CONTRACT OF SALE OF TIMESHARE RECEIVABLES WITH RECOURSE

This Contract of Sale of Timeshare Receivables with Recourse (“Agreement”) is
made this 20th day of June, 2005, by and between RESORT FUNDING LLC, a Delaware
limited liability company, with offices at 360 South Warren Street, 6th Floor,
Syracuse, New York  13202 (“Buyer”), and PREMIERE DEVELOPMENT INCORPORATED, an
Arizona corporation with offices at 2111 East Highland, Suite 210, Phoenix,
Arizona  85016 (“Seller”).

A.

Seller is in the business of marketing and selling timeshare intervals in the
form of memberships in Premiere Vacation Club, a multi-site vacation club (“Club
Project”), consisting of the following Component Sites, as defined herein:

(i)

Varsity Clubs of America: Notre Dame Chapter, located at Mishawaka, Indiana
 (“VCA South Bend Project”);

(ii)

Varsity Clubs of America: Tucson Chapter, located at Tucson, Arizona (“VCA
Tucson Project”);

(iii)

Sedona Vacation Club at Los Abrigados, located at Sedona, Arizona (“Los
Abrigados Project”);

(iv)

Kohl’s Ranch Lodge located in Payson, Arizona (“Kohl’s Ranch Project”);

(v)

Golden Eagle Resort in Estes Park, Colorado (“Golden Eagle Project”);

(vi)

The Inn at Los Abrigados Resort in Sedona, Arizona (“Inn at Los Abrigados
Project”);

(vii)

Sea of Cortez Premiere Vacation Club (formerly known as Sea of Cortez Beach
Club) in San Carlos, Sonora, Mexico (“San Carlos Project”);

(viii)

Rancho Manana Resort in Cave Creek, Arizona (“Rancho Manana Project”);

(ix)

The Carriage House Deluxe Suite Hotel, located in Las Vegas, Nevada (“Carriage
House Project”);

(x)

Bell Rock Inn, located in the Village of Oak Creek, Arizona (“Bell Rock Inn
Project”);

(xi)

Scottsdale Camelback Resort, located in Scottsdale, Arizona (“Scottsdale
Camelback Resort Project”);

(xii)

Roundhouse Resort, located in Pinetop, Arizona (“Roundhouse Project”); and

(xiii)

Premiere Vacation Club at the Roundhouse Resort, located in Pinetop, Arizona
(“PVC at Roundhouse Project”).

B.

Seller, in the course of conducting such business, may accept promissory notes,
deeds of trust, contracts for deed, installment contracts and other documents
from purchasers of Intervals and Club Memberships (collectively, “Purchasers”)
evidencing and securing the Purchasers’ obligations to make payments to Seller
for the unpaid balance of the purchase price of the Club Interests
(collectively, “Contracts”).

C.

Buyer is engaged, in addition to other activities, in the business of purchasing
and financing Contracts.

D.

Seller has agreed to sell to Buyer certain Contracts generated from the sale of
Intervals and Club Memberships in the Club Project that meet the criteria set
forth below, pursuant to the terms and conditions of this Agreement.

For good and valuable consideration, the receipt of which is acknowledged, and
pursuant to the mutual covenants and conditions in this Agreement, the parties
agree as follows:

SECTION 1 - DEFINITIONS

In addition to the words and terms elsewhere defined in this Agreement the
following words and terms as used in this Agreement have the following meanings:

1.0

Agreement means this Contract of Sale of Timeshare Receivables with Recourse and
any modifications, changes, addenda, or additions thereto.   

1.1

Carriage House Project Intervals means those timeshare intervals in the Carriage
House Project, and all other rights of usage and other appurtenances of and
pertaining to each such timeshare interest.  

1.2

Club means Premiere Vacation Club Incorporated, an Arizona non-profit
corporation, which is the owner of certain Unit Weeks located within the
Component Sites, which Unit Weeks are conveyed to Seller by the Component Site
Developer of such Unit Weeks pursuant to the terms of the Membership Plan and
related Project documents.

1.3

Club Interest or Club Memberships means the ownership interest of any Purchaser
in the Club Project consisting of such Purchaser’s Club Membership Share and a
Club Deed to a corresponding undivided fractional interest in either the Los
Abrigados Resort or the Carriage House Project as tenants-in-common with Other
Purchasers.

1.4

Club Inventory means timeshare inventory consisting of Unit Weeks from each of
the Resorts conveyed to the Club by the Owner of such inventory and set forth in
each declaration of annexation for the Club.

1.5

Club Membership Agreement means the “Vacation Club Membership Purchase
Agreement” or any other purchase agreement which includes a promissory note or
other evidence of indebtedness between Seller and the Purchaser providing for
the sale by Seller and the purchase by Purchaser of one or more Club Interests.

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1.6

Club Membership Share means each Purchaser’s owned share in the Club based on
the occupancy period and annual frequency of such Purchaser’s Club Interest as
set forth in the Club Membership Agreement and Club Deed in accordance with the
Membership Plan.

1.7

Club Project Interval means a timeshare interval owned by the Club or a
Purchaser in the form of a deed to an undivided interest in a Component Site,
except for the San Carlos Project, where timeshare intervals owned by the Club
are in the form of a certificate evidencing a right to use the San Carlos
Project.

1.8

Component Site means a timeshare resort in which Purchasers of Intervals are
afforded use rights to the buildings together with the other facilities of that
Resort through the Club’s ownership of timeshare intervals at that Resort.

1.9

Component Site Developer means the developer of a Component Site, but excludes
Component Sites not developed or managed by Seller or Guarantor.

1.10

Declaration collectively means, as amended from time to time:

(a)

that Declaration of Condominium for Varsity Clubs of America: Notre Dame
Chapter as recorded in the Public Records of St. Joseph County, Indiana at
Document No. 0257469;

(b)

that Declaration of Condominium for Varsity Clubs of America:  Tucson Chapter as
recorded in the Public Records of Pima County, Arizona at Docket 10716, Page
683;

(c)

that Declaration of Condominium for the Sedona Vacation Club at Los Abrigados as
recorded in the Public Records of Coconino County, Arizona at Document No.
3166134;

(d)

that Declaration of Condominium for Kohl’s Ranch Lodge as recorded in the Public
Records of Gila County, Arizona at Document No. 2002-016942;

(e)

that Declaration of Condominium for Golden Eagle Resort Lodge as recorded in the
Public Records of Larimer County, Colorado at Reception No. 90006436;

(f)

that Declaration of Condominium for the Inn at Los Abrigados Resort as recorded
in the Public Records of Coconino County, Arizona at Instrument No. 98-18102;

(g)

that Reglamento Interno Del Servicio Del Intervalo de Vacaciones dated
November 21, 1997 for the Sea of Cortez Beach Club;

(h)

that Declaration of Condominium for the Rancho Manana Resort as recorded in the
Public Records of Maricopa County, Arizona at Record No. 2002-1307510; and

(i)

that Declaration of Condominium for the Carriage House Deluxe Suite Hotel as
recorded in the public records of Clark County, Nevada, at Instrument No.
19900816-00872.

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1.11

Deeds of Trust means any deed of trust executed and delivered by a Purchaser
encumbering all of the right, title and interest of each such Purchaser in and
to its purchased undivided interest in Los Abrigados Resort or the Carriage
House Project as security for such Purchaser’s obligations under any Financed
Note Receivable.

1.12

Default Purchase Rate means, on the occurrence and during the continuation of an
Event of Default, the interest rate to be used in calculating the Purchase
Price, which shall be a rate five percent (5.0%) higher than the Purchase Rate.

1.13

Defaulted Receivable means any Receivable for which a payment has not been made
by a Purchaser within thirty (30) days of the due date for the initial payment
or which becomes ninety (90) days or more past due with regard to any payment
thereafter.

1.14

Effective Date means the date of this Agreement as first set forth above.

1.15

Eligible Receivable means a Contract which satisfies all of the following
criteria:

(a)

payments due under the Contract shall be self-amortizing and payable in equal
monthly installments; and the maximum term of each such Contract shall not
exceed eighty-four (84) months from the first payment due date and delivery of
the Contract.  Notwithstanding the foregoing, up to twenty-five percent (25%) of
the Eligible Receivables offered for sale on an annual basis may have a term of
up to one hundred twenty (120) months;

(b)

the interest rate to the Purchaser is not less than fourteen percent (14%) per
annum, such minimum interest rate to be determined so that, on calculation of
the weighted average interest rate of all Contracts, such weighted average
interest rate shall not be less than fourteen percent (14%) at any time during
the term of this Agreement;

(c)

the first payment due date is not more than forty-five (45) days from the date
it is offered for sale to Buyer;

(d)

the Contract arises as a result of a bona fide sale and no single Purchaser has
purchased more than four (4) Club Interests, as defined in Section 1.20 herein;

(e)

the Purchaser meets credit standards acceptable to Buyer in accordance with the
criteria set forth in Exhibit “H”;

(f)

the Contract is in form and substance satisfactory to Buyer, is validly
enforceable in accordance with its terms, and shall become due and payable on
the occurrence of an event of default thereunder by Purchaser;

(g)

Purchaser has made a cash down payment of at least ten percent (10%) of the
actual purchase price of the Club Interest, exclusive of closing costs and
processing fees, and no part of such payment has been made or loaned to
Purchaser by Seller or Guarantor or an Affiliate of Seller or Guarantor, nor has
the Purchaser received any cash or rebate of any kind;

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(h)

no installment is more than thirty (30) days past due on a contractual basis at
the time of sale to Buyer, nor becomes more than ninety (90) days past due on
a contractual basis thereafter;

(i)

the Unit with respect to the Club Interest purchased has been completed,
developed, and furnished in accordance with the Purchase Documents and is in
compliance with all applicable restrictions and the Law and the approvals for
use and occupancy for which have been duly obtained;

(j)

all amenities at the Component Sites for which the Club Interest purchased is
located have been completed and are available for use by all Purchasers and are
in compliance with all applicable restrictions and the Law, the approvals for
use and occupancy for which have been duly obtained;

(k)

the Purchaser is the sole payor under the Contract and is not an Affiliate of,
related to, or employed by Seller or Guarantor;

(l)

the sale of the Interval from which the Contract arises has not been canceled by
the Purchaser, any statutory or other applicable cancellation or rescission
period has expired, and the sale of the Interval otherwise complies fully with
the terms, provisions, and conditions of this Agreement, any other related
documents, the Purchase Documents and all Laws; and the Contract is free and
clear of adverse claims, liens, and encumbrances and is not currently, nor shall
it potentially be in the future, subject to claims of rescission, invalidity,
unenforceability, illegality, defense, offset or counterclaim, nor is Seller
aware of any threatened claims of rescission, invalidity, unenforceability,
illegality, offset, or counterclaim;

(m)

payments are to be in legal tender of the United States;

(n)

the Purchase Documents are valid, genuine, and enforceable against the obligor
thereunder and the Purchaser does not have any right of set-off, abatement, or
counterclaim, all applicable rescission periods have expired, and such Purchaser
has not assigned his interest thereunder;

(o)

the Purchaser is a U.S., Mexican or Canadian citizen and resident, provided,
however,  that no more that ten percent (10%) of the Contracts offered to Buyer
are Canadian residents, and that the payment method for the Receivable by
Mexican citizens is either by automatic credit or debit card charge;

(p)

payments have been and shall be made by the Purchaser thereunder and not by
Seller or any Affiliate of Seller or Guarantor on the obligor’s behalf;

(q)

the Purchase Documents shall not contain any provision obligating a Purchaser to
pay any prepayment penalty to either Seller or Buyer;

(r)

the Purchaser of the relevant Club Interest has access to a Unit among the
Component Sites during any use period reserved by or assigned to such Purchaser,
all in accordance with the Purchase Documents;

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(s)

the original of the Contract and all related documents have been endorsed by the
Seller to Buyer in the manner prescribed by Buyer and delivered to Seller as
provided in this Agreement, and the terms thereof and all instruments related
thereto shall comply in all respects with all Laws;

(t)

a certificate of occupancy for such Unit (or the building in which the Unit is
located) has been issued, and such Unit is not subject to any lien or Claim
(other than the lien created by a Contract and the Permitted Exceptions) that
has not previously been consented to in writing by Buyer;

(u)

the form of Purchase Documents, including but not limited to the form of
promissory note, deed of trust, federal Truth-in-Lending disclosure statement,
purchase contract, and other documents and instruments, relating to the Interval
purchase transactions giving rise to such Contract have been approved in advance
by Buyer in writing;

(v)

the Note Receivable is secured by a pledge and assignment of the Club Membership
Agreement Deed of Trust which shall be assigned by the Seller to the Buyer; and

(w)

the maximum outstanding principal balance of such Contract does not exceed
$30,000 (or such greater amount as may be approved in writing in advance by
Buyer).

1.16

Eligible Receivable Balance means the principal balance owed by the underlying
consumer on the Eligible Receivable as of the date the Eligible Receivable is
purchased by Buyer.  

1.17

Environmental Indemnity Agreement means the Environmental Indemnity Agreement
dated as of the date hereof executed and delivered by the Seller and Guarantor
to the Buyer, as the same may be amended from time to time.

1.18

Environmental Law means The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time (“CERCLA”), the Resource
Conservation and Recovery Act of 1976, as amended from time to time (“RCRA”),
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
federal Clean Air Act, the federal Clean Water Act, the federal Safe Drinking
Water Act, the federal Toxic Substances Control Act, the federal Hazardous
Materials Transportation Act, the federal Emergency Planning and Community Right
to Know Act of 1986, the federal Endangered Species Act, the federal
Occupational Safety and Health Act of 1970, the federal Water Pollution Control
Act, and any and all comparable statutes or ordinances enacted in the
jurisdiction in which the Resort is located, as all of the foregoing laws may be
amended from time to time, and any rules or regulations promulgated pursuant to
the foregoing; together with any similar local, state, or federal statutes,
ordinances, rules, or regulations, either in existence as of the date hereof or
enacted or promulgated after the date of this Agreement, that concern the
management, control, storage, discharge, treatment, containment, removal, and/or
transport of Hazardous Materials or other substances that are or may become
a threat to public health or the environment; together with any common law
theory involving Hazardous Materials or substances that are (or alleged to be)
hazardous to human health or the environment, based on nuisance, trespass,

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negligence, strict liability, or other tortious conduct, or any other federal,
state, or local statute, ordinance, regulation, rule, policy, or determination
pertaining to health, hygiene, the environment, or environmental conditions.

1.19

Event of Default has the meaning set forth in Section 7.

1.20

Financing Statements means the UCC-1 Financing Statements or amendments thereto
in form and substance approved by Buyer, filed of record from time to time as
required under this Agreement.

1.21

GAAP means generally accepted accounting principles, applied on a consistent
basis, set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants or in statements of the Financial
Accounting Standards Board which are applicable in the circumstances as of the
date in question; and the requisite that such principles be applied on
a consistent basis means that the accounting principles in a current period are
comparable in all material respects to those applied in a preceding period, with
any exceptions thereto noted.

1.22

Governmental Authority and Governmental Authorities means the United States of
America and the state, county, and municipality in which the Property is
located, and all other governmental authorities having jurisdiction over Seller,
Purchaser, the Guarantor, the Property, repair, restoration and renovation of
the Improvements, the Resort or the sale, use and occupancy of Intervals.

1.23

Guarantor means ILX Resorts Incorporated, an Arizona corporation.

1.24

Guaranty means that certain Guaranty and Subordination Agreement executed by
Guarantor on or of even date herewith, guarantying all of the obligations of
Seller to Buyer under this Agreement, as the same may be amended from time to
time.

1.25

Hazardous Materials means “hazardous substances”, “hazardous waste”, “hazardous
constituents”, “toxic substances”, or “solid waste”, as defined in the
Environmental Laws, and any other contaminant or any material, waste, or
substance that is petroleum or petroleum based, asbestos, polychlorinated
biphenyls, flammable explosives, or radioactive materials.

1.26

Holdback means with respect to any Eligible Receivable, the portion of the
Purchase Price for such Eligible Receivable that is not paid on the Purchase
Date of any Eligible Receivable.

1.27

 Holdback Fraction means the initial percent obtained by dividing the initial
Holdback for an Eligible Receivable by the Purchase Price for such Eligible
Receivable.

1.28

Law means any and all applicable federal, state, and local statutes, ordinances,
rules, regulations, court orders or other decree of any governmental entity, and
other legal requirements of any and every conceivable type to which Seller,
Guarantor, Club, any of the Resorts, or any portion thereof, the Resort
Documents, this Agreement,

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the Related Documents, or all or any portion of the Receivables, as applicable,
is or becomes subject from time to time.

1.29

Los Abrigados Intervals means those timeshare intervals in the Los Abrigados
Project, and all other rights of usage and other appurtenances of and pertaining
to each such timeshare interest.  

1.30

Los Abrigados Partners Limited Partnership “Los Abrigados” means an Arizona
limited partnership in the business of marketing timeshare intervals in the Los
Abrigados Project.

1.31

Managing Entity means for the Club Project and each Component Site, the entity
that is responsible for the operation and maintenance of the Club Project or
Component Site in accordance with the Project Documents.

1.32

Membership Plan means the Premiere Vacation Club Membership Plan restated and
recorded in the public records of Maricopa County, Arizona, on 12/06/02 as
Redord No. 2002-1307518, as the same may be amended or restated from time to
time, which document provides for the management, operation, use, and enjoyment
of the Club and establishes the benefits and burdens of the Club.

1.33

Note Receivable means the contract, installment notes and related Purchase
Documents executed by a Purchaser in favor of Seller in connection with such
Purchaser’s acquisition of a Club Interest.

1.34

Obligation means any and all indebtedness, obligations, liabilities, contracts,
representations, warranties, and agreements of every kind and nature between
Seller and Buyer now existing or hereinafter arising, and now or hereinafter
contemplated pursuant to this Agreement, or otherwise.

1.35

Permitted Exceptions means the exceptions to title listed on Exhibit “C “.

1.36

Person means natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts, or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.

1.37

Project Documents means any and all documents evidencing or relating to the sale
of Club Interests by Seller or Los Abrigados and the operation of the Club
Project and the Component Sites, including, without limitation, the Club
Membership Agreement, the Membership Plan, the receipt for Club Documents,
Component Site Declarations, the public offering statement or prospectus and all
exhibits thereto, the declaration, the articles and bylaws of the Managing
Entity for the Club Project and the Component Sites, the rules and regulations
of the Club Project and the Component Sites, the affiliation agreement(s) with
an internal or external exchange program, the Club Project and Component Site
management contracts, and such other documents as required to be delivered to
Purchasers or filed with a governmental authority by the Law.

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1.38

Property means the lands on which the Resorts or Component Sites are located,
and including any land hereafter added to the Resorts or Component Sites
pursuant to the Declarations.  

1.39

Purchase Date  means  the date of  purchase by Buyer of any Eligible Receivable
from Seller.

1.40

Purchase Documents means the Receivables and any agreement and related sale
documents executed and delivered by a Purchaser to Seller or Los Abrigados with
respect to the purchase of a Club Interest which is financed by Purchaser
through a Contract (including, without limitation, all loan applications, title
insurance policies, financial statements, truth in lending disclosure
statements, Real Estate Settlement Procedures Act disclosure statements, credit
card authorization forms, and the like) and all guaranties and other documents
or instruments evidencing or securing the obligations of the Purchaser or any
other person primarily or secondarily liable on such purchase agreement,
including, without limitation, all pledge and assignments of Club Membership
Agreements and all Deeds of Trust.

1.41

Purchase Price means the present value of the remaining monthly payments due on
an Eligible Receivable at the time of sale, discounted at the Purchase Rate.

1.42

Purchase Rate means, for the purposes of calculating the Purchase Price,
a floating rate per annum equal to the Prime Rate as published in The Wall
Street Journal, Eastern Edition (“Prime Rate”), plus two and three-quarters
percent (2.75%) but in no event less than seven percent (7.0%) per annum.  The
Purchase Rate for each calendar month for Contracts purchased during that month
shall be fixed for the duration of the Contracts, and shall be determined by the
Prime Rate published prior to and in effect on the first (1st) business day of
the month in which the Contract is purchased.

1.43

Purchaser means any Person who purchases one or more Club Interests.

1.44

Receivable means each Contract and the related Purchase Documents which are now
or hereafter assigned, endorsed, and delivered to Buyer pursuant to this
Agreement, together with:

(a)

All guaranties and other documents or instruments evidencing or securing the
obligations of the Purchaser or any other person primarily or secondarily liable
on each Contract;

(b)

All files, books and records of Seller pertaining to any of the foregoing; and

(c)

All proceeds from the foregoing.

1.45

Receivable Payments means those payments on Contracts which have been sold,
assigned, transferred, or set over to Buyer pursuant to this Agreement.

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1.46

Recourse means the obligation of Seller to Buyer pursuant to Section 3 resulting
from a Defaulted Receivable

1.47

Related Documents means all other documents and agreements between Seller and
Buyer executed or delivered in connection with this transaction, together with
any and all renewals, extensions, amendments, restatements, or replacements
thereof, whether now or hereafter existing.

1.48

Replacement Note Receivable means an Eligible Receivable, which is assigned to
Buyer in replacement of or as a supplement to a Defaulted Receivable.

1.49

Resorts collectively mean the following and mean any one of them as the context
permits:

(i)

VCA South Bend Project;

(ii)

VCA Tucson Project;

(iii)

Los Abrigados Project;

(iv)

Kohl’s Ranch Project;

(v)

Golden Eagle Project;

(vi)

Inn at Los Abrigados Project;

(vii)

San Carlos Project;

(viii)

Rancho Manana Project;

(ix)

Carriage House Project;

(x)

Bell Rock Inn Project;

(xi)

Scottsdale Camelback Resort Project;

(xii)

Roundhouse Project; and

(xiii)

PVC at Roundhouse Project.

1.50

Timeshare Act means any and all laws governing timeshares as enacted in the
State in which the Component Sites are located.

1.51

Unit means an individual residential dwelling unit within a Resort, together
with all furniture, fixtures, and furnishings therein, and together with any and
all interest in common elements appurtenant thereto, as provided in the
respective Declaration.

1.52

Unit Weeks means specific fee simple interval ownership interests or other
occupancy rights, each consisting primarily of a seven (7) day occupancy period
in a type

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of Unit at a Component Site which is conveyed to the Club by one of the
Component Site Developers pursuant to a special warranty deed or with respect to
the San Carlos Project by business agreement, and as more particularly described
in the Declaration of Annexation attached to the Membership Plan.

SECTION 2 - RIGHT TO FINANCE;
SUBJECT MATTER OF SALE AND PAYMENT

2.0

Right to Purchase.  Subject to the provisions hereinafter set forth, Seller
shall offer Buyer the first, absolute and exclusive right to purchase or finance
Eligible Receivables in an aggregate face amount of up to Thirty Million and
No/100 Dollars ($30,000,000.00) and all Eligible Receivables in excess of such
amounts such purchase to be in the sole discretion of Buyer (“Exclusive Right to
Purchase”).  Buyer’s Exclusive Right to Purchase shall terminate thirty-six (36)
months from the Effective Date or on the earlier termination of this Agreement.
 Notwithstanding the foregoing, Buyer’s Exclusive Right to Purchase with respect
to Eligible Receivables shall be satisfied if Seller offers to Buyer through the
termination of this Agreement not fewer than 40% of all such Eligible
Receivables.  Seller shall not sell, hypothecate, assign, offer, use as
collateral, or otherwise finance in any other way, more than 60% of the Eligible
Receivables with any Person other than Buyer without first offering to sell such
Eligible Receivables to Buyer and in any event only after receipt of the prior
written consent of Buyer.  If Buyer gives Seller written notice that it declines
to finance or purchase any Eligible Receivables offered by Seller, or Buyer
fails to finance within 14 days of submittal any Eligible Receivables offered by
Seller, then Seller may arrange for alternative financing or purchase sources
for such Eligible Receivables.  The purchase price of Eligible Receivables for
determining the aggregate face amount of the thirty million dollars
($30,000,000) available to Seller shall be the Advance Rate as defined in
Section 2.4.

2.1

Form of Receivables.  All Receivables purchased shall be in the form attached as
Exhibit “B” unless otherwise approved by Buyer in writing.  Concurrently with
the transfer of each Receivable, Seller shall transfer and assign or cause to be
transferred and assigned to Buyer the related Contract and other Purchase
Documents, pursuant to an assignment in the form attached as Exhibit “I”.

2.2

Conditions Precedent to Purchase.  The obligation of Buyer to purchase any
Eligible Receivable is subject to satisfaction of all of the following
conditions and in accordance with the other terms and conditions in this
Agreement:

(a)

Closing Deliveries.  Prior to execution of this Agreement, Buyer shall have
received, in form and substance satisfactory to Buyer, all documents,
instruments, and information identified on the closing checklist attached as
Exhibit “D”.

(b)

Deliveries Prior to Each Sale.  Prior to each sale to Buyer, Buyer shall have
received all documents, instruments, and information identified on Exhibit “E”
pertaining to the Contracts seller is offering to Buyer.  Requests for purchase
shall be made by Buyer not more than on a weekly basis, shall be made at least
seven (7) days prior to the requested date of disbursement and shall be in the
form of Exhibit “F”.

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(c)

Representations and Warranties.  The representations and warranties in this
Agreement and in the Related Documents shall be true, correct, and complete in
all material respects on and as of the date of sale taking into account any
amendments to the exhibits as a result of any disclosures made by Seller to
Buyer in writing after the Effective Date and approved by Buyer in writing.

(d)

No Default.  No Event of Default shall have occurred.

(e)

Performance of Agreements.  Seller shall have performed in all material respects
all agreements, paid all fees, costs and expenses, and satisfied all conditions
which this Agreement or the Related Documents provide shall be paid or performed
by it as of such date.

(f)

Governmental Approvals.  Seller shall have obtained all approvals, licenses,
permits and consents for (a) Seller’s operation of that portion of the Resort
for which sales of Club Interests which are the subject of the requested sale
have been made and (b) the sale of Club Interests which generated the Eligible
Receivable that are the subject of the requested sale.

2.3

Disbursement.  Within fourteen (14) days after Buyer’s receipt of the documents
described in Section 2.2 and provided that all other conditions precedent have
been met to Buyer’s satisfaction, Buyer shall disburse to Seller the Purchase
Price to which Seller would be entitled for each Eligible Receivable submitted
to and accepted by Buyer.  Notwithstanding the foregoing, Buyer’s disbursement
of the Purchase Price for any Eligible Receivable shall not be construed as
a waiver of any of its rights under this Agreement or the Law.

2.4

Purchase Payments.  Buyer shall pay to Seller, on the purchase of each Eligible
Receivable accepted by Buyer, an amount equal as follows:  

(i)

on the Purchase Date, Buyer shall pay to Seller one hundred percent (100%) of
the Eligible Receivable Balance for such Eligible Receivable on such date.

(ii) thereafter, Buyer shall pay to Seller, periodically as set forth below, a
portion of the Holdback for such Eligible Receivable, (“Holdback Payments”).
 Such periodic Holdback Payments shall (a) be made on the date twenty-four (24)
months after the Purchase Date for such Eligible Receivable and at six month
intervals thereafter (the date of each such periodic payment being referred to
hereinafter as a “Payment Date”) and (b) be in an amount equal to the product of
the Holdback Fraction for such Eligible Receivable times the difference between
(A) the Purchase Price for such Eligible Receivable, minus (B) the present value
on the Payment Date of the remaining monthly payments due on such Eligible
Receivable discounted at the Purchase Rate for such Eligible Receivable as in
effect on the Purchase Date minus, if any, the aggregate Holdback Payments
previously paid,.  Once a portion of the Holdback is paid to the Seller, the
remaining Holdback amount shall equal the original Holdback less the aggregate
Holdback Payments paid.  

Notwithstanding anything herein to the contrary, Seller does not have the right
to receive any Holdback payments described in 2.4(ii) above upon the occurrence
and during the continuation

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of an Event of Default or if Seller owes any amounts to Buyer.  The Buyer shall
have the right to offset any Holdback payments by all or a portion of any amount
due to Buyer resulting from a Defaulted Receivable or other amounts due under
the Loan Documents.

2.5

Intentionally Deleted.

2.6

Prepayment.  Should a Receivable be prepaid by a Purchaser, then the difference
between the present value of the balance of the Receivable at Seller’s interest
rate to the Purchaser specified in the Contract (“Purchaser PV”) and the present
value of the balance of the Receivable at the Purchase Rate (“Buyer PV”) shall
be calculated to determine if money is owed to Buyer or to Seller.  If the
Purchaser PV exceeds the Buyer PV, Seller shall pay an amount equal to the
original discount less the difference between Purchaser PV and Buyer PV to Buyer
within ten (10) days of the Purchaser’s prepayment.  If the Buyer PV exceeds the
Purchaser PV, and provided that no Event of Default exists and no condition
exists that with the giving of notice or the passage of time or both would cause
an Event of Default to exist, Buyer shall pay an amount equal to the original
Holdback less the difference between Buyer PV and Purchaser PV and less Holdback
Payments paid on the Receivable to Seller within ten (10) days of the
Purchaser’s prepayment.  Notwithstanding anything to the contrary in the
Agreement, should any Receivable be prepaid in full or a chargeback, as defined
below, within 90 days of the first payment due date thereunder, Seller shall pay
to Buyer a processing fee of one hundred dollars (US$100.00) per Receivable.
 Purchasers shall not be obligated to pay any prepayment penalty to either Buyer
or Seller.

2.7

True Sale.  The sale of Receivables to Buyer from Seller is a true sale. The
purchase of Receivables by Buyer is absolute and, subject to Section 3, Seller
has no right to repurchase any Receivables.

2.8

Recharacterization.  Without prejudice to the provisions of Section 2.7 above
providing for the absolute transfer of all of Seller’s interest in the
Receivables, in order to secure the prompt payment and performance of Seller to
Buyer and Buyer’s assignees arising in connection with this Agreement whether
now or hereafter existing, due or to become due, direct or indirect, or absolute
or contingent, Seller hereby assigns and grants to Buyer a first priority
security interest in all Seller’s right, title and interest, whether now owned
or hereafter acquired, if any, in, to and under the Receivables and Purchase
Documents, and Buyer shall be entitled to file Financing Statements in
connection therewith.

SECTION 3 - RECOURSE

3.0

For each Receivable that has become a Defaulted Receivable (“Chargeback”),
Seller unconditionally agrees to do either of the following:

(a)

Repurchase the Defaulted Receivable for the Repurchase Price (as defined in
Section 3.1 below) from Buyer within fifteen (15) days after Buyer delivers
notice to Seller requesting repurchase.

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(b)

Repurchase the Defaulted Receivable from Buyer and replace the Defaulted
Receivable with a new Eligible Receivable acceptable to Buyer, which shall be
subject to this Agreement, with a principal balance, term, and interest rate not
less than the Defaulted Receivable being replaced, within fifteen (15) days
after Buyer delivers notice to Seller requesting repurchase and replacement.

3.1

The repurchase price of any Defaulted Receivable which Seller is required to
repurchase pursuant to this Agreement shall be a sum equal to the Buyer PV minus
the difference between the original Holdback and the Holdback Payments paid on
the Defaulted Receivable, plus accrued interest and late fees and any other
costs and expenses as set forth in the Contract (“Repurchase Price”).  If Seller
elects to replace the Defaulted Receivable, Buyer shall pay Seller the Purchase
Price for the replacement Eligible Receivable in accordance with Section 2.
 Provided, however, that Buyer shall be entitled to a credit for the Repurchase
Price in connection with Seller’s repurchase of the Defaulted Receivable.

3.2

On payment to Buyer of the Repurchase Price, the Defaulted Receivable shall be
transferred and assigned to Seller free and clear of any rights of any person
claiming through or under Buyer, and without recourse to Buyer.

SECTION 4 - REPRESENTATIONS AND WARRANTIES

Seller, Component Site Developer and Guarantor, as applicable, represent and
warrant and shall be deemed continuously to represent and warrant to Buyer the
following:

4.0

Existence; Good Standing.  Seller is a validly existing corporation duly formed
under the laws of the State of Arizona.  Seller is duly authorized to do
business and is in good standing under the laws of such jurisdiction and such
other jurisdictions as required to conduct the business in which it is engaged,
and has all licenses and permits necessary to conduct the business in which it
is engaged.  Club is validly existing Arizona corporation duly formed under the
laws of the State of Arizona.  Club is duly authorized to do business and is in
good standing under the laws of such state and such other jurisdictions as
required to conduct the business in which it is engaged, and has all licenses
and permits necessary to conduct the business in which it is engaged.  Los
Abrigados is a validly existing Arizona limited partnership formed under the
laws of Arizona.  Los Abrigados is authorized to do business and is in good
standing under the laws of such other jurisdictions as required to conduct its
business and has all licenses and permits necessary to conduct the business in
which it is engaged.  Each of the other Component Site Developers is a validly
existing Arizona corporation incorporated under the laws of Arizona.  Each of
the other Component Site Developers is authorized to do business and is in good
standing under the laws of such other jurisdictions as required to conduct its
business and has all licenses and permits necessary to conduct its business.
 Guarantor is a validly existing corporation incorporated under the laws of
Arizona, and is in good standing.

4.1

Authority.

(a)

Seller.  Seller has (and, at the time of entry into the Contracts, had) the
power and authority to own its property and transact the business in which it is
engaged or

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presently proposes to engage and to execute, deliver, and perform under the
Contracts, this Agreement and Related Documents, the execution, delivery, and
performance of which have been duly authorized by all requisite action required
by Law and by its articles of incorporation and bylaws.  Each Component Site
Developer has (and, at the time of entry into the Contracts, had) the power and
authority to own its property and transact the business in which it is engaged
or presently proposes to engage and to execute, deliver, and perform under the
Contracts, this Agreement and Related Documents, the execution, delivery, and
performance of which have been duly authorized by all requisite action required
by Law and by its articles of incorporation and bylaws.  The execution,
delivery, and performance of this Agreement and the Related Documents by Seller
does not and will not constitute a breach or violation of Seller’s articles of
incorporation or bylaws; any other instrument or contract to which Seller is
a party or any Law by which Seller is bound; or any documents relating to the
Resorts or the Club Interests.  The execution, delivery and performance of this
Agreement by each Component Site Developer does not and will not constitute a
breach or violation of such Component Site Developer’s applicable entity
documents; an other instrument or contract to which such Component Site
Developer is a party or any Law by which such Component Site Developer is bound.

(b)

Guarantor.  Guarantor has the power and authority to execute, deliver, and
perform under the Guaranty, the execution, delivery, and performance of which
has been duly authorized by all requisite action required by Law and by its
articles of incorporation and bylaws.  The execution, delivery, and performance
of the Guaranty by Guarantor does not and will not constitute a breach or
violation of Guarantor’s articles of incorporation or bylaws; any other
instrument or contract to which Seller is a party or any Law by which Seller is
bound; or any documents relating to the Resort or the Club Project Intervals,
Los Abrigados Intervals or Carriage House Intervals.

4.2

Other Agreements.  Neither Seller, Guarantor nor any Component Site Developer is
in default under any indenture, mortgage, deed of trust, agreement, or other
instrument to which it is a party. The execution, delivery, and compliance with
this Agreement and the Related Documents will not (i) to the best of Seller’s
knowledge, violate the Law, or (ii) conflict or be inconsistent with, or result
in any default under, any contract, agreement, or commitment to which Seller is
bound.

4.3

Enforceability.  Each of the Contracts and other Purchase Documents, this
Agreement and each of the Related Documents are valid, binding, and enforceable
in accordance with their terms and do not require the consent or approval of any
governmental body, agency, or authority.

4.4

Litigation and Proceedings.  Except as disclosed in Exhibit “G”, there are no
actions, suits, proceedings, orders, or injunctions pending or, to the best of
Seller’s knowledge, threatened against or affecting Seller, Club, any Component
Site Developer, Guarantor, the Managing Entity, or any Affiliate of Seller or
Guarantor, the Property or the Resort, at law or in equity, or before or by any
governmental authority.  Neither Seller nor Guarantor has received any notice
from any court or governmental authority alleging that such Person or any
Affiliate of Seller, Guarantor, or the Managing Entity has violated the
Timeshare Act or any Law.

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4.5

Taxes.  Seller, Club and each Component Site Developer has filed all tax
returns, income or otherwise, which are required to be filed by it and has paid,
or will pay prior to delinquency, all taxes (including all interest and
penalties, if any) due pursuant to such returns or pursuant to any assessment
received by it, and there is no unassessed tax or tax deficiency proposed or
threatened against it or Guarantor.  All ad valorem taxes and other taxes and
assessments against the Club Project, each Component Site, Club Interest and the
Collateral have been paid or are current and will be paid when due and Seller
knows of no basis for any additional taxes or assessments against the Club
Project, each Component Site, Club Interest or the Collateral.  Seller shall
collect and pay all applicable sales or rental tax respecting the sale or rental
of the Club Interests.

4.6

Financial Statements.  Guarantor’s financial statements fairly present the
financial condition and (if applicable) results of operations of Guarantor as of
the date or dates of the financial statements and for the periods covered by the
financial statements.  All such financial statements, if any, were prepared in
accordance with GAAP.  There has been no material adverse change in the
financial condition of Guarantor from the financial condition shown in the
financial statements.  Guarantor is able to pay all of its debts as they become
due, and Guarantor shall maintain such solvent financial condition, giving
effect to all obligations, absolute and contingent, of Guarantor.  Guarantor’s
obligations under the Loan Documents will not render Guarantor unable to pay its
debts as they become due.  The present fair market value of Guarantor’s assets
is greater than the amount required to pay its total liabilities.

4.7

Compliance With Law.  To the best of their knowledge after the exercise of due
care and diligence, Seller, Club and each Component Site Developer has complied
in all respects with the Law applicable to its business, including, without
limitation: (i) the Interstate Land Sales Full Disclosure Act; (ii) any
applicable state condominium and timeshare statutes, rules, and regulations,
including but not limited to those governing the administration and operation of
owners’ associations and those requiring registration of any of the Intervals;
(iii) Regulation Z of the Federal Reserve Board; (iv) the Equal Credit
Opportunity Act; (v) Regulation B of the Federal Reserve Board; (vi) Section 5
of the Federal Trade Commission Act; (vii) all applicable state and federal
securities laws; (viii) all applicable usury laws; (ix) all applicable trade
practices, home and telephone solicitation, sweepstakes, lottery, and other
consumer credit and protection laws; (x) all applicable real estate sales
licensing, disclosure, reporting, and escrow laws; (xi) the Americans with
Disabilities Act; (xii) the Real Estate Settlement Procedures Act; and (xiii)
all amendments to and rules and regulations promulgated under the foregoing.

4.8

Licenses and Permits.  Seller, Club and each Component Site Developer has all
required franchises, certificates of convenience and necessity, operating
rights, licenses, permits, consents, authorizations, approvals, exemptions, and
orders as are necessary to carry on its business as now being conducted
(collectively, “Licenses”).  Such Licenses are in full force and effect and no
violations are or have been recorded in respect to any License and no proceeding
is pending or threatened to revoke any License.

4.9

Employee Benefit Plan. Seller, Club and each Component Site Developer is in
compliance in all material respects with all applicable provisions of the
Employee

16

Retirement Income Security Act, the Internal Revenue Code, and all other
applicable laws and the regulations and interpretations thereof with respect to
all employee benefit plans adopted by Seller for the benefit of its employees.
 No material liability has been incurred by Seller, which remains unsatisfied
for any funding obligation, taxes, or penalties with respect to any such
employee benefit plan.

4.10

Principal Place of Business.  The address of the principal place of business of
Seller is Phoenix, Arizona.  All documents and records, including computer
records, pertaining to the Receivables, and collections thereon are and will be
kept at 2111 East Highland, Suite 210, Phoenix, Arizona  85016.

4.11

Representations and Warranties as to the Club Project.

(a)

Title; Prior Liens.  Club is the owner of all Club Inventory and has good and
marketable title to the timeshare intervals in the Component Sites annexed into
the Club (excluding Los Abrigados Intervals and Carriage House Intervals deeded
to Club members) subject to the Permitted Exceptions.  Neither Seller nor any
Component Site Developer is in material default under any of the documents
evidencing or securing any indebtedness which is secured, wholly or in part, by
the Club Project or any Component Site, and no event has occurred which with the
giving of notice, the passage of time, or both, would constitute a default under
any of the documents evidencing or securing any such indebtedness.  There are no
liens or encumbrances against the Club Project Intervals Owned by Club or any
Component Site developed by Seller or Guarantor, other than the Permitted
Exceptions as listed on Exhibit “C”.

(b)

Purchase Documents.  The security interest created by the Purchase Documents is
and will be prior to any lien or other interest relating to Club Interests.  The
Purchase Documents are assignable by the obligee and its successors and assigns.

(c)

Access. Each Component Site has direct access to a publicly dedicated road over
recorded easements, and all roadways, if any, inside the Resorts are or will be
common areas under the Declaration.

(d)

Utilities.  Electric, gas, sewer, water facilities, and other necessary
utilities are lawfully available in sufficient capacity to service the Resorts
and any easements necessary to the furnishing of such utility service have been
obtained and duly recorded.

(e)

Amenities.  All amenities described in the Project Documents as completed are
completed.  Each Purchaser has access to and the use of all of the amenities and
public utilities of the Resorts as and to the extent provided in the Project
Documents.

(f)

Construction.  All costs arising from the construction of all improvements or
repair, restoration and renovation of the Improvements and the purchase of all
equipment, inventory, or furnishings located in or on the Resorts and promised
with respect to the sale of a Club Interest which is the subject of a purchased
Receivable have been paid in full or financed.  The Property, the Resorts, and
the Improvements have been and will continue to be constructed and operated in
compliance with all applicable zoning requirements, building codes, subdivision
ordinances, licensing requirements, covenants, conditions, and restrictions of
record, and all Laws.

17

(g)

Project Documents:  Seller has furnished Buyer with true and correct copies of
the Project Documents.  The Project Documents comply with the Law, including,
without limitation, the Timeshare Act and all of the rules or regulations
thereunder and are in full force and effect.  Each Component Site has been
established and dedicated as, and will remain, a timeshare project.
 All necessary approvals of the offering for the sale of Club Interests from the
states in which they are sold have been obtained.  Except for amendments to
cause accommodations to be annexed or de-annexed or as required by law, Seller
will not vote to materially amend the Membership Plan without the prior written
consent of Lender, which consent shall not be unreasonably withheld.

4.12

Assessments.  The Managing Entity has the authority to levy annual assessment to
cover the costs of maintaining and operating the Club Project and each Component
Site.  The Managing Entity is solvent, and currently levied assessments on
Purchasers together with developer subsidies and/or advances are adequate to
cover the costs of maintaining and operating the Club Project and each Component
Site and to pay for current deferred maintenance and capital improvements.
 There are no events, which currently exist or could reasonably be foreseen by
Seller, which could give rise to a material increase in such costs.  

4.13

Exchange Company.  Seller and/or Club is a member and participant, pursuant to
a validly executed and enforceable written agreement with Interval
International.  Seller has paid all fees and other amounts due and owing under
such agreement and is not in default under such agreement, and no condition
exists which, with the giving of notice or the passage of time, or both would
constitute a default under such agreement.

4.14

Environmental Matters.  To the best of Seller, Club, and Component Site
Developers’ knowledge, the Property does not contain any Hazardous Materials,
and no Hazardous Materials are used or stored at or transported to or from the
Property, except for commercially reasonable amounts thereof commonly found at
residential or resort properties in the immediate vicinity of the Property;
Seller, Club or Component Site Developer have received no notice from any
governmental agency or other Person with regard to Hazardous Materials on,
under, or affecting all or any portion of the Receivables and neither Seller,
the Club Project, each Component Site, nor any portion of the Receivables are in
violation of any Environmental Laws with regard to Hazardous Materials.

4.15

Representations as to the Receivables.

(a)

Title and Enforceability.  Seller, Club and each Component Site Developer, as
applicable, has good and marketable title to the Receivables and has full right
to enter into the Purchase Documents; to the best of Seller’s knowledge, all
parties to the Purchase Documents have full capacity to contract; all filing and
recording required by Law have been completed and complied with and any
requirement of new or further filing, recording, or renewals thereof shall be
complied with by Seller, the Club, each Component Site Developer, and Buyer may
undertake same but shall be without any responsibility or obligations whatsoever
for any omission or invalid accomplishment thereof; the Purchase Documents and
assignments

18

of Purchase Documents are genuine and in all respects what they purport to be
and enforceable according to their terms; to the best of Seller’s knowledge, all
statements in the Purchase Documents are true and all unpaid balances shown
therein or in other documents provided by Seller to Buyer are correct; and the
Purchase Documents and the obligations which they evidence are, and will
continue to be, free and clear of all defenses, setoffs, counterclaims, liens,
and encumbrances of every kind and nature.  The bargained-for services and
facilities are and shall remain available to Purchasers in satisfactory
condition and have been accepted by Purchasers under the Contracts and the
Purchase Documents.

(b)

Eligibility.  On the date of the assignment and delivery to Buyer, each Contract
assigned to Buyer constitutes an Eligible Receivable and Seller is not aware of
any facts or information, which would cause such Eligible Receivable to be
ineligible under this Agreement.

(c)

Compliance With Law.  The Purchase Documents comply with the Law, including,
without limitation, Truth-in-Lending laws, federal and state disclosure
requirements and regulations, and other Laws pertaining to the enforcement or
enforceability of the Contracts.  The marketing, sale, offering of sale, rental,
solicitation of Purchasers or, if applicable, lessees, and financing of
Intervals (i) do not constitute the sale, or the offering for sale, of
securities subject to the registration or other requirements of the Securities
Act of 1933, as amended, or any state securities law; (ii) do not violate the
Interstate Land Sales Full Disclosure Act, the applicable law governing
timeshare, or any other Law; and (iii) do not violate any consumer credit or
usury statute of the state or country in which the Resort is located or any
jurisdiction in which sales or solicitation activities regarding the Intervals
occur.  To the extent required by the Law, all Interval marketing and sales
activities are performed by employees or independent contractors of Seller, who
is and shall remain properly licensed in accordance with the Law.

(d)

Deed of Trust.  Each Deed of Trust is a first priority security interest on the
purchased undivided interest in Los Abrigados Resort or undivided interest in
the Carriage House Project.

4.16

Full Disclosure.  No part of this Agreement or the Related Documents or any
certificate or statement furnished by Seller to Buyer contains or will contain,
during the term of this Agreement, any misleading or untrue statement of
a material fact.  To the best of Seller’s knowledge, there is no fact, other
than facts relating to general economic conditions, which materially adversely
affects the business, operations, affairs, conditions, properties, or assets of
Seller which has not been set forth in the documents, certificates, or
statements furnished to Buyer.  Seller knows of no legal or contractual
restriction which will prevent it from offering or selling Club Project
Intervals or Los Abrigados Intervals to Purchasers in any jurisdictions where it
is selling such Intervals.

4.17

Reservation System.  The Reservation System for the Club is fully operational
for its intended purpose.  Seller represents that the Reservation System for the
Club including the computer software is owned by ILX Resorts Incorporated free
and clear of any Liens (other than those relating to the financing or leasing of
equipment or software or licensing of software) that the Reservation System
shall continue in operation and shall be available to the Club and that the
Reservation System shall always be operated to

19

facilitate Purchaser’s ability to exercise and use their timeshare interests in
accordance with the Project Documents.  Seller and the Club acknowledge the
significance of the Reservation System to the ability of Purchasers to exercise
their use rights in accordance with their Club Membership Agreement and the
Project Documents.  

4.18

One to One Ratio.  Borrower represents and warrants that the Club as of the
closing date will have sufficient accommodations and use rights so that at all
times Total Authorized Club Membership Shares (as defined in the Membership
Plan) sold and attributable to all Purchasers who are in compliance with their
Club Membership Agreements, and the Project Documents is less than or equal to
the Club Inventory consisting of Unit Weeks which have been annexed at that time
in accordance with the Membership Plan (“One to One Ratio”).

4.19

Club Reports.  Seller shall maintain at all times and available for inspection
by Buyer a complete listing of all Purchasers in good standing of the Club, the
fractional value of all Club Interests and related Memberships purchased,
whether the Club Interest is annual or biennial, a current inventory status
report of all accommodations and facilities which make up the Club and shall
provide additional reports and information concerning the Club as reasonably
requested by Buyer.

SECTION 5 - AFFIRMATIVE COVENANTS

Seller covenants with Buyer as follows:

5.0

Performance.  Seller promptly shall perform all of its obligations under this
Agreement and the Related Documents.

5.1

Insurance.  Seller, Club and each Component Site Developer shall maintain the
following insurance policies (“Insurance Policies”):

(a)

For properties managed by Seller, all-risk builder’s risk insurance during
renovation of the Improvements, in an amount equal to one hundred percent (100%)
of the replacement cost of the Property, providing all-risk coverage on the
Property and the materials stored on the Property and elsewhere, including the
perils of collapse and water damage.

(b)

All-risk insurance on the Property until such time as the this Agreement is
terminated, as determined by Buyer, in an amount equal to one hundred percent
(100%) of the replacement cost of either the Property or of the Intervals
annexed to Club Project if Seller does not manage the Property or in such
additional amounts as Buyer may reasonably require, providing all-risk coverage
on the Property.

(c)

Such other insurance as Buyer may reasonably require, which may include business
interruption, flood, sinkhole, earthquake, hurricane, and other risks.

All Insurance Policies shall be issued on forms and by companies of at least
a Best rating of A-, XII, which are licensed to do business in the state in
which the Component Site is located, and shall be satisfactory to Buyer.  Seller
shall deliver copies of all

20

Insurance Policies to Buyer prior to closing, and shall deliver to Buyer
evidence of such coverage on or before the anniversary date of each Insurance
Policy.  All Insurance Policies shall have loss made payable to Buyer as
mortgagee together with the standard mortgagee clause, if such is required in
the state in which the Component Site is located.  No Insurance Policy may be
terminated, reduced, or materially changed without Buyer’s prior written
consent, and all Insurance Policies shall contain a provision giving Buyer
thirty (30) days’ prior notice of termination, reduction, or other material
change of the coverage.

(d)

Proofs of Claim.  In case of loss or damage or other casualty, Seller shall give
immediate written notice thereof to the insurance carrier(s) and to Buyer.
 Subject to the prior rights of the Managing Entity under the Project Documents,
Buyer is authorized and empowered, and Seller hereby irrevocably appoints Buyer
as its attorney-in-fact (such appointment is coupled with an interest), at
Buyer’s option, to make or file proofs of loss or damage and to settle and
adjust all claims under insurance policies which insure against such risks, to
direct Seller, in writing, to agree with the insurance carrier(s) on the amount
to be paid in regard to such loss, and to endorse all checks for insurance
proceeds payable to Seller or Club so that the proceeds are payable to Buyer.

(e)

Loss or Casualty.  Provided no Event of Default then exists and Seller certifies
as to same, the net insurance proceeds shall be made available for the
restoration or repair of a Component Site if (i) in Buyer’s reasonable judgment:
(A) restoration or repair and the continued operation of the Resort or
a Component Site is economically feasible; (B) the value of Buyer’s security is
not reduced; and (C) the casualty loss does not exceed the net insurance
proceeds available for restoration, or Seller or the Managing Entity provides
a deposit in the amount of any such excess or other evidence satisfactory to
Buyer that funds are otherwise available to pay any excess costs of restoration.
Seller shall pay, or cause to be paid, all amounts, in addition to the net
insurance proceeds, necessary to pay in full the cost of the restoration or
repair.  In addition, prior to any disbursement of insurance proceeds subject to
this Agreement for renovation or repair to the Resort or a Component Site, Buyer
shall have approved in writing (i) all plans and specifications for any proposed
repair or restoration; (ii) the construction schedule; and (iii) the architect’s
and general contractor’s contracts for restoration exceeding $100,000.  Buyer
may establish other conditions it deems reasonably necessary to assure the work
is fully completed in a good and workmanlike manner free of all liens or claims
by reason thereof, and in compliance with the Law.  At Buyer’s option, the net
insurance proceeds shall be disbursed pursuant to a construction escrow
acceptable to Buyer.  

If an Event of Default then exists, or any of the conditions set forth in this
subsection have not been met or satisfied, or the Resort is not to be restored
or repaired, the net insurance proceeds shall be applied to the Indebtedness in
such order and manner as Buyer may elect, whether or not due and payable, with
any excess paid to Seller.  

Notwithstanding anything in this Agreement to the contrary, for so long as any
Club Interest that is the subject of a sale to Buyer is subject to the
Declaration, insurance proceeds shall first be applied in accordance with the
Declaration.  The Project Documents and the Mortgages shall contain provisions
which will require disbursement of insurance proceeds to Buyer to the extent
available under the Declaration for disbursement to Purchasers of Intervals,
which provisions shall not be modified in any way or deleted without the prior
written consent of

21

Buyer.  In no event shall the Project Documents or any Mortgage permit
disbursement of the insurance proceeds for any Interval directly to such
Purchaser to the extent that any unpaid balance is due on such Mortgage.

5.2

Condemnation.  The proceeds of all awards, payments, and claims for damages,
direct or consequential, in connection with any condemnation or other taking of
any Unit or Club Interest which is the subject of a purchased Note Receivable or
part thereof, or for conveyances in lieu of condemnation, which may become due
with respect to the Receivables shall be in accordance with the Club Project
Documents.  

The Project Documents which contain provisions regarding disbursement of
condemnation proceeds shall not be modified in any way or deleted without the
prior written consent of Buyer.  In no event shall Seller nor any Component Site
Developer permit disbursement of the condemnation proceeds directly to Purchaser
for any Interval financed through a Contract to the extent that any unpaid
balance is due on such Contract.  

5.3

Inspections and Audits.  Seller, each Component Site Developer and Club shall,
at such reasonable times during normal business hours and as often as may be
reasonably requested, permit all agents or representatives of Buyer to inspect
any Resort  and any of Seller’s assets (including, without limitation, financial
and accounting books and records), to examine and make copies of and abstracts
from the records and books of account of Seller, Club or the Managing Entity
(as permitted by the Law) and to discuss its affairs, finances, and accounts
with any of its officers, employees, or independent public accountants.  Buyer
may conduct such audits and inspections on at least an annual basis.  Seller
shall make available to Buyer all credit information in Seller’s possession or
under Seller’s control with respect to Purchasers as Buyer may request.
 All property inspections, audits, and credit investigations shall be at
Seller’s reasonable expense.

5.4

Seller’s Reporting Requirements.  So long as this Agreement is in effect, Seller
shall furnish the following to Buyer:

(a)

Sales and Inventory Reports.  Within ten (10) days after the end of each month,
a report showing sales of  Club Interests for that month, in form and content
reasonably satisfactory to Buyer; and within thirty (30) days after the end of
each fiscal year of Seller, an annual sales and inventory report for the Club
Project detailing the sales of all Intervals during such fiscal year and the
available inventory Intervals, each monthly and annual report certified by the
chief financial officer of Seller to be true, correct, and complete and
otherwise in the form approved by Buyer.

(b)

Quarterly Financial Reports.  Within sixty (60) days after the end of each
calendar quarter, financial statements of Guarantor for that quarter, certified
by Guarantor’s chief financial officer.

(c)

Year-End Financial Reports.  As soon as available and in any event within one
hundred twenty (120) days after the end of each calendar year: (i) the balance
sheet of Guarantor as of the end of such year and the related statements of
income and cash flow for such year; (ii) a schedule of all outstanding
indebtedness of Guarantor describing in reasonable detail

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each such debt or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt or loan; and
(iii) the audited financial statements of Guarantor from a firm of independent
certified public accountants, which shall be unqualified as to going concern and
scope of audit and shall state that such financial statements present fairly the
financial position of Guarantor as of the dates indicated and the results of
operations and cash flow for the periods indicated in conformity with GAAP.

(d)

Association Reports.  Promptly on receipt thereof, one (1) copy of each other
report submitted to Seller and the Managing Entity by independent public
accountants in connection with all annual, interim, and special audits made by
them of the books of Seller and the Managing Entity, if any, as applicable.

(e)

Other Reports.  Such other reports, statements, notices, and written
communications relating to Seller, Guarantor, the Managing Entity, the Club, or
any Component Site as Buyer may require, in its reasonable discretion.

(f)

SEC Reports.  Promptly on their becoming available one (1) copy of each
financial statement, report, notice, and proxy statement sent by Seller or
Guarantor to security holders generally, and of each regular or periodic report
and each registration statement, prospectus, and written communication (other
than transmittal letters) in respect thereof publicly filed by Seller or
Guarantor with, or received by Seller or Guarantor in connection therewith from,
any securities exchange or the Securities and Exchange Commission or any
successor agency.

5.5

Records.  Seller shall keep adequate records and books of account reflecting all
financial transactions of Seller, including sales of Club Interests, in which
complete entries will be made in accordance with GAAP.

5.6

Management.  The manager and the management contracts for each Component Site
shall at all times be satisfactory to Buyer.  For so long as Seller controls the
Managing Entity, Seller shall not change the Resort management company or amend,
modify, or waive any provision of or terminate the management contract for any
of the  Resorts without the prior written consent of Buyer, which consent shall
not be unreasonably withheld.  

5.7

Maintenance.  Component Site Developer shall maintain its respective Component
Site in good repair, working order, and condition and shall make or cause to be
made all necessary replacements to each Component Site.

5.8

Claims.  Seller and Club shall (a) promptly notify Buyer of (i) any claim,
action, or proceeding affecting any Component Site or the Receivables, or any
part thereof, and (ii) any action, suit, proceeding, order, or injunction of
which Seller becomes aware after the Effective Date pending or threatened
against or affecting Seller, Club, Club Project, Component Site Developer or
Guarantor or any Affiliates of Seller or Guarantor, and; (b) at the request of
Buyer, appear in and defend, at Seller’s expense, any such claim, action, or
proceeding; and (c) comply in all respects, and shall cause Guarantor  and all

23

Affiliates of Seller and Guarantor to comply in all respects, with the terms of
any orders imposed by any governmental authority.

5.9

Use of Buyer Name.  Seller will not, and will not permit any Affiliate of Seller
or Guarantor to, without the prior written consent of Buyer, use the name of
Buyer or the name of any affiliates of Buyer in connection with any of their
respective businesses or activities, except in connection with internal business
matters, administration of this Agreement, and as required in dealings with
governmental agencies.

5.10

Release and Bonding of Liens.  (a) If any lien attaches to any Component Sites,
Seller shall, within sixty (60) days after such attachment, either (i) cause
such lien to be released of record, or (ii) transfer such claim to the Bond,
if available, or (iii) provide Buyer with such security as Buyer may reasonably
require, including depositing with Buyer, in cash, the amount of the lien claim;
and (b) in the event Seller and/or Club receives a notice of mechanic’s lien
claim, or a mechanic’s lien claim is filed with any Office of Public Records in
the County and State where a Component Site is located, on a Component Site or
in the event suit is filed against Seller and/or Club to enforce a mechanic’s
lien on a Component Site, the Seller shall promptly notify Buyer of any such
filing of notice of lien, lien, or suit to enforce lien, and upon request of
Buyer, shall provide Buyer with copies of all suit papers filed by any party in
such a mechanic’s lien lawsuit.  Seller’s responsibility to provide such notice
is cumulative to those responsibilities found elsewhere in this Agreement
including, but not limited to, paragraph 5.9 above.  

5.11

Net Worth; Net Income.  At all times while this Agreement remains in effect or
Buyer is obligated to purchase Eligible Receivables from Seller, Seller and
Guarantor shall not, for more than sixty (60) continuous days, fail to maintain
a minimum net worth of $20,000,000.

5.12

Servicing and Collections.

(a)

Notification.  Seller shall furnish Buyer for Buyer’s review and approval and
prior to delivery to Purchasers, an executed letter on Seller’s or Guarantor’s
letterhead advising Purchasers of the sale and assignment of their Contracts
under this Agreement to Buyer.

(b)

Authority.  Seller shall have no authority to accept any collections of any sums
under the Contracts unless Buyer consents in advance and in writing, except for
dues or maintenance fees if so provided in the Contracts.  On the occurrence of
an event of default under a Contract, without releasing the liability of Seller,
Buyer may, in its own discretion, grant extensions of time of payment to and
compromise or release claims against the Purchaser who is in default on the
Contracts on thirty (30) days notice to Seller.

(c)

Duties in General.  Buyer shall itself or through a servicing agent invoice
Purchasers, debit their accounts through electronic funds transfer on a monthly
basis or provide Purchasers with coupon books.  On repurchase of Defaulted
Receivables by Seller from Buyer, Seller shall bear all responsibility for
collection and any related legal action.

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(d)

Aging Report.  Buyer shall provide Seller with a monthly aging report of the
Receivables.

5.13

Servicing Fees and Cost.  All costs and expenses payable on a Receivable shall
be received and serviced by Buyer.  Seller shall pay all servicing payments, and
the costs and expenses of the Buyer and Seller shall be responsible for the cost
of collections.  For each Receivable serviced by Buyer, Seller shall pay to
Buyer an up-load fee of five dollars ($5.00), a down-load fee of five dollars
($5.00), and a monthly servicing fee of four and 25/100 dollars ($4.25) per
Contract per month (collectively, “Servicing Fees”).  The Servicing Fees shall
be adjusted on an annual basis by the increase, if any, in the Consumer Price
Index (“CPI-U”) over the CPI-U from the immediately preceding year.

5.14

Tax.  Seller shall pay all taxes due to the appropriate authorities with respect
to each Receivable purchased by Buyer no later than 15 days after each sale (or,
if later, the date the tax becomes due) in accordance with all Laws.  Without
limiting the generality of the foregoing, Seller shall pay all sales taxes and
excise taxes relating in any way to the sale, purchasing and servicing of the
Receivables and on the stream of income generated therefrom, excluding income
taxes of Buyer, whether such taxes are imposed on Seller or Buyer.

5.15

Closing Payment.  Seller shall pay to Buyer a closing payment (“Closing
Payment”) which shall be fully earned on the Effective Date, in an amount equal
to Three Hundred Thousand and No/100 Dollars ($300,000.00), representing one
percent (1.00%) of Thirty Million Dollars ($30,000,000.00).  The Closing Payment
shall be paid to Buyer and shall be payable by Seller in equal installments on
or before the dates set forth below (“Installment Payment”):

1st Installment

$50,000.00

Due upon Effective Date of Agreement

2nd Installment

$50,000.00

September 20, 2005

3rd Installment

$50,000.00

March 20, 2006

4th Installment

$50,000.00

September 20, 2006

5th Installment

$50,000.00

March 20, 2007

6th Installment

$50,000.00

September 20, 2007

5.16

Costs and Expenses.  Seller shall pay when due all costs and expenses if any
required by this Agreement including, but not limited to, the following:  (a) 
all taxes and assessments applicable to each Component Site; (b) all fees,
charges, and taxes in connection with filing or recording the Receivables; (c) 
all fees and commissions lawfully due to brokers, salesmen, and agents in
connection with the Receivables or the Component Site; (d) all reasonable fees
and expenses of both inside and outside counsel to Buyer, including but not
limited to all attorneys’ and paralegals’ fees and expenses had or incurred in:
 (i) preparation and negotiation of this Agreement and Related Documents,
including, without limitation, all due diligence review which in such counsel’s
sole discretion reasonably is necessary in connection with the Agreement;
(ii) the interpretation or enforcement of any of the provisions of, or the
creation, preservation, or exercise of rights and remedies under, any of the
Related Documents; (iii) the preparation for, negotiations regarding,
consultations concerning, or the defense or prosecution of legal

25

proceedings involving any claim or claims made or threatened against Buyer
arising out of this transaction or the preservation or protection of the Resort
or a Component Site, expressly including, without limitation, the defense by
Buyer of any legal proceedings instituted or threatened, including those for
pre-trial, trial, appellate, bankruptcy, and probate matters, and all costs
associated therewith, including, without limitation, receivers’ fees,
appraisers’ fees, engineers’, attorneys’ and paralegals’ fees, accountants’
fees, independent consultants’ fees, including, without limitation,
environmental consultants, outlays for documentary and expert evidence, and
stenographers’ charges, publication costs, and costs, which may be estimates as
to items to be expended after entry of an order or judgment, for procuring all
such title commitments, title and UCC searches and examinations, title policies,
and similar data and assurances with respect to title as Buyer may deem
reasonably necessary either to prosecute any action; (e) all title insurance
policy and title examination charges, including, without limitation, premiums
for the title insurance policy; (f) all survey costs and expenses, including,
without limitation, the cost of the survey; (g) all premiums for the insurance
policies required for the Loan; (h) all travel and out-of-pocket expenses of
Buyer or its agents to conduct inspections or audits; (i) all service fees, wire
fees, and collection costs in connection with the Agreement, excluding costs of
servicing and collecting Receivables which are covered in Section 5.13; (j) all
other costs and expenses payable to third parties incurred by Seller in
connection with the consummation of the transactions contemplated by this
Agreement; and (k) all other reasonable expenditures and expenses which may be
paid or incurred by or on behalf of Buyer, including, without limitation, repair
costs and payments to remove or protect against liens.  All costs and expenses
to be paid by Seller to Buyer shall be due as a condition precedent to each
funding, or at Buyer’s election, within ten (10) days of Buyer’s delivery to
Seller of written notification of such costs and expenses from Buyer, and all
such costs and expenses shall be secured by all of the Receivables.

5.17

Other Documents.  Seller will maintain accurate and complete files relating to
the Receivables and other Purchase Documents to the satisfaction of Buyer, and
such files will contain copies of each Receivable together with the Purchase
Documents, truth-in-lending statements, all relevant credit memoranda, and all
collection  information and correspondence relating to such Receivable.

5.18

Compliance With the Law.  Seller, Guarantor and each Component Site Developer
shall comply with, conform to, and obey each and every Law and judgment,
indenture, instrument, agreement, or document to which it is a party and by
which it is a party or by which it is bound of whatever nature associated with
the operation of the Club, Component Sites and the sale of Club Project
Intervals, Los Abrigados Intervals or Carriage House Project Intervals,
including, without limitation, all laws pertaining to timeshare sales and
marketing activities, the providing of consumer credit to third parties, and all
other related Laws.

SECTION 6 - NEGATIVE COVENANTS

6.0

Timeshare Regime.  Without Buyer’s prior written consent, which shall not be
unreasonably withheld, Seller, Club or any Component Site Developer shall not
materially amend, modify, or terminate the Project Documents or the covenants,
conditions, easements, or

26

restrictions against any Component Site (or any portion thereof), except that if
any amendment or modification is required either (a) to cause additional
accommodations to be annexed or de-annexed into the timeshare regime of
a Component Site or Club Project, or (b) by the Law, in which event Seller shall
implement the same and give prompt written notice thereof, along with copies of
the revised documents, to Buyer.

6.1

Receivables.  Seller, Club or any Component Site Developer shall not take any
action (nor permit or consent to the taking of any action) which might
reasonably be anticipated to impair the value of a Component Site or any of the
rights of Buyer in a Component Site. Seller, Club or any Component Site
Developer shall not (a) modify or amend any of the Purchase Documents without
Buyer’s prior written consent, or (b) grant extensions of time for the payment
of, compromise for less than the full face value, release in whole or in part
any Purchaser liable for the payment of, or allow any credit whatsoever except
for the amount of cash to be paid on, any Component Site or any instrument or
document representing a Component Site.

6.2

Other Agreements.  Seller, Club or any Component Site Developer shall not
materially amend, modify, or assign to any other party except in the ordinary
course of business any management, marketing, servicing, maintenance, or other
similar contract for any Component Site.

6.3

Restrictions on Transfers.  Except as set forth in this Agreement, Seller, Club
or any Component Site Developer shall not, without obtaining the prior written
consent of Buyer, which may be granted or withheld in Buyer’s sole discretion,
transfer, sell, pledge, mortgage, convey, assign, hypothecate or encumber all or
any portion of the Resort or a Component Site (or contract to do any of the
foregoing, including options to purchase and installment sales contracts) except
sales of Intervals to Purchasers in arms-length transactions, annexing or
de-annexing of Intervals to Club Project and transactions in the ordinary course
of business.

6.4

Operation of Business:  Seller shall not change the type or character or the
standard operation of Seller out of the ordinary course of its current business.

6.5

Sales.  Except in states and countries where currently registered or which do
not require registration, Seller, Club or any Component Site Developer shall not
market or cause to be marketed, attempt to sell or cause to attempt to sell, or
sell or cause the sale of any Intervals unless, prior to taking any such
actions, Seller delivers to Buyer the applicable Compliance Documents and
provides Buyer with evidence satisfactory to Buyer that Seller has complied and
is in compliance with the Law regarding same.

SECTION 7 - EVENTS OF DEFAULT

The occurrence of any of the following shall constitute an Event of Default:

7.0

Payments:  Seller or Guarantor’s failure to pay when due any amount payable
under this Agreement.

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7.1

Representations.  Any representation or other statement made by or on behalf of
Seller, Club, Component Site Developer or Guarantor in this Agreement or in any
instrument furnished in compliance with or in reference to the Agreement, is
false, misleading, or incorrect in any material respect as of the date made.

7.2

Financial Condition.  The financial condition of Seller, Club, Guarantor, or the
Managing Entity has materially adversely changed since the date of the last
financial statement provided pursuant to and otherwise provided for in
Section 5.

7.3

Judgments, Liens, and Bankruptcy.  The issuance, filing, or levy against Seller,
Guarantor, Component Site Developer or the Club of one or more attachments,
injunctions, executions, tax liens, or judgments for the payment of money
cumulatively in excess of $100,000, which is not discharged in full or stayed
within thirty (30) days after issuance or filing.  The institution of any
proceeding by or against Seller, Guarantor, Component Site Developer or the Club
under any bankruptcy or insolvency laws or the general assignment of Seller’s or
Guarantor’s assets for the benefit of its creditors.

7.4

Failure to Permit Inspections.  Seller, Component Site Developer, or Club fails
strictly to comply with Section 5.4.

7.5

Operation of Business.  Termination or suspension of the operation of Seller,
Club, or any Component Site Developer out of the ordinary course of its
business.

7.6

Use of Resort.  Any act of or failure to act by Seller, Club or Component Site
Developer which materially and adversely limits the rights of Purchasers to use
the common areas and recreational facilities of a Component Site.

7.7

Exchange Program.  Termination of the contract or licensing agreement for Club
Project with Interval International unless replaced with a contract with the
same or a different exchange program.

7.8

Default by Seller, Club or Component Site Developer in Other Agreements. Any
default by Seller, Club or Component Site Developer in any of its obligations,
under the Purchase Documents or any agreement between Seller and Buyer or any of
the Related Documents.

7.9

Default by Guarantor.  Any material default by Guarantor under the Guaranty or
any other document executed by Guarantor in connection with this Agreement or
any other agreement between Seller, Guarantor and Buyer, after the expiration of
any applicable notice and cure periods.

7.10

Covenant Defaults.  Seller, Club or Component Site Developer materially fails to
perform or observe any covenant, agreement, or obligation in this Agreement or
any of the Related Documents (other than as set forth above in this Section), or
materially fails to perform or observe any non-monetary covenant, agreement or
obligation in any of the Related Documents and such failure continues for the
time period provided in this Section, or if none, for thirty (30) days, after
Buyer delivers written notice thereof to Seller.

28

7.11

Death of Guarantor.  The death or dissolution (administrative or actual) of any
Guarantor, unless Seller can produce an acceptable substitution of Collateral
within thirty (30) days, which Collateral shall be satisfactory to Buyer.

7.12

Defaulted Receivables.  The total amount of Defaulted Receivables which have not
been repurchased or replaced by Seller exceeds fifteen percent (15%) of the
total balance of Receivables at any time.

SECTION 8 - RIGHTS ON DEFAULT

8.0

On the occurrence of an Event of Default, Buyer may take any one or more of the
following actions, all without notice to Seller:

(a)

Without notice thereof, immediately terminate Buyer’s further performance under
this Agreement, without any further liability or obligation by Buyer.

(b)

Appropriate and apply to any Obligation any monies due or owing to Seller held
by Buyer under this Agreement, including but not limited to, amounts held
pursuant to Section 2.5, or under any other financing agreement or otherwise,
whether accrued or not.

(c)

Use the Default Purchase Rate in calculating the Purchase Price for any
Receivables or in Recourse situations.

(d)

Exercise any rights, privileges, and remedies that Seller would be entitled to
exercise as payee under the Contracts either in the name of Buyer or with full
power in the name of Seller as its true and lawful attorney-in-fact for the use
and benefit of Buyer with respect to such Contracts.

(e)

Enforce all rights available under the Related Documents.

(f)

Institute an action against Seller or Guarantor for the payment of all recourse
obligations under this Agreement.

(g)

Exercise any other rights, privileges and remedies afforded by Law as Buyer
shall deem appropriate.   

8.1

Waiver.  No delay or omission of Buyer to exercise any right or power arising
from the occurrence of any Event of Default shall exhaust or impair any such
right or power or prevent its exercise during the continuance of an Event of
Default.  No waiver by Buyer of any Event of Default, whether such waiver be
full or partial, shall extend to or be taken to affect any subsequent Event of
Default, or to impair the rights resulting therefrom except as may be otherwise
provided therein.  

8.2

Cumulative Rights.  No remedy is intended to be exclusive of any other remedy,
but each and every remedy under this Agreement or otherwise existing shall be
cumulative; nor shall the giving, taking, or enforcement of any other or
additional security, collateral, or guaranty, waive any rights, powers, or
remedies under this Agreement, nor

29

shall Buyer be required to look first to enforce or exhaust such other or
additional security, collateral, or guaranties.

8.3

Survival or Termination.  Any termination of this Agreement, either through the
occurrence of an Event of Default or by lapse of time, the giving of notice, or
otherwise, shall not absolve, release, or otherwise affect the liability of
Seller or Guarantor with respect to transactions prior to such termination, or
affect any of the liens, security interests, rights, powers, and remedies of
Buyer, but they shall, in all events, continue until the Obligations are
satisfied.

SECTION 9 - CERTAIN RIGHTS OF BUYER

9.0

Protection of Contracts.  Seller promptly shall take such reasonable actions as
Buyer requests and deems necessary or appropriate, at any time and from time to
time, to protect Buyer’s interests in and to the Receivables.  Seller, Club and
Component Site Developer agree to cooperate fully with all of Buyer’s efforts to
preserve the Receivables and Buyer’s liens and security interests therein.

9.1

Performance by Buyer.  If Seller, Club, Guarantor or Component Site Developer
fails to perform any covenant or obligation in this Agreement, Buyer may, but
shall not be obligated to, cause the performance of such covenant or obligation,
and the expenses of Buyer incurred in connection therewith promptly shall be
payable by Seller bearing interest at the Default Rate until paid.

9.2

Power of Attorney.  Seller and Club hereby irrevocably constitutes and appoints
Buyer as Seller’s and Club’s true and lawful agent and attorney-in-fact, with
full power of substitution, for Seller and Club and in Seller’s and Club’s name,
place and stead, or otherwise, to (a) endorse any checks or drafts payable to
Seller or Club in the name of Seller or Club and in favor of Buyer; (b) to
demand and receive from time to time any and all property, rights, titles, and
interests hereby assigned and transferred, or intended so to be, and to give
receipts for same; and (c) to institute and prosecute in the name of Seller,
Club or otherwise, but for the benefit of Buyer, any and all proceedings at law,
in equity, or otherwise, that Buyer may deem proper in order to collect, assert,
or enforce any claim, right, or title, of any kind, in and to the property,
rights, titles, interests, and liens hereby assigned or transferred, or intended
so to be, and to defend and compromise any and all actions, suits, or
proceedings in respect of any of the property, rights, titles, interests, and
liens, and generally to do all and any such acts and things in relation to the
Receivables as Buyer deems advisable.  Seller  and Club hereby declare that the
appointment made and the powers granted pursuant to this Section are coupled
with an interest and are and shall be irrevocable by Seller or Club in any
manner, or for any reason, unless and until all obligations of Seller under this
Agreement and the Related Documents to Buyer have been satisfied.

9.3

Indemnification.  Seller shall indemnify Buyer and hold Buyer harmless from and
against any and all liabilities, indebtedness, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses, and disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Buyer (collectively,

30

“Liability”), ‘in any way relating to or arising out of (a) this Agreement and
Related Documents, (b) any of the transactions contemplated therein or thereby
(c) the willful or grossly negligent acts or omissions of Seller or (d) in
connection with any Hazardous Materials or the failure by the Seller, the
Guarantor, the Club, any Component Site Developer or any Affiliate of the Seller
or the Guarantor, the Managing Entity, the Property or a Component Site to
comply with any Environmental Laws.  On written notice, Seller will reimburse
Buyer for all legal and other expenses reasonably incurred by or on behalf of
Seller, including, without limitation, such costs incurred in all bankruptcy and
probate proceedings, in connection with investigating or defending each
Liability.  This indemnity shall be in addition to any liability which Seller
may have to Buyer in equity, at common law, or otherwise.  This Section shall
survive the expiration or termination of this Agreement.  

9.4

Assignment.  Buyer may, in the ordinary course of its business, at any time
assign, sublet, lend, transfer, pledge, or hypothecate (collectively, “Assign”)
to one or more banks, investment banks, or other entities (the “Other Party”)
all or any part of Buyer’s rights to the repayment of the Receivables without
the consent of Seller.  If Buyer assigns any Receivables, Buyer’s obligations
under this Agreement shall remain unchanged and Buyer shall remain solely
responsible to Seller for the performance of Buyer’s obligations.
 Notwithstanding the foregoing, Seller shall be directly obligated to each Other
Party for the matters assigned to each such Other Party, and shall have no
rights of setoff or other remedies against any Other Party as a consequence of
Buyer’s acts or omissions under this Agreement.  Buyer and Seller shall make
appropriate arrangements to execute such new documents or modifications to this
Agreement as the Other Parties reasonably request reflecting the parties’
respective rights.

SECTION 10 - MISCELLANEOUS

10.0

Notices.  All notices and other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and may
be personally served or sent by reputable overnight courier or U.S. Mail and
shall be deemed given:  (a) if served in person, when served; (b) if by
reputable overnight courier, on the first business day after delivery to the
courier; or (c) if by U.S. Mail, certified or registered mail, return receipt
requested on the fourth (4th) day after deposit in the mail postage prepaid.

(a)

To Seller:

Premiere Development Incorporated

2111 East Highland, Suite 210

Phoenix, Arizona  85016

Attention:  Joseph P. Martori

(b)

To Buyer:

Resort Funding LLC

360 South Warren Street, 6th Floor

Syracuse, New York  13202

31

Attention:  Lisa M. Henson, President and COO

with copies to:

Carlton Fields, P.A.

P.O. Box 3239

Tampa, Florida  33601

Attention:  Sandra G. Porter, Esq.

10.1

Broker’s Fees.  There are no broker’s, finder’s, or other similar fees or
commitments due with respect to the transactions described in the Agreement.

10.2

Consent to Advertising and Publicity.  Seller consents that Buyer may issue and
disseminate to the public information describing the transactions entered into
pursuant to this Agreement.

10.3

Entire Agreement.  This Agreement and Related Documents embody the entire
agreement between the parties, supersede all prior agreements and understandings
between the parties whether written or oral relating to the subject matter of
this Agreement, and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.  There are no
oral agreements among Buyer, and/or Seller, or and/or any Guarantor or between
any two or more of them.  

THE PARTIES HEREBY AGREE THAT ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT THE
PARTIES FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.   THIS AGREEMENT AND THE RELATED DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

10.4

Modification.  This Agreement and the Related Documents may be modified or
changed only in a writing executed by both Buyer and Seller.

10.5

Severability.  If any provision of this Agreement or any Related Document is
declared invalid, such provision shall be inapplicable and deemed omitted, but
the remaining provisions shall be given full force and effect.

10.6

Choice of Law, Jurisdiction, and Venue.  This Agreement and the Related
Documents shall be deemed to have been negotiated, made, and executed in the
County of Onondaga, State of New York.  This Agreement and the Related Documents
shall be interpreted, construed, and enforced in accordance with the laws of the
State of New York without regard to the principles of conflict of laws.

32

SELLER, COMPONENT SITE DEVELOPERS AND GUARANTOR AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY, INDIRECTLY, OR OTHERWISE IN CONNECTION WITH, OUT
OF, RELATED TO OR FROM THIS AGREEMENT OR THE RELATED DOCUMENTS SHALL BE
LITIGATED, AT BUYER’S SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A
SITUS WITHIN THE COUNTY OF ONONDAGA, STATE OF NEW YORK.  SELLER AND GUARANTOR
HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL
COURT LOCATED WITHIN SAID COUNTY AND STATE.  SELLER AND GUARANTOR HEREBY WAIVE
ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST IT OR THEM BY BUYER ON THIS AGREEMENT OR THE RELATED DOCUMENTS
IN ACCORDANCE WITH THIS SECTION.

10.7

Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when executed shall be deemed an original and when taken together
shall constitute one and the same Agreement.  This Agreement shall become
effective on Buyer’s receipt of one or more counterparts of this Agreement
signed by the parties.

10.8

Headings.  Headings are for convenience of reference only and shall not be used
in the interpretation of this Agreement.

10.9

Survival.  Any termination of this Agreement shall not absolve, release, or
otherwise affect the liability of Seller or Guarantor with respect to the sale
of the Receivables prior to such termination, or affect any of the liens,
security interests, rights, powers, or remedies of Buyer, but they shall, in all
events, continue until all of the Obligations are satisfied.

10.10

Successors and Assigns. Except as provided in this Agreement, this Agreement and
the Related Documents shall be binding on and inure to the benefit of the
parties and their respective successors and assigns, if any, as permitted under
this Agreement.

10.11

Jury Trial Waiver.  THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING OUT OF THIS AGREEMENT
OR THE RELATED DOCUMENTS.  THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE RELATED DOCUMENTS, AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
 THE PARTIES WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

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34

IN WITNESS WHEREOF, the parties set their hands effective the date above first
written.

Witness

Print Name

Witness

Print Name

BUYER:

RESORT FUNDING LLC, a Delaware limited liability company

By:

Name:

Lisa M. Henson

Title:

President and COO

Witness

Print Name

Witness

Print Name

SELLER:

PREMIERE DEVELOPMENT INCORPORATED, an Arizona corporation

By:

Name:

Joseph P. Martori

Title:

Chairman

Witness

Print Name

Witness

Print Name

GUARANTOR:

ILX RESORTS INCORPORATED, an Arizona corporation

By:

Name:

Joseph P. Martori

Title:

Chairman

35

The undersigned, all being affiliates of Seller and Guarantor, acknowledge and
agree to the terms of this Agreement, confirm that the representations and
warranties made by the undersigned contained in this Agreement are true and
correct, and agree to perform and be bound by all of the applicable covenants,
conditions, and restrictions in this Agreement, as a material inducement to
Seller to enter into this Agreement.

PREMIERE VACATION CLUB,

an Arizona non-profit corporation

By:

Name:

Joseph P. Martori

Title:

Chairman

VCA SOUTH BEND INCORPORATED,

an Arizona corporation, developer of the VCA South Bend Project

By:

Name:

Joseph P. Martori

Title:

Chairman

VCA TUCSON INCORPORATED,

an Arizona corporation, developer of the VCA Tucson Project

By:

Name:

Joseph P. Martori

Title:

Chairman

LOS ABRIGADOS PARTNERS LIMITED PARTNERSHIP, an Arizona limited partnership,
developer of the Los Abrigados Project

By:

Name:

Title:

36

ILX SEDONA INCORPORATED

By:

Name:

Joseph P. Martori

Title:

Chairman

ILX RESORTS INCORPORATED,

an Arizona corporation, developer of the Kohls’ Ranch Project, the Golden Eagle
Project, and the Inn at Los Abrigados Project, and co-developer of the San
Carlos Mexico Project

By:

Name:

Joseph P. Martori

Title:

Chairman

PREMIERE DEVELOPMENT INCORPORATED, an Arizona corporation,

developer of the Rancho Manana Project

By:

Name:

Joseph P. Martori

Title:

Chairman

Exhibits

EXHIBITS

EXHIBIT “A”

Legal Description for each Component Site

EXHIBIT “B”

Form of Consumer Timeshare Receivables Contract for each Component Site

EXHIBIT “C”

Permitted Exceptions

EXHIBIT “D”

Closing Checklist

EXHIBIT “E”

Closing Deliveries

EXHIBIT “F”

Request for Purchase

EXHIBIT “G”

Litigation and Proceedings

EXHIBIT “H”

Acceptable Credit Standards

EXHIBIT “I”

Assignment of Receivables

A - 38

EXHIBIT “A”

Legal Description for each Component Site

B - 39

EXHIBIT “B”

Form of Consumer Timeshare Receivables Contract for each Component Site

C - 40

EXHIBIT “C”

Permitted Exceptions

D - 41

EXHIBIT “D”

Closing Checklist

E - 42

EXHIBIT “E”

Closing Deliveries

Pursuant to the Agreement, Buyer shall not be obligated to purchase any Eligible
Receivables unless Buyer shall have received, in form and substance satisfactory
to Buyer, all documents, instruments, and information at least seven (7) days
prior to the requested funding date, as follows:

1.

A completed Request for Purchase.

2.

All information pertaining to the creditworthiness of any such Purchaser
available to Seller (specifically, a copy of the credit report with respect to
such Purchaser).

3.

A copy of the document evidencing down payment.

4.

The applicable portion of the Closing Payment in immediately available U.S.
funds.

5.

Originals of all Purchase Documents on forms approved by Buyer, with each
Contract endorsed by Seller to Buyer, all of which shall be acceptable to Buyer.

6.

Such additional information as Buyer may reasonably require.

F - 43

EXHIBIT “F”

Request For Purchase

Date:___________________________

Resort Funding LLC

Attention: Lisa M. Henson

360 South Warren Street, 6th Floor

Syracuse, New York  13202

Re:

$________ purchase of timeshare receivables described in that certain Contract
for Sale of Timeshare Receivables With Recourse (“Agreement”) between Resort
Funding LLC (“Buyer”) and Premiere Development Incorporation (“Seller”).

Dear Sir or Madam:

In accordance with the terms of the Agreement, Seller wishes to sell
$______________ worth of Eligible Receivables on ____________, ____.  All terms
used in this letter, unless otherwise specified, have the meanings in the
Agreement.  In order to induce Buyer to make such purchase, Seller represents
and warrants to Buyer:

1.

No Event of Default has occurred, and no event which, with the passage of time
or the giving of notice or both, would constitute an Event of Default has
occurred or will occur as a result of the purchase requested.

2.

The representations and warranties in the Agreement are true, correct, and
complete in all material respects to the same extent as though made on the date
of the Agreement except for any representation or warranty limited by its terms
to a specific date and taking into account any amendments to the exhibits as
a result of any subsequent disclosures made by Seller in writing to and approved
in writing by Buyer.

3.

Seller is in compliance with each and every one of its covenants, agreements,
and obligations under the Agreement.

4.

Seller has no defenses or offsets with respect to the payment of any amounts due
Buyer.

5.

Buyer has performed all of its obligations to Seller.

6.

All of the Contracts described in Exhibit “A” attached meet all of the
requirements to be Eligible Receivables.

7.

Seller shall sell to Buyer those certain Contracts set forth in Exhibit “A”
attached along with all of the other Purchase Documents related thereto.

F - 44

8.

No obligor has any asserted or threatened defense, offset, counterclaim,
discount, or allowance in respect of each Contract to be pledged in connection
with this purchase.  Seller has no knowledge of any facts which would lead
a reasonable person to conclude that any such Contract shall not be paid in
accordance with its terms.

SELLER:

PREMIERE DEVELOPMENT INCORPORATED, an Arizona corporation

By:

Printed Name:

Title:

F - 45

EXHIBIT “A” to Request for Purchase

Description of Contracts

Name

Membership Type

Interval

Contract Date

Contract Amount

Membership Number

Deed Recording Date

                                                                               
                                                                       

G - 46

EXHIBIT “G”

Litigation and Proceedings

H - 47

EXHIBIT “H”

Acceptable Credit Standards

EXHIBIT “I”

Assignment of Receivables

This document prepared by

and after recording return to:

Resort Funding LLC

360 South Warren Street

6th Floor

Syracuse, New York  13202

Attention:  Jackie See

ASSIGNMENT OF RECEIVABLES

THIS ASSIGNMENT (“Assignment”) is made and executed as of ____________________,
20__, by PREMIERE INCORPORATED, an Arizona corporation (“Seller”), whose address
is 2111 East Highland, Suite 210, Phoenix, Arizona  85016, in favor of RESORT
FUNDING LLC, a Delaware limited liability company (“Buyer”), whose address is
360 South Warren Street, 6th Floor, Syracuse, New York  13202.

1.

Seller and Buyer entered into a Contract of Sale of Timeshare Receivables With
Recourse, dated as of __________________________________ (as amended from time
to time, the “Agreement”), pursuant to which Seller has agreed to sell, on the
terms and conditions set forth in the Agreement, to Buyer certain Receivables
(as defined and further described in the Agreement.)  This Assignment is being
delivered pursuant to the Agreement.

2.

For value received in accordance with the Agreement, Seller hereby sells,
conveys, assigns, transfers, and sets over to Buyer all of its right, title,
interest in and to those certain Receivables, including, without limitation, as
to the following, those notes, purchase agreements, the related mortgages or
deeds of trust and the related title insurance policies identified on
Exhibit “A” attached to this Assignment and incorporated in this Assignment by
this reference, its beneficial interest as beneficiary in such deeds of trust,
all sums, (including interest), due or to become due, and all rights accrued or
to accrue under the foregoing.

3.

Seller warrants and represents to Buyer that the Receivables assigned by this
Agreement are held free and clear of all prior liens, security interests,
charges, and encumbrances whatsoever and covenants and agrees to maintain the
same in good standing at all times in accordance with the terms thereof, and not
to take any action with respect to the Receivables which may be prejudicial to
the rights of Buyer.

4.

The execution and delivery of this Assignment shall not subject Buyer to, or
transfer or pass to Buyer, or in any way affect or modify, the liability of
Seller under all or part of such Receivables assigned under this Assignment, it
being understood and agreed that notwithstanding this Assignment or any
subsequent assignment, all of the obligations of Seller to each and every other
party under each and every item of the Receivables shall be and remain
enforceable by such other party, its successors, and assigns, only against
Seller and its successors and assigns, and that Buyer has not assumed any of the
obligations or duties of Seller under or with respect to any of the Receivables.

I - 2

5.

Seller agrees and acknowledges that neither the acceptance of this Assignment by
Buyer nor the exercise of, or failure to exercise, any right, power, or remedy
in this Assignment conferred on Buyer shall be deemed or construed to obligate
Buyer, or its successors or assigns, to pay any sum of money, take any action,
or incur any liability in connection with any of the Receivables which are the
subject of this Assignment.  Neither Buyer nor its successors or assigns shall
be liable in any way for any costs, expenses, or liabilities connected with, or
any charges or liabilities resulting from, any of such Receivables.

6.

Seller agrees and acknowledges that the assignment of Receivables to Buyer from
Seller is a true assignment. The purchase of Receivables by Buyer is absolute
and, subject to Section 3 of the Agreement, Seller has no right to repurchase
any Receivables.

This Assignment shall be binding on Seller and its successors and assigns, and
shall inure to the benefit of Buyer and its successors and assigns.

IN WITNESS WHEREOF, Seller has executed this Assignment on the date first
written above.

SELLER:

PREMIERE DEVELOPMENT INCORPORATED, an Arizona corporation

By:

Print Name:

Title:

STATE OF ARIZONA

)

)  SS.

COUNTY OF

)

The foregoing instrument was acknowledged before me this ____ day of
__________________, 200__, by _______________, as ________________ of PREMIERE
INCORPORATED, an Arizona corporation on behalf of said corporation.  He/She is
personally known to me or has produced ________________ as identification.

__________________________

(Notary Signature)

__________________________

(Notary Name Printed)

NOTARY PUBLIC

Commission No. ___________  

(NOTARY SEAL)

I - 3

Exhibit “A” to Assignment

LAST

NAME

FIRST

NAME/MI

SECOND
LAST NAME

SECOND FIRST NAME/

MI

CONTRACT NUMBER

DATE OF PURCHASE AGREEMENT

MORTGAGE/

DEED OF

TRUST DATE

RECORDING DATE

RECORD BOOK

PAGE

         

I - 4