential land and Timeshare Interest sales during the 1997      
Period were partially offset by lower Communities Division sales.               

As of December 28, 1997, approximately $18.0 million in sales or $8.3 
million in estimated income was deferred under percentage of completion         
accounting. At March 30, 1997, approximately $8.4 million of sales or $3.8      
million in estimated income was deferred and is included on the Consolidated    
Balance Sheet under the caption Deferred Revenue.                               

Residential Land Division                                                   

    During the 1996 and 1997 Periods, residential land sales contributed $54.6
million or 67% and $78.8 million or 64%, respectively, of the Company's total   
consolidated revenues from the sale of real estate.                             

The table set forth below outlines the number of parcels sold and the 
average sales price per parcel for the Residential Land Division by geographic  
region for the fiscal periods indicated, before giving effect to the percentage 
of completion method of accounting and excluding a $2 million bulk land sale    
during the 1997 Period.                                                         

                                                        [Enlarge/Download Table]

                                                                 NINE MONTHS ENDED,                     
                                             -----------------------------------------------------------
                                                  DECEMBER 29, 1996               DECEMBER 28, 1997     
                                             ---------------------------     ---------------------------
                                                               AVERAGE                         AVERAGE  
                                              NUMBER OF      SALES PRICE      NUMBER OF      SALES PRICE
GEOGRAPHIC REGION                            PARCELS SOLD    PER PARCEL      PARCELS SOLD    PER PARCEL 
-----------------                            ------------    -----------     ------------    -----------
                                                                                                        
Southwest...................................      822         $ 37,378            850         $ 44,417  
Southeast...................................      178           35,375            268           54,021  
Midwest.....................................      137           24,550            195           35,324  
Mid-Atlantic................................      123           34,274            148           42,717  
Rocky Mountains.............................      175           41,163            184           35,554  
West........................................       20          149,425             59          170,478  
Northeast and Canada........................       43           21,952             36           14,417  
                                                -----                           -----                   
Totals......................................    1,498           37,207          1,740           47,449  
                                                =====                           =====                   

    The aggregate number of parcels sold and aggregate average sales price per
parcel increased from the 1996 Period to the 1997 Period due to the following:  

     - Southwest region -- Increases attributable to the Company's Bentwater and
    White Oak Estates projects in Granbury, Texas and Conroe, Texas, which
opened in February 1997.                                          

    - Southeast region -- Increases attributable to the Winding River property
     in North Carolina which opened in February 1997. The project will feature
 a host of amenities including a beach club, 27-hole championship golf
course, club-house, river amenities and bike paths.                 

     - Midwest region -- Increases attributable to the opening of two properties
  in Tennessee in March 1997. One project features lake frontage and the
   other property lies adjacent to a daily-fee golf course currently under
development by a third party.                                       

    - West region -- Increases attributable to greater parcel sales and higher
average sales prices, which are indicative of the Company's Arizona 
      project gaining more momentum as it enters its third year in marketing and
    sales. The majority of the Arizona property is being marketed in parcels
of 36 acres at retail prices ranging from $100,000 to $185,000.     

    The Company plans to continue to dedicate greater resources to residential
land properties located in areas with proven records of success. These locations
include, but are not limited to, Texas, the Carolinas, Virginia, Tennessee, New 
Mexico and Arizona.                                                             
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  The average gross margin for the Residential Land Division was 46.9% and
48.3% for the 1996 and 1997 Periods, respectively. The average gross margin     
increased primarily due to the opening of the Company's Winding River Property  
in North Carolina and increased sales at the Company's properties in New Mexico 
and Arizona, which generated gross margins of 58.6%, 55.2% and 50.9%,           
respectively, during the 1997 Period. The Company's Investment Committee        
approves all property acquisitions. In order to be approved for purchase by the 
Investment Committee, all residential land properties are expected to achieve   
certain minimum economics including a minimum gross margin. No assurances can be
given that such minimum economics will be achieved.                             

Resorts Division                                                            

    During the 1996 and 1997 Periods, sales of Timeshare Interests contributed
$20.8 million or 25% and $39.9 million or 32%, respectively, of the Company's   
total consolidated revenues from the sale of real estate.                       

     The following tables set forth information for sales of Timeshare Interests
associated with the Company's Resorts Division for the periods indicated, before
giving effect to the percentage of completion method of accounting and excluding
approximately $126,000 of incremental revenues from the conversion in the 1997  
Period of 62 existing Timeshare Interests owners to the points-based vacation   
club acquired in connection with the RDI Acquisition.                           

                                                        [Enlarge/Download Table]

                                                                 NINE MONTHS ENDED,     
                                                             ---------------------------
                                                             DECEMBER 29,   DECEMBER 28,
                                                                 1996           1997    
                                                             ------------   ------------
                                                                                        
Number of Timeshare Interests sold..........................     2,579          4,903   
Average sales price per Timeshare Interest..................    $8,342         $8,695   
Gross margin................................................       70%            74%   

The increase in Timeshare Interest sales during the 1997 Period was   
partially due to the RDI Acquisition effective September 30, 1997, which        
contributed approximately $4.2 million in Timeshare Interest sales (including   
543 Timeshare Interests sold) during the 1997 Period. The increase in the number
of Timeshare Interests sold during the 1997 Period was also partially due to two
new resort properties that became operational during such period - Harbour      
Lights in Myrtle Beach, South Carolina, and The Falls Village in Branson,       
Missouri, which generated 569 and 556 Timeshare Interest sales, respectively,   
during the 1997 Period. In addition, Timeshare Interest sales increased due to  
the maturation of existing resorts and the increased effectiveness of marketing 
programs.                                                                       

     During the 1997 Period, the improvement in gross margins from the Company's
resorts was primarily the result of increases in the retail selling prices,     
particularly at the Company's Mountain Loft (Gatlinburg, Tennessee) and Laurel  
Crest (Pigeon Forge, Tennessee) resorts, which generated gross margins of       
approximately 75% and 76%, respectively, during the 1997 Period.                

     During the 1997 Period, other resort service revenue and related costs were
approximately $1.6 million and $1.5 million, respectively. Other resort services
include the resort property management services, resort title services and      
certain retail amenity and lodging operations acquired in connection with the   
RDI Acquisition. There were no resort service operations during the 1996 Period.

Interest Income and Other                                                   

Interest income and other increased 60% from $4.6 million for the 1996
Period to $7.3 million for the 1997 Period. The Company's interest income is    
earned from its receivable portfolio, securities retained pursuant to REMIC     
financings and cash and cash equivalents. The increase in interest income is    
primarily due to an increase in the average note receivable balance during the  
1997 Period as compared to the 1996 Period.                                     

Selling, General and Administrative Expense (S,G&A Expense)                 

The Company's S,G&A Expense consists primarily of marketing costs,    
advertising expenses, sales commissions and corporate overhead. S,G&A Expense   
totaled $38.1 million and $55.5 million for the 1996                            

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Period and the 1997 Period, respectively. A significant portion of S,G&A Expense
is variable relative to sales and profitability levels and, therefore, increases
with growth in sales of real estate. As a percentage of sales of real estate,   
S,G&A Expense (including corporate administrative expense) decreased from 44% in
the 1996 Period to 42% in the 1997 Period. The decrease in S,G&A Expense as a   
percentage of sales is primarily due to the Company's strategic emphasis on     
controlling costs, coupled with increasing the revenue base in the Resorts      
Division to support the existing infrastructure.                                

Interest Expense                                                            

    Interest expense totaled $3.9 million and $6.5 million for the 1996 Period
and 1997 Period, respectively. The 66% increase in interest expense for the 1997
Period was primarily attributable to increased borrowings associated with the   
Company's receivable-backed notes payable and for the acquisition of residential
land and Timeshare Interest inventory.                                          

Provisions for Losses                                                       

   The Company recorded provisions for loan losses and for real estate taxes
and other costs associated with delinquent customers of $901,000 and $1.3       
million during the 1996 Period and 1997 Period. The increase in the provision   
for losses is commensurate with the significant increase in timeshare revenues  
and receivables during the 1997 Period, as delinquencies as a percentage of     
sales are higher for timeshare receivables than for residential land            
receivables.                                                                    

Summary                                                                     

  Based on the factors discussed above, the Company's net income increased
from a net loss of $3.5 million in the 1996 Period to net income of $7.0 million
in the 1997 Period.                                                             

YEARS ENDED APRIL 2, 1995, MARCH 31, 1996 AND MARCH 30, 1997                    

   Sales.  Consolidated sales of real estate were $91.9 million for the year
ended April 2, 1995 ("fiscal 1995") compared to $113.4 million for the year     
ended March 31, 1996 ("fiscal 1996") and $109.7 million for the year ended March
30, 1997 ("fiscal 1997") representing an increase of 23.4% from fiscal 1995 to  
fiscal 1996 and a decrease of 3.3% from fiscal 1996 to fiscal 1997. Increases in
fiscal 1997 Timeshare Interest sales were more than offset by lower Residential 
Land Division and Communities Division sales. Among other reasons, decreases in 
fiscal 1997 residential land revenues were the result of $6.7 million more in   
sales being deferred subject to percentage of completion accounting.            

    Residential Land Division.  During fiscal 1995, 1996 and 1997, residential
land sales contributed $72.6 million or 79%, $84.9 million or 75% and $72.6     
million or 66%, respectively, of the Company's total consolidated revenues from 
the sale of real estate.                                                        

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The table set forth below outlines the number of parcels sold and the 
average sales price per parcel for the Residential Land Division by geographic  
region for the periods indicated, before giving effect to the percentage of     
completion method of accounting.                                                

                                                        [Enlarge/Download Table]

                                                               YEARS ENDED,                                    
                           ------------------------------------------------------------------------------------
                                 APRIL 2, 1995                MARCH 31, 1996               MARCH 30, 1997      
                           --------------------------   --------------------------   --------------------------
                                            AVERAGE                      AVERAGE                      AVERAGE  
                            NUMBER OF     SALES PRICE    NUMBER OF     SALES PRICE    NUMBER OF     SALES PRICE
GEOGRAPHIC REGION          PARCELS SOLD   PER PARCEL    PARCELS SOLD   PER PARCEL    PARCELS SOLD   PER PARCEL 
-----------------          ------------   -----------   ------------   -----------   ------------   -----------
                                                                                                               
Southwest.................    1,107         $34,999        1,117        $ 37,489        1,131        $ 39,719  
Southeast.................      289          28,311          223          36,925          291          35,736  
Rocky Mountains...........      339          32,033          297          44,524          218          40,499  
Midwest...................      317          28,740          334          27,451          175          24,111  
West......................       --              --           19         138,347           34         147,816  
Mid-Atlantic..............      215          23,136          236          21,951          152          31,605  
Northeast and Canada......      130          18,176          121          12,313           56          20,423  
                              -----                        -----                        -----                  
Totals....................    2,397          30,969        2,347          34,856        2,057          38,572  
                              =====                        =====                        =====                  

1995 vs 1996 Comparison of Residential Land Division Parcels Sold and 
Average Sales Prices.  The number of parcels sold in the Southwest increased    
only slightly from fiscal 1995 to 1996 due to a shortage of ready-to-market     
Texas property during the first quarter. The reduction in the number of sales   
from Texas properties was offset by an increase in the number of sales from the 
Company's New Mexico project. The average sales price per parcel in the         
Southwest increased during fiscal 1996 due to a greater number of parcel sales  
from the Company's New Mexico project at a higher average selling price than    
during 1995. There were 139 sales from the New Mexico project at an average     
sales price of $44,141 during fiscal 1996 compared to 71 sales at an average    
sales price of $41,599 during 1995.                                             

The Company did not sell any parcels in the West during fiscal 1996.  

   The number of parcels sold in the Rocky Mountains region decreased during
fiscal 1996 due to fewer sales from the Company's Montana properties, partially 
offset by more sales from Colorado properties. The average sales price per      
parcel in the Rocky Mountains region increased during fiscal 1996 due to the    
sale of larger tracts in two projects located in Colorado. In addition, during  
fiscal 1996 the average sales price was affected by a single bulk sale          
constituting approximately 8,300 acres in Colorado for $2.5 million. The average
sales price per parcel in the Rocky Mountains region, excluding the $2.5 million
bulk sale, was $36,228.                                                         

    The number of parcels sold in the Midwest increased during fiscal 1996 due
to more sales momentum from the Tennessee properties which were reaching        
maturity.                                                                       

     The number of parcels sold in the Southeast decreased because of slow sales
in a new project in South Carolina during the first quarter of fiscal 1996. This
was partially offset by higher sales of more expensive parcels from a North     
Carolina property.                                                              

1996 vs 1997 Comparison of Residential Land Division Parcels Sold and 
Average Sales Prices.  The number of parcels sold in the Southwest, which       
includes Texas and New Mexico, increased during fiscal 1997 due to more sales   
made from the Company's Houston and Dallas projects than during fiscal 1996. The
increase in sales from these markets in the current year was partially offset by
lower sales from San Antonio properties due to a temporary shortage of          
ready-to-market inventories which was remedied with a large acquisition in June,
1996.                                                                           

     The number of parcels sold in the Southeast, which includes North and South
Carolina, increased during fiscal 1997 due to the introduction of lots at       
Winding River, the Company's 1,100 acre golf course community located in North  
Carolina.                                                                       

   The number of parcels sold in the Rocky Mountains region decreased during
fiscal 1997 due to fewer sales from the Company's Idaho and Montana properties. 
The Company does not expect to expand operations in these states beyond the     
properties currently being marketed.                                            

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    The number of parcels sold in the Midwest decreased during fiscal 1997 due
to a shortage of inventory in Tennessee. The Company acquired two Tennessee     
properties during the fourth quarter of fiscal 1997 and sales activity at the   
projects commenced March 1997.                                                  

   Sales in the West in fiscal 1996 and 1997 were derived from the Company's
subdivision in Arizona. Increased parcel sales and higher average sales prices  
are indicative of the project gaining more momentum as it matures. The majority 
of the Arizona property is being marketed in parcels of 36 acres at retail      
prices during such periods from $130,000 to $150,000, although certain five acre
lots are also being marketed.                                                   

Projects in the Mid-Atlantic region have historically been located in 
Pennsylvania, Virginia and West Virginia. Lower parcel sales in fiscal 1997     
reflect reduced inventory holdings in Pennsylvania and West Virginia where the  
Company has no plans for expansion.                                             

The number of parcels sold in the Northeast and Canada reflect lower  
inventory levels in these regions where the Company has no plans for expansion. 

As mentioned above, the Company plans to continue to dedicate greater 
resources to residential land properties located in areas with proven records of
success.                                                                        

   Comparison of Residential Land Division Gross Margins.  The average gross
margin for the Residential Land Division was 57%, 51% and 45% for fiscal 1995,  
1996 and 1997, respectively. The decrease in the gross margin from fiscal 1995  
to 1997 was attributable to the continued liquidation of properties where the   
Company is discontinuing residential land operations (and experienced sub-par   
operating results) in locations such as the Northeast, Pennsylvania, West       
Virginia, Montana and Idaho. As mentioned above, the Company's Investment       
Committee approves all property acquisitions. In order to be approved for       
purchase by the Investment Committee, all residential land (and timeshare)      
properties are expected to achieve certain minimum economics including a minimum
gross margin. No assurances can be given that such minimum economics will be    
achieved.                                                                       

  During the first quarter of fiscal 1997, the Company recorded provisions
for the write-down of certain residential land inventories in the amount of $3.4
million.                                                                        

Resorts Division                                                            

     During fiscal 1995, 1996 and 1997, sales of Timeshare Interests contributed
$5.9 million or 6%, $13.8 million or 12% and $27.4 million or 25%, respectively,
of the Company's total consolidated revenues from the sale of real estate.      

   The following table sets forth certain information for sales of Timeshare
Interests associated with the Company's Resorts Division for the periods        
indicated, before giving effect to the percentage of completion method of       
accounting.                                                                     

                                                        [Enlarge/Download Table]

                                                                       YEARS ENDED,          
                                                             --------------------------------
                                                             APRIL 2,   MARCH 31,   MARCH 30,
                                                               1995       1996        1997   
                                                             --------   ---------   ---------
                                                                                             
Number of Timeshare Interests sold..........................   952       1,865       3,195   
Average sales price per Timeshare Interests.................  $7,119    $7,325       $8,362  
Gross margin................................................   62%        67%         71%    

  During fiscal 1995, all Timeshare Interest sales were generated from the
Company's first resort in Gatlinburg, Tennessee. During fiscal 1996, 1,374      
Timeshare Interests were sold from the Gatlinburg resort, 484 Timeshare         
Interests were sold from the Company's second resort in neighboring Pigeon      
Forge, Tennessee and seven Timeshare Interests were sold from the Company's     
resort in Myrtle Beach, South Carolina. During fiscal 1997, 1,451 Timeshare     
Interests were sold from the Gatlinburg resort, 976 Timeshare Interests were    
sold from the Company's second resort in neighboring Pigeon Forge, Tennessee and
768 Timeshare Interests were sold from the Company's resort in Myrtle Beach,    
South Carolina. An immaterial amount of revenues were deferred under the        
percentage of completion method of accounting at March 30, 1997.                

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     During fiscal 1997, gross margins from the Company's resorts in Gatlinburg,
Pigeon Forge and Myrtle Beach were 69%, 72% and 73%, respectively. The          
improvement in gross margins from the Company's resorts was primarily the result
of increases to the retail selling prices.                                      

Communities Division                                                        

     During fiscal 1995, 1996 and 1997, the Communities Division generated $13.4
million or 15%, $14.7 million or 13% and $9.7 million or 9%, respectively, of   
the Company's total consolidated revenues from the sale of real estate.         

 The following table sets forth certain information for sales associated
with the Company's Communities Division for the periods indicated.              

                                                        [Enlarge/Download Table]

                                                                       YEARS ENDED,          
                                                             --------------------------------
                                                             APRIL 2,   MARCH 31,   MARCH 30,
                                                               1995       1996        1997   
                                                             --------   ---------   ---------
                                                                                             
Number of homes/lots sold...................................   133        206         146    
Average sales price......................................... $100,866   $71,546      $66,422 
Gross margin (1)............................................   12%        10%          3%    

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

(1) A charge of $4.8 million was recorded during fiscal 1997 for the write-down 
of certain inventories managed under the Communities Division and is    
  included in the Consolidated Statement of Operations under "Provisions for
losses."                                                                

The reduction in the average sales price from fiscal 1995 to 1997 was 
primarily attributable to a smaller number of site-built homes and a greater    
number of lot-only sales. The $13.4 million in fiscal 1995 sales was comprised  
of 110 manufactured homes with an average sales price of $77,243 and 23         
site-built homes with an average sales price of $213,640. The $14.7 million in  
fiscal 1996 sales was comprised of 114 manufactured homes with an average sales 
price of $75,232, an additional 20 site-built homes with an average sales price 
of $198,592, 71 sales of lots-only at an average sales price of $23,279 and one 
larger acreage Southwestern bulk lot sale for $530,320. The $9.7 million in     
fiscal 1997 sales was comprised of 73 manufactured homes with an average sales  
price of $79,282, an additional 4 site-built homes with an average sales price  
of $172,225 and 69 sales of lots at an average sales price of $46,355. During   
fiscal 1997, as discussed above, the Company recorded provisions for the        
write-down of certain communities related inventories in the amount of $4.8     
million. See Note 4 to the Consolidated Financial Statements and discussion of  
"Provisions for Losses" below.                                                  

Interest Income and Other                                                   

   Interest income and other was $7.3 million, $7.4 million and $6.2 million
for 1995, 1996 and 1997, respectively. The Company's interest income is earned  
from its note receivables, securities retained pursuant to REMIC financings and 
cash and cash equivalents. Interest income for each year was also affected by   
the sale of receivables in REMIC transactions, which resulted in a loss of      
$411,000 in fiscal 1995, a gain of $1,119,572 in fiscal 1996 and a loss of      
$96,211 in fiscal 1997.                                                         

Selling, General and Administrative Expenses (S, G & A Expenses)            

     S,G & A expenses totaled $36.5 million, $43.7 million and $51.4 million for
fiscal 1995, 1996 and 1997, respectively. As a percentage of sales of real      
estate, S, G&A expenses were 40% for fiscal 1995, 39% for fiscal 1996 and 47%   
for 1997. The increase as a percent of sales in fiscal 1997 was largely the     
result of higher S,G&A expenses for the Resorts Division as well as higher      
corporate general and administrative expenses. The Company invested in human    
resources and other infrastructure during fiscal 1997 to support the anticipated
long-term growth of its Resorts Division. Furthermore, marketing expense tends  
to be higher during the early years of a resort project and decreases as the    
property reaches some maturity.                                                 

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Interest Expense                                                            

  Interest expense totaled $6.7 million, $6.3 million and $5.5 million for
fiscal 1995, 1996 and 1997, respectively. The 13% decrease in interest expense  
for fiscal 1997 was primarily attributable to an increase in the amount of      
interest capitalized to inventory. The Company capitalized interest totaling    
$1.9 million during fiscal 1996, compared to $3.0 million for 1997. The increase
in capitalized interest is the direct result of the Company acquiring certain   
inventory which requires significant development with longer sell-out periods   
(and therefore qualifying for interest capitalization). The effective cost of   
borrowing (when adding back capitalized interest) was 10.5%, 11.1% and 10.2% for
fiscal 1995, 1996 and 1997, respectively.                                       

Provisions for Losses                                                       

     As noted above, the Company wrote down certain inventory in fiscal 1997. As
of March 30, 1997, approximately 50% of the inventories subject to write-down   
had been sold (as measured by both number of properties and cost basis).        

   The Company recorded provisions for loan losses (or related advanced real
estate taxes for delinquent customers) totaling $792,000, $612,000 and $1.3     
million during fiscal 1995, 1996 and 1997, respectively. Because a greater      
percentage of the fiscal 1997 note portfolio consists of timeshare loans (where 
historical default rates exceed those for land loans), higher provisions were   
recorded. See the discussion below under "-- Liquidity and Capital Resources."  

Summary                                                                     

  Based on the factors discussed above, the Company's net income increased
from $6.1 million in fiscal 1995 to $6.5 million in fiscal 1996 and decreased to
a net loss of $(4.4) million in 1997.                                           

CHANGES IN FINANCIAL CONDITION                                                  

Years Ended April 2, 1995, March 31, 1996 and March 30, 1997                

    Cash and cash equivalents decreased by $1.7 million during fiscal 1995 and
increased $3.8 million and $200,000 during fiscal 1996 and fiscal 1997,         
respectively.                                                                   

  Net cash provided by the Company's operations was $9.4 million and $15.0
million for fiscal 1995 and 1996, respectively. Net cash used by the Company's  
operations was $8.2 million for fiscal 1997. The increase in cash flow from     
operations during fiscal 1996 was primarily attributable to the Company         
receiving $28.7 of net proceeds from private placement REMIC transactions during
fiscal 1996 compared to $22.7 million in fiscal 1995. The decrease in cash flow 
from operations during fiscal 1997 was due to the Company receiving only $16.9  
million of net proceeds from REMIC transactions combined with a $3.6 million    
increase in cash paid for the acquisition and development of the Company's      
inventories, a $4.1 million increase in cash paid to suppliers, employees and   
sales representatives, and a $6.5 million decrease in cash received from        
customers.                                                                      

     Net cash used by investing activities was $1.6 million and $1.2 million for
fiscal 1995 and 1996, respectively. Net cash provided by investing activities   
was $1.3 million for fiscal 1997. The decrease in net cash used by investing    
activities during fiscal 1996 was due to approximately $337,000 of additional   
proceeds from sales of property and equipment as compared to fiscal 1995. The   
increase in cash provided by investing activities during fiscal 1997 was        
primarily due to $1.4 million of additional cash received from sales of         
investments in securities and an $854,000 decrease in purchases of property and 
equipment as compared to fiscal 1996.                                           

  Net cash used by financing activities was $9.6 million and $10.0 million
for fiscal 1995 and 1996, respectively. Net cash provided by financing          
activities was $7.1 million for fiscal 1997. The increase in net cash used by   
financing activities during fiscal 1996 was due to an increase in the net       
payments under the Company's lines-of-credit and other notes payable. The       
increase in net cash provided by financing activities during fiscal 1997 was due
to an $18.5 million increase in net borrowings under the Company's              
lines-of-credit and other notes payable, partially offset by $1.4 million of    
cash paid to buy treasury stock.                                                

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Nine Months Ended December 29, 1996 and December 28, 1997                   

Cash and cash equivalents increased by $3.3 million and $13.5 million 
during the 1996 Period and 1997 Period, respectively.                           

Net cash provided by the Company's operations was $892,000 and $14.1  
million for the 1996 Period and 1997 Period, respectively. The increase in cash 
flow from operations was primarily attributable to an increase in sales of      
inventory during the 1997 Period as well as an increase in net cash provided by 
the hypothecation of the Company's notes receivable from residential land and   
Timeshare Interest sales.                                                       

     Net cash provided by investing activities was $702,000 for the 1996 Period.
Net cash used by investing activities was $3.6 million for the 1997 Period. The 
decrease in net cash provided by investing activities was due to cash paid to   
acquire RDI of $6.2 million (including acquisition costs), net of cash acquired 
with RDI of $3.8 million and a $2.0 million increase in property and equipment  
purchases, partially offset by a $400,000 increase in cash received from the    
Company's investment in REMIC securities.                                       

     Net cash provided by financing activities was $1.7 million and $3.0 million
for the 1996 Period and 1997 Period, respectively. The increase in net cash     
provided by financing activities was due to the $6.0 million proceeds from the  
issuance of the Convertible Notes and a decrease in cash payments for treasury  
stock of $1.2 million offset by an increase in the net payments under the       
Company's lines-of-credit and other notes payable of $5.5 million.              

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company's capital resources are provided from both internal and   
external sources. The Company's primary capital resources from internal         
operations are: (i) cash sales of real estate, (ii) downpayments on real estate 
and timeshare sales which are financed, (iii) principal and interest payments on
the purchase money mortgage loans arising from residential land sales and       
contracts for deed arising from sales of Timeshare Interests (collectively      
"Receivables") and (iv) proceeds from the sale of, or borrowings collateralized 
by, Receivables. Historically, external sources of liquidity have included      
borrowings under secured lines-of-credit, seller and bank financing of inventory
acquisitions and the issuance of debt securities. The Company's capital         
resources are used to support the Company's operations, including (i) acquiring 
and developing inventory, (ii) providing financing for customer purchases, (iii)
meeting operating expenses and (iv) satisfying the Company's debt and other     
obligations. The net proceeds of the Note Offering were used to repay certain   
outstanding indebtedness. The Company anticipates that it will continue to      
require external sources of liquidity to support its operations and satisfy its 
debt and other obligations.                                                     

Credit Facilities for Timeshare Receivables and Timeshare Inventories       

    The Company has various credit facilities with financial institutions that
provide for receivable financing for its timeshare projects. The interest rates 
charged under these facilities range from the three-month London Interbank      
Offered Rate ("LIBOR") plus 4.25% to the prime lending rate plus 3.75%. At      
December 28, 1997, the aggregate outstanding principal balance under the credit 
facilities was $43.3 million, including approximately $8.4 million of debt      
associated with receivables previously sold by RDI to financial institutions    
with recourse. In addition, the Company has various credit facilities with      
financial institutions that provide for the financing of acquisition and        
development of certain of its timeshare projects. At December 28, 1997, the     
aggregate outstanding balance under such facilities was approximately $15.0     
million.                                                                        

   In connection with the Note Offering, the Company retired all outstanding
indebtedness related to timeshare receivable and inventory financings, except   
for debt associated with receivables previously sold to financial institutions  
with recourse. The Company terminated the existing credit facilities for        
timeshare receivable and inventory financings concurrently with the closing of  
the Note Offering.                                                              

The Company has obtained from a financial institution a $135 million  
combined timeshare warehouse financing and receivables purchase facility. The   
$35 million warehouse facility and the $100 million receivable purchase facility
will bear interest at LIBOR plus 2.35% and a fixed rate equal to the weighted   
average term Treasury rate plus 1.40%, respectively. Should the Company fail to 
sell to such financial institution during the                                   
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term of the purchase facility notes receivable with a cumulative present value  
of at least $100 million, the interest rate on the purchase facility will       
increase by .05% for each $10 million shortfall, to a maximum applicable margin 
of 1.60%. Under the facility, eligible notes receivable would periodically move 
from the warehouse facility to the purchase facility. Both the warehouse and the
purchase facility will have detailed requirements with respect to the           
eligibility of notes receivable for inclusion and other conditions to funding.  
The borrowing base under the warehouse facility will be 95% of the outstanding  
principal balance of eligible notes arising from the sale of Timeshare          
Interests. Under the purchase facility, the Company is required to maintain a   
specified overcollateralization level and a cash reserve account. Loans sold    
under this facility are without recourse to the Company except for breaches of  
representations and warranties made at the time of sale. Fundings under the     
facility will terminate upon the occurrence of specified trigger events. The    
Company will act as servicer under the purchase facility and will be required to
make advances to the financial institution to the extent it believes such       
advances will be recoverable. If obtained, the combined facility will expire two
years from the closing date of the Note Offering. In addition to other customary
fees and expenses, the Company anticipates that it will pay a fee equal to      
$575,000, $250,000 at the closing of this facility and $325,000 within 12 months
of closing. In addition, the Company anticipates it will pay an annual          
utilization fee equal to 1% of the incremental amount by which outstanding      
indebtedness under the facility is below $10 million. The facility includes     
various conditions to funding, eligibility requirements for collateral,         
affirmative, negative and financial covenants, and events of default. See       
"Description of Other Indebtedness."                                            

   In addition, the Company is currently negotiating with the same financial
institution referred to in the preceding paragraph to provide the Company with a
$25 million acquisition and development facility for its timeshare inventories. 
The facility would include a two-year draw down period and have a term of seven 
years. Principal would be repaid through agreed-upon release prices as Timeshare
Interests are sold at the financed resort, subject to minimum required          
amortization. It is anticipated that the indebtedness under the facility would  
bear interest at the three-month LIBOR plus 3.0%. With respect to any inventory 
financed under the facility, the Company will be required to have provided      
equity of at least 15% of the approved project costs. In connection with the    
facility, the Company will also be required to pay certain fees and expenses to 
the financial institution. See "Description of Other Indebtedness."             

Credit Facilities for Residential Land Receivables and Residential Land     
Inventories                                                                     

The Company has a credit facility with a financial institution for the
pledge of land receivables. The Company uses this facility as a warehouse until 
it accumulates a sufficient quantity of land receivables to sell under private  
placement REMIC transactions. Under the terms of this facility, the Company is  
entitled to advances secured by Receivables equal to 90% of the outstanding     
principal balance of eligible pledged Receivables. The interest rates charged on
outstanding borrowings range from the prime lending rate plus 0.5% to prime plus
2.25%. At December 28, 1997, the aggregate outstanding principal balance under  
this facility was $3.5 million. In connection with the Note Offering, the       
Company intends to retire this indebtedness.                                    

    The Company has an existing $20.0 million revolving credit facility with a
financial institution for the pledge of Residential Land Division Receivables.  
The Company uses the facility as a temporary warehouse until it accumulates a   
sufficient quantity of residential land receivables to sell under private       
placement REMIC transactions. Under the terms of this facility, the Company is  
entitled to advances secured by Residential Land Division receivables up to 90% 
of the outstanding principal balance of eligible pledged Residential Land       
Division receivables. In addition, up to $8.0 million of the facility can be    
used for land acquisition and development purposes. The interest rate charged on
outstanding borrowings ranges from prime plus 0.5% to 1.5%. At December 28,     
1997, the outstanding principal balance under the facility was $4.7 million. All
principal and interest payments received on pledged Receivables are applied to  
principal and interest due under the facility. The ability to borrow under the  
facility expires in September 2000. Any outstanding indebtedness is due in      
September 2002. This facility will be retained by the Company following the Note
Offering.                                                                       

    Over the past three years, the Company has received 80% to 90% of its land
sales in cash. Accordingly, in recent years the Company has reduced the         
borrowing capacity under credit agreements secured by land                      
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receivables. The Company attributes the significant volume of cash sales to an  
increased willingness on the part of certain local banks to extend more direct  
customer lot financing. No assurances can be given that local banks will        
continue to provide such customer financing.                                    

Historically, the Company has funded development for road and utility 
construction, amenities, surveys, and engineering fees from internal operations 
and has financed the acquisition of residential land property through seller,   
bank or financial institution loans. Terms for repayment under these loans      
typically call for interest to be paid monthly and principal to be repaid       
through lot releases. The release price is usually defined as a pre-determined  
percentage of the gross selling price (typically 25% to 50%) of the parcels in  
the subdivision. In addition, the agreements generally call for minimum         
cumulative annual amortization. When the Company provides financing for its     
customers (and therefore the release price is not available in cash at closing  
to repay the lender), it is required to pay the creditor with cash derived from 
other operating activities, principally from cash sales or the pledge of        
Receivables originated from earlier property sales.                             

  At December 28, 1997, the aggregate outstanding balance on the Company's
residential land acquisition and development loans was approximately $16.0      
million. In connection with the Note Offering, the Company retired all          
outstanding indebtedness under such loans. In addition, the Company is currently
negotiating with a financial institution for a $35 million revolving credit     
facility. The Company expects to use this facility to finance the acquisition   
and development of residential land projects and to finance land receivables.   
The facility when drawn upon will be secured by the real property (and personal 
property related thereto) with respect to which borrowings are made, with the   
lender to advance up to a specified percentage of the value of the mortgaged    
property and eligible pledged receivables, provided that the maximum outstanding
amount secured by pledged receivables may not exceed $20.0 million. The interest
charged on outstanding borrowings is expected to be approximately prime plus    
1.5%. It is anticipated that the facility will include customary conditions to  
funding, eligibility requirements for collateral, affirmative, negative and     
financial covenants and events of default. See "Description of Other            
Indebtedness."                                                                  

   On December 15, 1997, the Company entered into a short-term loan with the
Initial Purchasers. The loan bore interest at the greater of 10% or the prime   
rate plus 2.75% and was repaid on the closing of the Note Offering. The Company 
was required to pay a fee equal to 1% of each advance. The Company borrowed     
$22.1 million under the loan.                                                   

 The Indenture and the Company's other credit facilities include certain
covenants restricting, among other things, the incurrence of debt, the payment  
of dividends and other restricted payments, the incurrence of liens and         
transactions with affiliates. Certain current and future credit facilities do or
will include financial covenants. No assurances can be given that such covenants
will not limit the Company's ability to satisfy or refinance its obligations or 
otherwise adversely affect the Company's operations. See "Risk Factors --       
Leverage; Ability to Service Debt and Liquidity and Financing Requirements."    

See "Description of Other Indebtedness" for a further description of  
certain indebtedness and facilities anticipated to be outstanding following the 
effective date of this Prospectus.                                              

    The Company estimates that the total cash required to complete preparation
for the sale of its residential land and timeshare property inventory as of     
December 28, 1997 was approximately $186.0 million. During the three-month      
period ending March 29, 1998 and during fiscal 1998, the Company anticipates    
spending approximately $7.9 million and approximately $47.5, respectively, for  
expansion and development activities at the Company's timeshare resorts, and    
approximately $14.6 million and approximately $55.7 million, respectively, for  
the acquisition and development of residential land. The Company plans to fund  
these expenditures primarily with available capacity on existing or proposed    
credit facilities and cash generated from operations. There can be no assurances
that the Company will be able to obtain the financing necessary to complete the 
foregoing plans.                                                                

Summary.  The Company intends to continue to pursue a growth-oriented 
strategy, particularly with respect to its Resorts Division. In connection with 
this strategy, the Company may from time to time acquire,                       

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among other things, additional resort properties and completed Timeshare        
Interests; land upon which additional resorts may be built; management          
contracts; loan portfolios of Timeshare Interest mortgages; portfolios which    
include properties or assets which may be integrated into the Company's         
operations; and operating companies providing or possessing management, sales,  
marketing, development, administration and/or other expertise with respect to   
the Company's operations in the timeshare industry. In addition, the Company    
intends to continue to focus the Residential Land Division on larger more       
capital intensive projects particularly in those regions where the Company      
believes the market for its products is strongest, such as the Southeast,       
Southwest, Rocky Mountains and Western regions of the United States and to      
replenish its residential land inventory in such regions as existing projects   
are sold-out.                                                                   

The Company believes that the net proceeds from the Note Offering and 
anticipated cash generated from operations and anticipated future permitted     
borrowings under existing or proposed credit facilities will be sufficient to   
meet the Company's working capital, capital expenditures and debt service       
requirements for the foreseeable future. The Company may, in the future, require
additional credit facilities or issuances of other corporate debt or equity     
securities in connection with acquisitions or otherwise. Any debt incurred or   
issued by the Company may be secured or unsecured, fixed or variable rate       
interest and may be subject to such terms as management deems prudent. There can
be no assurance that the proposed credit facilities will be consummated on the  
terms described herein, if at all, or that sufficient funds will be available   
from operations or under existing, proposed or future revolving credit or other 
borrowing arrangements to meet the Company's cash needs, including, without     
limitation, its debt service obligations. As noted above the Indenture and the  
Company's other credit facilities include customary conditions to funding,      
eligibility requirements for collateral, certain financial and other affirmative
and negative covenants, including, among others, limits on the incurrence of    
indebtedness, covenants concerning net worth and fixed charge coverage          
requirements and debt to equity ratios and events of default. In addition, the  
Company's future operating performance and ability to meet its financial        
obligations will be subject to future economic conditions and to financial,     
business and other factors, many of which will be beyond the Company's control. 

Impact of Year 2000                                                         

     Some of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer     
programs have time-sensitive software that recognizes a date using "00" as the  
year 1900 rather than the year 2000. This could cause a system failure and      
miscalculations causing disruptions of operations, including, among other       
things, a temporary inability to process transactions, send invoices, or engage 
in similar normal business activities.                                          

 The Company has completed an assessment relative to the modification or
replacement of portions of its software so that its computer systems will       
function properly with respect to dates in the year 2000 and thereafter. The    
total "Year 2000" project cost is estimated at approximately $400,000, which    
consists of costs to be incurred to acquire upgraded software that will be      
capitalized. It is anticipated that these costs will be paid for using cash from
operations.                                                                     

The project is estimated to be completed not later than June 30, 1999,
which is prior to any anticipated impact on the Company's operating systems. The
Company believes that with modifications to existing software and conversions to
new software, the Year 2000 issue will not pose significant operational problems
for its computer systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 issue could have a material    
impact on the operations of the Company.                                        

     The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,  
which were derived utilizing numerous assumptions of future events, including   
the continued availability of certain resources and other factors. However,     
there can be no guarantee that these estimates will be achieved and actual      
results could differ materially from those anticipated. Specific factors that   
might cause such material differences include, but are not limited to, the      
availability and cost of personnel trained in this area, the ability to locate  
and correct all relevant computer codes, and similar uncertainties.             

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THREE MONTHS AND FISCAL YEAR ENDED MARCH 29, 1998                               

The Company expects that its total revenues for the three months ended
March 29, 1998 (the "1998 Quarter") will be approximately $55.8 million, an     
increase of 88.5% from the Company's total revenues in the comparable prior year
period (the "1997 Quarter") of $29.6 million, and that its total revenues for   
the fiscal year ended March 29, 1998 ("fiscal 1998") will be approximately      
$187.6 million, an increase of 61.9% from the Company's total revenues for the  
prior fiscal year of $115.9 million. Timeshare sales (from the Resorts Division)
are expected to increase 215% to $20.9 million in the 1998 Quarter from $6.6    
million in the 1997 Quarter and 122% to $60.8 million in fiscal 1998 from $27.4 
million in fiscal 1997. Lot sales (from the Residential Land Division) are      
expected to increase 51.2% to $27.2 million in the 1998 Quarter from $18.0      
million in the 1997 Quarter and 46.1% to $106.1 million in fiscal 1998 from     
$72.6 million in fiscal 1997. The Company anticipates net income of $3.0 million
(or $0.15 per share (basic) and $0.13 per share (diluted)) in the 1998 Quarter, 
compared to a net loss of $832,000 (or $(0.04) per share) in the 1997 Quarter,  
and net income of $10.0 million (or $0.49 per share (basic) and $0.46 (diluted))
in fiscal 1998, compared to a net loss of $4.4 million (or $(0.21) per share) in
fiscal 1997.                                                                    

 The increase in timeshare sales for the 1998 Quarter and Fiscal 1998 is
partially due to the RDI Acquisition effective September 30, 1997, which        
contributed approximately $9.0 million in timeshare sales during fiscal 1998.   
The increase was also partially due to two new resort properties that became    
operational during fiscal 1998 -- Harbour Lights in Myrtle Beach, South         
Carolina, and The Falls Village in Branson, Missouri. In addition, the Company's
interest in BG Aruba accounted for $4.6 million in timeshare sales in fiscal    
1998, primarily all of which occurred in the 1998 Quarter. Timeshare sales also 
increased due to the maturation of existing resorts and the increased           
effectiveness of marketing programs.                                            

  Results for fiscal 1997 reflect the write-down of certain inventories by
$8.2 million in the first quarter of fiscal 1997. See "-- General" and Note 4 of
Notes to Consolidated Financial Statements.                                     

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BUSINESS

 The Company is a leading marketer of vacation and residential lifestyle
choices through its resorts and residential land businesses. The Resorts        
Division strategically acquires, develops and markets Timeshare Interests in    
resorts generally located in popular high-volume, "drive-to" vacation           
destinations. Timeshare Interests typically entitle the buyer to a              
fully-furnished vacation residence for an annual one-week period in perpetuity, 
as well as access to over 1,500 resorts worldwide through the Company's         
participation in timeshare exchange networks. The Company currently markets and 
sells Timeshare Interests in eight resorts located in the United States and the 
Caribbean. Prior to investing in new timeshare projects, the Company performs   
extensive market research and testing and, prior to completion of development,  
pre-sells a significant portion of its Timeshare Interests inventory. The       
Residential Land Division strategically acquires, develops and subdivides       
property and markets the subdivided residential lots to retail customers seeking
to build a home in a high quality residential setting. The Residential Land     
Division's strategy is to locate its projects near major metropolitan centers   
outside the perimeter of intense subdivision development or in popular          
retirement areas. The Company has focused the Residential Land Division's       
activities in certain proven, core markets in which the Company has developed   
substantial marketing expertise and has a strong track record of success. Prior 
to acquiring residential land, the Company typically utilizes market research,  
conducts due diligence and, in the case of new project locations, engages in    
pre-marketing techniques to evaluate market response and price acceptance. Once 
a parcel of property is acquired, the Company pre-sells a significant portion of
its planned residential lots on such property prior to extensive capital        
investment as a result of the Company's ability to bond its projects to         
completion. The Company also generates significant interest income through its  
financing of individual purchasers of Timeshare Interests and, to a lesser      
extent, land sold by the Residential Land Division. For the nine-month period   
ended December 28, 1997, the Company had aggregate revenues of approximately    
$131.8 million and EBITDA of approximately $21.4 million.                       

   The Resorts Division.  The Company's Resorts Division was founded in 1994
to capitalize on the consistent growth of the timeshare industry. According to  
ARDA and other industry sources, timeshare industry sales and the number of     
Timeshare Interest owners grew at compound annual rates of approximately 16% and
22%, respectively, from 1980 to 1997 (see charts on page 53). The Company       
currently markets and sells Timeshare Interests in eight resorts located in the 
Smoky Mountains of Tennessee; Myrtle Beach, South Carolina; Orlando, Florida;   
Branson, Missouri; Wisconsin Dells, Wisconsin; and Aruba. The Company also      
manages 33 timeshare resorts (including seven of its own resorts) with an       
aggregate of approximately 70,000 members, which the Company believes makes it  
the second largest manager of timeshare resorts in North America (based on the  
number of resorts managed). For the nine-month period ended December 28, 1997,  
the Company sold 4,903 Timeshare Interests, an increase of 90.1%, compared to   
2,579 Timeshare Interests sold for the comparable period in 1996. The Company's 
estimated remaining life-of-project sales and estimated remaining               
life-of-project field operating profit with respect to the Resorts Division     
increased to approximately $674.6 million and $65.4 million, respectively, as of
December 28, 1997 from approximately $260.4 million and $11.2 million,          
respectively, as of December 29, 1996. These increases are a direct result of   
new projects developed by the Company in fiscal 1998, the RDI Acquisition and   
the Aruba Transaction, which the Company believes will result in a significant  
increase in revenues and field operating profit in fiscal 1999.                 

The Resorts Division utilizes a variety of techniques to attract      
prospective purchasers of Timeshare Interests, including targeted mailings,     
direct mail mini-vacations, kiosks in retail locations, marketing to current    
owners of Timeshare Interests and referrals. The majority of the Company's      
Timeshare Interests are sold through on-site sales presentations. The Company   
believes its ability to effectively implement and manage these marketing        
activities has resulted in the generation of a predictable and increasing supply
of sales prospects. To support its marketing and sales efforts, the Company has 
developed and continues to enhance its database to track its timeshare marketing
and sales programs. Management believes that, as the Company's timeshare        
operations grow, this database will become an increasingly significant asset,   
enabling it to take advantage of, among other things, less costly marketing and 
referral opportunities.                                                         

   According to ARDA, the primary reason cited by consumers for purchasing a
Timeshare Interest is the ability to exchange a Timeshare Interest for          
accommodations at other resorts through worldwide exchange                      
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networks. Each of the Company's timeshare resorts is affiliated with either II  
or RCI, the two largest worldwide timeshare exchange companies. Participation in
an exchange network entitles owners to exchange their annual Timeshare Interests
for occupancy at over 1,500 participating II resorts or over 3,200 participating
RCI resorts worldwide. To further enhance the ability of its Timeshare Interest 
owners to customize their vacation experience, the Company also intends to      
expand the points-based vacation club system it acquired in the RDI Acquisition 
which, when completed, will permit its Timeshare Interest owners to purchase an 
annual allotment of points which can be redeemed for occupancy rights at all    
Company-owned and participating managed resorts.                                

    Prior to acquiring property for resorts, the Resorts Division undertakes a
full property review, including an environmental assessment, which is presented 
for approval to the Company's Investment Committee, which was established in    
1990 and consists of certain key members of senior management. During the review
process, acquisition specialists analyze market, tourism and demographic data as
well as the quality and diversity of the location's existing amenities and      
attractions to determine the potential strength of the timeshare market in such 
area and the availability of a variety of recreational opportunities for        
prospective Timeshare Interest purchasers.                                      

     The Company has historically provided financing to approximately 89% of its
timeshare customers, who are required to make a downpayment of at least 10% of  
the Timeshare Interest sales price and who typically finance the balance of the 
sales price over a period of seven to ten years. As of December 28, 1997, the   
Company had a timeshare receivables portfolio totaling approximately $66.5      
million in principal amount, with a weighted average contractual yield of       
approximately 15.8% per annum. The Company is currently negotiating with a      
financial institution to provide the Company with a combined timeshare warehouse
financing and receivables purchase facility and a separate timeshare acquisition
and development facility. See "Management's Discussion and Analysis of Results  
of Operations and Financial Condition."                                         

  The Residential Land Division.  The Residential Land Division is focused
primarily on land projects located in states in which the Company has developed 
substantial marketing expertise and has a strong track record of success, such  
as Texas, the Carolinas, New Mexico, Virginia, Tennessee and Arizona. The       
Company believes no other company in the United States of comparable size or    
financial resources markets and sells residential land to retail customers. For 
the nine-month period ended December 28, 1997, the Residential Land Division had
revenues of approximately $78.8 million, an increase of 44.4% compared to       
revenues of approximately $54.6 million for the comparable period in 1996. The  
Company's estimated remaining life-of-project sales and estimated remaining     
life-of-project field operating profit with respect to the Residential Land     
Division increased to approximately $224.5 million and $47.6 million,           
respectively, as of December 28, 1997 from approximately $209.3 million and     
$32.4 million, respectively, as of December 29, 1996.                           

    The Residential Land Division utilizes its proven marketing techniques and
proprietary SIMS database and other residential land databases maintained by the
Company to target families seeking a quality lifestyle improvement which is     
generally unavailable in traditional suburban developments. Based on the        
Company's extensive experience in marketing and selling residential lots to its 
target customers, the Company has been able to develop a comprehensive marketing
and sales program that generates a significant number of on-site sales          
presentations to potential prospects through low-cost, high-yield newspaper     
advertising. In addition, SIMS and the other Residential Land Division databases
enable the Company to compile, process and maintain comprehensive information   
concerning future sales prospects within each of its operating regions. The     
Company currently has over 250,000 potential sales prospects in its Residential 
Land Division databases. Through the Company's targeted sales and marketing     
program, the Company believes that it has been able to achieve a high conversion
ratio of sales to prospects receiving on-site sales presentations. The          
conversion ratio of sales to on-site sales presentations for the ten-month      
period ended January 31, 1998 was approximately 20%.                            

  The Residential Land Division acquires and develops land in two markets:
(i) near major metropolitan centers outside the perimeter of intense subdivision
development; and (ii) popular retirement areas. Prior to acquiring undeveloped  
land, the Company researches market depth and forecasts market absorption. In   
new market areas, the Company typically supplements its research with a         
structured classified ad test marketing                                         

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system that evaluates market response and price acceptance. The Company's sales 
and marketing efforts begin as soon as practicable after the Company enters into
an agreement to acquire a parcel of land. The Company's ability to bond projects
to completion allows it to sell a significant portion of its residential land   
inventory on a pre-development basis, thereby reducing the Company's need for   
external capital to complete improvements. The Company believes that its        
pre-acquisition research and test marketing allow it to market its residential  
lots at predictable margins. As is the case with the Resorts Division, all      
acquisitions of residential land are subject to Investment Committee approval.  

    In fiscal 1997, the Company began construction of its first daily-fee golf
course as part of its long-term plan to participate in the growing daily-fee    
golf market. The Company believes that because the demographics of this market  
are similar to those of the Residential Land Division, daily-fee golf courses   
are an attractive amenity that will increase the marketability of the Company's 
adjacent residential lots in certain projects. The Company's first golf course, 
the Carolina National Golf Club, is located near Southport, North Carolina, just
30 miles north of Myrtle Beach, South Carolina, one of the nation's most popular
golf destinations, and was designed by Masters Champion Fred Couples. Also, as  
part of the RDI Acquisition, the Company acquired a daily-fee golf course       
located in Wisconsin Dells, Wisconsin.                                          

COMPETITIVE STRENGTHS 

SUBSTANTIAL INTERNAL GROWTH CAPACITY                                            

  The Company believes its substantial investment in resort infrastructure
and core residential land holdings will allow it to convert current and planned 
inventory into positive and sustainable revenues and cash flow. As of December  
28, 1997, the Company had existing completed inventory of 19,659 Timeshare      
Interests at its resorts, 7,900 Timeshare Interests under construction or       
development, and plans to develop approximately 53,300 additional Timeshare     
Interests at existing resorts. Based on the foregoing, the Resorts Division's   
estimated remaining life-of-project sales and estimated remaining               
life-of-project field operating profit were approximately $674.6 million and    
$65.4 million, respectively, at December 28, 1997. The aggregate carrying amount
of Residential Land Division inventory at December 28, 1997 was $51.7 million.  
The Residential Land Division's estimated remaining life-of-project sales and   
estimated remaining life-of-project field operating profit were approximately   
$224.5 million and $47.6 million, respectively, at December 28, 1997.           

ATTRACTIVE LOCATIONS AND HIGH QUALITY LIFESTYLE PRODUCTS                        

    The Company seeks to maximize sales penetration and cash flow by marketing
and selling high quality lifestyle products in attractive locations possessing  
positive demographic and population attributes. The Resorts Division generally  
markets Timeshare Interests in popular "drive-to" locations providing a high    
quality, cost-effective vacation alternative to its buyers. The Resorts Division
also provides its customers, through its participation in II and RCI, access to 
over 1,500 and 3,200 participating resorts worldwide, respectively. The         
Residential Land Division markets residential lots (typically two to five       
acres), which are larger than those generally available in traditional suburban 
developments. These lots are often near attractive amenities and are located    
near major metropolitan centers outside the perimeter of intense subdivision    
development or in popular retirement areas.                                     

STRONG INDUSTRY FUNDAMENTALS                                                    

The timeshare industry is one of the fastest growing segments of the  
hospitality industry with a compound annual sales growth rate from 1980 to 1997 
of approximately 16%. In addition, the number of timeshare resorts worldwide    
increased 167.4% from 1,550 in 1984 to over 4,100 in 1994 (the most recent date 
for which ARDA statistics are available). The Company believes that several     
factors have contributed to this sustained industry growth including: (i)       
increased flexibility of ownership due to the growth in the international       
exchange programs and points-based vacation club systems; (ii) increased        
consumer awareness of the economic values and benefits of timeshare ownership;  
(iii) improvement in both the quality and management of the resorts; (iv) an    
influx of brand-name national lodging companies to the timeshare industry; (v)  
implementation of consumer protection regulations; (vi) availability of consumer
financing; and (vii) improvement in inventory management systems. The Company   
believes that, despite the industry's growth,                                   

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timeshare ownership has achieved only an approximate 5% market penetration among
United States households with income above $50,000 per year.                    

RISK MANAGEMENT THROUGH PRE-SELLING AND RIGOROUS INTERNAL CONTROLS              

   The Company's acquisition and development strategies for both its Resorts
and its Residential Land Divisions are designed to reduce capital risk. Prior to
acquiring timeshare projects or residential land, the Company typically utilizes
market research and conducts due diligence. In addition, in the case of new     
Residential Land Division locations, the Company engages in pre-marketing       
techniques prior to acquiring residential land. The Company typically develops  
its projects in phases, and its ability to bond projects to completion allows it
to sell a significant portion of Timeshare Interests or planned residential lots
on a pre-development basis prior to full capital investment. All acquisitions   
must be approved by the Investment Committee.                                   

ATTRACTIVE MARKET DEMOGRAPHICS                                                  

 Both the Resorts and Residential Land Divisions target customers in the
40-55 year old age group. The Company's target group, which is one of the       
fastest growing segments in the U.S., seeks to use its growing earning power to 
effect quality lifestyle improvements. The Company believes that its products   
will allow it to effectively capitalize on the anticipated growth and objectives
of this target market.                                                          

SOPHISTICATED SALES INFORMATION MANAGEMENT SYSTEM                               

     The Company's significant investment in its sales and marketing information
systems has enabled both its Resorts Division and its Residential Land Division 
to compile, process and maintain comprehensive, valuable data regarding future  
sales prospects. The Company currently has over 250,000 potential prospective   
buyers in its databases. The Company believes that the ability to access this   
information allows the Company to more accurately target its prospective        
customers and, thus, reduce marketing costs and increase closing rates.         

SUPERIOR SALES AND MARKETING PERSONNEL                                          

     The success of the Company's sales and marketing efforts depends heavily on
the knowledge and experience of its marketing and commission-based sales        
personnel. The Company believes its marketing and sales personnel are among the 
most experienced in the timeshare and residential land industries. The Company  
has expended considerable resources in training such personnel in the effective 
use of the Company's databases and sales marketing systems, site attributes and 
surrounding area amenities. The Company enhances this sales and marketing       
expertise through the Bluegreen Institute, a mandatory training program designed
to instill the Company's marketing and customer service philosophy in middle-   
and lower-level management.                                                     

COST EFFICIENCIES THROUGH MULTI-SITE OPERATIONS AND RESORT MATURATION           

As the Resorts Division grows, the Company believes it has significant
opportunities to realize economies of scale through the operation of a          
multi-resort management system and the reduction of fixed operating costs as a  
percentage of sales. In addition, the Company believes that, as its existing    
resorts mature, a greater percentage of Timeshare Interests will be sold through
less expensive marketing techniques such as referrals and upgrade sales to      
existing Timeshare Interest owners.                                             

EXPERIENCED MANAGEMENT TEAM                                                     

The Company's five senior executive officers have over 100 years of   
industry-related experience. The Company has employment agreements with each of 
these executive officers, which expire in March 2001.                           

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BUSINESS STRATEGY 

In order to further enhance its market positions and to maximize      
profitability and cash flow, the Company's principal strategic objectives are as
follows:                                                                        

CAPITALIZE ON SIGNIFICANT GROWTH OPPORTUNITIES IN THE TIMESHARE INDUSTRY        

    The Resorts Division was founded in 1994 to capitalize on the rapid growth
of the timeshare industry. The Company intends to continue to aggressively      
market and sell its existing and planned Timeshare Interest inventory through   
the further development of in-house sales and marketing programs, exchange      
program synergies and the use of technology and database management systems. The
Company's goal is to continue to increase sales of Timeshare Interests as a     
percentage of the Company's total consolidated revenue, further diversifying the
Company's base of revenue.                                                      

IMPROVEMENT OF MARGINS IN RESORTS DIVISION                                      

The Company believes that increased efficiency and a multi-resort     
management system will reduce operating costs as a percentage of sales and allow
the Company to experience increased margins at its existing resorts by spreading
operating and corporate overhead costs over a larger revenue base. In addition, 
the Company expects operating margins at its resorts to improve over time as a  
greater percentage of Timeshare Interests are sold through more efficient, less 
costly marketing techniques, such as referrals and sales of additional Timeshare
Interests to existing customers. The Company also believes that it will reduce  
the Resorts Division's sales and marketing expenses, as a percentage of sales,  
over time by targeting more potential buyers through its Resorts Division       
database system and through lead generation assistance and cross-marketing and  
selling from the Residential Land Division.                                     

ACQUISITIONS OF TIMESHARE RESORT ASSETS                                         

The Company intends to continue to grow the Resorts Division through  
acquisitions in destinations that will complement the Company's current resort  
locations. Because the timeshare industry is highly fragmented, the Company     
believes that significant opportunities exist to make selected acquisitions at  
attractive valuations. Acquisitions the Company may consider include acquiring  
additional Timeshare Interest inventory, operating companies, management        
contracts, Timeshare Interest mortgage portfolios and properties or other       
timeshare-related assets which may be integrated into the Company's operations. 

FOCUS ON RESIDENTIAL LAND BUSINESS CORE MARKETS                                 

   The Company intends to continue to focus the Residential Land Division on
those regions where the market for its products is strongest, such as the       
Southeast, Southwest, Rocky Mountain and Western regions of the United States   
and to replenish its residential land inventory in such regions as existing     
projects are sold-out. The Company believes that its in-depth knowledge of these
markets, together with the current strong economic growth and favorable         
demographic trends in these regions, will enable it to continue to maintain     
favorable operating margins and cash flows.                                     

DEVELOPMENT OF POINTS-BASED VACATION CLUB SYSTEM                                

     The Company intends to expand the points-based vacation club system that it
acquired in the RDI Acquisition. The Company's objective in expanding its       
points-based vacation club system is to create, in conjunction with its         
participation in worldwide timeshare exchange networks, a Bluegreen timeshare   
system that maximizes the vacation flexibility of its current and prospective   
Timeshare Interest owners.                                                      

INTERNATIONAL EXPANSION                                                         

    The Company intends to selectively add timeshare resort locations in areas
outside the United States. Through the Aruba Transaction, the Company has       
obtained Timeshare Interest inventory in the Caribbean. The Company intends to  
continue to focus on the Caribbean region, as well as Central and South America,
as possible locations for additional resort properties.                         

GOLF COURSE DEVELOPMENT                                                         

In fiscal 1997, the Company began construction of its first 27 hole   
daily-fee golf course as part of its long-term strategy to participate in the   
growing daily-fee golf market. Management believes that the demographics        

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of this market are similar to those of the Company's Residential Land Division. 
As a result, management believes that daily-fee golf courses are an attractive  
amenity that will increase the marketability of the Company's adjacent          
residential lots in certain projects.                                           

CROSS UTILIZATION OF DATABASES                                                  

The Company intends to cross-utilize information contained in its     
Residential Land Division and Resorts Division databases. Because the           
Residential Land and Resorts Divisions target similar geographic markets and    
demographics classes, the Company believes that such cross-utilization will     
significantly enhance its sales and marketing efforts for each division.        

INDUSTRY OVERVIEWS                                                              

Resorts Division                                                            

The Market.  The resort component of the leisure industry is serviced 
primarily by two separate alternatives for overnight accommodations: commercial 
lodging establishments and timeshare resorts. Commercial lodging consists       
principally of hotels and motels in which a room is rented on a nightly, weekly 
or monthly basis for the duration of the visit or rentals of privately-owned    
condominium units or homes. For many vacationers, particularly those with       
families, a lengthy stay at a quality commercial lodging establishment can be   
expensive, and the space provided to such vacationers by these establishments   
relative to the cost is often not economical. In addition, room rates at        
commercial lodging establishments are subject to change periodically and        
availability is often uncertain. The Company believes that Timeshare Interest   
ownership presents an attractive vacation alternative to commercial lodging.    

    First introduced in Europe in the mid-1960's, Timeshare Interest ownership
has been one of the fastest growing segments of the hospitality industry over   
the past two decades. According to ARDA, timeshare industry sales and the number
of Timeshare Interest owners have grown at compound annual rates of             
approximately 16% and 22%, respectively, from 1980 to 1997 (see charts below).  

(Timeshare Graphs)

Source: ARDA (includes, with respect to 1995, 1996 and 1997, unpublished
estimates provided by ARDA) 

   The Company believes that, based on ARDA reports and other industry data,
the following factors have contributed to the increased acceptance of the       
timeshare concept among the general public and the substantial growth of the    
timeshare industry:                                                             

- Consumer awareness of the value and benefits of Timeshare Interest  
ownership, including the cost savings relative to other lodging   
alternatives;                                                     

- Flexibility of Timeshare Interest ownership due to the growth of    
      international exchange organizations such as II and RCI and points-based
vacation club systems;                                            

- The quality of the timeshare resorts and their management;          

    - Consumer confidence resulting from consumer protection regulation of the
       timeshare industry and an influx of brand name national lodging companies
to the timeshare industry; and                                    

     - Availability of consumer financing for purchasers of Timeshare Interests.

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The timeshare industry traditionally has been highly fragmented and   
dominated by a large number of local and regional resort developers and         
operators, each with small resort portfolios generally of differing quality. The
Company believes that one of the most significant factors contributing to the   
current success of the timeshare industry is the entry into the market of some  
of the world's major lodging, hospitality and entertainment companies, such as  
Marriott, Disney, Hilton, Hyatt, Four Seasons and Inter-Continental. Although   
timeshare operations currently comprise only a small portion of these companies'
overall operations, their involvement in the timeshare industry, together with  
other publicly-traded timeshare companies, has enhanced the industry's image    
with the general public.                                                        

    The Consumer.  According to information compiled by ARDA, customers in the
40-55 year age range represented approximately 45.1% of all Timeshare Interest  
owners in 1997. During the past two years, the median age of a Timeshare        
Interest buyer at the time of purchase was 48. The median annual household      
income of current Timeshare Interest owners in the United States is             
approximately $71,000, with approximately 24% of all Timeshare Interest owners  
having annual household incomes greater than $100,000 and approximately 12% of  
such owners having annual household incomes greater than $125,000. The Company  
believes that, despite the industry's growth, Timeshare Interest ownership has  
achieved only an approximate 5% market penetration among United States          
households with incomes above $50,000 per year.                                 

Timeshare Interest Ownership.  The purchase of a Timeshare Interest   
typically entitles the buyer to use a fully-furnished vacation residence,       
generally for a one-week period each year in perpetuity. Typically, the buyer   
acquires an ownership interest in the vacation residence, which is often held as
tenant-in-common with other buyers of interests in the property.                

    The owners of Timeshare Interests manage the property through a non-profit
homeowners' association, which is governed by a board of directors or trustees  
consisting of representatives of the developer and owners of Timeshare Interests
at the resort. The board hires a management company to which it delegates many  
of the rights and responsibilities of the homeowners' association, including    
grounds landscaping, security, housekeeping and operating supplies, garbage     
collection, utilities, insurance, laundry and repairs and maintenance.          

Each Timeshare Interest owner is required to pay the homeowners'      
association a share of all costs of maintaining the property. These charges can 
consist of an annual maintenance fee plus applicable real estate taxes and      
special assessments, assessed on an as-needed basis. If the Timeshare Interest  
owner does not pay such charges, such owner's use rights may be suspended and   
the homeowners' association may foreclose on the owner's Timeshare Interest.    

Participation in Timeshare Interest Exchange Networks.  The Company   
believes that its Timeshare Interests are made more attractive by the Company's 
affiliation with Timeshare Interest exchange networks operated by II and RCI,   
the two largest worldwide, timeshare exchange companies. Six of the Company's   
timeshare resorts (including the Aruba Resort) are affiliated with II and have  
been awarded II's highest designation (five stars), while the two resorts       
acquired in the RDI Acquisition are affiliated with RCI. A Timeshare Interest   
owner's participation in the II or RCI exchange network (the fee for which is   
paid by the Company in the first year of such owner's participation) allows such
owner to exchange his annual Timeshare Interest for occupancy at over 1,500     
participating resorts in the case of II and over 3,200 participating resorts in 
the case of RCI, based upon availability and the payment of a variable exchange 
fee. A member may exchange his Timeshare Interest for an occupancy right in     
another participating resort by listing his Timeshare Interest as available with
the exchange organization and by requesting occupancy at another participating  
resort, indicating the particular resort or geographic area to which the member 
desires to travel, the size of the unit desired and the period during which     
occupancy is desired. The exchange network assigns ratings to each listed       
Timeshare Interest, based upon a number of factors, including the location and  
size of the unit, the quality of the resort and the period during which the     
Timeshare Interest is available, and attempts to satisfy the exchange request by
providing an occupancy right in another Timeshare Interest with a similar       
rating. If the exchange network is unable to meet the member's initial request, 
it suggests alternative resorts based on availability. The failure of the       
Company to participate in qualified exchange networks or the failure of such    

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networks to operate effectively could have a material adverse effect on the     
Company. See "Risk Factors -- Risks Associated with Timeshare Interest Exchange 
Networks."                                                                      

Residential Land Division                                                   

  The Residential Land Division operates within a specialized niche of the
real estate industry which focuses on the sale of residential land to retail    
customers who intend to build a home on such land at some point in the future.  
The participants in this market niche are generally individual landowners who   
are selling specific parcels of property and small developers who focus         
primarily on projects in their region. Although no specific data is available   
regarding this market niche, the Company believes that no other company in the  
United States of comparable size or financial resources currently markets and   
sells residential land to retail customers.                                     

Unlike commercial homebuilders who focus on vertical development, the 
Residential Land Division focuses primarily on horizontal development           
activities, such as grading, roads and utilities. As a result, the projects     
undertaken by the Company and other participants in this market niche are       
significantly less capital intensive than those undertaken by the commercial    
homebuilders, which reduces the Company's risk of holding a large inventory of  
property. In addition, the Company believes that, through its financial and     
marketing resources, it is able to acquire properties in attractive locations   
throughout the United States on a cost-effective basis thereby enabling the     
Company's projects to achieve desired cash flows and targeted gross margins. The
Company's market niche is also the beneficiary of a number of trends, including 
the large number of people entering into the 40-55 year age bracket and the     
economic and population growth in certain of its primary markets.               

RECENT ACQUISITIONS                                                             

    Effective September 30, 1997, the Company consummated the RDI Acquisition.
RDI owns and operates timeshare projects located in Orlando, Florida (the       
"Orlando Resort") and Wisconsin Dells, Wisconsin (the "Wisconsin Resort") and   
provides management services to 31 other vacation ownership resorts. Although   
all the existing Timeshare Interests at the Orlando Resort have been sold, the  
Company plans to develop and market an additional 2,496 Timeshare Interests at  
this property. As of December 28, 1997, the Wisconsin Resort consisted of 960   
unsold Timeshare Interests. The amenities at the Wisconsin Resort include an    
18-hole golf course and seven ski trails serviced by two chair lifts. The       
Company plans to add nine more holes to the golf course, continue expanding the 
Wisconsin Resort and develop land located on the property for sale by the       
Residential Land Division. The purchase price for RDI was $7.5 million, of which
$6.0 million was paid in cash and $1.5 million was paid in the form of a        
promissory note bearing interest at 9% per annum. The RDI Acquisition was       
accounted for using the purchase method of accounting. No goodwill was recorded 
by the Company as a result of the RDI Acquisition. See "Description of Other    
Indebtedness" for a description of the indebtedness incurred by the Company to  
finance the RDI Acquisition.                                                    

In connection with the RDI Acquisition, the Company (a) was granted an
option (the "Amclub Option") to acquire the capital stock or assets of AmClub,  
Inc. ("AmClub"), a corporation owned by Jeffrey J. Keim, Randy Keim and David   
Bidgood (collectively, the "RDI Stockholders"), which owns a timeshare resort in
Virginia known as Shenandoah Crossing Farm & Club (the "Virginia Resort"), and  
(b) agreed to indemnify the RDI Stockholders from any obligations in respect of 
guarantees executed by the RDI Stockholders of indebtedness of RDI and its      
affiliates (including indebtedness of AmClub). Although all AmClub indebtedness 
covered by such guarantees is collateralized by notes receivable, there can be  
no assurance that the Company will not be required to make payments with respect
to such indemnification obligation. Pursuant to the AmClub Option the exercise  
price for the purchase of AmClub's capital stock is $10,000, while the exercise 
price for any assets of AmClub is equal to the fair market value of such assets 
at the time of exercise. As of December 28, 1997, AmClub's total liabilities    
were $14.0 million, and the total indebtedness guaranteed by the Company was    
$2.7 million. The Company manages the Virginia Resort through RDI. The Company  
has lent AmClub $300,000 for working capital purposes pursuant to 8% promissory 
notes due April 30, 1998. AmClub's liabilities include approximately $4.4 owed  
to a financial institution which has a mortgage on the Virginia Resort (the     
"AmClub Senior Lender"). The Company and                                        
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the AmClub Senior Lender have agreed in principle, subject to certain           
conditions, to certain arrangements pursuant to which, among other things, (i)  
the debt owed to the AmClub Senior Lender would cease to accrue interest, (ii)  
the Company would lend up to $1 million to AmClub to fund the completion of     
certain capital improvements, such loan to bear interest at the prime rate plus 
1% and be secured by a mortgage on the Virginia Resort (the "Bluegreen Loan"),  
(iii) the Company would market approximately ninety residential lots at the     
Virginia Resort, with the Company receiving 55% of the net sales proceeds to    
compensate it for its services and the remaining 45% to be paid to the Company  
until the Bluegreen Loan has been paid in full, at which time such 45% of net   
sales proceeds will be paid to the AmClub Senior Lender to repay indebtedness,  
(iv) the Company would use its best efforts to sell certain other property at   
the Virginia Resort and (v) the Company would have the option to repay the debt 
owed to the AmClub Senior Lender with a lump sum cash payment reflecting a      
specified discount on the outstanding balance owed. No assurances can be given  
that the proposed arrangements will be consummated on these terms, if at all, or
that the Company's arrangements with respect to AmClub will be profitable.      

   In December 1997, the Company invested $250,000 of capital in BG Aruba in
exchange for a fifty percent equity interest. Concurrently, the Company and an  
affiliate of the individual who owns the remaining equity interest in BG Aruba  
each lent $3 million to BG Aruba. The loans are evidenced by promissory notes   
due on December 15, 2000 and bearing interest at the prime rate plus 1%. BG     
Aruba then acquired from a third party the unsold Timeshare Interest inventory  
(approximately 8,000 Timeshare Interests) at the Aruba Resort (the "Aruba       
Transaction"). Established in 1989, the Aruba Resort is a 449-suite ocean front 
property which offers one, two and three-bedroom suites, garden suites and      
penthouse accommodations. The purchase price for the Aruba Resort's timeshare   
inventory was $6 million in cash and the assumption of approximately $16.6      
million of indebtedness owed by the seller to a bank in Aruba. The indebtedness 
is not guaranteed by Bluegreen or any of its wholly-owned subsidiaries. An      
affiliate of the seller in the Aruba Transaction is responsible for the payment 
of all interest on the indebtedness. BG Aruba recorded this indebtedness net of 
imputed interest using a 12% discount rate. The debt is to be repaid over five  
years from the release prices as Timeshare Interests are sold; BG Aruba will be 
required to pay approximately 32% of the sales price of each Timeshare Interest 
to the bank, subject to minimum monthly payments of approximately $278,000. See 
"Description of Other Indebtedness." Under the terms of its agreement with its  
joint venture partner, BG Aruba pays to the Company a quarterly management fee  
equal to 7% of the net sales price (as defined) of Timeshare Interests (less any
discounts or incentives) sold by BG Aruba during the quarter for certain        
management services performed for BG Aruba by the Company. After making minimum 
principal payments (more fully described in "Description of Other Indebtedness")
and payment of the quarterly management fee, BG Aruba distributes cash flow from
operations, after deducting specified reserves, to the shareholders in          
proportion to their equity interests. The shareholder agreement between the     
Company and the individual who owns the remaining equity interest in BG Aruba   
provides that the Company shall have majority control of BG Aruba's Board of    
Directors and places certain restrictions on the transfer of equity interests in
BG Aruba. Due to its controlling financial interest in BG Aruba, the Company has
included BG Aruba in its consolidated financial statements as of December 28,   
1997. See "Description of Other Indebtedness."                                  

COMPANY PRODUCTS                                                                

Timeshare Resorts                                                           

Set forth below is a description of each of the Company's timeshare   
resorts. All units at each of the properties have certain standard amenities,   
including a full kitchen, at least two televisions, a VCR player and a CD       
player. Some units have additional amenities, such as larger televisions and    
game systems. Each property offers guests a clubhouse (with an indoor/outdoor   
pool, a game room, exercise facilities and a lounge) and a hotel-type staff. The
Company manages each resort other than the Aruba Resort.                        

   MountainLoft Resort -- Gatlinburg, Tennessee.  The MountainLoft Resort in
Gatlinburg, Tennessee is located near the Great Smoky Mountains National Park   
and is minutes from the family attractions of Pigeon Forge, Tennessee. Units are
located in individual chalets or mid-rise villa buildings. Each unit is fully   
furnished with a whirlpool bath and private balconies, and certain units include
gas fireplaces.                                                                 

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Laurel Crest -- Pigeon Forge, Tennessee.  Laurel Crest is located in  
proximity to the Great Smoky Mountains National Park and the Dollywood theme    
park. In addition, visitors to Pigeon Forge can enjoy over 200 factory outlet   
stores and music shows featuring renowned country music stars as well as partake
in a variety of outdoor activities, such as horseback riding, trout fishing,    
boating, golfing and white water rafting.                                       

   Shore Crest Vacation Villas -- Myrtle Beach, South Carolina.  Shore Crest
Vacation Villas is located on the beach in the Windy Hill section of North      
Myrtle Beach a mile from the famous Barefoot Landing, with its restaurants,     
theaters, shops and outlet stores.                                              

    Harbour Lights -- Myrtle Beach, South Carolina.  Harbour Lights is located
in the Fantasy Harbour Complex in the center of Myrtle Beach. Nearby are Theater
Row, shopping, golf and restaurants. The resort's Activities Center overlooks   
the Intracoastal Waterway.                                                      

  The Falls Village -- Branson, Missouri.  The Falls Village is located in
the Ozark Mountains. Fishing, boating and swimming are available at nearby Table
Rock Lake and Lake Taneycomo, and area theaters feature shows by country music  
stars. Most customers of the resort come from areas within an eight to ten hour 
drive of Branson.                                                               

     Christmas Mountain -- Wisconsin Dells, Wisconsin.  The Company acquired the
Christmas Mountain resort as part of the RDI Acquisition. Christmas Mountain    
offers an 18-hole golf course and seven ski trails served by two chair lifts.   
Other on-site amenities include horseback riding, tennis courts, a five-acre    
lake with paddleboats and rowboats and four outdoor swimming pools. Christmas   
Mountain attracts customers primarily from the greater Chicago area and other   
locations within an eight to ten hour drive of Wisconsin Dells.                 

   Orlando Sunshine -- Orlando, Florida.  Orlando Sunshine was also acquired
as part of the RDI Acquisition. The resort is located on International Drive,   
near Wet'n'Wild water park and Universal Studios.                               

La Cabana All Suite Beach Resort & Racquet Club -- Aruba, Dutch       
Caribbean.  BG Aruba acquired the unsold Timeshare Interest inventory of the    
Aruba Resort (approximately 8,000 Timeshare Interests) in December 1997.        
Established in 1989, the Aruba Resort is a 449-suite ocean front property which 
offers one, two and three bedroom suites, garden suites and penthouse           
accommodations. On-site amenities include tennis, racquetball, squash, casino,  
two pools and private beach cabanas, none of which are owned or managed by the  
Company.                                                                        

    The following table sets forth additional data with respect to each of the
properties managed under the Resorts Division.                                  

                                                        [Enlarge/Download Table]

                                                                                                                 ORLANDO   
                                                             SHORE CREST     HARBOUR     THE FALLS   CHRISTMAS   SUNSHINE  
                                MOUNTAINLOFT  LAUREL CREST     MYRTLE        LIGHTS       VILLAGE   MOUNTAIN(1)    (1)     
                                GATLINBURG,   PIGEON FORGE,    BEACH,     MYRTLE BEACH,  BRANSON,    WISCONSIN   ORLANDO,  
LOCATION                             TN            TN            SC            SC           MO       DELLS, WI      FL     
--------                        ------------  -------------  -----------  -------------  ---------  -----------  --------  
                                                                                                                           
Date sales commenced..........       7/94          8/95           4/96          6/97         7/97       9/97          --   
Number of Timeshare Interests                                                                                              
  completed as of December 28,                                                                                             
  1997 (3)....................      7,540         4,160          5,928            --        1,535      1,137          --   
Number of Timeshare Interests                                                                                              
  under construction as of                                                                                                 
  December 28, 1997 (3).......      1,040         1,664             --         3,744        1,248        204          --   
Number of additional Timeshare                                                                                             
  Interests planned (3)(4)....      4,332         6,067          5,160        11,091       15,261      8,906       2,496   
Average Timeshare Interests                                                                                                
  selling price through                                                                                                    
  December 28, 1997...........     $8,691        $8,509        $10,042       $ 7,990      $ 7,968     $8,093     $10,000(5)
Number of Timeshare Interests                                                                                              
  sold through December 28,                                                                                                
  1997........................      3,788         2,642          2,554           617          587        177          --   



                                 LACABANA                                                                                  
                                RESORT(2)                                                                                  
LOCATION                          ARUBA                                                                                    
--------                        ----------                                                                                 
                                                                                                                           
Date sales commenced..........      1/98                                                                                   
Number of Timeshare Interests                                                                                              
  completed as of December 28,                                                                                             
  1997 (3)....................     8,030                                                                                   
Number of Timeshare Interests                                                                                              
  under construction as of                                                                                                 
  December 28, 1997 (3).......        --                                                                                   
Number of additional Timeshare                                                                                             
  Interests planned (3)(4)....        --                                                                                   
Average Timeshare Interests                                                                                                
  selling price through                                                                                                    
  December 28, 1997...........   $10,000(5)                                                                                
Number of Timeshare Interests                                                                                              
  sold through December 28,                                                                                                
  1997........................        --                                                                                   

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

(1) Acquired by the Company in the RDI Acquisition. See "-- Recent              
Acquisitions."                                                          
(2) BG Aruba acquired unsold Timeshare Interests inventory at this resort in    
December, 1997. See "-- Recent Acquisitions."                           
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(3) The number of Timeshare Interests completed, under construction or planned  
are intended to be sold in 52 weekly intervals.                         
(4) There can be no assurance that the Company will have the resources to       
complete all such planned Timeshare Interests or that such Timeshare    
Interests will be sold at favorable prices.                             
(5) Anticipated average selling prices once sales commence.                     

Certain Residential Land Projects                                           

 Set forth below is a description of the four largest projects currently
marketed by the Residential Land Division, which are representative of the types
of projects that the Company has been focusing on since 1993. These properties  
represented 48.7% of the Residential Land Division's estimated remaining        
life-of-project sales at December 28, 1997.                                     

 River Mountain Ranch -- San Antonio, Texas.  The Company acquired 3,600
acres located approximately 35 miles outside of San Antonio, Texas in fiscal    
1997 for $6.5 million. The property features frontage along the Guadalupe River 
and is characteristic of the Texas Hill Country with its rolling meadows and    
mature trees. The property also includes private river parks for picnics and    
outings. The project includes 608 lots, with most ranging in size from three to 
five acres. The Company began selling lots in October 1996 and aggregate sales  
through December 28, 1997 were $14.4 million. Aggregate development costs       
through December 28, 1997 were $4.1 million and the Company anticipates that the
remaining capital expenditures for the project will be $1.9 million. The Company
anticipates that the remaining lots will be sold-out over the next year.        

Winding River Plantation -- Southport, North Carolina.  The Company   
acquired approximately 1,300 acres located near Southport, North Carolina (and  
between Myrtle Beach, South Carolina and Wilmington, North Carolina) for $3.4   
million in fiscal 1997. The property has frontage along the Lockwood Folly      
River, a navigable waterway that leads to the Intercoastal Waterway and the     
Atlantic Ocean. The project will include river amenities, a beach club and      
tennis courts. In addition, the project is the site of the Company's first      
daily-fee golf course, which opened for limited play in November 1997 and was   
developed by Masters Champion Fred Couples. The Company anticipates that the    
project will consist of a total of approximately 1,000 lots, which average      
approximately one acre. The Company began selling lots in February 1997, and    
aggregate sales through December 28, 1997 were $9.2 million. Aggregate          
development costs through December 28, 1997 were $10.9 million and the Company  
anticipates that the aggregate capital expenditures to complete development at  
the project will be $13.4 million. The Company anticipates that the remaining   
lots will be sold-out over the next four years.                                 

 Lake Ridge at Joe Pool Lake -- Cedar Hill, Texas.  The Company acquired
1,400 acres located approximately 19 miles outside of Dallas, Texas and 30 miles
outside of Fort Worth, Texas in April 1994 for $6.1 million. The property is    
located at Joe Pool Lake and is atop the highest elevation within 100 miles. The
lake has in excess of 7,500 acres of water for boating, fishing, windsurfing and
other water activities. Adjacent amenities (not owned or managed by the Company)
include a 154 acre park with baseball, football and soccer fields, a fishing    
pool with a pier, camping areas and an 18-hole golf course. The project includes
252 lots, with most ranging in size from 1/4 to five acres and 399 acres        
available for future development. The Company began selling lots in April 1994  
and aggregate sales through December 28, 1997 were $25.1 million. Aggregate     
development costs through December 28, 1997 were $11.7 million and the Company  
anticipates that the remaining capital expenditures will be $10 million. The    
Company anticipates that unsold lots will be sold-out over the next two years.  

  Crossroads Ranch -- Prescott, Arizona.  The Company acquired 6,500 acres
located 20 miles north of Prescott, Arizona in July 1995 for $6.0 million. The  
property has elevations ranging from 4,600 to 5,600 feet and a four-season      
climate. The terrain includes pasture lands with seasonal creeks and rolling    
hills. The property is 95 miles north of Phoenix and Scottsdale, approximately  
2 1/2 hours south of the Grand Canyon and approximately one hour away from      
Sedona. The Company anticipates that the project will include 153 lots, each    
averaging 36 acres, and 26 lots, each averaging five acres. The Company provided
gravel roads and trails for hiking and horseback riding. Electric service was   
installed underground so that utility poles would not spoil                     

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the views. The Company also created deed restrictions designed to ensure that   
future development on the property is compatible with the land's ranch          
character. The Company began selling lots in January 1996 and aggregate sales   
through December 28, 1997 were $17.3 million. Aggregate development costs       
through December 28, 1997 were $5.1 million and the Company anticipates that the
remaining capital expenditures will be $2.0 million. The Company anticipates    
that the unsold lots will be sold-out over the next year.                       

ACQUISITION OF TIMESHARE AND RESIDENTIAL LAND INVENTORY                         

    In order to provide centralized and uniform controls on the type, location
and amount of timeshare and residential land inventory that the Company         
acquires, all such inventory acquisitions have required the approval of the     
Investment Committee since 1990. The Investment Committee consists of George F. 
Donovan, President and Chief Executive Officer; John F. Chiste, Treasurer and   
Chief Financial Officer; Patrick E. Rondeau, Senior Vice President, Director of 
Legal Affairs; L. Nicolas Gray, Senior Vice President -- Resorts Division; and  
Daniel C. Koscher, Senior Vice President -- Residential Land Division. The      
Investment Committee reviews each proposed inventory acquisition to determine   
whether the property meets certain criteria, including estimated cash flows and 
gross profit margins.                                                           

Resorts Division                                                            

The Company obtains information with respect to resort acquisition    
opportunities through interaction by the Company's management team with resort  
operators, lodging companies and financial institutions with which the Company  
has established business relationships. The four resorts acquired and directly  
developed by the Company (the Tennessee and South Carolina resorts) were        
specifically designed and built for timeshare use to appeal to the Company's    
targeted customers. Prior to acquiring property for future resorts, the Resorts 
Division undertakes a full property review, including an environmental          
assessment, which is presented to the Investment Committee for approval. During 
the review process, acquisition specialists analyze market, tourism and         
demographic data as well as the quality and diversity of the location's existing
amenities and attractions to determine the potential strength of the timeshare  
market in such area and the availability of a variety of recreational           
opportunities for prospective Timeshare Interest purchasers. Specifically, the  
Company evaluates the following factors, among others, to determine the         
viability of a potential new timeshare resort: (i) supply/demand ratio for      
Timeshare Interests in the relevant market, (ii) the market's growth as a       
vacation destination, (iii) competitive accommodation alternatives in the       
market, (iv) uniqueness of location, and (v) barriers to entry that would limit 
competition. The Company anticipates that its timeshare resorts will generally  
have a sell-out term of approximately seven years.                              

    During fiscal 1998, the Company acquired the land and began development of
its Harbour Lights Resort in Myrtle Beach, South Carolina, acquired The Falls   
Village Resort in Branson, Missouri and consummated the RDI Acquisition and the 
Aruba Transaction. As a result of these transactions, the Company's Timeshare   
Interest inventory increased from 9,935 unsold Timeshare Interests as of March  
30, 1997 to 19,659 unsold Timeshare Interests as of December 28, 1997, an       
increase of 97.9%. See "-- Recent Acquisitions."                                

The Company intends to continue to pursue growth by expanding or      
supplementing the Company's existing resorts operations through acquisitions in 
destinations that will complement such existing operations. Because the         
timeshare industry is highly fragmented, the Company believes that significant  
opportunities exist to make selected acquisitions at attractive valuations.     
Acquisitions the Company may consider include acquiring additional Timeshare    
Interest inventory, operating companies, management contracts, Timeshare        
Interest mortgage portfolios and properties or other timeshare-related assets   
which may be integrated into the Company's operations. In addition, the Company 
intends to continue to pursue timeshare resort locations in areas outside the   
United States, particularly in the Caribbean, as well as Central and South      
America. No assurances can be given that the Company will be successful in its  
acquisition strategy. See "Risk Factors -- Acquisition Strategy."               

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Residential Land Division                                                   

    The Residential Land Division, through the Company's regional offices, and
subject to Investment Committee review and approval, typically acquires         
inventory that (i) is located near a major population center outside the        
perimeter of intense subdivision development or in popular retirement areas,    
(ii) is suitable for subdivision, (iii) has attractive topographical features   
and (iv) the Company believes will result in an acceptable profit margin and    
cash flow to the Company based upon anticipated retail value. Properties are    
generally subdivided for resale into parcels typically ranging in size from two 
to five acres. During the nine-month period ended December 28, 1997, the Company
acquired 3,082 acres in nine separate transactions for a total purchase price of
approximately $9.5 million, or $3,090 per acre, and during fiscal 1997, the     
Company acquired 19,254 acres in 23 separate transactions for a total purchase  
price of $29.7 million, or $1,541 per acre. Seller, bank or similar financial   
institution financing of $4.9 million, or 52% of the $9.5 million total purchase
price, was obtained with respect to purchases during the nine-month period ended
December 28, 1997, and $15.0 million, or 51% of the $29.7 million total purchase
price, was obtained with respect to purchases during fiscal 1997.               

    In connection with its review of potential residential land inventory, the
Investment Committee considers such established criteria as the economic        
conditions in the area in which the parcel is located, environmental            
sensitivity, availability of financing, whether the property is consistent with 
the Company's general policies and the anticipated ability of that property to  
produce acceptable profit margins and cash flow. As part of its long-term       
strategy for the Residential Land Division, the Company in recent years has     
focused on fewer, more capital-intensive projects. The Company intends to       
continue to focus the Residential Land Division on those regions where the      
Company believes the market for its products is strongest, such as the          
Southeast, Southwest, Rocky Mountain and Western regions of the United States   
and to replenish its residential land inventory in such regions as existing     
projects are sold-out.                                                          

   The Residential Land Division has several specialists who assist regional
management in locating inventory for acquisition. The Company has established   
contacts with numerous land owners and real estate brokers in many of its market
areas, and because of such contacts and its long history of acquiring           
properties, the Company believes that it is generally in a favorable position to
learn of available properties, often before the availability of such properties 
is publicly known. In order to ensure such access, the Company attempts to      
develop and maintain strong relationships with major property owners and        
brokers. Regional offices regularly contact property owners, such as timber     
companies, financial institutions and real estate brokers, by a combination of  
telephone, mail and personal visits. In addition, prior to acquiring property in
new areas, the Company will conduct test marketing for a prospective project    
prior to entering into an acquisition agreement to determine whether sufficient 
customer demand exists for the project. To date, the Company's regional offices 
generally have been able to locate and acquire adequate quantities of inventory 
which meet the criteria established by the Investment Committee to support their
operational activities. In certain cases, however, the Company has experienced  
short-term shortages of ready-for-sale inventory due to either difficulties in  
acquiring property or delays in the approval and/or development process.        
Shortfalls in ready-for-sale inventory may materially adversely affect the      
Company's business, operating results and financial condition. See "Risk        
Factors -- Acquisition Strategy" and "-- Risks Related to Development           
Activities."                                                                    

    Once a desirable property is identified, the Company completes its initial
due diligence procedures and enters into a purchase agreement with the seller to
acquire the property. It is generally the Company's policy to advance only a    
small downpayment of 1%-3% of the purchase price upon signing the purchase      
agreement and to limit the liquidated damages associated with such purchase     
agreement to the amount of its downpayment and any preliminary development      
costs. In most cases, the Company is not required to advance the full purchase  
price or enter into a note payable obligation until regulatory approvals for the
subdivision and sale of at least the initial phase of the project have been     
obtained. While local approvals are being sought, the Company typically engages 
in pre-marketing techniques and, with the consent of the seller and the         
knowledge of prospective purchasers, occasionally attempt to pre-sell parcels,  
subject to closing its purchase of the property. When the necessary regulatory  
approvals have been received, the closing on the property occurs and the Company
obtains title to the property. The time between execution of a purchase         
agreement and closing on a property has generally been six to 12 months.        
Although the Company generally retains the right to cancel                      
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purchase agreements without any loss beyond forfeiture of the downpayment and   
preliminary development costs, few purchase agreements have been canceled       
historically.                                                                   

     By requiring, in most cases, that regulatory approvals be obtained prior to
closing and by making small downpayments upon signing purchase agreements, the  
Company is typically able to place a number of properties under contract without
expending significant amounts of cash. This strategy enables the Residential    
Land Division to reduce (i) the time during which it actually owns specific     
properties, (ii) the market risk associated with holding such properties and    
(iii) the risk of acquiring properties that may not be suitable for sale. It    
also provides the Residential Land Division an additional source of available   
properties to meet customer demand. In certain circumstances, however, the      
Company has acquired properties and then held such properties until their prime 
marketing seasons.                                                              

     Prior to closing on a purchase of residential land, the Company's policy is
to complete its own environmental assessment of the property. The purpose of the
Company's assessment is to evaluate the impact the proposed subdivision will    
have on such items as flora and fauna, wetlands, endangered species, open space,
scenic vistas, recreation, transportation and community growth and character. To
obtain this information, the Company's acquisition specialists typically consult
with various groups and agencies including the appropriate county and state     
planning agencies, environmental groups, state heritage programs, soil          
conservation agencies and forestry groups. If the Company's environmental       
assessment indicates that the proposed subdivision meets environmental criteria 
and complies with zoning, building, health and other laws, the Company develops 
a formal land use plan, which forms a basis for determining an appropriate      
acquisition price. The Company attempts, where possible, to accommodate the     
existing topographical features of the land, such as streams, hills, wooded     
areas, stone walls, farm buildings and roads. Prior to closing on an            
acquisition, the Company will typically have the property surveyed by a         
professional surveyor and have soil analyses conducted to determine the         
suitability of the site for septic systems. At closing, the Company also obtains
title insurance on the property.                                                

MARKETING AND SALE OF INVENTORY                                                 

Resorts Division                                                            

The Resorts Division utilizes a variety of techniques to attract      
prospective purchasers of Timeshare Interests, including targeted mailings,     
direct mail mini-vacation invitations, kiosks in retail locations, marketing to 
current owners and referrals. The Resorts Division provides hotel accommodations
to prospective purchasers at reduced prices in exchange for their touring the   
timeshare resort. To support its marketing and sales efforts, the Company has   
developed and continues to enhance its database to track its timeshare marketing
and sales programs. Management believes that, as the Resort Division's timeshare
operations grow, this database will become an increasingly significant asset,   
enabling the Company to focus its marketing and sales efforts to take advantage 
of, among other things, less costly marketing and referral opportunities.       
Timeshare resorts are staffed with sales representatives, sales managers and an 
on-site manager who oversees the day-to-day operations, all of whom are         
employees of the Company. Sales personnel are generally experienced in resort   
sales and undergo ongoing Company-sponsored training. During the nine-month     
period ended December 28, 1997, total advertising expense for the Resorts       
Division was $10.1 million or 25.5% of the division's $39.9 million in sales,   
and during fiscal 1997, total advertising expense for the Resorts Division was  
$7.6 million or 28% of such division's $27.4 million in sales.                  

 The Company requires its sales staff to provide each timeshare customer
with a written disclosure statement regarding the Timeshare Interest to be sold 
prior to the time the customer signs a purchase agreement. This disclosure      
statement sets forth relevant information regarding timeshare ownership at the  
resort and must be signed by every purchaser. The Company believes that this    
information statement contains all material and relevant information a customer 
requires to make an informed decision as to whether or not to purchase a        
Timeshare Interest at one of its resorts.                                       

    After deciding to purchase a Timeshare Interest, a purchaser enters into a
purchase agreement and is required to pay the Company a deposit of at least 10% 
of the purchase price. Purchasers are entitled to cancel                        

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purchase agreements within specified periods after execution in accordance with 
statutory requirements. Substantially all timeshare purchasers visit the resort 
prior to purchasing.                                                            

     The Company intends to expand the points-based vacation club system that it
acquired in the RDI Acquisition, which is currently only available to owners of 
Timeshare Interests at the Company's Wisconsin Dells, Wisconsin and Orlando,    
Florida resorts. Under a points-based vacation club system, members purchase an 
annual allotment of points which can be redeemed for occupancy rights at        
participating resorts. Compared to other vacation ownership arrangements, the   
points-based system offers members significant flexibility in planning their    
vacations. The number of points that are required for a stay at any one resort  
varies, depending on a variety of factors, including the resort location, the   
size of a unit, the vacation season and the days of the week used. Under this   
system, members can select vacations according to their schedules, space needs  
and available points. Subject to certain restrictions, members are typically    
allowed to carry over for one year any unused points and to "borrow" points from
the forthcoming year. In addition, members are required to pay annual fees for  
certain maintenance and management costs associated with the operation of the   
resorts based on the number of points to which they are entitled. The Company's 
expansion of the RDI points-based vacation club system involves certain risks   
and uncertainties and no assurances can be given that the Company will be       
successful. See "Risk Factors -- Acquisition Strategy", "-- Risks Related to    
Development Activities" and "-- Risks of Development of Points-Based Vacation   
Club".                                                                          

The attractiveness of Timeshare Interest ownership has been enhanced  
significantly by the availability of exchange networks that allow Timeshare     
Interest owners to exchange the occupancy right in their Timeshare Interest in a
particular year, for an occupancy right at another participating network resort 
at either the same or a different time. The two resorts acquired in the RDI     
Acquisition are affiliated with the timeshare exchange network operated by RCI, 
while the Company's six other resorts (including Aruba) are affiliated with II's
timeshare exchange network. In connection with the RDI Acquisition, the Company 
has advised each of II and RCI of the existence of its agreement with the other 
timeshare interest exchange network and of the potential conflict. Although the 
Company believes this conflict will be resolved satisfactorily, no assurances   
can be given. If the Company's resorts ceased to qualify for the exchange       
networks or such networks ceased to operate effectively, the Company's sales of 
Timeshare Interests and the performance of its timeshare receivables could be   
materially adversely affected. See "Risk Factors -- Dependence on Timeshare     
Interest Exchange Networks."                                                    

   The following table sets forth certain information for sales of Timeshare
Interests by the Resorts Division for the periods indicated. Certain sales have 
been deferred under percentage of completion accounting. See Contracts          
Receivable and Revenue Recognition under Note 1 to the Consolidated Financial   
Statements.                                                                     

                                                        [Enlarge/Download Table]

                                                      YEAR ENDED,                 NINE MONTHS ENDED,     
                                            --------------------------------  ---------------------------
                                            APRIL 2,   MARCH 31,   MARCH 30,  DECEMBER 29,   DECEMBER 28,
                                              1995       1996        1997         1996           1997    
                                            --------   ---------   ---------  ------------   ------------
                                                                                                         
Number of Timeshare Interests sold.........   952       1,865       3,195       2,579          4,903     
Average sales price per Timeshare                                                                        
  Interest................................. $7,119     $7,325      $8,362      $8,342         $8,695     
Gross margin(1)............................   62%        67%         71%         70%            74%      

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

(1) Gross margin is computed as the difference between the sales price and the  
    related cost of inventory (including the cost of improvements, amenities and
in certain cases capitalized interest), divided by the sales price.     

    For further information on sales attributable to the Resorts Division, see
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition."                                                                     

Residential Land Division                                                   

     In general, as soon as practicable after agreeing to acquire a property and
during the time period that appropriate improvements are being completed, the   
Company establishes selling prices for the individual parcels taking into       
account such matters as regional economic conditions, quality as a building     
site, scenic views, road frontage and natural features such as lakes, mountains,
streams, ponds and wooded areas. The                                            

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Company also considers recent sales of comparable parcels in the area. Initial  
decisions on pricing of parcels in a given area are made by the Company's       
regional managers and, in all cases, are subject to approval by the Investment  
Committee. Once such selling prices are established the Company commences its   
marketing efforts.                                                              

   The most widely used marketing technique by the Residential Land Division
is advertising in major newspapers in metropolitan areas located within a one to
three hour drive from the property and local newspapers. In addition, the       
Company uses its proprietary database and inventory management system, which    
enables the Company to compile quickly information on the previously identified 
prospects most likely to be interested in a particular project. The Residential 
Land Division also conducts direct mail campaigns to market property through the
use of brochures describing available parcels, as well as television and radio  
advertising. Through this sales and marketing program, the Company believes that
it has been able to achieve a high conversion ratio of sales to prospects       
receiving on-site sales presentations. The conversion ratio of sales to         
prospects receiving on-site sales presentations for the ten-month period ended  
January 31, 1998 was approximately 20%. A sales representative who is           
knowledgeable about the property answers each inquiry generated by the Company's
marketing efforts, discusses the property with the prospective purchaser,       
attempts to ascertain the purchaser's needs and determine whether the parcel    
would be suitable for that person, and arranges an appointment for the purchaser
to visit the property. Substantially all prospective purchasers inspect a       
property before purchasing. During the nine-month period ended December 28,     
1997, the Residential Land Division incurred $5.6 million in advertising        
expenses, or 7.2% of such division's $78.8 million in sales, and during fiscal  
1997, the Residential Land Division incurred $6.3 million in advertising        
expense, or 9% of such division's $72.6 million in sales.                       

The success of the Company's marketing efforts depends heavily on the 
knowledge and experience of its sales personnel. The Company requires that,     
prior to initiating the marketing effort for a property, every sales            
representatives walk the property and become knowledgeable about each parcel and
applicable zoning, subdivision and building code requirements. Continued        
training programs are conducted, including training with regional office sales  
managers, weekly sales meetings and frequent site visits by an executive officer
of the Company. The Company enhances its sales and marketing organization       
through the Bluegreen Institute, a mandatory training program, which is designed
to instill the Company's marketing and customer service philosophy in middle and
lower-level management. Additionally, the sales staff is evaluated against      
performance standards established by the executive officers of the Company.     
Substantially all of a sales representative's compensation is commission-based. 

    The Company requires its sales staff to provide each prospective purchaser
with a written disclosure statement regarding the property to be sold prior to  
the time such purchaser signs a purchase agreement. This information statement, 
which is either in the form of a U.S. Department of Housing and Urban           
Development ("HUD") lot information statement, where required, or a Company     
generated "Vital Information Statement," sets forth relevant information with   
respect to, and risks associated with, the property and must be signed by each  
purchaser. The Company believes that these information statements contain all   
material and relevant information necessary for a prospective purchaser to make 
an informed decision as to whether or not to purchase such property, including  
the availability and estimated cost of utilities, restrictions regarding        
property usage, status of access roads and information regarding rescission     
rights.                                                                         

 After deciding to purchase a parcel, a purchaser enters into a purchase
agreement and is required to pay the Company a deposit of at least 10% of the   
purchase price. Purchasers are entitled to cancel purchase agreements within    
specified periods after execution in accordance with statutory requirements. The
closing of a residential land sale usually occurs two to eight weeks after      
payment of the deposit. Upon closing of a residential land sale, the Company    
typically delivers a warranty deed and a recent survey of the property to the   
purchaser. Title insurance is available at the purchaser's expense.             

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The table to follow sets forth certain information regarding sales of 
parcels by the Residential Land Division for the periods indicated. Certain     
sales have been deferred under percentage of completion accounting. See         
Contracts Receivable and Revenue Recognition under Note 1 to the Consolidated   
Financial Statements and "Management's Discussion and Analysis of Results of    
Operations and Financial Condition."                                            

                                                        [Enlarge/Download Table]

                                                     YEAR ENDED,                 NINE MONTHS ENDED,     
                                           --------------------------------  ---------------------------
                                           APRIL 2,   MARCH 31,   MARCH 30,  DECEMBER 29,   DECEMBER 28,
                                             1995       1996        1997         1996           1997    
                                           --------   ---------   ---------  ------------   ------------
                                                                                                        
Number of parcels sold....................  2,397      2,347       2,057       1,498          1,740     
Average sales price per parcel............ $30,969    $34,856     $38,572     $37,207        $47,449    
Gross margin(1)...........................   57%        51%         45%         47%            48%      

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

(1) Gross margin is computed as the difference between the sales price and the  
    related cost of inventory (including the cost of improvements, amenities and
in certain cases capitalized interest), divided by the sales price.     

CUSTOMER FINANCING                                                              

General                                                                     

     During fiscal 1995, 1996 and 1997, and the nine-month period ended December
28, 1997, the Company financed 24%, 26%, 30% and 33%, respectively, of the      
aggregate purchase price of its sales of Timeshare Interests and residential    
land to customers that closed during these periods and received cash for the    
remaining balance of the purchase price. The increase in the percentage of sales
financed by the Company since 1995 is primarily attributable to an increase in  
the sales of Timeshare Interests over the same period. Sales of Timeshare       
Interests accounted for 32% of consolidated sales of real estate during the     
nine-month period ended December 28, 1997, compared to 6%, 12% and 25% of       
consolidated sales during fiscal 1995, 1996 and 1997, respectively.             
Approximately 89% of all Timeshare Interests finance with the Company (compared 
to 8% of residential land purchasers in the nine-month period ended December 28,
1997 and 14% of residential land buyers in fiscal 1997). In recent years the    
percentage of residential land customers who utilized the Company's financing   
has declined materially due, among other things, to an increased willingness on 
the part of local banks to extend direct lot financing to purchasers.           

 The Company believes that its financing is attractive to purchasers who
find it convenient to handle all facets of the purchase of residential land and 
Timeshare Interests through a single source and because the downpayments        
required by the Company are similar to those required by banks and mortgage     
companies which offer this type of credit.                                      

The Company offers financing of up to 90% of the purchase price of its
Timeshare Interests. The typical financing extended by the Company on a         
Timeshare Interest during the nine-month period ended December 28, 1997 and     
fiscal 1997 provides for a term of seven years and a fixed interest rate.       
Historically, at the closing, the Company and the purchaser have executed a     
contract for deed agreement. After the obligation is paid in full, the Company  
delivers a deed to the purchaser. RDI has historically delivered the deed to    
purchasers at the Closing of a sale, while securing repayment of the purchaser's
obligation by obtaining a mortgage on the purchaser's Timeshare Interest. In    
connection with the expansion of its points-based vacation club system, the     
Company anticipates that it will move to a note and mortgage system. The Company
does not believe that the transfer to a note and mortgage system will have a    
material adverse effect on its servicing operations or financial results.       

     The Company also offers financing of up to 90% of the purchase price of all
parcels sold under the Residential Land Division to all purchasers who qualify  
for such financing. The term of repayment on such financing has historically    
ranged from five to 15 years although the Company, by offering reduced interest 
rates, has been successful in encouraging customers during recent years to      
finance their purchases over shorter terms with increased downpayments.         
Management believes such strategy has improved the quality of the notes         
receivable generated by its Residential Land Division in recent years. An       
average note receivable underwritten by the Company during fiscal 1997 and the  
nine month period ended December 28, 1997 has a                                 

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term of ten years. Most notes receivable bear interest at a fixed interest rate 
and are secured by a first lien on the land.                                    

  The weighted average interest rate on the Company's notes receivable was
12.4%, 13.3% and 15.0% at March 31, 1996, March 30, 1997 and December 28, 1997, 
respectively. The table below sets forth additional information relating to the 
Company's notes receivable (amounts in thousands).                              

                                                        [Enlarge/Download Table]

                                                                                    NINE MONTHS 
                                                                  YEAR ENDED,          ENDED,   
                                                             ---------------------  ------------
                                                             MARCH 31,   MARCH 30,  DECEMBER 28,
                                                               1996        1997         1997    
                                                             ---------   ---------  ------------
                                                                                                
Notes receivable secured by land............................  $26,243     $12,334     $14,675   
Notes receivable secured by Timeshare Interests.............   11,667      23,501      59,912   
                                                              -------     -------     -------   
Notes receivable, gross.....................................   37,910      35,835      74,587   
Reserve for loan losses.....................................     (896)     (1,216)     (1,472)  
                                                              -------     -------     -------   
Notes receivable, net.......................................  $37,014     $34,619     $73,115   
                                                              =======     =======     =======   

Loan Underwriting                                                           

  Resorts Division.  Consistent with industry practice, Timeshare Interest
financing is not subject to extensive loan underwriting criteria. Customer      
financing on sales of Timeshare Interests requires (i) receipt of a minimum     
downpayment of 10% of the purchase price and (ii) a contract for deed and other 
closing documents between the Company and the purchaser. The Company encourages 
purchasers to make increased downpayments by offering a lower interest rate. In 
addition, purchasers who do not elect to participate in the Company's           
pre-authorized payment plan are charged interest at a rate which is one percent 
greater than the otherwise prevailing rate. Historically, timeshare receivables 
have had a higher default rate than residential land receivables. See           
"-- Collection Policies" below.                                                 

   Residential Land Division.  The Company has established loan underwriting
criteria and procedures designed to reduce credit losses on its residential land
loan portfolio. The loan underwriting process undertaken by the Company's credit
department includes reviewing the applicant's credit history, verifying         
employment and income as well as calculating certain debt-to-income ratios. The 
primary focus of the Company's underwriting review is to determine the          
applicant's ability to repay the loan in accordance with its terms. This        
assessment is based on a number of factors, including the relationship of the   
applicant's required monthly payment to disposable income. The Company also     
examines the applicant's credit history through various credit reporting        
agencies. In order to verify an applicant's employment status, the Company      
generally contacts the applicant's employer. The Company also obtains current   
pay stubs, recent tax returns and other tax forms from the applicant.           

In order to obtain financing from the Residential Land Division, a    
prospective purchaser must submit a completed and signed credit application,    
purchase and sale agreement and pre-authorized checking agreement accompanied by
a voided check, if applicable, to the Company's credit department. All credit   
decisions are made at the Company's corporate headquarters. Loan amounts under  
$50,000 are approved by designated personnel located in the Company's corporate 
headquarters, while loan amounts of $50,000 or more require approval from a     
senior executive officer. In addition, rejected applications and any material   
exceptions to the underwriting policy are also reviewed by senior management.   
Customers are notified of the reasons for credit denial by mail.                

   The Company encourages customers to increase their downpayment and reduce
the loan term through the structure of its loan programs. Customers receive a   
lower rate of interest as their downpayment increases and the loan term         
shortens. Additionally, the Company encourages its customers to make timely     
payments through a pre-authorized payment arrangement. Customers who do not     
choose a pre-authorized payment plan are charged interest at a rate which is one
percent greater than the prevailing rate. Approximately 75% of purchasers using 
the Company's financing have historically participated in the pre-authorized    
payment plan.                                                                   

    After the credit decision has been made, the credit department categorizes
the file as either approved, pending or declined. Upon receipt of a credit      
approval, the regional office schedules the closing with the                    

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customer. Closings are typically conducted at the office of the Company's local 
attorney or settlement agent, although in some cases the closing may take place 
at the sales site or by mail.                                                   

  When the original closing documents are received from the closing agent,
the Company verifies that the loan closed under terms approved by the Company's 
credit department. A quality control audit is performed to verify that required 
documents have been received and that they have been prepared and executed      
correctly. If any revisions are required, notification is sent to the regional  
office.                                                                         

  A loan file typically includes a copy of the signed security instrument,
the mortgage note, a copy of the deed, Truth-in-Lending disclosure, purchase and
sale agreement, credit application, local counsel opinion, Vital Information    
Statement or purchaser's acknowledgment of receipt of HUD lot information       
statement, HUD settlement statement and a copy of the assignment of mortgage and
an original note endorsement from the Company's subsidiary originating the sale 
and the loan to the Company (if applicable). After the initial closing documents
are received, the recorded mortgage and assignment and original title insurance 
policy are obtained in order to complete the loan file.                         

Collection Policies                                                         

Resorts Division.  The Company's timeshare receivables have been      
historically documented by contracts for deed, which allows the Company to      
retain title to the Timeshare Interest until the obligation is paid in full,    
thereby eliminating the need to foreclose in the event of a default. Collection 
efforts and delinquency information concerning the Resorts Division are managed 
at the Company's corporate headquarters. Servicing of the division's receivables
is handled by a staff of experienced collectors, assisted by an on-line mortgage
collection computer system. Unless circumstances otherwise dictate, collection  
efforts are generally made by mail and telephone. If a contract for deed becomes
delinquent for ten days, a reminder letter is mailed to the customer. If the    
customer fails to bring the account current, a late notice is mailed when the   
account is 15 days delinquent (and telephone contact commences). After an       
account is 45 days delinquent, the Company typically sends a third letter       
advising the customer that such customer has 15 days within which to bring the  
account current. Under the terms of the contract for deed, the borrower is in   
default when the account becomes 60 days delinquent. At this time a default     
letter is sent advising the customer that he or she has 30 days to bring the    
account current or lose his or her contractual interest in the timeshare unit.  
When the account becomes 90 days delinquent, the Company forwards a final letter
informing the customer that the contract for deed has been terminated. At such  
time, the Timeshare Interest can be resold to a new purchaser. In connection    
with the expansion of its points-based vacation club system, the Company        
anticipates moving to a note and mortgage system. To the extent that this change
occurs, the Company does not anticipate that the period of time for realizing on
a defaulted timeshare receivable will be materially longer, because title to the
applicable property will be held by the vacation club trust.                    

    Residential Land Division.  Collection efforts and delinquency information
concerning the Residential Land Division are also managed at the Company's      
corporate headquarters. Servicing of the division's receivables is handled by a 
staff of experienced collectors, assisted by an on-line mortgage collection     
computer system. Unless circumstances otherwise dictate, collection efforts are 
generally made by mail and telephone. Collection efforts begin when an account  
is ten days past due, at which time the Company mails a reminder letter.        
Attempts are then made to contact the customer via telephone to determine the   
reason for the delinquency and to bring the account current. The determination  
of how to handle a delinquent loan is based upon many factors, including the    
customer's payment history and the reason for the current inability to make     
timely payments. If no agreement is made or the customer does not abide by the  
agreement, collection efforts continue until the account is either brought      
current or legal action is commenced. If not accelerated sooner, the Company    
declares the loan in default when the loan becomes 60 days delinquent. When the 
loan is 90 days past due, the accrual of interest is stopped (unless the loan is
considered an in-substance foreclosure loan, in which case all accrued interest 
is reversed since the Company's means of recovery is determined through the     
resale of the underlying collateral and not through collection on the note) and 
the Credit/Collection Manager determines the action to be taken.                

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Loan Loss Reserves.  At December 28, 1997, approximately 5.0% or $4.1 
million of the aggregate $81.9 million principal amount of loans which were held
by the Company or by third parties under sales transactions in which the Company
had a limited recourse liability, were more than 30 days past due. At March 30, 
1997, approximately 6% or $2.1 million of the aggregate $36.7 million principal 
amount of loans which were held by the Company or by third parties under sales  
transactions in which the Company had a limited recourse liability, were more   
than 30 days past due. Of the $36.7 million principal amount of loans, $35.8    
million were held by the Company, while approximately $840,000 were associated  
with programs under which the Company has a limited recourse liability. In most 
cases of limited recourse liability, the recourse to the Company terminates when
the principal balance of the loan becomes 70% or less of the original selling   
price of the property underlying the loan. At March 31, 1996, approximately 7%  
or $2.8 million of the aggregate $39.2 million principal amount of loans which  
were held by the Company or by third parties under sales transactions in which  
the Company had a limited recourse liability, were more than 30 days past due.  

    Reserve for loan losses as a percentage of period end notes receivable was
2.4%, 3.4% and 2.0% at March 31, 1996, March 30, 1997 and December 28, 1997,    
respectively. The adequacy of the Company's reserve for loan losses is          
determined by management and reviewed on a regular basis considering, among     
other factors, historical frequency of default, loss experience, present and    
expected economic conditions as well as the quality of the receivables. The     
increase in the reserve for loan losses as a percent of period end loans is     
primarily the result of the portfolio consisting of more timeshare receivables  
where historical default rates exceed those on Residential Land Division        
receivables. See "Risk Factors -- Risks Associated with Customer Financing and  
Receivables."                                                                   

The table below sets forth activity in the reserve for estimated loan 
losses.                                                                         

                                                                [Download Table]
                                                                         
Reserve for loan losses, April 2, 1995......................  $1,089,652 
Provision for loan losses...................................     344,718 
Charge-offs.................................................    (537,901)
                                                              ---------- 
Reserve for loan losses, March 31, 1996.....................     896,469 
Provision for loan losses...................................   1,008,271 
Charge-offs.................................................    (688,619)
                                                              ---------- 
Reserve for loan losses, March 30, 1997.....................   1,216,121 
Provision for loan losses...................................   1,109,540 
Charge-offs.................................................    (853,544)
                                                              ---------- 
Reserve for loan losses, December 28, 1997..................  $1,472,117 
                                                              ========== 

SALES OF RECEIVABLES/PLEDGING OF RECEIVABLES                                    

Since 1986, the Company has sold or pledged substantially all of its  
receivables, generally retaining the right and obligation to service such       
receivables. In the case of residential land receivables, the Company typically 
transfers the receivables to a special purpose finance subsidiary, which in turn
enters into a receivables securitization. The receivables are typically sold by 
such subsidiary with limited or no recourse. In the case of receivables in      
securitization transactions pledged to a financial institution, the Company     
generally must maintain a debt to eligible collateral rate (based on outstanding
principal balance of the pledged loans) of 90%. The Company is obligated to     
pledge additional eligible receivables or make additional principal payments in 
order to maintain this collateralization rate. Repurchases and additional       
principal payments have not been material to date. At December 28, 1997, the    
Company was subject to limited recourse requirements on approximately $8.6      
million of receivables sold to financial institutions. See "Management's        
Discussion and Analysis of Results of Operations and Financial                  
Condition -- Liquidity and Capital Resources."                                  

As discussed above, private placement REMIC financings have provided  
substantial capital resources to the Company. Under the terms of these          
transactions, the receivables are sold to a REMIC trust and the Company has no  
obligation to repurchase the receivables due to default by the borrowers. The   
Company does, however, have the obligation to repurchase the receivables in the 
event that there is any material defect in the loan documentation and related   
representations and warranties as of the time of sale.                          

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As discussed under "Management's Discussion and Analysis of Results of
Operations and Financial Condition," the Company is currently negotiating with a
financial institution to provide the Company with a combined warehouse financing
and receivables purchase facility. The Company will have no obligation to       
repurchase the receivables due to default by the borrowers under the proposed   
purchase facility. The Company will, however, have the obligation to repurchase 
the receivables in the event that there is any material defect in the loan      
documentation and related representations and warranties as of the time of sale.

RECEIVABLES SERVICING                                                           

Receivables servicing includes collecting payments from borrowers and 
remitting such funds to the owners, lenders or investors in such receivables,   
accounting for receivables principal and interest, making advances when         
required, contacting delinquent borrowers, foreclosing in the event that        
defaults are not remedied and performing other administrative duties. The       
Company's obligation to provide receivables servicing and its rights to collect 
fees are set forth in a servicing agreement. The Company has the obligation and 
right to service all of the receivables it originates and retains the obligation
and right with respect to substantially all of the receivables it sells through 
REMICs. The Company typically receives an annual servicing fee of approximately 
.5% of the scheduled principal balance, which is deducted from payments       
received.                                                                       

CUSTOMER SERVICE                                                                

The Company emphasizes customer satisfaction and maintains full-time  
customer service representatives in its Boca Raton headquarters to respond to   
customer inquiries. At closing, all purchasers are provided with a toll-free    
customer service phone number to facilitate any additional information requests.
Customer service surveys are sent to each purchaser to measure customer         
satisfaction and to alert the Company to problems, if any.                      

REGULATION                                                                      

  The real estate industry is subject to extensive and complex regulation.
The Company is subject to compliance with various federal, state and local      
environmental, zoning and other statutes and regulations regarding the          
acquisition, subdivision and sale of real estate and Timeshare Interests and    
various aspects of its financing operations. On a federal level, the Federal    
Trade Commission has taken an active regulatory role through the Federal Trade  
Commission Act, which prohibits unfair or deceptive acts or competition in      
interstate commerce. In addition to the laws applicable to the Company's        
customer financing and other operations discussed below, the Company is or may  
be subject to the Fair Housing Act and various other federal statutes and       
regulations. The Company is also subject to various foreign laws with respect to
the Aruba Resort. The Company believes that it is in compliance in all material 
respects with such regulations. However, no assurance can be given that the cost
of complying with applicable laws and regulations will not be significant or    
that the Company is in fact in compliance with applicable law. Any failure to   
comply with applicable laws or regulations could have a material adverse effect 
on the Company. See "Risk Factors -- Acquisition Strategy" and "-- Regulation." 

The Company's sales and marketing of residential land are subject to  
various consumer protection laws and to the Interstate Land Sales Full          
Disclosure Act which establishes strict guidelines with respect to the marketing
and sale of land in interstate commerce. HUD has enforcement powers with respect
to this statute. In some instances, the Company has been exempt from HUD        
registration requirements because of the size or number of the subdivided       
parcels and the limited nature of its offerings. The Company, at its discretion,
may formally request an exemption advisory opinion from HUD to confirm the      
exempt status of any particular offering. Several such exemption requests have  
been submitted to, and approved by, HUD. In those cases where the Company and   
its legal counsel determine parcels must be registered to be sold, the Company  
files registration materials disclosing financial information concerning the    
property, evidence of title and a description of the intended manner of offering
and advertising such property. The Company bears the cost of such registration, 
which includes legal and filing fees. Many states also have statutes and        
regulations governing the sale of real estate. Consequently, the Company        
regularly consults with counsel for assistance in complying                     

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with federal, state and local law. The Company must obtain the approval of      
numerous governmental authorities for its acquisition and marketing activities  
and changes in local circumstances or applicable laws may necessitate the       
application for, or the modification of, existing approvals.                    

The Company's timeshare resorts are subject to various regulatory     
requirements including state and local approvals. The laws of most states       
require the Company to file with a designated state authority for its approval a
detailed offering statement describing the Company and all material aspects of  
the project and sale of Timeshare Interests. Laws in each state where the       
Company sells Timeshare Interests generally grant the purchaser of a Timeshare  
Interest the right to cancel a contract of purchase at any time within a        
specified period following the earlier of the date the contract was signed or   
the date the purchaser has received the last of the documents required to be    
provided by the Company. Most states have other laws which regulate the         
Company's activities, such as real estate licensure; seller's of travel         
licensure; anti-fraud laws; telemarketing laws; price, gift and sweepstakes     
laws; and labor laws. In addition, certain state and local laws may impose      
liability on property developers with respect to construction defects discovered
or repairs made by future owners of such property. Pursuant to such laws, future
owners may recover from the Company amounts in connection with the repairs made 
to the developed property. In compliance with state laws, the Company provides  
its timeshare purchasers with a public disclosure statement which contains,     
among other items, detailed information about the surrounding vicinity, the     
resort and the purchaser's rights and obligations as a Timeshare Interests      
owner.                                                                          

  Under various federal, state and local laws, ordinances and regulations,
the owner of real property generally is liable for the costs of removal or      
remediation of certain hazardous or toxic substances located on or in, or       
emanating from, such property, as well as related costs of investigation and    
property damage. Such laws often impose such liability without regard to whether
the owner knew of, or was responsible for, the presence of such hazardous or    
toxic substances. The presence of such substances, or the failure to properly   
remediate such substances, may adversely affect the owner's ability to sell or  
lease a property or to borrow using such real property as collateral. Other     
federal and state laws require the removal or encapsulation of                  
asbestos-containing material when such material is in poor condition or in the  
event of construction, demolition, remodeling or renovation. Other statutes may 
require the removal of underground storage tanks. Noncompliance with these and  
other environmental, health or safety requirements may result in the need to    
cease or alter operations at a property.                                        

   The Company's customer financing activities are also subject to extensive
regulation, which may include, Truth-in-Lending Act and Regulation Z, the Fair  
Housing Act, the Fair Debt Collection Practices Act, the Equal Credit           
Opportunity Act and Regulation B, the Electronic Funds Transfer Act and         
Regulation E, the Home Mortgage Disclosure Act and Regulation C, Unfair or      
Deceptive Acts or Practices and Regulation AA and Right to Financial Privacy    
Act.                                                                            

  Management is not aware of any pending regulatory contingencies that are
expected to have a materially adverse impact on the Company. See "Risk          
Factors -- Regulation."                                                         

COMPETITION                                                                     

     The real estate industry is highly competitive. In each of its markets, the
Company competes against numerous developers and others in the real estate      
business. The Resorts Division competes with various high profile and           
well-established operators. Many of the world's most recognized lodging,        
hospitality and entertainment companies have begun to develop and sell Timeshare
Interests in resort properties. Major companies that now operate or are         
developing or planning to develop timeshare resorts include Marriott, Disney,   
Hilton, Hyatt, Four Seasons and Inter-Continental. The Company also competes    
with other publicly traded timeshare companies, including Signature, Vistana,   
Fairfield, Silverleaf and numerous other owners and operators of timeshare      
resorts. The Residential Land Division competes with builders, developers and   
others for the acquisition of property and with local, regional and national    
developers, housebuilders and others with respect to the sale of residential    
lots. Competition may be generally smaller with respect to the Company's        
residential lot sales in the more rural markets in which it operates. The       
Company believes that it can compete on the basis of its reputation and the     
price, location and quality of the products it offers for sale, as well as on   
the basis of its experience in land acquisition, development and sale. Although,
as noted above, the Resorts Division competes with various high profile and     
well-established operators, the Company believes                                
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that it can compete on the basis of its general reputation and the price,       
location and quality of its timeshare resorts. The development and operation of 
additional timeshare resorts in the Company's markets could have a material     
adverse impact on the demand for the Company's Timeshare Interests and its      
results of operations. In its customer financing activities, the Company        
competes with banks, mortgage companies, other financial institutions and       
government agencies offering financing of real estate. In recent years, the     
Company has experienced increased competition with respect to the financing of  
Residential Land Division sales as evidenced by the low percentage of           
residential land sales internally financed since 1995. The Company believes     
that, based on its interest rates and repayment schedules, the financing        
packages it offers are convenient for customers and competitive with those of   
other institutions which offer such financing. See "Risk                        
Factors -- Competition."                                                        

PERSONNEL                                                                       

    As of December 28, 1997, the Company had 1,501 full-time and 132 part-time
employees. Of the 1,633 employees, 105 were located at the Company's            
headquarters in Boca Raton, Florida, 116 at the Company's corporate office in   
Fort Myers, Florida and 1,412 in regional offices throughout the United States  
and Canada (the field personnel include 269 field employees supporting the      
Company's Residential Land Division as follows: three residential land          
divisional presidents, seven residential land regional and district managers,   
114 residential land sales personnel, 12 residential land project managers, nine
residential land acquisition specialists and 124 residential land administrative
and other support personnel. In addition, the Company employed 1,143 field      
employees supporting the Company's Resorts Division as follows: four timeshare  
divisional Presidents/regional directors, 264 timeshare sales personnel, two    
directors of development and 873 timeshare administrative and other support     
personnel). None of the Company's employees are represented by a collective     
bargaining unit, and the Company believes that relations with its employees     
generally are excellent.                                                        

LITIGATION                                                                      

In the ordinary course of its business, the Company from time to time 
becomes subject to claims or proceeding relating to the purchase, subdivision,  
sale and/or financing of real estate. Additionally, from time to time, the      
Company becomes involved in disputes with existing and former employees. The    
Company believes that substantially all of the above are incidental to its      
business.                                                                       

  On November 26, 1997, an action was filed in the U.S. District Court for
the Eastern District of Tennessee against the Company. The complaint purports to
be brought on behalf of a class of current and former timeshare sales           
representative employees of the Company. It asserts claims for violations of the
minimum wage and overtime provisions of the Fair Labor Standards Act. The       
Company is in the early stages of evaluating this litigation's potential impact,
if any, on the Company, and accordingly cannot predict the outcome with any     
degree of certainty. Although no assurances can be given, the Company does not  
believe that any likely outcome will have a material adverse effect on the      
Company.                                                                        

   In May 1996, RDI and the RDI Stockholders entered into a letter agreement
(the "Letter Agreement") with certain individuals on behalf of an entity to be  
formed by such individuals (the "Prospective Buyer") regarding the proposed     
acquisition of RDI. The Letter Agreement indicated, among other things, that the
agreement was binding, the parties proposed to negotiate and execute a          
definitive agreement consistent with the Letter Agreement by June 15, 1996 and  
that the transaction would close by December 31, 1996. The Letter Agreement also
included an exclusivity provision pursuant to which the parties agreed to       
negotiate in good faith exclusively with each other to enter into a definitive  
agreement until June 30, 1996. On July 1, 1996, counsel for the Prospective     
Buyer forwarded to RDI's counsel a letter which would have extended the June 15,
1996 and June 30, 1996 dates referred to above had it been executed by RDI and  
the RDI Stockholders; the letter was not executed by RDI or the RDI             
Stockholders. In September 1996, RDI informed the Prospective Buyer that RDI did
not wish to proceed with negotiations. The Prospective Buyer advised RDI in     
writing shortly thereafter that, among other things, the Prospective Buyer      
believed that the Letter Agreement was a binding agreement for the sale of RDI  
and that the Prospective Buyer would assert its alleged right to prevent an     
acquisition by RDI by any third party and take action against any such third    
party and RDI and the RDI Stockholders. After September 1996, no further        
negotiations with respect to the                                                
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acquisition took place between RDI and the Prospective Buyer. The Company       
executed and announced a purchase agreement for the RDI Acquisition in July 1997
and closed this transaction on October 3, 1997. To date, the Prospective Buyer  
has taken no further action. Although no assurances can be given, the Company   
believes that any claim by the Prospective Buyer would be meritless and the     
Company would defend any such claim vigorously.                                 

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS                                                

   The following table sets forth certain information concerning each person
who is a director or executive officer of the Company.                          

                                                        [Enlarge/Download Table]

NAME                                       AGE  POSITION                                          
----                                       ---  --------                                          
                                                                                                  
George F. Donovan......................... 59   President, Chief Executive Officer and Director   
Daniel C. Koscher......................... 40   Senior Vice President -- Residential Land Division
L. Nicolas Gray........................... 51   Senior Vice President -- Resorts Division         
Patrick E. Rondeau........................ 51   Senior Vice President, Director of Corporate      
                                                Legal Affairs and Clerk                           
John F. Chiste............................ 41   Chief Financial Officer and Treasurer             
Joseph C. Abeles.......................... 83   Director                                          
Ralph A. Foote............................ 75   Director                                          
Frederick M. Myers........................ 75   Chairman of the Board and Director                
J. Larry Rutherford....................... 51   Director                                          
Stuart A. Shikiar......................... 51   Director                                          
Bradford T. Whitmore...................... 40   Director                                          

GEORGE F. DONOVAN joined the Company as a Director in 1991 and was    
appointed President and Chief Operating Officer in October 1993. He became Chief
Executive Officer in December, 1993. Mr. Donovan has served as an officer of a  
number of other recreational real estate corporations, including Leisure        
Management International, of which he was President from 1991 to 1993, and      
Fairfield Communities, Inc., of which he was President from April 1979 to       
December 1985.                                                                  

 DANIEL C. KOSCHER joined the Company in 1986. During his tenure, he has
served in various financial management positions including Chief Accounting     
Officer, Vice President and Director of Planning/Budgeting. In 1997, he became  
Senior Vice President, Residential Land Division. Prior to his employment with  
the Company, Mr. Koscher was employed by the William Carter Company, a          
manufacturing company located in Needham, Massachusetts. He has also been       
employed by Cipher Data Products, Inc., a computer peripheral manufacturer      
located in San Diego, California, as well as the State of Nevada as an audit    
agent. Mr. Koscher holds an M.B.A. along with a B.B.A. in Accounting.           

L. NICOLAS GRAY joined the Company in 1995 to oversee the Company's   
timeshare resorts operation and was named Senior Vice President in 1997. Mr.    
Gray has over 25 years of experience in the hospitality, timeshare and related  
resort industries. Mr. Gray served as Director of Development for Resort        
Condominium International, a timeshare exchange organization from 1993 to 1995. 
Prior to that time, Mr. Gray was Executive Vice President and General Manager   
for resort developments of Thousand Trails from 1989 to 1991 and Fairfield      
Communities from 1979 to 1989.                                                  

PATRICK E. RONDEAU joined the Company in 1990 and was elected Vice    
President and Director of Corporate Legal Affairs. He became Clerk in 1993 and  
Senior Vice President in 1997. For more than five years prior to his employment 
with the Company, Mr. Rondeau was a senior partner of Freedman, DeRosa &        
Rondeau, located in North Adams, Massachusetts, which firm serves as legal      
counsel to the Company on various matters. Mr. Rondeau holds a B.A. in Political
Science along with a J.D.                                                       

JOHN F. CHISTE joined the Company in July 1997 as Treasurer and Chief 
Financial Officer. From January 1997 to June 1997, Mr. Chiste was employed by   
Compscript, Inc. From December 1992 to January 1997, he served as the Chief     
Financial Officer, Secretary and Treasurer of Computer Integration Corporation, 
a publicly-held distribution company which provides information products and    
services to corporations nationwide. From 1983 through 1992, Mr. Chiste         
practiced as a Certified Public Accountant with Ernst & Young LLP.              

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  JOSEPH C. ABELES, a private investor, has been a Director of the Company
since 1987. Mr. Abeles has been a Director of Intermagnetics General Corporation
since 1986. He has also served as a Director of Igene Biotechnology, Inc. and   
Ultralife Batteries, Inc. since 1991.                                           

     RALPH A. FOOTE has been a Director of the Company since 1987. Since 1955 he
has been a senior partner of Conley & Foote, a Middlebury, Vermont law firm     
which serves as legal counsel to the Company with respect to various matters.   

  FREDERICK M. MYERS has been a Director of the Company since 1990 and has
served as Chairman of the Board since 1997. Since 1964 he has been a senior     
partner of Cain, Hibbard, Myers & Cook, a Pittsfield, Massachusetts law firm    
which serves as legal counsel to the Company with respect to various matters.   

  J. LARRY RUTHERFORD was elected to the Board of Directors in April 1997.
Since 1990, he has been President and Chief Executive Officer of Atlantic Gulf  
Communities, a publicly traded real estate development company. In 1992, Mr.    
Rutherford was named as a defendant in a three-count Information filed by the   
State Attorney for Broward County, Florida. The charges in the Information,     
which include a charge of vehicular homicide, relate to an April 1991 traffic   
accident in which a passenger was killed. Following review of the circumstances 
surrounding this accident and the charges, the Board determined that the        
pendency of this proceeding likely will not adversely affect Mr. Rutherford's   
ability to perform his duties as a Director of the Company.                     

STUART A. SHIKIAR has been a Director since 1994. Mr. Shikiar is an   
investment advisor and has served as President of Shikiar Asset Management, Inc.
since November 1994. From 1993 to 1994, Mr. Shikiar was a general partner of    
Omega Advisors, a private investment partnership. From 1985 to 1993, Mr. Shikiar
served as a Managing Director for Prudential Securities Investment Management,  
Inc. Mr. Shikiar has been a Director of Ultralife Batteries, Inc. since 1991 and
Intermagnetics General Corporation since 1995.                                  

 BRADFORD T. WHITMORE has been a Director of the Company since 1990. Mr.
Whitmore has been a general partner of Grace Brothers, Ltd., an investment      
partnership and securities broker-dealer, since 1986. He has been a trustee of  
Aerospace Creditors Liquidating Trust since 1993.                               

EXECUTIVE COMPENSATION                                                          

  Summary Compensation Table.  The following table sets forth compensation
for the past three fiscal years for the Company's Chief Executive Officer and   
the other four most highly compensated executive officers (the "Named Executive 
Officers").                                                                     

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SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                         LONG-TERM                 
                                                                        COMPENSATION               
                                                                           AWARDS                  
                                                 ANNUAL COMPENSATION   --------------              
                                                 --------------------    SECURITIES     ALL OTHER  
                                         FISCAL               BONUS      UNDERLYING    COMPENSATION
NAME AND PRINCIPAL POSITION               YEAR   SALARY($)    ($)(1)   OPTIONS(#)(2)      ($)(3)   
---------------------------              ------  ---------   --------  --------------  ------------
                                                                                                   
George F. Donovan.......................  1998   $350,000    $200,000     146,775        $60,772   
  President and Chief                     1997    300,000      86,000      30,000         59,183   
  Executive Officer                       1996    300,000     139,129      52,500         39,120   

Patrick E. Rondeau......................  1998    175,000     100,000      59,362         20,431   
  Senior Vice President,                  1997    160,000      38,000      15,000         17,666   
  Director of Corporate                   1996    160,000      61,475      26,250             --   
  Legal Affairs and Clerk                                                                          

Daniel C. Koscher.......................  1998    175,000     100,000      73,500         13,973   
  Senior Vice President,                  1997    150,000      38,000      15,000          8,369   
  Resid. Land Division                    1996    150,000      61,475      26,250          1,751   

L. Nicolas Gray.........................  1998    160,000     115,000      73,500         22,920   
  Senior Vice President,                  1997    130,000      38,000          --         20,582   
  Resorts Division                        1996    120,000      39,076          --         24,245   

John F. Chiste(4).......................  1998    113,846      75,000      59,362             --   
  Treasurer and Chief                     1997         --          --          --             --   
  Financial Officer                       1996         --          --          --             --   

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

(1) Amounts represent bonus earned for each fiscal year and paid during the     
subsequent year.                                                        
(2) Figures for 1998 and 1997 represent incentive stock options granted under   
the Company's 1995 Stock Incentive Plan. Figures for 1996 represent     
incentive stock options granted under the Company's Second Amended and  
   Restated 1985 Stock Option Plan. Incentive stock options for 1996 have been
adjusted to reflect the Common Stock dividends.                         
(3) Other compensation for 1998 includes contributions to the Company's Section 
401(k) Retirement Savings Plan for the benefit of each Named Executive  
   Officer (Mr. Donovan, $3,964; Mr. Rondeau, $3,868; Mr. Koscher, $3,916; and
Mr. Gray, $3,961) and dollar amounts of premiums paid on life insurance 
policies for the benefit of the Named Executive Officer (Mr. Donovan,   
    $56,808; Mr. Rondeau, $16,563; Mr. Koscher, $10,057; and Mr. Gray, $18,959).
(4) Mr. Chiste became the Company's treasurer and chief financial officer on    
July 1, 1997.                                                           

  Options Grants In Last Fiscal Year.  The following table shows all stock
option grants to the Named Executive Officers during fiscal 1998.               

                                                        [Enlarge/Download Table]

                                                                                                POTENTIAL REALIZABLE  
                                                                                                  VALUE AT ASSUMED    
                                                                                                ANNUAL RATE OF STOCK  
                                                PERCENT OF TOTAL                               PRICE APPRECIATION FOR 
                            NUMBER OF SHARES   OPTIONS GRANTED TO                                  OPTION TERM(2)     
                           UNDERLYING OPTIONS      EMPLOYEES       EXERCISE PRICE  EXPIRATION  -----------------------
NAME                         GRANTED (#)(1)      IN FISCAL YEAR      PER SHARE        DATE         5%          10%    
----                       ------------------  ------------------  --------------  ----------  ----------   ----------
                                                                                                                      
George F. Donovan.........       75,000                                $3.13        7/31/07     $147,422     $373,594 
                                 71,775                                 4.88        2/24/08      220,089      557,746 
                                -------                                                         --------     -------- 
                                146,775                16%                                      $367,511     $931,339 
Patrick E. Rondeau........       30,000                                $3.13        7/31/07     $ 58,969     $149,438 
                                 29,362                                 4.88        2/24/08       90,035      228,165 
                                -------                                                         --------     -------- 
                                 59,362                 6%                                      $149,004     $377,602 
Daniel C. Koscher.........       30,000                                $3.13        7/31/07     $ 58,969     $149,438 
                                 43,500                                 4.88        2/24/08      133,387      338,028 
                                -------                                                         --------     -------- 
                                 73,500                 8%                                      $192,356     $487,465 

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                                                        [Enlarge/Download Table]

                                                                                                POTENTIAL REALIZABLE  
                                                                                                  VALUE AT ASSUMED    
                                                                                                ANNUAL RATE OF STOCK  
                                                PERCENT OF TOTAL                               PRICE APPRECIATION FOR 
                            NUMBER OF SHARES   OPTIONS GRANTED TO                                  OPTION TERM(2)     
                           UNDERLYING OPTIONS      EMPLOYEES       EXERCISE PRICE  EXPIRATION  -----------------------
NAME                         GRANTED (#)(1)      IN FISCAL YEAR      PER SHARE        DATE         5%          10%    
----                       ------------------  ------------------  --------------  ----------  ----------   ----------
                                                                                                                      
L. Nicolas Gray...........       30,000                                $3.13        7/31/07     $ 58,969     $149,438 
                                 43,500                                 4.88        2/24/08      133,387      338,028 
                                -------                                                         --------     -------- 
                                 73,500                 8%                                      $192,356     $487,465 
John F. Chiste............       30,000                                $2.75        7/01/07     $ 51,893     $131,505 
                                 29,362                                 4.88        2/24/08       90,035      228,165 
                                -------                                                         --------     -------- 
                                 59,362                 6%                                      $141,927     $359,670 

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

(1) These options vest in five equal annual installments, commencing one year   
from their respective dates of grant.                                   
(2) As required by the rules of the Securities and Exchange Commission,         
potential values stated are based on the prescribed assumption that the 
 Company's common stock will appreciate in value from the date of grant to
the end of the option term at rates (compounded annually) of 5% and 10%,
respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the Company's common stock.       

Fiscal Year-End Option Values.  During fiscal 1998, none of the Named 
Executive Officers exercised stock options issued by the Company. The following 
table sets forth information regarding the number of vested and unvested options
and the unrealized value or spread (the difference between the exercise price   
and the market value) of the unexercised options issued by the Company and held 
by the Named Executive Officers on March 29, 1998. Unrealized value is computed 
by multiplying the number of shares purchasable by the amount by which the      
closing market price of the Company's Common Stock on the New York Stock        
Exchange on March 27, 1998 exceeds the exercise price.                          

                                                        [Enlarge/Download Table]

                                                           NUMBER OF                                   
                                                       SHARES UNDERLYING                               
                                                      UNEXERCISED OPTIONS    VALUE OF UNEXERCISED IN-  
                                                       AT FISCAL YEAR-END   THE-MONEY OPTIONS AT FISCAL
                                                              (#)                  YEAR-END ($)        
                                                      --------------------  ---------------------------
NAME                                                   VESTED    UNVESTED      VESTED        UNVESTED  
----                                                  --------   ---------  ------------   ------------
                                                                                                       
George F. Donovan.................................... 268,033     274,599    $1,248,071     $1,157,878 
Patrick E. Rondeau...................................  81,273     100,342       474,793        416,005 
Daniel C. Koscher....................................  95,949     114,480       558,967        461,954 
L. Nicolas Gray......................................   6,300      82,950        22,712        325,442 
John F. Chiste.......................................      --      59,362            --        256,677 

Employment Agreements                                                       

     In March, 1998, the Company entered into employment agreements with each of
George F. Donovan, John F. Chiste, L. Nicolas Gray, Daniel C. Koscher and       
Patrick E. Rondeau. Each employment agreement is for a three year period (six   
years in the case of Mr. Donovan) (subject to extension) and provides that the  
employee will receive a base salary ($375,000 for Mr. Donovan and $175,000 for  
each of Messrs. Chiste, Gray, Koscher and Rondeau) and certain other benefits   
and will be eligible to receive a cash bonus as determined by the Board of      
Directors. Under the employment agreements, if the Company terminates any       
employee without cause, the Company will pay the employee his base salary for   
the 12 months (24 months in the case of Mr. Donovan) following such termination 
(which shall be reduced by the amount of any compensation the employee receives 
from subsequent employment during such period). A termination of the employee   
without cause shall be deemed to occur upon, among other things, a significant  
decrease of the employee's position, duties or responsibilities, the failure by 
the Company to obtain the assumption of the employment agreement by any         
successor to the Company's business, or the sale of all or substantially all of 
the business or assets of the Company or the Company's liquidation. Upon any    
termination by the Company for                                                  

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cause (as defined in the employment agreements) or by the employee, the employee
shall be entitled only to amounts then due to him. In the event the employee is 
disabled, the employee's employment shall be terminated and the employee shall  
be entitled to receive his base salary for 12 months (24 months in the case of  
Mr. Donovan) following such termination. Pursuant to his employment agreement,  
each employee agrees, for 12 months (24 months in the case of Mr. Donovan)      
following his termination, not to compete with the Company, disclose            
confidential information about the Company, or solicit the Company's current or 
former employees. In addition, Mr. Donovan's employment agreement provides that 
the aggregate of $219,328 of indebtedness owing by Mr. Donovan to the Company   
will be forgiven on a pro rata basis (20% per year) over the five year period   
commencing on April 1, 1998. See "Certain Relationships and Related             
Transactions."                                                                  

In connection with the RDI Acquisition, each of the RDI stockholders  
entered into a three-year employment agreement with the Company providing for an
annual base salary of $180,000 and the grant by the Company of an incentive     
stock option to acquire 60,000 shares of the Company's Common Stock. The options
vest ratably over five years.                                                   

     Compensation of Divisional Presidents and Regional Managers.  The Company's
Divisional Presidents/Regional Executive Directors and Regional Managers have   
oversight responsibility for the acquisition, development and sale of the       
Company's real estate inventories. Compensation for the Company's six Divisional
Presidents/Regional Executive Directors includes a base salary that currently   
ranges from $50,000 to $144,000 accompanied by performance bonuses. Compensation
for the Company's seven Regional Managers typically includes a base salary that 
currently ranges from $25,000 to $80,000 accompanied by several performance     
bonuses. Bonuses are established to reward strong performance by a subsidiary   
and the payment of a bonus is subject to exceeding predetermined, acceptable    
performance objectives. Management defined these objectives to address operating
benchmarks deemed critical to the success of the subsidiary. They include, but  
are not limited to, the attainment of projected retail sales and operating      
profit, containment of overhead costs, achievement of maximum operating profits,
optimizing transactional cash flow and, on a project by project basis,          
surpassing gross margin projections. Annual bonus awards for Divisional         
Presidents/Regional Managers generally do not exceed $200,000, with the         
exception of those awards for management of the Company's Texas residential land
operation, where aggregate annual bonuses for fiscal 1998 ranged from $160,000  
to $975,000.                                                                    

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    On December 15, 1997, the Company entered into a short-term loan agreement
with the Initial Purchasers. The loan bears interest at the greater of 10% or   
the prime rate plus 2.75%. The Company is required to pay a fee equal to 1% of  
each advance. The Company repaid all amounts outstanding under the loan         
(approximately $22.1 million principal amount as of the date hereof) upon the   
closing of the Note Offering. See "Use of Proceeds."                            

The Company borrowed an aggregate of $6,000,000 from Joseph Abeles, a 
director of the Company, and Grace Brothers, Ltd., an affiliate of Bradford T.  
Whitmore, a director of the Company, pursuant to a Note Purchase Agreement dated
as of September 11, 1997 (the "Note Agreement"), which amount was used to fund a
portion of the purchase price in connection with the RDI Acquisition. In        
December 1997, Stuart A. Shikiar, a Director of the Company purchased $200,000  
of the Convertible Notes originally issued pursuant to the Note Agreement from  
Mr. Abeles in a private transaction. See "Description of Other Indebtedness --  
Convertible Notes."                                                             

   Frederick M. Myers, a Director of the Company, is a senior partner of the
Pittsfield, Massachusetts law firm of Cain, Hibbard, Myers & Cook, which        
rendered services to the Company during fiscal 1998. The total amount paid to   
Cain, Hibbard, Myers & Cook by the Company for services rendered during fiscal  
1998 was approximately $35,369. It is anticipated that Cain, Hibbard, Myers &   
Cook will continue to perform certain legal services for the Company during     
fiscal 1998.                                                                    

   In connection with George F. Donovan's appointment as the Company's Chief
Executive Officer and his relocation, on November 15, 1993, the Board of        
Directors authorized a $130,000 loan which accrued interest at the prime lending
rate through June 1, 1996. The loan has been interest-free from June 2, 1996 to 
date. The Board also approved a $33,209 equity advance against the sale of Mr.  
Donovan's former residence and the                                              

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payment of $28,000 to Mr. Donovan's current residential community for an equity 
membership. The equity membership is fully refundable by the residential        
community in the event Mr. Donovan's home is sold. Mr. Donovan's employment     
agreement provides that the aggregate indebtedness of $191,209 plus accrued     
interest of $28,119 will be forgiven on a pro rata basis (20% per year) over the
five-year period commencing on April 1, 1998. See "Management -- Executive      
Compensation -- Employment Agreements."                                         

  Bradford T. Whitmore, a director of the Company, is a general partner of
Grace Brothers, Ltd., an investment partnership and broker-dealer. In March     
1997, Grace Brothers, Ltd. extended a short-term loan to the Company in the     
amount of $1.5 million which loan was repaid in May 1997. The interest rate     
charged under the agreement was prime plus 1%.                                  

   In May 1988, the Company's Board of Directors approved a policy regarding
the purchase of property from the Company by employees or executive officers,   
which policy was amended in March 1993. Under this policy, one residential      
lot/Timeshare Interests per year may be purchased from the Company for 15% below
the retail price of such residential lot/Timeshare Interests. An employee taking
advantage of a discount may not receive a commission on the sale and the sale   
will not be included for purposes of any bonus calculations. In addition,       
employees or executive officers may receive financing on one residential        
lot/Timeshare Interests at a time for up to 90% of the purchase price at the    
prevailing rate provided that the employee qualifies for such financing under   
the Company's credit policy with no exceptions. Under the policy, borrowings by 
any employee will be limited to $100,000. Any purchaser under the policy must   
agree to hold the parcel for at least two years before selling, provided that a 
sale may be made at any time after termination of employment. Notwithstanding   
the foregoing, all purchases by executive officers under the policy are required
to be approved by the Board of Directors. No purchases under the policy were    
made by any executive officer during fiscal 1998.                               

  Any existing loans to the Company's officers and employees other than in
the ordinary course of business have been approved, and any such future loans   
will be approved, by a majority of disinterested, non-management Directors. It  
is also the Company's policy that any transaction with an employee, officer,    
Director or principal shareholder, or affiliate of any of them, involving in    
excess of $1,000 (other than in the ordinary course of the Company's business)  
shall be approved by a majority vote of disinterested Directors, and any such   
transaction will be on terms no less favorable to the Company than those which  
could reasonably be obtained from an independent third party.                   

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PRINCIPAL STOCKHOLDERS

 The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 1, 1998 by (a) each person who
is known by the Company to own beneficially more than 5% of the Common Stock,   
(b) each director and Named Executive Officer of the Company, and (c) all       
directors and executive officers as a group. Unless otherwise indicated below,  
to the knowledge of the Company, all persons listed below have sole voting and  
investment power with respect to their shares of Common Stock, except to the    
extent authority is shared by spouses under applicable law.                     

                                                        [Enlarge/Download Table]

                                                               SHARES OF                                 
                                                              COMMON STOCK                               
                                                             ISSUABLE UPON                               
                                                OPTIONS      CONVERSION OF   TOTAL SHARES    PERCENT OF  
                                   COMMON     EXERCISABLE    DEBENTURES AND  BENEFICIALLY      SHARES    
                                    STOCK    WITHIN 60 DAYS     NOTES(1)        OWNED      OUTSTANDING(2)
                                  ---------  --------------  --------------  ------------  --------------
                                                                                                         
Beth Investments International                                                                           
  Inc............................ 1,629,858          --          166,617      1,796,475          8.8%    
  P.O. Box N-3242, IDB House                                                                             
  East Bay Street                                                                                        
  Nassau, Bahamas(3)                                                                                     
Grace Brothers, Ltd. ............ 1,676,766          --        1,782,244      3,459,010         15.7%    
  1560 Sherman Avenue                                                                                    
  Suite 900                                                                                              
  Evanston, Illinois 60201(3)                                                                            
Friess Associates of Delaware,                                                                           
  Inc. .......................... 1,206,000          --               --      1,206,000          5.9%    
  3908 Kennett Pike                                                                                      
  Greenville, Delaware 19807(3)                                                                          
Joseph C. Abeles(4)..............   364,553      79,048          442,065        885,666          4.3%    
John F. Chiste...................        --          --               --             --           --     
George F. Donovan................    84,187     274,033               --        358,220          1.7%    
Ralph A. Foote...................     7,870     102,897               --        110,767            *     
L. Nicolas Gray..................        --       6,300               --          6,300            *     
Daniel C. Koscher................     1,218      98,949               --        100,167            *     
Frederick M. Myers(5)............    34,398      90,973               --        125,371            *     
Patrick E. Rondeau...............    11,339      84,273               --         95,612            *     
J. Larry Rutherford..............        --          --               --             --           --     
Stuart A. Shikiar(6).............   721,182      32,038           80,145        833,365          4.1%    
Bradford T. Whitmore(7)..........   758,146      85,011               --        843,157          4.1%    
All Directors and executive                                                                              
  officers as a group (15                                                                                
  persons)....................... 1,991,713     896,109          522,210      3,410,032         15.7%    

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

*  Less than 1%.                                                              

(1) The conversion prices of $8.24 per share and $3.92 per share (the conversion
   price on May 1, 1998) are used to determine the shares of Common Stock into
   which the Company's 8.25% Convertible Subordinated Debentures due 2012 (the
    "Debentures") and the Company's 8.00% Convertible Subordinated Notes Payable
due 2002 (the "Notes") are convertible, respectively.                   
(2) The denominator used to calculate the percent of shares outstanding includes
shares issuable upon conversion of any Debentures and Notes held by the 
 applicable stockholder or group and upon exercise of any options that are
   exercisable within 60 days and held by the applicable stockholder or group,
plus 20,317,042 shares outstanding on May 1, 1998.                      
(3) Based on the most recent (as of May 1, 1998) Form 13F, 13G or 13D (as       
applicable) filed with the Securities and Exchange Commission.          
(4) Includes 11,574 shares and 36,407 shares issuable upon the conversion of    
  $300,000 aggregate principal amount of Debentures held by Mr. Abeles' wife
and 16,018 shares issuable upon the conversion of                       

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   $132,000 aggregate principal amount of Debentures held by family trusts for
which he disclaims beneficial ownership.                                
(5) Includes 34,398 shares of Common Stock held by Mr. Myers' wife for which he 
disclaims beneficial ownership.                                         
(6) Includes 3,034 shares of Common Stock issuable upon the conversion of       
   $25,000 aggregate principal amount of Debentures held by a family trust for
which Mr. Shikiar disclaims beneficial ownership. Also includes 534,706 
shares of Common Stock and 15,169 shares issuable upon the conversion of
$125,000 aggregate principal amount of Debentures over which Mr. Shikiar
exercises voting and investment power.                                  
(7) Mr. Whitmore is a general partner of Grace Brothers, Ltd. Mr. Whitmore      
   exercises shared voting and investment power with respect to shares held by
Grace Brothers, Ltd. and disclaims beneficial ownership of such shares  
except to the extent of his proportionate interest therein.             

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DESCRIPTION OF NOTES

GENERAL                                                                         

    The Outstanding Notes were and the Exchange Notes will be issued under the
Indenture, dated as of April 1, 1998 (the "Indenture"), among the Company, the  
Subsidiary Guarantors and SunTrust Bank, Central Florida, National Association  
("SunTrust"), as Notes Trustee (the "Notes Trustee"), a copy of which is        
available upon request to the Company as set forth under "Available             
Information." The Exchange Notes and the Outstanding Notes will constitute a    
single class of debt securities under the Indenture and, accordingly, will vote 
together as a single class for purposes of determining whether holders of the   
requisite percentage in outstanding principal amount of the Notes have taken    
certain actions or exercised certain rights under the Indenture. The following  
is a summary of certain provisions of the Indenture and the Notes and does not  
purport to be complete and is subject to, and is qualified in its entirety by   
reference to, all the provisions of the Indenture (including the definitions of 
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended) and the Notes. The definitions of certain terms used in
the following summary are set forth below under "-- Certain Definitions." As    
used in this Description of the Notes, the "Company" refers to Bluegreen        
Corporation and not its subsidiaries.                                           

  Except as otherwise indicated, the following description relates both to
the Outstanding Notes issued in the Note Offering and the Exchange Notes to be  
issued in the Exchange Offer. The form and terms of the Exchange Notes are the  
same as the form and terms of the Outstanding Notes in all material respects,   
except that (i) the Exchange Notes will bear a Series B designation and have    
been registered under the Securities Act and therefore will not bear legends    
restricting the transfer thereof and will not contain certain provisions        
relating to an increase in the interest rate which were included in the terms of
the Outstanding Notes in certain circumstances relating to the timing of the    
Exchange Offer and (ii) the holders of the Exchange Notes will not be entitled  
to certain rights of the holders of the Outstanding Notes under the Registration
Rights Agreement, which rights shall terminate upon the consummation of the     
Exchange Offer. The Exchange Notes will be obligations of the Company evidencing
the same indebtedness as the outstanding Notes.                                 

   Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the   
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Notes Trustee in New York, New York),      
except that, at the option of the Company, payment of interest may be made by   
check mailed to the address of the holders as such address appears in the Note  
Register. Initially, the Notes Trustee will act as Paying Agent and Registrar   
for the Notes. The Notes may be presented for registration of transfer and      
exchange at the offices of the Registrar, which initially will be the Notes     
Trustee's corporate trust office. The Company may change any Paying Agent and   
Registrar without notice to holders of the Notes.                               

For each Outstanding Note accepted for exchange, the holder of such   
Outstanding Note will receive an Exchange Note having a principal amount equal  
to that of the surrendered Outstanding Note.                                    

     The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge  
will be made for any registration of transfer or exchange of Notes, but the     
Company may require payment of a sum sufficient to cover any transfer tax or    
other similar governmental charge payable in connection therewith.              

TERMS OF NOTES                                                                  

 The Company sold $110 million aggregate principal amount of Outstanding
Notes in the Note Offering. The Notes will mature on April 1, 2008. Each Note   
will bear interest at the rate of 10 1/2% per annum from the date of issuance,  
or from the most recent date to which interest has been paid or provided for,   
and will be payable semiannually on April 1 and October 1 of each year (each an 
"Interest Payment Date"), commencing on October 1, 1998, to holders of record at
the close of business on the March 15 or September 15 immediately preceding the 
Interest Payment Date. The interest rate on the Outstanding Notes is subject to 
increase under certain circumstances. See "The Exchange Offer." Interest will be
computed on the basis of a                                                      

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360-day year comprised of twelve 30-day months. The Notes will not be entitled  
to the benefit of any mandatory sinking fund.                                   

OPTIONAL REDEMPTION                                                             

   Except as set forth below, the Notes will not be redeemable at the option
of the Company prior to April 1, 2003. On and after such date, the Notes will be
redeemable, at the Company's option, in whole or in part, at any time upon not  
less than 30 nor more than 60 days' prior notice mailed by first-class mail to  
each holder's registered address, at the following redemption prices (expressed 
in percentages of principal amount), if redeemed during the 12-month period     
commencing on April 1 of the years set forth below, plus accrued and unpaid     
interest to the redemption date (subject to the right of holders of record on   
the relevant record date to receive interest due on the relevant Interest       
Payment Date):                                                                  

                                                                [Download Table]

                                                              REDEMPTION
PERIOD                                                          PRICE   
------                                                        ----------
                                                                        
2003........................................................    105.25% 
2004........................................................    103.50  
2005........................................................    101.75  
2006 and thereafter.........................................    100.00  

   Optional Redemption Upon Equity Offering.  In addition, at any time prior
to April 1, 2001, the Company may, at its option, redeem up to 35% of the       
original aggregate principal amount of the Notes, with net cash proceeds of one 
or more Equity Offerings, at a redemption price equal to 110.5% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the date of
redemption; provided, however, that after any such redemption the aggregate     
principal amount of the Notes outstanding must equal at least $65 million. In   
order to effect the foregoing redemption with the proceeds of any Equity        
Offering, the Company shall make such redemption not more than 90 days after the
consummation of any such Equity Offering.                                       

   Selection.  In the case of any partial redemption, selection of the Notes
for redemption will be made by the Notes Trustee on a pro rata basis, by lot or 
by such other method as the Notes Trustee in its sole discretion shall deem to  
be fair and appropriate; provided, however, that if a partial redemption is made
with proceeds of an Equity Offering, selection of the Notes or portion thereof  
for redemption shall be made by the Notes Trustee only on a pro rata basis,     
unless such method is otherwise prohibited. Notes may be redeemed in part in    
multiples of $1,000 principal amount only. Notice of redemption will be sent, by
first class mail, postage prepaid, at least 45 days (unless a shorter period is 
acceptable to the Notes Trustee) prior to the date fixed for redemption to each 
holder whose Notes are to be redeemed at the last address for such holder then  
shown on the registry books. If any Note is to be redeemed in part only, the    
notice of redemption that relates to such Note shall state the portion of the   
principal amount thereof to be redeemed. A new Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the holder thereof 
upon cancellation of the original Note. On and after any redemption date,       
interest will cease to accrue on the Notes or part thereof called for redemption
as long as the Company has deposited with the Paying Agent funds in satisfaction
of the redemption price pursuant to the Indenture.                              

RANKING                                                                         

     The Outstanding Notes are and the Exchange Notes will be senior obligations
of the Company. The Outstanding Notes rank and the Exchange Notes will rank pari
passu in right of payment with all existing and future Senior Indebtedness of   
the Company (i.e., all indebtedness that is not by its terms expressly          
subordinate or junior in right of payment to any other Indebtedness of the      
Company). The Outstanding Notes rank and the Exchange Notes will rank senior in 
right of payment to any existing and future Subordinated Obligations of the     
Company. None of the assets of Bluegreen will secure its obligations under the  
Notes, and the Notes will be effectively subordinated to Secured Indebtedness of
the Company to any third party to the extent of any assets serving as security  
therefor. As described below, the Indenture allows the Company to incur         
Permitted Liens. As of December 28, 1997, on a pro forma basis after giving     
effect to the Note Offering                                                     

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and the application of the net proceeds therefrom and excluding the Notes, the  
Company would have approximately $25.9 million of Secured Indebtedness          
outstanding.                                                                    

SECURITY                                                                        

The Note Guarantees of certain Subsidiary Guarantors are secured by a 
Mortgage (subject to customary exceptions) on the respective Pledged Properties 
of such Subsidiary Guarantors. The Pledged Properties consist of real property  
presently owned by one of the Subsidiary Guarantors and located in: Texas, New  
Mexico, Montana, Arizona, Virginia, Colorado, Idaho, and North Carolina. Such   
Mortgages secure the payment and performance when due of all of the obligations 
of each Subsidiary Guarantor that owns Pledged Property under their respective  
Notes Guarantees. The Company has agreed to obtain certain title insurance      
policies in connection with the mortgaging of the Pledged Properties. If all    
such title insurance policies are not obtained by June 1, 1998, pursuant to the 
Purchase Agreement, the interest rate on the Notes will increase by 0.50% and   
any additional interest resulting from such increase will be payable on the     
interest payment dates set forth herein. Such additional interest will cease to 
accrue on the first to occur of the (i) the date on which a title insurance     
policy for the last of the Pledged Properties is delivered to the Initial       
Purchasers and (ii) the date on which the last of the Pledged Properties has    
been sold. The proceeds of any sale of the Pledged Properties following an Event
of Default under the Indenture would not be sufficient to repay the Notes in    
full. No appraisals on the Pledged Properties were obtained in connection with  
the Note Offering or the Exchange Offer. As of January 25, 1998, the real       
property comprising the Pledged Properties had an aggregate book value of       
approximately $46.1 million. Inventory has been sold from the Pledged Properties
since such date. No assurances can be given that the property subject to the    
Mortgages could be sold for such amount in the event of a foreclosure or other  
comparable proceeding realizing on the Mortgages or that the property will not  
decline in value. Pursuant to the terms of the Indenture and the Mortgages, the 
Notes Trustee shall be required to release the lien of the Mortgages with       
respect to the sale of any property covered thereby unless an Event of Default  
shall have occurred and be continuing. Absent such an Event of Default the Notes
Trustee shall not have a lien on the proceeds from a sale of the Pledged        
Properties. Consequently, the value of the collateral covered by the Mortgages  
will diminish over time as Pledged Properties are sold. Lots are currently being
sold at each of the Pledged Properties. Although no assurances can be given and 
the Pledged Properties may be sold more quickly, the Company currently estimates
based on historical sales that the Pledged Properties will be sold-out over a   
one to three year period. Except for the Mortgages on the Pledged Properties,   
neither the Company nor any of its subsidiaries including the Subsidiary        
Guarantors has provided or is required to provide any security for its          
obligations under the Notes or the Note Guarantees, as applicable. See "Risk    
Factors -- Risk of Inability to Realize Upon Mortgages; Insufficient            
Collateral."                                                                    

NOTE GUARANTEES                                                                 

Each Subsidiary Guarantor has unconditionally guaranteed, jointly and 
severally, to each holder and the Notes Trustee, as primary obligor and not as a
surety, the full and prompt payment of principal of and interest on the Notes,  
and the performance of all other obligations of the Company under the Indenture 
and the Notes. The initial Subsidiary Guarantors are substantially all of the   
Company's currently active Subsidiaries other than BG Aruba, Resort Title       
Agency, Inc. and any Receivables Subsidiary and certain other subsidiaries which
do not have material assets. In addition to the initial Subsidiary Guarantors,  
the Company will cause each Subsidiary of the Company that becomes a Restricted 
Subsidiary after the date of the Indenture to execute and deliver a supplement  
to the Indenture pursuant to which such Restricted Subsidiary will guarantee the
payment of the Notes on the same terms and conditions as the Note Guarantees by 
the initial Subsidiary Guarantors.                                              

   The Outstanding Guarantees are and the Exchange Guarantees will be senior
obligations (i.e., not contractually subordinated to other obligations) of each 
respective Subsidiary Guarantor. The Outstanding Guarantees rank and the        
Exchange Guarantees will rank pari passu in right of payment with all future and
existing Senior Indebtedness of such Subsidiary Guarantor, and senior in right  
of payment to all future and existing Subordinated Obligations of such          
Subsidiary Guarantor. As stated above, the Note Guarantees of certain Subsidiary
Guarantors will be secured by a first Mortgage on the Pledged Properties. Except
for such                                                                        

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secured Note Guarantees, the Note Guarantees of each Subsidiary Guarantor will  
be effectively subordinated to Secured Indebtedness of such Subsidiary Guarantor
to the extent of the assets serving as security therefor. As described below,   
the Indenture allows the Subsidiaries to incur Permitted Liens. At December 28, 
1997, on a pro forma basis after giving effect to the Note Offering and the     
application of the net proceeds therefrom, the Subsidiary Guarantors had $14.9  
million of Senior Indebtedness outstanding, other than the Note Guarantees.     

 The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed           
liabilities of such Subsidiary Guarantor (and after giving effect to any        
collections from or payments made by or on behalf of any other Subsidiary       
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Note Guarantee or pursuant to its contribution obligations under the        
Indenture) result in the obligations of such Subsidiary Guarantor under the Note
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under 
any federal or state law. Each Subsidiary Guarantor that makes a payment or     
distribution under a Note Guarantee shall be entitled to contribution from each 
other Subsidiary Guarantor in pro rata amount based on the Adjusted Net Assets  
of each Subsidiary Guarantor.                                                   

  Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor without limitation.       
Subject to certain conditions, each Subsidiary Guarantor may also consolidate   
with or merge into or sell all or substantially all its assets to a corporation,
partnership or trust other than the Company or another Subsidiary Guarantor     
(whether or not affiliated with the Subsidiary Guarantor). Upon the sale or     
disposition of a Subsidiary Guarantor (or all or substantially all of its       
assets) to a Person (whether or not an Affiliate of the Subsidiary Guarantor)   
which is not a Subsidiary of the Company, which sale or disposition is otherwise
in compliance with the Indenture (including the covenant described under        
"-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock"),  
such Subsidiary Guarantor shall be deemed released from all of its obligations  
under the Indenture and its Note Guarantee and such Note Guarantee shall        
terminate; provided, however, that any such termination shall occur only to the 
extent that all obligations of such Subsidiary Guarantor under and all of its   
guarantees of, and under all of its pledges of assets or other security         
interests which secure, any other Indebtedness of the Company shall also        
terminate upon such release, sale or transfer.                                  

CHANGE OF CONTROL                                                               

Upon the occurrence of any of the following events (each a "Change of 
Control"), each holder will have the right to require the Company to repurchase 
all or any part of such holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant     
record date to receive interest due on the relevant Interest Payment Date): (i) 
any sale, lease, exchange or other transfer (in one transaction or a series of  
related transactions) of all or substantially all of the assets of the Company  
and its Subsidiaries; or (ii) a majority of the Board of Directors of the       
Company shall consist of Persons who are not Continuing Directors of the        
Company; or (iii) the acquisition by any Person or Group of the power, directly 
or indirectly, to vote or direct the voting of securities having more than 50%  
of the total voting power for the election of directors of the Company or of any
direct or indirect holding company thereof.                                     

Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in         
connection with such Change of Control, the Company shall mail a notice to each 
holder with a copy to the Notes Trustee stating: (1) that a Change of Control   
has occurred and that such holder has the right to require the Company to       
purchase such holder's Notes at a purchase price in cash equal to 101% of the   
principal amount thereof plus accrued and unpaid interest, if any, to the date  
of purchase (subject to the right of holders of record on a record date to      
receive interest on the relevant Interest Payment Date); (2) the repurchase date
(which shall be no earlier than 30 days nor later than 60 days from the date    
such notice is mailed); and (3) the procedures determined by the Company,       
consistent with the Indenture, that a holder must follow in order to have its   
Notes purchased. To exercise the repurchase right, holders must comply with     
certain procedures set forth in the Indenture.                                  

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 Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may  
apply in the event that the repurchase option becomes available to the holders  
of the Notes. The Company will comply, to the extent applicable, with the       
requirements of Section 14(e) of the Exchange Act and any other securities laws 
or regulations in connection with the repurchase of Notes pursuant to the       
Indenture. To the extent that the provisions of any securities laws or          
regulations conflict with provisions of the Indenture, the Company will comply  
with the applicable securities laws and regulations and shall not be deemed to  
have breached its obligations described in the Indenture by virtue thereof.     

     The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of the       
Company and its Subsidiaries. With respect to the disposition of property or    
assets, the phrase "all or substantially all" as used in the Indenture varies   
according to the facts and circumstances of the subject transaction, has no     
clearly established meaning under New York law (which is the law which governs  
the Indenture) and is subject to judicial interpretation. Accordingly, in       
certain circumstances there may be a degree of uncertainty in ascertaining      
whether a particular transaction would involve a disposition of "all or         
substantially all" of the property or assets of a Person, and therefore it may  
be unclear as to whether a Change of Control has occurred and whether the       
Company is required to make an offer to repurchase the Notes as described above.

    Current and future Senior Indebtedness of the Company and its Subsidiaries
may contain prohibitions of certain events that would constitute a Change of    
Control or require such Senior Indebtedness to be repurchased upon a Change of  
Control. Moreover, the exercise by the holders of their right to require the    
Company to repurchase the Notes could cause a default under such Senior         
Indebtedness, even if the Change of Control itself does not, due to the         
financial effect of such repurchase on the Company. Finally, the Company's      
ability to pay cash to the holders upon a repurchase may be limited by the      
Company's then existing financial resources. There can be no assurance that     
sufficient funds will be available when necessary to make any required          
repurchases. See "Risk Factors -- Limitation on Repurchase of Notes Upon a      
Change of Control."                                                             

CERTAIN COVENANTS                                                               

The Indenture contains certain covenants including, among others, the 
following:                                                                      

Limitation on Indebtedness.  (a) The Company shall not, and shall not 
permit any of its Restricted Subsidiaries to, Incur any Indebtedness; provided, 
however, that the Company and its Restricted Subsidiaries may Incur Indebtedness
if no Default or Event of Default shall have occurred and be continuing at the  
time of such Incurrence or would occur as a consequence of such Incurrence and  
the Consolidated Coverage Ratio would be equal to at least (x) 2.00 to 1.00 if  
such Indebtedness is Incurred prior to April 1, 2000, (y) 2.25 to 1.00 if such  
Indebtedness is Incurred after April 1, 2000 but prior to March 31, 2002 and (z)
2.50 to 1.00 after March 31, 2002.                                              

(b) Notwithstanding the foregoing paragraph (a), the Company and its  
Restricted Subsidiaries may Incur any or all of the following Indebtedness:     

         (i) Indebtedness Incurred under any Credit Agreements and/or pursuant
to seller financing in connection with the acquisition of inventory;  
  provided, however, after giving effect to such Incurrence, the aggregate
principal amount of such Indebtedness then outstanding does not exceed
$30.0 million;                                                        

   (ii) Indebtedness represented by Capitalized Lease Obligations,
mortgage financing or purchase money obligations in addition to that  
 specified in clause (i) above, in each case Incurred for the purpose of
    financing all or any part of the purchase price or cost of construction or
improvement of property used in a Permitted Business or Incurred to   
   refinance any such purchase price or cost of construction or improvement,
in each case Incurred no later than 365 days after the date of such   
    acquisition or the date of completion of such construction or improvement;
   provided, however, that the principal amount of any Indebtedness Incurred
pursuant to this clause (ii) shall not exceed $2.0 million at any time
outstanding;                                                          

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          (iii) Indebtedness outstanding pursuant to the Convertible Debentures,
the Convertible Notes and the RDI Note and other Existing Indebtedness
    outstanding as of the Issue Date after the application of the net proceeds
of the Note Offering;                                                 

          (iv) Indebtedness of the Company owing to and held by any Wholly-Owned
    Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by
    the Company or any Wholly-Owned Subsidiary; provided, however, that (A) if
the Company is the obligor on such Indebtedness, such Indebtedness is 
expressly subordinate to the payment in full of all Obligations with  
 respect to the Notes and (B) any subsequent issuance or transfer of any
 Capital Stock or any other event which results in any such Wholly-Owned
Subsidiary ceasing to be a Wholly-Owned Subsidiary or any subsequent  
transfer of any such Indebtedness (except to the Company or any       
   Wholly-Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;                

     (v) Indebtedness represented by (A) the Outstanding Notes and any
  Exchange Notes issued in exchange for the Outstanding Notes of any equal
principal amount, (B) the Note Guarantees, and (C) any Refinancing    
   Indebtedness Incurred in respect of any Indebtedness described in clauses
    (i) through (iii) or this clause (v) or Incurred pursuant to paragraph (a)
above;                                                                

 (vi) (A) Indebtedness of a Restricted Subsidiary Incurred and
     outstanding on the date on which such Restricted Subsidiary was acquired by
 the Company (other than Indebtedness Incurred in anticipation of, or to
provide all or any portion of the funds or credit support utilized to 
  consummate the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Subsidiary or was otherwise 
acquired by the Company); provided, however that, at the time such    
  Restricted Subsidiary is acquired by the Company, the Company would have
   been able to Incur $1.00 of additional Indebtedness pursuant to paragraph
(a) above after giving effect to the Incurrence of such Indebtedness  
     pursuant to this clause (vi) and (B) Refinancing Indebtedness Incurred by a
Restricted Subsidiary in respect of Indebtedness incurred by such     
Restricted Subsidiary pursuant to this clause (vi);                   

          (vii) Indebtedness (A) in respect of performance bonds, completion and
  maintenance bonds, bankers' acceptances, letters of credit and surety or
    appeal bonds provided by the Company or any of its Restricted Subsidiaries
     to their customers in the ordinary course of their business, (B) in respect
  of performance bonds or similar obligations of the Company or any of its
Restricted Subsidiaries for or in connection with pledges, deposits or
 payments made or given in the ordinary course of business in connection
   with or to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations and (C) 
arising from Guarantees to suppliers, lessors, licensees, contractors,
   franchises or customers of obligations (other than Indebtedness) incurred
in the ordinary course of business;                                   

(viii) Indebtedness arising from agreements providing for   
  indemnification, adjustment of purchase price or similar obligations, or
  from Guarantees or letters of credits, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted      
Subsidiaries pursuant to such agreements, in each case Incurred in    
connection with the disposition of any business assets or Restricted  
   Subsidiary of the Company (other than Guarantees of Indebtedness or other
 obligations Incurred by any Person acquiring all or any portion of such
    business assets or Restricted Subsidiary of the Company for the purpose of
financing such acquisition) not to exceed the gross proceeds actually 
     received by the Company or any of its Restricted Subsidiaries in connection
    with such disposition; provided, however, that the principal amount of any
  Indebtedness Incurred pursuant to this clause (viii) when taken together
with all Indebtedness Incurred pursuant to this clause (viii) and then
outstanding, shall not exceed $2.0 million;                           

 (ix) Indebtedness under Currency Agreements and Interest Rate
    Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements such Currency Agreements and Interest Rate   
   Agreements are entered into for bona fide hedging purposes of the Company
     or its Restricted Subsidiaries (as determined in good faith by the Board of
Directors of the Company) and correspond in terms of notional amount, 
   duration, currencies and interest rates as applicable, to Indebtedness of
  the Company or its Restricted Subsidiaries Incurred without violation of
the Indenture                                                         
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   or to business transactions of the Company or its Restricted Subsidiaries
on customary terms entered into in the ordinary course of business;   

         (x) Indebtedness consisting of (A) Guarantees by the Company (so long
as the Company could have Incurred such Indebtedness directly without 
   violation of the Indenture) and (B) Guarantees by a Restricted Subsidiary
 of Senior Indebtedness Incurred by the Company without violation of the
   Indenture (so long as such Restricted Subsidiary could have Incurred such
Indebtedness directly without violation of the Indenture);            

  (xi) Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument issued by the
Company or its Subsidiaries drawn against insufficient funds in the   
ordinary course of business in an amount not to exceed $250,000 at any
   time, provided that such Indebtedness is extinguished within two business
days of its incurrence; and                                           

    (xii) Indebtedness (other than Indebtedness described in clauses
(i)-(xi)) in a principal amount which, when taken together with the   
     principal amount of all other Indebtedness Incurred pursuant to this clause
(xii) and then outstanding, will not exceed $10.0 million.            

For purposes of determining compliance with this "Limitation on       
Indebtedness" covenant, in the event that an item of Indebtedness meets the     
criteria of more than one of the types of Indebtedness described in the above   
clauses at the time of incurrence, the Company shall, in its sole discretion,   
classify such item of Indebtedness and only be required to include the amount   
and type of such Indebtedness in the applicable clause(s) so selected by the    
Company. No fluctuation in currency exchange rates or interest rates following  
the incurrence of any Indebtedness shall result in a Default hereunder if the   
Indebtedness itself was incurred in compliance with the Indenture at the time of
incurrence.                                                                     

(c) Neither the Company nor any Restricted Subsidiary shall Incur any 
Indebtedness under paragraph (b) above if the proceeds thereof are used,        
directly or indirectly, to refinance any Subordinated Obligations of the Company
unless such Indebtedness shall be subordinated to the Notes to at least the same
extent as such Subordinated Obligations. No Restricted Subsidiary shall Incur   
any Indebtedness under paragraph (b) above if the proceeds thereof are used,    
directly or indirectly, to refinance any Guarantor Subordinated Obligation of   
such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the 
obligations of such Subsidiary Guarantor under the Note Guarantee to at least   
the same extent as such Guarantor Subordinated Obligation.                      

  (d) The Company will not permit any Unrestricted Subsidiary to Incur any
Indebtedness other than Non-Recourse Debt.                                      

  Limitation on Restricted Payments.  (a) The Company shall not, and shall
not permit any of its Restricted Subsidiaries, directly or indirectly, to (i)   
declare or pay any dividend or make any distribution on or in respect of its    
Capital Stock (including any payment in connection with any merger or           
consolidation involving the Company or any of its Restricted Subsidiaries)      
except (A) dividends or distributions payable in its Capital Stock (other than  
Disqualified Stock) or in options, warrants or other rights to purchase such    
Capital Stock (other than Disqualified Stock) and (B) dividends or distributions
payable to the Company or a Restricted Subsidiary of the Company which holds any
equity interest in the paying Restricted Subsidiary, (ii) purchase, redeem,     
retire or otherwise acquire for value any Capital Stock of the Company held by  
Persons other than a Wholly-Owned Subsidiary of the Company or any Capital Stock
of a Restricted Subsidiary of the Company held by any Person, other than a      
Wholly-Owned Subsidiary (in either case, other than in exchange for its Capital 
Stock (other than Disqualified Stock)), (iii) purchase, repurchase, redeem,     
defease or otherwise acquire or retire for value, any Subordinated Obligations  
or (iv) make any Investment (other than a Permitted Investment) in any Person   
(any such dividend, distribution, purchase, redemption, repurchase, defeasance, 
other acquisition, retirement or Investment as described in preceding clauses   
(i) through (iv) being referred to as a "Restricted Payment"), if at the time   
the Company or such Restricted Subsidiary makes such Restricted Payment and     
immediately after giving pro forma effect to such Restricted Payment: (1) a     
Default shall have occurred and be continuing (or would result therefrom); or   
(2) the Company is not able to incur an additional $1.00 of Indebtedness        
pursuant to paragraph (a) under "Limitation on                                  

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Indebtedness"; or (3) the aggregate amount of such Restricted Payment and all   
other Restricted Payments declared or made subsequent to the Issue Date would   
exceed the sum, without duplication, of (A) 50% of the Consolidated Net Income  
accrued during the period (treated as one accounting period) from the first day 
of the first fiscal quarter beginning on or after the Issue Date to the end of  
the most recent fiscal quarter ending prior to the date of such Restricted      
Payment as to which financial results are available (but in no event ending more
than 135 days prior to the date of such Restricted Payment) (or, in case such   
Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the
aggregate Net Cash Proceeds received by the Company from the issue or sale of   
its Capital Stock subsequent to the Issue Date (other than Disqualified Stock   
and other than Net Cash Proceeds received from an issuance or sale of such      
Capital Stock to a Subsidiary of the Company); (C) the amount by which          
Indebtedness of the Company is reduced on the Company's balance sheet upon the  
conversion or exchange (other than by a Restricted Subsidiary of the Company)   
subsequent to the Issue Date of any Indebtedness of the Company convertible or  
exchangeable for Capital Stock of the Company (less the amount of any cash, or  
other property, distributed by the Company upon such conversion or exchange);   
(D) the amount equal to the net reduction in Investments (other than Permitted  
Investments) made after the Issue Date by the Company or any of its Restricted  
Subsidiaries in any Person resulting from (i) repurchases or redemptions of such
Investments by such Person, proceeds realized upon the sale of such Investment  
to an unaffiliated purchaser, repayments of loans or advances or other transfers
of assets by such Person to the Company or any Restricted Subsidiary of the     
Company or (ii) the redesignation of Unrestricted Subsidiaries to Restricted    
Subsidiaries (valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount of        
Investments previously included in the calculation of the amount of Restricted  
Payments; provided, however, that no amount shall be included under this Clause 
(D) to the extent it is already included in Consolidated Net Income; and (E) $5 
million.                                                                        

     (b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Obligations of the Company made by  
exchange for, conversion into or out of the proceeds of the substantially       
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock 
and other than Capital Stock issued or sold to a Subsidiary); provided, however,
that (A) such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds (to the extent used 
for such purchase or redemption) from such sale shall be excluded from clause   
(3) (B) of paragraph (a); (ii) any purchase or redemption of Subordinated       
Obligations of the Company made by exchange for, conversion into or out of the  
proceeds of the substantially concurrent sale of, Subordinated Obligations      
constituting Refinancing Indebtedness of the Company in compliance with the     
"Limitation on Indebtedness" covenant; provided, further, that such purchase or 
redemption shall be excluded in the calculation of the amount of Restricted     
Payments; (iii) any purchase or redemption of Subordinated Obligations as a     
result of a Change of Control (provided that the covenant described in          
"Limitation on Repayments upon a Change of Control" is complied with); (iv) any 
purchase or redemption of Subordinated Obligations from Net Available Cash to   
the extent permitted under "Limitation on Sales of Assets and Subsidiary Stock" 
below; provided, further, that such purchase or redemption shall be excluded in 
the calculation of the amount of Restricted Payments; (v) payment by the Company
of any scheduled sinking fund payments under the Public Debentures; provided    
that the Company reduces its required sinking fund payments to the maximum      
amount permitted under the Indenture pursuant to which such Public Debentures   
were issued; (vi) repayment of the Convertible Notes upon stated maturity,      
provided, however, that the amount of such payment shall be included in the     
calculation of the amount of permitted Restricted Payments subsequent to the    
date of such payment; (vii) dividends paid within 60 days after the date of     
declaration if at such date of declaration such dividend would have complied    
with this provision; provided, however, that such dividend shall be included in 
the calculation of the amount of Restricted Payments; and (viii) repurchases of 
Capital Stock deemed to occur upon the exercise of stock options (other than    
options relating to Disqualified Stock) if such Capital Stock represents a      
portion of the exercise price of such options; provided, however, that in the   
case of clauses (i), (ii), (iii), (iv) and (v) no Default or Event of Default   
shall have occurred or be continuing at the time of such payment or as a result 
thereof. As discussed below under "Description of Other Indebtedness," an Event 
of Default under the Indenture may not prevent payment on the Public Debentures 

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or the Convertible Notes for more than 90 days unless the Company's obligations 
under the Notes have been and remain accelerated. See "Description of Other     
Indebtedness."                                                                  

 (c) For purposes of determining compliance with the foregoing covenant,
Restricted Payments may be made with cash or non-cash assets, provided that any 
Restricted Payment made other than in cash shall be valued at the fair market   
value (determined, subject to the additional requirements of the immediately    
succeeding proviso, in good faith by the Board of Directors) of the assets so   
utilized in making such Restricted Payment, provided, however that (i) in the   
case of any Restricted Payment made with Capital Stock or Indebtedness, such    
Restricted Payment shall be deemed to be made in an amount equal to the greater 
of the fair market value thereof and the liquidation preference (if any) or     
principal amount of the Capital Stock or Indebtedness, as the case may be, so   
utilized, (ii) in the case of any Restricted Payment made other than in cash in 
an aggregate amount in excess of $2.0 million but less than $4.0 million, the   
fairness of the valuation thereof (as determined by the Company) for purposes of
determining compliance with the "Limitation on Restricted Payments" covenant in 
the Indenture shall be approved by a majority of the disinterested members of   
the Board of Directors of the Company and (iii) in the case of any Restricted   
Payment made other than in cash in an aggregate amount of $4.0 million or more, 
a written opinion as to the fairness of the valuation thereof (as determined by 
the Company) for purposes of determining compliance with the "Limitation on     
Restricted Payments" covenant in the Indenture shall be issued by an independent
investment banking, accounting or qualified appraisal firm of national standing.

   (d) Not later than the date of making any Restricted Payment, the Company
shall deliver to the Notes Trustee an Officer's Certificate stating that such   
Restricted Payment complies with the Indenture and setting forth in reasonable  
detail the basis upon which the required calculations were computed, which      
calculations may be based upon the Company's latest available quarterly         
financial statements, and a copy of any required investment banker's,           
accountant's or appraiser's opinion.                                            

    Limitation on Liens.  The Indenture provides that the Company will not and
will not permit any Restricted Subsidiary to, directly or indirectly, create or 
permit to exist any Liens except for Permitted Liens.                           

Limitation on Restrictions on Distributions from Restricted           
Subsidiaries.  The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual   
encumbrance or consensual restriction on the ability of any such Restricted     
Subsidiary to (a) pay dividends or make any other distributions on its Capital  
Stock or pay any Indebtedness or other obligation owed to the Company, (b) make 
any loans or advances to the Company, (c) transfer any of its property or assets
to the Company, or (d) guarantee the Notes, except: (i) any encumbrance or      
restriction pursuant to an agreement in effect at or entered into on the Issue  
Date, including, without limitation, the Indenture, the Notes and the Credit    
Agreements, if any; (ii) any encumbrance or restriction with respect to such a  
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness     
Incurred by such Restricted Subsidiary which was entered into on or prior to the
date on which such Restricted Subsidiary was acquired by the Company and        
outstanding on such date (other than Indebtedness Incurred in anticipation of,  
or to provide all or any portion of the funds or credit support utilized to     
consummate, the transaction or series of related transactions pursuant to which 
such Restricted Subsidiary became a Restricted Subsidiary of the Company or was 
acquired by the Company) provided that such encumbrance or restriction is not   
applicable to any properties or assets other than of the types owned or held by 
such Restricted Subsidiary at the time it became a Restricted Subsidiary; (iii) 
any encumbrance or restriction with respect to such a Restricted Subsidiary     
effecting a refinancing of Indebtedness issued pursuant to an agreement referred
to in clauses (i) or (ii) or this clause (iii) or contained in any amendment to 
an agreement referred to in clauses (i) or (ii) or this clause (iii) (or        
effecting a Refinancing of such Refinancing Indebtedness pursuant to this clause
(iii) or contained in any amendment, modification, restatement, renewal or      
supplement to an agreement referred to in clause (i) or (ii) or this clause     
(iii)); provided, however, that the encumbrances and restrictions with respect  
to such Restricted Subsidiary contained in any of such agreement, refinancing   
agreement or amendment, taken as a whole, are no less favorable to the holders  
of the Notes in any material respect, as determined in good faith by the Board  
of Directors of the Company, than encumbrances and restrictions with respect to 
such Restricted Subsidiary contained in agreements in effect at, or entered into
on, the Issue Date; (iv) in the case of clause (c), any encumbrance or          
restriction (A) that restricts in a customary manner the subletting, assignment 
or                                                                              
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transfer of any property or asset that is a lease, license, conveyance or       
contract or similar property or asset, (B) by virtue of any transfer of,        
agreement to transfer, option or right with respect to, or Lien on, any property
or assets of the Company or any Restricted Subsidiary not otherwise prohibited  
by the Indenture or (C) that is included in a licensing agreement to the extent 
such restrictions limit the transfer of the property subject to such licensing  
agreement; (v) in the case of clause (c) above, restrictions contained in       
security agreements, mortgages or similar documents securing Indebtedness       
(including purchase money Indebtedness) of a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements, mortgages or similar documents; (vi) any restriction with respect to
such a Restricted Subsidiary imposed pursuant to an agreement entered into for  
the sale or disposition of all or substantially all the Capital Stock or assets 
of such Restricted Subsidiary pending the closing of such sale or disposition;  
(vii) encumbrances or restrictions arising or existing by reason of applicable  
law; (viii) any encumbrance or restriction pursuant to Indebtedness of          
Restricted Subsidiaries that is permitted to be Incurred subsequent to the Issue
Date pursuant to the provisions of the covenant described under "-- Limitation  
on Indebtedness"; and (ix) restrictions on cash or other deposits imposed by    
customers under contracts incurred in the ordinary course of business consistent
with past practices.                                                            

    Limitation on Sales of Assets and Subsidiary Stock.  (a) The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, make any Asset 
Disposition unless (i) the Company or such Restricted Subsidiary receives       
consideration at the time of such Asset Disposition at least equal to the fair  
market value, as determined in good faith by the Company's Board of Directors   
(including as to the value of all non-cash consideration), of the shares and    
assets subject to such Asset Disposition, (ii) at least 75% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form of 
cash or Cash Equivalents and (iii) an amount equal to 100% of the Net Available 
Cash from such Asset Disposition is applied by the Company (or such Restricted  
Subsidiary, as the case may be) (A) first, to the extent the Company or any     
Restricted Subsidiary elects (or is required by the terms of any Secured        
Indebtedness), (x) to prepay, repay or purchase Secured Indebtedness or (y) to  
the investment in or acquisition of Additional Assets within 360 days from the  
later of the date of such Asset Disposition or the receipt of such Net Available
Cash; (B) second, within 360 days from the receipt of such Net Available Cash,  
to the extent of the balance of such Net Available Cash after application in    
accordance with clause (A), to make an offer to purchase Notes at 100% of their 
principal amount plus accrued and unpaid interest, if any, thereon; and (C)     
third, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B) (w) to the investment in or acquisition  
of Additional Assets, (x) the making of Temporary Cash Investments or (y) any   
other purpose otherwise permitted under the Indenture, in each case within the  
later of 45 days after the application of Net Available Cash in accordance with 
clauses (A) and (B) or the date that is one year from the receipt of such Net   
Available Cash; provided, however, that, in connection with any prepayment,     
repayment or purchase of Indebtedness pursuant to clause (A) or (B) above, the  
Company or such Restricted Subsidiary shall retire such Indebtedness and shall  
cause the related loan commitment (if any) to be permanently reduced in an      
amount equal to the principal amount so prepaid, repaid or purchased.           
Notwithstanding the foregoing provisions, the Company and its Restricted        
Subsidiaries shall not be required to apply any Net Available Cash in accordance
herewith except to the extent that the aggregate Net Available Cash from all    
Asset Dispositions which are not applied in accordance with this covenant at any
time exceeds $10.0 million. The Company shall not be required to make an offer  
for Notes pursuant to this covenant if the Net Available Cash available therefor
(after application of the proceeds as provided in clause (A)) is less than $10.0
million for any particular Asset Disposition (which lesser amounts shall be     
carried forward for purposes of determining whether an offer is required with   
respect to the Net Available Cash from any subsequent Asset Disposition).       

     For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Company or   
Senior Indebtedness of any Restricted Subsidiary of the Company and the release 
of the Company or such Restricted Subsidiary pursuant to a customary novation   
agreement from all liability on such Senior Indebtedness in connection with such
Asset Disposition (in which case the Company shall, without further action, be  
deemed to have applied such assumed Indebtedness in accordance with clause (A)  
of the preceding paragraph) and (y) securities received by the Company or any   

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Restricted Subsidiary of the Company from the transferee that are promptly (and 
in any event within 90 days) converted by the Company or such Restricted        
Subsidiary into cash.                                                           

(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a) (iii) (B), the Company will be required to purchase
Notes tendered pursuant to an offer by the Company for the Notes at a purchase  
price of 100% of their principal amount plus accrued and unpaid interest, if    
any, to the purchase date in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture. If the aggregate  
purchase price of the Notes tendered pursuant to the offer is less than the Net 
Available Cash allotted to the purchase of the Notes, the Company will apply the
remaining Net Available Cash in accordance with clause (a)(iii)(C) above.       

   Limitation on Affiliate Transactions.  (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter 
into or conduct any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property, employee compensation        
arrangement or the rendering of any service) with or for the benefit of any     
Affiliate of the Company, other than the Company or a Wholly-Owned Subsidiary   
(an "Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction
are no less favorable to the Company or such Restricted Subsidiary, as the case 
may be, than those that could be obtained at the time of such transaction in    
arm's length dealings with a Person who is not such an Affiliate; (ii) in the   
event such Affiliate Transaction involves an aggregate amount in excess of $1.0 
million or is a loan, advance or other Indebtedness, the terms of such          
transaction have been approved by a majority of the disinterested members of    
such Board, if any (and such majority determines that such Affiliate Transaction
satisfies the criteria in clause (i) above); and (iii) in the event such        
Affiliate Transaction involves an aggregate amount in excess of $2.0 million,   
the Company has received a written opinion from an independent investment       
banking, accounting or appraisal firm of nationally recognized standing that    
such Affiliate Transaction is fair to the Company or such Restricted Subsidiary,
as the case may be, from a financial point of view.                             

(b) The foregoing paragraph (a) shall not apply to (i) the Company's  
employee compensation and other benefit arrangements (including without         
limitation any option grants or other equity based awards), (ii) loans or       
advances to employees in the ordinary course of business of the Company or any  
of its Restricted Subsidiaries in aggregate amount outstanding not to exceed    
$250,000 to any employee or $500,000 in the aggregate at any time, (iii) the    
payment of reasonable and customary fees to directors of the Company who are not
employees of the Company (including without limitation the grant of stock       
options), (iv) indemnification agreements with, and the payment of fees and     
indemnities to, directors, officers and employees of the Company and its        
Restricted Subsidiaries, in each case in the ordinary course of business, (v)   
transactions pursuant to agreements in existence on the Issue Date which are (x)
described in the Prospectus or (y) otherwise, in the aggregate, immaterial to   
the Company and its Restricted Subsidiaries taken as a whole, and, in either    
case, are effected pursuant to the terms of such agreements as in effect on the 
Issue Date, and (vi) transactions with respect to the acquisition of Accounts   
Receivable and/or direct sales of Accounts Receivable to financial institutions 
or sales of Accounts Receivable in connection with securitization transactions, 
in each case in the ordinary course of business.                                

   Limitation on Issuances of Capital Stock of Restricted Subsidiaries.  The
Company will not permit any of its Restricted Subsidiaries to issue any Capital 
Stock to any Person (other than to the Company or a Wholly-Owned Subsidiary of  
the Company) or permit any Person (other than the Company or a Wholly-Owned     
Subsidiary of the Company and other than directors' qualifying shares and, to   
the extent required by local ownership laws in foreign countries, shares owned  
by foreign shareholders) to own any Capital Stock of a Restricted Subsidiary of 
the Company; provided, however, that this provision shall not prohibit (a) the  
Company or any of its Restricted Subsidiaries from selling, leasing or otherwise
disposing of all of the Capital Stock of any Restricted Subsidiary, provided    
that the net cash proceeds from such sale, lease or other disposition are       
applied in accordance with the covenant described under the caption             
"-- Limitation on Sales of Assets and Subsidiary Stock" or (b) the designation  
of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with the 
Indenture.                                                                      

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 Limitation on Repayment upon a Change of Control.  The Company will not
make an offer to repurchase any Subordinated Obligations if it is required to do
so pursuant to a Change of Control until at least 60 days after the occurrence  
of such Change of Control and shall not purchase any Subordinated Obligations   
for 30 days following the time the Company is required to make purchases of the 
Notes under the Indenture following such Change of Control.                     

    Limitation on Sale/Leaseback Transactions.  The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into,    
Guarantee or otherwise become liable with respect to any Sale/Leaseback         
Transaction with respect to any property or assets unless (a) the Company or    
such Restricted Subsidiary, as the case may be, would be entitled pursuant to   
the Indenture to Incur Indebtedness secured by a Permitted Lien on such property
or assets in an amount equal to the Attributable Indebtedness with respect to   
such Sale/Leaseback Transaction, (b) the Net Cash Proceeds from such            
Sale/Leaseback Transaction are at least equal to the fair market value of the   
property or assets subject to such Sale/Leaseback Transaction (such fair market 
value determined, in the event such property or assets have a fair market value 
in excess of $1.0 million, no more than 30 days prior to the effective date of  
such Sale/Leaseback Transaction, by the Board of Directors of the Company as    
evidenced by a resolution of such Board) and (c) the net cash proceeds of such  
Sale/Leaseback Transaction are applied in accordance with the provisions        
described under "-- Limitation on Sales of Assets and Subsidiary Stock."        

   SEC Reports.  The Company will file with the Notes Trustee and provide to
the holders of the Notes (upon request), within 15 days after it files them with
the Commission, copies of the annual reports and of the information, documents  
and other reports (or copies of such portions of any of the foregoing as the    
Commission may by rules and regulations prescribe) which the Company files with 
the Commission pursuant to Section 13 or 15(d) of the Exchange Act. In the event
that the Company is not required to file such reports with the Commission       
pursuant to the Exchange Act, the Company will nevertheless deliver such        
Exchange Act information to the holders of the Notes within 15 days after it    
would have been required to file it with the Commission.                        

   Limitation on Designations of Unrestricted Subsidiaries.  The Company may
designate any Subsidiary of the Company (other than a Subsidiary of the Company 
which owns Capital Stock of a Restricted Subsidiary) as an "Unrestricted        
Subsidiary" under the Indenture (a "Designation") only if:                      

          (a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and                          

       (b) except in the case of a newly organized Subsidiary in which the
    Company and the Restricted Subsidiaries have made aggregate investments of
     $10,000 or less, the Company would be permitted under the Indenture to make
 an Investment at the time of Designation (assuming the effectiveness of
    such Designation) in an amount (the "Designation Amount") equal to the sum
   of (i) fair market value of the Capital Stock of such Subsidiary owned by
the Company and the Restricted Subsidiaries on such date and (ii) the 
 aggregate amount of other Investments of the Company and the Restricted
Subsidiaries in such Subsidiary on such date; and                     

   (c) the Company would be permitted to incur $1.00 of additional
   Indebtedness (other than permitted Indebtedness) pursuant to the covenant
    described under "-- Limitation on Indebtedness" at the time of Designation
(assuming the effectiveness of such Designation).                     

In the event of any such Designation, the Company shall be deemed to have made  
an Investment constituting a Restricted Payment pursuant to the covenant        
described under "-- Limitation on Restricted Payments" for all purposes of the  
Indenture in the Designation Amount. The Indenture will further provide that the
Company shall not, and shall not permit any Restricted Subsidiary to, at any    
time (i) provide direct or indirect credit support for or a guarantee of any    
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,      
agreement or instrument evidencing such Indebtedness), (ii) be directly or      
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (iii)  
be directly or indirectly liable for any Indebtedness which provides that the   
holder thereof may (upon notice, lapse of time or both) declare a default       
thereon or cause the payment thereof to be accelerated or payable prior to its  
final scheduled maturity upon the                                               

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occurrence of a default with respect to any Indebtedness of any Unrestricted    
Subsidiary (including any right to take enforcement action against such         
Unrestricted Subsidiary), except, in the case of clause (i) or (ii), to the     
extent permitted under the covenant described under "-- Limitation on Restricted
Payments."                                                                      

    The Indenture further provides that the Company may revoke any Designation
of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such  
Subsidiary shall then constitute a Restricted Subsidiary, if:                   

       (a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and                       

  (b) all Liens and Indebtedness of such Unrestricted Subsidiary
 outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the 
Indenture.                                                            

    All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Notes Trustee certifying compliance with the       
foregoing provisions.                                                           

  Taxes.  The Company will, and will cause its Restricted Subsidiaries to,
pay and discharge when due and payable all taxes, levies, imposts, duties or    
other governmental charges ("Taxes") imposed on it or on its income or profits  
or on any of its properties except such Taxes which are being contested in good 
faith in appropriate proceedings and for which adequate reserves have been      
established in accordance with GAAP.                                            

    Merger and Consolidation.  The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all of its      
assets to, any Person, unless: (a) the resulting, surviving or transferee Person
(the "Successor Company") shall be a corporation organized and existing under   
the laws of the United States of America, any State thereof or the District of  
Columbia and the Successor Company (if not the Company) shall expressly assume, 
by supplemental indenture, executed and delivered to the Notes Trustee, in form 
satisfactory to the Notes Trustee, all the obligations of the Company under the 
Notes and the Indenture; (b) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the Successor      
Company or any Subsidiary of the Successor Company as a result of such          
transaction as having been incurred by the Successor Company or such Restricted 
Subsidiary at the time of such transaction), no Default or Event of Default     
shall have occurred and be continuing; (c) immediately after giving effect to   
such transaction, the Successor Company (i) shall have a Consolidated Net Worth 
equal or greater to the Consolidated Net Worth of the Company immediately prior 
to such transaction and (ii) shall be able to Incur at least an additional $1.00
of Indebtedness pursuant to paragraph (a) of "-- Limitation on Indebtedness";   
(d) the Company shall have delivered to the Notes Trustee an Officers'          
Certificate and an Opinion of Counsel, each stating that such consolidation,    
merger or transfer and such supplemental indenture (if any) comply with the     
Indenture; and (e) there has been delivered to the Notes Trustee an Opinion of  
Counsel to the effect that holders of the Notes will not recognize income, gain 
or loss for U.S. Federal income tax purposes as a result of such consolidation, 
merger, conveyance, transfer or lease and will be subject to U.S. Federal income
tax on the same amount and in the same manner and at the same times as would    
have been the case if such consolidation, merger, conveyance, transfer or lease 
had not occurred.                                                               

The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in the 
case of a lease of all or substantially all its assets, the Company will not be 
released from the obligation to pay the principal of and interest on the Notes. 

Notwithstanding the foregoing clauses (b) and (c), any Restricted     
Subsidiary of the Company may consolidate with, merge into or transfer all or   
part of its properties and assets to the Company or any other Restricted        
Subsidiary.                                                                     

EVENTS OF DEFAULT                                                               

    Each of the following constitutes an Event of Default under the Indenture:
(a) a default in any payment of interest on any Note when due, continued for 30 
days, (b) a default in the payment of principal of any Note when due at its     
Stated Maturity, upon optional redemption, upon required repurchase, upon       
declaration or                                                                  

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otherwise, (c) the failure by the Company to comply with its obligations under  
the "Merger and Consolidation" covenant described under "Certain Covenants"     
above, (d) the failure by the Company to comply for 30 days after notice by the 
Trustee or holders of not less than 25% aggregate principal amount of Notes then
outstanding with any of its obligations under the covenants described under     
"Change of Control" above or under covenants described under "Certain Covenants"
above (in each case, other than a failure to purchase Notes which shall         
constitute an Event of Default under clause (b) above), other than "Merger and  
Consolidation," (e) the failure by the Company or any Subsidiary Guarantor to   
comply for 60 days after notice with its other agreements contained in the      
Indenture, (f) Indebtedness of the Company or any Restricted Subsidiary is not  
paid within any applicable grace period after final maturity or is accelerated  
by the holders thereof because of a default and the total amount of such        
Indebtedness unpaid or accelerated exceeds $2.0 million and such default shall  
not have been cured or such acceleration rescinded after a 20-day period, (g)   
certain events of bankruptcy, insolvency or reorganization of the Company or a  
Significant Subsidiary (the "bankruptcy provisions"), (h) any judgment or decree
for the payment of money in excess of $2.0 million (to the extent not covered by
insurance) is rendered against the Company or a Significant Subsidiary and such 
judgment or decree shall remain undischarged or unstayed for a period of 60 days
after such judgment becomes final and non-appealable (the "judgment default     
provision"), (i) any Note Guarantee by a Significant Subsidiary ceases to be in 
full force and effect (except as contemplated by the terms of the Indenture) or 
any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms  
its obligations under the Indenture or its Note Guarantee and such Default      
continues for 10 days, or (j) an event of default under, or if none is specified
therein, a failure to comply with any provision of any Mortgage and the         
continuance of such event of default or failure to comply, as the case may be,  
for a period of 30 days after written notice is given by the Notes Trustee to   
the Company or to the Company and the Notes Trustee by the holders of at least  
25% in aggregate principal amount of the Notes outstanding. However, a default  
under clause (d) or (e) will not constitute an Event of Default until the Notes 
Trustee or the holders of 25% in principal amount of the outstanding Notes      
notify the Company of the default and the Company does not cure such default    
within the time specified in clause (d) or (e) after receipt of such notice.    

   If an Event of Default occurs and is continuing, the Notes Trustee or the
holders of at least 25% in principal amount of the outstanding Notes by notice  
to the Company may declare the principal of and accrued and unpaid interest, if 
any, on all the Notes to be due and payable. Upon such a declaration, such      
principal and accrued and unpaid interest shall be due and payable immediately. 
If an Event of Default relating to certain events of bankruptcy, insolvency or  
reorganization of the Company occurs, the principal of and accrued and unpaid   
interest on all the Notes will become and be immediately due and payable without
any declaration or other act on the part of the Notes Trustee or any holders.   
Under certain circumstances, the holders of a majority in principal amount of   
the outstanding Notes may rescind any such acceleration with respect to the     
Notes and its consequences.                                                     

  Subject to the provisions of the Indenture relating to the duties of the
Notes Trustee, if an Event of Default occurs and is continuing, the Notes       
Trustee will be under no obligation to exercise any of the rights or powers     
under the Indenture at the request or direction of any of the holders unless    
such holders have offered to the Notes Trustee reasonable indemnity or security 
against any loss, liability or expense. Except to enforce the right to receive  
payment of principal, premium (if any) or interest when due, no holder may      
pursue any remedy with respect to the Indenture or the Notes unless (i) such    
holder has previously given the Notes Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in principal amount of the outstanding 
Notes have requested the Notes Trustee to pursue the remedy, (iii) such holders 
have offered the Notes Trustee reasonable security or indemnity against any     
loss, liability or expense, (iv) the Notes Trustee has not complied with such   
request within 60 days after the receipt of the request and the offer of        
security or indemnity and (v) the holders of a majority in principal amount of  
the outstanding Notes have not given the Notes Trustee a direction that, in the 
opinion of the Notes Trustee, is inconsistent with such request within such     
60-day period. Subject to certain restrictions, the holders of a majority in    
principal amount of the outstanding Notes are given the right to direct the     
time, method and place of conducting any proceeding for any remedy available to 
the Notes Trustee or of exercising any trust or power conferred on the Notes    
Trustee. The Notes Trustee, however, may refuse to follow any direction that    
conflicts with law or the Indenture or that the Notes Trustee determines is     
unduly prejudicial to the rights of any other holder or that would involve the  
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Notes Trustee in personal liability. Prior to taking any action under the       
Indenture, the Notes Trustee shall be entitled to indemnification satisfactory  
to it in its sole discretion against all losses and expenses caused by taking or
not taking such action.                                                         

  The Indenture provides that if a Default occurs and is continuing and is
known to the Notes Trustee, the Notes Trustee must mail to each holder notice of
the Default within 90 days after it occurs. Except in the case of a Default in  
the payment of principal of, premium (if any) or interest on any Note, the Notes
Trustee may withhold notice if and so long as its board of directors, a         
committee of its board of directors or a committee of its Trust officers in good
faith determines that withholding notice is in the interests of the holders of  
the Notes. In addition, the Company is required to deliver to the Notes Trustee,
within 90 days after the end of each fiscal year, a certificate indicating      
whether the signers thereof know of any Default that occurred during the        
previous year. The Company also is required to deliver to the Notes Trustee,    
within 30 days after the occurrence thereof, written notice of any events which 
would constitute certain Defaults.                                              

AMENDMENTS AND WAIVERS                                                          

Subject to certain exceptions, the Indenture may be amended with the  
consent of the holders of a majority in principal amount of the Notes then      
outstanding and any past default or compliance with any provisions may be waived
with the consent of the holders of a majority in principal amount of the Notes  
then outstanding. However, without the consent of each holder of an outstanding 
Note affected, no amendment may, among other things, (a) reduce the amount of   
Notes whose holders must consent to an amendment, (b) reduce the stated rate of 
or extend the stated time for payment of interest on any Note, (c) reduce the   
principal of or extend the Stated Maturity of any Note, (d) reduce the premium  
payable upon the redemption or repurchase of any Note or change the time at     
which any Note may be redeemed as described under "-- Optional Redemption"      
above, (e) make any Note payable in money other than that stated in the Note,   
(f) impair the right of any holder to receive payment of principal of and       
interest on such holder's Notes on or after the due dates therefor or to        
institute suit for the enforcement of any payment on or with respect to such    
holder's Notes or (g) make any change in the amendment provisions which require 
each holder's consent or in the waiver provisions.                              

  Without the consent of any holder, the Company and the Notes Trustee may
amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a Successor Company of the obligations of the     
Company under the Indenture, to add further Guarantees with respect to the      
Notes, to add further security for the Notes, to add to the covenants of the    
Company for the benefit of the holders or to surrender any right or power       
conferred upon the Company, to make any change that does not adversely affect   
the rights of any holder or to comply with any requirement of the Commission in 
connection with the qualification of the Indenture under the Trust Indenture    
Act.                                                                            

    The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent 
approves the substance of the proposed amendment.                               

  After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.     
However, the failure to give such notice to all the holders, or any defect      
therein, will not impair or affect the validity of the amendment.               

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS        

No director, officer or employee of the Company or any Subsidiary or  
shareholder of the Company, as such, shall have any personal liability for any  
obligations of the Company or any Subsidiary under the Notes, the Indenture, the
Note Guarantees, the Mortgages or for any claim based on, in respect of, or by  
reason of, such obligations or their creation. Each holder by accepting a Note  
waives and releases all such liability. The waiver and release are part of the  
consideration for issuance of the Notes and the Note Guarantees and the grant of
the Mortgages. Such waiver may not be effective to waive liabilities under the  
federal securities laws and it is the view of the Commission that such a waiver 
is against public policy.                                                       

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DEFEASANCE                                                                      

 The Company at its option may at any time terminate all its obligations
under the Notes and the Indenture ("legal defeasance"), except for certain      
obligations, including those respecting the defeasance trust and obligations to 
register the transfer or exchange of the Notes, to replace mutilated, destroyed,
lost or stolen Notes and to maintain a registrar and paying agent in respect of 
the Notes. In addition, the Company at its option may at any time terminate its 
obligations under covenants described under "Certain Covenants" (other than     
"Merger and Consolidation"), the operation of the cross acceleration provision, 
the bankruptcy provisions with respect to Significant Subsidiaries, the judgment
default provision and the Note Guarantee provision described under "Events of   
Default" above and the limitations contained in clauses (c) and (d) under       
"Certain Covenants -- Merger and Consolidation" above ("covenant defeasance").  

  The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its  
legal defeasance option, payment of the Notes may not be accelerated because of 
an Event of Default with respect thereto. If the Company exercises its covenant 
defeasance option, payment of the Notes may not be accelerated because of an    
Event of Default specified in clause (d, (f), (g) (with respect only to         
Significant Subsidiaries), (h) or (i) under "Events of Default" above or because
of the failure of the Company to comply with clause (c) or (d) under "Certain   
Covenants -- Merger and Consolidation" above.                                   

     In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Notes Trustee money or U.S.  
Government Obligations for the payment of principal, premium (if any) and       
interest on the Notes to redemption or maturity, as the case may be, and must   
comply with certain other conditions, including delivery to the Notes Trustee of
an Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and 
in the same manner and at the same times as would have been the case if such    
deposit and defeasance had not occurred (and, in the case of legal defeasance   
only, such Opinion of Counsel must be based on a private or public ruling of the
Internal Revenue Service or other change in applicable Federal income tax law). 

SATISFACTION AND DISCHARGE OF THE INDENTURE                                     

The Indenture will cease to be of further effect (except as otherwise 
expressly provided for in the Indenture) when either (a) all outstanding Notes  
have been delivered (other than lost, stolen or destroyed Notes which have been 
replaced) to the Notes Trustee for cancellation or (b) all outstanding Notes    
have become due and payable, whether at maturity or as a result of the mailing  
of a notice of redemption pursuant to the terms of the Indenture and the Company
has irrevocably deposited with the Notes Trustee funds sufficient to pay at     
maturity or upon redemption all outstanding Notes, including interest thereon   
(other than lost, stolen, mutilated or destroyed Notes which have been          
replaced), and, in either case, the Company has paid all other sums payable     
under the Indenture. The Notes Trustee is required to acknowledge satisfaction  
and discharge of the Indenture on demand of the Company accompanied by an       
Officer's Certificate and an Opinion of Counsel at the cost and expense of the  
Company.                                                                        

TRANSFER AND EXCHANGE                                                           

    Subject to the transfer restrictions described in this Prospectus, holders
may transfer or exchange their Notes in accordance with the Indenture. See      
"Transfer Restrictions on the Notes." Upon any transfer of a Note, the registrar
may require a holder, among other things, to furnish appropriate endorsements   
and transfer documents, and to pay any taxes and fees required by law or        
permitted by the Indenture. The registrar is not required to transfer or        
exchange any Notes selected for redemption nor is the registrar required to     
transfer or exchange any Notes for a period of 15 days before a selection of    
Notes to be redeemed. The registered holder of a Note may be treated as the     
owner of it for all purposes.                                                   

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CONCERNING THE NOTES TRUSTEE                                                    

     SunTrust is the Notes Trustee under the Indenture and has been appointed by
the Company as registrar and paying agent with regard to the Notes. The Notes   
Trustee's current address is 225 East Robinson Street, Suite 250, Orlando,      
Florida 32801.                                                                  

The Indenture contains certain limitations on the rights of the Notes 
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any  
such claim a security or otherwise. The Notes Trustee will be permitted to      
engage in other transactions; however, if it acquires any conflicting interest  
(as defined) it must eliminate such conflict or resign.                         

The holders of a majority in aggregate principal amount of the then   
outstanding Notes issued under the Indenture will have the right to direct the  
time, method and place of conducting any proceeding for exercising any remedy   
available to the Notes Trustee. The Indenture provides that in case an Event of 
Default shall occur (which shall not be cured) the Notes Trustee will be        
required, in the exercise of its power, to use the degree of care of a prudent  
man in the conduct of his own affairs. Subject to such provisions, the Notes    
Trustee will be under no obligation to exercise any of its rights or powers     
under the Indenture at the request of any of the holders of the Notes issued    
thereunder unless they shall have offered to the Notes Trustee security and     
indemnity satisfactory to it.                                                   

GOVERNING LAW                                                                   

The Indenture provides that it and the Notes will be governed by, and 
construed in accordance with, the laws of the State of New York without giving  
effect to applicable principles of conflicts of law to the extent that the      
application of the law of another jurisdiction would be required thereby.       

CERTAIN DEFINITIONS                                                             

     "Accounts Receivable" means collectively Mortgages Receivable and Timeshare
Interests Receivable.                                                           

"Additional Assets" means (i) any property or assets (other than      
Indebtedness and Capital Stock) in a Permitted Business; (ii) the Capital Stock 
of a Person that becomes a Restricted Subsidiary as a result of the acquisition 
of such Capital Stock by the Company or a Restricted Subsidiary of the Company; 
(iii) Capital Stock constituting a minority interest in any Person that at such 
time is a Restricted Subsidiary of the Company; or (iv) Permitted Investments of
the type and in the amounts described in clause (vii) of the definition thereof;
provided, however, that, in the case of clauses (ii) and (iii), such Restricted 
Subsidiary is primarily engaged in a Permitted Business.                        

    "Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
lesser of the amount by which (i) the fair value of the property of such        
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, the probable liability of such Subsidiary Guarantor with respect to 
its contingent liabilities (after giving effect to all other fixed and          
contingent liabilities incurred or assumed on such date), but excluding         
liabilities under the Note Guarantees, of such Subsidiary Guarantor at such date
and (ii) the present fair salable value of the assets of such Subsidiary        
Guarantor at such date exceeds the amount that will be required to pay the      
probable liability of such Subsidiary Guarantor on its debts (after giving      
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary by such      
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the 
Note Guarantees), excluding debt in respect of the Note Guarantees, as they     
become absolute and matured.                                                    

 "Affiliate" of any specified person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common     
control with such specified Person. For the purposes of this definition,        
"control" when used with respect to any Person means the power to direct the    
management and policies of such Person, directly or indirectly, whether through 
the ownership of voting securities, by contract or otherwise; and the terms     
"controlling" and "controlled" have meanings correlative to the foregoing.      

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"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or        
dispositions that are part of a common plan) of shares of Capital Stock of (or  
any other equity interests in) a Restricted Subsidiary (other than directors'   
qualifying shares and, to the extent required by local ownership laws in foreign
countries, shares owned by foreign shareholders) or of any other property or    
other assets (each referred to for the purposes of this definition as a         
"disposition") by the Company or any of its Restricted Subsidiaries (including  
any disposition by means of a merger, consolidation or similar transaction)     
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) sales or  
other transfers in the ordinary course of business (including, without          
limitation, bulk sales in the ordinary course of business consistent with past  
practices), of Timeshare Interests, points in a points-based vacation club      
system, Accounts Receivable (including, without limitation, direct sales to     
financial institutions and sales or transfers in connection with securitization 
transactions in the ordinary course of business) or Residential Lots or other   
real property (including, without limitation, bulk sales in the ordinary course 
of business consistent with past practices), (iii) a disposition of obsolete or 
worn out equipment or equipment that is no longer useful in the conduct of the  
business of the Company and its Restricted Subsidiaries and that is disposed of 
in each case in the ordinary course of business, (iv) dispositions of property  
for net proceeds which, when taken collectively with the net proceeds of any    
other such dispositions under this clause (iv) that were consummated since the  
beginning of the calendar year in which such disposition is consummated, do not 
exceed $1.0 million, (v) transactions permitted under "Certain                  
Covenants -- Merger and Consolidation" above and (vi) Permitted Investments.    
Notwithstanding anything to the contrary contained above, a Restricted Payment  
made in compliance with the "Limitation on Restricted Payments" covenant shall  
not constitute an Asset Disposition (except for purposes of determinations of   
the Consolidated Coverage Ratio) to the extent that such Restricted Payment as  
of the date made together with all other Restricted Payments not constituting   
Asset Dispositions pursuant to this sentence made subsequent to the Issue Date  
do not exceed, as of such date, 50% of the amount calculated in accordance with 
clause (a)(3) set forth under "-- Certain Covenants -- Limitation on Restricted 
Payments."                                                                      

"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the    
interest rate per annum equal to the discount rate which would be applicable to 
a Capitalized Lease Obligation with a like term in accordance with GAAP) of the 
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for 
which such lease has been extended).                                            

    "Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the product of   
the numbers of years (rounded upwards to the nearest month) from the date of    
determination to the dates of each successive scheduled principal payment of    
such Indebtedness or redemption multiplied by the amount of such payment by (ii)
the sum of all such payments.                                                   

   "Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or       
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.          

    "Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting     
purposes in accordance with GAAP, and the amount of Indebtedness represented by 
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the  
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.                              

    "Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or  
any agency or instrumentality thereof, (iii) certificates of deposit, time      
deposits and eurodollar time deposits with maturities of one year or less from  
the date of acquisition, bankers' acceptances with maturities not exceeding one 
year and overnight bank deposits, in each case with any commercial bank having  
capital and surplus in excess of $500 million, (iv) repurchase obligations for  
underlying securities of the types described in clauses (ii) and (iii) entered  
into with any financial institution meeting the qualifications specified in     
clause (iii) above, (v) commercial                                              

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paper rated A-1 or the equivalent thereof by Moody's Investors Service, Inc.    
("Moody's") or Standard and Poor's Ratings Services, a division of The          
McGraw-Hill Companies, Inc. ("S&P") and in each case maturing within one year   
after the date of acquisition, (vi) investment funds investing 95% of their     
assets in securities of the types described in clauses (i)(v) above, and (vii)  
readily marketable direct obligations issued by any state of the United States  
of America or any political subdivision thereof having one of the two highest   
rating categories obtainable form either Moody's or S&P.                        

   "Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus, without duplication, the following to the extent deducted
in calculating such Consolidated Net Income: (i) income tax expense, (ii)       
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization    
expense, and (v) all other non-cash items reducing Consolidated Net Income      
(excluding any non-cash item to the extent it represents an accrual of or       
reserve for cash disbursements for any subsequent period prior to the stated    
maturity of the Notes) and less, (x) the aggregate amount of contingent and     
"earnout" payments in respect of any Permitted Business acquired by the Company 
or any Restricted Subsidiary that are paid in cash during such period and (y) to
the extent added in calculating Consolidated Net Income, non-cash items         
(excluding such non-cash items to the extent they represent an accrual for cash 
receipts reasonably expected to be received prior to the Stated Maturity of the 
Notes), in each case for such period. Notwithstanding the foregoing, the income 
tax expense, depreciation expense and amortization expense of a Subsidiary of   
the Company shall be included in Consolidated Cash Flow only to the extent (and 
in the same proportion) that the net income of such Subsidiary was included in  
calculating Consolidated Net Income.                                            

 "Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of   
the most recent four consecutive fiscal quarters ending prior to the date of    
such determination and as to which financial statements are available to (ii)   
Consolidated Interest Expense for such four fiscal quarters; provided, however, 
that (A) if the Company or any of its Restricted Subsidiaries has Incurred any  
Indebtedness since the beginning of such period and through the date of         
determination of the Consolidated Coverage Ratio that remains outstanding or if 
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and           
Consolidated Interest Expense for such period shall be calculated after giving  
effect on a pro forma basis to (l) such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period (provided that if such            
Indebtedness is incurred under a revolving credit facility (or similar          
arrangement or under any predecessor revolving credit or similar arrangement)   
only that portion of such Indebtedness that constitutes the one year projected  
average daily balance of such Indebtedness (as determined in good faith by the  
Board of Directors of the Company) shall be deemed outstanding for purposes of  
this calculation), and (2) the discharge of any other Indebtedness repaid,      
repurchased, defeased or otherwise discharged with the proceeds of such new     
Indebtedness as if such discharge had occurred on the first day of such period, 
(B) if since the beginning of such period any Indebtedness of the Company or any
of its Restricted Subsidiaries has been repaid, repurchased, defeased or        
otherwise discharged (other than Indebtedness under a revolving credit or       
similar arrangement unless such revolving credit Indebtedness has been          
permanently repaid and the underlying commitment terminated and has not been    
replaced), Consolidated Interest Expense for such period shall be calculated    
after giving pro forma effect thereto as if such Indebtedness had been repaid,  
repurchased, defeased or otherwise discharged on the first day of such period,  
(C) if since the beginning of such period the Company or any of its Restricted  
Subsidiaries shall have made any Asset Disposition or if the transaction giving 
rise to the need to calculate the Consolidated Coverage Ratio is an Asset       
Disposition, Consolidated Cash Flow for such period shall be reduced by an      
amount equal to the Consolidated Cash Flow (if positive) attributable to the    
assets which are the subject of all such Asset Dispositions for such period or  
increased by an amount equal to the Consolidated Cash Flow (if negative)        
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (i) reduced by an amount equal to the Consolidated Interest     
Expense attributable to any Indebtedness of the Company or any of its Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect 
to the Company and its continuing Restricted Subsidiaries in connection with all
such Asset Dispositions for such period (or, if the Capital Stock of any        
Restricted Subsidiary of the Company is sold, the Consolidated Interest Expense 
for such period directly attributable to the Indebtedness of such Restricted    
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries 
are no longer liable for such Indebtedness after such sale) and                 
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(ii) increased by interest income attributable to the assets which are the      
subject of all such Asset Dispositions during such period, (D) if since the     
beginning of such period the Company or any of its Restricted Subsidiaries (by  
merger or otherwise) shall have made an Investment in any Restricted Subsidiary 
of the Company (or any Person which becomes a Restricted Subsidiary of the      
Company as a result thereof) or an acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder which constitutes 
all or substantially all of an operating unit of a business, Consolidated Cash  
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the incurrence of any Indebtedness)  
as if such Investment or acquisition occurred on the first day of such period   
and (E) if since the beginning of such period any Person (that subsequently     
became a Restricted Subsidiary of the Company or was merged with or into the    
Company or any Restricted Subsidiary of the Company since the beginning of such 
period) shall have repaid, repurchased, defeased or otherwise discharged        
Indebtedness or made any Asset Disposition, Investment or acquisition of assets 
that would have required an adjustment pursuant to clause (B), (C) or (D) above 
if made by the Company or a Restricted Subsidiary of the Company during such    
period, Consolidated Cash Flow and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Asset      
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an 
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness        
incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the Company.  
If any Indebtedness bears a floating rate of interest and is being given pro    
forma effect, the interest expense on such Indebtedness shall be calculated as  
if the rate in effect on the date of determination had been the applicable rate 
for the entire period (taking into account any Interest Rate Agreement          
applicable to such Indebtedness if such Interest Rate Agreement has a remaining 
term in excess of 12 months).                                                   

   "Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Restricted Subsidiaries determined in accordance 
with GAAP, plus, to the extent not included in such interest expense and to the 
extent Incurred by the Company or its Restricted Subsidiaries (i) interest      
expense attributable to Capitalized Lease Obligations, (ii) capitalized         
interest, (iii) amortization of debt discount, (iv) non-cash interest expense,  
(v) commissions, discounts and other fees and charges owed with respect to      
letters of credit and bankers' acceptance financing, (vi) interest actually paid
by the Company or any such Restricted Subsidiary under any guarantee of         
Indebtedness or other obligation of any other Person, (vii) net payments        
(whether positive or negative) pursuant to Interest Rate Agreements, (viii) the 
cash contributions to any employee stock ownership plan or similar trust to the 
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Indebtedness Incurred 
by such plan or trust and (ix) cash and Disqualified Stock dividends in respect 
of all Preferred Stock of Subsidiaries and Disqualified Stock of the Company    
held by Persons other than the Company or a Wholly-Owned Subsidiary and less (a)
to the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income. Notwithstanding the foregoing, the 
Consolidated Interest Expense with respect to any Restricted Subsidiary of the  
Company, that was not a Wholly-Owned Subsidiary, shall be included only to the  
extent (and in the same proportion) that the net income of such Restricted      
Subsidiary was included in calculating Consolidated Net Income.                 

   "Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries determined in accordance with     
GAAP; provided, however, that there shall not be included in such Consolidated  
Net Income: (i) any net income (loss) of any Person acquired by the Company or  
any of its Restricted Subsidiaries in a pooling of interests transaction for any
period prior to the date of such acquisition, (ii) any net income of any        
Restricted Subsidiary of the Company if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making 
of distributions by such Restricted Subsidiary, directly or indirectly, to the  
Company to the extent of such restriction (other than restrictions in effect on 
the Issue Date with respect to a Restricted Subsidiary of the Company and other 
than restrictions that are created or exist in compliance with the "Limitation  
on Restrictions on Distributions from Restricted Subsidiaries" covenant), (iii) 
any gain or loss realized upon the sale or other disposition of any assets of   
the Company or its consolidated Restricted Subsidiaries (including pursuant to  
any Sale/Leaseback                                                              
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Transaction) which are not sold or otherwise disposed of in the ordinary course 
of business (it being understood that direct sales of Accounts Receivable to a  
financial institution or sales of Accounts Receivable in connection with        
securitization transactions shall be deemed to be in the ordinary course of     
business) and any gain or loss realized upon the sale or other disposition of   
any Capital Stock of any Person, (iv) any extraordinary gain or loss, (v) the   
cumulative effect of a change in accounting principles, (vi) the net income of  
any Person, other than a Restricted Subsidiary, except to the extent of the     
lesser of (A) cash dividends or distributions actually paid to the Company or   
any of its Restricted Subsidiaries by such Person and (B) the net income of such
Person (but in no event less than zero), and the net loss of such Person (other 
than an Unrestricted Subsidiary) shall be included only to the extent of the    
aggregate Investment of the Company or any of its Restricted Subsidiaries in    
such Person and (vii) any non-cash expenses attributable to grants or exercises 
of employee stock options. Notwithstanding the foregoing, for the purpose of the
covenant described under "Certain Covenants -- Limitation on Restricted         
Payments" only, there shall be excluded from Consolidated Net Income any        
dividends, repayments of loans or advances or other transfers of assets from    
Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the      
extent such dividends, repayments or transfers increase the amount of Restricted
Payments permitted under such covenant pursuant to clause (a)(3)(D) thereof.    

"Consolidated Net Worth" means the total of the amounts shown on the  
balance sheet of the Company and its consolidated Restricted Subsidiaries,      
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending prior to the taking of any     
action for the purpose of which the determination is being made and for which   
financial statements are available (but in no event ending more than 135 days   
prior to the taking of such action), as (i) the par or stated value of all      
outstanding Capital Stock of the Company plus (ii) paid in capital or capital   
surplus relating to such Capital Stock plus (iii) any retained earnings or      
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.                                                          

     "Continuing Director" of any Person means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of such Person on the 
date of the Indenture or (ii) was nominated for election or elected to the Board
of Directors of such Person with the affirmative vote of a majority of the      
Continuing Directors of such Person who were members of such Board of Directors 
at the time of such nomination or election.                                     

     "Convertible Debentures" means the Company's 8.25% Convertible Subordinated
Debentures due May 15, 2012 issued pursuant to that certain Indenture dated as  
of May 15, 1987 between The Patten Corporation and Shawmut Bank, N.A., as       
trustee.                                                                        

    "Convertible Notes" means the Company's 8% Convertible Notes due September
11, 2002 in the aggregate principal amount of $6,000,000 orginally issued to    
Joseph C. Abeles and Grace Brothers, Ltd.                                       

   "Credit Agreements" means any credit agreement or similar facility or any
other agreement governing Indebtedness entered into by the Company or any       
Restricted Subsidiary, as any of the same may be amended, waived, modified,     
refinanced with Refinancing Indebtedness or replaced from time to time (except  
to the extent any such amendment, waiver, modification, replacement or          
refinancing would be prohibited by the terms of the Indenture).                 

"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such   
Person is a party or a beneficiary.                                             

   "Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.                                             

     "Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is           
exchangeable), or upon the happening of any event (other than an event which    
would constitute a Change of Control), (i) matures (excluding any maturity as   
the result of an optional redemption by the issuer thereof) or is mandatorily   
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the    
final Stated Maturity of the Notes, or (ii) is convertible into or exchangeable 
(unless at the sole option of the issuer                                        
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thereof) for (a) debt securities or (b) any Capital Stock referred to in (i)    
above, in each case at any time prior to the final Stated Maturity of the Notes.

   "Equity Offering" means an offering for cash by the Company of its common
stock, or options, warrants or rights with respect to its common stock, which in
any case is registered with the Securities and Exchange Commission under the    
Securities Act of 1933.                                                         

  "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.                                      

     "Existing Indebtedness" means Indebtedness of the Company or its Restricted
Subsidiaries in existence on the Issue Date, plus interest accrued, thereon,    
after application of the net proceeds of the Notes as described in the          
Prospectus.                                                                     

     "fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under 
undue pressure or compulsion to complete the transaction. Fair market value     
shall be determined by the Board of Directors of the Company acting reasonably  
and in good faith and shall be evidenced by a Board Resolution of the Board of  
Directors of the Company delivered to the Notes Trustee.                        

    "GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set    
forth in the opinions and pronouncements of the Accounting Principles Board of  
the American Institute of Certified Public Accountants and statements and       
pronouncements of the Financial Accounting Standards Board or in such other     
statements by such other entity as approved by a significant segment of the     
accounting profession All ratios and computations based on GAAP contained in the
Indenture shall be computed in conformity with GAAP.                            

"Group" shall mean any "group" for purposes of Section 13(d) of the   
Exchange Act.                                                                   

  "Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to  
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership     
arrangements, or by agreement to keep-well, to purchase assets, goods,          
securities or services, to take-or-pay, or to maintain financial statement      
conditions or otherwise) or (ii) entered into for purposes of assuring in any   
other manner the obligee of such Indebtedness of the payment thereof or to      
protect such obligee against loss in respect thereof (in whole or in part);     
provided, however, that the term "Guarantee" shall not include endorsements for 
collection or deposit in the ordinary course of business. The term "Guarantee"  
used as a verb has a corresponding meaning.                                     

  "Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person      
existing at the time such Person becomes a Restricted Subsidiary (whether by    
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred 
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary;   
provided that a change in GAAP that results in an obligation of such Person that
exists at such time becoming Indebtedness shall not be deemed an incurrence of  
such Indebtedness.                                                              

"Indebtedness" means, with respect to any Person on any date of       
determination (without duplication), (i) the principal of and premium (if any)  
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by   
bonds, debentures, notes or other similar instruments, (iii) all obligations of 
such Person in respect of letters of credit or other similar instruments        
(including reimbursement obligations with respect thereto) (other than          
obligations with respect to letters of credit securing obligations (other than  
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are 
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed  
no later than the third business day following receipt by such Person of a      
demand for reimbursement following payment on the letter of credit), (iv) all   
obligations of such Person to pay the deferred and unpaid purchase price of     
property or services (except trade payables and other accrued expenses incurred 
in the ordinary course of business), which purchase price is due more than six  
months after the date of placing such property in                               
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service or taking delivery and title thereto or the completion of such services,
(v) all Capitalized Lease Obligations and all Attributable Indebtedness of such 
Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;        
provided, however, that if such obligations have not been assumed, the amount of
such Indebtedness shall be deemed to be the lesser of the principal amount of   
the obligations or the fair market value of the pledged property or assets,     
(vii) all Indebtedness of other Persons to the extent Guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the         
redemption, repayment or other repurchase of any Disqualified Stock or, with    
respect to any Restricted Subsidiary of the Company, any Preferred Stock of such
Restricted Subsidiary to the extent such obligation arises on or before the     
Stated Maturity of the Notes (but excluding, in each case, accrued dividends)   
with the amount of Indebtedness represented by such Disqualified Stock or       
Preferred Stock, as the case may be, being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price;   
provided that, for purposes hereof the "maximum fixed repurchase price" of any  
Disqualified Stock or Preferred Stock, as the case may be, which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such 
Disqualified Stock or Preferred Stock, as the case may be, as if such           
Disqualified Stock or Preferred Stock, as the case may be, were purchased on any
date on which Indebtedness shall be required to be determined pursuant to the   
Indenture, and if such price is based on the fair market value of such          
Disqualified Stock or Preferred Stock, as the case may be, such fair market     
value shall be determined in good faith by the Board of Directors of the Company
and (ix) to the extent not otherwise included in this definition, obligations   
under Currency Agreements and Interest Rate Agreements. Unless specifically set 
forth above, the amount of Indebtedness of any Person at any date shall be the  
outstanding principal amount of all unconditional obligations as described      
above, as such amount would be reflected on a balance sheet prepared in         
accordance with GAAP, and the maximum liability of such Person, upon the        
occurrence of the contingency giving rise to the obligation, of any contingent  
obligations described above at such date.                                       

 "Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option 
agreement, interest rate swap agreement, interest rate cap agreement, interest  
rate collar agreement, interest rate hedge agreement or other similar agreement 
or arrangement as to which such Person is party or a beneficiary.               

"Investment" in any Person means any direct or indirect advance, loan 
(other than advances to customers in the ordinary course of business that are   
recorded as accounts payable on the balance sheet of such Person) or other      
extension of credit (including by way of Guarantee or similar arrangement, but  
excluding any debt or extension of credit represented by a bank deposit other   
than a time deposit) or capital contribution to (by means of any transfer of    
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,     
Indebtedness or other similar instruments issued by such Person. For purposes of
the "Limitation on Restricted Payments" covenant and the definition of          
"Unrestricted Subsidiary", (i) "Investment" shall include the portion           
(proportionate to the Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net   
assets of such Restricted Subsidiary of the Company at the time that such       
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,       
however, that upon a redesignation of such Subsidiary as a Restricted           
Subsidiary, the Company shall be deemed to continue to have a permanent         
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to  
(x) the Company's "Investment" in such Subsidiary at the time of such           
redesignation less (y) the portion (proportionate to the Company's equity       
interest in such Subsidiary) of the fair market value of the net assets of such 
Subsidiary at the time that such Subsidiary is so redesignated a Restricted     
Subsidiary; and (ii) any property transferred to or from an Unrestricted        
Subsidiary shall be valued at its fair market value at the time of such         
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors certified in an Officers'  
Certificate to the Notes Trustee. Notwithstanding the foregoing, in no event    
shall the issuance of Capital Stock (other than Disqualified Stock) of the      
Company in exchange for Capital Stock, property or assets of another Person     
constitute an Investment by the Company in such other Person.                   

    "Issue Date" means the date on which the Outstanding Notes were originally
issued.                                                                         

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    "Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention     
agreement or lease in the nature thereof).                                      

"Mortgages Receivable" means the receivables of the Company and its   
Restricted Subsidiaries arising from sales by the Company and its Restricted    
Subsidiaries of Residential Lots or otherwise acquired by the Company or a      
Restricted Subsidiary determined on a consolidated basis in accordance with     
GAAP.                                                                           

     "Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal   
pursuant to a note or installment receivable or otherwise, but only as and when 
received, but excluding any other consideration received in the form of         
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Disposition) therefrom in each
case net of (i) all legal, title and recording tax expenses, commissions and    
other fees and expenses incurred, and all Federal, state, foreign and local     
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all distributions and other payments required to
be made to any Person owning a beneficial interest in assets subject to sale or 
minority interest holders in Subsidiaries or joint ventures as a result of such 
Asset Disposition, (iii) the deduction of appropriate amounts to be provided by 
the seller as a reserve, in accordance with GAAP, against any liabilities       
associated with the assets disposed of in such Asset Disposition, provided      
however, that upon any reduction in such reserves (other than to the extent     
resulting from payments of the respective reserved liabilities), Net Available  
Cash shall be increased by the amount of such reduction to reserves, and        
retained by the Company or any Restricted Subsidiary of the Company after such  
Asset Disposition and (iv) any portion of the purchase price from an Asset      
Disposition placed in escrow (whether as a reserve for adjustment of the        
purchase price, for satisfaction of indemnities in respect of such Asset        
Disposition or otherwise in connection with such Asset Disposition) provided,   
however, that upon the termination of such escrow, Net Available Cash shall be  
increased by any portion of funds therein released to the Company or any        
Restricted Subsidiary.                                                          

     "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,        
accountants' fees, underwriters' or placement agents' fees, discounts or        
commissions and brokerage, consultant and other fees actually incurred in       
connection with such issuance or sale and net of taxes paid or payable as a     
result of such issuance or sale.                                                

    "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any Restricted Subsidiary (a) provides any guarantee or credit support of   
any kind (including any undertaking, Guarantee, indemnity, agreement or         
instrument that would constitute Indebtedness) or (b) is directly or indirectly 
liable (as a guarantor, general partner or otherwise) and (ii) no default with  
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon       
notice, lapse of time or both) any holder of any other Indebtedness of the      
Company or any Restricted Subsidiary to declare a default under such other      
Indebtedness or cause the payment thereof to be accelerated or payable prior to 
its Stated Maturity.                                                            

    "Officer" means the Chairman of the Board, the Vice-Chairman of the Board,
the Chief Executive Officer, the Chief Financial Officer, the President, any    
Vice-President, the Treasurer or the Secretary of the Company.                  

"Note Guarantee" means the Guarantee of the Notes by a Subsidiary     
Guarantor.                                                                      

    "Officer's Certificate" shall mean a certificate signed by two Officers of
the Company, at least one of whom shall be the principal executive, financial or
accounting officer of the Company.                                              

"Opinion of Counsel" means a written opinion, in form and substance   
acceptable to the Notes Trustee, from legal counsel acceptable to the Notes     
Trustee.                                                                        

   "Permitted Business" means any business which is the same as, or related,
ancillary or complementary to, any of the businesses of the Company and its     
Restricted Subsidiaries on the date of the Indenture, as reasonably determined  
by the Company's Board of Directors.                                            

 "Permitted Investment" means an Investment by the Company or any of its
Restricted Subsidiaries in (i) the Company or a Wholly-Owned Subsidiary of the  
Company; provided, however, that the primary business of such Wholly-Owned      
Subsidiary is a Permitted Business; (ii) another Person if as a result of such  
Investment such other Person becomes a Wholly-Owned Subsidiary of the Company or
is merged or                                                                    

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consolidated with or into, or transfers or conveys all or substantially all its 
assets to, the Company or a Wholly-Owned Subsidiary of the Company; provided,   
however, that in each case such Person's primary business is a Permitted        
Business; (iii) Temporary Cash Investments; (iv) a Receivables Subsidiary or    
originations, purchases or acquisitions of Accounts Receivable by the Company or
any Restricted Subsidiary created or acquired in the ordinary course of         
business; (v) payroll, travel and similar advances to cover matters that are    
expected at the time of such advances ultimately to be treated as expenses for  
accounting purposes and that are made in the ordinary course of business; (vi)  
stock, obligations or securities received in settlement of debts created in the 
ordinary course of business and owing to the Company or any of its Restricted   
Subsidiaries or in satisfaction of judgments or claims; (vii) a Person engaged  
in a Permitted Business or a loan or advance by the Company the proceeds of     
which are used solely to make an investment in a Person engaged in a Permitted  
Business or a Guarantee by the Company of Indebtedness of any Person in which   
such Investment has been made provided, however, that no Permitted Investments  
may be made pursuant to this clause (vii) to the extent the amount thereof      
would, when taken together with all other Permitted Investments made pursuant to
this clause (vii), exceed $3.0 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments  
made pursuant to this clause (vii), or any release or other cancellation of any 
Guarantee constituting such Permitted Investment); (viii) Persons to the extent 
such Investment is received by the Company or any Restricted Subsidiary as      
consideration for asset dispositions effected in compliance with the covenant   
described under "Limitations on Sales of Assets and Subsidiary Stock"; (ix)     
prepayments and other credits to suppliers made in the ordinary course of       
business consistent with the past practices of the Company and its Restricted   
Subsidiaries; (x) Investments in connection with pledges, deposits, payments or 
performance bonds made or given in the ordinary course of business in connection
with or to secure statutory, regulatory or similar obligations, including       
obligations under health, safety or environmental obligations; (xi) Investments 
in Currency Agreements and Interest Rate Protection Agreements permitted by the 
covenant described under "-- Certain Covenants -- Limitation on Indebtedness";  
and (xii) any Investment acquired by the Company or any of its Restricted       
Subsidiaries (A) in exchange for any other Investment or accounts receivable    
held by the Company or any such Restricted Subsidiary in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization of the      
issuer of such other Investment or accounts receivable or (B) as a result of a  
foreclosure (or deed in lieu of) by the Company or any of its Restricted        
Subsidiaries with respect to any secured Investment or other transfer of title  
with respect to any secured Investment in default;                              

"Permitted Liens" means: (i) Liens granted by the Company and the     
Subsidiary Guarantors which secure Indebtedness to the extent the Indebtedness  
is incurred pursuant to paragraph (a) or clause (i) of paragraph (b) under the  
"Limitation on Incurrence of Indebtedness" covenant and Liens granted to the    
Trustee or the Pledged Properties securing the obligations of certain Subsidiary
Guarantors under their respective Note Guarantees; (ii) Liens in favor of the   
Company or any Subsidiary Guarantor; (iii) Liens existing on the Issue Date;    
(iv) Liens on property of a Person existing at the time such Person is acquired 
by or merged into or consolidated with the Company or any Restricted Subsidiary 
thereof; provided that such Liens were in existence prior to the contemplation  
of such acquisition and do not extend to any assets of the Company or its       
Restricted Subsidiaries other than those acquired in connection with such merger
or consolidation; (v) Liens to secure the performance of statutory obligations, 
surety or appeal bonds, performance bonds or other obligations of a like nature 
incurred in the ordinary course of business; (vi) Liens in respect of           
extensions, renewals, refundings or refinancings of any Indebtedness secured by 
the Liens referred to in clauses (i), (ii) and (iii) above and (vii) below;     
provided that the Liens in connection with such renewal, extensions, renewals,  
refundings or refinancing shall be limited to all or part of the specific       
property which was subject to the original Lien; (vii) Liens for taxes,         
assessments or governmental charges or claims that are not yet delinquent or    
that are being contested in good faith by appropriate proceedings promptly      
instituted and diligently concluded; provided that any reserve or other         
appropriate provisions as shall be required in conformity with GAAP shall have  
been made therefor; (viii) any Lien securing purchase money obligations incurred
in compliance with paragraph (b)(ii) of the "Limitation on Indebtedness"        
covenant, provided that such Liens do not extend to any property (other than the
property so purchased) owned by the Company or its Restricted Subsidiaries and  
is not incurred more than 30 days after the incurrence of such Indebtedness     
secured by such Lien; (ix) Liens to secure Capitalized Lease Obligations (except
in respect of                                                                   

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Sale/Leaseback Transactions) on real or personal property of the Company to the 
extent consummated in compliance with paragraph (b)(ii) of the "Limitation on   
Indebtedness" covenant, provided that such Liens do not extend to or cover any  
property of the Company or any of its Subsidiaries other than the property      
subject to such Capitalized Lease Obligation; (x) Liens incurred in the ordinary
course of business of the Company or any Restricted Subsidiary thereof with     
respect to obligations that do not exceed $1.0 million at any one time          
outstanding and that (A) are not incurred in connection with the borrowing of   
money or the obtaining of advances or credit (other than trade credit in the    
ordinary course of business) and (B) do not in the aggregate materially detract 
from the value of the property or materially impair the use thereof in the      
operation of the business by the Company or such Restricted Subsidiary; (xi)    
Liens on property or assets at the time the Company or any Restricted Subsidiary
acquired such assets, including any acquisition by means of a merger or         
consolidation with or into the Company or such Restricted Subsidiary,           
provided,however, that (A) if any such Lien is incurred in anticipation of such 
transaction, such property or assets subject to such Lien will have a fair      
market value at the date of the acquisition thereof not in excess of the lesser 
of (1) the aggregate purchase price paid or owed by the Company or such         
Restricted Subsidiary in connection with the acquisition thereof and of any     
other property and assets acquired simultaneously therewith and (2) the fair    
market value of all such property and assets acquired by the Company or such    
Restricted Subsidiary and (B) any such Lien will not extend to any other        
property or assets owned by the Company or any Restricted Subsidiary; (xii)     
Liens on property or assets of the Company securing Interest Rate Agreements and
Currency Agreements so long as the related Indebtedness is permitted under      
"-- Certain Covenants -- Limitation on Indebtedness" and is secured by a Lien on
the same property securing the relevant Interest Rate Agreement or Currency     
Agreement; (xiii) survey exceptions, encumbrances, easements or, reservations   
of, or rights of others for, licenses, rights-of-way, sewers, electric lines,   
telegraph and telephone lines and other similar purposes or zoning or other     
restrictions as to the use of real property of the Company or such Restricted   
Subsidiary incidental to the ordinary course of conduct of the business of the  
Company or such Restricted Subsidiary or as to the ownership of properties of   
the Company or any Restricted Subsidiary, which, in either case, were not       
incurred in connection with Indebtedness and which do not in the aggregate      
materially adversely affect the value of said properties or materially impair   
their use in the operation of the business of the Company or any Restricted     
Subsidiary; (xiv) judgment Liens with respect to judgments that do not cause an 
Event of Default under clause (h) of the provision of the Indenture described   
under "-- Events of Default"; (xv) Liens with respect to a purchase and sale    
agreement or other option or right to acquire property entered into in the      
ordinary course of business consistent with past practices prior to the closing 
date of such purchase; (xvi) Liens with respect to deposits made by the Company 
or any Restricted Subsidiary in connection with the acquisition of inventory in 
the ordinary course of business consistent with past practices; and (xvii) Liens
with respect to mineral rights associated with any real property of the Company 
or any Restricted Subsidiary.                                                   

    "Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated 
organization, government or any agency or political subdivision hereof or any   
other entity.                                                                   

"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is       
preferred as to the payment of dividends, or as to the distribution of assets   
upon any voluntary or involuntary liquidation or dissolution of such            
corporation, over shares of Capital Stock of any other class of such            
corporation.                                                                    

   "RDI Note" means the Promissory Note in the aggregate principal amount of
$1,500,000 issued in the RDI Acquisition to the RDI Stockholders.               

     "Receivables and Related Assets" means Accounts Receivable and instruments,
chattel paper, obligations, general intangibles, mortgages, deeds, records and  
other similar assets, in each case relating to such Accounts Receivable.        

"Receivables Subsidiary" means a Subsidiary which is established and  
continues to operate for the limited purpose of acquiring, selling and financing
Receivables and Related Assets in connection with receivables securitization or 
financing transactions.                                                         

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 "Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays prepays, reduces, defeases, retires or extends         
(including pursuant to any defeasance or discharge mechanism) (collectively,    
"refinances," and "refinanced" shall have a correlative meaning) any            
Indebtedness existing on the date of the Indenture or Incurred in compliance    
with the Indenture (including Indebtedness of the Company that refinances       
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted    
Subsidiary that refinances Indebtedness of another Restricted Subsidiary)       
including Indebtedness that refinances Refinancing Indebtedness; provided,      
however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier 
than the earlier of (A) the first anniversary of the Stated Maturity of the     
Notes and (B) Stated Maturity of the Indebtedness being refinanced, (ii) the    
Refinancing Indebtedness has an Average Life at the time such Refinancing       
Indebtedness is Incurred that is equal to or greater than the lesser of (A) the 
Average Life of the Notes and (B) the Average Life of the Indebtedness being    
refinanced and, (iii) the Refinancing Indebtedness is in an aggregate principal 
amount (or if issued with original issue discount, an aggregate issue price)    
that is equal to (or 101% of, in the case of a refinancing of the Notes in      
connection with a Change of Control) or less than the sum of the aggregate      
principal amount (or if issued with original issue discount, the aggregate      
accreted value) then outstanding of the Indebtedness being refinanced (plus the 
amount of any premium required to be paid in connection therewith and reasonable
fees and expenses therewith); provided, further, that Refinancing Indebtedness  
shall not include Indebtedness of a Subsidiary which refinances Indebtedness of 
the Company.                                                                    

   "Residential Lots" means the parcels of real property sold by the Company
and its Restricted Subsidiaries in the ordinary course of their residential land
business.                                                                       

"Restricted Subsidiary" means any Subsidiary of the Company other an  
Unrestricted Subsidiary.                                                        

    "Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary      
transfers such property to a Person and the Company or a Subsidiary leases it   
from such Person.                                                               

  "Secured Indebtedness" means any Senior Indebtedness of the Company or a
Subsidiary Guarantor secured by a Lien.                                         

     "Senior Indebtedness" means Indebtedness that is not by its terms expressly
subordinate or junior in right of payment to any other Indebtedness of the      
Company or the Note Guarantee of a Subsidiary Guarantor.                        

  "Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under   
Regulation S-X promulgated by the SEC.                                          

   "Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such    
security is due and payable, including pursuant to any mandatory redemption     
provision, but excluding any provisions providing for the repurchase, redemption
or repayment of such security at the option of the holder thereof upon the      
happening of any contingency unless such contingency has occurred.              

     "Subordinated Obligations" means Indebtedness that is expressly subordinate
or junior in right of payment to any other Indebtedness of the Company or the   
Note Guarantee of a Subsidiary Guarantor.                                       

    "Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of    
shares of Capital Stock or other interests (including partnership interests)    
entitled (without regard to the occurrence of any contingency) to vote in the   
election of directors, managers or trustees thereof is at the time owned or     
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such   
Person. Unless otherwise specified herein, each reference to a Subsidiary shall 
refer to a Subsidiary of the Company.                                           

     "Subsidiary Guarantor" means each Subsidiary of the Company in existence on
the Issue Date and each Subsidiary (other than Unrestricted Subsidiaries)       
created or acquired by the Company after the Issue Date, other than BG Aruba,   
Resort Title Agency, Inc., any Receivables Subsidiary and any Subsidiary which  
is established and continues to operate for the limited purpose of holding a    
real estate broker's license and acting                                         
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as a broker for the benefit of the Company and its Subsidiaries in connection   
with the sale of real estate or Timeshare Interests and certain other           
Subsidiaries which have individually less than $50,000 of assets.               

     "Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or  
obligations Guaranteed by the United States of America or any agency thereof;   
(ii) Investments in time deposit accounts, certificates of deposit and money    
market deposits maturing within 180 days of the date of acquisition thereof     
issued by a bank or trust company which is organized under the laws of the      
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital surplus and undivided profits       
aggregating in excess of $250 million (or the foreign currency equivalent       
thereof) and whose long-term debt, or whose parent holding company's long-term  
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436   
under the Securities Act); (iii) repurchase obligations with a term of not more 
than 30 days for underlying securities of the types described in clause (i)     
above entered into with a bank meeting the qualifications described in clause   
(ii) above; (iv) Investments in commercial paper, maturing not more than 180    
days after the date of acquisition, issued by a corporation (other than an      
Affiliate of the Company) organized and in existence under the laws of the      
United States of America or any foreign country recognized by the United States 
of America with a rating at the time as of which any investment therein is made 
of "P-l" (or higher) according to Moody's or "A-1 (or higher) according to S&P; 
(v) Investments in securities with maturities of six months or less from the    
date of acquisition issued or fully guaranteed by any state, commonwealth or    
territory of the United States of America, or by any political subdivision or   
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's; and  
(vi) Investments in mutual funds whose investment guidelines restrict such      
funds' investments to those satisfying the provisions of clauses (i) through (v)
above.                                                                          

    "Timeshare Interests" means the right to use (whether arising by virtue of
a club membership or a deeded interest in real property or otherwise) a         
fully-furnished vacation residence for a specified period each year or          
otherwise, sold by the Company and its Restricted Subsidiaries in the ordinary  
course of their resorts business.                                               

   "Timeshare Interests Receivable" means the receivables of the Company and
its Restricted Subsidiaries arising from sales by the Company and its Restricted
Subsidiaries of Timeshare Interests or otherwise acquired by the Company or a   
Restricted Subsidiary (but excluding any receivables for service or other fees  
in respect of such Timeshare Interests) determined on a consolidated basis in   
accordance with GAAP.                                                           

   "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the 
Board of Directors in the manner provided below and (ii) any Subsidiary of an   
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of 
the Company (including any newly acquired or newly formed Subsidiary of the     
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its  
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any    
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided        
however, that each Subsidiary to be so designated and each of its Subsidiaries  
has not at the time of such designation, and does not thereafter create, Incur, 
issue, assume, Guarantee or otherwise becomes liable with respect to any        
Indebtedness other than Non-Recourse Debt and either (A) the Subsidiary to be so
designated has total consolidated assets of $10,000 or less or (B) if such      
Subsidiary has consolidated assets greater than $10,000, then such designation  
would be permitted under "Limitation on Restricted Payments." The Board of      
Directors may designate any Unrestricted Subsidiary to be a Restricted          
Subsidiary subject to the limitations contained in "Limitation on Designations  
of Unrestricted Subsidiaries."                                                  

 "U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of 
America (including any agency or instrumentality thereof) for the payment of    
which the full faith and credit of the United States of America is pledged and  
which are not callable or redeemable at the issuer's option.                    

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     "Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company, all
of the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or another Wholly-Owned Subsidiary.                              

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THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER                                        

    The Outstanding Notes were originally sold by the Company on April 1, 1998
to the Initial Purchasers pursuant to the Purchase Agreement among the Company, 
the Subsidiary Guarantors and the Initial Purchasers. The Initial Purchasers    
subsequently resold the Outstanding Notes to qualified institutional buyers     
pursuant to Rule 144A under the Securities Act. Pursuant to the Purchase        
Agreement, the Company entered into the Registration Rights Agreement, pursuant 
to which the Company has agreed, for the benefit of the holders of the          
Outstanding Notes, at the Company's cost, to use its reasonable efforts to (i)  
file a registration statement with the Commission within 75 days after the Issue
Date of the Outstanding Notes with respect to the Exchange Offer for the        
Outstanding Notes, and (ii) cause the registration statement to be declared     
effective under the Securities Act within 135 days after the Issue Date. Upon   
the registration statement being declared effective, the Company will offer the 
Exchange Notes in exchange for the Outstanding Notes. The Company will keep the 
Exchange Offer open for no less than 30 days (or longer if required by          
applicable law) after the date on which notice of the Exchange Offer is mailed  
to the holders of the Outstanding Notes.                                        

  For each Outstanding Note properly tendered and accepted pursuant to the
Exchange Offer, the holder of such Outstanding Note will receive an Exchange    
Note having a principal amount equal to that of the Outstanding Note tendered.  
Interest on each Exchange Note will accrue from the last respective interest    
date on which interest was paid on the Outstanding Note tendered in exchange    
therefor or, if no interest has been paid on such Outstanding Note, from the    
Issue Date. Holders whose Outstanding Notes are accepted for exchange will be   
deemed to have waived the right to receive any interest accrued on the          
Outstanding Notes.                                                              

     Each holder of the Outstanding Notes who wishes to exchange the Outstanding
Notes for Exchange Notes in the Exchange Offer will be required to represent in 
the Letter of Transmittal that (i) it is not an affiliate of the Company or the 
Subsidiary Guarantors, (ii) the Exchange Notes to be received by it were        
acquired in the ordinary course of its business and (iii) at the time of        
commencement of the Exchange Offer, it has no arrangement with any person to    
participate in the distribution (within the meaning of the Securities Act) of   
the Exchange Notes and that it is not acting on behalf of a person who could not
truthfully make the foregoing representations.                                  

     If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the 
Exchange Notes. If the holder is a broker-dealer that will receive Exchange     
Notes for its own account in exchange for Outstanding Notes that were acquired  
as a result of market making activities or other trading activities, it will be 
required to acknowledge that it will deliver a prospectus in connection with any
resale of the Exchange Notes.                                                   

     In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect the Exchange Offer, or if for any other     
reason the Exchange Offer is not consummated within 165 days after the Issue    
Date, or, under certain circumstances, if the Initial Purchasers or any holder  
of Outstanding Notes (other than the Initial Purchasers) who is not eligible to 
participate in the Exchange Offer shall so request (each a "Shelf Request"), the
Company will at its cost, (a) within 75 days of such Shelf Request, file a shelf
registration statement covering resales of the Outstanding Notes (a "Shelf      
Registration Statement"), (b) use its reasonable efforts to cause such Shelf    
Registration Statement to be declared effective under the Securities Act no     
later than 135 days following a Shelf Request and (c) use its reasonable efforts
to keep effective such Shelf Registration Statement until the earlier of one    
year after the Issue Date and such time as all of the applicable Outstanding    
Notes have been sold thereunder. The Company will, in the event of the filing of
a Shelf Registration Statement, provide to each holder of the Outstanding Notes 
copies of the prospectus which is a part of such Shelf Registration Statement,  
notify each such holder when such Shelf Registration Statement has become       
effective and take certain other actions as are required to permit unrestricted 
resales of the Outstanding Notes. A holder that sells its Outstanding Notes     
pursuant to a Shelf Registration Statement generally will be required to be     
named as a selling securityholder in the related prospectus and to deliver a    
prospectus to purchasers, will be subject to certain of the civil liability     
provisions                                                                      

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under the Securities Act in connection with such sales and will be bound by the 
provisions of the Registration Rights Agreement which are applicable to such    
holder (including certain indemnification obligations).                         

   If the Company or the Subsidiary Guarantors fail to comply with the above
provisions or if such Shelf Registration Statement fails to become effective,   
then, as liquidated damages, additional interest (the "Additional Interest")    
shall become payable with respect to the Outstanding Notes as follows:          

         (i) if the registration statement for the Exchange Offer is not filed
    within 75 days after the Issue Date or the Shelf Registration Statement is
   not filed within 75 days following the Shelf Request, Additional Interest
  shall accrue on the Outstanding Notes over and above the stated interest
     percentage at a rate of 0.50% per annum for the first 30 days commencing on
    the 76th day after the Issue Date or the Shelf Request, respectively, such
     Additional Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 30-day period;                           

          (ii) if the registration statement for the Exchange Offer or the Shelf
     Registration Statement is not declared effective within, in the case of the
  Exchange Offer registration statement, 135 days following the Issue Date
   or, in the case of the Shelf Registration Statement, 135 days following a
Shelf Request, the Additional Interest shall accrue on the Outstanding
    Notes over and above the stated interest percentage at a rate of 0.50% per
 annum for the first 30 days commencing on the 135th day after the Issue
Date or the Shelf Request, respectively, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each  
subsequent 30-day period; or                                          

    (iii) if (A) the Company has not exchanged all Outstanding Notes
   validly tendered in accordance with the terms of the Exchange Offer on or
  prior to 165 days after the Issue Date or (B) the registration statement
     for the Exchange Offer ceases to be effective at any time prior to the time
that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf     
Registration Statement ceases to be effective at any time prior to the
    first anniversary of the Issue Date (unless all the Outstanding Notes have
    been sold thereunder or as otherwise provided herein), then the Additional
  Interest shall accrue on the Outstanding Notes over and above the stated
   interest at a rate of 0.50% per annum for the first 30 days commencing on
(x) the 165th day after the Issue Date with respect to the Outstanding
     Notes validly tendered and not exchanged by the Company, in the case of (A)
    above, or (y) the day of the registration statement for the Exchange Offer
  ceases to be effective or usable for its intended purpose in the case of
 (B) above, or (z) the day the Shelf Registration Statement ceases to be
  effective in the case of (C) above, the rate of such Additional Interest
increasing by an additional 0.50% per annum at the beginning of each  
   subsequent 30-day period; provided, however, that the Additional Interest
    rate payable on the Outstanding Notes may not exceed in the aggregate 1.5%
per annum; and provided further, that (1) upon the filing of the      
 registration statement for the Exchange Offer or the Shelf Registration
    Statement (in the case of clause (i) above), (2) upon the effectiveness of
such registration statement for the Exchange Offer or the Shelf       
Registration Statement (in the case of (ii) above), or (3) upon the   
    exchange of Exchange Notes for all Outstanding Notes tendered (in the case
  of clause (iii)(A) above), or upon the effectiveness of the registration
statement which had ceased to remain effective in the case of clause  
(iii)(B) above, or upon the effectiveness of the Shelf Registration   
Statement which had ceased to remain effective (in the case of clause 
    (iii)(C) above), the Additional Interest accruing on the Outstanding Notes
    as a result of such clause (or the relevant subclause thereof) shall cease
to accrue.                                                            

  Any Additional Interest due pursuant to clauses (i), (ii) or (iii) above
will be payable in cash, on the same original interest payment dates as interest
on the Outstanding Notes. The amount of Additional Interest will be determined  
by multiplying the applicable rate of such Additional Interest by the principal 
amount of the Outstanding Notes multiplied by a fraction, the numerator of which
is the number of days such Additional Interest was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),  
and the denominator of which is 360.                                            

  The summary herein of all material provisions of the Registration Rights
Agreement does not purport to be exhaustive and is subject to, and is qualified 
in its entirety by, all the provisions of the Registration Rights Agreement, a  
copy of which is available upon request to the Company. See "Available          
Information."                                                                   
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Following the consummation of the Exchange Offer, holders of the      
Outstanding Notes who were eligible to participate in the Exchange Offer but who
did not tender their Outstanding Notes will not have any further exchange or    
registration rights and such Outstanding Notes will continue to be subject to   
certain restrictions on transfer. Accordingly, the liquidity of the market for  
such Outstanding Notes could be adversely affected. See "Risk                   
Factors -- Consequences of Failure to Exchange."                                

TERMS OF THE EXCHANGE OFFER                                                     

   Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all           
Outstanding Notes validly tendered and not withdrawn prior to 5:00 p.m., New    
York City time, on the Expiration Date. The Company will issue $1,000 principal 
amount of Exchange Notes in exchange for each $1,000 principal amount of        
Outstanding Notes accepted in the Exchange Offer. Holders may tender some or all
of their Outstanding Notes pursuant to the Exchange Offer. However, Outstanding 
Notes may be tendered only in integral multiples of $1,000.                     

     The form and terms of the Exchange Notes are the same as the form and terms
of the Outstanding Notes except that (i) the Exchange Notes will bear a Series B
designation and will have been registered under the Securities Act and,         
therefore, will not bear legends restricting the transfer thereof and will not  
contain certain provisions relating to an increase in the interest rate which   
were included in the terms of the Outstanding Notes in certain circumstances    
relating to the timing of the Exchange Offer and (ii) holders of the Exchange   
Notes will not be entitled to certain rights of the holders of the Outstanding  
Notes under the Registration Rights Agreement, which rights shall terminate upon
the consummation of the Exchange Offer. The Exchange Notes will evidence the    
same debt as the Outstanding Notes (which they replace) and will be issued under
and entitled to the benefits of the Indenture. The Outstanding Notes and the    
Exchange Notes will constitute a single class of debt securities under the      
Indenture.                                                                      

   As of the date of this Prospectus $110,000,000 aggregate principal amount
of Outstanding Notes are outstanding. The Company has fixed the close of        
business June 19, 1998 as the record date for the Exchange Offer for purposes of
determining the person to whom this Prospectus and the Letter of Transmittal    
will be mailed initially.                                                       

   Holders of the Outstanding Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange   
Act and the rules and regulations of the Commission thereunder.                 

   The Company shall be deemed to have accepted validly tendered Outstanding
Notes when, as and if the Company has given oral or written notice thereof to   
the Exchange Agent. The Exchange Agent will act as agent for the tendering      
holders for the purpose of receiving the Outstanding Notes from the Company.    

    If any tendered Outstanding Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or   
otherwise, the certificates for any such unaccepted Outstanding Notes will be   
returned, without expense, to the tendering holder thereof as promptly as       
practicable after the Expiration Date.                                          

Holders who tender Outstanding Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions of
the Letter of Transmittal, transfer taxes with respect to the exchange of       
Outstanding Notes pursuant to the Exchange Offer. The Company will pay all      
charges and expenses, other than the transfer taxes in certain circumstances, in
connection with the Exchange Offer. See "-- Fees and Expenses."                 

EXPIRATION DATE; EXTENSIONS; AMENDMENTS                                         

 The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
July 23, 1998, unless the Company, in its sole discretion, extends the Exchange 
Offer, in which case the term "Expiration Date" shall mean the latest date and  
time to which the Exchange Offer is extended.                                   

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     In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. The       
Company reserves the right, (i) to delay accepting any Outstanding Notes, to    
extend the Exchange Offer or to terminate the Exchange Offer if any of the      
conditions set forth below under "-- Conditions" shall not have been satisfied, 
by giving oral or written notice of such delay, extension or termination to the 
Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner.  
Any such delay in acceptance, extension, termination or amendment will be       
followed as promptly as practicable by oral or written notice thereof to the    
registered holders.                                                             

PROCEDURES FOR TENDERING                                                        

     The tender of Outstanding Notes pursuant to any of the procedures set forth
in this Prospectus and in the Letter of Transmittal will constitute a binding   
agreement between the Tendering Holder and the Company in accordance with the   
terms and subject to the conditions set forth herein and in the Letter of       
Transmittal. The tender of Outstanding Notes will constitute an agreement to    
deliver good and marketable title to all tendered Outstanding Notes prior to the
Expiration Date free and clear of all liens, charges, claims, encumbrances,     
interests and restrictions of any kind. Holders must follow the procedures set  
forth in this Prospectus in order to properly and effectively tender Outstanding
Notes.                                                                          

EXCEPT AS PROVIDED IN "-- GUARANTEED DELIVERY PROCEDURES," UNLESS THE 
OUTSTANDING NOTES BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE EXCHANGE  
AGENT PRIOR TO THE EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL), THE COMPANY MAY, AT ITS OPTION, REJECT SUCH    
TENDER. ISSUANCE OF OUTSTANDING NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF      
TENDERED OUTSTANDING NOTES AND DELIVERY OF ALL OTHER REQUIRED DOCUMENTS.        
NOTWITHSTANDING THE FOREGOING, DTC PARTICIPANTS TENDERING THROUGH ATOP WILL BE  
DEEMED TO HAVE MADE VALID DELIVERY WHERE THE EXCHANGE AGENT RECEIVES AN AGENT'S 
MESSAGE (DEFINED BELOW) PRIOR TO THE EXPIRATION DATE.                           

Outstanding Notes held through DTC.  Each Beneficial Owner holding    
Outstanding Notes through a DTC Participant must instruct such DTC Participant  
to cause its Outstanding Notes to be tendered in accordance with the procedures 
set forth in this Prospectus.                                                   

     Pursuant to an authorization given by DTC to the DTC Participants, each DTC
Participant holding Outstanding Notes through DTC must (i) electronically       
transmit its acceptance through ATOP, and DTC will then verify the acceptance,  
execute a book-entry delivery to the Exchange Agent's account at DTC and send an
Agent's Message to the Exchange Agent for its acceptance, or (ii) comply with   
the guaranteed delivery procedures set forth below and in the Notice of         
Guaranteed Delivery. See "-- Guaranteed Delivery Procedures."                   

The Exchange Agent will (promptly after the date of this Prospectus)  
establish accounts at DTC for purposes of the Exchange Offer with respect to    
Outstanding Notes held through DTC, and any financial institution that is a DTC 
Participant may make book-entry delivery of interests in Outstanding Notes into 
the Exchange Agent's account through ATOP. However, although delivery of        
interests in the Outstanding Notes may be effected through book-entry transfer  
into the Exchange Agent's account through ATOP, an Agent's Message in connection
with such book-entry transfer, and any other required documents, must be        
transmitted to and received by the Exchange Agent at its address set forth under
"-- Exchange Agent," or the guaranteed delivery procedures set forth below must 
be complied with, in each case, prior to the Expiration Date. Delivery of       
documents to DTC does not constitute delivery to the Exchange Agent. The        
confirmation of a book-entry transfer into the Exchange Agent's account at DTC  
as described above is referred to herein as a "Book-Entry Confirmation."        

The term "Agent's Message" means a message transmitted by DTC to, and 
received by, the Exchange Agent and forming a part of the Book-Entry            
Confirmation, which states that DTC has received an express                     
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acknowledgment from each DTC Participant tendering through ATOP that such DTC   
Participants have received a Letter of Transmittal and agree to be bound by the 
terms of the Letter of Transmittal and that the Company may enforce such        
agreement against such DTC Participants.                                        

Cede & Co., as the Holder of the global certificates representing the 
Outstanding Notes (a "Global Security"), will tender a portion of each Global   
Security equal to the aggregate principal amount due at the stated maturity or  
number of shares for which instructions to tender are given by DTC Participants.

    Outstanding Notes held by Holders.  Each Holder must (i) complete and sign
and mail or deliver the accompanying Letter of Transmittal, and any other       
documents required by the Letter of Transmittal, together with certificate(s)   
representing all tendered Outstanding Notes, to the Exchange Agent at its       
address set forth under "-- Exchange Agent," or (ii) comply with the guaranteed 
delivery procedures set forth below and in the Notice of Guaranteed Delivery.   
See "-- Guaranteed Delivery Procedures."                                        

    All signatures on a Letter of Transmittal must be guaranteed by any member
firm of a registered national securities exchange or of the National Association
of Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor" institution    
within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible    
Institution"); provided, however, that signatures on a Letter of Transmittal    
need not be guaranteed if such Outstanding Notes are tendered for the account of
an Eligible Institution including (as such terms are defined in Rule 17Ad-15):  
(i) a bank; (ii) a broker, dealer, municipal securities dealer, municipal       
securities broker, government securities dealer or government securities broker;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings institution that is a          
participant in a Securities Transfer Association recognized program.            

    If a Letter of Transmittal or any Outstanding Note is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer of a        
corporation or other person acting in a fiduciary or representative capacity,   
such person must so indicate when signing, and proper evidence satisfactory to  
the Company of the authority of such person so to act must be submitted.        

    Holders should indicate in the applicable box in the Letter of Transmittal
the name and address to which substitute certificates evidencing Outstanding    
Notes for amounts not tendered are to be issued or sent, if different from the  
name and address of the person signing the Letter of Transmittal. In the case of
issuance in a different name, the employer identification or social security    
number of the person named must also be indicated. If no instructions are given,
such Outstanding Notes not tendered, as the case may be, will be returned to the
person signing the Letter of Transmittal.                                       

     By tendering, each Holder and each DTC Participant will make to the Company
the representations set forth in the third paragraph under the heading          
"-- Purpose and Effect of the Exchange Offer."                                  

No alternative, conditional, irregular or contingent tenders will be  
accepted (unless waived). By executing a Letter of Transmittal or transmitting  
an acceptance through ATOP, as the case may be, each Tendering Holder waives any
right to receive any notice of the acceptance for purchase of its Outstanding   
Notes.                                                                          

All questions as to the validity, form, eligibility (including time of
receipt), and acceptance and withdrawal of tendered Outstanding Notes will be   
resolved by the Company in its sole discretion, whose determination will be     
final and binding. The Company reserves the absolute right to reject any or all 
tenders that are not in proper form or the acceptance of which may, in the      
opinion of counsel for the Company, be unlawful. The Company also reserves the  
absolute right to waive any condition to the Exchange Offer and any             
irregularities or conditions of tender as to particular Outstanding Notes. The  
Company's interpretation of the terms and conditions of the Exchange Offer      
(including the instructions in the Letter of Transmittal) will be final and     
binding. Unless waived, any irregularities in connection with tenders must be   
cured within such time as the Company shall determine. The Company and the      
Exchange Agent shall not be under any duty to give notification of defects in   
such tenders and shall not incur liabilities for failure to give such           
notification. Tenders of Outstanding Notes will not be deemed to have been made 
until such irregularities have been cured or waived. Any Outstanding Notes      
received by the Exchange Agent that are not properly tendered and as to which   
the irregularities have not been cured or waived will be returned by the        
Exchange Agent to the                                                           

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tendering Holder, unless otherwise provided in the Letter of Transmittal, as    
soon as practicable following the Expiration Date.                              

LETTERS OF TRANSMITTAL AND OUTSTANDING NOTES MUST BE SENT ONLY TO THE 
EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OUTSTANDING NOTES TO THE  
COMPANY OR DTC.                                                                 

     The method of delivery of Outstanding Notes and Letters of Transmittal, any
required signature guarantees and all other required documents, including       
delivery through DTC and any acceptance through ATOP, is at the election and    
risk of the persons tendering and delivering acceptances or Letters of          
Transmittal and, except as otherwise provided in the applicable Letter of       
Transmittal, delivery will be deemed made only when actually received by the    
Exchange Agent. If delivery is by mail, it is suggested that the Holder use     
properly insured, registered mail with return receipt requested, and that the   
mailing be made sufficiently in advance of the Expiration Date to permit        
delivery to the Exchange Agent prior to the Expiration Date.                    

GUARANTEED DELIVERY PROCEDURES                                                  

   Outstanding Notes held through DTC.  DTC Participants holding Outstanding
Notes through DTC who wish to cause their Outstanding Notes to be tendered, but 
who cannot transmit their acceptances through ATOP prior to the Expiration Date,
may cause a tender to be effected if:                                           

          (a) guaranteed delivery is made by or through an Eligible Institution;

          (b) prior to 5:00 p.m., New York City time on the Expiration Date, the
     Exchange Agent receives from such Eligible Institution a properly completed
  and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided by the Company herewith; and                                 

    (c) Book-Entry Confirmation and an Agent's Message in connection
  therewith (as described above) are received by the Exchange Agent within
   three New York Stock Exchange ("NYSE") trading days after the date of the
execution of the Notice of Guaranteed Delivery.                       

Outstanding Notes held by Holders.  Holders who wish to tender their  
Outstanding Notes and (i) whose Outstanding Notes are not immediately available,
(ii) who cannot deliver their Outstanding Notes, the Letter of Transmittal or   
any other required documents to the Exchange Agent or (iii) who cannot complete 
the procedures for book-entry transfer, prior to the Expiration Date, may effect
a tender if:                                                                    

(a) the tender is made through an Eligible Institution;     

          (b) prior to 5:00 p.m., New York City time on the Expiration Date, the
     Exchange Agent receives from such Eligible Institution a properly completed
     and duly executed Notice of Guaranteed Delivery (by facsimile transmission,
  mail or hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Outstanding Notes and the principal 
     amount of Outstanding Notes tendered, stating that the tender is being made
 thereby and guaranteeing that, within three NYSE trading days after the
    Expiration Date, the Letter of Transmittal (or facsimile thereof) together
with the certificate(s) representing the Outstanding Notes (or a      
confirmation of book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility), and any
    other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and                 

      (c) such properly completed and executed Letter of Transmittal (or
     facsimile thereof), as well as the certificate(s) representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation or   
 book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility), and all other documents 
  required by the Letter of Transmittal are received by the Exchange Agent
upon three NYSE trading days after the Expiration Date.               

     Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Outstanding Notes according to the     
guaranteed delivery procedures set forth above.                                 

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WITHDRAWAL OF TENDERS                                                           

  Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration 
Date.                                                                           

   Outstanding Notes held through DTC.  DTC Participants holding Outstanding
Notes who have transmitted their acceptances through ATOP may, prior to 5:00    
p.m., New York City time, on the Expiration Date, withdraw the instruction given
thereby by delivering to the Exchange Agent, at its address set forth under     
"-- Exchange Agent," a written, telegraphic or facsimile notice of withdrawal of
such instruction. Such notice of withdrawal must contain the name and number of 
the DTC Participant, the principal amount due at the Stated Maturity date of the
Outstanding Notes to which such withdrawal related and the signature of the DTC 
Participant. Withdrawal of such an instruction will be effective upon receipt of
such written notice of withdrawal by the Exchange Agent.                        

Outstanding Notes held by Holders.  Holders may withdraw a tender of  
Outstanding Notes in the Exchange Offer, by a telegram, telex, letter or        
facsimile transmission notice of withdrawal received by the Exchange Agent at   
its address set forth herein prior to 5:00 p.m., New York City time, on the     
Expiration Date. Any such notice of withdrawal must (i) specify the name of the 
person having deposited the Outstanding Notes to be withdrawn (the "Depositor"),
(ii) identify the Outstanding Notes to be withdrawn (including the certificate  
number(s) and principal amount due at the Stated Maturity of such Outstanding   
Notes, or, in the case of Outstanding Notes transferred by book-entry transfer, 
the name and number of the account at the Book-Entry Transfer Facility to be    
credited), (iii) be signed by the holder in the same manner as the original     
signature on the Letter of Transmittal by which such Outstanding Notes were     
tendered (including any required signature guarantees) or be accompanied by     
documents of transfer sufficient to have the Trustee with respect to the        
Outstanding Notes register the transfer of such Outstanding Notes into the name 
of the person withdrawing the tender and (iv) specify the name in which any such
Outstanding Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of       
receipt) of such notices will be determined by the Company, whose determination 
shall be final and binding on all parties. Any Outstanding Notes so withdrawn   
will be deemed not to have been validly tendered for purposes of the Exchange   
Offer and no Exchange Notes will be issued with respect thereto unless the      
Outstanding Notes so withdrawn are validly retendered. Any Outstanding Notes    
which have been tendered but which are not accepted for exchange will be        
returned to the holder thereof without cost to such holder as soon as           
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Outstanding Notes may be retendered by following one  
of the procedures described above under "-- Procedures for Tendering" at any    
time prior to the Expiration Date.                                              

    All signatures on a notice of withdrawal must be guaranteed by an Eligible
Institution; provided, however, that signatures on the notice of withdrawal need
not be guaranteed if the Outstanding Notes being withdrawn are held for the     
account of an Eligible Institution.                                             

     A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as the 
person's name appears on its transmission through ATOP or Letter of Transmittal,
as the case may be, to which such withdrawal relates. If a notice of withdrawal 
is signed by a trustee, partner, executor, administrator, guardian,             
attorney-in-fact, agent, officer of a corporation or other person acting in a   
fiduciary or representative capacity, such person must so indicate when signing 
and must submit with the revocation appropriate evidence of authority to execute
the notice of withdrawal. A DTC Participant or a Holder may withdraw an         
instruction or a tender, as the case may be, only if such withdrawal complies   
with the provisions of this Prospectus.                                         

 A withdrawal of a tender of Outstanding Notes by a DTC Participant or a
Holder, as the case may be, may be rescinded only by a new transmission of an   
acceptance through ATOP or execution and delivery of a new Letter of            
Transmittal, as the case may be, in accordance with the procedures described    
herein.                                                                         

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CONDITIONS                                                                      

     Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange securities for, any Outstanding 
Notes, and may terminate or amend the Exchange Offer as provided herein before  
the acceptance of such Outstanding Notes, if:                                   

         (a) any action or proceeding is instituted or threatened in any court
    or by or before any governmental agency with respect to the Exchange Offer
     which, in the judgment of the Company upon written advice of counsel, could
   reasonably be expected to materially impair the ability of the Company to
 proceed with the Exchange Offer or any material adverse development has
   occurred in any existing action or proceeding with respect to the Company
or any of the subsidiaries; or                                        

         (b) any law, statute, rule, regulation or interpretation by the staff
   of the Commission is proposed, adopted or enacted, which, in the judgment
    of the company and based on written advice of counsel, could reasonably be
  expected to materially impair the ability of the Company to proceed with
  the Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company; or                                     

       (c) any governmental approval has not been obtained, which approval
the Company shall, in its discretion and based on written advice of   
counsel, deem necessary for the consummation of the Exchange Offer as 
contemplated hereby.                                                  

   If any of the conditions are not satisfied, the Company may (i) refuse to
accept any Outstanding Notes and return all tendered Outstanding Notes to the   
tendering holders, (ii) extend the Exchange Offer and retain all Outstanding    
Notes tendered prior to the expiration of the Exchange Offer, subject, however, 
to the rights of holders to withdraw such Outstanding Notes (see "-- Withdrawal 
of Tenders") or (iii) waive such unsatisfied conditions with respect to the     
Exchange Offer and accept all properly tendered Outstanding Notes which have not
been withdrawn.                                                                 

EXCHANGE AGENT                                                                  

    SunTrust Bank, Central Florida, National Association has been appointed as
Exchange Agent for the Exchange Offer. Questions and requests for assistance,   
requests for additional copies of this Prospectus or of the Letter of           
Transmittal and requests for Notice of Guaranteed Delivery should be directed to
the Exchange Agent addressed as follows:                                        

By Facsimile Transmission:                                            
SunTrust Bank, Central Florida, NA                                    
225 East Robinson Street                                              
Suite 250                                                             
Orlando, Florida 32801                                                
(407) 237-5299                                                        
Attn: Lisa Derryberry                                                 

Confirm by Telephone:                                                 
Lisa Derryberry                                                       
(407) 237-4791                                                        

By Mail or Overnight Courier:                                         
SunTrust Bank, Central Florida, NA                                    
c/o First Chicago Trust Company of New York                           
Corporate Trust                                                       
8th Floor                                                             
14 Wall Street                                                        
New York, New York 10005                                              

  Delivery to an address other than as set forth above, or transmission of
instructions via a facsimile number other than the one set forth above, will not
constitute a valid delivery.                                                    
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FEES AND EXPENSES                                                               

The expenses of soliciting tenders will be borne by the Company. The  
principal solicitation is being made by mail; however, additional solicitation  
may be made by telegraph, telecopy, telephone or in person by officers and      
regular employees of the Company and its affiliates.                            

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others    
soliciting acceptances of the Exchange Offer. The Company will pay the Exchange 
Agent reasonable and customary fees for its services and will reimburse it for  
its reasonable out-of-pocket expenses in connection therewith.                  

     The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange 
Agent and Trustee, accounting and legal fees and printing costs, among others.  

ACCOUNTING TREATMENT                                                            

The Exchange Notes will be recorded at the same carrying value as the 
Outstanding Notes, as reflected in the Company's accounting records on the date 
of exchange. Accordingly, no gain or loss for accounting purposes will be       
recognized by the Company.                                                      

CONSEQUENCES OF FAILURE TO EXCHANGE                                             

     The Outstanding Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such         
Outstanding Notes may be resold only (i) to the Company (upon redemption thereof
or otherwise), (ii) so long as the Outstanding Notes are eligible for resale    
pursuant to Rule 144A, to a person inside the United States whom the seller     
reasonably believes is a qualified institutional buyer within the meaning of    
Rule 144A under the Securities Act in a transaction meeting the requirements of 
Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to 
another exemption from the registration requirements of the Securities Act (and 
based upon an opinion of counsel reasonably acceptable to the Company), (iii)   
outside the United States to a foreign person in a transaction meeting the      
requirements of Rule 904 under the Securities Act, or (iv) pursuant to an       
effective registration statement under the Securities Act, in each case in      
accordance with any applicable securities laws of any state of the United       
States. See "Risk Factors -- Consequences of Failure to Exchange."              

RESALE OF THE EXCHANGE NOTES                                                    

    With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties, 
the Company believes that a holder or other person who receives Exchange Notes  
in the ordinary course of business, whether or not such person is the holder    
(other than (i) a broker-dealer who purchases such Exchange Notes from the      
Company to resell pursuant to Rule 144A or any other available exemption under  
the Securities Act or (ii) a person that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) who receives Exchange Notes in
exchange for Outstanding Notes, and who is not participating, does not intend to
participate, and has no arrangement or understanding with person to participate,
in the distribution of the Exchange Notes, will be allowed to resell the        
Exchange Notes to the public without further registration under the Securities  
Act and without delivering to the purchasers of the Exchange Notes a prospectus 
that satisfies the requirements of Section 10 of the Securities Act. However, if
any holder acquires Exchange Notes in the Exchange Offer for the purpose of     
distributing or participating in a distribution of the Exchange Notes, such     
holder cannot rely on the position of the staff of the Commission enunciated in 
such no-action letters or any similar interpretive letters, and must comply with
the registration and prospectus delivery requirements of the Securities Act in  
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives    
Exchange Notes for its own account in exchange for Exchange Notes, where such   
Securities were acquired by such Participating Broker-Dealer as a result of     
market-making activities or other trading activities, must acknowledge that it  
will deliver a prospectus in connection with any resale of such Exchange Notes. 
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As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to 
the Company in the Letter of Transmittal that (i) the Exchange Notes are to be  
acquired by the holder or the person receiving such Exchange Notes, whether or  
not such person is the holder, in the ordinary course of business, (ii) the     
holder or any such other person (other than a broker-dealer referred to in the  
next sentence) is not engaging and does not intend to engage, in the            
distribution of the Exchange Notes, (iii) the holder or any such other person   
has no arrangement or understanding with any person to participate in the       
distribution of the Exchange Notes, (iv) neither the holder nor any such other  
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose  
of distributing the Exchange Notes it must comply with the registration and     
prospectus delivery requirements of the Securities Act in connection with any   
resale of the Exchange Notes and cannot rely on those no-action letters. As     
indicated above, each Participating Broker-Dealer that receives Exchange Notes  
for its own account in exchange for Outstanding Notes must acknowledge that it  
will deliver a prospectus in connection with any resale of such Exchange Notes. 
For a description of the procedures for such resales by Participating           
Broker-Dealers, see "Plan of Distribution."                                     

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DESCRIPTION OF OTHER INDEBTEDNESS 

 The following discussion describes certain indebtedness, other than the
Notes, that will be outstanding as of the date of this Prospectus.              

CONVERTIBLE SUBORDINATED DEBENTURES                                             

    In May 1987, the Company sold $46.0 million principal amount of its 8 1/4%
Convertible Subordinated Debentures due 2012 (the "Public Debentures"), of which
$34.7 million were outstanding at December 28, 1997. The Public Debentures are  
convertible at any time prior to maturity, unless previously redeemed, into     
Common Stock at a current conversion price of $8.24 per share, subject to       
adjustment under certain conditions. The Public Debentures are redeemable at any
time, at the Company's option, in whole or in part, at a redemption price equal 
to 100% of the face amount, plus accrued interest, if any. The Company is       
obligated to redeem annually, commencing May 15, 2003, 10% of the original      
principal amount of the Public Debentures at 100% of the face amount, plus      
accrued interest, if any. The Company may reduce the principal amount of Public 
Debentures to be redeemed by subtracting 100% of the principal amount of any    
Public Debentures that the Company has delivered for cancellation upon          
repurchase (other than pursuant to an Offer (defined below)) or following a     
conversion or redemption (other than a mandatory redemption). Through December  
28, 1997, the Company had repurchased (other than pursuant to an Offer) Public  
Debentures in the aggregate principal amount of $11.3 million. Such redemptions 
are calculated to retire 90% of the principal amount of the Public Debentures   
prior to maturity. Interest is payable semi-annually on May 15 and November 15. 

  The Public Debentures are unsecured and subordinated to all existing and
future senior indebtedness of the Company. No payment on account of principal or
interest on the Public Debentures may be made unless, (i) at the time proposed  
for any such payment, full payment of amounts then due in respect of senior     
indebtedness shall have been made or duly provided for and (ii) at the time for,
or immediately after giving effect to, any such payment, there shall not exist  
or be created under any senior indebtedness, any default which shall not have   
been cured or waived, provided that no such event of default will prevent       
payment on the Public Debentures for more than 90 days unless the maturity of   
such senior indebtedness has been and remains accelerated. Consequently, if an  
Event of Default were to occur and be continuing under the Notes, absent an     
acceleration of the Notes the Notes Trustees and/or the holders of the Notes    
will only be able to block payments on the Public Debentures for 90 days.       

    Under financial covenants contained in the Indenture pursuant to which the
Public Debentures were issued, the Company is required to maintain a net worth  
of not less than $29.0 million. Should the Company's net worth fall below $29.0 
million for two consecutive quarters, the Company is required to make an offer  
to purchase 20% of the outstanding Public Debentures at par, plus accrued       
interest.                                                                       

CONVERTIBLE NOTES                                                               

     The Company borrowed an aggregate $6,000,000 from Joseph Abeles, a director
of the Company, and Grace Brothers, Ltd., an affiliate of Bradford T. Whitmore, 
a director of the Company, pursuant to a Note Purchase Agreement dated as of    
September 11, 1997 (the "Note Agreement"), which amount was used to fund a      
portion of the purchase price in connection with the RDI Acquisition. Pursuant  
to the Note Agreement, the Company executed the Convertible Notes in the        
aggregate principal amount of $6,000,000. The Convertible Notes have a maturity 
date of September 11, 2002, and the outstanding balances of the Convertible     
Notes are convertible into Common Stock at a conversion price of $3.92 per      
share, subject to adjustment. Interest is payable quarterly in arrears on       
December 11, March 11, June 11 and September 11 of each year. The Convertible   
Notes may not be prepaid without the consent of the holders thereof. The        
Convertible Notes are subordinated to the Notes to the same extent the Public   
Debentures are subordinated to the Notes (described above); the Convertible     
Notes are not contractually subordinated to any other indebtedness of the       
Company. In December 1997, Stuart A. Shikiar purchased $200,000 of Convertible  
Notes from Mr. Abeles in a private transaction.                                 

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RDI NOTE                                                                        

In connection with the RDI Acquisition, the Company and a wholly-owned
subsidiary of the Company issued a 9% promissory note in the principal amount of
$1,500,000 to the former stockholders of RDI (the "RDI Note"). The principal    
amount of the RDI Note is payable as follows: $250,000 on March 29, 1998,       
$250,000 on September 29, 1998, and $1,000,000 on September 29, 1999. Interest  
is payable in arrears when principal payments are required to be made. The      
Company may at any time prepay all or a portion of the RDI Note. Amounts payable
under the RDI Note may be set off by the Company against any amounts payable to 
the Company under its indemnification rights contained in the Stock Purchase    
Agreement by and among the Company and the RDI Stockholders.                    

ARUBA DEBT                                                                      

     In connection with the acquisition by BG Aruba, an Aruban limited liability
company in which the Company owns a fifty percent equity interest, of the unsold
Timeshare Interest inventory of the Aruba Resort, BG Aruba assumed approximately
$16.6 million of the indebtedness (the "Aruba Debt") owed by the seller to      
Interbank Aruba N.V. (the "Bank"). The Aruba Debt is not guaranteed by Bluegreen
or any of its wholly-owned subsidiaries. An affiliate of the seller is          
responsible for payment of all interest on the Aruba Debt; BG Aruba is not      
responsible for any such interest payments and the Aruba Debt shall not be      
declared in default for any failure of the seller to make an interest payment.  
Under the Aruba Debt, BG Aruba must make minimum monthly payments of            
approximately $278,000. The Aruba Debt is secured by the unsold Timeshare       
Interest inventory of the Aruba resort. Upon payment to the Bank of 31.48% of   
the purchase price of each Timeshare Interest sold, the Bank will release from  
collateral such interest.                                                       

   The cash portion of the purchase price for the Timeshare Interests at the
Aruba Resort was financed through $3.0 million loaned to BG Aruba by the Company
and $3.0 loaned to BG Aruba by an affiliate of the individual who owns the      
remaining equity interest in BG Aruba, pursuant to promissory notes due December
15, 2000 and bearing interest at the prime rate plus 1%.                        

CREDIT FACILITIES                                                               

    The Company has an existing $20.0 million revolving credit facility with a
financial institution for the pledge of Residential Land Division Receivables.  
The Company uses the facility as a temporary warehouse until it accumulates a   
sufficient quantity of residential land receivables to sell under private       
placement REMIC transactions. Under the terms of this facility, the Company is  
entitled to advances secured by Residential Land Division receivables up to 90% 
of the outstanding principal balance of eligible pledged Residential Land       
Division receivables. In addition, up to $8.0 million of the facility can be    
used for land acquisition and development purposes. The interest rate charged on
outstanding borrowings ranges from prime plus 0.5% to 1.5%. At December 28,     
1997, the outstanding principal balance under the facility was $4.7 million. All
principal and interest payments received on pledged Receivables are applied to  
principal and interest due under the facility. The ability to borrow under the  
facility expires in September 2000. Any outstanding indebtedness, is due in     
September 2002. The Company retained this facility following the Note Offering. 

     The Company is currently negotiating with another financial institution for
a $35.0 million revolving credit facility. The Company expects to use this      
facility to finance the acquisition and development of residential land projects
and to finance land receivables. The facility is expected to be secured by the  
real property (and personal property related thereto) with respect to which     
borrowings are made, with the lender to advance up to a specified percentage of 
the value of the mortgaged property and eligible pledged receivables, provided  
that the maximum outstanding amount secured by pledged receivables may not      
exceed $20.0 million. The interest charged on outstanding borrowings is expected
to be approximately prime plus 1.5%.                                            

The Company has obtained from a financial institution a $135 million  
combined timeshare warehouse financing and receivables purchase facility. The   
$35 million warehouse facility and the $100 million receivable purchase facility
will bear interest at LIBOR plus 2.35% and a fixed rate equal to the weighted   
average term Treasury rate plus 1.40%, respectively. Should the Company fail to 
sell to such financial institution during the                                   

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term of the purchase facility notes receivable with cumulative present value of 
at least $100 million, the interest rate will increase by .05% for each $10     
million shortfall, to a maximum applicable margin of 1.60%. Under the facility, 
eligible notes receivable would periodically move from the warehouse facility to
the purchase facility. Both the warehouse and the purchase facility will have   
detailed requirements with respect to the eligibility of notes receivable for   
inclusion and other conditions to funding. The borrowing base under the         
warehouse facility will be 95% of the outstanding principal balance of eligible 
notes arising from the sale of completed Timeshare Interests. Under the purchase
facility, the Company is required to maintain a specified overcollateralization 
level and a cash reserve account. Loans sold under this facility are without    
recourse to the Company except for breaches of representations and warranties   
made at the time of sale. Fundings under the facility will terminate upon the   
occurrence of specified trigger events. The Company will act as servicer under  
the purchase facility and will be required to make advances to the financial    
institution to the extent it believes such advances will be recoverable. If     
obtained, the combined facility will expire two years from the closing date of  
the Note Offering. In addition to other customary fees and expenses, the Company
anticipates that it will pay a fee equal to $575,000, $250,000 at the closing of
this facility and $325,000 within 12 months of closing. In addition, the Company
anticipates that it will pay an annual utilization fee equal to 1% of the       
incremental amount by which outstanding indebtedness under the facility is below
$10 million. The facility includes various conditions to funding, eligibility   
requirements for collateral, affirmative, negative and financial covenants, and 
events of default, to be negotiated.                                            

   In addition, the Company is currently negotiating with the same financial
institution referred to in the preceding paragraph to provide the Company with a
$25 million acquisition and development facility for its timeshare inventories. 
The facility would include a two-year draw down period and have a term of seven 
years. Principal would be repaid through agreed-upon release prices as Timeshare
Interests are sold at the financed resort, subject to minimum required          
amortizations. It is anticipated that the indebtedness under the facility would 
bear interest at the three-month LIBOR plus 3.0%. With respect to any inventory 
financed under the facility, the Company will be required to have provided      
equity of at least 15% of the approved project costs. The facility will include 
certain minimum financial covenants for the Company. In connection with the     
facility, the Company will also be required to pay certain fees and expenses to 
the financial institution. The Company anticipates that it will pay a commitment
fee equal to $250,000, $100,000 at the closing of this facility and the         
remainder paid through a 1% fee on each draw until the total commitment fee is  
paid.                                                                           

   The Company's credit facilities include, and its proposed facilities will
include, among other things, customary representations and warranties,          
provisions with respect to the payment of customary fees and expenses,          
conditions to funding, eligibility requirements and advance rates for           
collateral, events of default and certain financial and other affirmative and   
negative covenants, including, among others, limits on the incurrence of        
indebtedness, covenants concerning net worth and fixed charge coverage          
requirements and debt to equity ratios.                                         

  No assurances can be given that the proposed credit facilities described
above will be entered into or that funding will be provided on the terms        
discussed herein, if at all, or that the Company will be able to obtain         
sufficient external sources of liquidity on attractive terms, or at all. See    
"Risk Factors -- Leverage; Ability to Service Debt and Liquidity and Finance    
Requirements."                                                                  

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BOOK-ENTRY, DELIVERY AND FORM 

Except as described in the next paragraph, each of the Exchange Notes 
initially will be represented by a single permanent global certificate in       
definitive, fully registered form (the "Global Securities"). The Global         
Securities will be deposited upon issuance with the Notes Trustee as custodian  
for the Depository Trust Company ("DTC") and registered in the name of a nominee
of DTC for credit to an account of a direct or indirect participant as described
below.                                                                          

The Outstanding Notes were offered and sold by the Initial Purchasers 
solely to qualified institutional buyers in reliance on Rule 144A.              

Global Securities.  The Company expects that pursuant to procedures   
established by DTC (i) upon the issuance of the Global Securities, DTC or its   
custodian will credit, on its internal system, the principal amount of Notes of 
the individual beneficial interest represented by such Global Security to the   
respective accounts for persons who have accounts with DTC and (ii) ownership of
beneficial interests in the Global Securities will be shown on, and the transfer
of such ownership will be effected only through, records maintained by DTC or   
its nominee (with respect to interests of persons who have accounts with DTC    
("participants")) and the records of participants (with respect to interests of 
persons other than participants).                                               

  So long as DTC, or its nominee, is the registered owner or holder of the
Global Securities, DTC or such nominee, as the case may be, will be considered  
the sole owner or holder of the Notes represented by the Global Securities for  
all purposes under the Indenture. No beneficial owner of an interest in any of  
the Global Securities will be able to transfer that interest except in          
accordance with DTC's procedures.                                               

  Payments on the Global Securities will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the Notes
Trustee or any Paying Agent will have any responsibility or liability for any   
aspect of the records relating to or payments made on account of beneficial     
ownership interests in a Global Security or for maintaining, supervising or     
reviewing any records relating to such beneficial ownership interest.           

     The Company expects that DTC or its nominee, upon receipt of any payment in
respect of a Global Security, will credit participants' accounts with payments  
in amounts proportionate to their respective beneficial interests in the        
applicable Global Security as shown on the records of DTC or its nominee. The   
Company also expects that payments by participants to owners of beneficial      
interests in the Global Securities held through such participants will be       
governed by standing instructions and customary practice, as is now the case    
with securities held for the accounts of customers registered in the names of   
nominees for such customers. Such payments will be the responsibility of such   
participants.                                                                   

     Transfers between participants in DTC will be effective in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a   
holder requires physical delivery of a Certificated Security for any reason,    
including to sell such security to persons in states which require physical     
delivery of Certificated Securities, or to pledge such securities, such holder  
must transfer its interest in the applicable Global Security, in accordance with
the normal procedures of DTC and with the procedures set forth in the Indenture.

  DTC has advised the Company that it will take any action permitted to be
taken by a holder of Global Securities only at the direction of one or more     
participants to whose account the DTC interests in the Global Securities are    
credited and only in respect of such portion of the securities as to which such 
participant or participants has or have given such direction. However, if there 
is an Event of Default under the Indenture DTC will exchange the Global         
Securities representing Notes for Certificated Securities, which it will        
distribute to its participants.                                                 

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the      
Federal Reserve System, a "clearing corporation" within the meaning of the      
Uniform Commercial Code and a "clearing agency" registered pursuant to the      
provisions of Section 17A of the Exchange Act. DTC was created to hold          
securities for its participants and facilitate the clearance and settlement of  
securities transactions between participants through electronic book-entry      
changes                                                                         

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in accounts of its participants, thereby eliminating the need for physical      
movement of certificates. Participants include securities brokers and dealers,  
banks, trust companies and clearing corporations and certain other              
organizations. Indirect access to the DTC system is available to others such as 
banks, brokers, dealers and trust companies that clear through or maintain a    
custodial relationship with a participant, either directly or indirectly        
("indirect participants").                                                      

    Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Securities among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be      
discontinued at any time. None of the Company, the Notes Trustee or the Transfer
Agent will have any responsibility for the performance by DTC or its            
participants or indirect participants of their respect obligations under the    
rules and procedures governing their operations.                                

  The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.                       

EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES                             

The Global Note is exchangeable for definitive Notes in registered    
uncertificated form if (i) DTC (x) notifies the Company that it is unwilling or 
unable to continue as depositary for the Global Note and the Company thereupon  
fails to appoint a successor depositary or (y) has ceased to be a clearing      
agency registered under the Exchange Act; (ii) the Company, at its option,      
notifies the Trustee in writing that it elects to cause the issuance of the     
Notes in certificated form; or (iii) there shall have occurred and be continuing
a Default or an Event of Default with respect to the Notes. In all cases,       
certificated Notes delivered in exchange for the Global Note or beneficial      
interests therein will be registered in the names, and issued in any approved   
denominations, requested by or on behalf of the depositary (in accordance with  
its customary procedures).                                                      

CERTAIN U. S. FEDERAL INCOME TAX CONSIDERATIONS 

   The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial     
authority and administrative rulings and practice. There can be no assurance    
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or     
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or      
interpretations may or may not be retroactive and could affect the tax          
consequences to holders. Certain holders (including insurance companies,        
tax-exempt organizations, financial institutions, broker-dealers, foreign       
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below.                            

THE COMPANY RECOMMENDS THAT EACH HOLDER CONSULT SUCH HOLDER'S OWN TAX 
ADVISER AS TO THE PARTICULAR TAX CONSEQUENCES OF EXCHANGING SUCH HOLDER'S OLD   
NOTES FOR NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL 
OR FOREIGN TAX LAWS.                                                            

  The Company believes that the exchange of Outstanding Notes for Exchange
Notes pursuant to the Exchange Offer will not be treated as an "exchange" for   
federal income tax purposes because the Exchange Notes will not be considered to
differ materially in kind or extent from the Outstanding Notes. Rather, the     
Exchange Notes received by a holder will be treated as a continuation of the    
Outstanding Notes in the hands of such holder. As a result, there will be no    
federal income tax consequences to holders exchanging Outstanding Notes for     
Exchange Notes pursuant to the Exchange Offer.                                  

PLAN OF DISTRIBUTION

Based on interpretations of the staff of the Division of Corporation  
Finance of the Commission set forth in no-action letters issued to third        
parties, the Company believes that, except as described below, Exchange         

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Notes issued pursuant to the Exchange Offer may be offered for resale, resold   
and otherwise transferred by the respective holders thereof without further     
compliance with the registration and prospectus delivery requirements of the    
Securities Act, provided that (i) such Exchange Notes are acquired in the       
ordinary course of such holder's business and (ii) such holder is not           
participating, and has no arrangement or understanding with any person to       
participate, in a distribution of the Exchange Notes. A holder of Outstanding   
Notes that is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act or that is a broker-dealer that purchased Outstanding Notes  
from the Company to resell pursuant to an exemption from registration under the 
Securities Act (a) cannot rely on such interpretations by the staff of the      
Division of Corporation Finance of the Commission, (b) will not be permitted or 
entitled to tender such Outstanding Notes in the Exchange Offer and (c) must    
comply with the registration and prospectus delivery requirements of the        
Securities Act in connection with any sale or other transfer of such Outstanding
Notes unless such sale or transfer is made pursuant to an exemption from such   
requirements. In addition, any holder who tenders Outstanding Notes in the      
Exchange Offer with the intention or for the purpose of participating in a      
distribution of the Exchange Notes cannot rely on such interpretations by the   
staff of the Division of Corporation Finance of the Commission and must comply  
with the registration and prospectus delivery requirements of the Securities Act
in connection with the secondary resale transaction. Unless an exemption from   
registration is otherwise available, any such resale transaction should be      
covered by an effective registration statement containing selling security      
holders information required by Item 507 of Regulation S-K under the Securities 
Act. To date, the staff of the Division of Corporation Finance of the Commission
has taken the position that a broker-dealer that has acquired securities in     
exchange for securities that were acquired by such broker-dealer as a result of 
market-making activities or other trading activities may fulfill the prospectus 
delivery requirements with the prospectus contained in an exchange offer        
registration statement.                                                         

 Each holder of Outstanding Notes who wishes to exchange its Outstanding
Notes for Exchange Notes in the Exchange Offer will be required to make certain 
representations to the Company set forth in "The Exchange Offer -- Purpose and  
Effect of the Exchange Offer."                                                  

Each broker-dealer that receives Exchange Notes for its own account   
pursuant to the Exchange Offer must acknowledge that it will deliver a          
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. This Prospectus may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Outstanding  
Notes where such Outstanding Notes were acquired as a result of market-making   
activities or other trading activities. Subject to certain provisions set forth 
in the Registration Rights Agreement, the Company has agreed that, for a period 
of up to 180 days after the consummation of the Exchange Offer, it will make    
this Prospectus available to any broker-dealer for use in connection with any   
such resale. See "Risk Factors -- Absence of Public Market" and "The Exchange   
Offer -- Resale of the Exchange Notes."                                         

   The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own      
account pursuant to the Exchange Offer may be sold from time to time in one or  
more transactions in the over-the-counter market, in negotiated transactions,   
through the writing of options on the Exchange Notes or a combination of such   
methods of resale, at market prices prevailing at the time of resale, at prices 
related to such prevailing market prices or negotiated prices. Any such resale  
may be made directly to purchasers or to or through brokers or dealers who may  
receive compensation in the form of commissions or concessions from any such    
broker-dealer and/or the purchasers of any such Exchange Notes. Any             
broker-dealer that resells Exchange Notes that were received by it for its own  
account pursuant to the Exchange Offer and any broker or dealer that            
participates in a distribution of such Exchange Notes may be deemed to be an    
"underwriter" within the meaning of the Securities Act and any profit from any  
such resale of Exchange Notes and any commissions or concessions received by any
such person may be deemed to be underwriting compensation under the Securities  
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. A broker-dealer
may nonetheless be deemed to be an "underwriter" under the Securities Act       
notwithstanding such disclaimer.                                                

Subject to certain provisions set forth in the Registration Rights    
Agreement, for a period of 180 days after the date the Exchange Offer is        
consummated, the Company will promptly send additional copies of this           
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Prospectus and any amendment or supplement to this Prospectus to any            
Participating Broker-Dealer that requests such documents in the Letter of       
Transmittal. The Company has agreed to pay the expenses incident to the Exchange
Offer, other than any discounts or commissions incurred upon the sale of the    
Exchange Notes.                                                                 

LEGAL MATTERS 

    The validity of the issuance of the Exchange Notes will be passed upon for
the Company by Choate, Hall & Stewart (a partnership including professional     
corporations), Boston, Massachusetts.                                           

EXPERTS 

     The consolidated financial statements of Bluegreen Corporation at March 30,
1997 and March 31, 1996, and for each of the three years in the period ended    
March 30, 1997, appearing in this Prospectus and Registration Statement have    
been audited by Ernst & Young LLP, independent certified public accountants, as 
set forth in their report thereon appearing elsewhere herein, and are included  
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.                                                        

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BLUEGREEN CORPORATION 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]
                                                                  
Consolidated Financial Statements as of March 31, 1996 and        
  March 30, 1997 and for the Fiscal Years Ended April 2,          
  1995; March 31, 1996; and March 30, 1997:                       

  Report of Independent Certified Public Accountants........   F-2
  Consolidated Balance Sheets...............................   F-3
  Consolidated Statements of Operations.....................   F-4
  Consolidated Statements of Shareholders' Equity...........   F-5
  Consolidated Statements of Cash Flows.....................   F-6
  Notes to Consolidated Financial Statements................   F-8
Unaudited Condensed Consolidated Financial Statements as of       
  December 28, 1997 and for the Nine Months Ended December        
  29, 1996 and December 28, 1997:                                 

  Unaudited Condensed Consolidated Balance Sheet............  F-29
  Unaudited Condensed Consolidated Statements of                  
     Operations.............................................  F-30
  Unaudited Condensed Consolidated Statements of Cash             
     Flows..................................................  F-31
  Notes to Unaudited Condensed Consolidated Financial             
     Statements.............................................  F-32

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders                                         
Bluegreen Corporation                                                           

   We have audited the accompanying consolidated balance sheets of Bluegreen
Corporation as of March 30, 1997 and March 31, 1996, and the related            
consolidated statements of operations, shareholders' equity and cash flows for  
each of the three years in the period ended March 30, 1997. These financial     
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

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

     In our opinion, the financial statements referred to above, present fairly,
in all material respects, the consolidated financial position of Bluegreen      
Corporation at March 30, 1997 and March 31, 1996, and the consolidated results  
of its operations and its cash flows for each of the three years in the period  
ended March 30, 1997, in conformity with generally accepted accounting          
principles.                                                                     

West Palm Beach, Florida                                                        
May 2, 1997, except for Note 14 as to                                           
which the date is February 17, 1998                                         

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BLUEGREEN CORPORATION 

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                              MARCH 31,      MARCH 30,   
                                                                 1996           1997     
                                                             ------------   ------------ 
                                                                                         
ASSETS                                                                                   
Cash and cash equivalents (including restricted cash of                                  
  approximately $7.7 million and $8.0 million at March 31,                               
  1996 and March 30, 1997, respectively).................... $ 11,389,141   $ 11,597,147 
Contracts receivable, net...................................   12,451,207     14,308,424 
Notes receivable, net.......................................   37,013,802     34,619,325 
Investment in securities....................................    9,699,435     11,066,693 
Inventory, net..............................................   73,595,014     86,660,559 
Property and equipment, net.................................    5,239,100      4,948,554 
Debt issuance costs, net....................................    1,288,933      1,063,755 
Other assets................................................    4,286,401      5,362,572 
                                                             ------------   ------------ 
          TOTAL ASSETS...................................... $154,963,033   $169,627,029 
                                                             ============   ============ 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                     
Accounts payable............................................ $  2,557,797   $  1,917,907 
Deferred revenue............................................      746,955      3,791,924 
Accrued liabilities and other...............................    9,142,108     10,118,268 
Lines-of-credit and notes payable...........................   17,287,767     35,905,552 
Deferred income taxes.......................................    6,067,814      2,855,946 
Receivable-backed notes payable.............................   19,723,466     21,055,002 
8.25% convertible subordinated debentures...................   34,739,000     34,739,000 
                                                             ------------   ------------ 
          TOTAL LIABILITIES.................................   90,264,907    110,383,599 
Commitments and contingencies                                                            
SHAREHOLDERS' EQUITY                                                                     
Preferred stock, $.01 par value, 1,000,000 shares                                        
  authorized; none issued...................................           --             -- 
Common stock, $.01 par value, 90,000,000 shares authorized;                              
  20,533,410 and 20,601,871 shares outstanding at March 31,                              
  1996 and March 30, 1997, respectively.....................      205,334        206,019 
Capital-in-excess of par value..............................   71,296,158     71,410,755 
Accumulated deficit.........................................   (6,803,366)   (11,162,923)
Treasury stock, 443,000 common shares at March 30, 1997 at                               
  cost......................................................           --     (1,369,772)
Net unrealized gains on investments available-for-sale, net                              
  of income taxes...........................................           --        159,351 
                                                             ------------   ------------ 
Total shareholders' equity..................................   64,698,126     59,243,430 
                                                             ------------   ------------ 
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $154,963,033   $169,627,029 
                                                             ============   ============ 

See accompanying notes to consolidated financial statements.

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BLUEGREEN CORPORATION 

CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                                      YEARS ENDED                
                                                       ----------------------------------------- 
                                                        APRIL 2,      MARCH 31,      MARCH 30,   
                                                          1995           1996           1997     
                                                       -----------   ------------   ------------ 
                                                                                                 
REVENUES:                                                                                        
  Sales of real estate................................ $91,921,990   $113,422,228   $109,721,561 
  Interest income and other...........................   7,263,759      7,388,095      6,158,909 
                                                       -----------   ------------   ------------ 
                                                        99,185,749    120,810,323    115,880,470 
COST AND EXPENSES:                                                                               
  Cost of real estate sold............................  45,105,841     59,393,392     57,090,546 
  Selling, general and administrative expenses........  36,520,817     43,734,724     51,441,301 
  Interest expense....................................   6,737,687      6,276,187      5,458,919 
  Provisions for losses...............................     792,000        611,979      9,539,081 
                                                       -----------   ------------   ------------ 
                                                        89,156,345    110,016,282    123,529,847 
                                                       -----------   ------------   ------------ 
Income (loss) from operations.........................  10,029,404     10,794,041     (7,649,377)
Other income..........................................     372,443        121,884        260,299 
                                                       -----------   ------------   ------------ 
Income (loss) before income taxes.....................  10,401,847     10,915,925     (7,389,078)
Provision (benefit) for income taxes..................   4,264,758      4,449,069     (3,029,521)
                                                       -----------   ------------   ------------ 
NET INCOME (LOSS)..................................... $ 6,137,089   $  6,466,856   $ (4,359,557)
                                                       ===========   ============   ============ 
EARNINGS (LOSS) PER COMMON SHARE:                                                                
  Basic............................................... $       .30   $        .32   $       (.21)
                                                       ===========   ============   ============ 
  Diluted............................................. $       .29   $        .30   $       (.21)
                                                       ===========   ============   ============ 
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON                                                     
  EQUIVALENT SHARES:                                                                             
  Basic...............................................  20,415,856     20,508,037     20,318,509 
                                                       ===========   ============   ============ 
  Diluted.............................................  21,476,638     21,775,291     20,318,509 
                                                       ===========   ============   ============ 

See accompanying notes to consolidated financial statements.

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BLUEGREEN CORPORATION 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
YEARS ENDED APRIL 2, 1995, MARCH 31, 1996 AND MARCH 30, 1997

                                                        [Enlarge/Download Table]

                                                                                                      NET                    
                                                                                                   UNREALIZED                
                                                                                                    GAINS ON                 
                                                                                                  INVESTMENTS                
                                              COMMON                                               AVAILABLE-                
                                   COMMON     STOCK    CAPITAL IN                   TREASURY          FOR-                   
                                   SHARES    $.01 PAR   EXCESS OF   ACCUMULATED     STOCK AT      SALE, NET OF               
                                   ISSUED     VALUE     PAR VALUE     DEFICIT         COST        INCOME TAXES      TOTAL    
                                 ----------  --------  -----------  ------------   -----------   --------------  ----------- 
                                                                                                                             
Balance at March 27, 1994......  17,795,974  $177,960  $61,099,625  $(9,423,926)   $        --      $     --     $51,853,659 
4% stock dividend..............     711,076    7,111     2,570,540   (2,577,651)            --            --              -- 
5% stock dividend..............     925,751    9,257     3,115,152   (3,124,409)            --            --              -- 
Cash payment for dividends in                                                                                                
  lieu of fractional shares....          --       --            --       (5,432)            --            --          (5,432)
Shares issued to employees upon                                                                                              
  exercise of qualified stock                                                                                                
  options......................      37,933      379        54,282           --             --            --          54,661 
Net income.....................          --       --            --    6,137,089             --            --       6,137,089 
                                 ----------  --------  -----------  ------------   -----------      --------     ----------- 
Balance at April 2, 1995.......  19,470,734  194,707    66,839,599   (8,994,329)            --            --      58,039,977 
5% stock dividend..............     976,418    9,764     4,262,236   (4,272,000)            --            --              -- 
Cash payment for dividends in                                                                                                
  lieu of fractional shares....          --       --            --       (3,893)            --            --          (3,893)
Shares issued to employees upon                                                                                              
  exercise of qualified stock                                                                                                
  options......................      86,258      863       194,323           --             --            --         195,186 
Net income.....................          --       --            --    6,466,856             --            --       6,466,856 
                                 ----------  --------  -----------  ------------   -----------      --------     ----------- 
Balance at March 31, 1996......  20,533,410  205,334    71,296,158   (6,803,366)            --            --      64,698,126 
Net unrealized gains on                                                                                                      
  investments                                                                                                                
  available-for-sale, net of                                                                                                 
  income taxes.................          --       --            --           --             --       159,351         159,351 
Shares issued to employees upon                                                                                              
  exercise of qualified stock                                                                                                
  options......................      68,461      685       114,597           --             --            --         115,282 
Shares repurchased.............          --       --            --           --     (1,369,772)           --      (1,369,772)
Net loss.......................          --       --            --   (4,359,557)            --            --      (4,359,557)
                                 ----------  --------  -----------  ------------   -----------      --------     ----------- 
Balance at March 30, 1997......  20,601,871  $206,019  $71,410,755  $(11,162,923)  $(1,369,772)     $159,351     $59,243,430 
                                 ==========  ========  ===========  ============   ===========      ========     =========== 

See accompanying notes to consolidated financial statements.

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BLUEGREEN CORPORATION 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                      YEARS ENDED                 
                                                       ------------------------------------------ 
                                                         APRIL 2,      MARCH 31,      MARCH 30,   
                                                           1995           1996           1997     
                                                       ------------   ------------   ------------ 
                                                                                                  
OPERATING ACTIVITIES:                                                                             
  Cash received from customers including net cash                                                 
     collected as servicer of notes receivable to be                                              
     remitted to investors...........................  $ 78,667,484   $ 94,939,565   $ 88,471,780 
  Interest received..................................     5,409,259      6,220,829      5,247,636 
  Cash paid for land acquisitions and real estate                                                 
     development.....................................   (48,374,125)   (61,236,096)   (64,860,397)
  Cash paid to suppliers, employees and sales                                                     
     representatives.................................   (33,337,031)   (44,567,809)   (48,688,033)
  Interest paid, net of capitalized interest.........    (6,287,133)    (5,918,887)    (4,964,170)
  Income taxes paid, net of refunds..................    (3,097,292)    (3,316,235)    (1,677,762)
  Proceeds from borrowings collateralized by notes                                                
     receivable......................................     8,587,550     19,438,016     18,157,349 
  Payments on borrowings collateralized by notes                                                  
     receivable......................................   (14,845,131)   (19,229,268)   (16,825,813)
  Net proceeds from REMIC transactions...............    22,706,101     28,688,041     16,934,571 
                                                       ------------   ------------   ------------ 
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES.....     9,429,682     15,018,156     (8,204,839)
                                                       ------------   ------------   ------------ 
INVESTING ACTIVITIES:                                                                             
  Purchases of property and equipment................    (1,769,077)    (1,895,510)    (1,041,769)
  Sales of property and equipment....................       452,822        789,433        843,445 
  Cash received from investment in securities........            --        275,816      1,699,032 
  Additions to other long-term assets................      (259,109)      (410,814)      (180,505)
                                                       ------------   ------------   ------------ 
NET CASH FLOW (USED) PROVIDED BY INVESTING                                                        
  ACTIVITIES.........................................    (1,575,364)    (1,241,075)     1,320,203 
                                                       ------------   ------------   ------------ 
FINANCING ACTIVITIES:                                                                             
  Borrowings under line-of-credit facilities.........     3,916,436      5,795,604     16,887,870 
  Borrowings under secured credit facility...........            --             --      3,800,000 
  Payments under line-of-credit facilities...........            --     (4,053,615)    (5,484,517)
  Payments on other long-term debt...................   (13,539,555)   (11,909,697)    (6,856,221)
  Proceeds from exercise of employee stock options...        54,661        195,186        115,282 
  Cash paid for repurchase of common shares..........            --             --     (1,369,772)
  Payment for stock dividends in lieu of fractional                                               
     shares..........................................        (5,432)        (3,893)            -- 
                                                       ------------   ------------   ------------ 
NET CASH FLOW (USED) PROVIDED BY FINANCING                                                        
  ACTIVITIES.........................................    (9,573,890)    (9,976,415)     7,092,642 
                                                       ------------   ------------   ------------ 
Net (decrease) increase in cash and cash                                                          
  equivalents........................................    (1,719,572)     3,800,666        208,006 
Cash and cash equivalents at beginning of year.......     9,308,047      7,588,475     11,389,141 
                                                       ------------   ------------   ------------ 
Cash and cash equivalents at end of year.............     7,588,475     11,389,141     11,597,147 
Restricted cash and cash equivalents end of year.....    (5,164,650)    (7,683,901)    (7,978,256)
                                                       ------------   ------------   ------------ 
Unrestricted cash and cash equivalents at end of year                                             
  ...................................................  $  2,423,825   $  3,705,240   $  3,618,891 
                                                       ============   ============   ============ 

See accompanying notes to consolidated financial statements.

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BLUEGREEN CORPORATION 

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

                                                        [Enlarge/Download Table]

                                                                      YEARS ENDED                 
                                                       ------------------------------------------ 
                                                         APRIL 2,      MARCH 31,      MARCH 30,   
                                                           1995           1996           1997     
                                                       ------------   ------------   ------------ 
                                                                                                  
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH FLOW                                              
  PROVIDED (USED) BY OPERATING ACTIVITIES:                                                        
  Net income (loss)..................................  $  6,137,089   $  6,466,856   $ (4,359,557)
  Adjustments to reconcile net income (loss) to net                                               
     cash flow provided (used) by operating                                                       
     activities:                                                                                  
     Depreciation and amortization...................     1,301,125      1,636,933      1,065,794 
     Loss (gain) on REMIC transactions...............       411,000     (1,119,572)        96,211 
     (Gain) loss on sale of property and equipment...       (54,519)        48,561        (82,310)
     Provisions for losses...........................       792,000        611,979      9,539,081 
     Interest accretion on investment in                                                          
       securities....................................    (2,222,724)    (1,170,367)      (996,531)
     Proceeds from borrowings collateralized by notes                                             
       receivable....................................     8,587,550     19,438,016     18,157,349 
     Payments on borrowings collateralized by notes                                               
       receivable....................................   (14,845,131)   (19,229,268)   (16,825,813)
     Provision (benefit) for deferred income taxes...     1,326,791        998,095     (3,419,109)
  (INCREASE) DECREASE IN OPERATING ASSETS:                                                        
     Contracts receivable............................    (3,122,652)       600,047     (1,857,217)
     Inventory.......................................    (4,452,058)    (2,003,195)    (9,125,901)
     Other assets....................................     1,264,688        274,414     (1,076,176)
     Notes receivable and investment in securities...    11,864,101     10,446,396     (2,798,395)
  INCREASE (DECREASE) IN OPERATING LIABILITIES:                                                   
     Accounts payable, accrued liabilities and                                                    
       other.........................................     2,442,422     (1,980,739)     3,477,735 
                                                       ------------   ------------   ------------ 
NET CASH FLOW PROVIDED (USED) BY OPERATING                                                        
  ACTIVITIES.........................................  $  9,429,682   $ 15,018,156   $ (8,204,839)
                                                       ============   ============   ============ 
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING AND                                                   
  FINANCING ACTIVITIES                                                                            
     Inventory acquired through financing                                                         
       transactions .................................  $ 17,680,680   $  6,595,450   $ 10,030,647 
                                                       ============   ============   ============ 
     Inventory acquired through foreclosure or                                                    
       deedback in lieu of foreclosure...............  $  1,139,993   $  1,609,697   $  1,957,916 
                                                       ============   ============   ============ 
     Investment in securities retained in connection                                              
       with REMIC transactions.......................  $  2,674,370   $  2,044,029   $  1,774,319 
                                                       ============   ============   ============ 

See accompanying notes to consolidated financial statements.

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES                                              

Organization                                                                

     Bluegreen Corporation (the "Company") is a national leisure product company
operating predominantly in the Southeastern, Southwestern and Midwestern United 
States. The Company's primary business is (i) the acquisition, development and  
sale of residential land and (ii) the acquisition and development of timeshare  
properties which are sold in weekly intervals. The Company offers financing to  
its land and timeshare purchasers.                                              

Land and timeshare products are typically located in scenic areas or  
popular vacation destinations throughout the United States. The Company's       
products are primarily sold to middle-class individuals with ages ranging from  
forty to fifty-five. The Company changed its name, effective March 8, 1996, from
Patten Corporation.                                                             

Principles of Consolidation                                                 

    The financial statements include the accounts of Bluegreen Corporation and
all wholly owned subsidiaries. All significant intercompany transactions are    
eliminated.                                                                     

Use of Estimates                                                            

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

Cash and Cash Equivalents                                                   

   The Company invests cash in excess of immediate operating requirements in
short-term time deposits and money market instruments generally with original   
maturities of three months or less. The Company maintains cash and cash         
equivalents with various financial institutions. These financial institutions   
are located throughout the country and Company policy is designed to limit      
exposure to any one institution. However, a significant portion of the Company's
unrestricted cash is maintained with a single bank and, accordingly, the Company
is subject to credit risk. Periodic evaluations of the relative credit standing 
of financial institutions maintaining Company deposits are performed to evaluate
and mitigate, if necessary, credit risk.                                        

Restricted cash consists of funds collected as servicer under         
receivable-backed note agreements, along with customer deposits on real estate  
maintained in escrow accounts.                                                  

Contracts Receivable and Revenue Recognition                                

  In accordance with the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 66, the Company recognizes revenue on retail land sales  
and timeshare sales when a minimum of 10% of the sales price has been received  
in cash, the refund period has expired, collectibility of the receivable        
representing the remainder of the sales price is reasonably assured and the     
Company has completed substantially all of its obligations with respect to any  
development related to the real estate sold. In cases where all development has 
not been completed, the Company recognizes revenue in accordance with the       
percentage of completion method of accounting.                                  

Sales which do not meet the criteria for revenue recognition described
above are deferred using the deposit method. Under the deposit method, cash     
received from customers is classified as a refundable deposit in the liability  
section of the Consolidated Balance Sheet and profit recognition is deferred    
until the requirements of SFAS No. 66 are met.                                  

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    Contracts receivable is net of an allowance for cancellations amounting to
$451,000 and $112,000 at March 30, 1997 and March 31, 1996, respectively.       

Notes Receivable                                                            

Notes receivable are carried at amortized cost. Interest income is    
suspended on all notes receivable when principal or interest payments are more  
than three months contractually past due and not resumed until such loans become
contractually current.                                                          

Impact of Recently Issued Accounting Standards                              

 From time to time certain receivables have been securitized and sold to
investors through Real Estate Mortgage Investment Conduits (REMICs). See Note 3.
To date, the servicing rights to securitized receivables have been retained by  
the Company. SFAS No. 122, "Accounting for Mortgage Servicing Rights", requires 
that a separate asset be recognized for rights to service mortgage loans for    
others. Servicing rights retained by the Company have not been material to date.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and   
Extinguishments of Liabilities" establishes new criteria for determining whether
a transfer of financial assets occurring after December 31, 1997 in exchange for
cash or other consideration should be accounted for as a sale or as a pledge of 
collateral in a secured borrowing. It also establishes new accounting           
requirements for pledged collateral and new criteria for the extinguishment of  
liabilities. The Company does not believe the adoption of SFAS No. 125 in 1998  
will have a material affect on the Company's operations or financial condition. 

Investment in Securities                                                    

  The Company's investment in securities are considered available-for-sale
and are carried at fair value in accordance with SFAS No. 115 "Accounting for   
Certain Investments in Debt and Equity Securities". Accordingly, unrealized     
holding gains or losses on available-for-sale investments are recorded as       
adjustments to common shareholders' equity, net of income taxes. Declines in    
fair value deemed other than temporary are charged to operations.               

   Interest on the Company's securities is accreted at effective yield rates
which reflect interest at pass-through rates, the arbitrage resulting from rate 
differentials between the notes in the REMIC pool and pass-through rates, along 
with the effect of estimated prepayments and foreclosure losses. See Note 3.    

Inventory                                                                   

   Inventory consists of real estate acquired for sale and is carried at the
lower of cost, including costs of improvements and amenities incurred subsequent
to acquisition or estimated fair value, net of costs to dispose. Real estate    
reacquired through foreclosure or deedback in lieu of foreclosure is recorded at
the lower of fair value, net of costs to dispose, or the carrying value of the  
loan. The Company adopted SFAS No. 121, "Accounting for the Impairment of       
Long-Lived Assets and Long-Lived Assets to be Disposed Of " in April, 1996. The 
initial adoption of this Statement did not have a material impact on the        
Company's financial condition or results of operations.                         

Property and Equipment                                                      

    Property and equipment are stated at cost. Depreciation is computed on the
straight-line method based on the estimated useful lives of the related assets. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Debt Issuance Costs                                                         

 Costs associated with obtaining financing have been capitalized and are
amortized under an accelerated method (which approximates the interest method)  
over the terms of the related debt.                                             

Treasury Stock                                                              

    The Company accounts for repurchases of common stock using the cost method
with common stock in treasury classified in the balance sheets as a reduction of
common shareholders' equity.                                                    

Advertising Expense                                                         

     The Company expenses advertising costs the first time the advertising takes
place, which is within one year, except for direct-response advertising, which  
is capitalized and amortized over its expected period of future benefit. The    
Company uses direct-response advertising for its timeshare products and the     
advertising consists of direct mail with a response card confirming the         
prospective customer's pre-determined site-visit.                               

  At March 30, 1997, $517,000 of advertising was reported in other assets.
Comparable amounts were not material at March 31, 1996. Advertising expense was 
$7.1 million, $10.0 million and $13.9 million for the years ended April 2, 1995,
March 31, 1996 and March 30, 1997, respectively.                                

Income Taxes                                                                

 The Company and its subsidiaries file a consolidated federal income tax
return. Income taxes have been provided using the liability method in accordance
with SFAS No. 109, "Accounting for Income Taxes".                               

Stock Based Compensation                                                    

    The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of     
grant. The Company has elected to account for stock option grants in accordance 
with APB Opinion No. 25, "Accounting for Stock Issued to Employees", and,       
accordingly, recognizes no compensation expense in connection with stock option 
grants. See Note 11 for pro forma information regarding net earnings and        
earnings per share as required by SFAS 123 when adopted.                        

Earnings (Loss) Per Common Share                                            

   In February, 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, "Earnings Per Share", which became effective for the Company's    
quarter ended December 28, 1997. Basic earnings (loss) per common share is      
computed by dividing net income (loss) by the weighted average number of common 
shares outstanding. Diluted earnings (loss) per common share is computed in the 
same manner as basic earnings per share, but also gives effect to all dilutive  
stock options using the treasury stock method. The Company's 8.25% convertible  
subordinated debentures were not assumed to be converted into common stock for  
the purposes of this computation, as the impact would be antidilutive for all   
years presented. The earnings (loss) per common share and weighted average      
number of common and common equivalent shares for each of the three years in the
period ended March 30, 1997 have been restated in accordance with SFAS No. 128. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The following table sets forth the computation of basic and diluted   
earnings (loss) per share:                                                      

                                                        [Enlarge/Download Table]

                                                                       YEAR ENDED                 
                                                       ------------------------------------------ 
                                                         APRIL 2,      MARCH 31,      MARCH 30,   
                                                           1995           1996           1997     
                                                       ------------   ------------   ------------ 
                                                                                                  
Numerator:                                                                                        
  Numerator for basic and diluted earnings (loss) per                                             
     share -- net income (loss)                        $  6,137,089   $  6,466,856   $ (4,359,557)
                                                       ============   ============   ============ 

Denominator:                                                                                      
  Denominator for basic earnings (loss) per share --                                              
     weighted-average shares                             20,415,856     20,508,037     20,318,509 

  Effect of dilutive securities:                                                                  
     Stock options                                        1,060,782      1,267,254             -- 
                                                       ------------   ------------   ------------ 
Denominator for diluted earnings (loss) per share --                                              
  adjusted weighted-average shares                       21,476,638     21,775,291     20,318,509 
                                                       ============   ============   ============ 
Basic earnings (loss) per share                        $        .30   $        .32   $       (.21)
                                                       ============   ============   ============ 
Diluted earnings (loss) per share                      $        .29   $        .30   $       (.21)
                                                       ============   ============   ============ 

Reclassifications                                                           

     Certain reclassifications of prior period amounts have been made to conform
to the current year presentation.                                               

2. NOTES RECEIVABLE                                                             

    The weighted average interest rate on notes receivable was 13.3% and 12.4%
at March 30, 1997 and March 31, 1996, respectively. The table below sets forth  
additional information relating to the Company's notes receivable.              

                                                        [Enlarge/Download Table]

                                                             MARCH 31, 1996  MARCH 30, 1997
                                                             --------------  --------------
                                                                                           
Notes receivable secured by land............................  $26,243,222     $12,334,283  
Notes receivable secured by timeshare intervals.............   11,667,049      23,501,163  
                                                              -----------     -----------  
Notes receivable, gross.....................................   37,910,271      35,835,446  
Reserve for loan losses.....................................     (896,469)     (1,216,121) 
                                                              -----------     -----------  
Notes receivable, net.......................................  $37,013,802     $34,619,325  
                                                              ===========     ===========  

  Approximately 69% of the Company's notes receivable secured by land bear
interest at variable rates, while approximately 31% bear interest at fixed      
rates. The average interest rate charged on loans secured by land was 12.0% at  
March 30, 1997. All of the Company's timeshare loans bear interest at fixed     
rates. The average interest rate charged on loans secured by timeshare intervals
was 15.7% at March 30, 1997.                                                    

The Company's timeshare receivables are secured by property located in
Tennessee and South Carolina. No concentrations of credit exist for the         
Company's notes receivable secured by land.                                     

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The table below sets forth activity in the reserve for estimated loan 
losses.                                                                         

                                                                [Download Table]
                                                                         
Reserve for loan losses, April 2, 1995......................  $1,089,652 
Provision for losses........................................     344,718 
Charge-offs.................................................    (537,901)
                                                              ---------- 
Reserve for loan losses, March 31, 1996.....................     896,469 
Provision for losses........................................   1,008,271 
Charge-offs.................................................    (688,619)
                                                              ---------- 
Reserve for loan losses, March 30, 1997.....................  $1,216,121 
                                                              ========== 

     Installments due on notes receivable held by the Company during each of the
five fiscal years subsequent to 1997, and thereafter, are set forth below.      

                                                                [Download Table]
                                                                         
1998........................................................  $ 4,626,469
1999........................................................    4,456,082
2000........................................................    5,167,790
2001........................................................    5,424,765
2002........................................................    5,440,360
Thereafter..................................................   10,719,980
                                                              -----------
          Total.............................................  $35,835,446
                                                              ===========

3. INVESTMENT IN SECURITIES                                                     

    The Company's investment in securities and associated unrealized gains and
losses are set forth below.                                                     

                                                        [Enlarge/Download Table]

                                                     GROSS       GROSS                
                                                   UNREALIZED  UNREALIZED             
AVAILABLE-FOR-SALE SECURITIES            COST         GAIN        LOSS     FAIR VALUE 
-----------------------------         -----------  ----------  ----------  -----------
                                                                                      
1994 REMIC debt securities........... $ 3,892,575   $     --    $22,659    $ 3,869,916
1995 REMIC debt securities...........   4,999,733    198,705         --      5,198,438
1996 REMIC debt securities...........   1,904,299     94,040         --      1,998,339
                                      -----------   --------    -------    -----------
          Total...................... $10,796,607   $292,745    $22,659    $11,066,693
                                      ===========   ========    =======    ===========

  Contractual maturities and yield of investments are set forth below. See
also Note 13.                                                                   

                                                        [Enlarge/Download Table]

AVAILABLE-FOR-SALE SECURITIES                            FAIR VALUE   EFFECTIVE YIELD 
-----------------------------                            -----------  ----------------
                                                                                      
After one year but within five.......................... $ 3,869,916       11.91%     
After five years but within ten.........................   7,196,777        7.44%     
                                                         -----------                  
          Total......................................... $11,066,693                  
                                                         ===========                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

4. INVENTORY                                                                    

 The Company's net inventory holdings as of March 30, 1997 and March 31,
1996, summarized by division, are set forth below. Interest capitalized during  
fiscal 1997 and fiscal 1996 totaled $3.0 million and $1.9 million, respectively.
Interest expense in the Consolidated Statements of Operations is net of         
capitalized interest.                                                           

                                                        [Enlarge/Download Table]

                                                             MARCH 30, 1997                     
                                        --------------------------------------------------------
GEOGRAPHIC REGION                          LAND       RESORTS(1)    COMMUNITIES(2)      TOTAL   
-----------------                       -----------   -----------   --------------   -----------
                                                                                                
Southeast.............................. $ 7,997,611   $15,028,592    $ 5,685,074     $28,711,277
Midwest................................   8,050,969    12,495,034             --      20,546,003
Southwest..............................  19,959,473            --             --      19,959,473
Rocky Mountains........................   7,533,939            --             --       7,533,939
West...................................   5,511,879            --             --       5,511,879
Mid-Atlantic...........................   4,015,647            --             --       4,015,647
Northeast..............................     382,341            --             --         382,341
                                        -----------   -----------    -----------     -----------
          Totals....................... $53,451,859   $27,523,626    $ 5,685,074     $86,660,559
                                        ===========   ===========    ===========     ===========

                                                        [Enlarge/Download Table]

                                                             MARCH 31, 1996                     
                                        --------------------------------------------------------
GEOGRAPHIC REGION                          LAND       RESORTS(1)    COMMUNITIES(2)      TOTAL   
-----------------                       -----------   -----------   --------------   -----------
                                                                                                
Southeast.............................. $ 2,252,239   $ 5,189,815    $13,983,521     $21,425,575
Midwest................................   6,293,008    10,839,389             --      17,132,397
Southwest..............................  15,118,191            --        142,790      15,260,981
Rocky Mountains........................   9,299,344            --         50,800       9,350,144
West...................................   5,923,972            --             --       5,923,972
Mid-Atlantic...........................   2,490,025            --             --       2,490,025
Northeast..............................   1,982,895            --             --       1,982,895
Canada.................................      29,025            --             --          29,025
                                        -----------   -----------    -----------     -----------
          Totals....................... $43,388,699   $16,029,204    $14,177,111     $73,595,014
                                        ===========   ===========    ===========     ===========

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

(1) Resorts Division inventory as of March 30, 1997, consists of land inventory 
  of 5.4 million and $22.1 million of unit construction-in-progress. Resorts
   Division inventory as of March 31, 1996, consists of land inventory of $6.1
million and $9.9 million of unit construction-in-progress.              
(2) Communities Division inventory as of March 30, 1997, consists of land       
inventory of $1.5 million and $4.2 million of housing unit              
construction-in-progress. Communities Division inventory as of March 31,
1996, consists of land inventory of $10.5 million and $3.7 million of   
housing unit construction-in-progress.                                  

   During the first quarter of fiscal 1997, management changed its focus for
marketing certain of its inventories in an effort to expedite sales absorption, 
and use the proceeds from such sales for its more profitable land and timeshare 
projects. Based on the Company's exit-plans, management determined that         
inventories with a carrying value of $23.2 million should be written-down by    
$8.2 million to reflect their estimated fair value, less costs to sell. A       
substantial portion of the write-down ($4.8 million) related to inventories     
managed under the Communities Division. Home-building and other efforts under   
the Communities Division will cease upon sell-out of the existing inventories.  
The other inventories that were subject to write-down are managed under the Land
Division and are located in areas of the country where the Company does not plan
to continue operations beyond liquidating the existing properties. All such     
inventories are being liquidated through a combination of bulk sales and retail 
sales at reduced prices. Approximately 50% of the properties subject to         
write-down had been sold by March 30, 1997. No substantial gains or losses were 

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

recognized in connection with the sale of these inventories. Although no        
assurances can be given, the remaining inventories subject to write-down are    
expected to be fully liquidated in 12-18 months.                                

5. PROPERTY AND EQUIPMENT                                                       

   The table below sets forth the property and equipment held by the Company
at the period end indicated.                                                    

                                                        [Enlarge/Download Table]

                                                            USEFUL     MARCH 31,     MARCH 30,  
                                                             LIFE        1996          1997     
                                                           ---------  -----------   ----------- 
                                                                                                
Land, buildings and building improvements.................  30 years  $ 3,837,382   $ 3,161,601 
Office equipment, furniture and fixtures.................. 3-5 years    4,466,821     4,126,990 
Aircraft.................................................. 3-5 years    1,375,001     1,153,968 
Vehicles and equipment.................................... 3-5 years      451,202       435,274 
                                                                      -----------   ----------- 
                                                                       10,130,406     8,877,833 
Accumulated depreciation..................................             (4,891,306)   (3,929,279)
                                                                      -----------   ----------- 
          Total...........................................            $ 5,239,100   $ 4,948,554 
                                                                      ===========   =========== 

    Depreciation expense included in the Consolidated Statements of Operations
totaled $811,000, $1.0 million and $1.1 million for fiscal 1997, 1996 and 1995, 
respectively.                                                                   

6. LINES-OF-CREDIT AND NOTES PAYABLE                                            

    The Company has outstanding borrowings with various financial institutions
and other lenders which have been used to finance the acquisition and           
development of inventory and to fund operations. Significant financial data     
related to the Company's borrowing facilities is set forth below.               

                                                        [Enlarge/Download Table]

                                                               MARCH 31,    MARCH 30, 
                                                                 1996         1997    
                                                              -----------  -----------
                                                                                      
Lines-of-credit secured by land and timeshare inventory with                          
  interest rates ranging from 10.25% to 10.75% at March 30,                           
  1997 and 10.50% to 10.75% at March 31, 1996. Maturities                             
  range from 1997 to 1999...................................  $ 6,394,245  $17,797,600
Notes and mortgage notes secured by certain inventory and                             
  property and equipment with interest rates ranging from                             
  7.5% to 11.25% at March 30, 1997 and 6.2% to 11.0% at                               
  March 31, 1996. Maturities range from 1997 to 2019........   10,700,245   17,960,558
Lease obligations with a weighted average interest rate of                            
  11% at March 30, 1997. Maturities range from 1998 to                                
  2001......................................................      193,277      147,394
                                                              -----------  -----------
          Total.............................................  $17,287,767  $35,905,552
                                                              ===========  ===========

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

   At March 30, 1997, $5.0 million remained available under lines-of-credit.
The table below sets forth the contractual minimum principal payments required  
on the Company's lines-of-credit and notes payable for each of the five fiscal  
years subsequent to 1997, and thereafter. Such minimum contractual payments may 
differ from actual payments due to the effect of principal payments required on 
a lot or timeshare interval release basis for certain of the above obligations. 

                                                                [Download Table]
                                                                         
1998........................................................  $21,020,491
1999........................................................    5,702,848
2000........................................................    5,974,495
2001........................................................      590,039
2002........................................................      235,052
Thereafter..................................................    2,382,627
                                                              -----------
          Total.............................................  $35,905,552
                                                              ===========

   The Company is required to comply with certain covenants under several of
its debt agreements discussed above, including, without limitation, requirements
to (i) maintain net worth of at least $42.0 million, (ii) maintain certain      
minimum leverage ratios, (iii) limit S,G&A expenses to 50% of revenues, and (iv)
comply with various other restrictive covenants. The Company was in compliance  
with such covenants at March 30, 1997, and for each reporting period during     
fiscal 1996 and 1995.                                                           

7. CONVERTIBLE SUBORDINATED DEBENTURES                                          

The Company has $34.7 million of its 8.25% Convertible Subordinated   
Debentures (the "Debentures") outstanding at March 30, 1997 and March 31, 1996. 
The Debentures are convertible at any time prior to maturity (2012), unless     
previously redeemed, into common stock of the Company at a current conversion   
price of $8.24 per share, subject to adjustment under certain conditions. The   
Debentures are redeemable at any time, at the Company's option, in whole or in  
part. On May 15, 1997, the redemption price was 100% of the face amount. The    
Company is obligated to redeem annually 10% of the principal amount of the      
Debentures originally issued, commencing May 15, 2003. Such redemptions are     
calculated to retire 90% of the principal amount of the Debentures prior to     
maturity. The Debentures are unsecured and subordinated to all senior           
indebtedness of the Company. Interest is payable semi-annually on May 15 and    
November 15.                                                                    

     Under financial covenants of the Indenture pursuant to which the Debentures
were issued, the Company is required to maintain net worth of not less than     
$29.0 million. Should net worth fall below $29.0 million for two consecutive    
quarters, the Company is required to make an offer to purchase 20% of the       
outstanding Debentures at par, plus accrued interest.                           

8. RECEIVABLE-BACKED NOTES PAYABLE                                              

The Company has various credit facilities for the pledge of land and  
timeshare receivables. The interest rate charged under one agreement is the     
three-month London Interbank Offered Rate plus 4.25%, while the other agreements
call for interest at prime plus 2%. At March 30, 1997, the $21.1 million in     
receivable-backed notes payable was collateralized by $27.1 million in          
receivables. At March 31, 1996, the $19.7 million in receivable-backed notes    
payable was secured by $27.0 million in receivables. Payments received on the   
receivables are applied to reduce principal and pay interest monthly. At March  
30, 1997, $27.2 million remained available under credit facilities.             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

  Installments due on receivable-backed notes payable based upon principal
payments due on receivables in each of the four fiscal years subsequent to 1997 
is set forth below.                                                             

                                                                [Download Table]
                                                                         
1998........................................................  $ 4,890,941
1999........................................................    5,363,014
2000........................................................    5,954,346
2001........................................................    4,846,701
                                                              -----------
          Total.............................................  $21,055,002
                                                              ===========

9. INCOME TAXES                                                                 

The (benefit) provision for income taxes consists of the following:   

                                                        [Enlarge/Download Table]

                                                               YEARS ENDED              
                                                  ------------------------------------- 
                                                   APRIL 2,    MARCH 31,     MARCH 30,  
                                                     1995         1996         1997     
                                                  ----------   ----------   ----------- 
                                                                                        
Federal:                                                                                
  Current........................................ $2,307,313   $2,590,910   $   269,960 
  Deferred.......................................   380,195    1,207,941     (3,192,841)
                                                  ----------   ----------   ----------- 
                                                  2,687,508    3,798,851     (2,922,881)
State:                                                                                  
  Current........................................   630,654      860,064        119,628 
  Deferred.......................................   946,596     (209,846)      (226,268)
                                                  ----------   ----------   ----------- 
                                                  1,577,250      650,218       (106,640)
                                                  ----------   ----------   ----------- 
          Total.................................. $4,264,758   $4,449,069   $(3,029,521)
                                                  ==========   ==========   =========== 

(Loss) income before income taxes (excluding Canadian operations) was 
$(7.4) million in fiscal 1997, $10.9 million in fiscal 1996 and $10.4 million in
fiscal 1995.                                                                    

   The reasons for the difference between the provision for income taxes and
the amount which results from applying the federal statutory tax rate in fiscal 
1997, 1996 and 1995 to income before income taxes are as follows:               

                                                        [Enlarge/Download Table]

                                                               YEARS ENDED              
                                                  ------------------------------------- 
                                                   APRIL 2,    MARCH 31,     MARCH 30,  
                                                     1995         1996         1997     
                                                  ----------   ----------   ----------- 
                                                                                        
Income tax (benefit) expense at statutory rate... $3,536,628   $3,720,573   $(2,512,286)
Effect of state taxes, net of federal tax                                               
  benefit........................................   728,130      728,496       (517,235)
                                                  ----------   ----------   ----------- 
                                                  $4,264,758   $4,449,069   $(3,029,521)
                                                  ==========   ==========   =========== 

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    At March 30, 1997 and March 31, 1996, deferred income taxes consist of the
following components:                                                           

                                                        [Enlarge/Download Table]

                                                              MARCH 31,     MARCH 30,  
                                                                1996          1997     
                                                             -----------   ----------- 
                                                                                       
Deferred federal and state tax (assets) liabilities:                                   
Installment sales treatment of notes........................ $ 8,473,340   $ 8,931,920 
Deferred foreign tax liability due to installment sale                                 
  treatment of notes........................................     185,000            -- 
Deferred federal and state loss carryforwards/AMT credits...  (1,990,365)   (5,125,584)
Other.......................................................    (600,161)     (950,390)
                                                             -----------   ----------- 
Deferred income taxes....................................... $ 6,067,814   $ 2,855,946 
                                                             ===========   =========== 

As of March 30, 1997, the Company had $2.1 million of AMT credit      
carryforwards which have no expiration period and approximately $7.5 million of 
federal net operating loss ("NOL") that may be offset against future taxable    
income through 2012.                                                            

10. COMMITMENTS AND CONTINGENCIES                                               

At March 30, 1997, estimated cost to complete development work in     
subdivisions from which lots have been sold totaled $48.9 million. Development  
is estimated to be completed within the next five years as follows:             
1998 -- $24.0 million; 1999 -- $11.8 million; 2000 -- $4.4 million; 2001 -- $4.4
million and 2002 -- $4.3 million.                                               

 The Company is party to certain ordinary course litigation. Although no
assurances can be given, in the opinion of management, based on the advice of   
counsel, the potential outcome is not expected to have a materially adverse     
effect on the operations or financial condition of the Company.                 

11. STOCK OPTION PLANS AND EMPLOYEE RETIREMENT SAVINGS PLAN                     

  The Employee's Stock Option Plan expired in September, 1995. The Company
received shareholder approval for a new employee stock option plan (the 1995    
Stock Incentive Plan) at a meeting held on July 20, 1995. As of March 30, 1997, 
there were 453 individuals eligible to participate in the 1995 Stock Incentive  
Plan. Options under each plan expire ten years from the date of grant. A summary
of stock option activity for each plan is presented below.                      

Employee Stock Option Plan                                                  

                                                        [Enlarge/Download Table]

                                                NUMBER                                  NUMBER   
                                               OF SHARES               OPTION PRICE    OF SHARES 
                                               RESERVED    OPTIONS      PER SHARE     EXERCISABLE
                                               ---------  ---------   --------------  -----------
                                                                                                 
Balance at April 2, 1995...................... 1,839,317    962,422   $1.25 - $12.26    286,529  
Granted.......................................       --     250,000            $4.51             
Forfeited.....................................       --     (96,550)  $1.25 - $12.26             
Exercised.....................................  (82,258)    (82,258)  $1.25 - $ 3.28             
Expiration of plan............................ (723,445)         --                              
Stock dividends...............................   52,268      52,268                              
                                               ---------  ---------                              
Balance at March 31, 1996..................... 1,085,882  1,085,882   $1.25 - $11.64    381,528  
Forfeited.....................................  (97,551)    (97,551)  $1.25 - $11.64             
Exercised.....................................  (44,612)    (44,612)  $1.25 - $ 4.16             
                                               ---------  ---------                              
Balance at March 30, 1997.....................  943,719     943,719   $1.25 - $11.64    566,388  
                                               =========  =========                              

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

1995 Stock Incentive Plan                                                   

                                                        [Enlarge/Download Table]

                                               NUMBER                                  NUMBER   
                                              OF SHARES              OPTION PRICE     OF SHARES 
                                              RESERVED    OPTIONS      PER SHARE     EXERCISABLE
                                              ---------  ---------  ---------------  -----------
                                                                                                
Balance at March 31, 1996.................... 1,000,000         --               --         --  
Granted......................................        --     75,000            $4.25         --  
                                              ---------  ---------                              
Balance at March 30, 1997.................... 1,000,000     75,000            $4.25         --  
                                              =========  =========                              

Outside Directors Plan                                                      

In fiscal 1988, the Company's shareholders adopted a stock option plan
covering the Company's non-employee Directors (the "Director Plan"). The        
Director Plan provided for the grant to the Company's non-employee directors    
(the "Outside Directors") of non-qualified stock options to purchase up to an   
aggregate of 150,000 shares of common stock at a price not less than the fair   
market value at the date of grant. The Director Plan was amended in September,  
1991, to increase the number of issuable shares from 150,000 to 300,000 and     
again in July, 1995, to increase the number of issuable shares by an additional 
200,000. Options expire ten years from the date of grant. A summary of stock    
option activity related to the Company's Director Plan is presented below.      

                                                        [Enlarge/Download Table]

                                                 NUMBER                                NUMBER   
                                                OF SHARES              OPTION PRICE   OF SHARES 
                                                RESERVED    OPTIONS     PER SHARE    EXERCISABLE
                                                ---------  ---------   ------------  -----------
                                                                                                
Balance at April 2, 1995.......................  340,704     337,335   $.83 - $4.78    186,474  
Additional shares issuable.....................  200,000          --                            
Granted........................................       --      75,000       $3.80                
Stock dividends................................   17,035      20,617                            
                                                ---------  ---------                            
Balance at March 31, 1996......................  557,739     432,952   $.83 - $4.78    276,134  
Granted........................................       --      75,000       $3.13                
Exercised......................................       --     (23,849)  $.83 - $1.46             
                                                ---------  ---------                            
Balance at March 30, 1997......................  557,739     484,103   $.83 - $4.78    328,227  
                                                =========  =========                            

Pro forma information regarding net income and earnings per share is  
required by SFAS No. 123, and has been determined as if the Company had         
accounted for its employee stock options under the fair value method of that    
Statement. The fair value for these options was estimated at the date of grant  
using a Black-Scholes option pricing model with the following weighted average  
assumptions for fiscal 1995, 1996 and 1997: risk free investment rates of 5%,   
dividend yields of 1%, a volatility factor of the expected market price of the  
Company's common stock of .369; and a weighted average life of the options of 10
years.                                                                          

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's 
pro forma information follows.                                                  

                                                        [Enlarge/Download Table]

                                                     1995         1996        1997     
                                                  -----------  ----------  ----------- 
                                                                                       
Pro forma net income (loss)...................... $ 6,087,609  $6,338,928  $(4,562,126)
                                                  ===========  ==========  =========== 
Pro forma earnings (loss) per share:                                                   
  Basic.......................................... $       .30  $      .31  $      (.22)
  Diluted........................................         .28         .29         (.22)

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Employee Retirement Savings Plan                                            

    The Company's Employee Retirement Plan is a code section 401(k) Retirement
Savings Plan (the "Plan"). All employees at least 21 years of age with one year 
of employment with the Company are eligible to participate in the Plan. Employer
contributions to the Plan are at the sole discretion of the Company and were not
material to the operations of the Company for fiscal 1995, 1996 and 1997.       

12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)                                 

  Summarized quarterly financial information for the years ended March 31,
1996 and March 30, 1997 is presented below (in 000's except for per share       
information). (Loss) earnings per common share has been restated in accordance  
with SFAS No. 128 (See Note 1).                                                 

                                                        [Enlarge/Download Table]

                                                           THREE MONTHS ENDED                 
                                           ---------------------------------------------------
                                           JULY 2,     OCTOBER 1,     DECEMBER 31,   MARCH 31,
                                             1995         1995            1995         1996   
                                           --------   -------------   ------------   ---------
                                                                                              
Sales of real estate...................... $24,641       $33,258        $23,935       $31,588 
Gross profit..............................  12,449        16,035         10,805        14,740 
Net income................................   1,588         2,319            985         1,575 
Earnings per common share:                                                                    
  Basic...................................     .08           .11            .05           .08 
  Diluted.................................     .07           .11            .05           .07 

                                                        [Enlarge/Download Table]

                                                           THREE MONTHS ENDED                 
                                           ---------------------------------------------------
                                           JUNE 30,   SEPTEMBER 29,   DECEMBER 29,   MARCH 30,
                                             1996         1996            1996         1997   
                                           --------   -------------   ------------   ---------
                                                                                              
Sales of real estate...................... $28,782       $26,451        $26,478       $28,010 
Gross profit..............................  14,329        13,252         12,747        12,303 
Net (loss) income.........................  (4,124)          576             20          (832)
(Loss) earnings per common share:                                                             
  Basic...................................    (.20)          .03            .00          (.04)
  Diluted.................................    (.20)          .03            .00          (.04)

13. FAIR VALUE OF FINANCIAL INSTRUMENTS                                         

The following methods and assumptions were used by the Company in     
estimating the fair values of its financial instruments:                        

    Cash and cash equivalents:  The amounts reported in the balance sheets for
cash and cash equivalents approximates fair value.                              

Contracts receivable:  The amounts reported in the balance sheets for 
contracts receivable approximates fair value. Contracts receivable are          
non-interest bearing and generally convert into cash or an interest bearing     
mortgage note receivable within thirty days.                                    

    Notes receivable:  The carrying amounts reported in the balance sheets for
notes receivable approximates fair value based on (i) prices established by loan
pricing services and (ii) discounted future cash flows using current rates at   
which similar loans with similar maturities would be made to borrowers with     
similar credit risk.                                                            

 Investment in securities:  Investment in securities are carried at fair
value based on estimates from dealers.                                          

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BLUEGREEN CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

  Lines-of-credit, notes payable and receivable-backed notes payable:  The
carrying amounts reported in the balance sheets approximate their fair value    
based upon short-term maturities of the indebtedness which provide for variable 
interest rates.                                                                 

     8.25% convertible subordinated debentures:  The fair value of the Company's
8.25% convertible subordinated debentures is based on the quoted market price as
reported on the New York Stock Exchange.                                        

                                                        [Enlarge/Download Table]

                                                  MARCH 31, 1996             MARCH 30, 1997      
                                             -------------------------  -------------------------
                                              CARRYING      ESTIMATED    CARRYING      ESTIMATED 
                                               AMOUNT      FAIR VALUE     AMOUNT      FAIR VALUE 
                                             -----------   -----------  -----------   -----------
                                                                                                 
Cash and cash equivalents................... $11,389,141   $11,389,141  $11,597,147   $11,597,147
Contracts receivable........................  12,451,207    12,451,207   14,308,424    14,308,424
Notes receivable............................  37,013,802    37,013,802   34,619,325    34,619,325
Investment in securities....................   9,699,435     9,699,435   11,066,693    11,066,693
Lines-of-credit, notes payable and                                                               
  receivable-backed notes payable...........  37,011,233    37,011,233   56,960,554    56,960,554
8.25% convertible subordinated debentures...  34,739,000    30,570,320   34,739,000    29,832,116

14. SUPPLEMENTAL GUARANTOR INFORMATION                                          

  Under the terms of the Note Offering, all of the Company's subsidiaries,
with the exception of the Non-Guarantor Subsidiaries, as defined below, will    
fully and unconditionally guarantee, jointly and severally, the full and prompt 
payment of principal and interest on the Company's $110 million Senior Secured  
Notes due 2008 (the Notes), and the performance of all other obligations of the 
Company under the Notes and related indenture. The Non-Guarantor Subsidiaries   
are:                                                                            

Patten Receivables Finance Corporation III                    
Patten Receivables Finance Corporation VI                     
Bluegreen Land and Realty, Inc.                               
Patten Receivables Finance Corporation VII                    
Patten Receivables Finance Corporation VIII                   
CDP Realty, Inc.                                              
Patten Receivables Finance Corporation IX                     
Patten Receivables Finance Corporation X                      
Bluegreen Receivables Finance Corporation I                   
BXG Realty Tenn, Inc.                                         
Bluegreen Properties N.V.                                     
Resort Title Agency, Inc.                                     
Blue Ridge Public Service Company                             
RDI Vacation Club, Inc.                                       
Vacation Trust, Inc.                                          

    Management has determined that separate, full financial statements are not
required and, accordingly, are not provided. Supplemental financial information 
for Bluegreen Corporation, its combined non-guarantor subsidiaries and its      
combined guarantor subsidiaries is presented below:                             

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING BALANCE SHEET AT MARCH 31, 1996 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                     COMBINED       COMBINED                              
                                       BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                      CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                      -----------  -------------  ------------  ------------  ------------
                                                                                                          
ASSETS                                                                                                    

Cash and cash equivalents............  $  4,303       $ 3,103       $  3,984      $     --      $ 11,390  
Contracts receivable, net............       836            --         11,615            --        12,451  
Notes receivable, net................        --         8,127         28,887            --        37,014  
Investment in securities.............        --         9,699             --            --         9,699  
Inventory, net.......................    21,872            --         51,723            --        73,595  
Property and equipment, net..........     2,312            --          2,927            --         5,239  
Investments in subsidiaries..........        --            --             --            --            --  
Debt issuance costs, net.............       936             6            347            --         1,289  
Intercompany receivable..............    20,630         3,232             --       (23,862)           --  
Other assets.........................       975           291          3,020            --         4,286  
                                       --------       -------       --------      --------      --------  
          Total assets...............  $ 51,864       $24,458       $102,503      $(23,862)     $154,963  
                                       ========       =======       ========      ========      ========  

LIABILITIES AND SHAREHOLDERS' EQUITY                                                                      

LIABILITIES:                                                                                              
Accounts payable.....................  $  2,377       $    --       $    181      $     --      $  2,558  
Intercompany payable.................        --            --         23,862       (23,862)           --  
Deferred revenue.....................       117            --            630            --           747  
Accrued liabilities and other........     3,271         2,985          2,887            --         9,143  
Lines-of-credit and notes payable....     3,425            --         13,862            --        17,287  
Deferred income taxes................     6,068            --             --            --         6,068  
Receivable-backed notes payable......        --         6,271         13,452            --        19,723  
8.25% convertible subordinated                                                                            
  debentures.........................    34,739            --             --            --        34,739  
                                       --------       -------       --------      --------      --------  
          Total liabilities..........    49,997         9,256         54,874       (23,862)       90,265  

SHAREHOLDERS' EQUITY                                                                                      
Preferred stock......................        --            --             --            --            --  
Common stock.........................       205            --             --            --           205  
Capital-in-excess of par value.......    71,296            --             --            --        71,296  
Accumulated deficit..................   (69,634)       15,202         47,629            --        (6,803) 
                                       --------       -------       --------      --------      --------  
          Total shareholders'                                                                             
            equity...................     1,867        15,202         47,629            --        64,698  
                                       --------       -------       --------      --------      --------  
          Total liabilities and                                                                           
            shareholders' equity.....  $ 51,864       $24,458       $102,503      $(23,862)     $154,963  
                                       ========       =======       ========      ========      ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING BALANCE SHEET AT MARCH 30, 1997 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                     COMBINED       COMBINED                              
                                       BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                      CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                      -----------  -------------  ------------  ------------  ------------
                                                                                                          
ASSETS                                                                                                    

Cash and cash equivalents............  $  3,353       $ 3,442       $  4,802      $     --      $ 11,597  
Contracts receivable, net............     1,185            --         13,123            --        14,308  
Notes receivable, net................        --         5,588         29,031            --        34,619  
Investment in securities.............        --        11,067             --            --        11,067  
Inventory, net.......................    14,566            --         72,095            --        86,661  
Property and equipment, net..........     2,418            --          2,531            --         4,949  
Investments in subsidiaries..........        --            --             --            --            --  
Debt issuance costs, net.............       854            --            210            --         1,064  
Intercompany receivable..............    17,045         1,882             --       (18,927)           --  
Other assets.........................     2,024           395          2,943            --         5,362  
                                       --------       -------       --------      --------      --------  
          Total assets...............  $ 41,445       $22,374       $124,735      $(18,927)     $169,627  
                                       ========       =======       ========      ========      ========  

LIABILITIES AND SHAREHOLDERS' EQUITY                                                                      

LIABILITIES:                                                                                              
Accounts payable.....................  $  1,478       $    --       $    440      $     --      $  1,918  
Intercompany payable.................        --            --         18,927       (18,927)           --  
Deferred revenue.....................        46            --          3,746            --         3,792  
Accrued liabilities and other........     6,376         3,304            438            --        10,118  
Lines-of-credit and notes payable....     1,928            --         33,977            --        35,905  
Deferred income taxes................     2,843            --             13            --         2,856  
Receivable-backed notes payable......        --         3,514         17,541            --        21,055  
8.25% convertible subordinated                                                                            
  debentures.........................    34,739            --             --            --        34,739  
                                       --------       -------       --------      --------      --------  
          Total liabilities..........    47,410         6,818         75,082       (18,927)      110,383  

SHAREHOLDERS' EQUITY:                                                                                     
Preferred stock......................        --            --             --            --            --  
Common stock.........................       206            --             --            --           206  
Capital-in-excess of par value.......    71,411            --             --            --        71,411  
Accumulated deficit..................   (76,212)       15,397         49,653            --       (11,162) 
Treasury stock.......................    (1,370)           --             --            --        (1,370) 
Net unrealized gains.................        --           159             --            --           159  
                                       --------       -------       --------      --------      --------  
          Total shareholders'                                                                             
            equity...................    (5,965)       15,556         49,653            --        59,244  
                                       --------       -------       --------      --------      --------  
          Total liabilities and                                                                           
            shareholders' equity.....  $ 41,445       $22,374       $124,735      $(18,927)     $169,627  
                                       ========       =======       ========      ========      ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS 
YEAR ENDED APRIL 2, 1995
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                      COMBINED       COMBINED                              
                                        BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                       CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                       -----------  -------------  ------------  ------------  ------------
                                                                                                           
REVENUES:                                                                                                  
  Sales of real estate...............    $15,073       $   --        $76,849       $    --       $91,922   
  Management fee revenue.............      7,132           --             --        (7,132)           --   
  Interest income and other..........        533        2,104          4,626            --         7,263   
                                         -------       ------        -------       -------       -------   
                                          22,738        2,104         81,475        (7,132)       99,185   
                                         -------       ------        -------       -------       -------   
COST AND EXPENSES:                                                                                         
  Cost of real estate sold...........     10,357           --         34,749            --        45,106   
  Selling, general and administrative                                                                      
     expense.........................     12,492          130         31,030        (7,132)       36,520   
  Interest expense...................      3,095           --          3,643            --         6,738   
  Provisions for losses..............         --           --            792            --           792   
                                         -------       ------        -------       -------       -------   
                                          25,944          130         70,214        (7,132)       89,156   
                                         -------       ------        -------       -------       -------   
Income (loss) from operations........     (3,206)       1,974         11,261            --        10,029   
Other income.........................        269           --            104            --           373   
                                         -------       ------        -------       -------       -------   
Income (loss) before income taxes....     (2,937)       1,974         11,365            --        10,402   
Provision (benefit) for income                                                                             
  taxes..............................     (1,204)         809          4,660            --         4,265   
                                         -------       ------        -------       -------       -------   
          Net income (loss)..........    $(1,733)      $1,165        $ 6,705       $    --       $ 6,137   
                                         =======       ======        =======       =======       =======   

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS 
YEAR ENDED MARCH 31, 1996 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                      COMBINED       COMBINED                              
                                        BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                       CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                       -----------  -------------  ------------  ------------  ------------
                                                                                                           
REVENUES:                                                                                                  
  Sales of real estate...............    $25,586       $   --        $87,836       $    --       $113,422  
  Management fee revenue.............      8,253           --             --        (8,253)            --  
  Interest income and other..........      1,740        2,367          3,281            --          7,388  
                                         -------       ------        -------       -------       --------  
                                          35,579        2,367         91,117        (8,253)       120,810  
                                         -------       ------        -------       -------       --------  
COST AND EXPENSES:                                                                                         
  Cost of real estate sold...........     16,413           --         42,981            --         59,394  
  Selling, general and administrative                                                                      
     expense.........................     18,078          240         33,669        (8,253)        43,734  
  Interest expense...................      2,344        1,489          2,443            --          6,276  
  Provisions for losses..............         --           --            612            --            612  
                                         -------       ------        -------       -------       --------  
                                          36,835        1,729         79,705        (8,253)       110,016  
                                         -------       ------        -------       -------       --------  
Income (loss) from operations........     (1,256)         638         11,412            --         10,794  
Other income.........................         96           --             26            --            122  
                                         -------       ------        -------       -------       --------  
Income (loss) before income taxes....     (1,160)         638         11,438            --         10,916  
Provision (benefit) for income                                                                             
  taxes..............................       (473)         260          4,662            --          4,449  
                                         -------       ------        -------       -------       --------  
          Net income (loss)..........    $  (687)      $  378        $ 6,776       $    --       $  6,467  
                                         =======       ======        =======       =======       ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS 
YEAR ENDED MARCH 30, 1997 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                      COMBINED       COMBINED                              
                                        BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                       CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                       -----------  -------------  ------------  ------------  ------------
                                                                                                           
REVENUES:                                                                                                  
  Sales of real estate...............   $ 28,148       $   --        $81,573       $    --       $109,721  
  Management fee revenue.............      8,297           --             --        (8,297)            --  
  Interest income and other..........      2,378        1,029          2,752            --          6,159  
                                        --------       ------        -------       -------       --------  
                                          38,823        1,029         84,325        (8,297)       115,880  
                                        --------       ------        -------       -------       --------  
COST AND EXPENSES:                                                                                         
  Cost of real estate sold...........     20,616           --         36,475            --         57,091  
  Selling, general and administrative                                                                      
     expense.........................     22,298          100         37,341        (8,297)        51,442  
  Interest expense...................      2,886          600          1,973            --          5,459  
  Provisions for losses..............      4,425           --          5,113            --          9,538  
                                        --------       ------        -------       -------       --------  
                                          50,225          700         80,902        (8,297)       123,530  
                                        --------       ------        -------       -------       --------  
Income (loss) from operations........    (11,402)         329          3,423            --         (7,650) 
Other income.........................        253           --              7            --            260  
                                        --------       ------        -------       -------       --------  
Income (loss) before income taxes....    (11,149)         329          3,430            --         (7,390) 
Provision (benefit) for income                                                                             
  taxes..............................     (4,571)         135          1,406            --         (3,030) 
                                        --------       ------        -------       -------       --------  
          Net income (loss)..........   $ (6,578)      $  194        $ 2,024       $    --       $ (4,360) 
                                        ========       ======        =======       =======       ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS 
YEAR ENDED APRIL 2, 1995
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                 COMBINED       COMBINED                
                                                   BLUEGREEN   NON-GUARANTOR   GUARANTOR                
                                                  CORPORATION  SUBSIDIARIES   SUBSIDIARIES  CONSOLIDATED
                                                  -----------  -------------  ------------  ------------
                                                                                                        
OPERATING ACTIVITIES:                                                                                   
  Net income (loss).............................    $(1,733)     $  1,165       $  6,705      $  6,137  
  Depreciation and amortization.................        658          (605)         1,249         1,302  
  Loss on REMIC transaction.....................         --           410             --           410  
  Gain on sale of property and equipment........         --            --            (55)          (55) 
  Provisions for losses.........................         --            --            792           792  
  Interest accretion on investment in                                                                   
     securities.................................         --        (2,223)            --        (2,223) 
  Proceeds from borrowings collateralized by                                                            
     notes......................................         --            --          8,588         8,588  
  Payments on borrowings collateralized by                                                              
     notes......................................         --            --        (14,845)      (14,845) 
  Provision for deferred income taxes...........      1,327            --             --         1,327  
(Increase) decrease in operating assets:                                                                
  Contracts receivable..........................        281            --         (3,403)       (3,122) 
  Inventory.....................................     (6,447)           --          1,995        (4,452) 
  Other assets..................................        392          (104)           976         1,264  
  Intercompany receivable/payable...............      1,575        (3,076)         1,501            --  
  Notes receivable and investments in                                                                   
     securities.................................         --         3,404          8,460        11,864  
Increase in operating liabilities:                                                                      
  Accounts payable, accrued liabilities and                                                             
     other......................................        870           505          1,067         2,442  
                                                    -------      --------       --------      --------  
  Net cash (used) provided by operating                                                                 
     activities.................................     (3,077)         (524)        13,030         9,429  
                                                    -------      --------       --------      --------  
INVESTING ACTIVITIES:                                                                                   
  Purchases of property and equipment...........     (1,037)           --           (732)       (1,769) 
  Sales of property and equipment...............         --            --            453           453  
  Additions to other long-term assets...........         --            --           (259)         (259) 
                                                    -------      --------       --------      --------  
Net cash used in investing activities...........     (1,037)           --           (538)       (1,575) 
                                                    -------      --------       --------      --------  
FINANCING ACTIVITIES:                                                                                   
  Proceeds from borrowings under line-of-credit                                                         
     facilities and other notes payable.........      1,985            --          1,932         3,917  
  Payments under line-of-credit facilities and                                                          
     other notes payable........................         --            --        (13,540)      (13,540) 
  Payments for stock dividends in lieu of                                                               
     fractional shares..........................         (5)           --             --            (5) 
  Proceeds from exercise of employee stock                                                              
     options....................................         54            --             --            54  
                                                    -------      --------       --------      --------  
  Net cash flow (used) provided by financing                                                            
     activities.................................      2,034            --        (11,608)       (9,574) 
                                                    -------      --------       --------      --------  
  Net (decrease) increase in cash and cash                                                              
     equivalents................................     (2,080)         (524)           884        (1,720) 
  Cash and cash equivalents at beginning of                                                             
     year.......................................      3,484         2,914          2,910         9,308  
                                                    -------      --------       --------      --------  
  Cash and cash equivalents at end of year......      1,404         2,390          3,794         7,588  
  Restricted cash and cash equivalents at end of                                                        
     year.......................................       (177)       (2,390)        (2,597)       (5,164) 
                                                    -------      --------       --------      --------  
  Unrestricted cash and cash equivalents at end                                                         
     of year....................................    $ 1,227      $     --       $  1,197      $  2,424  
                                                    =======      ========       ========      ========  

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BLUEGREEN CORPORATION 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS 
YEAR ENDED MARCH 31, 1996 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                 COMBINED       COMBINED                
                                                   BLUEGREEN   NON-GUARANTOR   GUARANTOR                
                                                  CORPORATION  SUBSIDIARIES   SUBSIDIARIES  CONSOLIDATED
                                                  -----------  -------------  ------------  ------------
                                                                                                        
OPERATING ACTIVITIES:                                                                                   
  Net income (loss).............................    $  (687)     $    378       $  6,776      $  6,467  
  Depreciation and amortization.................        588           599            450         1,637  
  Gain on REMIC transaction.....................         --        (1,120)            --        (1,120) 
  Loss on sale of property and equipment........         --            --             49            49  
  Provisions for losses.........................         --            --            612           612  
  Interest accretion on investment in                                                                   
     securities.................................         --        (1,170)            --        (1,170) 
  Proceeds from borrowings collateralized by                                                            
     notes......................................         --            --         19,438        19,438  
  Payments on borrowings collateralized by                                                              
     notes......................................         --        (8,195)       (11,035)      (19,230) 
  Provision for deferred income taxes...........        998            --             --           998  
(Increase) decrease in operating assets:                                                                
  Contracts receivable..........................        137            --            463           600  
  Inventory.....................................     (4,567)           --          2,564        (2,003) 
  Other assets..................................        (42)         (185)           501           274  
  Intercompany receivable/payable...............      9,552       (13,942)         4,390            --  
  Notes receivable and investment in                                                                    
     securities.................................         --        23,532        (13,086)       10,446  
Increase (decrease) in operating liabilities:                                                           
  Accounts payable, accrued liabilities and                                                             
     other......................................     (1,736)          540           (784)       (1,980) 
                                                    -------      --------       --------      --------  
  Net cash provided by operating activities.....      4,243           437         10,338        15,018  
                                                    -------      --------       --------      --------  
INVESTING ACTIVITIES:                                                                                   
  Purchases of property and equipment...........       (974)           --           (921)       (1,895) 
  Sales of property and equipment...............         --            --            789           789  
  Cash received from investment in securities...         --           276             --           276  
  Additions to other long-term assets...........         --            --           (411)         (411) 
                                                    -------      --------       --------      --------  
Net cash flow (used) provided by investing                                                              
  activities....................................       (974)          276           (543)       (1,241) 
                                                    -------      --------       --------      --------  
FINANCING ACTIVITIES:                                                                                   
  Proceeds from borrowings under line-of-credit                                                         
     facilities and other notes payable.........         --            --          5,796         5,796  
  Payments under line-of-credit facilities and                                                          
     other notes payable........................       (562)           --        (15,401)      (15,963) 
  Payments for stock dividends in lieu of                                                               
     fractional shares..........................         (4)           --             --            (4) 
  Proceeds from exercise of employee stock                                                              
     options....................................        195            --             --           195  
                                                    -------      --------       --------      --------  
  Net cash flow used by financing activities....       (371)           --         (9,605)       (9,976) 
                                                    -------      --------       --------      --------  
  Net increase in cash and cash equivalents.....      2,898           713            190         3,801  
  Cash and cash equivalents at beginning of                                                             
     year.......................................      1,405         2,390          3,794         7,589  
                                                    -------      --------       --------      --------  
  Cash and cash equivalents at end of year......      4,303         3,103          3,984        11,390  
  Restricted cash and cash equivalents at end of                                                        
     year.......................................       (759)       (3,103)        (3,822)       (7,684) 
                                                    -------      --------       --------      --------  
  Unrestricted cash and cash equivalents at end                                                         
     of year....................................    $ 3,544      $     --       $    162      $  3,706  
                                                    =======      ========       ========      ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS 
YEAR ENDED MARCH 30, 1997 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                 COMBINED       COMBINED                
                                                   BLUEGREEN   NON-GUARANTOR   GUARANTOR                
                                                  CORPORATION  SUBSIDIARIES   SUBSIDIARIES  CONSOLIDATED
                                                  -----------  -------------  ------------  ------------
                                                                                                        
OPERATING ACTIVITIES:                                                                                   
  Net income (loss).............................    $(6,578)      $   194       $  2,024      $ (4,360) 
  Depreciation and amortization.................        590             6            470         1,066  
  Loss on REMIC transaction.....................         --            96             --            96  
  Gain on sale of property and equipment........         --            --            (82)          (82) 
  Provisions for losses.........................      4,426            --          5,113         9,539  
  Interest accretion on investment in                                                                   
     securities.................................         --          (997)            --          (997) 
  Proceeds from borrowings collateralized by                                                            
     notes......................................         --            --         18,157        18,157  
  Payments on borrowings collateralized by                                                              
     notes......................................         --        (2,757)       (14,069)      (16,826) 
  Benefit for deferred income taxes.............     (3,225)           --           (194)       (3,419) 
(Increase) decrease in operating assets:                                                                
  Contracts receivable..........................       (348)           --         (1,509)       (1,857) 
  Inventory.....................................      2,880            --        (12,005)       (9,125) 
  Other assets..................................     (1,049)         (104)            77        (1,076) 
  Intercompany receivable/payable...............      3,585         1,351         (4,936)           --  
  Notes receivable..............................         --           638         (3,436)       (2,798) 
Increase in operating liabilities:                                                                      
  Accounts payable, accrued liabilities and                                                             
     other......................................      2,135           213          1,130         3,478  
                                                    -------       -------       --------      --------  
  Net cash (used) provided by operating                                                                 
     activities.................................      2,416        (1,360)        (9,260)       (8,204) 
                                                    -------       -------       --------      --------  
INVESTING ACTIVITIES:                                                                                   
  Purchases of property and equipment...........       (614)           --           (428)       (1,042) 
  Sales of property and equipment...............         --            --            843           843  
  Other long term assets........................         --            --             --            --  
  Cash received from investment in securities...         --         1,699             --         1,699  
  Additions to other long-term assets...........         --            --           (181)         (181) 
                                                    -------       -------       --------      --------  
Net cash flow (used) provided by investing                                                              
  activities....................................       (614)        1,699            415         1,500  
                                                    -------       -------       --------      --------  
FINANCING ACTIVITIES:                                                                                   
  Proceeds from borrowings under line-of-credit                                                         
     facilities and other notes payable.........        606            --         20,082        20,688  
  Payments under line-of-credit facilities and                                                          
     other notes payable........................     (2,103)           --        (10,238)      (12,341) 
  Payments for treasury stock...................     (1,370)           --             --        (1,370) 
  Proceeds from exercise of employee stock                                                              
     options....................................        115            --             --           115  
                                                    -------       -------       --------      --------  
  Net cash flow (used) provided by financing                                                            
     activities.................................     (2,752)           --          9,663         6,911  
                                                    -------       -------       --------      --------  
  Net (decrease) increase in cash and cash                                                              
     equivalents................................       (950)          339            818           207  
  Cash and cash equivalents at beginning of                                                             
     year.......................................      4,303         3,103          3,984        11,390  
                                                    -------       -------       --------      --------  
  Cash and cash equivalents at end of year......      3,353         3,442          4,802        11,597  
  Restricted cash and cash equivalents at end of                                                        
     year.......................................     (1,932)       (3,442)        (2,604)       (7,978) 
                                                    -------       -------       --------      --------  
  Unrestricted cash and cash equivalents at end                                                         
     of year....................................    $ 1,421       $    --       $  2,198      $  3,619  
                                                    =======       =======       ========      ========  

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 28, 1997 
(AMOUNTS IN THOUSANDS)
(UNAUDITED) 

                                                                [Download Table]
                                                                         
ASSETS                                                                   
Cash and cash equivalents (including restricted cash of                  
  approximately $13,300 at December 28, 1997)...............    $ 25,124 
Contracts receivable, net...................................      12,646 
Notes receivable, net.......................................      73,115 
Investment in securities....................................      10,600 
Inventory, net..............................................     112,297 
Property and equipment, net.................................      11,147 
Debt issuance costs, net....................................       1,783 
Other assets................................................       8,096 
                                                                -------- 
          TOTAL ASSETS......................................    $254,808 
                                                                ======== 
LIABILITIES AND SHAREHOLDERS' EQUITY                                     
Accounts payable............................................    $  4,591 
Deferred income.............................................       8,322 
Accrued liabilities and other...............................      14,101 
Lines-of-credit and notes payable...........................      61,909 
Deferred income taxes.......................................       6,712 
Receivable-backed notes payable.............................      51,535 
8.00% convertible subordinated notes payable to related                  
  parties...................................................       6,000 
8.25% convertible subordinated debentures...................      34,739 
                                                                -------- 
          TOTAL LIABILITIES.................................     187,909 
Minority interest...........................................         250 
SHAREHOLDERS' EQUITY                                                     
Preferred stock, $.01 par value, 1,000 shares authorized;                
  none issued...............................................          -- 
Common stock, $.01 par value, 90,000 shares authorized;                  
  20,743 shares issued at December 28, 1997.................         208 
Capital-in-excess of par value..............................      71,844 
Accumulated deficit.........................................      (4,179)
Treasury stock, 450 common shares at cost at December 28,                
  1997......................................................      (1,389)
Net unrealized gains on investments available-for-sale, net              
  of income taxes...........................................         165 
                                                                -------- 
          TOTAL SHAREHOLDERS' EQUITY........................      66,649 
                                                                -------- 
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........    $254,808 
                                                                ======== 

See accompanying notes to condensed consolidated financial statements.

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                  NINE MONTHS ENDED     
                                                             ---------------------------
                                                             DECEMBER 29,   DECEMBER 28,
                                                                 1996           1997    
                                                             ------------   ------------
                                                                                        
REVENUES:                                                                               
  Sales of real estate......................................   $ 81,712       $122,902  
  Other resort services revenue.............................         --          1,585  
  Interest income and other.................................      4,577          7,324  
                                                               --------       --------  
                                                                 86,289        131,811  
COST AND EXPENSES:                                                                      
  Cost of real estate sold..................................     41,384         55,277  
  Cost of other resort services.............................         --          1,509  
  Selling, general and administrative expense...............     38,051         55,526  
  Interest expense..........................................      3,916          6,512  
  Provisions for losses.....................................      9,101          1,349  
                                                               --------       --------  
                                                                 92,452        120,173  
                                                               --------       --------  
Income (loss) from operations...............................     (6,163)        11,638  
Other income................................................        184            120  
                                                               --------       --------  
Income (loss) before income taxes...........................     (5,979)        11,758  
Provision (benefit) for income taxes........................     (2,451)         4,774  
                                                               --------       --------  
Net income (loss)...........................................   $ (3,528)      $  6,984  
                                                               ========       ========  
EARNINGS (LOSS) PER COMMON SHARE:                                                       
Basic.......................................................   $   (.17)      $    .35  
                                                               ========       ========  
Diluted.....................................................   $   (.17)      $    .33  
                                                               ========       ========  
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT                                 
  SHARES:                                                                               
Basic.......................................................     20,372         20,193  
                                                               ========       ========  
Diluted.....................................................     20,372         25,467  
                                                               ========       ========  

See accompanying notes to condensed consolidated financial statements.

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BLUEGREEN CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(AMOUNTS IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                   NINE MONTHS ENDED     
                                                              ---------------------------
                                                              DECEMBER 29,   DECEMBER 28,
                                                                  1996           1997    
                                                              ------------   ------------
                                                                                         
OPERATING ACTIVITIES:                                                                    
  Net income (loss).........................................    $(3,528)       $  6,984  
  Adjustments to reconcile net income (loss) to net cash                                 
    flow provided by operating activities, net of effects of                             
    acquisition:                                                                         
    Depreciation and amortization...........................        807           1,345  
    Loss on REMIC transaction...............................         96              --  
    Gain on sale of property and equipment..................        (44)             --  
    Provisions for losses...................................      9,101           1,349  
    Interest accretion on investment in securities..........       (745)         (1,047) 
    Proceeds from borrowings collateralized by notes                                     
     Receivable.............................................     14,004          26,495  
    Payments on borrowings collateralized by notes                                       
     Receivable.............................................    (14,060)        (11,440) 
    Provision (benefit) for deferred income taxes...........     (2,451)          4,774  
  (INCREASE) DECREASE IN OPERATING ASSETS:                                               
    Contracts receivable....................................      4,310           1,662  
    Inventory...............................................     (3,442)          3,944  
    Other assets............................................       (574)         (2,062) 
    Notes receivable........................................        855         (22,437) 
  INCREASE (DECREASE) IN OPERATING LIABILITIES:                                          
    Accounts payable, accrued liabilities and other.........     (3,437)          4,531  
                                                                -------        --------  
NET CASH PROVIDED BY OPERATING ACTIVITIES...................        892          14,098  
                                                                -------        --------  
INVESTING ACTIVITIES:                                                                    
  Acquisition of RDI Group, Inc. and Resort Title Agency,                                
    Inc., net of cash acquired..............................         --          (2,421) 
  Purchases of property and equipment.......................       (998)         (2,909) 
  Sales of property and equipment...........................        586             225  
  Cash received from investment in securities...............      1,114           1,524  
                                                                -------        --------  
NET CASH FLOW (USED) PROVIDED BY INVESTING ACTIVITIES.......        702          (3,581) 
                                                                -------        --------  
FINANCING ACTIVITIES:                                                                    
  Proceeds from issuance of 8% convertible subordinated                                  
    notes payable...........................................         --           6,000  
  Proceeds from borrowings under line-of-credit facilities                               
    and other notes payable.................................     11,946          36,136  
  Payments under line-of-credit facilities and other notes                               
    payable ................................................     (8,877)        (38,531) 
  Payment of debt issuance costs............................       (206)           (900) 
  Payments for treasury stock...............................     (1,245)            (19) 
  Proceeds from exercise of employee stock options..........        115             324  
                                                                -------        --------  
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES..............      1,733           3,010  
                                                                -------        --------  
Net increase in cash and cash equivalents...................      3,327          13,527  
Cash and cash equivalents at beginning of period............     11,389          11,597  
                                                                -------        --------  
Cash and cash equivalents at end of period..................     14,716          25,124  
Restricted cash and cash equivalents at end of period.......     (8,617)        (13,300) 
                                                                -------        --------  
Unrestricted cash and cash equivalents at end of period.....    $ 6,099        $ 11,824  
                                                                =======        ========  
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING, INVESTING AND                               
  FINANCING ACTIVITIES                                                                   
  Inventory acquired through financing......................    $10,630        $ 22,974  
                                                                =======        ========  
  Inventory acquired through foreclosure or Deedback in lieu                             
    of foreclosure..........................................    $ 1,490        $  2,497  
                                                                =======        ========  
    Property and equipment acquired through financing.......    $    --        $    812  
                                                                =======        ========  
  Investment in securities retained in Connection with REMIC                             
    transactions............................................    $ 1,774        $     --  
                                                                =======        ========  

See accompanying notes to condensed consolidated financial statements.

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BLUEGREEN CORPORATION 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 1997 
(UNAUDITED) 

1. BASIS OF PRESENTATION                                                        

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for   
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information   
and footnotes required by generally accepted accounting principles for complete 
financial statements.                                                           

The financial information furnished herein reflects all adjustments   
consisting of normal recurring accruals that, in the opinion of management, are 
necessary for a fair presentation of the results for the interim period. The    
results of operations for the nine-month period ended December 28, 1997 are not 
necessarily indicative of the results to be expected for the fiscal year ending 
March 29, 1998. For further information, refer to the consolidated financial    
statements and notes thereto included in Bluegreen Corporation's (the Company's)
Annual Report to Shareholders for the fiscal year ended March 30, 1997.         

Organization                                                                

   The Company is a national leisure and lifestyle product company operating
predominantly in the southeastern, southwestern and midwestern United States.   
The Company's primary business is (i) the acquisition and development of        
timeshare properties which are sold in weekly intervals (Resorts Division) and  
(ii) the acquisition, development and sale of residential land (Land Division)  
or residential home/lot packages (Communities Division). The Company offers     
financing to its Resort, Land and Communities product purchasers.               

Principles of Consolidation                                                 

     The condensed consolidated financial statements include the accounts of the
Company, all of its wholly-owned subsidiaries and entities in which the Company 
holds a controlling financial interest. All significant intercompany            
transactions are eliminated.                                                    

Use of Estimates                                                            

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

Earnings (Loss) Per Common Share                                            

   In February, 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per       
Share", which became effective for the Company's quarter ended December 28,     
1997. Basic earnings (loss) per common share is computed by dividing net income 
(loss) by the weighted average number of common shares outstanding. Diluted     
earnings (loss) per common share is computed in the same manner as basic        
earnings per share, but also gives effect to all dilutive stock options using   
the treasury stock method and includes an adjustment, if dilutive, to both net  
income and shares outstanding as if the Company's 8.00% convertible subordinated
notes payable and 8.25% convertible subordinated debentures were converted into 
common stock at the beginning of the earliest period reported or the date of    
issuance, if later. The earnings (loss) per common share and weighted average   
number of common and common equivalent shares for the nine-month period ended   
December 29, 1996 have been restated in accordance with SFAS No. 128.           

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BLUEGREEN CORPORATION 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The following table sets forth the computation of basic and diluted   
earnings (loss) per share:                                                      

                                                        [Enlarge/Download Table]

                                                                  NINE MONTHS ENDED     
                                                             ---------------------------
                                                             DECEMBER 29,   DECEMBER 28,
                                                                 1996           1997    
                                                             ------------   ------------
                                                                                        
Numerator:                                                                              
  Numerator for basic earnings (loss) per share -- net                                  
     income (loss)..........................................   $(3,528)       $ 6,984   
  Effect of dilutive securities (net of tax effects):                                   
     8.25% convertible subordinated debentures..............        --          1,277   
     8.00% convertible subordinated notes payable...........        --             85   
                                                               -------        -------   
                                                                    --          1,362   
                                                               -------        -------   
  Numerator for diluted earnings (loss) per share -- net                                
     income (loss) after assumed conversions................   $(3,528)       $ 8,346   
                                                               =======        =======   
Denominator:                                                                            
  Denominator for basic earnings (loss) per                                             
     share -- weighted-average shares.......................    20,372         20,193   
  Effect of dilutive securities:                                                        
     Stock options..........................................        --            360   
     8.25% convertible subordinated debentures..............        --          4,216   
     8.00% convertible subordinated notes payable...........        --            698   
                                                               -------        -------   
  Dilutive potential common shares..........................        --          5,274   
                                                               -------        -------   
  Denominator for diluted earnings (loss) per                                           
     share -- adjusted weighted-average shares and assumed                              
     conversions............................................    20,372         25,467   
                                                               =======        =======   
  Basic earnings (loss) per share...........................   $ (0.17)       $  0.35   
                                                               =======        =======   
  Diluted earnings (loss) per share.........................   $ (0.17)       $  0.33   
                                                               =======        =======   

New Pronouncements                                                          

     In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
and SFAS No. 131 "Disclosure about Segments of an Enterprise and Related        
Information" which are effective for fiscal years beginning after December 15,  
1997. Accordingly, the Company plans to adopt SFAS No. 130 and SFAS No. 131 with
the fiscal year beginning March 30, 1998. SFAS No. 130 and SFAS No. 131 do not  
have any impact on the financial results or financial condition of the Company, 
but will result in the disclosure of the components of comprehensive income and 
in certain changes in required disclosures of segment information.              

Reclassifications                                                           

Certain prior period amounts have been reclassified to conform to the 
current period presentation                                                     

2. ACQUISITION                                                                  

Effective September 30, 1997, a wholly-owned subsidiary of the Company
acquired all of the issued and outstanding common stock of RDI Group Inc. and   
Resort Title Agency, Inc. (collectively "RDI") for a purchase price of $7.5     
million consisting of $6 million cash and a $1.5 million, 9% promissory note due
October 3, 1999. The acquisition was accounted for using the purchase method of 
accounting and, accordingly, the results of operations of RDI have been included
in the Company's condensed consolidated                                         

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BLUEGREEN CORPORATION 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

financial statements from September 30, 1997. As the net assets acquired from   
RDI equaled the purchase price, no goodwill was recognized in connection with   
the acquisition of RDI.                                                         

     The Company financed the cash portion of the purchase price pursuant to the
issuance of two, 8% convertible promissory notes in the aggregate principal     
amount of $6 million (the Notes) to a member of the Board of Directors of the   
Company (the Board) and an affiliate of a Board member. The Notes, which were   
executed on September 11, 1997, are due on September 11, 2002, and are          
convertible into the Company's common stock at a conversion price of $3.92 per  
share, subject to adjustment. Pursuant to a Subordination Agreement executed by 
each of the holders of the Notes, the rights of the holders of the Notes are    
subordinated to the Senior Secured Notes due 2008 of the Company to the same    
extent that the Public Debentures are subordinated to such Senior Secured Notes.

    Headquartered in Fort Myers, Florida, RDI was privately-held and presently
owns timeshare resorts in Orlando, Florida and Wisconsin Dells, Wisconsin, as   
well as a points-based vacation club. In addition, RDI manages approximately 30 
vacation ownership resorts, located in the southeastern sun-belt states, with a 
member base of approximately 60,000.                                            

     The following pro forma financial information presents the combined results
of operations of the Company and RDI as if the acquisition had occurred on April
1, 1996, after giving effect to certain adjustments, including increased        
interest expense on debt related to the acquisition, and related income tax     
effects. The pro forma financial information does not necessarily reflect the   
results of operations that would have occurred had the Company and RDI          
constituted a single entity during such periods.                                

                                                                [Download Table]

                                                         NINE MONTHS ENDED          
                                               -------------------------------------
                                               DECEMBER 29, 1996   DECEMBER 28, 1997
                                               -----------------   -----------------
                                                (UNAUDITED -- AMOUNTS IN THOUSANDS, 
                                                      EXCEPT PER SHARE DATA)        
                                                                                    
Net revenues..................................     $102,859            $146,380     
                                                   ========            ========     
Net income (loss).............................       (4,311)              8,686     
                                                   ========            ========     
Earnings (loss) per share:                                                          
  Basic.......................................     $  (0.21)           $   0.43     
                                                   ========            ========     
  Diluted.....................................     $  (0.21)           $   0.39     
                                                   ========            ========     

3. JOINT VENTURE                                                                

     On December 15, 1997, the Company invested $250,000 of capital in Bluegreen
Properties N.V. (BPNV), an entity organized in Aruba that previously had no     
operations, in exchange for a 50% ownership interest. Concurrently, the Company 
and an affiliate of the other 50% owner of BPNV (who is not an affiliate of the 
Company), each loaned BPNV $3 million pursuant to promissory notes due on       
December 15, 2000 and bearing interest at the prime rate plus 1%. BPNV then     
acquired from a third party approximately 8,000 unsold timeshare intervals at   
the La Cabana All-Suite Beach Resort, a fully developed timeshare resort in     
Oranjestad, Aruba in exchange for $6 million cash and the assumption of         
approximately $16.6 million of interest-free debt from a bank in Aruba. The debt
was recorded by BPNV at approximately $12.5 million, which reflects a discount  
based on an imputed interest rate of 12%. The debt is to be repaid over five    
years through release-prices as intervals are sold, subject to minimum monthly  
payments of approximately $278,000.                                             

In addition to its 50% ownership interest, the Company will receive a 
quarterly management fee from BPNV equal to 7% of BPNV's net sales in exchange  
for the Company's involvement in the day-to-day operations of BPNV. The Company 
also has majority control of BPNV's board of directors and has a controlling    
financial interest in BPNV. Therefore, the accounts of BPNV are included in the 
Company's                                                                       

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

condensed consolidated financial statements as of December 28, 1997. The        
operations of BPNV for the 13 days ended December 28, 1997 were not significant.

4. INVENTORY                                                                    

The Company's inventories by geographic region, which consist of real 
estate acquired for sale, are summarized below (amounts in thousands).          

                                                        [Enlarge/Download Table]

                                                                 DECEMBER 28, 1997             
                                                     ------------------------------------------
GEOGRAPHIC REGION                                     LAND     RESORTS   COMMUNITIES    TOTAL  
-----------------                                    -------   -------   -----------   --------
                                                                                               
Southeast........................................... $12,520   $20,403     $3,588      $ 36,511
Southwest...........................................  24,902        --         --        24,902
Midwest.............................................   4,548    18,118         --        22,666
Caribbean...........................................      --    18,447         --        18,447
Rocky Mountains.....................................   3,575        --         --         3,575
Mid-Atlantic........................................   3,327        --         --         3,327
West................................................   2,420        --         --         2,420
Northeast...........................................     397        --         --           397
Canada..............................................      52        --         --            52
                                                     -------   -------     ------      --------
          Totals.................................... $51,741   $56,968     $3,588      $112,297
                                                     =======   =======     ======      ========

During 1996 management changed its focus for marketing certain of the 
Company's inventories in conjunction with a plan to accelerate the sale of      
properties managed under the Communities Division and certain properties managed
under the Land Division. This decision was largely the result of management's   
focus on expansion of the Company's Resorts Division and Land Division in       
certain locations. Because of the strategy to accelerate sales, management      
determined that inventories with a carrying value of $23.2 million should be    
written-down by $8.2 million during the nine months ended December 29, 1996. The
$8.2 million in provisions included $4.8 million for certain Communities        
Division inventories and $3.4 million for certain Land Division inventories.    
Management adopted a plan to aggressively pursue opportunities for the bulk sale
of a portion of the written-down assets and has reduced retail prices on others 
to increase sales activity. The Company's Communities Division primarily        
consists of three North Carolina properties acquired in 1988. The Company began 
marketing home/lot packages in 1995 to accelerate sales at the properties.      
However, the projects had been slow moving and yielded low gross profits and    
little to no operating profits. A majority of the Land Division parcels subject 
to write-down were scattered lots acquired through foreclosure or deedback in   
lieu of foreclosure, odd lots from former projects and properties located in    
parts of the country where the Company has no plans for expansion. As of        
December 28, 1997, approximately 73% (measured by historical cost basis) of the 
inventories subject to write-down had been sold.                                

5. CREDIT FACILITY                                                              

On December 15, 1997, the Company entered into a short term credit    
facility. The credit facility bears interest at the greater of 10% or the prime 
rate plus 2.75% and is due no later than 150 days from the first advance on the 
line (December 18, 1997). The Company is required to pay a commitment fee equal 
to 1% of each advance. Through December 28, 1997, the Company had borrowed $8   
million under the credit facility.                                              

6. QUARTERLY FINANCIAL INFORMATION                                              

  Summarized quarterly financial information for the three quarters in the
period ended December 31, 1997 is presented below (in 000's, except for per     
share information).                                                             

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                                    THREE MONTHS ENDED            
                                                         -----------------------------------------
                                                         JUNE 29,    SEPTEMBER 28,    DECEMBER 28,
                                                           1997          1997             1997    
                                                         --------    -------------    ------------
                                                                                                  
Sales of real estate.................................... $33,091        $45,321         $44,490   
Gross profit............................................  17,935         23,903          25,787   
Net income..............................................   1,739          2,770           2,475   
Earnings per common share:                                                                        
  Basic.................................................    0.09           0.14            0.12   
  Diluted...............................................    0.08           0.13            0.11   

7. LITIGATION                                                                   

 The Company is party to certain ordinary course litigation. Although no
assurances can be given, in the opinion of management, based on the advice of   
counsel, the potential outcome is not expected to have a materially adverse     
effect on the operations or financial condition of the Company.                 

  On November 26, 1997, an action was filed in the U.S. District Court for
the Eastern District of Tennessee against the Company. The complaint purports to
be brought on behalf of a class of current and former timeshare sales           
representative employees of the Company. It asserts claims for violations of the
minimum wage and overtime provisions of the Fair Labor Standards Act. The       
Company is in the early stages of evaluating this litigation's potential impact,
if any, on the Company, and accordingly cannot predict the outcome with any     
degree of certainty. Although no assurances can be given, the Company does not  
believe that any likely outcome will have a material adverse effect on the      
Company.                                                                        

8. SUPPLEMENTAL GUARANTOR INFORMATION                                           

  Under the terms of the Note Offering, all of the Company's subsidiaries,
with the exception of the Non-Guarantor Subsidiaries, as defined below, will    
fully and unconditionally guarantee, jointly and severally, the full and prompt 
payment of principal and interest on the Company's $110 million Senior Secured  
Notes due 2008 (the Notes), and the performance of all other obligations of the 
Company under the Notes and related indenture. The Non-Guarantor Subsidiaries   
are:                                                                            

Patten Receivables Finance Corporation III                    
Patten Receivables Finance Corporation VI                     
Bluegreen Land and Realty, Inc.                               
Patten Receivables Finance Corporation VII                    
Patten Receivables Finance Corporation VIII                   
CDP Realty, Inc.                                              
Patten Receivables Finance Corporation IX                     
Patten Receivables Finance Corporation X                      
Bluegreen Receivables Finance Corporation I                   
BXG Realty Tenn, Inc.                                         
Bluegreen Properties N.V.                                     
Resort Title Agency, Inc.                                     
Blue Ridge Public Service Company                             
RDI Vacation Club, Inc.                                       
Vacation Trust, Inc.                                          

    Management has determined that separate, full financial statements are not
required and, accordingly, are not provided. Supplemental financial information 
for Bluegreen Corporation, its combined non-guarantor subsidiaries and its      
combined guarantor subsidiaries is presented below:                             

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

CONDENSED CONSOLIDATING BALANCE SHEET AT DECEMBER 28, 1997
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                      COMBINED       COMBINED                              
                                        BLUEGREEN   NON-GUARANTOR   GUARANTOR                              
                                       CORPORATION  SUBSIDIARIES   SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                       -----------  -------------  ------------  ------------  ------------
                                                                                                           
ASSETS                                                                                                     

Cash and cash equivalents............   $ 11,490       $ 3,915       $  9,719      $     --      $ 25,124  
Contracts receivable, net............        296            --         12,350            --        12,646  
Notes receivable, net................         --         4,211         68,904            --        73,115  
Investment in securities.............         --        10,590             10            --        10,600  
Inventory, net.......................     14,315        18,447         79,535            --       112,297  
Property and equipment, net..........      2,726            77          8,344            --        11,147  
Investments in subsidiaries..........      7,947            --             --        (7,947)           --  
Debt issuance costs, net.............        859             4            920            --         1,783  
Intercompany receivable..............      2,875         5,953             --        (8,828)           --  
Other assets.........................      4,084         1,703          5,467        (3,158)        8,096  
                                        --------       -------       --------      --------      --------  
          Total assets...............   $ 44,592       $44,900       $185,249      $(19,933)     $254,808  
                                        ========       =======       ========      ========      ========  

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                                             

LIABILITIES:                                                                                               
Accounts payable.....................   $  2,117       $    85       $  2,546      $   (157)     $  4,591  
Intercompany payable.................         --            --          8,828        (8,828)           --  
Deferred income......................        240            --          8,082            --         8,322  
Accrued liabilities and other........      1,082         3,584          9,435            --        14,101  
Lines-of-credit and notes payable....      4,848        18,476         41,585        (3,000)       61,909  
Deferred income taxes................      8,242            --         (1,530)           --         6,712  
Receivable-backed notes payable......         --         3,536         47,999            --        51,535  
8.00% convertible notes payable to                                                                         
  related parties....................      6,000            --             --            --         6,000  
8.25% convertible subordinated                                                                             
  debentures.........................     34,739            --             --            --        34,739  
                                        --------       -------       --------      --------      --------  
          Total liabilities..........     57,268        25,681        116,945       (11,985)      187,909  
Minority interest....................         --            --             --           250           250  

SHAREHOLDERS' EQUITY (DEFICIT)                                                                             

Preferred stock......................         --            --             --            --            --  
Common stock.........................        208             6              3            (9)          208  
Capital-in-excess of par value.......     71,844           495          8,001        (8,496)       71,844  
Retained earnings (accumulated                                                                             
  deficit)...........................    (83,339)       18,553         60,300           307        (4,179) 
Treasury stock.......................     (1,389)           --             --            --        (1,389) 
Net unrealized gains.................         --           165             --            --           165  
                                        --------       -------       --------      --------      --------  
          Total shareholders' equity                                                                       
            (deficit)................    (12,676)       19,219         68,304        (8,198)       66,649  
                                        --------       -------       --------      --------      --------  
          Total liabilities and                                                                            
            shareholders' equity                                                                           
            (deficit)................   $ 44,592       $44,900       $185,249      $(19,933)     $254,808  
                                        ========       =======       ========      ========      ========  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                         NINE MONTHS ENDED DECEMBER 29, 1996                   
                                       ------------------------------------------------------------------------
                                                       COMBINED        COMBINED                                
                                        BLUEGREEN    NON-GUARANTOR    GUARANTOR                                
                                       CORPORATION   SUBSIDIARIES    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                       -----------   -------------   ------------   ------------   ------------
                                                                                                               
REVENUES:                                                                                                      
Sales of real estate.................    $21,983         $ --          $59,729        $    --        $81,712   
Management fee revenue...............      6,431           --               --         (6,431)            --   
Other resort services revenue........         --           --               --             --             --   
Interest income and other............          5          955            3,617             --          4,577   
                                         -------         ----          -------        -------        -------   
                                          28,419          955           63,346         (6,431)        86,289   
                                         -------         ----          -------        -------        -------   
COST AND EXPENSES:                                                                                             
  Cost of real estate sold...........     11,394           --           29,990             --         41,384   
  Cost of other resort services......         --           --               --             --             --   
  Management fees....................         --           96            6,335         (6,431)            --   
  Selling, general and administrative                                                                          
     expense.........................     16,583           --           21,468             --         38,051   
  Interest expense...................        243          410            3,263             --          3,916   
  Provisions for losses..............      4,426           --            4,675             --          9,101   
                                         -------         ----          -------        -------        -------   
                                          32,646          506           65,731         (6,431)        92,452   
                                         -------         ----          -------        -------        -------   
Income (loss) from operations........     (4,227)         449           (2,385)            --         (6,163)  
Other income (expense)...............          9          404             (229)            --            184   
                                         -------         ----          -------        -------        -------   
Income (loss) before income taxes....     (4,218)         853           (2,614)            --         (5,979)  
Provision (benefit) for income                                                                                 
  taxes..............................     (1,687)         341           (1,105)            --         (2,451)  
                                         -------         ----          -------        -------        -------   
          Net income (loss)..........    $(2,531)        $512          $(1,509)       $    --        $(3,528)  
                                         =======         ====          =======        =======        =======   

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                         NINE MONTHS ENDED DECEMBER 28, 1997                   
                                       ------------------------------------------------------------------------
                                                       COMBINED        COMBINED                                
                                        BLUEGREEN    NON-GUARANTOR    GUARANTOR                                
                                       CORPORATION   SUBSIDIARIES    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                       -----------   -------------   ------------   ------------   ------------
                                                                                                               
REVENUES:                                                                                                      
  Sales of real estate...............    $21,391        $   --         $101,511       $     --       $122,902  
  Management fee revenue.............     10,978            --               --        (10,978)            --  
  Other resort services revenue......         --           202            1,383             --          1,585  
  Interest income and other..........        356         1,513            5,455             --          7,324  
                                         -------        ------         --------       --------       --------  
                                          32,725         1,715          108,349        (10,878)       131,811  
COST AND EXPENSES:                                                                                             
  Cost of real estate sold...........     10,599            --           44,678             --         55,277  
  Cost of other resort services......         --           120            1,389             --          1,509  
  Management fees....................         --           171           10,807        (10,978)            --  
  Selling, general and administrative                                                                          
     expense.........................     18,883            --           36,643             --         55,526  
  Interest expense...................      2,730           331            3,451             --          6,512  
  Provision for losses...............         --            --            1,349             --          1,349  
                                         -------        ------         --------       --------       --------  
                                          32,212           622           98,317        (10,978)       120,173  
                                         -------        ------         --------       --------       --------  
  Income from operations.............        513         1,093           10,032             --         11,638  
  Other income (expense).............        120             9               (9)            --            120  
                                         -------        ------         --------       --------       --------  
  Income before income taxes.........        633         1,102           10,023             --         11,758  
  Provision for income taxes.........        253           441            4,080             --          4,774  
                                         -------        ------         --------       --------       --------  
          Net income.................    $   380        $  661         $  5,943       $     --       $  6,984  
                                         =======        ======         ========       ========       ========  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                             NINE MONTHS ENDED DECEMBER 29, 1996           
                                                  ---------------------------------------------------------
                                                                  COMBINED        COMBINED                 
                                                   BLUEGREEN    NON-GUARANTOR    GUARANTOR                 
                                                  CORPORATION   SUBSIDIARIES    SUBSIDIARIES   CONSOLIDATED
                                                  -----------   -------------   ------------   ------------
                                                                                                           
OPERATING ACTIVITIES:                                                                                      
  Net income (loss).............................    $(2,531)       $   512        $ (1,509)      $ (3,528) 
  Depreciation and amortization.................        429              4             374            807  
  Loss on REMIC transaction.....................         --             96              --             96  
  Gain on sale of property and equipment........         --             --             (44)           (44) 
  Provisions for losses.........................      4,426             --           4,675          9,101  
  Interest accretion on investment in                                                                      
     securities.................................         --           (745)             --           (745) 
  Proceeds from borrowings collateralized by                                                               
     notes......................................         --             --          14,004         14,004  
  Payments on borrowings collateralized by                                                                 
     notes......................................         --         (2,132)        (11,928)       (14,060) 
  Benefit for deferred income taxes.............     (1,687)           341          (1,105)        (2,451) 
(Increase) decrease in operating assets:                                                                   
  Contracts receivable..........................        387             --           3,923          4,310  
  Inventory.....................................       (872)            --          (2,570)        (3,442) 
  Other assets..................................        (72)           (98)           (404)          (574) 
  Intercompany receivable/payable...............     10,383          1,045         (11,428)            --  
  Notes receivable..............................         --             18             837            855  
Increase (decrease) in operating liabilities:                                                              
  Accounts payable, accrued liabilities and                                                                
     other......................................     (4,858)           193           1,228         (3,437) 
                                                    -------        -------        --------       --------  
  Net cash provided (used) by operating                                                                    
     activities.................................      5,605           (766)         (3,947)           892  
                                                    -------        -------        --------       --------  
INVESTING ACTIVITIES:                                                                                      
  Purchases of property and equipment...........       (548)            --            (450)          (998) 
  Sales of property and equipment...............         --             --             586            586  
  Cash received from investment in securities...         --          1,114              --          1,114  
                                                    -------        -------        --------       --------  
Net cash flow (used) provided by investing                                                                 
  activities....................................       (548)         1,114             136            702  
                                                    -------        -------        --------       --------  
FINANCING ACTIVITIES:                                                                                      
  Proceeds from issuance of 8% convertible notes                                                           
     payable....................................         --             --              --             --  
  Proceeds from borrowings under line-of-credit                                                            
     facilities and other notes payable.........        606             --          11,340         11,946  
  Payments under line-of-credit facilities and                                                             
     other notes payable........................     (1,874)            --          (7,003)        (8,877) 
  Payment of debt issuance costs................         --             --            (206)          (206) 
  Payments for treasury stock...................     (1,245)            --              --         (1,245) 
  Proceeds from exercise of employee stock                                                                 
     options....................................        115             --              --            115  
                                                    -------        -------        --------       --------  
  Net cash flow (used) provided by financing                                                               
     activities.................................     (2,398)            --           4,131          1,733  
                                                    -------        -------        --------       --------  
  Net increase in cash and cash equivalents.....      2,659            348             320          3,327  
  Cash and cash equivalents at beginning of                                                                
     period.....................................      4,302          3,103           3,984         11,389  
                                                    -------        -------        --------       --------  
  Cash and cash equivalents at end of period....      6,961          3,451           4,304         14,716  
  Restricted cash and cash equivalents at end of                                                           
     period.....................................     (1,137)        (3,451)         (4,029)        (8,617) 
                                                    -------        -------        --------       --------  
  Unrestricted cash and cash equivalents at end                                                            
     of period..................................    $ 5,824        $    --        $    275       $  6,099  
                                                    =======        =======        ========       ========  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS 
(IN THOUSANDS)
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                             NINE MONTHS ENDED DECEMBER 28, 1997           
                                                  ---------------------------------------------------------
                                                                  COMBINED        COMBINED                 
                                                   BLUEGREEN    NON-GUARANTOR    GUARANTOR                 
                                                  CORPORATION   SUBSIDIARIES    SUBSIDIARIES   CONSOLIDATED
                                                  -----------   -------------   ------------   ------------
                                                                                                           
OPERATING ACTIVITIES:                                                                                      
  Net income....................................    $   380        $   661        $  5,943       $  6,984  
  Depreciation and amortization.................        520             --             825          1,345  
  Loss on REMIC transaction.....................         --             --              --             --  
  Gain on sale of property and equipment........         --             --              --             --  
  Provisions for losses.........................         --             --           1,349          1,349  
  Interest accretion on investment in                                                                      
     securities.................................         --         (1,047)             --         (1,047) 
  Proceeds from borrowings collateralized by                                                               
     notes......................................         --          1,471          25,024         26,495  
  Payments on borrowings collateralized by                                                                 
     notes......................................         --         (1,449)         (9,991)       (11,440) 
  Provision (benefit) for deferred income                                                                  
     taxes......................................      5,399             --            (625)         4,774  
(Increase) decrease in operating assets:                                                                   
  Contracts receivable..........................        888             --             774          1,662  
  Inventory.....................................        251         (6,000)          9,693          3,944  
  Other assets..................................     (2,059)        (1,299)          1,296         (2,062) 
  Intercompany receivable/payable...............     10,597         (1,545)         (9,052)            --  
  Notes receivable..............................         --          1,377         (23,814)       (22,437) 
Increase (decrease) in operating liabilities:                                                              
  Accounts payable, accrued liabilities and                                                                
     other......................................     (8,534)           361          12,704          4,531  
  Net cash provided (used) by operating                                                                    
     activities.................................      7,442         (7,470)         14,126         14,098  
INVESTING ACTIVITIES:                                                                                      
  Acquisition of RDI Group, Inc. and Resort                                                                
     Title Agency, Inc., net of cash acquired...     (6,197)            --           3,776         (2,421) 
  Purchase of property and equipment............       (771)           (77)         (2,061)        (2,909) 
  Sales of property and equipment...............         --             --             225            225  
  Cash received from investment in securities...         --          1,524              --          1,524  
                                                    -------        -------        --------       --------  
Net cash flow (used) provided by investing                                                                 
  activities....................................     (6,968)         1,447           1,940         (3,581) 
                                                    -------        -------        --------       --------  
FINANCING ACTIVITIES:                                                                                      
  Proceeds from issuance of 8% convertible notes                                                           
     payable....................................      6,000             --              --          6,000  
  Proceeds from borrowings under line-of-credit                                                            
     facilities and other notes payable.........      6,998          6,000          23,138         36,136  
  Payments under line-of-credit facilities and                                                             
     other notes payable........................     (5,578)            --         (32,953)       (38,531) 
  Payment of debt issuance costs................        (62)            (4)           (834)          (900) 
  Payments for treasury stock...................        (19)           500            (500)           (19) 
  Proceeds from exercise of employee stock                                                                 
     options....................................        324             --              --            324  
                                                    -------        -------        --------       --------  
  Net cash flow provided (used) by financing                                                               
     activities.................................      7,663          6,496         (11,149)         3,010  
                                                    -------        -------        --------       --------  
  Net increase in cash and cash equivalents.....      8,137            473           4,917         13,527  
  Cash and cash equivalents at beginning of                                                                
     period.....................................      3,353          3,442           4,802         11,597  
                                                    -------        -------        --------       --------  
  Cash and cash equivalents at end of period....     11,490          3,915           9,719         25,124  
  Restricted cash and cash equivalents at end of                                                           
     period.....................................       (210)        (3,902)         (9,188)       (13,300) 
                                                    -------        -------        --------       --------  
  Unrestricted cash and cash equivalents at end                                                            
     of period..................................    $11,280        $    13        $    531       $ 11,824  
                                                    =======        =======        ========       ========  

F-41

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

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

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

TABLE OF CONTENTS 

                                                                [Download Table]

                                            PAGE
                                            ----
                                                
Available Information.....................  iii 
Incorporation of Certain Documents by           
  Reference...............................   iv 
Prospectus Summary........................    1 
Risk Factors..............................   15 
Use of Proceeds...........................   27 
Capitalization............................   28 
Pro Forma Financial Information...........   30 
Selected Consolidated Financial Data......   33 
Management's Discussion and Analysis of         
  Results of Operations and Financial           
  Condition...............................   35 
Business..................................   49 
Management................................   73 
Certain Relationships and Related               
  Transactions............................   77 
Principal Stockholders....................   79 
Description of Notes......................   81 
The Exchange Offer........................  110 
Description of Other Indebtedness.........  120 
Book-Entry, Delivery and Form.............  123 
Certain U.S. Federal Income Tax                 
  Considerations..........................  124 
Plan of Distribution......................  124 
Legal Matters.............................  126 
Experts...................................  126 
Index to Consolidated Financial                 
  Statements..............................  F-1 

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

$110,000,000

(BLUEGREEN CORPORATION LOGO)

10 1/2% SENIOR SECURED
NOTES DUE 2008, SERIES B

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

PROSPECTUS
--------------------

OFFER TO EXCHANGE UP TO $110,000,000 OF 10 1/2% SENIOR SECURED NOTES DUE 2008,  
SERIES B WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS        
AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING 10 1/2% SENIOR SECURED NOTES DUE    
2008, OF WHICH $110,000,000 IN PRINCIPAL AMOUNT IS OUTSTANDING ON THE DATE      
HEREOF.                                                                         

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

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LETTER OF TRANSMITTAL 

TO TENDER FOR EXCHANGE

10 1/2% SENIOR SECURED NOTES DUE 2008 

BLUEGREEN CORPORATION 
PURSUANT TO PROSPECTUS

DATED JUNE 19, 1998 

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON JULY 23, 1998, UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY IN
ITS SOLE DISCRETION, TENDERS OF 10 1/2% SENIOR SECURED NOTES DUE 2008 MAY ONLY
BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND HEREIN.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: 

SUNTRUST BANK, CENTRAL FLORIDA, 
NATIONAL ASSOCIATION

                                                        [Enlarge/Download Table]
                                                                                                                
              By Registered or Certified Mail:                                  By Overnight Courier:           
              SunTrust Bank, Central Florida,                              SunTrust Bank, Central Florida,      
                    National Association                                         National Association           
        c/o First Chicago Trust Company of New York                  c/o First Chicago Trust Company of New York
                      Corporate Trust                                              Corporate Trust              
                         8th Floor                                                    8th Floor                 
                       14 Wall Street                                               14 Wall Street              
                  New York, New York 10005                                     New York, New York 10005         

                 By Hand before 4:30 P.M.:                                          By Facsimile:               
              SunTrust Bank, Central Florida,                              SunTrust Bank, Central Florida,      
                    National Association                                         National Association           
                  225 East Robinson Street                                     225 East Robinson Street         
                         Suite 250                                                    Suite 250                 
                   Orlando, Florida 32801                                       Orlando, Florida 32801          
                 Attention: Lisa Derryberry                                         (407) 237-5299              
                                                                              Attention: Lisa Derryberry        
                                                                       Confirm by Telephone to: Lisa Derryberry 
                                                                                    (407) 237-4791              
------------------------------------------------------------------------------------------------------          
                              DESCRIPTION OF OUTSTANDING NOTES TENDERED                                         
------------------------------------------------------------------------------------------------------          
            NAME(S) AND ADDRESS(ES) OF HOLDER(S)                     OUTSTANDING NOTES TENDERED                 
       (PLEASE FILL IN, IN BLANK, EXACTLY AS NAME(S)                (ATTACH ADDITIONAL SCHEDULE                 
              APPEAR(S) ON OUTSTANDING NOTES)                              IF NECESSARY)                        
------------------------------------------------------------------------------------------------------          
                            (1)                                       (2)                  (3)                  
                                                                  CERTIFICATE        TOTAL PRINCIPAL            
                                                                   NUMBER(S)            AMOUNT OF               
                                                                 (IF ENCLOSING         OUTSTANDING              
                                                                 CERTIFICATES)       NOTES TENDERED             
------------------------------------------------------------------------------------------------------          

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

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

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

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

                                                                     TOTAL                                      
------------------------------------------------------------------------------------------------------          

   THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE PROSPECTUS, DATED JUNE 19, 1998
(THE "PROSPECTUS"), OF BLUEGREEN CORPORATION, A MASSACHUSETTS CORPORATION (THE  
"COMPANY"), AND THIS LETTER OF TRANSMITTAL RELATING TO THE OFFER (THE "EXCHANGE 
OFFER") OF THE COMPANY, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH  
IN THE PROSPECTUS AND HEREIN AND THE INSTRUCTIONS HERETO, TO EXCHANGE $1,000    
PRINCIPAL AMOUNT OF ITS 10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES B (THE    
"EXCHANGE NOTES") FOR EACH $1,000 PRINCIPAL AMOUNT OF ITS OUTSTANDING 10 1/2%   
SENIOR SECURED NOTES DUE 2008 (THE "OUTSTANDING NOTES"), OF WHICH $110 MILLION  
AGGREGATE PRINCIPAL AMOUNT IS OUTSTANDING. THE MINIMUM PERMITTED TENDER IS      
$1,000 PRINCIPAL AMOUNT OF OUTSTANDING NOTES, AND ALL OTHER TENDERS MUST BE IN  
INTEGRAL MULTIPLES OF $1,000.                                                   

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  DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION BY
FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.  
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ         
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.                       

  The Exchange Offer will expire at 5:00 p.m., New York City time, on July
23, 1998 (the "Expiration Date"), unless extended by the Company in its sole    
discretion, in which case the term Expiration Date shall mean the latest date   
and time to which the Exchange Offer is extended.                               

   HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER THEIR OUTSTANDING NOTES TO THE EXCHANGE AGENT
PRIOR TO 5:00 P.M. ON THE EXPIRATION DATE.                                      

    This Letter of Transmittal should be used only to exchange the Outstanding
Notes, pursuant to the Exchange Offer as set forth in the Prospectus.           

     This Letter of Transmittal is to be used (a) if Outstanding Notes are to be
physically delivered to the Exchange Agent or (b) if delivery of Outstanding    
Notes is to be made by book-entry transfer to the account maintained by the     
Exchange Agent at The Depository Trust Company ("DTC" or the "Book-Entry        
Transfer Facility") pursuant to the procedures set forth in the Prospectus under
the caption "The Exchange Offer -- Procedures for Tendering." Delivery of       
documents to the Book-Entry Transfer Facility does not constitute delivery to   
the Exchange Agent.                                                             

 Holders whose Outstanding Notes are not available or who cannot deliver
their Outstanding Notes and all other documents required hereby to the Exchange 
Agent by 5:00 p.m. on the Expiration Date nevertheless may tender their         
Outstanding Notes in accordance with the guaranteed delivery procedures set     
forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed     
Delivery Procedures." See Instruction 1.                                        

THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF    
OUTSTANDING NOTES FOR EXCHANGE BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY 
JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT  
BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.                            

 All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Prospectus.                                    

    HOLDERS WHO WISH TO EXCHANGE THEIR OUTSTANDING NOTES MUST COMPLETE COLUMNS
(1) THROUGH (3) IN THE BOX ENTITLED "DESCRIPTION OF OUTSTANDING NOTES TENDERED" 
ON THE PRIOR PAGE, COMPLETE THE BOX BELOW ENTITLED "METHOD OF DELIVERY" AND SIGN
WHERE INDICATED BELOW.                                                          

     THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OUTSTANDING
NOTES TENDERED" AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE  
TENDERED THE OUTSTANDING NOTES AND MADE CERTAIN REPRESENTATIONS DESCRIBED IN THE
PROSPECTUS AND HEREIN.                                                          

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METHOD OF DELIVERY
[ ]  CHECK HERE IF CERTIFICATE FOR TENDERED OUTSTANDING NOTES ARE ENCLOSED      
HEREWITH.                                                             

[ ]  CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY 
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:              

Name of Tendering Institution:                                          
                                  ----------------------------------------------

Account Number:                   Transaction Code Number:              
                   -------------                              ------------------

Principal Amount of Tendered Notes:                                           

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

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

[ ]  CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A 
 NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (SEE INSTRUCTIONS 1 AND 4):                    

Name(s) of Registered Holder(s):                                        
                                    --------------------------------------------

Window Ticket Number (if any):                                          
                                  ----------------------------------------------

Date of Execution of Notice of Guaranteed Delivery:                     
                                                        ------------------------

Name of Eligible Institution which Guaranteed Delivery:                 
                                                            --------------------

 IF DELIVERED BY THE BOOK-ENTRY TRANSFER FACILITY, PROVIDE THE FOLLOWING
INFORMATION:                                                          

[ ]  The Depository Trust Company                                       

Account Number:                  Transaction Code Number:               
                   -------------                             -------------------

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

[ ]  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL   
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS  
THERETO.                                                              

  PLEASE NOTE: THE COMPANY HAS AGREED THAT, FOR A PERIOD OF DAYS AFTER THE
 EXPIRATION DATE, IT WILL MAKE COPIES OF THE PROSPECTUS AVAILABLE TO ANY
PARTICIPATING BROKER-DEALER FOR USE IN CONNECTION WITH RESALES OF THE 
EXCHANGE NOTES.                                                       

Name:                                                                   
         -----------------------------------------------------------------------

Address:                                                                
            --------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW 
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY 

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Ladies and Gentlemen:                                                           

 Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Outstanding   
Notes indicated in the box entitled "Description of Outstanding Notes Tendered."
Subject to, and effective upon, the acceptance for exchange of the Outstanding  
Notes tendered hereby, the undersigned hereby irrevocably sells, assigns and    
transfers to or upon the order of the Company all right, title and interest in  
and to such Outstanding Notes, and hereby irrevocably constitutes and appoints  
the Exchange Agent the true and lawful agent and attorney-in-fact of the        
undersigned (with full knowledge that said Exchange Agent also acts as the agent
of the Company and as Trustee under the Indenture governing the Outstanding     
Notes and the Exchange Notes) with respect to such Outstanding Notes, with full 
power of substitution (such power of attorney being deemed to be an irrevocable 
power coupled with an interest) to (a) deliver certificates representing such   
Outstanding Notes, and to deliver all accompanying evidences of transfer and    
authenticity to or upon the order of the Company upon receipt by the Exchange   
Agent, as the undersigned's agent, of the Exchange Notes to which the           
undersigned is entitled upon the acceptance by the Company of such Outstanding  
Notes for exchange pursuant to the Exchange Offer, (b) receive all benefits and 
otherwise to exercise all rights of beneficial ownership of such Outstanding    
Notes, all in accordance with the terms of the Exchange Offer, and (c) present  
such Outstanding Notes for transfer on the register for such Outstanding Notes, 
and receive all benefits and otherwise exercise all rights of beneficial        
ownership of such Notes, all in accordance with the terms of the Exchange Offer.

   The undersigned acknowledges that prior to this Exchange Offer, there has
been no public market for the Outstanding Notes or the Exchange Notes. If a     
market for the Exchange Notes should develop, the Exchange Notes could trade at 
a discount from their principal amount. The undersigned is aware that the       
Company does not intend to list the Exchange Notes on a national securities     
exchange and that there can be no assurance that an active market for the       
Exchange Notes will develop.                                                    

    If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of       
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes, it represents that the Outstanding Notes to be exchanged for Exchange    
Notes were acquired as a result of market-making activities or other trading    
activities and it acknowledges that it will deliver a prospectus in connection  
with any resale of such Exchange Notes; however, by so acknowledging and by     
delivering a prospectus, the undersigned will not be deemed to admit that it is 
an "underwriter" within the meaning of the Securities Act.                      

    THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF, HOLDERS OF THE OUTSTANDING NOTES IN ANY JURISDICTION IN WHICH  
THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH   
THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY  
PROVISION OF ANY APPLICABLE SECURITY LAW.                                       

  The undersigned represents that (a) it is not an "affiliate," as defined
under Rule 405 of the Securities Act, of the Company or any of the Subsidiary   
Guarantors (as defined in the Prospectus), (b) it is not engaged in, and does   
not intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution of the Exchange Notes, and (c) it is acquiring
the Exchange Notes in the ordinary course of business. In addition, the         
undersigned acknowledges that an person participating in the Exchange Offer for 
the purpose of distributing the Exchange Notes must, in the absence of an       
exemption therefrom, comply with the registration and prospectus deliver        
requirements of the Securities Act in connection with a secondary resale of the 
Exchange Notes and cannot rely on the position of the staff of the Securities   
and Exchange Commission enunciated in no action letters and failure to comply   
with such requirements in such instance could result in the undersigned         
incurring liability under the Securities Act for which the undersigned is not   
indemnified by the Company. The undersigned will, upon request, execute and     
deliver any additional documents deemed by the Exchange Agent or the Company to 
be necessary or desirable to complete the assignment, transfer and purchase of  
the Notes tendered hereby.                                                      

    The undersigned understands and acknowledges that the Company reserves the
right, in its sole discretion, the purchase or make offers for any Outstanding  
Notes that remain outstanding subsequent to the Expiration Date or to terminate 
the Exchange Offer and, to the extent permitted by applicable law, purchase     
Outstanding Notes in the open market, in privately negotiated transactions or   
otherwise. The terms of any such purchases or offers will differ from the terms 
of the Exchange Offer.                                                          

 The undersigned hereby represents and warrants that (a) the undersigned
accepts the terms and conditions of the Exchange Offer, (b) the undersigned has 
a net long position within the meaning of Rule 14e-4 under the Exchange Act     
("Rule 14e-4") equal to or greater than the principal amount of Outstanding     
Notes tendered hereby, (c) the tender of such Outstanding Notes complies with   
Rule 14e-4 (to the extent that Rule 14e-4 is applicable to such exchange), (d)  
the undersigned has full power and authority to tender, exchange, assign and    
transfer the Outstanding Notes tendered hereby, and (e) when the same are       
accepted for exchange by the Company, the Company will acquire good and         
unencumbered title thereto, free and clear of all liens, restrictions, charges  
and encumbrances and not subject to any adverse claim or                        

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right. The undersigned will, upon request, execute and deliver any additional   
documents deemed by the Exchange Agent or the Company to be necessary or        
desirable to complete the sale, assignment and transfer of the Outstanding Notes
tendered hereby.                                                                

The undersigned agrees that all authority conferred or agreed to be   
conferred by this Letter of Transmittal and every obligation of the undersigned 
hereunder shall be binding upon the successors, assigns, heirs, executors,      
administrators, trustees in bankruptcy and legal representatives of the         
undersigned and shall not be affected by, and shall survive, the death or       
incapacity of the undersigned. The undersigned also agrees that, except as      
stated in the Prospectus, the Outstanding Notes tendered hereby cannot be       
withdrawn.                                                                      

    The undersigned understands that tenders of the Outstanding Notes pursuant
to any one of the procedures described in the Prospectus under the caption "The 
Exchange Offer -- Procedures for Tendering" and in the instructions hereto will 
constitute a binding agreement between the undersigned and the Company in       
accordance with the terms and subject to the conditions of the Exchange Offer.  

     The undersigned understands that by tendering Outstanding Notes pursuant to
one of the procedures described in the Prospectus and the instructions thereto, 
the tendering holder will be deemed to have waived the right to receive any     
payment in respect of interest on the Outstanding Notes accrued up to the date  
of issuance of the Exchange Notes.                                              

   The undersigned recognizes that, under certain circumstances set forth in
the Prospectus, the Company may not be required to accept for exchange any of   
the Outstanding Notes tendered. Outstanding Notes not accepted for exchange or  
withdrawn will be returned to the undersigned at the address set forth below    
unless otherwise indicated under "Special Delivery Instructions" below.         

    Unless otherwise indicated herein under the box entitled "Special Issuance
Instructions" below, Exchange Notes, and Outstanding Notes not validly tendered 
or accepted for exchange, will be issued in the name of the undersigned.        
Similarly, unless otherwise indicated under the box entitled "Special Delivery  
Instructions" below, Exchange Notes, and Outstanding Notes not validly tendered 
or accepted for exchange, will be delivered to the undersigned at the address   
shown below the signature of the undersigned. The undersigned recognizes that   
the Company has no obligation pursuant to the "Special Issuance Instructions" to
transfer any Outstanding Notes from the name of the registered holder thereof if
the Company does not accept for exchange any of the principal amount of such    
Outstanding Notes so tendered.                                                  

All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Outstanding Notes will be determined by
the Company in its sole discretion, which determination will be final and       
binding. The Company reserves the absolute right to reject any and all          
Outstanding Notes not properly tendered or any Outstanding Notes the Company's  
acceptance of which would, in the opinion of counsel for the Company, be        
unlawful. The Company reserves the absolute right to reject any and all         
Outstanding Notes not properly tendered or any Outstanding Notes the Company's  
acceptance of which would, in the opinion of counsel for the Company, be        
unlawful. The Company also reserves the right to waive any irregularities or    
conditions of tender as to particular Outstanding Notes. The Company's          
interpretation of the terms and conditions of the Exchange Offer (including the 
instruction sin this Letter of Transmittal) will be final and binding. Unless   
waived, any defects or irregularities in connection with tenders of Outstanding 
Notes must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Outstanding
Notes, nor shall any of them incur any liability for failure to give such       
notification. Tenders of Outstanding Notes will not be deemed to have been made 
until such irregularities have been cured or waived. Any Outstanding Notes      
received by the Exchange Agent that are not properly tendered and as to which   
the defects or irregularities have not been cured or waived will be returned    
without cost to such holder by the Exchange Agent to the tendering holders of   
Outstanding Notes, unless otherwise provided in this Letter of Transmittal, as  
soon as practicable following the Expiration Date.                              

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SIGN HERE 
(TO BE COMPLETED BY ALL TENDERING HOLDERS)

X                                                                               
--------------------------------------------------------------------------------

X                                                                               
--------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY) 

     Must be signed by the registered holder(s) of the Outstanding Notes exactly
as their name(s) appear(s) on certificate(s) for the Outstanding Notes or by    
person(s) with this Letter of Transmittal. If signature is by a trustee,        
executor, administrator, guardian, attorney-in-fact, officer of a corporation,  
agent or other person acting in a fiduciary or representative capacity, please  
provide the following information. See Instruction 3.                           

Name(s)                                                                         
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
(PLEASE PRINT)

Capacity (full title)                                                           
--------------------------------------------------------------------------------

Address:                                                                        
--------------------------------------------------------------------------------
(INCLUDING ZIP CODE)

(Area Code and Telephone Number)                                                
------------------------------------------------------------------------------  

SIGNATURE GUARANTEE 
(SEE INSTRUCTIONS 3)

--------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signature(s))

--------------------------------------------------------------------------------
(Address, Including Zip Code, and Telephone No., Including Area Code, of Firm)

--------------------------------------------------------------------------------
(Authorized Signature)

--------------------------------------------------------------------------------
(Printed Name)

--------------------------------------------------------------------------------
(Title) 

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

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

SPECIAL ISSUANCE INSTRUCTIONS 
(SEE INSTRUCTIONS 3, 4 AND 6) 

To be completed ONLY if certificates for Outstanding Notes in a 
principal amount not exchanged and/or certificates for Exchange Notes are 
to be issued in the name of someone other than the undersigned, or if     
Outstanding Notes are to be returned by credit to an account maintained by
the Book-Entry Transfer Facility.                                         

Issue (check appropriate box)                                             

[ ] Exchange Notes to:                                                

[ ] Outstanding Notes to:                                             

Name:                                                                     
------------------------------------------------------------              
      (PLEASE PRINT)

Address:                                                                  
------------------------------------------------------------              

------------------------------------------------------------              
ZIP CODE

------------------------------------------------------------              
TAXPAYER IDENTIFICATION NUMBER

(YOU MUST ALSO COMPLETE 
SUBSTITUTE FORM W-9 BELOW.) 

Credit unaccepted Outstanding Notes tendered by book-entry transfer to:   

[ ] The Depository Trust Company account set forth below                  

------------------------------------------------------------
(DTC ACCOUNT NUMBER)
======================================================================          

SPECIAL DELIVERY INSTRUCTIONS 
(SEE INSTRUCTIONS 3, 4, AND 6)

To be completed ONLY if certificates for Outstanding Notes in a 
principal amount not exchange and/or certificates for Exchange Notes are  
to be sent to someone other than undersigned at an address other than that
shown above.                                                              

Deliver (check appropriate box)                                           

[ ] Exchange Notes to:                                                

[ ] Outstanding Notes to:                                             

Name:                                                                     
------------------------------------------------------------              
      (PLEASE PRINT)

Address:                                                                  
------------------------------------------------------------              

------------------------------------------------------------              
ZIP CODE

------------------------------------------------------------              
TAXPAYER IDENTIFICATION NUMBER

(YOU MUST ALSO COMPLETE 
SUBSTITUTE FORM W-9 BELOW.) 

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

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INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF
THE OFFER AND THE SOLICITATION

1. Delivery of this Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures.  To be effectively tendered pursuant to the Exchange Offer,
the Outstanding Notes, together with a properly completed Letter of Transmittal 
(or facsimile thereof), duly executed by the registered holder thereof, and any 
other documents required by this Letter of Transmittal, must be received by the 
Exchange Agent at one of its addresses set forth on the first page of this      
Letter of Transmittal. If the beneficial owner of any Outstanding Notes is not  
the registered holder, then such person may validly tender his or her           
Outstanding Notes only by obtaining and submitting to the Exchange Agent a      
properly completed Letter of Transmittal from the registered holder. OUTSTANDING
NOTES SHOULD BE DELIVERED ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY OR  
TO ANY OTHER PERSON.                                                            

THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND ALL OTHER REQUIRED    
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER.      

     SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE
AGENT BY 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.                 

If a holder desires to tender Outstanding Notes and such holder's     
Outstanding Notes are not immediately available or time will not permit such    
holder's Letter of Transmittal, Outstanding Notes or other required documents to
reach the Exchange Agent on or before the Expiration Date, such holder's tender 
may be effected if:                                                             

        (a) the tender is made through an Eligible Institution (as defined);

      (b) prior to the Expiration Date, the Exchange Agent receives from
    such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
    setting forth the name and address of the holder of the Outstanding Notes,
the certificate number or numbers of such Outstanding Notes and the   
    principal amount of Outstanding Notes tendered, stating that the tender is
     being made thereby, and guaranteeing that, within three business days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof) 
   together with the certificate(s) representing the Outstanding Notes to be
   tendered in proper form for transfer or a Book-Entry Confirmation, as the
    case may be, and any other documents required by the Letter of Transmittal
    will be deposited by the Eligible Institution with the Exchange Agent; and

      (c) such properly completed and executed Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing all  
tendered Outstanding Notes in proper form for transfer and all other  
documents required by this Letter of Transmittal are received by the  
Exchange Agent within three business days after the Expiration Date.  

   2. Withdrawal of Tenders.  Tendered Outstanding Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless 
previously accepted for exchange.                                               

   To be effective, a written or facsimile transmission notice of withdrawal
must (a) be received by the Exchange Agent at one of its addresses set forth on 
the first page of this Letter of Transmittal prior to 5:00 p.m., New York City  
time, on the Expiration Date, unless previously accepted for exchange, (b)      
specify the name of the person who tendered the Outstanding Notes, (c) contain  
the description of the Outstanding Notes to be withdrawn, the certificate       
numbers shown on the particular certificate evidencing such Outstanding Notes   
and the aggregate principal amount represented by such Outstanding Notes and (d)
be signed by the holder of such Outstanding Notes in the same manner as the     
original signature appears on this Letter of Transmittal (including any required
signature guarantee) or be accompanied by evidence sufficient to have the       
Trustee with respect to the Outstanding Notes register the transfer of such     
Outstanding Notes into the name of the holder withdrawing the tender. The       
signature(s) on the notice of withdrawal must be guaranteed by an Eligible      
Institution unless such Outstanding Notes have been tendered (a) by a registered
holder of Outstanding Notes who has not completed either the box entitled       
"Special Issuance Instructions" or the box entitled "Special Delivery           
Instructions" on this Letter of Transmittal or (b) for the account of an        
Eligible Institution. All questions as to the validity, form and eligibility    
(including time of receipt) of such withdrawal notices shall be determined by   
the company, whose determination shall be final and binding on all parties. If  
the Outstanding Notes to be withdrawn have been delivered or otherwise          
identified to the Exchange Agent, a signed notice of withdrawal is effective    
immediately upon receipt by the Exchange Agent of a written or facsimile        
transmission notice of withdrawal even if physical release is not yet effected. 
In addition, such notice must specify, in the case of Outstanding Notes tendered
by delivery of certificates for such outstanding Notes, the name of the         
registered holder (if different from that of the tendering holder) to be        
credited with the withdrawn Outstanding Notes. Withdrawals may not be rescinded,
and any Outstanding Notes withdrawn will thereafter be deemed not validly       
tendered for purposes of the Exchange Offer. However, properly withdrawn        
Outstanding Notes may be retendered by following one of the procedures described
under "The Exchange Offer -- Procedures for Tendering" in the Prospectus at any 
time on or prior to the applicable Expiration Date.                             

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   3. Signatures on this Letter of Transmittal, Bond Powers and Endorsement;
Guarantee of Signatures.  If this Letter of Transmittal is signed by the        
registered holder(s) of the Outstanding Notes tendered hereby, the signature    
must correspond exactly with the name(s) as written on the face of the          
certificates without any change whatsoever.                                     

     If any Outstanding Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.             

    If any Outstanding Notes tendered hereby are registered in different names
on several certificates, it will be necessary to complete, sign and submit as   
many separate copies of this Letter of Transmittal as there are different       
registrations of certificates.                                                  

When this Letter of Transmittal is signed by the registered holder or 
holders specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required unless Exchange Notes are to be issued, or    
certificates for any untendered principal amount of Outstanding Notes are to be 
reissued, to a person other than the registered holder.                         

If this Letter of Transmittal is signed by a person other than the    
registered holder(s) of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate bond powers, in either cased     
signed exactly as the name(s) of the registered holder(s) appear(s) on the      
certificate(s).                                                                 

 If this Letter of Transmittal or a Notice of Guaranteed Delivery or any
certificates or bond powers are signed by trustees, executors, administrators,  
guardians, attorney-in-fact, officers of corporations or others acting in a     
fiduciary or representative capacity, such persons should so indicate when      
signing, and unless waived by the Company, evidence satisfactory to the Company 
of their authority so to act must be submitted with this Letter of Transmittal. 

  Except as described below, signatures on this Letter of Transmittal or a
notice of withdrawal, as the case may be, must be guaranteed by an Eligible     
Institution, Signatures of this Letter of Transmittal or a notice of withdrawal,
as the case may be, need not be guaranteed if the Outstanding Notes tendered    
pursuant hereto are tendered (a) by a registered holder of Outstanding Notes who
has not completed either the box "Special Issuance Instructions" or the box     
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b)   
for the account of an Eligible Institution. In the event that signatures on this
Letter of Transmittal or a notice of withdrawal, as the case may be, are        
required to be guaranteed, such guarantee must be by a firm which is a member of
a registered national securities exchange or a member of the National           
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (each as "Eligible       
Institutions").                                                                 

  Endorsements on certificates for Outstanding Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by an Eligible         
Incitation.                                                                     

  4. Special Issuance and Delivery Instructions.  Tendering holders should
indicate in the applicable box the name and address to which certificates for   
Exchange notes and/or substitute certificates evidencing Outstanding Notes for  
the principal amounts not exchanged are to be issued or sent, if different from 
the name and address of the person signing this Letter of Transmittal. In the   
case of issuance in a different name, the employer identification or social     
security number of the person named must also be indicated. If not such         
instructions are given, any Outstanding Notes not exchanged will be returned to 
the name and address of the person signing this Letter of Transmittal.          

  5. Tax Identification Number Withholding.  Federal income tax law of the
United States requires that a holder of Outstanding Notes whose Outstanding     
Notes are accepted for exchange provide the Company with the holder's correct   
taxpayer identification number, which, in the case of a holder who is an        
individual, is his or her social security number, or otherwise establish an     
exemption from backup withholding. If the Company is not provided with the      
correct taxpayer identification number, the exchanging holder of Outstanding    
Notes may be subject to a $50 penalty imposed by the Internal Revenue Service   
(the "IRS"). In addition, interest on the Exchange Notes acquired pursuant to   
the Exchange Offer may be subject to backup withholding in an amount equal to   
31% of any interest payment. If withholding occurs and results in an overpayment
of taxes, a refund may be obtained.                                             

  To prevent backup withholding, an exchanging holder of Outstanding Notes
must provide his correct taxpayer identification number by completing the       
Substitute Form W-9 provided in this Letter of Transmittal, certifying that the 
taxpayer identification number provided is correct (or that the exchanging      
holder of Outstanding Notes is awaiting a taxpayer identification number) and   
that either (a) the exchanging holder has not yet been notified by the IRS that 
such holder is subject to backup withholding as a result of failure to report   
all interest or dividends or (b) the IRS has notified the exchanging holder that
such holder is no longer subject to backup withholding.                         

   Certain exchanging holders of Outstanding Notes (including, among others,
all corporations and certain foreign individuals)are not subject to these backup
withholding requirements. A foreign individual and other exempt holders other   
than foreign individuals (e.g., corporations) should certify, in accordance with
the enclosed "Guidelines for Certification of Taxpayer Identification Number on 
Substitute Form W-9," to such exempt status on the Substitute                   

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Form W-9 provided in this Letter of Transmittal. Foreign individuals should     
complete and provide Form W-8 to indicate their foreign status.                 

   6. Transfer Taxes.  Holders tendering pursuant to the Exchange Offer will
not be obligated to pay brokerage commissions or fees or to pay transfer taxes  
with respect to their exchange under the Exchange Offer unless the box entitled 
"Special Issuance Instructions" in this Letter of Transmittal has been          
completed, or unless the Exchange Notes are to be issued to any person other    
than the holder of the Outstanding Notes tendered for exchange. The company will
pay all other charges or expenses in connection with the Exchange Offer. If     
holders tender Outstanding Notes for exchange and the Exchange Offer is not     
consummated, certificates representing the Outstanding Notes will be returned to
the holders at the Company's expense.                                           

 Except as provided in this Instructions 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this Letter
of Transmittal.                                                                 

7. Inadequate Space.  If the space provided herein is inadequate, the 
aggregate principal amount of the Outstanding Notes being tendered and the      
certificate numbers (if available) should be listed on a separate schedule      
attached hereto and separately signed by all parties required to sign this      
Letter of Transmittal.                                                          

    8. Partial Tenders.  Tenders of Outstanding Notes will be accepted only in
integral multiples of $1,000. If tenders are to be made with respect to less    
than the entire principal amount of any Outstanding Notes, fill in the principal
amount of Outstanding Notes which are tendered in column (3) in the box on the  
cover entitled "Description of Outstanding Notes Tendered." In the case of      
partial tenders, new certificates representing the Outstanding Notes in fully   
registered form for the remainder of the principal amount of the Outstanding    
Notes will be sent to the person(s) as promptly as practicable after the        
expiration or termination of the Exchange Offer.                                

9. Mutilated, Lost, Stolen or Destroyed Notes.  Any holder whose      
Outstanding Notes have been mutilated, lost, stolen or destroyed should contact 
the Exchange Agent at the address indicated above for further instructions.     

   10. Request for Assistance or Additional Copies.  Requests for assistance
or additional copies of the Prospectus or this Letter of Transmittal may be     
obtained from the Exchange Agent at its telephone number set forth on the first 
page.                                                                           

11. No Conditional Tender.  No alternative, conditional, irregular or 
contingent tender of Notes on transmittal of this Letter of Transmittal will be 
accepted.                                                                       

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PAYER'S NAME: 
--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]
                                                                                                                                 
---------------------------------------------------------------------------------------------------------------------------------

                                     PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND      ----------------------------   
  SUBSTITUTE                         CERTIFY BY SIGNING AND DATING BELOW.                            SOCIAL SECURITY NUMBER      
   FORMW-9                                                                                                                       
                                                                                                               OR                
                                                                                                  ----------------------------   
                                                                                                 EMPLOYER IDENTIFICATION NUMBER  
                                   --------------------------------------------------------------------------------------------- 
  DEPARTMENT OF THE TREASURY                                                                                                     
  INTERNAL REVENUE SERVICE           CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY                PART II --            
                                     THAT:                                                              AWAITING TIN [ ]         
                                     (1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER                                    
                                         IDENTIFICATION NUMBER (OR I AM WAITING FOR NUMBER TO             PART III --            
                                         BE ISSUED TO ME)(AND                                              EXEMPT [ ]            
                                     (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER                                           
                                         BECAUSE: (A) I AM EXEMPT FROM BACKUP WITHHOLDING; OR                                    
                                         (B) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE                                    
                                         SERVICE ("IRS") THAT I AM SUBJECT TO BACKUP                                             
                                         WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL                                        
                                         INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED                                      
                                         ME THAT I AM NO LONGER SUBJECT TO BACKUP                                                
                                         WITHHOLDING.                                                                            
                                   --------------------------------------------------------------------------------------------- 
                                        CERTIFICATION INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN         
                                        NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF                
  PAYER'S REQUEST FOR                   UNDER-REPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING        
  TAXPAYER IDENTIFICATION               NOTIFIED BY THE IRS THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER     
  NUMBER ("TIN")                        NOTIFICATION FROM THE IRS STATING THAT YOU ARE NO LONGER SUBJECT TO BACKUP               
                                        WITHHOLDING, DO NOT CROSS OUT ITEM (2). IF YOU ARE EXEMPT FROM BACKUP WITHHOLDING,       
                                        CHECK THE BOX IN PART III.                                                               
                                        SIGNATURE ____________________________________________         DATE __________ , 1998    
-----------------------------------------------------------------------------------------------------------------------------    

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING 
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE    
    SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 FOR ADDITIONAL
   DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART II OF SUBSTITUTE FORM W-9.                              

                                                        [Enlarge/Download Table]
                                                                                                                             
-----------------------------------------------------------------------------------------------------------------------------
                                   CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER                                    
     I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER        
     (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE            
     INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B) I INTEND TO MAIL OR DELIVER AN          
     APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE PAYER     
     BY THE TIME OF PAYMENT, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME WILL BE WITHHELD UNTIL I PROVIDE A NUMBER AND         
     TAT, IF I DO NOT PROVIDE MY TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, SUCH RETAINED AMOUNTS SHALL BE REMITTED      
     TO THE IRS AS BACKUP WITHHOLDING.                                                                                       

     ------------------------------------------------------------------   ------------------------------ , 1998              
                                  Signature                                               Date                               
--------------------------------------------------------------------------------------------------------------------         

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NOTICE OF GUARANTEED DELIVERY 

TO TENDER FOR EXCHANGE
10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES B 

OF

BLUEGREEN CORPORATION 
PURSUANT TO 
PROSPECTUS DATED JUNE 19, 1998

    This Notice of Guaranteed Delivery or a form substantially equivalent hereto
must be used to accept the offer (the "Exchange Offer") of Bluegreen            
Corporation, a Massachusetts corporation (the "Company"), to exchange $1,000    
principal amount of its 10 1/2% Senior Secured Notes due 2008, Series B for each
$1,000 principal amount of its outstanding 10 1/2% Senior Secured Notes due 2008
(the "Outstanding Notes") if (a) certificates representing the Outstanding Notes
are not immediately available or (b) time will not permit the Outstanding Notes 
and all other required documents to reach the Exchange Agent on or prior to the 
Expiration Date. This form may be delivered by an Eligible Institution (as      
defined) by mail or hand delivery, or transmitted via facsimile, telegram or    
telex, to the Exchange Agent as set forth below. All capitalized terms used     
herein but not defined herein shall have the meanings ascribed to them in the   
Prospectus dated June 19, 1998 (the "Prospectus").                              

THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF      
OUTSTANDING NOTES BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF OUTSTANDING NOTES
IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER     
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.                  
--------------------------------------------------------------------------------

The Exchange Offer will expire at 5:00 p.m., New York City Time on July   
23, 1998, unless extended. Tenders of 10 1/2% Senior Secured Notes due    
2008, Series B may only be withdrawn under the circumstances described in 
the Prospectus and the Letter of Transmittal.                             
--------------------------------------------------------------------------------

The Exchange Agent for the Exchange Offer:

SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION

                                                        [Enlarge/Download Table]
                                                                                                    
      By Registered or Certified Mail:                        By Overnight Courier:                 
      SunTrust Bank, Central Florida,                    SunTrust Bank, Central Florida,            
            National Association                               National Association                 
c/o First Chicago Trust Company of New York        c/o First Chicago Trust Company of New York      
              Corporate Trust                                    Corporate Trust                    
                 8th Floor                                          8th Floor                       
               14 Wall Street                                     14 Wall Street                    
          New York, New York 10005                           New York, New York 10005               

         By Hand before 4:30 P.M.:                                By Facsimile:                     
      SunTrust Bank, Central Florida,                    SunTrust Bank, Central Florida,            
            National Association                               National Association                 
          225 East Robinson Street                           225 East Robinson Street               
                 Suite 250                                          Suite 250                       
           Orlando, Florida 32801                             Orlando, Florida 32801                
         Attention: Lisa Derryberry                               (407) 237-5299                    
                                                            Attention: Lisa Derryberry              
                                             Confirm by Telephone to: Lisa Derryberry (407) 237-4791

Delivery of this Notice of Guaranteed Delivery to an address, or        
transmission via facsimile, telegram or telex, other than as set forth above,   
will not constitute a valid delivery.                                           

  This form is not to be used to guarantee signatures. if a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution" 
under the instructions thereto, such signature guarantee must appear in the     
applicable space provided in the signature box on the Letter of Transmittal.    

Ladies and Gentlemen:                                                           

   The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus, receipt of which is hereby       
acknowledged, the principal amount of Outstanding Notes set forth below,        
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
the caption "The Exchange Offer -- Guaranteed Delivery Procedures."             

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  Subject to and effective upon acceptance for exchange of the Outstanding
Notes tendered herewith, the undersigned hereby sells, assigns and transfers to 
or upon the order of the Company all right, title and interest in and to, and   
any and all claims in respect of or arising or having arisen as a result of the 
undersigned's status as a holder of, all Outstanding Notes tendered hereby. In  
the event of a termination of the Exchange Offer, the Outstanding Notes tendered
pursuant thereto will be returned promptly to the tendering Outstanding Note    
holder.                                                                         

     The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Prospectus and the Letter of Transmittal, has   
full power and authority to tender, sell, assign and transfer the Outstanding   
Notes tendered hereby and that the Company will acquire good and unencumbered   
title thereto, free and clear of all liens, restrictions, charges and           
encumbrances and not subject to any adverse claim. The undersigned will, upon   
request, execute and deliver any additional documents deemed by the Exchange    
Agent or the Company to be necessary or desirable to complete the sale,         
assignment and transfer of the Outstanding Notes tendered.                      

    All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery    
shall be binding upon the heirs, personal representatives, executors,           
administrators, successors, assigns, trustees in bankruptcy and other legal     
representatives of the undersigned.                                             

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PLEASE SIGN AND COMPLETE

                                                        [Enlarge/Download Table]
                                                                                                            
Signature(s) of Registered Holder(s) or Authorized                                                          
Signatory:                                                                  Addresses:                      

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

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

-----------------------------------------------------  -----------------------------------------------------
Name(s) of Registered Holder(s) No.:                                  Area Code and Telephone               

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

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

If Outstanding Notes will be delivered by a book-entry transfer, provide the
following information:

Principal Amount of Outstanding Notes Tendered:                                 

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

Transaction Code No.:                                                           

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

Certificate No(s). of Outstanding Notes (if available):                         

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

Depository Account No.:                                                         

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

This Notice of Guaranteed Delivery must be signed by the registered   
holder(s) of Outstanding Notes exactly as their name(s) appear(s) on the        
Outstanding Notes or by person(s) authorized to become registered holder(s) by  
endorsements and documents transmitted with this Notice of Guaranteed Delivery. 
If signature is by a trustee, guardian, attorney-in-fact, officer of a          
corporation, executor, administrator, agent or other representative, such person
must provide the following information:                                         

PLEASE PRINT NAME(S) AND ADDRESS(ES)

Name(s):                                                                        
        ------------------------------------------------------------------------

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

Capacity:                                                                       
        ------------------------------------------------------------------------

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

Address(es):                                                                    
          ----------------------------------------------------------------------

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

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GUARANTEE 
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

     The undersigned, a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc. or a commercial  
bank or trust company having an office or correspondent in the United States    
(each, an "Eligible Institution"), hereby guarantees that, within three business
days from the date of this Notice of Guaranteed Delivery, a properly completed  
and validly executed Letter of Transmittal (or a facsimile thereof), together   
with Outstanding Notes tendered hereby in proper form for transfer (or          
confirmation of the book-entry transfer of such Outstanding Notes into the      
Exchange Agent's account at a Book-Entry Transfer Facility) and all other       
required documents will be deposited by the undersigned with the Exchange Agent 
at one of its addresses set fort above.                                         

Name of Firm:                                                                   

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

Authorized Signature:                                                           

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

Address:                                                                        

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

Name:                                                                           

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

Title:                                                                          

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

Area Code and Telephone No.:                                                    

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

Date:                                                                           

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

 DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND       
VALIDLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS:        

INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

     1. Delivery.  A properly completed and duly executed copy of this Notice of
Guaranteed Delivery and any other documents required by this Notice of          
Guaranteed Delivery must be received by the Exchange Agent at its address set   
forth herein prior to the Expiration Date. The method of delivery is at the     
election and sole risk of the holders and the delivery will be deemed made only 
when actually received by the Exchange Agent. In all cases, sufficient time     
should be allowed to assure timely delivery.                                    

  2. Requests for Assistance or Additional Copies.  Questions and requests
for assistance and requests for additional copies of this document and/or the   
Prospectus may be directed to the Exchange Agent at the address specified in the
Prospectus. Holders may also contact their broker, dealer, commercial bank,     
trust company or other nominee for assistance concerning the Exchange Offer.    

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OFFER TO EXCHANGE 

10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES B 
FOR ANY AND ALL OUTSTANDING 
10 1/2% SENIOR SECURED NOTES DUE 2008 

OF

BLUEGREEN CORPORATION 

     THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON JULY 23,
1998, UNLESS EXTENDED. TENDERS OF 10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES 
B MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND 
THE LETTER OF TRANSMITTAL.                                                      

                                                                   June 19, 1998

To Our Clients:                                                                 

    Enclosed for your consideration is the Prospectus dated June 19, 1998 (the
"Prospectus") and the related letter of Transmittal and instructions thereto    
(the "Letter of Transmittal") in connection with the offer (the "Exchange       
Offer") of Bluegreen Corporation, a Massachusetts corporation (the "Company"),  
to exchange $1,000 principal amount of its 10 1/2% Senior Secured Notes due     
2008, Series B (the "Exchange Notes") for each $1,000 principal amount of its   
outstanding 10 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes").    

Consummation of the Exchange Offer is subject to certain conditions   
described in the Prospectus. Capitalized terms used herein but not defined shall
have the meanings ascribed to them in the Prospectus.                           

WE ARE THE REGISTERED HOLDER OF OUTSTANDING NOTES HELD BY US FOR YOUR 
ACCOUNT. A TENDER OF ANY SUCH OUTSTANDING NOTES CAN BE MADE ONLY BY US AS THE   
REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL  
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO      
TENDER OUTSTANDING NOTES HELD BY US FOR YOUR ACCOUNT.                           

  Accordingly, we request instructions as to whether you wish us to tender
any or all such Outstanding Notes held by us for your account pursuant to the   
terms and conditions set forth in the Prospectus and the Letter of Transmittal. 
We urge you to read carefully the Prospectus an the Letter of Transmittal before
instructing us to tender your Outstanding Notes.                                

Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Outstanding Notes on your behalf in accordance with
the provisions of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00    
P.M., NEW YORK CITY TIME ON JULY 23, 1998 (the "Expiration Date"), UNLESS       
EXTENDED. Outstanding Notes tendered pursuant to the Exchange Offer may only be 
withdrawn under the circumstances described in the Prospectus and the Letter of 
Transmittal.                                                                    

Your attention is directed to the following:                          

         1. The Exchange Offer is for the entire aggregate principal amount of
Outstanding Notes.                                                    

 2. Consummation of the Exchange Offer is conditioned upon the
conditions set forth in the Prospectus under the caption "The Exchange
Offer -- Conditions."                                                 

        3. Tendering holders may withdraw their tender at any time until the
Expiration Date.                                                      

       4. Any transfer taxes incident to the transfer of Outstanding Notes
from the tendering holder to the Company will be paid by the Company, 
    except as provided in the Prospectus and the instructions to the letter of
Transmittal.                                                          

         5. The Exchange Offer is not being made to (nor will the surrender of
     Outstanding Notes for exchange be accepted from or on behalf of) holders of
    Outstanding Notes in any jurisdiction in which the making or acceptance of
the Exchange Offer would not be in compliance with the laws of such   
jurisdiction.                                                         

        6. The acceptance for exchange of Outstanding Notes validly tendered
 and not be validly withdrawn and the issuance of Exchange Notes will be
     made as promptly as practicable after the Expiration Date. However, subject
  to rules promulgated pursuant to the Securities Exchange Act of 1934, as
   amended (the "Exchange Act"), the Company expressly reserves the right to
delay acceptance of any of the Outstanding Notes or to terminate the  
Exchange Offer and not accept for purchase any Outstanding Notes not  
theretofore accepted if any of the conditions                         

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set forth in the Prospectus under the caption "The Exchange Offer     
Conditions" shall not have been satisfied or waived by the Company.   

        7. The Company expressly reserves the right, in its sole discretion,
   (i) to delay accepting any Outstanding Notes, (ii) to extend the Exchange
    Offer, (iii) to amend the terms of the Exchange Offer or (iv) to terminate
    the Exchange Offer. Any delay, extension, amendment or termination will be
followed as promptly as practicable by oral or written notice to the  
Exchange Agent and the Company will mail to the registered holders an 
   announcement thereof, each prior to 9:00 a.m., New York City time, on the
     next business day after the previously scheduled Expiration Date. Except as
 otherwise provided in the Prospectus, withdrawal rights with respect to
Outstanding Notes tendered pursuant to the Exchange Offer will not be 
extended or reinstated as a result of an extension or amendment of the
Exchange Offer.                                                       

          8. Consummation of the Exchange Offer may have adverse consequences to
   non-tendering Outstanding Note holders, including that the reduced amount
     of Outstanding Notes as a result of the Exchange Offer may adversely affect
  the trading market, liquidity and market price of the Outstanding Notes.

   If you wish to have us tender any or all of the Outstanding Notes held by
us for your account, please so instruct us by completing, executing and         
returning to us the instruction form that follows:                              

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BLUEGREEN CORPORATION 

INSTRUCTIONS REGARDING THE EXCHANGE OFFER 

WITH RESPECT TO THE 

10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES B 

TO REGISTERED HOLDER AND/OR PARTICIPANTS OF                                     
THE BOOK-ENTRY TRANSFER FACILITY                                        

THE UNDERSIGNED ACKNOWLEDGE(S) RECEIPT OF YOUR LETTER AND THE ENCLOSED
DOCUMENTS REFERRED TO THEREIN RELATING TO THE EXCHANGE OFFER OF THE COMPANY.    

    THIS WILL INSTRUCT YOU TO TENDER THE PRINCIPAL AMOUNT OF OUTSTANDING NOTES
INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED PURSUANT TO THE  
TERMS OF AND CONDITIONS SET FORTH IN THE PROSPECTUS AND THE LETTER OF           
TRANSMITTAL.                                                                    

                                                                [Download Table]
                                                                    
Box 1 [ ] Please tender the Outstanding Notes held by you for my    
          account, as indicated below.                              

Box 2 [ ] Please do not tender any Outstanding Notes held by you for
          my account.                                               

The aggregate face amount of the Notes held by you for the account of the       
undersigned is [fill in amount]: $               of the 10 1/2% Senior Secured  
Notes due 2008.                                                                 

With respect to the Exchange Offer, the undersigned hereby instructs you [check 
appropriate box]:                                                               

                                                        [Enlarge/Download Table]
                                                                                                   
[ ]   To TENDER the following Notes held by you for the account of                                 
      the undersigned [insert principal amount of notes to be                                      
      tendered if any]: $          .                                                               

[ ]   NOT TO TENDER any Notes held by you for the account of the                                   
      undersigned.                                                                                 
Date: ------------------------------, 1998                                                         
                                                     ----------------------------------------------

                                                     ----------------------------------------------
                                                     Signature(s)                                  

Principal Amount of Outstanding Notes to be Tendered: $          * (must be in the principal amount
of $1,000 or an integral multiple thereof)                                                         

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

----------------------------------------------       Taxpayer Identification or Social Security    
Please print name(s) here                            Number                                        

----------------------------------------------       ----------------------------------------------
Area code and Telephone Number                       My Account Number with You                    

*UNLESS OTHERWISE INDICATED, SIGNATURE(S) HEREON BY BENEFICIAL OWNER(S) SHALL   
CONSTITUTE AN INSTRUCTION TO THE NOMINEE TO TENDER ALL OUTSTANDING NOTES OF SUCH
BENEFICIAL OWNER(S).                                                            

  If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to     
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a         
beneficial owner, including but not limited to the representations that (i) the 
undersigned's principal residence is in the state of [fill in state]            
         , (ii) the undersigned is acquiring the Exchange Notes in the
ordinary course of business of the undersigned, (iii) the undersigned is not    
participating, does not intend to participate, and has no arrangement or        
understanding with any person to participate in the distribution of the Exchange
Notes, (iv) the undersigned acknowledges that any person participating in the   
Exchange Offer for the purpose of distributing the Exchange Notes must comply   
with the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the "Act"), in connection with a secondary resale          
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in    
noaction letters that are discussed in the section of the Prospectus entitled   
"The Exchange Offer -- Resales of the New Notes," and (v) the undersigned is not
an "affiliate," as defined in Rule 405 under the Act, of the Company; (b) to    
agree,                                                                          

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on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of    
Transmittal to effect the valid tender of such Notes.                           

     [ ]  Check this box if the Beneficial Owner of the Notes is a Participating
         Broker-Dealer and such Participating Broker-Dealer acquired the Notes
        for its own account as a result of market-making activities or other
     trading activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF
        THESE INSTRUCTIONS TO JOHN F. CHISTE, CHIEF FINANCIAL OFFICER OF THE
COMPANY, VIA FACSIMILE: (561) 912-8100.                     

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SUNTRUST BANK, CENTRAL FLORIDA, 
NATIONAL ASSOCIATION
225 EAST ROBINSON STREET
SUITE 250 
ORLANDO, FLORIDA 32801

BLUEGREEN CORPORATION 

OFFER TO EXCHANGE 

10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES B 
FOR ANY AND ALL OUTSTANDING 
10 1/2% SENIOR SECURED NOTES DUE 2008 

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON JULY 23,     
1998, UNLESS EXTENDED. TENDERS OF 10 1/2% SENIOR SECURED NOTES DUE 2008, SERIES 
B MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND 
THE LETTER OF TRANSMITTAL.                                                      

To Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees:      

We have been appointed by Bluegreen Corporation, a Massachusetts      
corporation (the "Company"), to act as the Exchange Agent in connection with the
offer (the "Exchange Offer") of the Company to exchange $1,000 principal amount 
of its 10 1/2% Senior Secured Notes due 2008, Series B for each $1,000 principal
amount of its 10 1/2% Senior Secured Notes due 2008 (the "Outstanding Notes"),  
upon the terms and subject to the conditions set forth in the Prospectus dated  
June 19, 1998 (the "Prospectus") and in the related Letter of Transmittal and   
the instructions thereto (the "Letter of Transmittal").                         

Enclosed herewith are copies of the following documents:              

1. The Prospectus;                                          

        2. The Letter of Transmittal for your use and for the information of
    your clients, together with guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number on Substitute Form W-9
  providing information relating to backup federal income tax withholding;

      3. Notice of Guaranteed Delivery to be used to accept the Exchange
    Offer if the Notes and all other required documents cannot be delivered to
the Exchange Agent on or prior to the Expiration Date (as defined);   

   4. A form of letter which may be sent to your clients for whose
   account you hold the Notes in your name or in the name of a nominee, with
    space provided for obtaining such clients' instructions with regard to the
Exchange Offer; and                                                   

5. A return envelope addressed to the Exchange Agent.       

     PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON JULY 23, 1998 (the "Expiration Date"), UNLESS EXTENDED. WE URGE YOU TO  
CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.                                   

    The Company will not pay any fees or commission to any broker or dealer or
other person (other than to the Exchange Agent) for soliciting tenders of the   
Notes pursuant to the Exchange Offer. You will be reimbursed for customary      
mailing and handling expenses incurred by you in forwarding the enclosed        
materials to your clients.                                                      

   Additional copies of the enclosed materials may be obtained by contacting
the Exchange Agent as provided in the enclosed Letter of Transmittal.           

                   Very truly yours,
                                 SUNTRUST BANK, CENTRAL FLORIDA,
                      NATIONAL ASSOCIATION

    NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON, THE AGENT OF THE COMPANY OR THE EXCHANGE AGENT OR AUTHORIZE
YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON   
BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER NOT CONTAINED IN THE   
PROSPECTUS OR THE LETTER OF TRANSMITTAL.                                        

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION 
NUMBER ON SUBSTITUTE FORM W-9 

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE         
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e. 
000-00-0000. Employer identification numbers have nine digits separated by only 
one hyphen: i.e. 00-0000000. The table below will help determine the number to  
give the payer.                                                                 

                                                                [Download Table]

                                                           
-----------------------------------------------------------
                                            GIVE THE       
                                        SOCIAL SECURITY    
     FOR THIS TYPE OF ACCOUNT:            NUMBER OF--      
-----------------------------------------------------------
 1.  An individual's account.        The individual        
 2.  Two or more individuals (joint  The actual owner of   
     account)                        the account or, if    
                                     combined funds, any   
                                     one of the            
                                     individuals(1)        
 3.  Husband and wife (joint         The actual owner of   
     account)                        the account or, if    
                                     joint funds, either   
                                     person(1)             
 4.  Custodian account of a minor    The minor(2)          
     (Uniform Gift to Minors Act)                          
 5.  Adult and minor (joint          The adult or, if the  
     account)                        minor is the only     
                                     contributor, the      
                                     minor(1)              
 6.  Account in the name of          The ward, minor or    
     guardian or committee for a     incompetent person(3) 
     designated ward, minor, or                            
     incompetent person                                    
 7.  a. The usual revocable savings  The grantor-          
       trust account (grantor is     trustee(1)            
       also trustee)                                       
     b. So-called trust account      The actual owner(1)   
       that is not a legal or valid                        
       trust under State law                               
 8.  Sole proprietorship account     The owner(4)          
-----------------------------------------------------------

                                                                [Download Table]

                                                           
-----------------------------------------------------------
                                       GIVE THE EMPLOYER   
                                         IDENTIFICATION    
     FOR THIS TYPE OF ACCOUNT:            NUMBER OF--      
-----------------------------------------------------------
                                                           
 9.  A valid trust, estate, or       The legal entity (Do  
     pension trust                   not furnish the       
                                     identifying number of 
                                     the personal          
                                     representative or     
                                     trustee unless the    
                                     legal entity itself is
                                     not designated in the 
                                     account title)(5)     

10.  Corporate account               The corporation       

11.  Religious, charitable, or       The organization      
     educational organization                              
     account                                               

12.  Partnership account held in     The partnership       
     the name of the business                              

13.  Association, club, or other     The organization      
     tax-exempt organization                               

14.  A broker or registered nominee  The broker or nominee 

15.  Account with the Department of  The public entity     
     Agriculture in the name of a                          
     public entity (such as a State                        
     or local government, school                           
     district, or prison) that                             
     receives agricultural program                         
     payments                                              
-----------------------------------------------------------

(1) List first and circle the name of the person whose number you furnish.      
(2) Circle the minor's name and furnish the minor's social security number.     
(3) Circle the ward's, minor's or incompetent person's name and furnish such    
person's social security number.                                        
(4) Show the name of the owner.                                                 
(5) List first and circle the name of the legal trust, estate, or pension trust.

Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.                     

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION 
NUMBER ON SUBSTITUTE FORM W-9 

PAGE 2

OBTAINING A NUMBER                                                              
If you don't have a taxpayer identification number or you don't know your       
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a  
number.                                                                         

PAYEES EXEMPT FROM BACKUP WITHHOLDING                                           
Payees specifically exempted from backup withholding on ALL payments include the
following:                                                                      
- A corporation.                                                            
- A financial institution.                                                  
- An organization exempt from tax under section 501(a), or an individual    
retirement.                                                             
- The United States or any agency or instrumentality thereof.               
  - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.                                 
- A foreign government, a political subdivision of a foreign government, or 
any agency or instrumentality thereof.                                  
- An international organization or any agency, or instrumentality thereof.  
  - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.                                                  
- A real estate investment trust.                                           
- A common trust fund operated by a bank under section 584(a).              
- An exempt charitable remainder trust, or a non-exempt trust described in  
Section 4947(a)(1).                                                     
 - An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.                                          
 Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:                                              
- Payments to nonresident aliens subject to withholding under Section 1441. 
 - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.                            
- Payments of patronage dividends where the amount received is not paid in  
money.                                                                  
- Payments made by certain foreign organizations.                           
- Payments made to a nominee.                                               
Payments of interest not generally subject to backup withholding include the
following:                                                                      
 - Payments of interest on obligations issued by individuals. NOTE: You may be
   subject to backup withholding if this interest is $600 or more, and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.               
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).                                                           
- Payments described in Section 6049(b)(5) to non-resident aliens.          

- Payments on tax-free covenant bonds under Section 1451.                   
- Payments made by certain foreign organizations.                           
- Payments made to a nominee.                                               

EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS  
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER        
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO 
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.                                                         

  Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup         
withholding. For details, see the regulations under Sections 6041, 6041A(a),    
6045, and 6050A.                                                                

PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,    
interest, or other payments to give taxpayer identification numbers to payers   
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are        
required to file tax returns. Beginning January 1, 1993, payers must generally  
withhold 31% of taxable interest, dividends, and certain other payments to a    
payee who does not furnish a taxpayer identification number to a payer. Certain 
penalties may also apply.                                                       

PENALTIES                                                                       
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you    
fail to furnish your correct taxpayer identification number to a payer, you are 
subject to a penalty of $50 for each such failure unless your failure is due to 
reasonable cause and not to willful neglect.                                    
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING. -- If you   
make a false statement with no reasonable basis which results in no imposition  
of backup withholding, you are subject to a penalty of $500.                    
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- If you falsify              
certifications or affirmations, you are subject to criminal penalties including 
fines and/or imprisonment.                                                      

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX 
CONSULTANT OR THE INTERNAL REVENUE SERVICE.