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                                                                    EXHIBIT 10.3

                                CONTRACT OF SALE


         This Agreement is entered into by and between J. PHILLIP BALLARD, JR.
("Seller") and EAGLE GREENS LTD, formerly known as Northeast Georgia
Recreational and Development Co., Inc. and SILVERLEAF RESORTS, INC., a Texas
corporation ("Purchaser").

                              W I T N E S S E T H :

         FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:

                                    ARTICLE I

                                    PROPERTY

         The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:

                  Those certain tracts of land located in the 12th Land
         District, Habersham County, Georgia, commonly known as "Hollywood Hills
         Golf Club," containing approximately 220 acres, more or less, and being
         more particularly described in Exhibit "A" attached hereto and made a
         part hereof for all purposes.

Hereafter the aforesaid real property is referred to as the "Land."

         The conveyance by Seller to Purchaser shall also include all buildings
and other improvements on the Land, including specifically, without limitation,
the club house, all storage buildings, all recreational facilities, lakes and
parks located thereon (the foregoing property is herein referred to collectively
as the "Improvements").

         The conveyance by Seller to Purchaser shall also include all fixtures
and personal property, tangible or intangible, of any kind whatsoever owned by
Seller and used in connection with the Land and/or Improvements, including but
not limited to, the following items:

                  a. All machinery, equipment, fixtures, furniture and other
         personal property of every kind and character owned by Seller and
         located on or used in connection with the operation of the Land and
         Improvements including all golf carts;



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                  b. If and to the extent owned by Seller, the name "Hollywood
         Hills Golf Club," as used in the ownership or operation of the Land and
         Improvements;

                  c. All licenses, franchises and permits used in or relating to
         the ownership, occupancy or operation of the golf club being operated
         by Seller on the Land including, in particular, any water permits or
         other utility permits;

                  d. Any developer's, declarant's, or owner's interests under
         any operating agreements or reciprocal easement agreements or other
         similar agreements affecting and/or benefiting the Land;

                  e. All service, maintenance, management or other contracts
         respecting the ownership, maintenance, operation, provisioning or
         equipping of the golf club being operated on the Land by Seller,
         including warranties and guaranties relating thereto; and

                  f. All outstanding receivables and membership agreements, if
         any, owned by Seller which have been generated from the sale of
         membership or use rights at the golf club being operated by Seller on
         the Land.

The foregoing items are hereinafter collectively referred to as the "Golf Course
Assets."

         Hereinafter all property being conveyed to Purchaser by Seller pursuant
to this Contract including the Land, the Improvements and the Golf Course Assets
are sometimes referred to collectively as the "Subject Property."

                                   ARTICLE II

                                 PURCHASE PRICE

         The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of Three Million Five Hundred Twenty-Five Thousand and
No/100 Dollars ($3,525,000.00). The purchase price shall be payable all in cash
at the closing.

                                   ARTICLE III

                                  EARNEST MONEY

         Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Fifty Thousand and No/100 Dollars ($50,000.00) to Safeco Land Title of Dallas,
5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn: Bobbie Irwin
(the "Title Company"). The Title Company shall immediately cash the earnest
money check and deposit the proceeds thereof in an interest bearing account, the
earnings from which shall accrue to the benefit of Purchaser (hereinafter the
proceeds of the earnest money check shall be referred to as the "earnest
money"). If Purchaser

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does not terminate this Contract during the Inspection Period (as defined in
Article VI hereinbelow), then, within two (2) business days after the expiration
of the Inspection Period, the Title Company shall immediately disburse the
entire $50,000.00 earnest money deposit to Seller; upon such disbursement the
$50,000.00 earnest money deposit shall be non-refundable to the Purchaser except
in the event of a default by Seller hereunder, but, if this Contract closes,
then the entire $50,000.00 earnest money deposit shall be applied in partial
satisfaction of the purchase price payable at closing.

         In the event that this Contract is closed, then all earnest money shall
be applied in partial satisfaction of the purchase price. In the event that this
Contract is not closed, then the earnest money shall be disbursed in the manner
provided for elsewhere herein. Notwithstanding the foregoing or anything to the
contrary contained elsewhere in this Contract, it is understood and agreed that
One Hundred Dollars ($100.00) of the earnest money shall in all events be
delivered to Seller as valuable consideration for the Inspection Period
described in Article VI hereinbelow and the execution of this Contract by
Seller.

                                   ARTICLE IV

                 PRE-CLOSING OBLIGATIONS OF SELLER AND PURCHASER

         Within ten (10) days from the date of execution of this Contract,
Seller shall furnish to Purchaser, each of the following (collectively, the "Due
Diligence Items"):

                  a. Copies of all licenses, permits, applications,
         authorizations, certificates of occupancy, governmental approvals and
         other entitlements relating to the Subject Property and the operation
         thereof in the possession of Seller, if any, including, in particular,
         copies of all permits relating to utilities;

                  b. A schedule of all current or pending litigation with
         respect to the Subject Property or any part thereof, if any, together
         with a brief description of each proceeding;

                  c. An accurate and complete schedule reflecting with respect
         to the golf club being operated by Seller at the Subject Property for
         the calendar year ending immediately preceding the date of this
         Contract: (i) ad valorem taxes, (ii) expenses incurred for such period
         for water, electricity, natural gas and other utility charges, and
         (iii) all other income or expenses of operation of the golf club being
         operated on the Land by Seller. Said operating schedule shall be
         accompanied by Seller's statement that said operating schedule is true,
         complete and correct as of the date provided;

                  d. A list of all service contracts, warranties, management,
         maintenance, or other agreements affecting the Subject Property, if
         any, together with copies of same. Seller agrees not to enter into any
         additional contracts, warranties, or agreements prior to closing which
         would be binding on Purchaser and which cannot be cancelled by


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         Purchaser upon thirty (30) days written notice without cost, penalty,
         or obligation unless such service contracts or other agreements are
         approved in writing by Purchaser;

                  e. All site plans, drawings, environmental, mechanical,
         electrical, structural, soils and similar reports and/or audits and
         plans and specifications relative to the Subject Property in the
         possession of Seller, if any;

                  f. True and correct copies of the tax statements covering the
         Subject Property or any part thereof for each of the two (2) years
         prior to the current year and, if available, for the current year;

                  g. A schedule of all Golf Course Assets (specifying if any
         such Golf Course Assets are leased);

                  h. A list of any unwritten agreements affecting the Subject
         Property to which Seller is a party or of which Seller has knowledge;
         and

         During the Inspection Period (defined hereinbelow), Purchaser, at its
sole cost and expense, shall obtain and deliver to Seller copies of the
following (collectively the "Purchaser Due Diligence Items"):

                  a. An updated survey of the Subject Property dated subsequent
         to the date of execution of this Contract and prepared by a licensed
         professional engineer or surveyor acceptable to Purchaser, which Survey
         shall: (a) include a metes and bounds legal description of the Subject
         Property; (b) accurately show all improvements, encroachments and uses
         and accurately show all easements and encumbrances visible or listed on
         the Title Commitment (identifying each by recording reference if
         applicable); (c) recite the number of acres included in the Subject
         Property; (d) state whether the Subject Property (or any portion
         thereof) lies within a flood zone, or flood prone area; (e) contain a
         certificate verifying that the Survey was made on the ground, that the
         Survey is correct, that there are no improvements, encroachments,
         easements, uses or encumbrances except as shown on the survey plat,
         that the area represented for the Subject Property has been certified
         by the surveyor as being correct, that the Subject Property does not
         lie within any flood zone or flood prone area, except as indicated
         thereon; and (f) otherwise be in form sufficient for the amendment of
         the boundary exception by the Title Company. Unless otherwise agreed by
         Seller and Purchaser, the metes and bounds description contained in the
         Survey shall be the legal description employed in the documents of
         conveyance of the Subject Property; and

                  b. A current commitment (the "Title Commitment") for the
         issuance of an owner's policy of title insurance to the Purchaser from
         the Title Company, together with good and legible copies of all
         documents constituting exceptions to Seller's title as reflected in the
         Title Commitment.


                                    ARTICLE V

                             TITLE INSPECTION PERIOD

         Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser pursuant
to the

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provisions of Article IV hereinabove reflects or discloses any defect, exception
or other matter affecting the Subject Property ("Title Defects") that is
unacceptable to Purchaser, then prior to the expiration of the Title Review
Period Purchaser shall provide Seller with written notice of Purchaser's
objections. Seller may, at its sole option, elect to cure or remove the
objections raised by Purchaser; provided, however, that Seller shall have no
obligation to do so. Should Seller elect to attempt to cure or remove the
objections, Seller shall have thirty (30) days from the date of Purchaser's
written notice of objections (the "Cure Period") in which to accomplish the
cure. In the event Seller either elects not to cure or remove the objections or
is unable to accomplish the cure prior to the expiration of the Cure Period,
then Seller shall so notify Purchaser in writing specifying which objections
Seller does not intend to cure, and then Purchaser shall be entitled, as
Purchaser's sole and exclusive remedies, either to terminate this Agreement by
providing written notice of termination to Seller within thirty (30) days from
the date on which Purchaser receives Seller's no-cure notice or waive the
objections and close this transaction as otherwise contemplated herein. If
Purchaser shall fail to notify Seller in writing of any objections to the state
of Seller's title to the Subject Property as shown by the Survey and Title
Commitment, then Purchaser shall be deemed to have no objections to the state of
Seller's title to the Subject Property as shown by the Survey and Title
Commitment, and any exceptions to Seller's title which have not been objected to
by Purchaser and which are shown on the Survey or described in the Title
Commitment shall be considered to be "Permitted Exceptions." It is further
understood and agreed that any Title Defects which have been objected to by
Purchaser and which are subsequently waived by Purchaser shall be Permitted
Exceptions.

                                   ARTICLE VI

                                INSPECTION PERIOD

         Purchaser, at Purchaser's sole expense, shall have the right to conduct
a feasibility, environmental, engineering and physical study of the Subject
Property for a period of time commencing on the date of execution of this
Contract and expiring sixty (60) days from that date. Purchaser and Purchaser's
duly authorized agents or representatives shall be permitted to enter upon the
Subject Property at all reasonable times during the Inspection Period in order
to

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conduct engineering studies, soil tests and any other inspections and/or tests
that Purchaser may deem necessary or advisable; provided, however, that no
drilling or other ground penetrations or physical sampling in any building shall
be done without Seller's prior written consent, which consent shall not be
unreasonably withheld or delayed. Purchaser further agrees to indemnify and hold
Seller harmless from any claims or damages, including reasonable attorneys'
fees, resulting from Purchaser's inspection of the Subject Property. In the
event that the review and/or inspection conducted by this paragraph shows any
fact, matter or condition to exist with respect to the Subject Property that is
unacceptable to Purchaser, in Purchaser's sole discretion, or if for any reason
Purchaser determines that purchase of the Subject Property is not feasible, then
Purchaser shall be entitled, as Purchaser's sole remedy, to cancel this Contract
by providing written notice of cancellation to Seller prior to the expiration of
the Inspection Period. If Purchaser shall provide written notice of cancellation
prior to the expiration of the Inspection Period, then this Contract shall be
cancelled, all earnest money (less $100.00) shall be immediately returned to
Purchaser by the Title Company, and thereafter neither Seller nor Purchaser
shall have any continuing obligations one unto the other. If no notice of
cancellation is provided by Purchaser prior to the expiration of the Inspection
Period, then this Contract shall remain in full force and effect.

                                   ARTICLE VII

              REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER

         Seller represents and warrants to Purchaser that at closing Seller will
have good and indefeasible fee simple title to the Subject Property free and
clear of all liens, encumbrances, covenants, restrictions, rights-of-way,
easements, and any other matters affecting title to the Subject Property except
for the Permitted Exceptions, and at closing, Seller will be in a position to
convey the Subject Property to Purchaser free and clear of all liens,
encumbrances, covenants, restrictions, rights-of-way, easements and other such
matters affecting title except for the Permitted Exceptions.

         Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, Seller shall not sell, assign, or convey any right,
title, or interest whatsoever in or to

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the Subject Property, or create or permit to exist any lien, security interest,
easement, encumbrance, charge, or condition affecting the Subject Property
(other than the Permitted Exceptions) without promptly discharging the same
prior to closing.

         Seller hereby further represents and warrants to Purchaser, to the best
of Seller's knowledge, as follows:

                  a. There are no actions, suits, or proceedings pending or, to
         the best of Seller's knowledge, threatened against Seller or otherwise
         affecting any portion of the Subject Property, at law or in equity, or
         before or by any federal, state, municipal, or other governmental
         court, department, commission, board, bureau, agency, or
         instrumentality, domestic or foreign;

                  b. The execution by Seller of this Contract and the
         consummation by Seller of the sale contemplated hereby have been duly
         authorized, and do not, and, at the closing date, will not, result in a
         breach of any of the terms or provisions of, or constitute a default
         under any indenture, agreement, instrument, or obligation to which
         Seller is a party or by which the Subject Property or any portion
         thereof is bound, and do not, and at the closing date will not,
         constitute a violation of any regulation affecting the Subject
         Property;

                  c. Seller has not received any notice of any violation of any
         ordinance, regulation, law, or statute of any governmental agency
         pertaining to the Subject Property or any portion thereof;

                  d. The Subject Property and the current operation thereof
         comply in all material respects with all laws, regulations, ordinances,
         rules, orders and other requirements of all governmental authorities
         having jurisdiction over the Subject Property or affecting all or any
         part thereof or bearing on its construction or operation, and with all
         private covenants or restrictions;

                  e. From the date of execution of this Contract through the
         date of closing, Seller shall continue to maintain the Subject Property
         in its present condition, subject to ordinary wear and tear and Article
         XV hereof, and shall continue to manage the Subject Property in the
         same manner as it is currently being managed; Seller shall not remove
         any fixtures, equipment, furnishings or other personal property from
         the Subject Property unless replaced with items of equal or greater
         quality and quantity, nor shall Seller in any manner neglect the
         Subject Property;

                  f. That, at closing, there will be no unpaid bills, claims, or
         liens in connection with any construction or repair of the Subject
         Property except for ones which will be paid in the ordinary course of
         business or which have been bonded around or the payment of which has
         otherwise been adequately provided for to the complete satisfaction of
         Purchaser; and

                  g. The assets and other items to be conveyed to Purchaser by
         Seller pursuant to this Contract comprise all of the assets and
         properties of Seller that are used in the operation of the Subject
         Property in the ordinary course of business and consistent with current
         practice; notwithstanding anything to the contrary contained herein, in
         the event that either Seller or Purchaser discovers after closing that
         any asset or item used in connection with the operation of the Subject
         Property has not been conveyed to Purchaser at closing, then Seller
         will immediately, upon demand by Purchaser, convey such asset or other
         item to Purchaser for no additional consideration of any kind
         whatsoever.


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All of the foregoing representations and warranties of Seller are made by Seller
both as of the date hereof and as of the date of the closing hereunder.
Notwithstanding the foregoing or anything to the contrary contained herein, it
is understood and agreed that the representations and warranties set forth
hereinabove shall survive the closing of this Contract only for a period of one
(1) year following the closing date, but not thereafter, and Seller shall have
no liability of any kind whatsoever for any breach thereof except to the extent
a claim is asserted against Seller within such one (1) year period.

                                  ARTICLE VIII

                         CONDITIONS PRECEDENT TO CLOSING

         The obligation of Purchaser to close this Contract shall, at the option
of Purchaser, be subject to the following conditions precedent:

                  a. All of the representations, warranties and agreements of
         Seller set forth in this Contract shall be true and correct in all
         material respects as of the date hereof and at closing, and Seller
         shall not have on or prior to closing, failed to meet, comply with or
         perform in any material respect any conditions or agreements on
         Seller's part as required by the terms of this Contract;

                  b. There shall be no change in the matters reflected in the
         Title Commitment, and there shall not exist any encumbrance or title
         defect affecting the Subject Property not described in the Title
         Commitment except for the Permitted Exceptions;

                  c. There shall be no changes in the matters reflected in the
         Survey, and there shall not exist any easement, right-of-way,
         encroachment, waterway, pond, flood plain, conflict or protrusion with
         respect to the Subject Property not shown on the Survey; and

                  d. No material and substantial change shall have occurred with
         respect to the Subject Property which would in any way affect the
         findings made in the inspection of the Subject Property described in
         Article VI hereinabove.

         If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.


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                                   ARTICLE IX

                                     CLOSING

         The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before sixty (60) days from the date of
expiration of the Inspection Period. Purchaser shall notify Seller at least five
(5) days in advance of the exact time and date of closing. Purchaser shall have
the right to obtain one sixty (60) day extension of the deadline for closing by
delivering directly to Seller, prior to the then scheduled closing deadline, an
additional Twenty-Five Thousand and No/100 Dollars ($25,000.00) in
non-refundable earnest money. If Purchaser exercises this right, then the
deadline for closing of this Contract shall be extended by sixty (60) days; the
additional $25,000.00 in earnest money which is paid by Purchaser in order to
extend the deadline for closing of this Contract shall be non-refundable to
Purchaser except in the event of a default by Seller hereunder, but, if this
Contract closes, then such additional earnest money shall be applied in partial
satisfaction of the purchase price payable hereunder. Upon the expiration of the
first sixty (60) day extension, Purchaser shall have the right to obtain a
second sixty (60) day extension of the deadline for closing by delivering
directly to Seller, prior to the then scheduled closing deadline, an additional
Twenty-Five Thousand and No/100 Dollars ($25,000.00) in non-refundable earnest
money. If Purchaser exercises this right, then the deadline for closing of this
Contract shall be extended by sixty (60) days; the additional $25,000.00 in
earnest money which is paid by Purchaser in order to extend the deadline for
closing of this Contract shall be non-refundable to Purchaser except in the
event of default by Seller hereunder, but if this Contract closes, then such
additional earnest money shall be applied in partial satisfaction of the
purchase price payable hereunder.

                                    ARTICLE X

                         SELLER'S OBLIGATIONS AT CLOSING

         At the closing, Seller shall do the following:

                  a. Deliver to Purchaser a limited warranty deed covering the
         Subject Property, duly signed and acknowledged by Seller, which deed
         shall be in form reasonably acceptable to Purchaser for recording and
         shall convey to Purchaser good and marketable title to the Subject
         Property, free and clear of all liens, rights-of-way, easements, and
         other matters affecting title to the Subject Property, except for the
         Permitted Exceptions.

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                  b. Deliver or cause to be delivered to Purchaser an ALTA
         owner's form of title insurance policy (the "Title Policy") insuring
         Purchaser in the amount of the purchase price that Purchaser has
         acquired good and marketable title to the Subject Property, subject
         only to the Permitted Exceptions. Purchaser shall be entitled to
         request the Title Company to provide, at Purchaser's sole cost and
         expense, such endorsements (or amendments) to the Title Policy as
         Purchaser may reasonably require so long as such endorsements or
         amendments impose no additional liability on Seller or delay the
         closing. Purchaser acknowledges and agrees that the Title Policy may be
         actually delivered within a reasonable time following the closing so
         long as Purchaser has received at closing a current binding title
         commitment obligating the Title Company to deliver the Title Policy.
         Seller shall pay the premium for a standard owner's form of title
         insurance policy in the amount of the purchase price, and Purchaser
         shall pay the cost of any title endorsements required by Purchaser and
         the cost of any reinsurance required by Purchaser.

                  c. Deliver a bill of sale and a blanket assignment in form
         reasonably acceptable to Purchaser, duly executed and acknowledged by
         Seller, conveying and/or assigning to Purchaser the Golf Course Assets.

                  d. Deliver a non-withholding statement that will satisfy the
         requirements of Section 1445 of the Internal Revenue Code so that
         Purchaser is not required to withhold any portion of the purchase price
         for payment to the Internal Revenue Service.

                  e. Deliver to Purchaser any other documents or items necessary
         or convenient in the reasonable judgment of Purchaser to carry out the
         intent of the parties under this Contract.


                                   ARTICLE XI

                       PURCHASER'S OBLIGATIONS AT CLOSING

         At the closing, Purchaser shall deliver to Seller the purchase price in
cash. In addition, if Purchaser elects to continue to use the Yamaha golf carts
now leased by Seller for use at the Subject Property, then Purchaser must assume
all obligations outstanding under any such lease at the time of closing.

                                   ARTICLE XII

                              COSTS AND ADJUSTMENTS

         At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:

                  a. Any real estate transfer taxes or sales taxes payable in
         connection with the sale of the Subject Property shall be paid in full
         by Seller.

                  b. Ad valorem taxes for the Subject Property for the current
         calendar year shall be prorated as of the date of closing, and Seller
         shall pay to Purchaser in cash at closing Seller's pro rata portion of
         such taxes. Seller's pro rata portion of such taxes shall be based upon
         taxes actually assessed for the current calendar year or, if for any
         reason such taxes for the Subject Property have not been actually
         assessed, such proration

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         shall be based upon the amount of such taxes for the immediately
         preceding calendar year, and adjusted by cash settlement when exact
         amounts are available. However, anything herein to the contrary
         notwithstanding, any tax abatement or refund for a period of time prior
         to closing shall belong to Seller.

                  c. All other income and ordinary operating expenses for or
         pertaining to the Subject Property including, but not limited to,
         public utility charges, maintenance, service charges, and all other
         normal operating charges of the Subject Property shall be prorated as
         of the closing date. Seller will assign to Purchaser all of Seller's
         right, title and interest in and to utility deposits and other deposits
         heretofore made by Seller in connection with the operation of the
         Subject Property.

                  d. All other closing costs, including but not limited to,
         recording and escrow fees shall be divided equally between Seller and
         Purchaser; provided, however, that Seller and Purchaser shall each be
         responsible for the fees and expenses of their respective attorneys.

         Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.

         Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.

         Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.

                                  ARTICLE XIII

                                ENTRY ON PROPERTY

         Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior to
closing for the purpose of inspecting the Subject Property and conducting such
engineering and mechanical tests as Purchaser may deem necessary or advisable,
any such inspections and tests to be made at Purchaser's sole expense. Purchaser
agrees to indemnify and hold Seller harmless from and against any and all



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losses, damages, costs, or expenses incurred by Seller as a result of any
inspections or tests made by Purchaser.

                                   ARTICLE XIV

                             POSSESSION OF PROPERTY

         Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.

                                   ARTICLE XV

                     DAMAGE OR DESTRUCTION PRIOR TO CLOSING

         In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:

                  a. Less than One Hundred Thousand Dollars ($100,000.00), then
         at Purchaser's option, either (i) the Seller shall repair such damage
         as promptly as is reasonably possible, restoring the damaged property
         at least to its condition immediately prior to such damage; and, in the
         event such repairs have not been completed prior to closing, then the
         closing shall nevertheless proceed as scheduled, and Purchaser may have
         the Title Company withhold from Seller the funds necessary to make such
         repairs until Seller has repaired such damage pursuant to the
         provisions hereof, at which time such funds shall be distributed to
         Seller or (ii) Purchaser may take an assignment of Seller's insurance
         proceeds and a credit for Seller's deductible and repair such damage
         itself;

or if said cost is:

                  b. greater than One Hundred Thousand Dollars ($100,000.00),
         then, at Purchaser's election, Seller shall pay to Purchaser, at
         closing, all insurance proceeds payable for such damage, and the sale
         shall be closed without Seller's repairing such damage, or, if
         Purchaser does not elect to accept such insurance proceeds, then either
         Seller or Purchaser may elect to terminate this Contract, in which case
         the earnest money (less $100.00) shall be returned to Purchaser and
         thereafter neither party shall have any further obligations one unto
         the other.


                                   ARTICLE XVI

                                     NOTICES

         All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in

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accordance with the provisions of this paragraph. All notices shall be in
writing and delivered to the person to whom the notice is directed, either in
person, by facsimile transmission, or by United States Mail, as a registered or
certified item, return receipt requested. Notices delivered by mail shall be
deemed given when deposited in a post office or other depository under the care
or custody of the United States Postal Service, enclosed in a wrapper with
proper postage affixed, addressed as follows:

         Seller:                            J. Phillip Ballard, Jr.
                                            P.O. Box 520
                                            330 Foster Street
                                            Cornelia, Georgia  30531
                                            Telephone No: (706) 778-7062
                                            Fax No: (706) 778-7061

         Purchaser:                         Silverleaf Resorts, Inc.
                                            1221 Riverbend Drive
                                            Suite 120
                                            Dallas, Texas  75247
                                            Attn:  Robert E. Mead
                                            Telephone No.:  (214) 631-1166
                                            Facsimile No.:  (214) 905-0514

         With Required Copy to:             Meadows, Owens, Collier, Reed, 
                                            Cousins & Blau, L.L.P.
                                            3700 NationsBank Plaza
                                            901 Main Street
                                            Dallas, Texas  75202
                                            Attn:  George R. Bedell, Esq.
                                            Telephone No.:  (214) 749-2448
                                            Facsimile No.:  (214) 747-3732


                                  ARTICLE XVII

                                    REMEDIES

         In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Contract by providing
written notice thereof to Seller, in which event the earnest money (less
$100.00) shall be returned immediately to Purchaser by the Title Company and the
parties hereto shall have no further liabilities or obligations one unto the
other; (ii) to waive any defect or requirement and close this Contract; or (iii)
to sue Seller for specific performance. The exercise of any of the foregoing
remedies of Purchaser shall not in any manner be construed as a waiver of
Purchaser's right to seek specific performance, and in the

                                     - 13 -


<PAGE>   14



event of a default by Seller hereunder, Purchaser shall be entitled to enforce
specific performance hereunder.

         In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to receive the Earnest
Money. The Earnest Money is agreed upon by and between the Seller and Purchaser
as liquidated damages due to the difficulty and inconvenience of ascertaining
and measuring actual damages, and the uncertainty thereof, and no other damages,
rights, or remedies shall in any case be collectible, enforceable, or available
to the Seller other than in this paragraph defined, and Seller shall accept the
Earnest Money as Seller's total damages and relief.

                                  ARTICLE XVIII

                                   ASSIGNMENT

         Purchaser shall have the right to nominate who shall take title and who
shall succeed to Purchaser's duties and obligations hereunder, or assign this
Contract to any person, firm, corporation, or other entity which Purchaser may,
at Purchaser's sole option, choose, and from and after such nomination or
assignment, wherever in this Contract reference is made to Purchaser such
reference shall mean the nominee or assignee who shall succeed to all the
rights, duties, and obligations of Purchaser hereunder.

                                   ARTICLE XIX

                        INTERPRETATION AND APPLICABLE LAW

         This Agreement shall be construed and interpreted in accordance with
the laws of the State of Georgia. Where required for proper interpretation,
words in the singular shall include the plural; the masculine gender shall
include the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.


                                     - 14 -


<PAGE>   15



                                   ARTICLE XX

                                    AMENDMENT

         This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.

                                   ARTICLE XXI

                                    AUTHORITY

         Each person executing this Contract warrants and represents that he is
fully authorized to do so.

                                  ARTICLE XXII

                                 ATTORNEYS' FEES

         In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.

                                  ARTICLE XXIII

                              DESCRIPTIVE HEADINGS

         The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

                                  ARTICLE XXIV

                                ENTIRE AGREEMENT

         This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior

                                     - 15 -


<PAGE>   16



and contemporaneous agreements and understandings of the parties in connection
therewith. No representation, warranty, covenant, agreement, or condition not
expressed in this Contract shall be binding upon the parties hereto or shall
affect or be effective to interpret, change, or restrict the provisions of this
Contract.

                                   ARTICLE XXV

                             MULTIPLE ORIGINALS ONLY

         Numerous copies of this Contract may be executed by the parties hereto.
Each such executed copy shall have the full force and effect of an original
executed instrument.

                                  ARTICLE XXVI

                                   ACCEPTANCE

         Seller shall have until 5:00 o'clock p.m., February 25, 1998, to
execute and return a fully executed original of this Contract to Purchaser,
otherwise this Contract shall become null and void. Time is of the essence of
this Contract. The date of execution of this Contract by Seller shall be the
date of execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday, or legal holiday under the laws of the State of Georgia, then
in such event the expiration date of such period shall be extended to the next
day which is not a Saturday, Sunday, or legal holiday under the laws of the
State of Georgia.

                                  ARTICLE XXVII

                             REAL ESTATE COMMISSION

         In the event that this Contract closes, but not otherwise, Seller
agrees to pay at closing a real estate commission to Century 21 Farish Realty
("Broker"), such commission to be in the amount of four percent (4%) of the
purchase price payable hereunder. Seller represents and warrants to Purchaser
that Seller has not contacted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this transaction,
and that Seller has not taken any action which would result in any real estate
broker's, finder's, or other fees or commissions being due and payable to any
other party with respect to the transaction

                                     - 16 -


<PAGE>   17



contemplated hereby. Purchaser hereby represents and warrants to Seller that
Purchaser has not contracted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this transaction,
and that Purchaser has not taken any action which would result in any real
estate broker's, finder's, or other fees or commissions being due or payable to
any other party with respect to the transaction contemplated hereby. Each party
hereby indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including reasonable attorneys' fees)
resulting to the other party by reason of a breach of the representation and
warranty made by such party herein. Notwithstanding anything to the contrary
contained herein, the indemnities set forth in this Article XXVII shall survive
the closing.
                                 ARTICLE XXVIII

                                    EXCHANGE

         Seller wishes to have the option to effect an exchange of real property
pursuant to the provisions of Section 1031 of the Internal Revenue Code, as
amended, in connection with the sale of the Subject Property to Purchaser.
Consequently, if, prior to the closing hereunder, Seller designates a property
or properties as exchange property, Purchaser will use Purchaser's best efforts
to acquire the exchange property for use in an exchange with Seller.
Alternatively, in the event Seller has not identified the exchange property by
the date of closing, this transaction shall close in such manner as will not
defeat a like kind exchange with respect to property later identified and
purchased within the qualifying time period. Purchaser agrees to cooperate with
Seller in consummating a like kind exchange provided that in doing so Purchaser
incurs no additional cost and the closing of this Contract is not thereby
delayed.

         EXECUTED on this the 25th day of February, 1998, 9:40 a.m.

                                            SELLER:


                                            /s/ J.P. Ballard
                                            -------------------------------- 
                                            J. PHILLIP BALLARD, JR.



                                     - 17 -


<PAGE>   18


         EXECUTED on this the 19th day of February, 1998.

                                  PURCHASER:

                                  SILVERLEAF RESORTS, INC., a Texas corporation



                                  By: /s/ Robert E. Mead
                                     -----------------------------------------
                                  Name: Robert E. Mead
                                       ---------------------------------------
                                  Its: CEO
                                      ----------------------------------------


RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:

TITLE COMPANY:

SAFECO LAND TITLE OF DALLAS



By: /s/ J.G. Kerr
    ------------------------------------
Name: J. G. Kerr, V.P.
     -----------------------------------
Its: Special Projects
     -----------------------------------
     Senior Commercial Escrow Officer





Exhibits:

         Ex A:  Legal Description


                                     - 18 -