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                                                                  EXHIBIT 10.206














                       GENERAL LOAN AND SECURITY AGREEMENT
                           (RECEIVABLE LOAN FACILITY)

                                      AMONG

                             STEAMBOAT SUITES, INC.,
                         PREFERRED EQUITIES CORPORATION

                                       AND

                          TEXTRON FINANCIAL CORPORATION

                          DATED AS OF DECEMBER 17, 1999



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<TABLE>
<S>            <C>
SECTION 1.     INTERPRETATION OF THIS AGREEMENT
        1.1    Terms Defined
        1.2    Directly or Indirectly
        1.3    Headings
        1.4    Accounting Principles

SECTION 2.     ADVANCES AND NOTES
        2.1    Receivables Advances; Receivables Loan
        2.2    Issuance of Note; Rate of Interest; Receipt of Payments
        2.3    Mandatory Prepayments of Receivables Loan; Voluntary Prepayments
               of Receivables Loan
        2.4    Participating Lender
        2.5    Commitment Fee

SECTION 3.     COLLATERAL
        3.1    Security
        3.2    Undertakings Regarding Collateral
        3.3    Financing Statements
        3.4    Location of Collateral; Books and Records
        3.5    Insurance of Collateral
        3.6    Condemnation
        3.7    Taxes Affecting Collateral
        3.8    Discharge of Liens Affecting Collateral
        3.9    Use of Resort
        3.10   Other Timeshare Covenants
        3.11   Protection of Collateral; Assessments; Reimbursement
        3.12   Interest on Lender Paid Expenses
        3.13   Lender Responsibility
        3.14   Notice to Obligors
        3.15   Release of Lien on Unsold Inventory Timeshare Intervals

SECTION 4.     REPRESENTATIONS AND WARRANTIES
        4.1    Subsidiaries and Capital Structure
        4.2    Corporate Organization and Authority
        4.3    Business and Property
        4.4    Financial Statements
        4.5    Full Disclosure
        4.6    Pending Litigation
        4.7    Title to Properties
        4.8    Trademarks; Licenses and Permits
        4.9    Transaction Is Legal and Authorized
        4.10   No Defaults
        4.11   Governmental Consent
        4.12   Taxes
        4.13   Use of Proceeds
        4.14   Compliance with Law
        4.15   Restrictions of Debtor
        4.16   Brokers' Fees
        4.17   Deferred Compensation Plans
</TABLE>



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<TABLE>
<S>            <C>
        4.18   Labor Relations
        4.19   Validity and Enforceability
        4.20   Validity of Liens Granted to Lender
        4.21   Timeshare Regimen Reports
        4.22   The Timeshare Intervals
        4.23   Pre-Sale of Timeshare Intervals

SECTION 5.     CONDITIONS PRECEDENT  AND EFFECTIVENESS OF THIS AGREEMENT
        5.1    Opinions of Counsel
        5.2    Warranties and Representations True as of Closing Date
        5.3    Compliance with this Agreement
        5.4    Officer's Certificates; Secretary's Certificates; Good-Standing
               Certificates
        5.5    Uniform Commercial Code Financing Statements
        5.6    Assignment of Property-Related Contracts
        5.7    Intentionally Deleted
        5.8    Guaranty Agreement
        5.9    Subordination of Indebtedness
        5.10   Expenses
        5.11   Receivables Note; Inventory Note; Inventory Deed of Trust
        5.12   Title Insurance; Casualty Insurance
        5.13   Environmental Site Assessment Report
        5.14   Taxes
        5.15   Inspection
        5.16   Survey
        5.17   Engineering Report
        5.18   Schedule of Subsequent Inventory Advances
        5.19   First Lienholder Status; Quit-Claim Deed; Proxy Acknowledged
        5.20   Proceedings Satisfactory

SECTION 6.     RECEIVABLES ADVANCE CLOSING CONDITIONS
        6.1    Requests for Advances
        6.2    Pledged Notes Receivable
        6.3    Proceedings Satisfactory
        6.4    Other Conditions
        6.5    Expenses

SECTION 7.     COVENANTS
        7.1    Payment of Taxes and Claims
        7.2    Maintenance of Properties; Corporate Existence; Stock Ownership;
               Renovations; Supervisory Architect; Indebtedness; Liens; Business
        7.3    Payment of Notes and Maintenance of Office
        7.4    Sale of Properties
        7.5    Consolidation and Merger
        7.6    Timeshare Covenants
        7.7    Guaranties
        7.8    Compliance with Environmental Laws
        7.9    Transactions with Affiliates; Principal Properties
        7.10   Use of the Lender Name
        7.11   Subordinated Obligations
        7.12   Notice of Legal Proceedings
</TABLE>



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<TABLE>
<S>            <C>
        7.13   Further Assurances
        7.14   Financial Statements
        7.15   Officers' Certificate
        7.16   Inspection

SECTION 8.     EVENTS OF DEFAULT
        8.1    Default
        8.2    Default Remedies

SECTION 9.     REVIVAL OF OBLIGATIONS AND LIENS

SECTION 10.    MISCELLANEOUS
        10.1   Governing Law
        10.2   Expenses and Closing Fees
        10.3   Parties, Successors and Assigns
        10.4   Notices
        10.5   Total Agreement
        10.6   Survival
        10.7   Litigation
        10.8   Power of Attorney
        10.9   Survival of Indemnities
        10.10  Conflicting Obligations; Rights and Remedies
</TABLE>

Schedule 1A/1B     --     Property Description of Resorts
Schedule 2         --     Property-Related Contracts
Schedule 3         --     Affiliates and Capital Structure
Schedule 4         --     Reserved
Schedule 5         --     Reserved
Schedule 6         --     Litigation
Schedule 7         --     Title Exceptions
Schedule 8         --     Personal Property Exceptions
Schedule 9         --     Permitted Leases and Rentals of Units
Schedule 10        --     Hazardous Substances
Schedule 11        --     Use of Proceeds
Schedule 12        --     Licenses, Permits, Etc. Not Obtained
Schedule 13        --     Deferred Compensation Plans
Schedule 14        --     Payment Instructions
Schedule 15        --     Address of Debtor for Books and Records
Schedule 16        --     Address of Debtor for Notices
Schedule 17        --     Address of Lender for Notices
Schedule 18               Description of Defaulted Note
Exhibit A                 Form of Inventory Deed of Trust
Exhibit B          --     Form of Receivables Note
Exhibit C                 Form of Timeshare Instruments
Exhibit D          --     Form of Proxies
Exhibit E          --     Reserved (?)
Exhibit F          --     Form of Opinion from Ballard Spahr
                          Andrews & Ingersol



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Exhibit G          --     Form of Opinion of Lionel Sawyer & Collins
Exhibit H          --     Form of Opinion of
                          Greenberg Traurig et al
Exhibit I          --     Form of Debtor's Officer's Certificate
Exhibit J          --     Form of Debtor's Secretary's Certificate
Exhibit K          --     Form of Preferred Equities' Secretary's Certificate
Exhibit L          --     Form of Mego Financial's Secretary's Certificate
Exhibit M          --     Form of Guaranty Agreement
Exhibit N                 Form of Assignment of Rents
Exhibit O                 Form of Officers Certificate - Financial Statements
Exhibit P                 Form of Receivable Advance Request
Exhibit Q                 Form of Collateral Assignment of Notes Receivable and
                          Supplement Collateral Assignment





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                       GENERAL LOAN AND SECURITY AGREEMENT
                            RECEIVABLE LOAN FACILITY


        THIS GENERAL LOAN AND SECURITY AGREEMENT (as amended from time to time,
this "Agreement"), made and executed as of the 17th day of December, 1999, by
and among TEXTRON FINANCIAL CORPORATION, a Delaware corporation, as secured
party (herein referred to as the "Lender"), PREFERRED EQUITIES CORPORATION, a
Nevada corporation, and STEAMBOAT SUITES, INC., a Colorado corporation, each
jointly and severally, as debtor (herein collectively and individually referred
to as the "Debtor").

BACKGROUND:

        Lender and Steamboat Suites, Inc. ("Steamboat") are parties to a General
Loan and Security Agreement dated October 5, 1994 amended by First Amendment to
General Loan and Security Agreement dated as of February 27, 1995, Second
Amendment to General Loan and Security Agreement dated as of November 30, 1995,
Third Amendment to General Loan and Security Agreement dated as of November 29,
1996, Fourth Amendment to General Loan and Security Agreement dated as of June
30, 1999, and letter amendments dated respectively September 23, 1996, December
10, 1997 and October 15, 1999 (collectively "Existing Loan Agreement"). Such
Existing Loan Agreement evidences a $15,000,000 receivable loan and a $7,500,000
original inventory loan to Steamboat for the Steamboat Resort (as defined
below). The obligations of the Existing Loan Agreement are guaranteed by
Preferred Equities Inc. ("Preferred") and Mego Financial Corp. Steamboat and
Preferred have requested an extension of the Existing Loan Agreement and
increase of the inventory loan to provide financing to both Steamboat and
Preferred and to include the Hilltop Resort (as defined below). Lender has
agreed to such request and determined to provide an inventory loan and a
receivable loan facility to both Preferred and Steamboat so long as the Existing
Loan Agreement is rewritten and the loans are evidenced by separate loan
agreements. For purposes of maintaining and continuity of agreement between
Steamboat and Lender, this Agreement shall be considered as necessary, an
amendment and restatement of the Existing Loan Documents and not a prepayment
under the terms thereof. Any defined terms used herein and not defined in
Section 1 hereof shall have meanings assigned in the Existing Loan Agreement. It
is the intention of Lender and Debtor that the Inventory loan and Receivable
loan be cross collateralized and cross defaulted during the term of each loan
and with all other indebtedness owed to Lender by either Debtor. To that end,
certain security documents shall evidence and secure both loans and all other
obligations owed by Steamboat or Preferred to Lender.

SECTION 1. INTERPRETATION OF THIS AGREEMENT

        1.1 TERMS DEFINED.

        As used in this Agreement, the following terms shall have the following
respective meanings set forth below or set forth in the Section referred to
following such term:

               ADVANCE -- means the Receivables Advances.

               AFFILIATE -- means any Person

                      (a) which directly or indirectly through one or more
               intermediaries controls, or is controlled by, or is under common
               control with, the Debtor;



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                      (b) which beneficially owns or holds 5% or more of any
               class of the Voting Stock of the Debtor; or

                      (c) 5% or more of the Voting Stock (or in the case of a
               Person which is not a corporation, 5% or more of the equity
               interest) of which is beneficially owned or held by the Debtor.

               The term "control" means the possession, directly or indirectly,
        of the power to direct or cause the direction of the management and
        policies of a Person, whether through the ownership of Voting Stock,
        other voting Securities, by contract or otherwise.

               AGENCY AGREEMENT -- means an agreement among the Debtor, the
        Collection Agent and the Lender, reasonably satisfactory in form and
        substance to the Lender, relating to lockbox services in connection with
        a post office box and a related Lockbox Account.

               AGREEMENT OR THIS AGREEMENT -- as defined in the preamble hereto.

               AMENITY BUILDING: -- means that certain building built at the
        Steamboat Resort which contains, among other things, a lobby, a
        hospitality coffee bar, a hot tub, a sauna and sales facilities, and to
        have individual ski storage lockers affixed thereto.

               ASSIGNMENT OF RENTS -- as defined in Section 5.11 of this
        Agreement.

               ASSOCIATION AND ASSOCIATIONS -- means collectively or
        individually, as appropriate, The Suites at Steamboat Owners'
        Association, a Colorado nonprofit corporation, or any successor
        association thereto as provided in the Steamboat Timeshare Documents and
        Hilltop Resort Owners' Association, Inc., a Colorado nonprofit
        corporation, or any successor association thereto as provided in the
        Hilltop Timeshare Documents.

               BOOKS AND RECORDS -- means all books, records, computer tapes,
        disks, software and micro-fiche records of the Debtor related to the
        Resorts.

               BUILDING -- means Building A and/or Building B.and/or Building I.

               BUILDING A -- means the first residential building at the
        Steamboat Resort, designated "Building A," which consists of 30 Units,
        as provided in the Steamboat Declaration.

               BUILDING B -- means the second residential building at the
        Steamboat Resort, designated "Building B" which consists of 30 Units, as
        provided in the Steamboat Declaration.

               BUILDING I.-- means the residential building at the Hilltop
        Resort which consists of 56 residential units and 2 commercial
        condominium units.

               BUSINESS DAY -- means a day other than a Saturday or Sunday or a
        day on which banks in the State of Nevada, the State of Rhode Island or
        the State of Connecticut are required or authorized by law to be closed
        (other than for a general banking moratorium or holiday for a period
        exceeding 4 consecutive days).

               CHANGE IN MANAGEMENT -- means that Preferred and/or Guarantor
        shall cease to own, directly or indirectly, in the aggregate 100% of the
        total combined voting power of all classes of



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        Voting Stock or other equity interests of any Person which shall have
        managerial and/or supervisory operational responsibilities in respect of
        the Resort.

               CLOSING DATE -- means December 17, 1999.

               COLORADO UNIFORM COMMERCIAL CODE -- means the Uniform Commercial
        Code as adopted and in force in the State of Colorado, as from time to
        time in effect.

               COLLATERAL -- as defined Section 3.1 of this Agreement.

               COLLECTION AGENT -- at any time means the Person, acting as agent
        for the Lender,which is responsible for receiving payments under the
        Pledged Notes Receivable from the Makers thereof; and which is a party
        to an Agency Agreement and pursuant thereto maintains or may maintain
        one or more Lockbox Accounts for the deposit of payments in respect of
        Pledged Notes Receivable.

               COMMON AMENITIES -- means the common areas and other amenities at
        the Resort as contemplated in the Declaration which any purchaser of a
        Timeshare Interval shall be entitled to use pursuant to the Declaration.
        "Common Amenities" shall include the amenities offered in the Amenity
        Building.

               COMPENSATION -- as defined in Section 3.1(g) of this Agreement.

               CONDEMNATION COMPENSATION -- as defined in Section 3.6(a) of this
        Agreement.

               CONTRACT -- means any purchase and sale agreement between one or
        more natural Persons and the Debtor which agreement provides for the
        sale by the Debtor to such natural Person or Persons of one or more
        Timeshare Intervals.

               DEBTOR -- as defined in the preamble hereto.

               DECLARATIONS -- means the Steamboat Declaration and Hilltop
        Declaration.

               DECLARANT -- the status of the Debtor as the declarant under
        applicable Colorado law and under the respective Declaration and the
        Articles of Incorporation and By-Laws of the respective Association.

               DEFAULT -- means an event or condition the occurrence of which
        would, with the lapse of time or the giving of notice or both, become an
        Event of Default.

               DEFAULT RATE -- means, at any time, the per annum rate of
        interest equal to the Interest Rate, then in effect, plus 2% per annum;
        provided, however, that the Default Rate shall in no event exceed the
        Maximum Rate.

               DORFINCO -- means Dorfinco Corporation, a Delaware corporation.

               ELIGIBLE NOTE RECEIVABLE -- means each Pledged Note Receivable in
        respect of which all of the following requirements shall have been
        satisfied:



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                      (a) such Pledged Note Receivable shall arise from the sale
               of one or more Timeshare Intervals by the Debtor to the purchaser
               thereof, provided that such purchaser may not be an employee of
               the Debtor or an Affiliate, and provided further that,

                             (i) if such purchaser resides in Canada and, at the
                      time of the pledging of such Pledged Note Receivable of
                      such purchaser and after giving effect thereto and
                      assuming that it otherwise qualifies as an Eligible Note
                      Receivable, the aggregate outstanding principal balances
                      of all Eligible Notes Receivable of purchasers residing in
                      Canada exceeds 20% of the aggregate principal balance of
                      all Eligible Notes Receivable then outstanding, such
                      Pledged Note Receivable of such purchaser residing in
                      Canada shall not, at such time or thereafter for so long
                      as the aforesaid 20% condition shall exist, be deemed an
                      Eligible Note Receivable; and

                             (ii) if such purchaser is a resident of neither the
                      United States of America nor Canada and, at the time of
                      the pledging of such Pledged Note Receivable of such
                      purchaser and after giving effect thereto and assuming
                      that it otherwise qualifies as an Eligible Note
                      Receivable, the aggregate outstanding principal balances
                      of all Eligible Notes Receivable of purchasers not
                      residing in the United States of America or Canada exceeds
                      5% of the aggregate principal balance of all Eligible
                      Notes Receivable then outstanding, such Pledged Note
                      Receivable of such purchaser not residing in the United
                      States of America or Canada shall not, at such time or
                      thereafter for so long as the aforesaid 5% condition shall
                      exist, be deemed an Eligible Note Receivable;

                      (b) payments of principal and interest under the terms of
               such Pledged Note Receivable shall be payable in legal tender of
               the United States of America and in equal monthly installments of
               principal and interest, provided that no interest is required to
               be paid under such Pledged Note Receivable that qualifies as a
               Zero Coupon Pledged Note Receivable;

                      (c) the unpaid balance of such Pledged Note Receivable
               shall be due and payable not later than 120 months from the date
               thereof.

                      (d) with respect to such Pledged Note Receivable, no
               monthly installment in respect of such Pledged Note Receivable
               shall be more than 60 days contractually delinquent, provided
               that, if such Pledged Note Receivable shall have been pledged to
               support a direct funding of a Receivables Advance and such
               Receivables Advance is the first such Receivables Advance to be
               made in respect of such Pledged Note Receivable, no monthly
               installment in respect of such Pledged Note Receivable shall be
               more than 30 days contractually delinquent at the time of such
               first Receivables Advance;

                      (e) the Maker of such Pledged Note Receivable shall have
               access, in accordance with the Pledged Contract related thereto
               and the Timeshare Documents, to the Timeshare Interval in respect
               of such Pledged Note Receivable and to the Common Amenities; at
               the time of the pledging of such Pledged Note Receivable, such
               Timeshare Interval shall provide such Maker with access to a
               Unit;

                      (f) the executed original of such Pledged Note Receivable,
               which shall be in form and substance reasonably satisfactory to
               the Lender, shall have been endorsed by the Debtor to the order
               of the Lender and delivered to the Lender;



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                      (g) the Lender shall have a valid and perfected,
               first-priority Lien in and to such Pledged Note Receivable, the
               Timeshare Instruments related thereto and all proceeds arising
               therefrom and such Pledged Note Receivable shall be secured by a
               Pledged Note Receivable Deed of Trust in and to the Timeshare
               Interval or Timeshare Intervals being financed by such Pledged
               Note Receivable;

                      (h) the Unit in respect of the Timeshare Interval being
               financed by such Pledged Note Receivable shall not be subject to
               any Lien not previously consented to by the Lender, and the
               Debtor, as the mortgagee under the Pledged Note Receivable Deed
               of Trust securing such Pledged Note Receivable shall be a "first
               mortgagee" for purposes of the Declaration, and the Debtor shall
               deliver a written notice to the Association informing it that all
               notices to be sent to a "first mortgagee" in respect of the
               aforesaid Timeshare Interval shall be sent to the Debtor and to
               the Lender;

                      (i) the terms of such Pledged Note Receivable, the Pledged
               Contract related thereto and all other Timeshare Instruments
               related thereto shall comply in all respects with all applicable
               federal and state laws and the regulations promulgated
               thereunder, including, without limitation, the applicable
               provisions of the Federal Consumer Credit Protection Act, as
               amended, Regulation Z of the Federal Reserve Board, as amended,
               and the Colorado Uniform Consumer Credit Code, as amended, and
               copies of all such regulatory, rescission and other disclosure
               documents shall be either delivered to the Lender or made readily
               available to the Lender in the files of the Debtor, and all
               rights of rescission in respect of such Pledged Note Receivable
               or the related Pledged Contract shall have expired or otherwise
               terminated;

                      (j) without the prior written approval of the Lender, such
               Pledged Note Receivable shall not have an original principal
               balance in excess of $25,000 and, at the time of the pledging of
               such Pledged Note Receivable and after giving effect thereto and
               assuming that it otherwise qualifies as an Eligible Note
               Receivable, the aggregate outstanding principal balances of all
               Eligible Notes Receivable of the Maker of such Pledged Note
               Receivable and/or of any affiliate of such Maker shall not exceed
               $25,000;

                      (k) no defense, offset, counterclaim, discount or
               allowance (including any stay, defense or claim arising out of
               any bankruptcy or insolvency proceeding) in respect of such
               Pledged Note Receivable or any other Timeshare Instrument related
               thereto shall have been asserted by the Maker thereof or on
               behalf of such Maker, and the Debtor shall have represented in
               writing to the Lender that it has no knowledge of any threatened
               assertion of the same, provided that, notwithstanding the
               foregoing in this clause (k), if the Lender has knowledge of, or
               reasonable cause to believe that, any such defense, offset,
               counterclaim, discount or allowance in respect of such Pledged
               Note Receivable or such Timeshare Instrument has been asserted,
               may be asserted or is threatened to be asserted and it confirms
               the same, in writing, to the Debtor, such Pledged Note Receivable
               shall be deemed not to, or to no longer, satisfy the requirements
               of this clause (k);

                      (l) the Maker shall have previously paid to the Debtor, in
               connection with the execution and delivery of the Pledged
               Contract related to such Pledged Note Receivable, a down payment
               (prior to all discounts not offered to purchasers generally in
               the ordinary course of business of the Debtor) of not less than
               10% of the purchase price



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<PAGE>   11

               (as set forth in such Pledged Contract) of the Timeshare
               Interval being so purchased by such Maker;

                      (m) the sale of the Timeshare Interval related to such
               Pledged Note Receivable shall have been recognized as a sale on
               the books of the Debtor pursuant to, and in accordance with, the
               definition thereof set forth in the Guidelines established by the
               American Institute of Certified Public Accountants; and

                      (n) at the time of the pledging of such Pledged Note
               Receivable and after giving effect thereto, the Note Receivable
               Portfolio Average Rate of Interest shall be at least 12.5% per
               annum, however, notwithstanding subsection (c) or (n) herein,
               Pledged Notes Receivable evidencing 0% or 5% interest for terms
               of 24 or 36 months, respectively, shall also be acceptable
               provided Maker has paid to Debtor 50% of such purchase price and
               such Pledged Notes Receivable do not exceed 30% of the aggregate
               principal balance of the Pledged Notes Receivable outstanding at
               the time of such determination.

               If any Pledged Note Receivable, having met all of the
        requirements of an "Eligible Note Receivable," shall fail, at any time
        thereafter, to continue to meet the requirements set forth in
        subparagraphs (a), (b), (c), (d), (e), (g), (h), (j), (k), (l) or (n)
        above, such Pledged Note Receivable shall immediately be excluded from
        the Receivables Borrowing Base as an Eligible Note Receivable. Before
        any such Pledged Note Receivable shall be reinstated as an Eligible Note
        Receivable, such Pledged Note Receivable shall meet all of the
        requirements set forth in subparagraphs (a) through (n), inclusive,
        above, as if such Pledged Note Receivable were being pledged anew at
        such time, and the Debtor shall have received payment of all delinquent
        payments thereunder.

               ENVIRONMENTAL PROTECTION LAW -- means each federal, state,
        county, regional or local law, statute, or regulation enacted in
        connection with or relating to the protection or regulation of the
        environment, including, without limitation, those laws, statutes, and
        regulations regulating the disposal, removal, production, storing,
        refining, handling, transferring, processing, or transporting of
        Hazardous Substances, and any regulations issued or promulgated in
        connection with such statutes by any governmental authority and any
        orders, decrees or judgments issued by any court of competent
        jurisdiction in connection with any of the foregoing.

               EQUIPMENT -- means the furniture, fixtures and furnishings of
        each Unit and all fixtures, fittings, machinery, appliances, equipment,
        apparatus, furnishings and personal Property of every nature found on or
        used in connection with the Resort, but excluding motor vehicles,
        Property owned by the Association, Property owned by occupants of the
        Units and telephone and computer equipment leased in the ordinary course
        of business.

               EVENT OF DEFAULT -- as defined in Section 8.1 of this Agreement.

               FAIR MARKET VALUE -- at any time with respect to any Property
        means the sale value of such Property that would be realized in an
        arm's-length sale at such time between an informed and willing buyer,
        and an informed and willing seller, under no compulsion to buy or sell,
        respectively.

               GUARANTY -- as defined in Section 7.7(b) of this Agreement.

               GUARANTY AGREEMENT -- as defined in Section 5.8 of this
        Agreement.



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<PAGE>   12

               GUARANTOR -- means Mego Financial.

               HAZARDOUS SUBSTANCES -- means any and all pollutants,
        contaminants, toxic or hazardous wastes or any other substances that
        might pose a hazard to health or safety, the removal of which may be
        required or the generation, manufacture, refining, production,
        processing, treatment, storage, handling, transportation, transfer, use,
        disposal, release, discharge, spillage, seepage or filtration of which
        is or shall be restricted, prohibited or penalized by any Environmental
        Protection Law (including, without limitation, asbestos, urea
        formaldehyde foam insulation and polychlorinated biphenyls); provided,
        however, that "Hazardous Substances" shall not include any substance
        used by the Debtor, any homeowner or their respective agents in the
        ordinary course of business in compliance with applicable Environmental
        Protection Laws.

               HILLTOP DECLARATION. -- means that certain Condominium
        Declaration with Timeshare Ownership, Covenants, Conditions and
        Restrictions Hilltop Resort, A Condominium dated January 5, 1998 and
        recorded with the Office of the Clerk and Recorder for Routt County,
        Colorado on February 18, 1998 in Book 743, Page 478 as amended for time
        to time in accordance with the terms and provisions thereof and hereof.

               HILLTOP RESORT -- means the Property described in Schedule 1-A
        including without limitation, all of the currently existing and
        hereafter created buildings, Units, Timeshare Intervals, Common
        Amenities in respect thereof and all other currently existing or
        hereafter constructed buildings, structures and improvements of every
        nature whatsoever now or hereafter situated on or serving, said
        Property.

               IMPOSITIONS -- as defined in Section 3.7 of this Agreement.

               INSURANCE PREMIUMS -- as defined in Section 3.5(a) of this
        Agreement.

               INTEREST RATE -- means, with respect to any calendar month, a per
        annum rate of interest equal to the greater of:

                      (a) 8.75%, or

                      (b) the sum of

                             (i) 2.0%, plus

                             (ii) the Prime Rate then in effect for such month.

               The interest rate for each calendar month shall be based upon the
        Prime Rate in effect at 9:00 a.m. (Eastern time) on the 1st day of such
        month. The term "Prime Rate" shall mean the "prime rate" as announced
        from time to time by Chase Manhattan Bank, N.A. or any successor
        thereto. In the event Chase Manhattan Bank, N.A., or any successor
        thereto, shall discontinue announcement of said Prime Rate, a comparable
        index designated by the Lender shall be used in calculating the Interest
        Rate. It is expressly agreed that the use of the term "prime rate" or
        any other similar designation is not intended to, nor does it, imply
        that said rate of interest is a preferred rate of interest or one which
        is offered by Chase Manhattan Bank, N.A. or any successor thereto to its
        most creditworthy customers.



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<PAGE>   13

               INVENTORY DEED OF TRUST -- means that certain combination deed of
        trust, security agreement and fixture financing statement, substantially
        in the form of Exhibit A to this Agreement, as the same may be amended
        from time to time.

               INVENTORY LOAN -- means, that certain $8,400,000 Timeshare
        Interval inventory loan made or to be made by lender to Debtor.

               INVENTORY LOAN AGREEMENT -- means that certain General Loan and
        Security Agreement among Lender and Debtor of even date hereof to
        provide for the Inventory Loan.

               INVENTORY NOTE - means the note in the amount of $8,400,000
        delivered by Debtor to the Lender pursuant to the Inventory Loan
        Agreement.

               LENDER -- as defined in the preamble to this Agreement.

               LETTER OF INTENT -- means, with respect to any request by the
        Debtor regarding (a) an extension of the Receivables Commitment Period,
        (b) additional loans to be extended to it by the Lender or (c) the sale
        of Notes Receivable by the Debtor to the Lender, a letter from the
        Lender to the Debtor expressing an interest in such request, provided
        that any such Letter of Intent may incorporate or be subject to
        conditions and contingencies as are customarily included in such letters
        and shall not be deemed to be an acceptance of any offer of the Debtor
        in such request or a commitment or offer by the Lender to make loans to,
        or purchase Notes Receivable from, the Debtor.

               LIEN -- any interest in Property securing an obligation owed to,
        or a claim by, a Person other than the owner of the Property, whether
        such interest is based on the common law, statute or contract, and
        including, but not limited to, attachments, judgments or tax liens
        (except for inchoate tax liens which arise in connection with taxes not
        yet due and payable) and the security interest or lien arising from a
        mortgage, encumbrance, pledge, conditional sale or trust receipt or a
        lease, consignment or bailment for security purposes. The term "Lien"
        shall include reservations, exceptions, encroachments, easements,
        rights-of-way, covenants, conditions, restrictions, leases and other
        title exceptions and encumbrances affecting Property. For the purpose of
        this Agreement, the Debtor shall be deemed to be the owner of any
        Property which it has acquired or holds subject to a conditional sale
        agreement or other arrangement pursuant to which title to the Property
        has been retained by or vested in some other Person for security
        purposes.

               LOAN -- means the Receivables Loan and the Inventory Loan.

               LOAN COSTS -- as defined in Section 10.2 of this Agreement.

               LOCKBOX ACCOUNT -- means a deposit account maintained by the
        Collection Agent exclusively for, and in the name of, the Debtor for the
        receipt and deposit of payments in respect of Pledged Notes Receivable.

               MAKER -- means any natural Person, who shall have, in a bona fide
        transaction, purchased a Timeshare Interval and executed a Contract and
        a Note Receivable in respect thereof.

               MANDATORY RECEIVABLES PREPAYMENT -- means any payment required by
        Section 2.3(b) of this Agreement.



                                        8
<PAGE>   14

               MAXIMUM RATE -- as defined in Section 2.2(b) of this Agreement.

               MEGO FINANCIAL -- means Mego Financial Corp., a New York
        corporation.

               MONTHLY AVERAGE WEIGHTED LOAN BALANCE -- means, for any calendar
        month with respect to the Receivables Loan, the quotient of

                      (a) the aggregate of the Daily Loan Balances for each of
               the days of such month in respect of such Receivable Loan divided
               by

                      (b) the number of days in such month.

               For purposes of this definition, "Daily Loan Balance" shall mean,
        for any day, the principal balance of the Receivables Loan outstanding
        as of the close of business of the Lender for such day after giving
        effect to all payments received and Receivables Advances made during
        such day.

               NOTES -- means the Inventory Note and the Receivables Note.

               NOTE RECEIVABLE -- means any promissory note made payable to the
        order of the Debtor which provides for payment of the deferred purchase
        price of one or more Timeshare Intervals purchased by the Maker thereof.

               NOTE RECEIVABLE PORTFOLIO AVERAGE RATE OF INTEREST -- means, at
        any time, the quotient of

                      (a) the sum of the respective products for each Eligible
               Note Receivable, where each such product equals, with respect to
               each such Eligible Note Receivable, the stated per annum rate of
               interest (expressed as a decimal and rounded to the nearest
               thousandth) times the principal balance of such Eligible Note
               Receivable outstanding at such time divided by

                      (b) the aggregate of the principal balances of all
               Eligible Notes Receivable outstanding at such time;

               For the purposes of this definition, Pledged Notes Receivable
        having an interest rate of 0% or 5% shall be excluded from the
        determination of the Note Receivable Portfolio Average Rate of Interest
        if all of the following conditions with respect thereto are satisfied:

                      (a) the aggregate unpaid principal balance of all such 0%
               or 5% interest rate Pledged Notes Receivable shall not exceed 30%
               of the aggregate outstanding principal balance of all Pledged
               Notes Receivable outstanding at the time of such determination;
               to extent that such 30% threshold shall be exceeded, the 0% or 5%
               interest rate Pledged Notes Receivable contributing, in whole or
               part, to such excess shall be included in the determination of
               the Note Receivable Portfolio Average Rate of Interest;

                      (b) each purchaser of a Timeshare Interval related to each
               such 0% interest rate Pledged Note Receivable shall have
               previously paid to the Debtor, in connection with the execution
               and delivery of the Pledged Contract related thereto, a down
               payment (prior to all discounts not offered to purchasers
               generally in the ordinary course of business of the Debtor) of
               not less than 50% of the purchase price (as set forth in such
               Pledged Contract) of the Timeshare Interval purchased by such
               purchaser; and



                                        9
<PAGE>   15

                      (c) the unpaid principal balance of each 0% interest rate
               Pledged Note Receivable shall be due and payable, in legal tender
               of the United States of America, in equal monthly installments
               and the remaining term of such Pledged Note Receivable shall not
               exceed 24 months (each such 0% interest rate Pledged Note
               Receivable meeting the requirements of this subclause (C) and
               subclause (B) above is referred to herein as a "Zero Coupon
               Pledged Note Receivable").

               OBLIGATIONS -- means all sums now or hereafter loaned, advanced
        or incurred by the Lender to or on behalf of the Debtor under this
        Agreement, the Inventory Loan, the Receivables Note, and any other
        Security Document (including, without limitation, accrued and unpaid
        interest, unpaid prepayment premium and Loan Costs), and the full,
        prompt and complete performance of all obligations owed by, or
        undertakings or indemnities of, Debtor arising hereunder or thereunder
        and the PEC Obligations.

               PARTICIPATING LENDER -- means any Person which (a) shall have
        been granted the right by the Lender to participate in any of the Notes
        and the Collateral and (b) shall have entered into a participation
        agreement in form and substance satisfactory to the Lender which shall
        provide, inter alia, that the Participating Lender shall communicate and
        deal only with the Lender with respect to the Participating Lender's
        interest in the Notes and the Collateral.

               PEC OBLIGATIONS -means all sums now or hereafter loaned, advanced
        or incurred by the Lender or Dorfinco to or on behalf of Preferred under
        the Loan and Security Agreement dated as of August 12, 1998, as amended,
        and Loan and Security Agreement dated as of July 31, 1991, as amended,
        together with any amendments thereto, and Security Documents (including,
        without limitation, accrued and unpaid interest, unpaid prepayment
        premium and Loan Costs), and the full, prompt and complete performance
        of all obligations owed by, or undertakings or indemnities of, Debtor
        arising hereunder or thereunder.

               PERMITTED EXCEPTIONS -- means the title exceptions set forth in
        Schedule 7 of this Agreement.

               PERSON -- means an individual, partnership, corporation, trust,
        unincorporated organization, or a government or agency or political
        subdivision thereof.

               PHASE II COMMITMENT LETTER - means with respect to any Letter of
        Intent issued by the Lender, a letter from the Lender to the Debtor
        whereby the Lender offers to extend credit to, or purchase Notes
        Receivable from, the Debtor substantially in accordance with the terms
        and conditions set forth in such Letter of Intent. Such offer may be
        subject to such conditions and contingencies as are customarily found in
        commitment letters.

               PLEDGED CONTRACT -- means any Contract related to a Pledged Note
        Receivable, which Pledged Note Receivable evidences the payment of the
        deferred purchase price of one or more Timeshare Intervals provided for
        in such Contract.

               PLEDGED NOTE RECEIVABLE DEED OF TRUST -- with respect to any
        Pledged Note Receivable financing the purchase of a Timeshare Interval
        means a deed of trust, in form and substance reasonably acceptable to
        the Lender, (a) which deed of trust shall have created a first priority
        Lien in and to such Timeshare Interval, (b) which deed of trust shall
        have been duly recorded (and all fees and taxes in connection therewith
        paid by the Debtor) in the appropriate land records, (c) the original of
        which deed of trust, which shall contain an appropriate official
        acknowledgement of



                                       10
<PAGE>   16

        its due recordation in the appropriate local land records, shall have
        been delivered to the Lender by the Debtor, provided that if such
        original deed of trust has been delivered for recordation but has not
        yet been returned to the Debtor, the Debtor shall deliver to the Lender
        a copy of such original deed of trust, certified by the Debtor to be a
        true copy, together with a certificate of the Debtor certifying that
        such original deed of trust has been delivered for recordation,
        provided, further, that the Debtor shall deliver to the Lender the
        original deed of trust containing an official acknowledgement of its due
        recordation within 60 days of the purchase of the related Timeshare
        Interval, (d) which deed of trust shall have been assigned to the Lender
        by the Debtor pursuant to an assignment, in form and substance
        reasonably acceptable to the Lender (and such assignment shall have been
        duly recorded {and all fees and taxes in connection therewith paid by
        the Debtor} in the appropriate land records) and (e) in respect of which
        deed of trust a mortgagee's title insurance policy shall have been
        issued by a title insurance company acceptable to the Lender and
        delivered to the Lender (each such mortgagee's title insurance policy
        shall be in form and substance reasonably satisfactory to the Lender and
        its counsel {all exceptions thereto, other than Permitted Exceptions,
        being subject to the approval of the Lender and its counsel} and shall
        name the Lender, by way of an endorsement thereto {which endorsement
        shall have been delivered to the Lender}, as the insured party thereon,
        and the amount of coverage provided by each such mortgagee's title
        insurance policy shall not be less than the principal amount of such
        Pledged Note Receivable.

               PLEDGED NOTES RECEIVABLE -- means any Note Receivable which shall
        have been assigned and delivered to the Lender pursuant hereto and not
        reassigned or redelivered by the Lender to the Debtor.

               PREFERRED OR PREFERRED EQUITIES -- means Preferred Equities
        Corporation, a Nevada corporation.

               PRIME RATE -- as defined in the definition of "Interest Rate" in
        this Section 1.1.

               PROPERTY OR PROPERTIES -- means any interest in any kind of
        property or asset of Debtor, whether real, personal or mixed, or
        tangible or intangible.

               PROPERTY-RELATED CONTRACT -- as defined in Section 3.1(b) of this
        Agreement.

               RECEIVABLES ADVANCE -- means any advance made by the Lender
        hereunder in respect of Eligible Notes Receivable.

               RECEIVABLES BORROWING BASE --  means, at any time, the lesser of

                      (a) the remainder of (i) $26,500,000 minus (ii) the
               principal amount of the Inventory Loan outstanding at such time
               minus (iii) the principal amount outstanding under the Loan and
               Security Agreement dated as of August 12, 1998, as amended, by
               and between Preferred and Dorfinco minus (iv) the Obligations
               outstanding under the General Loan and Security Agreement dated
               as of July 31, 1991, as amended provided however such remainder
               shall not exceed $15,000,000; and

                      (b) the sum, without duplication, of (i) 80% of the
               aggregate of the unpaid principal balances of all Eligible Notes
               Receivable outstanding at such time plus (ii) 90% of the
               aggregate of the unpaid principal balances of all Eligible Notes
               Receivable in respect of which at least three or more scheduled
               monthly installment payment shall have been made.



                                       11
<PAGE>   17

               RECEIVABLES BORROWING BASE DEFICIENCY -- means, at any time, the
        remainder (if positive) of (a) the aggregate outstanding principal
        amount of the Receivables Loan at such time minus (b) the Receivables
        Borrowing Base at such time.

               RECEIVABLES COMMENCEMENT DATE -- means the date on which the
        first Receivables Advance is made, which date shall be no later than the
        Closing Date.

               RECEIVABLES COMMITMENT PERIOD -- means the period commencing on
        the Receivables Commencement Date and ending on the Receivables
        Termination Date.

               RECEIVABLES LOAN -- means, at any time, the aggregate principal
        balance of all Receivables Advances outstanding at such time.

               RECEIVABLES MATURITY DATE -- means June 1, 2004.

               RECEIVABLES NOTE -- means that certain promissory note, dated the
        date hereof and substantially in the form of Exhibit B to this
        Agreement.

               RECEIVABLES PREPAYMENT PREMIUM -- with respect to any prepayment
        of the Receivables Loan pursuant to Section 2.3(c) of this Agreement or
        as a result of the acceleration of the Receivables Loan pursuant to
        Section 8.2 of this Agreement, means the percentage set forth below,
        corresponding to the date on which the Receivables Loan is prepaid or
        accelerated, of the principal balance of the Receivables Loan
        outstanding at such time:


<TABLE>
<CAPTION>
================================================================================
       IF PREPAYMENT IS MADE, OR
    ACCELERATION OCCURS, DURING THE                     APPLICABLE PERCENTAGE OF
           FOLLOWING PERIODS                                PRINCIPAL AMOUNT
--------------------------------------------------------------------------------
<S>                                                     <C>
From and including the first anniversary of the                    3%
Receivables Commencement Date to (but
excluding) the second anniversary of the
Receivables Commencement Date

--------------------------------------------------------------------------------
From and including the second anniversary of                       2%
the Receivables Commencement Date to (but
excluding) the third anniversary of the
Receivables Commencement Date

--------------------------------------------------------------------------------
From and including the third anniversary of the                    1%
Receivables Commencement Date to (but
excluding) the fourth anniversary of the
Receivables Commencement Date

--------------------------------------------------------------------------------
After the fourth anniversary of the Receivables                    0%
Commencement Date to (and including) the
Receivables Maturity Date
================================================================================
</TABLE>



                                       12
<PAGE>   18

               RECEIVABLES TERMINATION DATE -- means the earliest of

                      (a) the date on which the Lender's obligations to make
               Receivable Advances are terminated pursuant to Section 8.2(b) of
               this Agreement,

                      (b) the date on which the Obligations are accelerated
               pursuant to Section 8.2(a) of this Agreement,

                      (c) the date on which any of the Events of Default set
               forth in Section 8.1(f) shall have occurred, and

                      (d) June 1, 2002

               RELEASE FEE -- as defined in the Inventory Loan Agreement.

               RELEASE PRICE -- means, with respect to any Unsold Inventory
        Timeshare Interval, $3,075

               RESORT OR RESORTS - means the Hilltop Resort and/or the Steamboat
        Resort.

               SECURITY -- shall have the same meaning as in Section 2(1) of the
        Securities Act of 1933, as amended.

               SECURITY DOCUMENTS -- means this Agreement, the Receivables Note,
        the Inventory Note, all assignments of the Pledged Notes Receivable and
        Pledged Contracts related to the Receivables Note, all assignments of
        Pledged Note Receivable Deeds of Trust securing Pledged Notes
        Receivable, all assignments of Property-Related Contracts, the Agency
        Agreement, the Inventory Deed of Trust, the Guaranty Agreements and all
        assignments, instruments, certificates, notices and other documents
        executed and delivered in connection with the transactions contemplated
        herein.

               STEAMBOAT:  means Steamboat Suites, Inc. a Colorado corporation.

               STEAMBOAT DECLARATION -- means that certain Amended and Restated
        Declaration with Timeshare Ownership Covenants, Conditions and
        Restrictions, The Suites at Steamboat, A Condominium dated March 21,
        1995 and recorded with the Office of the Clerk and Recorder for Routt
        County, Colorado on March 22, 1995 in Book 706, Page 337.

               STEAMBOAT RESORT - means the Property described on Schedule 1-B
        hereto, including, without limitation, all of the currently existing and
        hereafter created buildings, Units, Timeshare Intervals, Common
        Amenities in respect thereof and all other currently existing or
        hereafter constructed buildings, structures and improvements of every
        nature whatsoever now or hereafter situated on, or serving, said
        Property, including, without limitation, the Amenity Building.

               SUBORDINATION AGREEMENT -- as defined in Section 5.9 of this
        Agreement.

               SUBSIDIARY -- means any present or future corporation of which
        the Debtor owns, directly or indirectly, more than 50% of the Voting
        Stock.

               TIMESHARE DOCUMENTS -- means all documents and instruments
        establishing, memorializing, governing, or affecting the rights and
        obligations of the purchasers of Timeshare Intervals in and to a Unit,
        including, without limitation, the documents and certificates creating



                                       13
<PAGE>   19

        and effecting the timeshare regimen for such Unit, which shall include,
        without limitation, the Declaration, the Articles of Incorporation and
        By-Laws of the Association, any restrictive covenants in respect of such
        regimen and all other project instruments in respect of such regimen.

               TIMESHARE INSTRUMENTS -- as defined in Section 3.10(i) of this
        Agreement.

               TIMESHARE INTERVAL -- means (i) (A) an estate for years in and to
        any Unit which shall confer an exclusive right to use, occupy and
        possess such or any other similar Unit for a stipulated week or a week
        in a stipulated season, together with a vested remainder as a tenant in
        common in such Unit at the end of such estate for years, all as more
        particularly provided for by the Declaration and the other Timeshare
        Documents in respect of such Unit or (B) a freehold estate in any Unit
        created by the Declaration and the other Timeshare Documents in respect
        of such Unit, which freehold estate shall entitle the owner thereof to
        the exclusive use and occupancy of one of the 51 annually recurring
        weekly timeshare periods or a week in a stipulated season established
        and designated in said Declaration in respect of such Unit or any other
        similar Unit and (ii) the proportionate interest in the Common Amenities
        related to such Unit, as set forth in the Declaration.

               TITLE INSURANCE POLICY {BLANKET} -- as defined in Section 5.12
        hereof.

               UNIT -- means any unit (within the meaning of such term in the
        Declaration) in any Building.

               UNSOLD INVENTORY TIMESHARE INTERVAL -- means, at any time, any
        Timeshare Interval arising out of a Unit, which Timeshare Interval
        shall, as at such time, not have been released from the Lien of the
        Inventory Deed of Trust.

               VOTING STOCK -- means securities of any class or classes of a
        corporation the holders of which are ordinarily, in the absence of
        contingencies, entitled to elect a majority of the corporate directors
        (or Persons performing similar functions) of such corporation.

               ZERO COUPON PLEDGED NOTE RECEIVABLE -- as defined in the
        definition of "Note Receivable Portfolio Average Rate of Interest " in
        Section 1.1 of this Agreement.

        1.2 DIRECTLY OR INDIRECTLY.

        Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provisions
shall be applicable whether such action is taken directly or indirectly by such
Person.

        1.3 HEADINGS.

        Section headings have been inserted in this Agreement as a matter of
convenience of reference only; such section headings are not a part of this
Agreement and shall not be used in the interpretation of this Agreement.

        1.4 ACCOUNTING PRINCIPLES.



                                       14
<PAGE>   20

        Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be determined or made in accordance with generally
accepted accounting principles, procedures and practices consistently applied at
the time in effect, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.

SECTION 2. ADVANCES AND NOTES

        2.1 RECEIVABLES ADVANCES; RECEIVABLES LOAN;

               (a) RECEIVABLES ADVANCES. The Lender agrees, pursuant to the
        terms of this Agreement and subject to the satisfaction of the
        conditions precedent in Section 6 of this Agreement, to make one or more
        Receivables Advances to the Debtor from time to time during the
        Receivables Commitment Period, provided that at such time (and after
        giving effect to any Receivables Advance currently then to be made) the
        aggregate outstanding principal amount of all Receivables Advances shall
        not exceed the Receivables Borrowing Base. In accordance with the terms
        and conditions of this Agreement, the Debtor may borrow, cause the
        Receivables Loan to be repaid through collections and reborrow during
        the Receivables Commitment Period. The Receivables Note shall be payable
        in the manner set forth in Section 2.3 of this Agreement and the
        Receivables Note. The Receivables Loan shall be due and payable on the
        Receivables Maturity Date together with any accrued interest thereon
        then remaining unpaid and any other amounts due hereunder, under the
        Receivables Note or under any of the other Security Documents.

               (b) LENDING LIMIT: Debtor acknowledges, agrees and confirms that
        the obligations of Lender after giving effect to all participations to
        extend the Receivable Loan, Inventory Loan and PEC Obligations is
        limited to a maximum aggregate principal amount of $19,000,000. Debtor
        further acknowledges, agrees and confirms that the obligation of Lender
        to make the full amount of the Receivable Loan shall be subject to
        Lender participating $7,500,000 of the Receivable Loan.

        2.2 ISSUANCE OF NOTE; RATE OF INTEREST; RECEIPT OF PAYMENTS.

               (a) RECEIVABLES NOTE. The Debtor shall authorize, issue and
        deliver to the Lender the Receivables Note. On and after the Closing
        Date the Lender is hereby authorized by the Debtor to record (in good
        faith) in the manual or data processing records of the Lender, or on the
        grid schedule annexed to the Receivables Note, the date and amount of
        each Receivables Advance extended to the Debtor by the Lender hereunder
        and the date and amount of each repayment of principal and each payment
        of interest on account of the Receivables Loan. In the absence of
        manifest error, such records and schedule shall be conclusive as to the
        outstanding principal amount of all Receivables Advances and the payment
        of interest accrued hereunder; provided, that the failure to make any
        such record entry with respect to any Receivables Advance or payment
        shall not limit or otherwise affect the obligations of the Debtor under
        this Agreement, the Receivables Note or any other Security Document.

               (b) RATE OF INTEREST: RECEIVABLES LOAN AND INVENTORY LOAN.
        Interest shall accrue on the Receivables Loan and be due monthly in
        arrears on the first (1st) Business Day of each month, as more
        particularly provided in this clause (b), and shall be paid as provided
        in Section 2.3 of this Agreement. Subject to the accrual of interest on
        the Receivables Loan after the occurrence of a Default or Event of
        Default, as more particularly provided in this clause (b), the Monthly



                                       15
<PAGE>   21

        Average Weighted Loan Balance in respect of the Receivables Loan for
        each calendar month shall bear interest at a rate per annum equal to the
        Interest Rate.

               Interest shall be calculated under this clause (b) on the basis
        of actual days elapsed over a period of a 360 day year.

               Each Receivables Advance shall bear interest as of the date of
        the Lender's wiring of funds thereof through the date of the receipt by
        the Lender of the repayment of such Advance (if the repayment of all or
        any portion of any Advance is received by the Lender later than 3:00
        p.m. Eastern time, then interest accrual thereon shall be through the
        next Business Day following such receipt). After the occurrence of an
        Event of Default or after the Receivables Maturity Date (if the
        aggregate principal balance of the Receivables Advances is not paid in
        full on the Receivables Maturity Date), the Receivables Loan will bear
        interest at the Default Rate.

               The Debtor and the Lender intend to comply at all times with
        applicable usury laws. All agreements between the Debtor and the Lender,
        whether now existing or hereafter arising and whether written or oral,
        are hereby limited so that in no contingency, whether by reason of
        demand or acceleration of the maturity of any Note or otherwise, shall
        the interest contracted for, charged, received, paid or agreed to be
        paid to the Lender exceed the maximum amount permissible under
        applicable law, or in the absence of a maximum allowable rate under
        applicable law, then, 45% per annum (the "Maximum Rate"). The Lender
        may, in determining the Maximum Rate in effect from time to time, take
        advantage of any law, rule or regulation in effect from time to time
        available to the Lender which exempts the Lender from any limit upon the
        rate of interest it may charge or grants to the Lender the right to
        charge a higher rate of interest than that otherwise permitted by
        applicable law. If, from any circumstance whatsoever, interest would
        otherwise be payable to the Lender in excess of the Maximum Rate, the
        interest payable to the Lender shall be reduced to the Maximum Rate; and
        if from any circumstance the Lender shall ever receive anything of value
        deemed interest by applicable law in excess of the Maximum Rate, an
        amount equal to any excessive interest shall be applied to the reduction
        of the principal of the Loan and not to the payment of interest, or if
        such excessive interest exceeds the unpaid balance of principal of the
        Loan, such excess shall be refunded to the Debtor. All interest paid or
        agreed to be paid to the Lender shall, to the extent permitted by
        applicable law, be amortized, prorated, allocated and spread throughout
        the full period until payment in full of the principal so that the
        interest on the Loan for such full period shall not exceed the Maximum
        Rate. The Debtor agrees that in determining whether or not any interest
        payment under the Security Documents exceeds the Maximum Rate, any
        non-principal payment (except payments specifically described in the
        Security Documents as "interest") including without limitation,
        prepayment fees and late charges, shall to the maximum extent not
        prohibited by law, be an expense, fee or premium rather than interest.
        The Lender hereby expressly disclaims any intent to contract for, charge
        or receive interest in an amount which exceeds the Maximum Rate. The
        provisions of this Agreement, the Notes, and all other Security
        Documents are hereby modified to the extent necessary to conform with
        the limitations and provisions of this paragraph, and this paragraph
        shall govern over all other provisions in any document or agreement now
        or hereafter existing. This paragraph shall never be superseded or
        waived unless there is a written document executed by the Lender and the
        Debtor, expressly declaring the usury limitation set forth in this
        paragraph to be null and void, and no other method or language shall be
        effective to supersede or waive this paragraph.

               (c) INTEREST AND OTHER PAYMENTS DUE ON HOLIDAYS. If any payment
        due on, or with respect to, this Agreement, the Notes or any other
        Security Document shall fall due on a day other than a Business Day,
        then such payment shall be made on the 1st Business Day following the
        day



                                       16
<PAGE>   22

        on which such payment shall have so fallen due; provided that if all or
        any portion of such payment shall consist of a payment of interest, for
        purposes of calculating such interest, such payment shall be deemed to
        have been originally due on such first following Business Day, and such
        interest shall accrue and be payable to (but not including, subject to
        clause (d) below) the actual date of payment.

               (d) APPLICATION OF PAYMENTS RECEIVED AFTER 3:00 P.M. Any payment
        actually received by the Lender at or before 3:00 p.m. Eastern time, by
        federal funds wire transfer on any Business Day, shall be deemed to have
        been received by the Lender on such day. Any payment actually received
        by the Lender after 3:00 p.m. Eastern time, by federal funds wire
        transfer on any Business Day, shall be deemed to have been received on
        the next following Business Day. All payments received by the Lender on
        a day other than a Business Day, or in a manner other than by federal
        funds wire transfer, shall be deemed to have been received by the Lender
        on the Business Day such amounts actually become available to the Lender
        prior to 3:00 p.m. Eastern time in immediately available funds.

        2.3 MANDATORY PREPAYMENTS OF RECEIVABLES LOAN; VOLUNTARY PREPAYMENTS OF
            RECEIVABLES LOAN.

               (a) COLLECTION AND APPLICATION OF PROCEEDS FROM PLEDGED NOTES
        RECEIVABLE.

                      (i) The Debtor shall direct or otherwise cause all Makers
               under the Pledged Notes Receivable to pay all moneys due
               thereunder directly to the post office box established pursuant
               to the Agency Agreement or to such other Person or place as the
               Debtor may be advised by the Lender in writing.

                      (ii) The Debtor, to the extent it receives such payments
               directly from or on behalf of such Makers, shall hold the same
               (in the form so received) in trust for the sole and exclusive
               benefit of the Lender and immediately shall deliver the same to
               the Lender or, if so directed or agreed to in writing by the
               Lender, shall either deliver the same to the Collection Agent or
               shall mail the same to the post office box established pursuant
               to the Agency Agreement.

                      (iii) Moneys (in good, collected funds in legal tender of
               the United States of America) from Pledged Notes Receivable
               collected by the Lender and/or collected and delivered to the
               Lender by the Collection Agent or the Debtor shall be applied, on
               each Wednesday of each week (and if such Wednesday is not a
               Business Day, then on the next Business Day),

                             FIRST, towards the payment of fees, costs and
                      expenses as set forth in Section 10.2 of this Agreement,
                      in each case, as the same may have arisen in respect of
                      the Receivables Loan,

                             SECOND, towards the payment of all billed and
                      unpaid interest at the Interest Rate (except as provided
                      in clause third below) and any interest at the Default
                      Rate in respect of the Receivables Loan,

                             THIRD, towards the payment of accrued and unpaid
                      interest at the Interest Rate for and in respect of the
                      complete calendar month immediately preceding such week,



                                       17
<PAGE>   23

                             FOURTH, to the payment of the remaining principal
                      amount of the Receivables Loan then outstanding,

                             FIFTH, towards the payment of all other fees, costs
                      and expenses as set forth in Section 10.2 of this
                      Agreement,

                             SIXTH, towards the payment of all billed and unpaid
                      interest, if any, in respect of the Inventory Loan,

                             SEVENTH, to the payment of the principal amount of
                      the Inventory Loan, if any, and

                             EIGHTH, to the payment of any other Obligations
                      then unpaid and in default.

                      Interest which accrues on the Receivables Loan in respect
               of any month shall be due and payable on, and shall be paid by
               the Debtor on, the first (1st) Business Day of the immediately
               following month. To the extent that any interest due and payable
               as of the first (1st) Business Day of any month shall not have
               been previously paid in full by the application of the proceeds
               of the Pledged Notes Receivable, as referred to above, the Debtor
               shall pay such shortfall on or prior to the last day of such
               month and, if such day is not a Business Day, on or prior to the
               first Business Day immediately preceding such last day.

                      (b) MANDATORY PREPAYMENTS. If at any time the aggregate
        outstanding principal amount of the Receivables Loan shall exceed the
        Receivables Borrowing Base, the Debtor shall immediately notify the
        Lender of such fact and make a mandatory prepayment ("Mandatory
        Receivables Prepayment") in the amount necessary to reduce the then
        outstanding amount of the Receivables Loan to the amount of the
        Receivables Borrowing Base determined as at such time. If a Mandatory
        Receivables Prepayment is required, the Debtor shall have the option to
        eliminate all, or any part, of the Receivables Borrowing Base Deficiency
        and thereby avoid the obligation, in whole or part, to make a Mandatory
        Receivables Prepayment by (i) promptly notifying the Lender in writing
        of the Debtor's intention to deliver new Notes Receivable, which when
        pledged would constitute Eligible Notes Receivable, to the Lender so as
        to increase the Receivables Borrowing Base to the required amount and
        (ii) promptly assigning and delivering such new Notes Receivable to the
        Lender or such other Person as Lender may designate, but in no event
        later than 3 Business Days after the delivery of the monthly reports
        required to be delivered pursuant to Section 7.14(f) hereof that show
        that such Receivables Borrowing Base Deficiency exists, provided that,
        if such monthly reports are not delivered on or before the date provided
        therefor in said Section 7.14(f) or if such monthly reports are so
        delivered but fail to reflect (in the reasonable opinion of the Lender)
        a Receivables Borrowing Base Deficiency which exists in the month which
        is the subject of such reports, the actions required to be undertaken in
        subclause (i) and subclause (ii) above in respect of the Debtor's option
        set forth in this sentence shall be undertaken in connection with the
        Debtor's exercise of such option not later than the 15th day of the
        month following the month in which such Receivables Borrowing Base
        Deficiency occurred. Such assignment and delivery shall comply with the
        document delivery and recordation requirements set forth in Section 6 of
        this Agreement. Any Mandatory Receivables Prepayment to be made by the
        Debtor pursuant to this Section 2.3(b) shall not affect any other
        Obligation of the Debtor arising under this Agreement, the Notes or any
        other Security Document. Mandatory Receivables Prepayments shall not be
        subject to any prepayment premium. If any Receivables Borrowing Base
        Deficiency arises as a result of one or



                                       18
<PAGE>   24

        more of the Pledged Notes Receivable no longer qualifying as Eligible
        Notes Receivable and the Debtor effects, as provided above, a Mandatory
        Receivables Prepayment or the actions required by sub-clause (i) and
        sub-clause (ii) above and, as a result thereof, such Receivables
        Borrowing Base Deficiency is cured, the Debtor may, at such time,
        request the Lender, in writing, to return to it the Pledged Notes
        Receivable which do not qualify as Eligible Notes Receivable, and the
        Debtor shall identify said Pledged Notes Receivable in the aforesaid
        writing. The Lender shall, upon the receipt of the aforesaid writing and
        if such Receivables Borrowing Base Deficiency has been cured and no
        Default or Event of Default shall then exist, release its Liens in and
        to said Pledged Notes Receivable, the Pledged Note Receivable Deeds of
        Trust that specifically relate thereto and the other documents,
        instruments, title insurance and chattel paper that specifically relate
        thereto and all proceeds, Property rights, privileges and benefits that
        specifically arise from any of the same and shall endorse and deliver to
        the Debtor all of said Pledged Notes Receivables and shall reassign and
        (to the extent it has possession of the same) deliver to the Debtor all
        of said Pledged Note Receivable Deeds of Trust and said other documents,
        instruments, title insurance policies and chattel paper to the extent,
        but only to the extent, that the said other documents, instruments,
        title insurance or chattel paper relate specifically and solely to said
        Pledged Notes Receivable (such endorsement, delivery and assignment
        being without recourse to, and without representations or warranties of
        any kind from, the Lender). The Debtor shall bear all out-of-pocket
        expenses (including, without limitation, the reasonable legal fees and
        the disbursements of the Lender) in connection with such release,
        endorsement, delivery and assignment. All documentation related thereto
        shall be reasonably satisfactory to the Lender and its counsel.

                      (c) VOLUNTARY PREPAYMENTS. Debtor shall have the right on
        or after the first Business Day of the 12th full calendar month
        following the Receivables Commencement Date (excluding for purposes of
        this clause (c) the calendar month in which the Receivables Commencement
        Date occurs), upon 30 days' prior written notice to the Lender, to
        prepay the Receivables Loan, in whole but not in part (except the
        Receivables Loan may be partially prepaid (without prepayment premium)
        as contemplated in Section 3.5 and 3.6 hereof), together with (i) the
        applicable Receivables Prepayment Premium in respect of such prepayment,
        determined at the time making of such prepayment, (ii) all accrued and
        unpaid interest due on the Receivables Loan as at the time of the making
        of such prepayment and (iii) all other amounts payable hereunder,
        determined at the time of making such prepayment, including, without
        limitation, Loan Costs. Prepayments by Makers under their respective
        Pledged Notes Receivable shall not be deemed to be "voluntary
        prepayments" and shall not be subject to any Receivables Prepayment
        Premium.

        2.4 PARTICIPATING LENDER.

        The Lender shall have the right, without prior notice to the Debtor or
the approval of the Debtor, to designate one or more Participating Lenders and
to grant to such Participating Lenders participations in the Receivables Loan
and/or the Inventory Loan, on terms and conditions satisfactory to the Lender.
In the event that the Lender so designates a Participating Lender and grants
such Participating Lender a participation in any of such Loans, such
Participating Lender shall communicate and deal only with the Lender in respect
to such Participating Lender's interest in any of such Loans and the Collateral
and the Debtor shall communicate and deal hereunder only with the Lender and not
with any Participating Lender.

        SECTION 3. COLLATERAL

        3.1 SECURITY.



                                       19
<PAGE>   25

        For the purpose of securing the prompt and complete payment and
performance by the Debtor of all of the Obligations, the Debtor does
unconditionally and irrevocably hereby grant to the Lender a security interest
in, and a Lien upon, the following Property of the Debtor, whether now owned or
hereafter acquired (such Property being herein referred to as the "Collateral"):

               (a) all of the Debtor's right, title and interest in, to and
        under all Pledged Notes Receivable (now or hereafter existing) together
        with all deposits, accounts, accounts receivable, contract rights,
        general intangibles and other receivables arising under or in connection
        with such Pledged Notes Receivable or otherwise securing the obligations
        thereunder of the Makers thereof, together with all payments and other
        proceeds thereunder (including, without limitation, all Pledged
        Contracts, Pledged Note Receivable Deeds of Trust, documents,
        instruments, title insurance and chattel paper relating thereto and all
        proceeds, Property rights, privileges and benefits arising out of the
        enforcement thereof);

               (b) all of the Debtor's right, title and interest in, to and
        under (including, without limitation, all revenues, proceeds, rents and
        other benefits derived from) any franchises, (excluding the Hospitality
        Franchise Systems and Ramada Franchise Systems license agreements)
        permits, trade names, trademarks (and goodwill associated therewith),
        approvals, leasehold interests (whether as lessor or lessee), management
        contracts, marketing contracts, maintenance contracts, utility
        contracts, security contracts, licensing contracts, Timeshare Documents
        or other similar contracts and all guaranties of any of the foregoing,
        including, without limitation, the contracts set forth on Schedule 2 to
        this Agreement (individually, a "Property-Related Contract" and,
        collectively, the "Property-Related Contracts") relating, in each case,
        to one or more Units or Timeshare Intervals or to the Resort;

               (c) all other accounts, contract rights, general intangibles,
        documents, instruments and proceeds of the Debtor related to the
        Property described in clause (a) or clause (b) above, or otherwise
        connected with, or related to, the operation and/or use of the Resort
        (including, without limitation, all rights of the Debtor in and to
        unearned or prepaid Insurance Premiums, Impositions or other charges for
        utilities and any deposits with respect thereto related to the Resorts
        and any interest thereon and any Compensation that would be payable in
        respect of any Pledged Note Receivable Deed of Trust);

               (d)    all Books and Records;

               (e)    all Equipment;

               (f) all of the Debtor's right, title and interest of whatever
        character (whether as owner, vendor, mortgagee, chattel lessee,
        Declarant, Unit owner, Timeshare Interval owner or otherwise, whether
        vested or contingent and whether now owned or hereafter acquired) in and
        to (i) the Resort, including, without limitation, all Timeshare
        Intervals (now existing or hereafter created) in the Resort (whether
        sold or unsold), (ii) the Declaration (including, without limitation,
        its Development Rights or Special Declarant Rights, as such terms are
        defined in the Colorado Common Interest Ownership Act), (iii) all
        building materials, supplies and other Property now or hereafter stored
        at or delivered to the Resort or any other location for installation in
        or on the Resort, (iv) except to the extent included in clause (a),
        clause (b) or clause (c) above, all rents, issues, profits and
        condemnation awards now or hereafter belonging or in any way pertaining
        to the Resort and/or any building, structure or improvement now or
        hereafter located at the Resort, provided that nothing in this clause
        (iv) shall limit or restrict the right of the Debtor to collect "Rents"
        as defined, and provided for, in the Assignment of Rents, (v) any and
        all plans,



                                       20
<PAGE>   26

        specifications, drawings, books, records, marketing materials and
        similar items now or hereafter relating to the Resort, the operation
        thereof, any rights of the Debtor thereto or any interest therein;

               (g) all of the Debtor's right, title and interest of whatever
        character (whether as owner, chattel lessee, Declarant, Unit owner,
        Timeshare Interval owner or otherwise, whether vested or contingent and
        whether now owned or hereafter acquired) in and to any and all
        judgments, settlements, claims, awards, insurance proceeds and other
        proceeds and compensation, and any interest thereon (collectively,
        "Compensation"), now or hereafter made or payable in connection with (i)
        any casualty or other damage to all or any part of the Resort, (ii) any
        condemnation proceedings affecting the Resort or any rights thereto or
        any interest therein, (iii) any damage to or taking of the Resort or any
        rights thereto or any interest therein arising from or otherwise
        relating to any exercise of the power of eminent domain (including,
        without limitation, any and all Compensation for change of grade of
        streets or any other injury to or decrease in the value of the Resort),
        or any conveyance in lieu of or under threat of any such taking, (iv)
        any and all proceeds of any sale, assignment or other disposition of the
        Resort or any rights thereto or any interest therein, (v) any and all
        proceeds of any other conversion (whether voluntary or involuntary) of
        the Resort or any rights thereto or any interest therein or to cash or
        any liquidated claim relating thereto, and (vi) any and all refunds and
        rebates of or with respect to any Insurance Premium, any Imposition or
        any other charge for utilities relating to the Resort (including,
        without limitation, any and all refunds and rebates of or with respect
        to any deposit or prepayment relating to any such Insurance Premium,
        Imposition or charge), and any and all interest thereon, whether now or
        hereafter payable or accruing; and

               (h) all other "Mortgaged Property," as such term is defined in
        the Inventory Deed of Trust, whether such Collateral shall be presently
        in existence or whether it shall be acquired or created by the Debtor at
        any time hereafter, wherever located, together with the products and
        proceeds thereof, and any replacements, additions and/or accessions
        thereto and substitutions thereof and after-acquired Property relating
        thereto, provided that any Collateral which shall have been released by
        the Lender from the Liens provided for herein or in any other Security
        Document shall not be deemed to have again become subject to such Liens
        solely by virtue of becoming after-acquired Property of the Debtor.

        For purposes of the avoidance of doubt, the Lender and the Debtor
acknowledge that (1) this Agreement provides for the creation of a security
interest in, and a Lien upon, Pledged Notes Receivable, which (as provided in
the definition thereof set forth in this Agreement) only include Notes
Receivable which have been assigned and delivered to the Lender by the Debtor
under this Agreement and which have not been reassigned or redelivered by the
Lender to the Debtor, (2) it is not the intention of the Lender and the Debtor
that this Agreement or any other Security Document should create a security
interest in, or Lien upon, Notes Receivable which do not constitute Pledged
Notes Receivable, (3) the Inventory Deed of Trust grants a security interest for
the benefit of the Lender in and to the Debtor's right, title, interest and
income in respect of any contracts for the sale, transfer and other conveyance
of the Mortgaged Property or Timeshare Intervals therein and (4) it is not the
intention of the Lender and the Debtor that the Inventory Deed of Trust
(pursuant to the security interest referred to in subclause (3) above or
otherwise) shall require that the Debtor assign and deliver Notes Receivable to
the Lender or cause any Notes Receivable to qualify as Pledged Notes Receivable.

        The Lender agrees that, upon the release of a Timeshare Interval from
the Inventory Deed of Trust, the Lender will release any security interest , in
any related Notes Receivable that are not Pledged Notes Receivable at such time,
together with all documents, instruments, chattel paper, proceeds, revenues,
Property rights, privileges and other benefits relating thereto. In addition to
its agreements in



                                       21
<PAGE>   27

the immediately preceding sentence, the Lender further agrees that, upon the
incurrence by the Debtor of indebtedness other than to the Lender as permitted
in Section 7.2(g) hereof, or the sale of Notes Receivable by the Debtor to a
Person other than the Lender as permitted in Section 7.4 hereof, and the written
request of the Debtor, the Lender will release its security interest under any
Security Document (including, without limitation, the Inventory Deed of Trust),
in any Notes Receivable that are not Pledged Notes Receivable at such time and
are either being pledged in connection with the incurrence of such indebtedness
or being sold in connection with such sale, as the case may be, together with
all documents, instruments, chattel paper, proceeds, revenues, Property rights,
privileges and other benefits relating thereto.

        To the extent that the Debtor satisfies

               (a) the requirements of Section 7.2(g) hereof with respect to the
        incurrence of additional indebtedness in connection with the financing
        of Notes Receivable not pledged to the Lender under this Agreement or

               (b) the requirements of Section 7.4 hereof with respect to the
        sale of Notes Receivable not pledged to the Lender under this Agreement

and, in either case, if no Event of Default shall then exist, the Lender agrees,
upon receipt of a written request of the Debtor therefor, to enter into an
intercreditor agreement, which shall be in form and substance reasonably
satisfactory to the Lender and its counsel, with any other lender providing such
financing to the Debtor or any purchaser purchasing such Notes Receivable from
the Debtor, which intercreditor agreement shall provide

               (a) for an equal and ratable sharing between the Lender and such
        other lender or such purchaser of any security interest in, and Lien
        upon, the Collateral described in clause (b), in clause (c) (but only to
        the extent that clause (c) shall relate to Property described in clause
        (b)), clause (d) and clause (e) above, provided that the Lender shall
        not be obligated to effect any such sharing if such other lender or
        purchaser shall have failed to perfect its security interest in, and
        Lien upon, said Collateral,

               (b) that such other lender or purchaser shall recognize the
        priority and exclusivity of the Lender's security interest in, and Lien
        upon, all of the Collateral described in clause (a) above and in clause
        (c) above (to the extent that clause (c) shall relate to Property
        described in clause (a) above),

               (c) that the Lender shall recognize the priority and exclusivity
        of the other lender's or purchaser's security interest in, and Lien
        upon, the Notes Receivable specifically pledged or sold and (in each
        case) delivered to such other lender or such purchaser by the Debtor and
        in and to the accounts, contract rights, general intangibles and
        instruments, documents and proceeds in respect thereof, and

               (d) for a proportionate sharing of the voting rights granted by
        the Debtor to the Lender pursuant to Section 3.9(c) hereof, provided
        that such other lender has provided for an assignment of such voting
        rights to itself.

        The Lender may, in its sole discretion, require the Debtor to deliver to
the Lender certified copies of the documents of such other lender or such
purchaser providing for such financing or sale and the exhibits and other
instruments to be delivered in connection therewith, all of which shall be
reasonably



                                       22
<PAGE>   28

satisfactory to the Lender. All actions taken in connection with the execution
of any such intercreditor agreement shall be reasonably satisfactory to the
Lender and its counsel.

        3.2 UNDERTAKINGS REGARDING COLLATERAL.

               (a) The Lender shall not be required to take any steps to perfect
        or maintain the perfection of its security interest in the Collateral
        and no loss of, or damage to, the Collateral shall release the Debtor
        from any of the Obligations.

               (b) Notwithstanding that the Lender has agreed hereunder to make
        Receivable Advances to the Debtor only in respect of Eligible Notes
        Receivable, the Lender shall have a security interest in, and may
        collect payments under, all of the Pledged Notes Receivable of the
        Debtor.

               (c) The execution and delivery of this Agreement, and the
        granting of the Liens in and to the Collateral, shall not subject the
        Lender to, or transfer or pass to the Lender or in any way affect or
        modify, the liability of the Debtor under any or all of the Pledged
        Notes Receivable, the Pledged Contracts, the Property-Related Contracts
        or in connection with the Resort, the Declaration or the Association's
        Articles of Incorporation or By-Laws, it being understood and agreed
        that notwithstanding this Agreement, and the granting of the Liens in
        and to the Collateral, all of the obligations of the Debtor (whether as
        owner, chattel lessee, vendor, mortgagee, Declarant, Unit owner,
        Timeshare Interval owner or otherwise) to each and every other party
        under each and every one of the Pledged Notes Receivable, the Pledged
        Contracts and the Property-Related Contracts and/or in connection with
        the Resort or the Declaration and Articles of Incorporation and By-Laws
        of the Association shall be and remain enforceable by such other party,
        its successors and assigns, only against the Debtor or Persons other
        than the Lender, and the Lender has not assumed any of the obligations
        or duties of the Debtor under or with respect to any of the Pledged
        Notes Receivable, the Pledged Contracts or the Property-Related
        Contracts or otherwise in connection with the Resort or the Declaration
        or the Articles of Incorporation or By-Laws of the Association.

               (d) The Debtor hereby agrees and acknowledges that neither the
        acceptance of this Agreement or any other Security Document by the
        Lender nor the exercise of, or failure to exercise, any right, power or
        remedy in this Agreement or in any other Security Document conferred
        upon the Lender shall be deemed or construed to obligate the Lender to
        pay any sum of money, take any other action or incur any liability in
        connection with, or collect or realize upon, any of the Pledged Notes
        Receivable, the Pledged Contracts or any other Collateral. It is further
        agreed and understood by the Debtor that the Lender shall not be liable
        in any way for any cost, expense or liability connected with, or any
        charge or liability arising from, any of the Pledged Notes Receivable,
        any of the Pledged Contracts, any of the Property-Related Contracts or
        any other Collateral.

               (e) The Debtor hereby agrees to indemnify the Lender, and hold it
        harmless, from any and all liability, loss or damage which it may or
        might incur by reason of any and all claims and demands whatsoever which
        may be asserted against the Lender arising out of, as a result of, or
        otherwise connected with, the Liens hereby granted to the Lender by the
        Debtor under or in respect of any of the Pledged Notes Receivable, the
        Property-Related Contracts or any other Collateral by reason of (i) the
        failure by the Debtor to perform any obligations or undertakings
        required to be performed by the Debtor under or in connection with any
        of such Pledged Notes Receivables, the Pledged Contracts, the
        Property-Related Contracts or any other Collateral, (ii) any failure by
        the Debtor, in connection with any of such Pledged Notes Receivable, the
        Pledged



                                       23
<PAGE>   29

        Contracts, the Property-Related Contracts or any other Collateral, to
        comply with any applicable federal, state or local consumer credit, sale
        rescission or usury statute, including, without limitation, any such
        statute of any state in which a Maker may reside, the Consumer Credit
        Protection Act, as amended, the Federal Trade Commission Act, as
        amended, the Colorado Uniform Consumer Credit Code, as amended, all
        rules and regulations promulgated under the foregoing statutes, acts and
        codes, the Interstate Land Sales Full Disclosure Act, the Colorado
        Condominium Ownership Act and the rules and regulations promulgated
        thereunder and the Colorado Common Interest Ownership Act and the rules
        and regulations promulgated thereunder, and (iii) failure by the Debtor
        to comply with any applicable federal, state or local statutes or
        ordinances and the rules and regulations promulgated thereunder
        pertaining to the renovation, construction, use or operation of the
        Resort (including, without limitation, the Units) or to otherwise
        discharge its duties and obligations under applicable law and under the
        Declaration or the Association's Articles of Incorporation or By-Laws as
        Declarant.

        3.3 FINANCING STATEMENTS.

        The Debtor agrees, at its own expense, to execute the financing
statements required by the Colorado Uniform Commercial Code together with any
and all other instruments or documents and take such other action, including
delivery of such instruments and documents, as may be necessary to perfect, and
to continue the perfection of, the Lender's security interest and Liens in the
Collateral and, unless prohibited by law, the Debtor hereby authorizes the
Lender to execute and file any such financing statement on the Debtor's behalf.
The parties agree that a legible carbon, photographic or other reproduction of
this Agreement or of a financing statement shall be sufficient as a financing
statement.

        3.4 LOCATION OF COLLATERAL; BOOKS AND RECORDS.

        All tangible Collateral (other than Collateral delivered to the Lender
and other than certain Books and Records which may be kept on Debtors' premises
in Las Vegas, Nevada) which is personal Property is to remain, at all times, on
the premises of the Debtor in Steamboat Springs, Colorado and the Debtor
represents and warrants to the Lender that all of the currently existing
tangible Collateral is now located there, and the Debtor will not transfer the
Collateral from such premises to other locations without the prior written
approval of the Lender. The Debtor shall, upon receipt of a written request
therefor from the Lender, deliver to the Lender, then current copies of all
computer tapes, disks, software and micro-fiche records constituting, in whole
or in part, the Books and Records.

        3.5 INSURANCE OF COLLATERAL.

               (a) MAINTENANCE OF INSURANCE. The Debtor agrees to maintain, or
        cause to be maintained, insurance, with financially sound and reputable
        insurers acceptable to the Lender, with respect to the Buildings, the
        Units and the personal Property located therein (including, without
        limitation, the furniture, fixtures and furnishings thereof), all other
        equipment and other personal Property of every nature whatsoever now or
        hereafter located in or on, or attached to, and used or intended to be
        used in connection with the Resort, the Common Amenities (including,
        without limitation, the Amenity Building) and the Pledged Notes
        Receivable, the Pledged Contracts and the Books and Records, against
        casualties, contingencies, hazards and such other risks (including,
        without limitation, (i) fire, hurricane, tornado, wind damage, and such
        other risks insured against by a standard all-risk property and fire
        insurance policy and endorsement for extended coverage and (ii) flood
        insurance, if required by applicable law) and in such amounts as shall
        be reasonably satisfactory to the Lender (such insurance to be
        maintained during the refurbishing of the Resort and to cover materials
        in as well as adjacent to the structures so insured; such insurance
        shall also be maintained prior to such refurbishing as well as



                                       24
<PAGE>   30

        after such refurbishing); provided, however, that such casualty
        insurance shall (A) in no case be in an amount less than an amount
        sufficient to rebuild the Buildings, the Unit or the Common Amenity
        which shall have suffered the loss and replace any of the personal
        Property located therein and (B) be sufficient to provide funds to fully
        compensate owners of Timeshare Intervals in and to such Building and/or
        Unit for any inability to utilize such Building, Unit and/or Common
        Amenity during any period following a loss to such Building, Unit or
        Common Amenity. The Debtor shall deliver copies of the policies of such
        insurance to the Lender, with satisfactory lender's loss payable
        endorsements naming the Lender as loss payee to the extent of its
        interest and as such interest may appear on the Closing Date, as set
        forth in Section 5.12 hereof and within 15 days after the Closing Date,
        Debtor shall deliver a certification from the insurance company or
        insurance companies issuing such policies certifying that such copies
        are true and correct. Each such policy of insurance or endorsement shall
        contain a clause requiring the insurer to give not less than 30 days'
        prior written notice to the Lender in the event of cancellation of the
        policy for any reason whatsoever and a clause that the interest of the
        Lender shall not be impaired or invalidated by any act or neglect of the
        Debtor or owner of the Property nor by the occupation of the premises
        for purposes more hazardous than are permitted by said policy. If the
        Debtor shall fail to provide and pay for such insurance, or have the
        same provided and paid for, the Lender may, at the Debtor's expense,
        procure the same, but shall not be required to do so. The Debtor agrees
        to deliver to the Lender, promptly as rendered, true copies of all
        reports made by the Debtor in any reporting form to insurance companies.
        The Debtor shall maintain or caused to be maintained insurance with
        financially sound and reputable insurers with respect to its Property
        and business (including, without limitation, the Collateral) covering
        any public liability of the Debtor, its officers, agents or employees
        (including, without limitation, damage by Debtor or its officers, agents
        or employees or the Association to the Property of other Persons, any
        bodily injury caused by Debtor or its officers, agents or employees to
        any other Person, or any negligent act or other similar liability of
        Debtor or its officers, agents or employees) and in such amounts as are
        satisfactory to the Lender; the Lender shall be named as a co-insured
        thereon.

               The Debtor shall, on or prior to August 15 of each year,
        commencing on August 15, 2000, submit to the Lender insurance
        certificates showing the type and amounts of insurance coverage
        maintained, or caused to be maintained, by Debtor in respect of the
        Resort, the then current premium cost in respect thereof and the amount
        of such cost which shall have been previously paid. The Debtor shall, to
        the extent permitted by applicable law, cause all casualty policies of
        insurance provided under the Declaration to have mortgagee endorsements
        in respect of the Lender's interests in and to the Timeshare Interval
        that is the subject of any Pledged Note Receivable.

               The Debtor shall pay, or cause to be paid, all premiums on the
        aforesaid insurance policies and all other fees and charges payable in
        connection with such insurance policies (such premiums, fees and charges
        being collectively referred to herein as "Insurance Premiums") not later
        than the due date thereof. If the Debtor shall fail to pay, or cause to
        be paid, any such Insurance Premiums, the Lender may (but shall not be
        obligated to), at Debtor's expense, pay the same. Any such payment shall
        be subject to Section 3.11 hereof.

               If the Mortgaged Property (as defined in the Inventory Deed of
        Trust) is sold at a foreclosure sale or if the Lender shall acquire
        title to said Mortgaged Property, the Lender shall have all of the
        right, title and interest of the Debtor in and to all insurance policies
        required under this clause (a) and the unearned premiums thereon,
        related to the Mortgaged Property, and in and to the proceeds resulting
        from any damage to said Mortgaged Property prior to such sale or
        acquisition.



                                       25
<PAGE>   31

               (b) CONDOMINIUM/TIMESHARE INSURANCE PROCEEDS. The Lender
        acknowledges that application of all or a portion of any proceeds of
        insurance may be subject to the Colorado Condominium Ownership Act, the
        Colorado Common Interest Ownership Act and the terms and provisions of
        the Declaration, and the foregoing requirements in this Section 3.5
        shall be subject thereto (unless such laws may be modified by agreement
        and have been so modified). For so long as the Inventory Loan shall
        remain outstanding, any proceeds of insurance payable by the
        Association, any manager retained by it or by the Declarant in respect
        of any Unit or Timeshare Interval to the Debtor under the Declaration,
        the Association's Articles of Incorporation or By-Laws or under
        applicable Colorado law shall be promptly paid and/or turned over to the
        Lender as proceeds of the Collateral and applied either in accordance
        with applicable Colorado law or, if no such requirement exists, to the
        prepayment of the Loan without prepayment premium (after deducting
        therefrom all out-of-pocket costs and expenses of the Lender in respect
        thereof), first, as provided in the Inventory Loan Agreement and second,
        as provided in Section 2.3(c) hereof. Without limiting the immediately
        preceding sentence, any proceeds of insurance in respect of any Unit or
        Timeshare Interval received by the Debtor or received by the Debtor as
        Declarant or received by the Association at a time during which

                      (i) the Debtor (as Debtor or as Declarant) or any
               Affiliate shall be the only owner or owners of Units or Timeshare
               Intervals, or

                      (ii) the insurance provisions of the Declaration shall
               have been suspended,

        shall be promptly paid and/or turned over to the Lender (and the Debtor,
        as Debtor or as Declarant, shall cause such payment and/or turnover) as
        proceeds of the Collateral and applied to the prepayment of the Loan
        (after deducting therefrom all out-of-pocket costs and expenses of the
        Lender in respect thereof), first, as provided in the Inventory Loan
        Agreement and second, as provided in Section 2.3(c) hereof.

               (c) MISCELLANEOUS APPLICATION OF INSURANCE PROCEEDS. Subject to
        the terms, provisions and requirements of the Declaration and applicable
        Colorado law and to the extent that clause (b) above shall not be
        applicable, the Lender is hereby irrevocably authorized and appointed
        the agent and attorney-in-fact of the Debtor (with full right of
        substitution) to adjust or compromise any insured loss in respect of the
        Resort and to collect and receive the proceeds from any such policy in
        respect of any such loss, which appointment shall be deemed to be
        coupled with an interest. Each insurance company issuing any of the
        above-mentioned insurance policies is hereby irrevocably authorized and
        directed to make payment in respect of any such loss (whether or not the
        Lender shall have exercised its option to adjust or compromise such
        loss) directly to the Lender alone and not to the Debtor and the Lender
        jointly. The Debtor shall immediately pay over to the Lender any such
        payments received directly from any such insurance company. The Lender
        is hereby irrevocably authorized and appointed the agent and
        attorney-in-fact of the Debtor (with full right of substitution) to
        endorse the Debtor's name on any instrument in payment of such proceeds,
        which appointment shall be deemed to be coupled with an interest. Such
        insurance proceeds received by the Lender shall not be, nor be deemed to
        be, trust funds and may be commingled with the general funds of the
        Lender. No interest shall be payable in respect of any such insurance
        proceeds received by the Lender. After deducting from such insurance
        proceeds any expenses incurred by the Lender in the adjustment or
        compromise of such loss or in the collection or handling of such funds
        (including, without limitation, attorneys' fees and disbursements), the
        Lender shall



                                       26
<PAGE>   32

                      (i) if an Event of Default shall then exist, apply such
               net insurance proceeds to the prepayment of the Loan, first, as
               provided in the Inventory Loan Agreement and second, as provided
               in Section 2.3(c) hereof;

                      (i) if no Event of Default shall then exist and such loss
               shall not have been in respect of all, or substantially all, of
               the Property in respect of the Resort and shall have exceeded
               $20,000 and if the insurer which paid such insurance proceeds
               shall not claim any right of participation and/or assignment of
               rights in respect of the Lender with respect to the Obligations,
               either deliver the net insurance proceeds to the Debtor as
               contemplated in clause (A) below but subject to the conditions
               set forth in said clause (A) or apply the same as contemplated in
               clause (B) below:

                             (A) (1) the Debtor shall have, within 30 days of
                      such loss, delivered to the Lender a written undertaking
                      to rebuild, restore and/or repair the Property of the
                      Resort damaged or destroyed;

                                    (2) the Debtor shall have, within 60 days of
                      such loss, submitted to the Lender for its approval (x)
                      plans and specifications in respect of such rebuilding,
                      restoration and/or repairing, which plans and
                      specifications shall be reasonably satisfactory to the
                      Lender and which shall have been prepared by an architect
                      reasonably satisfactory to the Lender, (y) an estimate of
                      all costs of such rebuilding, restoration and/or repairing
                      signed by such architect and (z) copies of approvals or
                      consents of all necessary governmental authorities;

                                    (3) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that such net insurance proceeds,
                      together with any additional funds made available for such
                      purpose by the Debtor and deposited with the Lender, shall
                      be sufficient to effect such rebuilding, restoration
                      and/or repairing in accordance with the aforesaid plans
                      and specifications, free and clear of all Liens except the
                      Liens contemplated or otherwise permitted herein and in
                      the other Security Documents;

                                    (4) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that such rebuilding, restoration
                      and/or repairing can be completed within any applicable
                      time limitation imposed by law or, if there are no such
                      time limitations, within a reasonable period of time;

                                    (5) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that, after such application and such
                      rebuilding, restoration and/or repairing (taking into
                      account any restrictions imposed by law or agreement on
                      such rebuilding, restoration and/or repairing or on the
                      use of the Resort after such rebuilding, restoration
                      and/or repairing), the Resort shall have a Fair Market
                      Value substantially the same as, or greater than, the Fair
                      Market Value of the Resort immediately prior to the
                      occurrence of such damage or destruction;

                                    (6) at the time of each disbursement
                      contemplated by sub-clause (8) below, no Property-Related
                      Contract shall have been terminated or, if any
                      Property-Related Contract shall have been terminated, the
                      Lender shall be



                                       27
<PAGE>   33

                      reasonably satisfied that the Debtor will be able to
                      replace such Property-Related Contract reasonably
                      promptly;

                                    (7) the holder of any encumbrance senior to
                      the Liens provided herein or in any other Security
                      Document in respect of the Resort shall have consented and
                      agreed to the application of insurance proceeds as set
                      forth in this clause (A); and

                                    (8) the disbursement of such net insurance
                      proceeds shall be in accordance with terms, conditions and
                      procedures customarily followed by prudent institutional
                      lenders in making construction loans in similar amounts
                      and on such other terms, conditions and procedures as the
                      Lender may reasonably require (as evidenced by its written
                      notice thereof to the Debtor prior to the first
                      disbursement pursuant to this sub-clause (8)) to assure
                      the proper application of such proceeds and the continuing
                      performance by the Debtor of its obligations hereunder and
                      under the other Security Documents, including without
                      limitation, receipt by the Lender of evidence of suitable
                      payment bonds with respect to all material contracts and
                      Builder's All Risk Insurance and a certificate from the
                      Debtor certifying that (x) all rebuilding, restoration
                      and/or repairing to the date of such disbursement has been
                      performed substantially in accordance with the aforesaid
                      plans and specifications and that there have been no
                      material changes or modifications made in such plans and
                      specifications, (y) the labor, services and/or materials
                      to be paid by such disbursement have been performed upon,
                      or furnished in respect of, the rebuilding, restoration
                      and/or repairing of the Resort and (z) no Event of Default
                      exists at the time of such disbursement, or

                             (B) the Lender shall apply such net insurance
                      proceeds to the prepayment of the Loan, first, as provided
                      in the Inventory Loan Agreement and second, as provided in
                      Section 2.3(c) of this Agreement, if the Lender shall not
                      have received the written confirmation referred to in
                      sub-clause (A)(1) above within the time period required
                      therefor or if the Debtor shall have informed the Lender,
                      in writing, of its intention not to rebuild, repair and
                      restore the Resort or the Lender shall have determined the
                      same at any time during the rebuilding, repairing or
                      restoration process referred to in clause (A) above;

                      (iii) if no Event of Default shall then exist and such
               loss shall not have been in respect of all, or substantially all,
               of the Resort and shall not have exceeded $20,000, deliver all of
               such net insurance proceeds to the Debtor and the Debtor shall
               thereupon be obligated to, and shall, promptly rebuild, repair
               and restore the Property of the Resort subject to such loss (or
               shall cause such Property to be so promptly rebuilt, repaired and
               restored) to the equivalent of its condition immediately prior to
               such loss, whether or not such net insurance proceeds shall be
               sufficient to cover the costs thereof, and shall certify, within
               120 days of such loss, to the Lender that such rebuilding,
               repairing and restoration has been completed and paid for in
               full; or

                      (iv) if no Event of Default shall then exist and if such
               loss shall be in respect of all, or substantially all, of the
               Resort, apply such net insurance proceeds to the prepayment of
               the Loan, first, as provided in the Inventory Loan Agreement and
               second, as provided in Section 2.3(c) of this Agreement.



                                       28
<PAGE>   34

               Any payment of insurance proceeds over to the Debtor, as provided
        above, shall not affect the Lien of this Agreement or any other Security
        Document as security for the Obligations. Notwithstanding any such loss,
        the Debtor shall continue to pay interest and principal at the
        applicable rate and amounts and at the applicable times provided in this
        Agreement and in the Notes. Although the Lender intends to use
        reasonable efforts to collect such insurance proceeds in a timely
        fashion, the Lender shall not be responsible for any failure to collect
        any proceeds due under the terms of any insurance policy, regardless of
        the cause of such failure. Any balance of such net insurance proceeds
        remaining after the aforesaid application thereof shall, if no Event of
        Default shall then exist, belong, or be paid to, as the case may be, the
        Debtor, provided that, if an Event of Default shall then exist, the
        Debtor shall promptly deliver any such balance to the Lender and such
        balance shall be applied as a prepayment of the Loan, first, as provided
        in Section 2.4(b) hereof and second, as provided in Section 2.3(c)
        hereof.

               (d) DEBTOR UNDERTAKINGS. In the event of any casualty or loss in
        respect of the Resort (including, without limitation, any of the
        Collateral), (i) the Debtor shall immediately notify the Lender of the
        same, (ii) the Lender may, in addition to its rights as beneficiary
        under the Inventory Deed of Trust, elect to exercise the voting rights
        of the Debtor as "Lienholder" in respect of any Pledged Note Receivable
        Deed of Trust or as the owner of any Timeshare Interval, as such voting
        rights are provided for under the Declaration, regarding all matters of
        repair and restoration and (iii) the Debtor shall pay all assessments as
        required by the Declaration and/or the Association's Articles of
        Incorporation or By-Laws for repair and restoration due to inadequacy of
        insurance.

        Debtor agrees to cause any contractor hired by it to effect any of the
refurbishing of the Resort to carry adequate insurance in respect of bodily
injury or other personal liability or property damage in respect of its
employees or other third persons in connection with such refurbishing or
construction. Certificates of such insurance shall be filed with the Lender
prior to commencement of work and shall be reasonably acceptable to the Lender
in form and substance.

        3.6 CONDEMNATION.

               (a) CONDOMINIUM/TIMESHARE CONDEMNATION COMPENSATION. Any
compensation, awards, damages, claims, rights of action, proceeds, payment and
other relief (collectively, "Condemnation Compensation") of, or on account of,
any damage or taking of all or any part of the Resort in connection with any
condemnation proceedings or any exercise of the power of eminent domain (or any
conveyance in lieu of or under threat of any such taking), including, without
limitation, any such Condemnation Compensation for change of grade of streets or
any other injury to or decrease in the value of all or any part of the Resort
payable by the Association, any manager retained by it or by the Declarant in
respect of any Unit or Timeshare Interval to the Debtor under the Declaration,
the Association's Articles of Incorporation or By-Laws or under applicable
Colorado law shall be promptly paid and/or turned over to the Lender as proceeds
of the Collateral and applied to the prepayment of the Loan, first, as provided
in the Inventory Loan Agreement and second, as provided in Section 2.3(c)
hereof.

               (b) APPLICABLE LAW.

                      (i) The Lender acknowledges that application of all or a
               portion of any Condemnation Compensation may be subject to the
               Colorado Condominium Ownership Act, the Colorado Common Interest
               Ownership Act and the terms and provisions of the Declaration,
               and the foregoing requirements in this Section 3.6 shall be
               subject thereto (unless such laws may be modified by agreement
               and have been so modified).



                                       29
<PAGE>   35

                      (ii) Any Condemnation Compensation in respect of any Unit
               or Timeshare Interval received by the Debtor or received by the
               Debtor as Declarant or received by the Association at a time
               during which

                             (A) only the Debtor (as Debtor or as Declarant) or
                      any Affiliate shall be the only owner of Units or
                      Timeshare Intervals or

                             (B) the condemnation provisions of the Declaration
                      shall have been suspended

        shall be promptly paid and/or turned over to the Lender (and the Debtor,
        as Debtor or as Declarant, shall cause such payment and/or turnover) as
        proceeds of the Collateral and applied to the prepayment of the Loan,
        first, as provided in the Inventory Loan Agreement and second, as
        provided in Section 2.3(c) hereof.

               (c) MISCELLANEOUS APPLICATION OF CONDEMNATION COMPENSATION.
        Subject to the requirements, terms and provisions of the Declaration and
        applicable Colorado law and to the extent that clause (b) above shall
        not be applicable, the Lender shall be entitled to all Condemnation
        Compensation of, or on account of, any damage or taking of all or any
        part of the Resort in connection with any condemnation proceedings or
        any exercise of the power of eminent domain (or any conveyance in lieu
        of or under threat of any such taking), including, without limitation,
        any such Condemnation Compensation for change of grade of streets or any
        other injury to or decrease in the value of all or any part of the
        Resort. All such Condemnation Compensation, and the right thereto, is
        hereby assigned to the Lender and included in the Collateral. The Debtor
        shall promptly execute such further assignments of any such Condemnation
        Compensation as the Lender may require, and the Lender shall take all
        steps to assure that such Condemnation Compensation shall be paid to the
        Lender alone, and not to the Debtor and the Lender jointly, and that
        such Condemnation Compensation at all times shall be free and clear of
        any Liens, charges or encumbrances of any kind whatsoever, except the
        Liens permitted or otherwise provided for herein or in the other
        Security Documents. The Lender is hereby irrevocably authorized and
        appointed the agent and attorney-in-fact of the Debtor (with full right
        of substitution) to endorse the Debtor's name on any instrument in
        payment of such Condemnation Compensation, which appointment shall be
        deemed to be coupled with an interest.

               The Lender is hereby irrevocably authorized and appointed the
        agent and attorney-in-fact of the Debtor (with full right of
        substitution) to commence, appear in and prosecute in its own and/or the
        Debtor's name any action or proceeding relating to any condemnation or
        exercise of the power of eminent domain, to settle or compromise any
        claim in connection therewith and to collect and receive such
        Condemnation Compensation and give proper receipts and acquittances
        therefor, which appointment shall be deemed to be coupled with an
        interest. The Debtor from time to time shall promptly deliver to the
        Lender any and all instruments and authorizations which the Lender may
        request to enable the Lender to take any such action. Such Condemnation
        Compensation received by the Lender shall not be, nor be deemed to be,
        trust funds and may be commingled with the general funds of the Lender.
        No interest shall be payable in respect of any such Condemnation
        Compensation. After deducting from such Condemnation Compensation any
        expenses incurred by the Lender in connection therewith (including,
        without limitation, attorneys' fees and disbursements), the Lender shall

                      (i) if an Event of Default shall then exist, apply such
               net Condemnation Compensation to the prepayment of the Loan,
               first, as provided in the Inventory Loan Agreement and second, as
               provided in Section 2.3(c) of this Agreement;



                                       30
<PAGE>   36

                      (ii) if no Event of Default shall then exist, such damage
               or taking shall have not been in respect of all, or substantially
               all, of the Resort, such damage or taking shall not have rendered
               the remainder of the Resort economically inviable or unusable to
               the same extent and in the same manner as it was immediately
               prior to such damage or taking, and the Condemnation Compensation
               payable in respect thereof shall have exceeded $20,000, either
               deliver the Condemnation Compensation to the Debtor as
               contemplated in clause (A) below but subject to the conditions
               set forth in said clause (A) or apply the same as contemplated in
               clause (B) below:

                             (A) (1) the Debtor shall have, within 30 days of
                      such condemnation or taking, delivered to the Lender a
                      written undertaking to rebuild, restore and/or repair the
                      Property of the Resort not condemned or taken;

                                    (2) the Debtor shall have, within 60 days of
                      such condemnation or taking, submitted to the Lender for
                      its approval (x) plans and specifications in respect of
                      such rebuilding, restoration and/or repairing, which plans
                      and specifications shall be reasonably satisfactory to the
                      Lender and which shall have been prepared by an architect
                      reasonably satisfactory to the Lender, (y) an estimate of
                      all costs of such rebuilding, restoration and/or repairing
                      signed by such architect and (z) copies of approvals or
                      consents of all necessary governmental authorities;

                                    (3) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that such Condemnation Compensation,
                      together with any additional funds made available for such
                      purpose by the Debtor and deposited with the Lender, shall
                      be sufficient to effect such rebuilding, restoration
                      and/or repairing in accordance with the aforesaid plans
                      and specifications, free and clear of all Liens except the
                      Liens contemplated or otherwise permitted herein and in
                      the other Security Documents;

                                    (4) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that such rebuilding, restoration
                      and/or repairing can be completed within any applicable
                      time limitation imposed by law or, if there are no such
                      time limitations, within a reasonable period of time;

                                    (5) at the time of each disbursement
                      contemplated by sub-clause (8) below, the Lender shall be
                      reasonably satisfied that, after such application and such
                      rebuilding, restoration and/or repairing (taking into
                      account any restrictions imposed by law or agreement on
                      such rebuilding, restoration and/or repairing or on the
                      use of the Resort after such rebuilding, restoration
                      and/or repairing), the Resort shall have a Fair Market
                      Value substantially the same as, or greater than, the Fair
                      Market Value of the Resort immediately prior to the
                      occurrence of such condemnation or taking;

                                    (6) at the time of each disbursement
                      contemplated by sub-clause (8) below, no Property-Related
                      Contract shall have been terminated or, if any
                      Property-Related Contract shall have been terminated, the
                      Lender shall be reasonably satisfied that the Debtor will
                      be able to replace such Property-Related Contract
                      reasonably promptly;



                                       31
<PAGE>   37

                                    (7) the holder of any encumbrance senior to
                      the Liens provided herein or in any other Security
                      Document in respect of the Resort shall have consented and
                      agreed to the application of Condemnation Compensation as
                      set forth in this clause (A); and

                                    (8) the disbursement of such Condemnation
                      Compensation shall be in accordance with terms, conditions
                      and procedures customarily followed by prudent
                      institutional lenders in making construction loans in
                      similar amounts and on such other terms, conditions and
                      procedures as the Lender may reasonably require (as
                      evidenced by its written notice thereof to the Debtor
                      prior to the first disbursement pursuant to this
                      sub-clause (8)) to assure the proper application of such
                      proceeds and the continuing performance by the Debtor of
                      its obligations hereunder and under the other Security
                      Documents, including without limitation, receipt by the
                      Lender of evidence of suitable payment bonds with respect
                      to all material contracts and Builder's All Risk Insurance
                      and a certificate from the Debtor certifying that (x) all
                      rebuilding, restoration and/or repairing to the date of
                      such disbursement has been performed substantially in
                      accordance with the aforesaid plans and specifications and
                      that there have been no material changes or modifications
                      made in such plans and specifications, (y) the labor,
                      services and/or materials to be paid by such disbursement
                      have been performed upon, or furnished in respect of, the
                      rebuilding, restoration and/or repairing of the Resort and
                      (z) no Event of Default exists at the time of such
                      disbursement, or

                             (B) the Lender shall apply such Condemnation
                      Compensation to the prepayment of the Loan, first, as
                      provided in the Inventory Loan Agreement and second, as
                      provided in Section 2.3(c) of this Agreement, if Lender
                      (or its agent) shall have not received the written
                      confirmation referred to in sub-clause (A)(1) above within
                      the time period required therefor or if the Debtor shall
                      have informed the Lender, in writing, of its intention not
                      to rebuild, repair and restore the Resort or the Lender
                      shall have determined the same at any time during the
                      rebuilding, repairing or restoration process referred to
                      in clause (A) above;

                      (iii) if no Event of Default shall then exist and such
               damage or taking shall not have been in respect of all, or
               substantially all, of the Resort and the Condemnation
               Compensation payable in respect thereof shall not have exceeded
               $20,000, deliver all of such net Condemnation Compensation to the
               Debtor and the Debtor shall thereupon be obligated to, and shall,
               promptly rebuild, repair and restore the Resort (or shall cause
               the Resort to be so promptly rebuilt, repaired and restored) such
               that the Resort is useable to the same extent and in the same
               manner, and is in substantially an equivalent condition, after
               such damage or taking as it was immediately prior to such damage
               or taking, whether or not such net Condemnation Compensation
               shall be sufficient to cover the costs thereof, and shall
               certify, within 120 days of such damage or taking, to the Lender
               that such rebuilding, repairing and restoration has been
               completed and paid for in full; or

                      (iv) if no Event of Default shall then exist and if such
               damage or taking loss shall be in respect of all, or
               substantially all, of the Resort or the Resort is no longer
               economically viable or no longer useable to the same extent and
               in the same manner after such damage or taking as it was
               immediately prior to such damage or taking, apply such net
               Condemnation Compensation to the prepayment of the Loan, first,
               as provided in the Inventory Loan Agreement and second, as
               provided in Section 2.3(c) of this Agreement.



                                       32
<PAGE>   38

               The Lender may release such net Condemnation Compensation to the
        Debtor without affecting the Lien of this Agreement or any other
        Security Document as security for the Obligations. Any balance of such
        net Condemnation Compensation remaining after the aforesaid application
        thereof shall, if no Event of Default shall then exist, belong to, or be
        paid to, as the case may be, the Debtor, provided that, if an Event of
        Default shall then exist, the Debtor shall promptly deliver any such
        balance to the Lender and such balance shall be applied as a prepayment
        of the Loan, first, as provided in the Inventory Loan Agreement and
        second, as provided in Section 2.3(c) hereof. Notwithstanding any such
        condemnation, the Debtor shall continue to pay interest and principal at
        the applicable rate and amounts and at the applicable times provided in
        this Agreement and in the Notes. Although the Lender intends to use
        reasonable efforts to collect such Condemnation Compensation, in a
        timely fashion, the Lender shall not be responsible for any failure to
        collect such Condemnation Compensation, regardless of the cause of such
        failure.

               (d) DEBTOR UNDERTAKINGS. In the event of any condemnation or
        taking in respect of the Resort (including, without limitation, any of
        the Collateral), (i) the Debtor shall immediately notify the Lender of
        the same, (ii) the Lender may, in addition to its rights as beneficiary
        under the Inventory Deed of Trust, elect to exercise the voting rights
        of the Debtor as "Lienholder" in respect of any Pledged Note Receivable
        Deed of Trust or as the owner of any Timeshare Interval, as such voting
        rights are provided for under the Declaration, regarding all matters of
        repair and restoration and (iii) the Debtor shall pay all assessments as
        required by the Declaration and/or the Association's Articles of
        Incorporation or By-Laws for repair and restoration due to inadequacy of
        the Condemnation Compensation.

        3.7 TAXES AFFECTING COLLATERAL.

        The Debtor shall pay or cause to be paid, on or before the last day when
they may be paid without interest or penalty, all taxes, assessments, rates,
dues, charges, fees, levies, excises, duties, fines, impositions, liabilities,
obligations and encumbrances (including, without limitation, water and sewer
rents and charges, charges for setting or repairing meters and charges for other
utilities or services), general or special, ordinary or extraordinary, foreseen
or unforeseen, of every kind whatsoever, now or hereafter imposed, levied or
assessed by any public or quasi-public authority or instrumentality upon or
against any of the Collateral or the use, occupancy or possession of the Resort,
or upon or against this Agreement, the Notes or the other Security Documents,
the Obligations or the interest of the Lender in the Pledged Notes Receivable,
the Pledged Note Receivable Deeds of Trust or the Inventory Deed of Trust or any
other item of Collateral (provided that this Section 3.7 shall not be construed
to require the Debtor to pay any income tax imposed upon the general income of
the Lender), as well as all assessments and other governmental charges imposed,
levied or assessed in respect of any Collateral, and any and all interest, costs
and penalties on or with respect to any of the foregoing (collectively, the
"Impositions"). Upon request by the Lender, the Debtor shall deliver to the
Lender receipts or other satisfactory proof of payment of any Impositions.

        The Debtor shall not claim, demand or be entitled to receive any
reduction of, or credit toward, any Imposition on account of the Obligations. No
deduction shall be claimed from the taxable value of any Collateral or the
Resort by reason of the Obligations, any of the Security Documents or the
interest of the Lender in the Collateral.



                                       33
<PAGE>   39

        If existing laws or procedures governing the taxation of mortgages,
security documents or debts secured by mortgages or other security documents
shall be changed in any manner after the date hereof so as to materially
adversely impair the security of the Inventory Deed of Trust or the security
interest herein granted or granted in any of the other Security Documents or to
reduce the net income to the Lender in respect of the Obligations (excluding
from any such determination of net income any reduction in such net income
attributable to a change in taxes imposed on, or measured by, the net income of
the Lender), then, upon request by the Lender, the Debtor shall pay to the
Lender or to the taxing authority (if so directed by the Lender), all taxes,
charges and related costs for which the Lender may be liable as a result
thereof.

        The Debtor shall pay, or cause to be paid, when due, any and all
recording (mortgage or personal property), intangible property and documentary
stamp taxes, all similar taxes, and all filing, registration and recording fees,
which are now or hereafter may become payable in connection with the
Obligations, the Inventory Deed of Trust, this Agreement, any of the other
Security Documents, the Pledged Note Receivable Deeds of Trust or any of the
other Collateral. The Debtor shall pay when due any and all excise, transfer and
conveyance taxes which are now or hereafter may become payable in connection
with the Obligations, the Inventory Deed of Trust, any Pledged Note Receivable
Deed of Trust, this Agreement or any of the other Security Documents, or in
connection with any foreclosure of the Inventory Deed of Trust, any Pledged Note
Receivable Deed of Trust or any other foreclosure of any Collateral under this
Agreement or under any of the other Security Documents, or any other transfer of
any item of Collateral in extinguishment of all or any part of the Obligations
or any other enforcement of the rights of the Lender with respect thereto.

        3.8 DISCHARGE OF LIENS AFFECTING COLLATERAL.

        If any mechanic's, laborer's, materialman's, statutory or other Lien
(other than Permitted Exceptions) shall be filed or otherwise imposed upon or
against any item of the Collateral or the Resort, then the Debtor shall, within
30 days after being given notice of the filing of such Lien or otherwise
becoming aware of the imposition of such Lien, cause such Lien to be vacated or
discharged of record by payment, deposit, bond, final order of a court of
competent jurisdiction or otherwise.

        Except with respect to the Pledged Notes Receivable and the Pledged Note
Receivable Deeds of Trust, the Debtor shall have the right, at its sole expense,
to contest the validity of any such Lien or of the claim evidenced or secured
thereby, by appropriate proceedings commenced prior to the expiration of the
aforesaid 30-day period and thereafter diligently and continuously conducted in
good faith to final determination, in which event the Debtor shall not be
required to cause any such Lien to be vacated or discharged of record in
accordance with the immediately preceding paragraph if, and only so long as:

               (a) no final judicial determination in respect of any foreclosure
        or other enforcement proceeding in respect of such Lien or the claim
        evidenced or secured thereby shall have been rendered and no nonjudicial
        foreclosure proceeding or sale in respect of such Lien or such claim
        shall have been commenced;

               (b) no claim for liability of any kind shall have been asserted
        against the Lender in connection with such Lien or the claim evidenced
        or secured thereby; and

               (c) if such Lien shall secure a claim of more than $20,000, the
        Debtor shall have established an escrow with the Lender, or shall have
        delivered to the Lender a satisfactory bond issued by a surety
        acceptable to the Lender or a satisfactory letter of credit for the
        benefit of the Lender issued by a bank acceptable to the Lender, in each
        case in an amount estimated by the



                                       34
<PAGE>   40

        Lender to be adequate to cover (i) the unpaid amount of such claim, (ii)
        all interest, penalties and similar charges which reasonably can be
        expected to accrue by reason of such contest or by reason of such
        nonpayment, and (iii) all costs, fees and expenses (including, without
        limitation, attorneys' fees and disbursements) which reasonably can be
        expected to be incurred in connection therewith by the Lender, which
        escrow, bond or letter of credit shall be maintained in effect
        throughout such contest and the amount of which shall be increased from
        time to time if reasonably required by the Lender to cover the foregoing
        amounts in subclause (i), subclause (ii) and subclause (iii).

The Debtor shall inform the Lender, in advance and in writing, of its intention
to contest any Lien securing a claim, or such claim itself, under this Section
3.8 if such claim shall exceed $20,000.

        Upon termination of any such contest (whether by final determination or
otherwise), or at any time during the course of any such contest that the
conditions relieving the Debtor of its obligation to cause such Lien to be
vacated or discharged shall no longer be satisfied or shall be discovered not to
have been satisfied, the Debtor shall cause such Lien to be vacated or
discharged of record. At the Lender's option, the escrow established or bond or
letter of credit, as the case may be, delivered pursuant to this Section 3.8 may
be, in the case of the escrow, liquidated, or, in the case of the bond or the
letter of credit, drawn upon, at such time and the proceeds thereof may be
applied to payment of all or any part of the claim evidenced or secured by such
Lien and the interest, penalties, charges, costs, fees and expenses (including,
without limitation, attorneys' fees and disbursements) referred to in subclause
(ii) and subclause (iii) of the immediately preceding paragraph. Promptly after
such Lien has been vacated or discharged of record, the Debtor shall deliver to
the Lender evidence reasonably satisfactory to the Lender that such Lien has
been vacated or discharged of record. Thereafter, the amount then remaining in
the escrow established pursuant to this Section 3.8 or such bond or letter of
credit, as the case may be, shall be returned to the Debtor free and clear of
the Lien of this Agreement or any other Security Document so long as no Event of
Default shall have occurred and be continuing or, if an Event of Default shall
have occurred and be continuing, shall be retained by the Lender as part of the
Collateral.

        If any Lien shall not be vacated or discharged as required by this
Section, then, in addition to any other right or remedy of the Lender, the
Lender may, but shall not be obligated to, discharge such Lien in such manner as
the Lender may select, and the Lender shall be entitled, if the Lender shall so
elect, to compel the prosecution of an action for the foreclosure of such Lien
by the lienor and, if the Lender shall so elect, to pay the amount of any
judgment in favor of such lienor with interest, costs and allowances. Upon
request by the Lender, the Debtor shall pay to the Lender, or to any other
Person designated by the Lender, the amount of all payments made by the Lender
as provided above and all costs, expenses and liabilities (including, without
limitation, attorneys' fees and disbursements) incurred by the Lender in
connection therewith, together with interest thereon at the Default Rate from
the date paid or incurred by the Lender until the date so paid to, or as
directed by, the Lender. To the extent permitted by law, the Lender shall
thereupon be subrogated to the rights of such lienor and any such payments made
by the Lender pursuant to this Section 3.8 shall be secured by the Collateral.



                                       35
<PAGE>   41

        3.9 USE OF RESORT; VOTING RIGHTS OF DEBTOR; LENDER CONSENT TO TIMESHARE
            DECLARATION AMENDMENT.

               (a) RESORT. So long as the Inventory Loan is outstanding, the
        Debtor shall not, as Declarant, Timeshare Interval owner or Unit owner,
        without the prior written consent of the Lender

                      (i) request or otherwise initiate, consent to or acquiesce
               in any zoning classification or reclassification of the Resort or
               the adoption, issuance, imposition or amendment of any other law,
               ordinance, rule, regulation, order, judgment, injunction or
               decree relating to the use, occupancy, operation, development or
               disposition of the Resort or which would limit the use of the
               Units or the Timeshare Intervals therein or reduce its or their
               Fair Market Value,

                      (ii) request or otherwise initiate, consent to or
               acquiesce in the annexation of any part of the Resort by or into
               any municipality or other governmental or quasi-governmental
               unit,

                      (iii) execute, file or record any subdivision plat
               affecting the Resort or request or otherwise initiate, consent to
               or acquiesce in any subdivision of the Resort

                      (iv) enter into, consent to or otherwise cause, permit or
               suffer the Resort to become subject to any covenant, agreement or
               other arrangement restricting or limiting the use, occupancy,
               operation, development or disposition thereof (other than any
               covenant of this Agreement the Declarations or the other Security
               Documents,

                      (v) materially and substantially modify, alter, remove or
               improve the Common Amenities without the prior written consent of
               the Lender (except for the creation of additional common elements
               and limited common elements resulting from the refurbishing of
               the Buildings,

                      (vi) except as set forth in Schedule 9 of this Agreement,
               maintain the Units and/or Timeshare Intervals owned by it for
               lease or as a rental project,

                      (vii) add or withdraw real Property from the Resort, or
               create additional Units (beyond those Units existing or planned
               for in the Buildings in accordance with, and pursuant to, the
               Declaration ), or

                      (viii) permit the Units or any Timeshare Interval to be
               used other than for nonpermanent residential purposes;

               provided that the Debtor may create additional Timeshare
        Intervals within the Hilltop Resort so long as Debtor notifies the
        Lender promptly thereof.

               (b) USE BY PUBLIC. The Debtor shall not cause, permit or suffer
        the Resort to be used by the public without restriction (except as
        required by applicable law) or in any manner that might tend to impair
        the Debtor's right, title and interest in and to the Resort or in any
        manner that might make possible any claim of adverse usage or adverse
        possession by the public or any claim of implied dedication of all or
        any part of the Resort.



                                       36
<PAGE>   42

               (c) VOTING RIGHTS. The Debtor hereby appoints and constitutes the
        Lender as its attorney-in-fact (with full power of substitution) to
        exercise all of its voting rights pertaining to any Unit or Timeshare
        Interval owned by the Debtor or in which the Debtor has an interest
        giving rise to the right to vote (whether as Declarant, as "Lienholder"
        under any Pledged Note Receivable Deed of Trust or otherwise). This
        power of attorney is coupled with an interest and shall be irrevocable
        for so long as any Obligations are owing by the Debtor to the Lender.
        This power of attorney may be used from time to time in the sole
        discretion of the Lender if there shall exist an Event of Default, or a
        material casualty, condemnation or taking shall have occurred with
        respect to the Resort or any part thereof. The Debtor agrees to execute,
        from time to time, such other documents as the Lender may request
        (including, without limitation, the form of proxy substantially in the
        form of Exhibit D to this Agreement; which proxy shall, at the request
        of the Lender, be renewed every 11 months and shall be modified to
        include Timeshare Intervals in addition to Units) and file the same with
        the Secretary of the Association in accordance with the Association's
        By-Laws.

               Except with the prior written consent of the Lender, the Debtor
        shall not propose or vote for or consent to any modification of, or
        amendment to, the Declaration or the Association's Articles of
        Incorporation or By-Laws which could have (in the reasonable sole
        opinion of the Lender) an adverse effect on the Collateral or the
        operation or prospects of the Resort. In each case under the Declaration
        and/or the Association's Articles of Incorporation or By-Laws in which
        the consent or the vote of "Lienholders" in respect of the Units and/or
        Timeshare Intervals (including any such case in which the Debtor would
        be considered to be a "Lienholder" by virtue of any Pledged Note
        Receivable Deed of Trust) is provided for or is required, or in which
        the Debtor's consent is required (as Declarant or as an owner of a Unit
        or a Timeshare Interval or as a vendor or mortgagee) for any proposed
        action, the Debtor shall not vote or give such consent without obtaining
        the prior written consent of the Lender if such action (in the
        reasonable sole opinion of the Lender) could have an adverse effect on
        the Collateral or the operation or prospects of the Resort.

        3.10 OTHER TIMESHARE COVENANTS.

               (a) ACCESS. The Debtor shall have caused the owners of Timeshare
        Intervals to have direct access to a publicly dedicated road and shall
        cause all private roadways and parking lots or areas inside of the
        Resort to be common elements or limited common elements under the
        Declaration.

               (b) UTILITIES. The Debtor shall have caused electric, gas, sewer,
        and water service and other necessary utilities to be available to the
        Units in sufficient capacity to service the Units.

               (c) USE OF AMENITIES. The Debtor shall have caused each purchaser
        of a Timeshare Interval to have access to, and the use of, all of the
        amenities and public utilities relating to the Unit in which such
        Timeshare Interval is located (consistent with the contractual
        provisions and rules and regulations existing with respect to such
        amenities and public utilities), including, without limitation, the
        Common Amenities.

               (d) TIMESHARE REGIMEN. The Debtor shall do all things necessary
        in order to preserve the condominium and timeshare regimens in respect
        of each of the Units.

               (e) EXCHANGE PROGRAM. The Debtor shall maintain its membership
        in, and the Timeshare Intervals eligibility for, the timeshare exchange
        program of Resorts Condominium International, Inc or Interval
        International, Inc.



                                       37
<PAGE>   43

               (f) LOCAL LEGAL COMPLIANCE. The Debtor shall comply, and shall
        cause the Units and the Buildings to comply, with all applicable
        restrictive covenants, zoning or land use ordinances and building codes,
        health laws and regulations, and all other applicable laws, rules,
        ordinances and regulations.

               (g) REGISTRATION COMPLIANCE. The Debtor shall maintain, or cause
        to be maintained, all necessary consents, franchises, approvals, and
        exemption certificates, and the Debtor will make, or cause to be made,
        all registrations or declarations with any government or any agency or
        department thereof required in connection with the Units, the Buildings,
        and the Timeshare Intervals and the occupancy, use and operation of the
        Units and the Buildings, and the sale and offering for sale of Timeshare
        Intervals.

               (h) RECORDS. The Debtor shall maintain accurate and complete
        files relating to the Pledged Notes Receivables and the other Collateral
        (as well as in respect of all other Notes Receivable) to the reasonable
        satisfaction of the Lender, and such files will contain copies of each
        Pledged Note Receivable and the Pledged Contract and Pledged Note
        Receivable Deed of Trust related thereto, copies of all relevant credit
        memoranda relating thereto, and all collection information and
        correspondence relating thereto received from the Collection Agent.

               (i) FORMS OF TIMESHARE DOCUMENTS. Instruments in substantially
        the form of the Pledged Note Receivable, Pledged Contract, Pledged Note
        Receivable Deed of Trust and the special warranty deed set forth in
        Exhibit C attached hereto (together with the form of the
        Truth-in-Lending Statement and statement of rescission rights set forth
        therein) and the other instruments and documents related thereto
        (collectively, the "Timeshare Instruments") shall be used by the Debtor
        for all transactions which may be entered into after the first
        Receivables Advance for so long as any Obligation remains outstanding
        and instruments in substantially the form of such Pledged Note
        Receivable, Pledged Contract, Pledged Note Receivable Deed of Trust and
        special warranty deed will be used in connection with the first
        Receivables Advance. The Debtor shall not modify, amend or otherwise
        alter the form of or any of the terms of such Timeshare Instruments
        without the Lender's prior written consent, except as may be required by
        any regulatory agency or applicable law. Notwithstanding the Lender's
        review and determination of acceptability, if any, of the Timeshare
        Instruments used by the Debtor, the Debtor shall remain solely liable
        for all aspects of such Timeshare Instruments and their use; any
        determination of acceptability, if any, by Lender relating to such
        Timeshare Instruments shall only be for the Lender's benefit and no
        other Person shall be entitled to rely thereon in any manner.

               (j) PAYMENTS ON PLEDGED NOTES RECEIVABLE. The Debtor, except as
        specifically consented to in writing by the Lender, shall not grant any
        extensions of time for the payment of, compromise for less than the full
        face value of, release in whole or in any part any Person liable for the
        payment of, allow any credit whatsoever except for the amount of cash to
        be paid upon, or otherwise modify or amend, any Pledged Note Receivable
        or any other instrument or document executed in connection therewith or
        consent to the sale of or further encumbering of the Timeshare Interval
        related to such Pledged Note Receivable.

               (k) PROPERTY-RELATED CONTRACTS. Except as required by applicable
        law, the Debtor shall not materially modify or amend, or (subject to the
        rights and obligations of the Associations under the Declarations or the
        Associations' Articles of Incorporation or By-Laws) permit to be
        materially modified or amended, any material Property-Related Contract
        without the prior written consent of the Lender, which consent shall not
        be unreasonably withheld, or enter into, or (subject



                                       38
<PAGE>   44

        to the rights and obligations of the Associations under the Declarations
        or the Associations' Articles of Incorporation or By-Laws) permit to be
        entered into, any new material Property-Related Contract without the
        prior written consent of the Lender, which consent shall not be
        unreasonably withheld. The Debtor shall deliver any proposed amendment
        or modification of an existing Property-Related Contract or proposed new
        Property-Related Contract to the Lender at least 30 days prior to the
        execution thereof and shall request the Lender's consent to the form and
        substance of such amendment, modification or new Property-Related
        Contract. If the Debtor shall not have received a written response to
        such request from the Lender within 20 days of the delivery of such
        amendment, modification or new Property-Related Contract to the Lender,
        then the Debtor shall send a second request via nationally recognized
        overnight courier. Failure by the Lender to respond to such second
        request within 10 days of receipt thereof shall be deemed to constitute
        a consent to such request. The Debtor shall perform all of its
        obligations in a timely fashion under each Property-Related Contract.

               (l) FUTURE ADVANCES. The Debtor shall extend no future advance or
        advances to any Maker of a Pledged Note Receivable which would be
        secured, directly or indirectly, by the Timeshare Interval related to
        such Pledged Note Receivable.

               (m) UNDERTAKING. The Debtor shall perform each and every
        covenant, agreement, and undertaking applicable to the Debtor (whether
        as Declarant, owner of a Unit, owner of a Timeshare Interval or
        otherwise) under the Declarations and/or the Associations' Articles of
        Incorporation or By-Laws.

               (n) NOTICES. The Debtor shall promptly deliver to the Lender
        copies of each written notice or request, financial statement, budget or
        other information received by the Debtor under or with respect to the
        Declarations and/or the Associations' Articles of Incorporation or
        By-Laws, whether in its capacity as Declarant, owner of a Unit, owner of
        a Timeshare Interval, Lienholder or otherwise.

        3.11 PROTECTION OF COLLATERAL; ASSESSMENTS; REIMBURSEMENT.

        All Insurance Premiums and all expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all Impositions on any of the Collateral or in respect of the sale or other
disposal thereof shall be borne and paid by the Debtor or the Debtor shall cause
the Association or any manager retained by it to pay the same, as provided for
in the Declaration and/or the Association's Articles of Incorporation or
By-Laws. The Debtor shall promptly pay, as the same become due and payable, its
share of all Insurance Premiums, expenses, Impositions and/or assessments as
required by the Declaration and/or the Association's By-Laws. If the Debtor
shall fail to pay, or cause to be paid, any such Insurance Premiums, expenses,
Impositions and/or assessments, the Lender may, at the Debtor's expense, pay the
same.

        If, by reason of any suit or proceeding of any kind, nature or
description against the Debtor, or by the Debtor or any other party against any
other Person, or by reason of any other facts or circumstances, which in the
Lender's sole discretion makes it advisable for the Lender to seek counsel for
the protection and preservation of the Collateral, or to defend its own
interest, such expenses and counsel fees shall be allowed to the Lender and
borne and paid by the Debtor.



                                       39
<PAGE>   45

        3.12 INTEREST ON LENDER PAID EXPENSES.

        All sums paid or incurred by the Lender under this Section 3, and any
and all other sums for which the Debtor may become liable hereunder, and all
costs and expenses (including payments to other Lien holders and attorneys'
fees, legal expenses and court costs) which the Lender may incur in enforcing or
protecting its Lien on, or rights and interest in, the Collateral or any of its
rights or remedies under this Agreement or any other Security Document or in
respect of any of the transactions contemplated herein or therein shall (a) be
considered as additional indebtedness owing by the Debtor to the Lender
hereunder and, as such, shall be secured by all of the Collateral and (b) accrue
interest at the Default Rate from the date paid or incurred by the Lender until
paid in full by the Debtor.

        3.13 LENDER RESPONSIBILITY.

        The Lender shall not be (a) obligated or responsible for, the payment of
any of the amounts or sums referred to in this Section 3 or (b) liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto other than, to the extent it elects to safekeep the
Pledged Notes Receivable or any of the other Timeshare Instruments related
thereto, to exercise the standard of care in respect thereof which would be
exercised by an institutional custodian similarly situated to the Lender and
similarly engaged in the safekeeping of collateral and, in any case, shall not
be liable or responsible in any way for any diminution in the value of the
Collateral or for any act or default of any manager of the Resort or the
Collection Agent and shall not be liable for any warranty (implied or express)
whether created by statute, at law or pursuant to the Declaration or any other
Timeshare Document. If the Lender shall elect (in its sole discretion) to store
and safekeep the Pledged Notes Receivable and the other related Timeshare
Instruments, the Debtor agrees to pay the Lender a fee, to compensate it for its
costs and expenses in connection therewith, of $5 for each Pledged Note
Receivable delivered to the Lender; such fee shall be payable at the time of the
delivery thereof. Such fee shall be nonrefundable. If the Lender shall elect (in
its sole discretion) to use the services of an institutional custodian to store
and safekeep the Pledged Notes Receivable and the other related Timeshare
Instruments, the Debtor shall pay all reasonable fees, costs and expenses in
respect thereof. Any such institutional custodian shall be the agent solely of
the Lender.

        Upon the full, final and indefeasible payment of all Obligations and the
termination of the Receivable Commitment Period, the Lender shall release its
Liens in and to the Collateral, execute in favor of the Debtor any UCC release
or termination statement in respect thereof and reassign and deliver to the
Debtor all Pledged Notes Receivables and the other Collateral then in the
physical possession of the Lender or its agent (without recourse and without
representations or warranties of any kind). The Debtor shall bear all
out-of-pocket expenses (including, without limitation, legal fees and
disbursements of the Lender) in connection with such release, reassignment and
delivery. All such release and/or termination documentation shall be reasonably
satisfactory to the Lender and its counsel. To the extent that all obligations
in respect of any Pledged Note Receivable shall have been fully, finally and
indefeasibly paid by the Maker thereof, the Lender, upon receipt of a written
request from the Debtor, shall reassign and deliver to the Debtor such Pledged
Note Receivable and/or Pledged Note Receivable Deed of Trust related thereto and
all other related documentation in the possession of the Lender (all without
recourse and without representations or warranties of any kind), shall release
any Lien the Lender may have therein and shall execute and deliver to the Debtor
any UCC release statement in respect thereof. The Debtor shall bear all expenses
(including, without limitation, legal fees and disbursements of the Lender) in
connection with such reassignment and delivery. All such reassignment and
release documentation shall be reasonably satisfactory to the Lender and its
counsel.



                                       40
<PAGE>   46

        3.14 NOTICE TO MAKERS.

        The Debtor authorizes the Lender (but the Lender shall not be obligated)
to communicate at any time and from time to time with any Maker of a Pledged
Note Receivable or any other Person primarily or secondarily liable under a
Pledged Note Receivable with regard to (i) any delinquent payment under, or
other default in respect of, such Pledged Note Receivable, (ii) any other matter
relating to any Timeshare Instrument associated with such Pledged Note
Receivable or (iii) verifying that such Maker did execute and deliver such
Pledged Note Receivable and verifying the terms and provisions thereof, provided
that, the foregoing notwithstanding, the Lender agrees that it shall not, unless
and until an Event of Default shall then exist, communicate with any such Maker
or other such Person with respect to any delinquent payment (or the collection
thereof) or any other default under such Pledged Note Receivable. The Debtor
agrees, upon the request of the Lender (which may be made only if an Event of
Default shall then exist), to notify each Maker of a Pledged Note Receivable in
writing of the assignment to the Lender of its respective Pledged Note
Receivable and the related Timeshare Instruments, the Lender's Lien therein and
any other matter relating thereto. Notwithstanding the immediately preceding
sentence, the Lender shall, during the existence of any Event of Default, have
the right, without first making a request of the Debtor, to notify each Maker of
a Pledged Note Receivable of the assignment to the Lender of its respective
Pledged Note Receivable and the related Timeshare Instruments, the Lender's Lien
therein and any other matter relating thereto. Debtor agrees, as provided in
Section 2.3(a) of this Agreement, to direct each obligor of a Pledged Note
Receivable to remit all payments under its respective Pledged Note Receivable to
the post office box established under the Agency Agreement or to such other
Person as the Lender may designate. The Debtor agrees, as it may be instructed
by the Lender or the Collection Agent, to endorse any checks or other
instruments received directly by it in respect of Pledged Notes Receivable and
to deliver the same as provided in Section 2.3 (a) hereof.

        The Debtor shall not undertake any action, direct or indirect, to
terminate, or cause the termination of, the Agency Agreement without having
received the prior written consent of the Lender in respect thereof, and the
Debtor shall comply with all of its obligations thereunder. The Debtor may, in
accordance with the terms of the Agency Agreement, replace the Collection Agent
under the Agency Agreement with another bank, provided that the Debtor shall
have obtained the prior written consent of the Lender in respect thereof. In
connection with any request by the Debtor to the Lender for the Lender's written
consent, as provided in the immediately preceding two sentences, the Lender will
not, if no Default or Event of Default shall then exist, unreasonably withhold
such consent and will, in connection with the granting of any such consent, join
in the execution of any instruments to effect the action then being consented
to, provided that such instruments are in form and substance reasonably
satisfactory to the Lender and its counsel. The Debtor agrees and consents that
the Lender may, at any time during which an Event of Default exists and in its
sole discretion, terminate the Agency Agreement and/or replace the Collection
Agent in respect thereof. If the Lender shall terminate the Agency Agreement,
the Debtor shall cooperate with the Lender in establishing a new Agency
Agreement and a successor Collection Agent. The Debtor acknowledges and agrees
that the Collection Agent with respect to receiving payments under the Pledged
Notes Receivable and collecting and holding the proceeds thereof is the sole
agent of the Lender and that all payments, instruments, and moneys in respect of
the Pledged Notes Receivable are Property of the Lender, are to be promptly
deposited into the Lockbox Account and applied to the Receivables Loan or
otherwise disposed of, all as set forth herein. The Debtor acknowledges that the
Lockbox Account is the exclusive property of the Lender and it confirms that it
has no, and will have no, interest therein. The Debtor acknowledges that the
post office box established under the Agency Agreement is the exclusive property
of the Lender and it confirms that it has no, and will have no, interest
therein. The Debtor agrees to promptly make all payments in respect of the fees
and expenses of the Collection Agent under the Agency Agreement.



                                       41
<PAGE>   47

        The Debtor shall promptly invoice (through payment books or otherwise)
all Makers in respect of all payments due under their respective Pledged Notes
Receivable, promptly enter into its accounting system all payments in respect of
such Pledged Notes Receivable received and otherwise fully and completely
service such Pledged Notes Receivable. During the existence of any Event of
Default, the Debtor shall, if requested by the Lender, cause such other Person
or Persons, as shall have been selected by the Lender, to service the Pledged
Notes Receivable.

SECTION 4. REPRESENTATIONS AND WARRANTIES

        As an inducement to the Lender to make the Receivables Loan , each
Debtor warrants and represents, as of the date hereof, and covenants to the
Lender as follows:

        4.1 SUBSIDIARIES AND CAPITAL STRUCTURE.

        Steamboat Suites has no Subsidiaries. Schedule 3 to this Agreement
states (a) the name of each of the Affiliates of each Debtor and the nature of
the affiliation, (b) the number, nature and the holder of the outstanding
Securities of each Debtor, (c) the number of authorized, issued and treasury
shares of each Debtor, and (d) the name of each subsidiary of Preferred
Equities.

        4.2 CORPORATE ORGANIZATION AND AUTHORITY.

               (a) Steamboat is a corporation duly organized, validly existing
        and in good standing under the laws of the State of Colorado;

               (b) Preferred Equities is a duly organized, validly existing and
        in good standing under the laws of the State of Nevada.

               (c) Each Debtor has all requisite power and authority and
        necessary licenses and permits to own and operate its Properties and to
        carry on its business as now conducted; and

               (d) Each Debtor has duly qualified and is authorized to do
        business and is in good standing as a foreign corporation in each
        jurisdiction where the character of its Properties or the nature of its
        activities makes such qualification necessary or desirable.

        4.3 BUSINESS AND PROPERTY.

        Form 10K dated as of August 31, 1999 filed by Guarantor with the United
States Securities and Exchange Commission and delivered by Debtor to Lender and
except as set forth in the Form 10K correctly describes the general nature of
the businesses and Properties (including all owned real Property, leases and
leasehold interests) of the Debtor. Except as set forth in the Form 10K the
Debtor has not changed its name, been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person.



                                       42
<PAGE>   48

        4.4 FINANCIAL STATEMENTS.

        The Debtor shall have delivered tax returns and balance sheets and
statements of income and expense of the Debtor and financial statements required
under the Existing Loan Agreement.

        4.5 FULL DISCLOSURE.

        Neither this Agreement nor any written statement made by the Debtor in
connection with this transaction contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained herein
or therein not misleading. There is no fact which the Debtor has not disclosed
to the Lender in writing which materially affects adversely or, so far as the
Debtor can now foresee, will materially affect adversely the Property, business,
prospects, profits or condition (financial or otherwise) of the Debtor or the
ability of the Debtor to perform its Obligations under this Agreement, the Notes
or the other Security Documents.

        4.6 PENDING LITIGATION.

        Except as set forth in Schedule 6 to this Agreement, there are no
proceedings pending, or to the knowledge of the Debtor threatened, against or
affecting the Debtor, any Affiliate, the Resort or any Unit in any court or
before any governmental authority or arbitration board or tribunal which involve
the possibility of materially and adversely affecting the Property, business,
prospects, profits or condition (financial or otherwise) of the Debtor or the
ability of the Debtor to perform its obligations under this Agreement, the Notes
or the other Security Documents, provided that no such proceedings shall be
deemed to satisfy such material and adverse effect standard if such proceeding
shall have been commenced by one or more of the aforesaid Persons as plaintiff
and no counterclaim is pending in respect thereof against such Person. Neither
the Debtor nor any Affiliate nor the Resort nor any Unit is in default with
respect to any order of any court, governmental authority or arbitration board
or tribunal.

        4.7 TITLE TO PROPERTIES.

        The Debtor has good and marketable title in fee simple (or its
equivalent under applicable law) to all the real Property which it purports to
own at the Resorts free from Liens except as set forth on Schedule 7 to this
Agreement, and has good title to, and is the sole owner of, all personal
Property related to the Resorts which it purports to own (including, without
limitation, the personal Property constituting the Collateral), which personal
Property is free from all Liens except as set forth on Schedule 8 to this
Agreement. Except as set forth on Schedule 9 hereto, the Resort is not subject
to any leases.

        Neither the buildings in which the Units are located nor the Resort is
under investigation with respect to, and is not in violation of, any
Environmental Protection Law. No proceedings have been commenced against, nor
notice received by, the Debtor or any Affiliate concerning any alleged violation
of any Environmental Protection Law. Neither the buildings in which the Units
are located nor the Resort is, or has been, the subject of any threatened,
proposed or actual cleanup or other protective or remedial action relating to
any Hazardous Substances, whether pursuant to any Environmental Protection Law
or otherwise. There are no Hazardous Substances in, on, or under the buildings
in which the Units are located or the Resort, except as set forth on Schedule 10
to this Agreement and except as used or stored in compliance with all applicable
Environmental Protection Laws or, with respect to ordinary cleaning materials
and supplies, as customarily and prudently used or stored in operations similar
to the Units or the Resort.



                                       43
<PAGE>   49

        The Debtor shall cause all asbestos located in the Resort to be removed
by a duly licensed asbestos abatement contractor, all in accordance with
applicable federal and Colorado law.

        4.8 TRADEMARKS; LICENSES AND PERMITS.

        The Debtor owns or possesses all of the trademarks, service marks, trade
names, copyrights, franchises and licenses, and rights with respect thereto
necessary for the conduct of its business as now conducted and as proposed to be
conducted, without any known conflict with the rights of others.

        4.9 TRANSACTION IS LEGAL AND AUTHORIZED.

        The execution and delivery of this Agreement, each of the Notes and the
other Security Documents by the Debtor and the grant of the Liens to the Lender
with respect to the Collateral by the Debtor and compliance by the Debtor with
all of the provisions of this Agreement, each of the Notes and the other
Security Documents are:

               (a) within the corporate powers of the Debtor;

               (b) duly authorized and approved by the Board of Directors of the
        Debtor; and

               (c) valid and legal acts and will not conflict with, or result in
        any breach in any of the provisions of, or constitute a default under,
        or result in the creation of any Lien (except Liens contemplated under
        this Agreement or any other Security Document) upon any Property of the
        Debtor under the provisions of, any agreement, charter instrument, bylaw
        or other instrument to which the Debtor is a party or by which its
        Property may be bound.

        4.10 NO DEFAULTS.

        No Default or Event of Default exists, and there is no violation in any
material respect of any term of any agreement, charter instrument, bylaw or
other instrument to which the Debtor is a party or by which it may be bound.

        4.11 GOVERNMENTAL CONSENT.

        Neither the nature of the Debtor, or of any of its businesses or
Properties, or any relationship between the Debtor and any other Person, or any
circumstance in connection with the execution or delivery of this Agreement, any
of the Notes or the other Security Documents, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Debtor, as a condition of the
execution, delivery or performance of this Agreement, any of the Notes or any
other Security Document.



                                       44
<PAGE>   50

        4.12 TAXES.

        The Debtor is not in default with respect to the payment of any taxes
levied or assessed against it or any of its assets and has not failed to file
any tax return required to be filed by it.

        4.13 USE OF PROCEEDS.

        The proceeds from the Inventory Loan and the Receivables Loan will be
used as set forth on Schedule 11 to this Agreement. None of the transactions
contemplated in this Agreement will violate or result in the violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including, without limitation, Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
II. The Debtor does not intend to carry or purchase any "margin security" within
the meaning of said Regulation G. None of the proceeds will be used to purchase
or carry (or refinance any borrowing, the proceeds of which were used to
purchase or carry) any "margin security" within the meaning of said Regulation.

        4.14 COMPLIANCE WITH LAW.

        The Debtor

               (a) is not in violation of any laws, ordinances, governmental
        rules or regulations to which it is subject; and

               (b) except as set forth in Schedule 12 hereto, has not failed to
        obtain any licenses, permits, franchises or other governmental
        authorizations, or make or cause to be made any registrations or
        declarations with any government or agency or department thereof,
        necessary to the ownership of its Property or to the conduct of its
        business;

which violation or failure to obtain or register would materially adversely
affect the business, prospects, profits, Property or condition (financial or
otherwise) of the Debtor.

        4.15 RESTRICTIONS OF DEBTOR.

        The Debtor is not a party to any contract or agreement which restricts
its right or ability to incur indebtedness with respect to the Resort, or
prohibits the execution of, or compliance with, this Agreement or any of the
other Security Documents by the Debtor. The Debtor has not agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its Property constituting the Collateral, whether now owned or
hereafter acquired, to be subject to a Lien other than the Liens provided for
herein and in the other Security Documents.

        4.16 BROKERS' FEES.

        The Debtor and the Lender hereby agree that there are no brokers or
finders which are entitled to receive compensation for their services rendered
to the Debtor with respect to the transactions described in this Agreement.

        4.17 DEFERRED COMPENSATION PLANS.



                                       45
<PAGE>   51

        Except as set forth on Schedule 13 hereto, the Debtor has no pension,
profit sharing or other compensatory or similar plan providing for a program of
deferred compensation for any employee or officer which is subject to any
requirement of the Employee Retirement Income Security Act of 1974, as amended.

        4.18 LABOR RELATIONS.

        The employees of the Debtor are not a party to any collective bargaining
agreement with the Debtor.

        4.19 VALIDITY AND ENFORCEABILITY.

        Each of the Pledged Notes Receivable is, and will (after the creation
thereof) be, undisputed, bona fide indebtedness (enforceable in accordance with
its terms) of the Maker named therein and shall have been incurred by such Maker
in a fixed sum (as stated therein) with respect to the bona fide sale of a
Timeshare Interval, and no defense, offset, counterclaim, discount or allowance
shall have been asserted in respect of such Pledged Note Receivable and the
Debtor has no knowledge of any threatened assertion of any of the same. Each
such Pledged Note Receivable is genuine and true and no signature or endorsement
thereon has been forged.

        To the extent that any of the foregoing representations in this Section
4.19 with respect to any Pledged Note Receivable (such Pledged Note Receivable
is referred to in this paragraph as an "impaired Pledged Note Receivable") shall
have been false or misleading in any material respect when made or furnished and
would constitute an Event of Default under Section 8.1(b) hereof, no action
solely in respect of such Event of Default arising from such impaired Pledged
Note Receivable shall be taken by the Lender under Section 8.2 hereof if, within
20 days after the falsity or misleading nature of any such representation shall
have first become known to any officer of the Debtor or Guarantor, a new Note
Receivable, which when pledged hereunder would constitute an Eligible Note
Receivable, is assigned and delivered to the Lender by the Debtor (such
assignment and delivery shall comply with the document delivery and recordation
requirements set forth in Section 6 of this Agreement) in exchange for such
impaired Pledged Note Receivable or, in the alternative, the Debtor prepays the
Receivables Loan in an amount equal to 80% (or, if at least one scheduled
monthly installment shall have been made in respect of such impaired Pledged
Note Receivable, 90%) of the then outstanding principal balance of such impaired
Pledged Note Receivable together with (to the extent not already previously paid
pursuant to Section 2.3(a) hereof) all accrued interest and a Receivables
Prepayment Premium in respect of the portion of the Receivables Loan being so
prepaid, provided that, if the sum of the principal amount of the Receivables
Loan which is then being prepaid pursuant to this paragraph and which was
prepaid pursuant to this paragraph within the then last 10 Business Days shall
not exceed 15% of the principal balance of the Receivables Loan outstanding at
the beginning of such 10 Business Day period, the aforesaid accrued interest
shall be paid as otherwise provided in Section 2.3(a) hereof. In either case,
the Lender will, upon receipt of the aforesaid new Eligible Note Receivable or
the aforesaid prepayment, release its Lien in and to the such impaired Pledged
Note Receivable, the Pledged Note Receivable Deed of Trust that relates thereto
and the other documents, instruments, title insurance and chattel paper that
specifically relate thereto and all proceeds, Property rights, privileges and
benefits that specifically arise from any of the same and will endorse and
deliver to the Debtor such impaired Pledged Note Receivable and reassign and (to
the extent it has possession of the same) deliver to the Debtor said Pledged
Note Receivable Deed of Trust and said other documents, instruments, title
insurance policy and chattel paper to the extent, but only to the extent, that
the said other documents, instruments, title insurance or chattel paper are
related specifically and solely to such impaired Pledged Note Receivable (such
endorsement, delivery and assignment being without recourse to, and without
representations or warranties of any kind from, the



                                       46
<PAGE>   52

Lender). The failure of the Debtor to either deliver a new Eligible Note
Receivable or to effect a prepayment in respect of an impaired Pledged Note
Receivable, as provided for in this paragraph, shall be an immediate Event of
Default in respect of which the Lender shall have all of its rights and remedies
under Section 8.2 of this Agreement and as otherwise provided for in the
Security Documents. The Debtor shall bear all out-of-pocket expenses (including,
without limitation, the reasonable legal fees and the disbursements of the
Lender) in connection with such release, endorsement, delivery and assignment.
All documentation related thereto shall be reasonably satisfactory to the Lender
and its counsel.

        4.20 VALIDITY OF LIENS GRANTED TO LENDER.

        Except with respect to the Permitted Exceptions and Liens subject to the
sharing provisions of the last paragraph of Section 3.1 hereof, all Liens
granted to the Lender in respect of the Collateral are, and shall continue to
be, prior in right and superior to all other Liens granted to, or held by, any
other Person.

        4.21 TIMESHARE REGIMEN REPORTS.

        The Debtor has furnished to the Lender true and correct copies of all
Timeshare Documents, including, without limitation, the Declaration, and any
other Timeshare Document placed on file by the Debtor with any federal, state or
local regulatory or recording agencies, offices or departments. All filings
and/or recordations in order to establish the condominium and timeshare regimens
in respect of the Units and the Timeshare Intervals have been done and all
applicable laws and statutes in connection therewith have been complied with.

        4.22 THE TIMESHARE INTERVALS.

               (a) ACCESS. The owners of Timeshare Intervals in respect of each
        of the Units have direct access to a publicly dedicated road and/or
        insured easement, and all roadways inside the Resort are common elements
        under the Declaration.

               (b) UTILITIES. Electric, sewer, water facilities and other
        necessary utilities are available in sufficient capacity to service each
        of the Units.

               (c) AMENITIES. Each purchaser of a Timeshare Interval in respect
        of a Unit has access to, and the use of, all of the amenities and public
        utilities relating to such Unit, including, without limitation, the
        Common Amenities (subject to only the requirements of the Debtor in
        respect of on-going renovations and construction with respect to the
        Units that are not completed Units ).

               (d) LAWS. The Units and the Timeshare Intervals in respect
        thereof comply with all applicable restrictive covenants, zoning and
        land use ordinances and regulations and building codes, all applicable
        health and environmental laws and regulations and all other applicable
        laws, rules and regulations and all approvals, consents, licenses and
        certificates of occupancy in respect of the use and operation of the
        Units and the Timeshare Intervals in respect thereof have been obtained
        and are in full force and effect.

               (e) SALE OF TIMESHARE INTERVALS. The sale, offering of sale, and
        financing of Timeshare Intervals (i) do not constitute the sale, or the
        offering of sale, of Securities subject to the registration requirements
        of the Securities Act of 1933, as amended, or the blue-sky securities
        laws of the State of Colorado, (ii) are only done in the State of
        Colorado, the State of Nevada and/or the the State of Texas and will
        only be done in such jurisdictions where the Debtor has made all
        necessary filings and obtained all necessary permits to do so (and no
        solicitation and no



                                       47
<PAGE>   53

        advertising in respect of the sale of Timeshare Intervals that would, in
        either case, be in violation of applicable law is done in any other
        State or Province), (iii) do not violate any applicable federal, state
        or local consumer credit, sale rescission or usury statute, including,
        without limitation, any such statute of any state in which an obligor of
        a Note Receivable may reside, and (iv) do not violate in any material
        respect any other applicable federal, state or local law, statute or
        regulation. Without limiting the generality of the immediately preceding
        sentence, the Debtor has, to the extent required by its activities and
        businesses, fully complied with (1) all of the applicable provisions of
        (A) the Consumer Credit Protection Act, as amended, (B) the Federal
        Trade Commission Act, as amended, (C) all rules and regulations
        promulgated under the foregoing Acts, (D) the Interstate Land Sales Full
        Disclosure Act and the rules and regulations promulgated thereunder, and
        (E) all other applicable federal statutes and the rules and regulations
        promulgated thereunder pertaining to the operation of the Resort and (2)
        all of the applicable provisions of any law of any state (and the rules
        and regulations promulgated thereunder) or municipality relating to the
        operation of the Resort, including, without limitation, the laws, rules
        and regulations of the State of Colorado, the County of Routt, Colorado
        and the Town of Steamboat Springs, Colorado. The sale and offering of
        sale of Timeshare Intervals is not effected by any home solicitations.

               (f) EXCHANGE PROGRAM. The Resort has been accepted by Resorts
        Condominium International, Inc. or Interval International, Inc. into its
        timeshare exchange program and the Debtor and the Resort are in good
        standing as participants in each such timeshare exchange program and
        have satisfied all eligibility requirements in respect thereof.

SECTION 5. CONDITIONS PRECEDENT TO INITIAL RECEIVABLE ADVANCE AND EFFECTIVENESS
           OF THIS AGREEMENT

        The effectiveness of this Agreement and the obligation of the Lender to
make the initial Receivable Advance shall be subject to the following conditions
precedent:

        5.1 OPINIONS OF COUNSEL.

        The Lender shall have received from Ballard Spahr Andrews & Ingersoll,
special Colorado counsel for the Debtor, a closing opinion substantially in the
form of Exhibit F attached to this Agreement dated the Closing Date, from Lionel
Sawyer & Collins, special counsel to Preferred Equities, a closing opinion
substantially in the form of Exhibit G attached to this Agreement and from
Greenberg Traurig, special counsel to Mego Financial, a closing opinion
substantially in the form of Exhibit H attached to this Agreement.

        5.2 WARRANTIES AND REPRESENTATIONS TRUE AS OF CLOSING DATE.

               (a) The warranties and representations contained in this
        Agreement shall (except as affected by transactions contemplated by this
        Agreement) be true in all material respects on the Closing Date with the
        same effect as though made on and as of that date.

               (b) The Debtor shall not have taken any action, or permitted any
        condition to exist which would have been prohibited by any provision of
        this Agreement if such provision had been binding and effective at all
        times during the period from October 19, 1999 to and including the
        Closing Date.



                                       48
<PAGE>   54

        5.3    COMPLIANCE WITH THIS AGREEMENT.

        The Debtor shall have performed and complied with all covenants,
agreements and conditions contained herein which are required to be performed or
complied with by it before or on the Closing Date.

        5.4 OFFICER'S CERTIFICATES; SECRETARY'S CERTIFICATES; GOOD-STANDING
CERTIFICATES.

               (a) The Lender shall have received a certificate, substantially
        in the form of Exhibit I to this Agreement, dated as of the Closing Date
        and signed by the President or a Vice-President of the Debtor,
        certifying that the conditions specified in Section 5.2(a), Section
        5.2(b) and Section 5.3 of this Agreement have been fulfilled.

               (b) The Lender shall have received a certificate of the Secretary
        or any Assistant Secretary of Steamboat, substantially in the form of
        Exhibit J to this Agreement, dated as of the Closing Date, certifying
        (i) the adoption by the Board of Directors of Steamboat of a resolution
        authorizing Steamboat to enter into this Agreement and the transactions
        and instruments contemplated hereby and (ii) the incumbency and
        authority of, and verifying the specimen signatures of, the officers of
        Steamboat authorized to execute and deliver this Agreement, each of the
        Notes, the other Security Documents and the other documents contemplated
        hereunder.

               (c) Steamboat shall have delivered to the Lender, in form
        satisfactory to the Lender, a recent good standing certificate from the
        Secretary of State of Colorado certifying Steamboat's due corporate
        existence.

               (d) The Debtor shall have delivered to the Lender, in form
        satisfactory to the Lender, (i) a recent certificate of the Secretary of
        State of Colorado certifying the due corporate existence of the
        Association, (ii) copies of the Articles of Incorporation and all
        amendments thereto and (iii) copies of the By-Laws of the Association.

               (e) The Lender shall have received a certificate of the Secretary
        or any Assistant Secretary of Preferred Equities, substantially in the
        form of Exhibit K to this Agreement, dated as of the Closing Date,
        certifying (i) the adoption by the Board of Directors of Preferred
        Equities of a resolution authorizing Preferred Equities to enter into
        this Agreement and the transactions and instruments contemplated hereby
        and (ii) the incumbency and authority of, and verifying the specimen
        signatures of, the officers of Preferred Equities authorized to execute
        and deliver this Agreement and the other documents contemplated
        thereunder.

               (f) Preferred Equities shall have delivered to the Lender, in
        form satisfactory to the Lender, a recent good standing certificate from
        the Secretary of State of Nevada certifying Preferred Equities' due
        corporate existence.

               (g) The Lender shall have received a certificate of the Secretary
        or any Assistant Secretary of Mego Financial, substantially in the form
        of Exhibit L to this Agreement, dated as of the Closing Date, certifying
        (i) the adoption by the Board of Directors of Mego Financial of a
        resolution authorizing Mego Financial to enter into the Guaranty
        Agreement and the transactions and instruments contemplated thereby and
        (ii) the incumbency and authority of, and verifying the specimen
        signatures of, the officers of Mego Financial authorized to execute and
        deliver the Guaranty Agreement and the other documents contemplated
        thereunder.



                                       49
<PAGE>   55

               (h) Mego Financial shall have delivered to the Lender, in form
        satisfactory to the Lender, a recent good standing certificate from the
        Secretary of State of New York certifying Mego Financial's due corporate
        existence.

        5.5 UNIFORM COMMERCIAL CODE FINANCING STATEMENTS.

        All filings of Uniform Commercial Code financing statements and all
other filings and actions necessary to perfect the Lender's security interests
in and to the Collateral shall have been filed and confirmation thereof
received.

        5.6 ASSIGNMENT OF PROPERTY-RELATED CONTRACTS.

        The Debtor shall have delivered to the Lender certified copies of all
material Property-Related Contracts and executed and delivered in favor of the
Lender an assignment or assignments thereof, each in form and substance
satisfactory to the Lender and its counsel. All such Property-Related Contracts
shall be satisfactory to the Lender in form and substance. Each Person (other
than the Debtor) which is a party to any such Property-Related Contract shall
have been notified of the assignment thereof.

        5.7 INTENTIONALLY DELETED

        5.8 GUARANTY AGREEMENT.

         Guarantor shall have executed and delivered to the Lender a Guaranty
Agreement (as amended from time to time, the "Guaranty Agreement") substantially
in the form of Exhibit M attached to this Agreement.

        5.9 SUBORDINATION OF INDEBTEDNESS.

        The Debtor, the Lender and Guarantor shall have entered into one or more
Subordination Agreements, substantially in the form of Exhibit A attached to the
Guaranty Agreement (individually, a "Subordination Agreement" and, collectively,
the "Subordination Agreements").

        5.10 EXPENSES.

        The Debtor shall have paid all fees and expenses required to be paid by
it pursuant to Section 10.2 of this Agreement and the Inventory Loan Agreement.

        5.11 RECEIVABLES NOTE; INVENTORY DEED OF TRUST.

        The Debtor shall have executed the Receivables Note, and the Inventory
Deed of Trust. The Inventory Deed of Trust shall have been recorded, as of the
Closing Date, in the Office of the Clerk and Recorder for Routt County, Colorado
and all taxes, recording fees and other fees and charges required by applicable
law to be paid in connection therewith shall have been duly paid in full. The
Inventory Deed of Trust shall have created a valid Lien in and to the Resort in
respect of the Obligations subject to no other Liens except to the extent
permitted by Section 7.2(h) of this Agreement.

        The Debtor shall have executed and delivered to the Lender an assignment
of leases and rents (as may be amended from time to time, the "Assignment of
Rents"), substantially in the form of Exhibit N to this Agreement. The
Assignment of Rents shall have been recorded in the Office of the Clerk and
Recorder for Routt County, Colorado and all taxes, recording fees and other fees
and charges required by applicable law to be paid in connection therewith shall
have been duly paid in full. The Assignment of



                                       50
<PAGE>   56

Rents shall have created a valid Lien in and to the Property referred to therein
in respect of the Obligations subject to no other Liens except to the extent
permitted by Section 7.2(h) of this Agreement.

        5.12 TITLE INSURANCE; CASUALTY INSURANCE.

        The Debtor shall have delivered to the Lender a mortgagee's title
insurance policy (issued to the Lender and in full force and effect) in respect
of the Inventory Deed of Trust (the "Title Insurance Policy {Blanket}") together
with such endorsements thereto as the Lender may require, dated the Closing
Date. The Title Insurance Policy {Blanket} (a) shall have been issued by a title
insurance company which is satisfactory to the Lender, (b) shall be in form and
substance satisfactory to the Lender and its special counsel, (c) shall be in
amount not less than the principal amount of the outstanding Inventory Loan, (d)
shall insure that the Inventory Deed of Trust creates a valid first Lien in and
to the Resort free and clear of all defects, encumbrances and other Liens
unacceptable to the Lender and (e) shall contain such further endorsements and
affirmative coverage as the Lender may request. All premiums in respect of such
Title Insurance Policy {Blanket} shall have been paid in full and evidence
thereof shall have been delivered to the Lender.

        The Debtor shall have delivered to the Lender certificates of insurance
evidencing the insurance policies and endorsements required to be delivered
pursuant to Section 3.5 hereof, together with copies of such insurance policies
certified by the Debtor to be true and correct, except as otherwise provided in
Section 3.5. All premiums in respect of such insurance policies shall have been
paid in full and evidence thereof shall have been delivered to the Lender.

        5.13 ENVIRONMENTAL SITE ASSESSMENT REPORT.

        Except as may have been waived by the Lender, the Debtor (at its own
expense) shall have delivered to the Lender not less than 10 Business Days prior
to the Closing Date a Phase I environmental survey of the Hilltop Resort. The
Phase I environmental survey shall provide that the Lender may rely thereon in
connection with its making Advances hereunder.

        5.14 TAXES.

        The Debtor shall have delivered to the Lender copies of the most recent
tax receipts for the Resort and each of the Units (or certificates in respect
thereof) evidencing no delinquency in the payment thereof and that each of the
Units has been segregated from all other Property at the Resort on the
applicable municipal tax rolls.



                                       51
<PAGE>   57

        5.15 INSPECTION.

        The Debtor shall have permitted the Lender or its representatives to
make an inspection/audit of its books, accounts and records and such other
papers as it may desire and of its premises and the Resort, as the Lender may in
its sole discretion determine. Such inspection/audit shall have been
satisfactory to the Lender (in its sole determination).

        5.16 SURVEY.

        The Debtor shall have delivered to the Lender the existing as-built
survey of the Resort; such survey shall be prepared in accordance with ALTA/ACSM
1988 Minimum Survey Requirements by a licensed surveyor acceptable to the Lender
and shall be dated (or re-certified) as of a recent date and shall contain a
certification noted thereon in form and substance satisfactory to the Lender;
such survey shall show no easements, rights-of-way, party walls, encroachments,
streets or alleys which interfere with the use, enjoyment or market value of the
Units.

        5.17 ENGINEERING REPORT.

        The Debtor shall have delivered to the Lender a current engineering
report or reports which shall be in form and substance satisfactory to the
Lender and shall confirm that the Buildings and their Units are structurally and
mechanically sound. The engineering report shall provide that the Lender may
rely thereon in connection with its making Advances hereunder.

        5.18 INTENTIONALLY DELETED.

        5.19 INTENTIONALLY DELETED.

        5.20 FIRST LIENHOLDER STATUS; QUIT-CLAIM DEED; PROXY ACKNOWLEDGED.

        The Debtor shall have informed the Association, in writing, as to the
first Lienholder status of the Lender in and to the Units and the Association
shall have recognized the Lender as such First Lienholder. The Associations
shall have acknowledged and recognized the proxy referred to in Section 3.9
hereof.

        5.21 PROCEEDINGS SATISFACTORY.

        All actions taken in connection with the execution of this Agreement,
the Receivable Note, any other Security Document and all documents and papers
relating thereto shall be satisfactory to the Lender and its counsel. The Lender
shall be satisfied with its physical inspection of the Units and the Resorts.
The Lender and its counsel shall have received copies of such documents and
papers as the Lender or such counsel may reasonably request in connection
therewith, all in form and substance satisfactory to the Lender and its counsel,
including, without limitation, certified copies of the Declarations and the
Associations' Articles of Incorporation and By-Laws.

SECTION 6. SUBSEQUENT RECEIVABLE ADVANCES CLOSING CONDITIONS



                                       52
<PAGE>   58

        The obligation of the Lender to make a Receivables Advance on any date
(herein referred to as a "Subsequent Receivables Advance Date") shall be subject
to the satisfaction of all of the following conditions precedent:

        6.1 REQUESTS FOR ADVANCES.

        Each request for a Receivables Advance

               (a) shall be in writing,

               (b) shall designate the principal amount of the Receivables
        Advance requested, the Subsequent Receivables Advance Date on which such
        Receivables Advance is to be made, and the account to which the proceeds
        of such requested Receivables Advance are to be transferred,

               (c) shall have been delivered to the office of the Lender at
        least 10 Business Days in advance of the Subsequent Receivables Advance
        Date in respect of such requested Receivables Advance and

               (d) shall otherwise be substantially in the form of Exhibit P
        attached hereto.

        6.2 PLEDGED NOTES RECEIVABLE.

        With respect to any Receivables Advance in respect of Notes Receivable,
not less than 5 Business Days prior to such Subsequent Receivables Advance Date,
the Debtor shall have:

               (a) delivered to the Lender a list of all Notes Receivable which
        are to be the subject of such requested Receivables Advance, together
        with such additional information concerning such Notes Receivable, the
        obligors of such Notes Receivable and the Pledged Note Receivable Deeds
        of Trust securing the same as the Lender may reasonably require,
        together with detailed computations showing borrowing availability as of
        such Subsequent Receivables Advance Date under the Receivables Borrowing
        Base;

               (b) delivered to the Lender the original of each such Note
        Receivable (duly endorsed to the order of the Lender) referred to in
        such list, together with the original Pledged Note Receivable Deed of
        Trust (bearing a recordation acknowledgement from the Office of the
        Clerk and Recorder for Routt County, Colorado) referred to in such list,
        and copies of all other related Timeshare Instruments in respect of each
        such Note Receivable, provided that, if the original Pledged Note
        Receivable Deed of Trust bearing a recordation acknowledgement is not
        then available, the Debtor may substitute therefor a copy of such
        Pledged Note Receivable Deed of Trust showing the recordation of the
        same or if such copy with such recordation noted thereon is not then
        available, the Debtor may deliver a copy of such Pledged Note Receivable
        Deed of Trust together with a certificate of an officer of the Debtor
        certifying the recordation information in respect of such Pledged Note
        Receivable Deed of Trust together with a receipt showing the payment of
        all recording fees in respect thereof; the Debtor agrees to promptly
        deliver the original thereof to the Lender upon its receipt thereof;

               (c) delivered to the Lender an instrument (substantially in the
        form of Exhibit Q attached hereto) assigning to the Lender all of the
        Debtor's right, title and interest in and to each such Note Receivable
        and the related Pledged Note Receivable Deed of Trust;



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<PAGE>   59

               (d) delivered to the Lender all filings of Uniform Commercial
        Code financing statements and all other filings and shall have taken all
        other actions necessary to perfect the Lender's security interests in
        and to the aforesaid Notes Receivable and such financing statements and
        other filings shall have been recorded and confirmation thereof
        received; and

               (e) delivered to the Lender either (i) a separate mortgagee's
        title insurance policy insuring the Lien of each of the Pledged Note
        Receivable Deeds of Trust in the amount of the Note Receivable (referred
        to in the aforesaid list) secured thereby outstanding on the Subsequent
        Receivables Advance Date or (ii) a blanket mortgagee's title insurance
        policy (in the case of the first Receivables Advance) or an endorsement
        to an existing blanket mortgagee's title insurance policy (in the case
        of any subsequent Receivables Advance), in either case, in respect of
        the Pledged Note Receivable Deeds of Trust securing the Notes Receivable
        referred to in the aforesaid list (which blanket policy and/or
        endorsement are more particularly described below) and, in either case,
        showing that such Pledged Note Receivable Deeds of Trust have been
        assigned as collateral to Lender.

               The Pledged Note Receivable Deeds of Trust and the assignments
        thereof to the Lender shall each have been duly recorded in the Office
        of the Clerk and Recorder for Routt County, Colorado in order to
        constitute the same a valid first Lien on the Timeshare Interval
        encumbered thereby and an effective assignment of the same to the
        Lender. The aforesaid mortgagee's title insurance policies shall be in
        form and substance satisfactory to the Lender and shall be issued by
        Chicago Title Insurance Company (or such other title insurance company
        as shall be satisfactory to the Lender) and shall name the Lender, by
        way of an endorsement thereto (which endorsement shall have been
        delivered to the Lender), as the insured party thereon; as an
        alternative to the aforesaid mortgagee's title insurance policies in
        respect of each Pledged Note Receivable Deed of Trust, the Debtor may
        maintain a blanket mortgagee's title insurance policy insuring the
        Lender and, by way of an endorsement thereto, add the Pledged Note
        Receivable Deeds of Trust to the coverage thereof, increase the amount
        of coverage thereunder to include the Notes Receivable secured by the
        Pledged Note Receivable Deeds of Trust and make such changes effective
        as of such Subsequent Receivables Advance Date, provided that (A) such
        blanket mortgagee's title insurance policy shall be in form and
        substance satisfactory to the Lender and shall be issued by Chicago
        Title Insurance Company (or such other title insurance company as shall
        be satisfactory to the Lender) and shall name the Lender as the insured
        party thereon (and no exceptions or exclusions not satisfactory to the
        Lender shall be included therein) and (B) such endorsement thereto shall
        be satisfactory to the Lender in both form and substance (and no
        exceptions or exclusions not satisfactory to the Lender shall be
        included therein, provided that, with respect to any such endorsement,
        any such exceptions or exclusions previously accepted in respect of such
        blanket mortgagee's title insurance policy shall be deemed satisfactory
        to the Lender). The Title Insurance Policy {Blanket} shall have been
        "brought down to date" and shall otherwise be acceptable to the Lender.

               The contemporaneous funding of the requested Receivables Advance
        and delivery of the aforesaid Collateral and title insurance endorsement
        and recording of the original Pledged Note Receivable Deeds of Trust and
        assignments thereof shall be effected by way of an escrow arrangement
        with Chicago Title Insurance Company (or such other title insurance
        company as shall be acceptable to the Lender), the form and substance of
        which shall be satisfactory to the Lender.

        6.3 PROCEEDINGS SATISFACTORY.



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<PAGE>   60

        All actions taken in connection with any requested Receivables Advance
shall be reasonably satisfactory to the Lender and its counsel. The Lender and
its counsel shall receive copies of such documents and papers as the Lender or
such counsel may reasonably request in connection with any such requested
Receivables Advance, all in form and substance satisfactory to the Lender and
its counsel.

        6.4 OTHER CONDITIONS. The making of such requested Receivables Advance
shall be subject to the satisfaction of the following conditions:

               (a) no Default or Event of Default shall exist immediately prior
        to the making of such requested Receivables Advance or, after giving
        effect thereto, immediately after the making of such requested
        Receivables Advance;

               (b) each agreement required to have been executed and delivered
        in connection with any prior Receivables Advance shall be in full force
        and effect;

               (c) the date on which such requested Receivables Advance is to be
        made is not on or after the Receivables Termination Date and shall be a
        Business Day;

               (d) at least 5 Business Days in advance of the Subsequent
        Receivables Advance Date, the Debtor shall have delivered to the Lender
        a current aging report in respect of all Pledged Notes Receivable
        previously pledged hereunder and the Notes Receivable being pledged
        contemporaneously with such requested Receivables Advance, which report
        shall be in form and substance satisfactory to the Lender and shall show
        which of such Pledged Notes Receivable is delinquent and the duration of
        such delinquency, provided that the aforesaid aging report shall not be
        required to be delivered under this clause (d) if the Debtor is current
        with respect to all of the reports required to be delivered under
        Section 7.14(f) hereof;

               (e) not more than two Receivables Advances shall have previously
        been made in the same calendar month in which such requested Receivables
        Advance is to be made, provided that the Lender may, in its sole
        discretion, fund more than three Receivables Advances in any month;

               (f) upon making such requested Receivables Advance and after
        giving effect thereto, the aggregate principal amount of the Receivables
        Loan then outstanding would not exceed the Receivables Borrowing Base;

               (g) such requested Receivables Advance shall be in a principal
        amount of not less than $50,000, provided that the Lender may, in its
        sole discretion, make a Receivables Advance in a principal amount which
        is less than $50,000.

        6.5 EXPENSES.

        The Debtor shall have paid all fees and expenses required to be paid
pursuant to Section 10.2 of this Agreement in connection with such requested
Receivables Advance.

SECTION 7. COVENANTS

        The Debtor covenants that on and after the date hereof and so long as
any Obligation of the Debtor to the Lender exists as follows:



                                       55
<PAGE>   61

        7.1 PAYMENT OF TAXES AND CLAIMS.

        Except as otherwise provided for in Section 3.8 hereof, the Debtor shall
pay, or cause to be paid, before they become delinquent:

               (a) all taxes, assessments and governmental charges or levies
        imposed upon it or its Property at the Resorts, including, without
        limitation, the Collateral; and

               (b) all claims or demands of materialmen, mechanics, carriers,
        warehousemen, landlords and other like Persons which, if unpaid, might
        result in the creation of a Lien upon its Property at the Resorts,
        including, without limitation, the Collateral.

        7.2 MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE; STOCK OWNERSHIP;
            RENOVATIONS; SUPERVISORY ARCHITECT; INDEBTEDNESS; LIENS; BUSINESS.

        The Debtor shall:

               (a) PROPERTY -- maintain its Property at the Resorts in good
        repair, working order and condition and make all necessary renewals,
        repairs, replacements, additions, betterments and improvements thereto
        and, without limiting the generality of the foregoing, maintain, or
        cause to be maintained, the Resort in good repair, working order and
        condition and shall make, or shall cause to be made, all necessary
        repairs, replacements, additions, betterments and improvements to the
        Resort;

               (b) INSURANCE -- maintain, or cause to be maintained, insurance
        as required by Section 3.5 of this Agreement;

               (c) FINANCIAL RECORDS -- (i) keep true books of records and
        accounts (including, without limitation, the Books and Records) in which
        full and correct entries will be made of all its business transactions
        and (ii) reflect in its financial statements adequate accruals and
        appropriations to reserves, all in accordance with generally accepted
        accounting principles, practices and procedures at the time in effect
        and consistently applied;

               (d) CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done all
        things necessary or required (i) to preserve and keep in full force and
        effect its corporate existence, rights, powers and franchises,
        including, without limitation, its authorization to do business in the
        State of Colorado and (ii) to cause Preferred Equities to continue to
        own 100% of all legal and beneficial interest in all of the Voting Stock
        and other capital stock of Steamboat;

               (e) COMPLIANCE WITH LAW -- not be in violation of (i) any laws,
        ordinances, governmental rules and regulations to which it is subject,
        and to that end, the Debtor shall not fail to obtain any licenses,
        permits, franchises or other governmental authorizations necessary to
        the ownership of its Properties or to the conduct of its business, which
        violation or failure to obtain might materially and adversely affect the
        business, prospects, profits, Property or condition (financial or
        otherwise) of the Debtor, including, without limitation, any zoning,
        land use, subdivision control or Environmental Protection Laws
        applicable to its real Property (including, without limitation, the
        Units and the Resort), (ii) any statutes, rules and regulations, whether
        now or hereafter in force, in such jurisdictions as the Debtor may make
        sales of Timeshare Intervals relating to the right to do business in any
        of such jurisdictions and (iii) any applicable federal, state or
        municipal statutes, rules and regulations relating to sales of Timeshare
        Intervals and the



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<PAGE>   62

        manner of evidencing and financing the same, including, without
        limitation, the Consumer Credit Protection Act, as amended, the Federal
        Trade Commission Act, as amended, and Federal Reserve Board Regulation
        Z, as amended, to the end that all of the Pledged Notes Receivable, the
        Pledged Contracts related thereto and the Pledged Note Receivable Deeds
        of Trust securing any of such Pledged Notes Receivable shall be valid,
        binding and legally enforceable in accordance with their respective
        terms subsequent to the assignment thereof to the Lender;

               (f) DEFERRED COMPENSATION PLANS -- to the extent that it has one
        or more pension, profit sharing or other compensatory or similar plans
        providing for a program of deferred compensation for any employee or
        officer, be in compliance with all requirements of the Employee
        Retirement Income Security Act of 1974, as amended, and the rules and
        regulations promulgated in connection therewith;

               (g) INDEBTEDNESS/RIGHT OF FIRST REFUSAL -- not incur any
        indebtedness (other than the Loan and the leasing of motor vehicles,
        telephone and computer equipment in the ordinary course of business) in
        respect of the Collateral and/or the Resort, whether such indebtedness
        is secured or unsecured, and not permit the Association to incur any
        indebtedness, whether secured or unsecured, provided that the Debtor may
        incur additional indebtedness for borrowed money secured principally by
        Notes Receivable (other than the Pledged Notes Receivable), if, but only
        if, the following conditions shall have been satisfied:

                      (i) the Debtor shall have, at any time within the 120-day
               period prior to the termination of the Receivables Commitment
               Period, delivered to the Lender a written request for Lender's
               issuance to the Debtor of a Letter of Intent in respect of its
               borrowing of additional moneys to be secured principally by Notes
               Receivable (other than the Pledged Notes Receivable) on the terms
               and conditions to be outlined by the Debtor in such request (such
               terms to include, as applicable, the extension of the then
               current Receivables Commitment Period, the term of any new
               facility, the advance rate, the rate of interest, the borrowing
               base requirements, the revolving period and such other terms with
               respect to such borrowing as are customarily included in letters
               of intent);

                      (ii) at the time of the delivery of such written request
               to the Lender, the borrowing availability of the Debtor under the
               Receivables Borrowing Base is less than the requested additional
               indebtedness or the Receivables Commitment Period will terminate
               within 120 days;

                      (iii) one of the following shall be true:

                             (A) the Lender shall not have delivered to the
                      Debtor a Letter of Intent in respect of the Debtor's
                      aforesaid request within 20 days after the Lender's
                      receipt of such request; or

                             (B) the Lender shall have delivered to the Debtor a
                      written response in respect of the Debtor's aforesaid
                      request rejecting the same; or

                             (C) (1) the Lender shall have delivered to the
                      Debtor a Letter of Intent in respect of the Debtor's
                      aforesaid request within 20 days after the Lender's
                      receipt of such request and (2) within 10 days after
                      receipt of such Letter of Intent, the Debtor shall have
                      informed the Lender that, in the good faith opinion of the
                      Debtor, such Letter of Intent fails to materially satisfy
                      the terms outlined in the aforesaid Debtor's request; or



                                       57
<PAGE>   63

                             (D) (1) the Lender shall have delivered to the
                      Debtor a Letter of Intent in respect of the aforesaid
                      Debtor's request within 20 days after the Lender's receipt
                      of such request, (2) within 10 days after receipt of such
                      Letter of Intent, the Debtor shall have executed and
                      returned such Letter of Intent to the Lender, and (3)
                      within 30 days after receipt of such executed Letter of
                      Intent by the Lender, the Lender shall have failed to
                      issue to the Debtor a Phase II Commitment Letter in
                      respect of such Letter of Intent;

                      (iv) the Debtor shall not have made more than 2 other such
               requests under this clause (g) and/or under Section 7.4 hereof
               during the then current fiscal year of the Debtor; and

                      (v) no Event of Default shall exist at the time of the
               delivery of the aforesaid written request;

               (h) LIENS -- (i) not allow any Liens or encumbrances whatsoever
        to attach to the Collateral and/or the Resort other than the Liens and
        security interests of the Lender created by the Security Documents, any
        Liens in favor of the Association under the Declaration, the Liens set
        forth on Schedule 7, Schedule 8 and Schedule 9 hereto and any Liens
        permitted in connection with additional indebtedness for borrowed money
        permitted under clause (g) above or in connection with the sale of Notes
        Receivable under Section 7.4 hereof and (ii) cause the Liens and
        security interests of the Lender created by the Security Documents in
        and to the Collateral to continue to be valid, enforceable, perfected
        Liens and security interests subject to no other Liens except as set
        forth in this Agreement or in any other Security Document and in
        Schedule 7, Schedule 8 and Schedule 9 hereto;

               (i) MATERIAL ADVERSE EFFECT -- not undertake any action that
        would have a material adverse effect on the operation of the Resort or
        the Collateral; and

               (j) NOTIFICATION OF CLAIMS -- promptly notify the Lender of any
        claim, action or proceeding affecting title to the Collateral, or any
        part thereof, or any of the security interests granted hereunder, and,
        at the request of the Lender, appear in and defend, at the Debtor's
        expense, any such claim, action or proceeding.

        7.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.

        The Debtor shall punctually pay or cause to be paid the principal and
interest (and prepayment premium, if any) to become due in respect of each of
the Notes according to the terms thereof (all of which are incorporated herein
by reference). All payments hereunder or under the Notes shall be made in
accordance with the payment instructions set forth in Schedule 14 to this
Agreement. The Debtor shall maintain an office in Steamboat Springs, Colorado
and/or Las Vegas, Nevada where notices, presentations and demands in respect of
this Agreement, the Notes or any other Security Document may be made upon the
Debtor. Such offices shall be maintained at the addresses of the Debtor set
forth on Schedule 15 to this Agreement until such time as the Debtor shall so
notify the Lender, in writing, of any change of location of such offices. The
books and records of the Debtor shall be maintained at the Las Vegas, Nevada
office of the Debtor . The Debtor shall not change its name without 30-day prior
written notice to the Lender.

        7.4 SALE OF PROPERTIES.



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        Without the prior written consent of the Lender, the Debtor shall not
sell, lease, transfer or otherwise dispose of any of the Collateral, provided
that the Debtor may sell the Unsold Inventory Timeshare Intervals in the
ordinary course of its business to unaffiliated consumers and remove and dispose
of (and receive the proceeds thereof) in the ordinary course of its business,
free from any Liens created or contemplated by this Agreement, items of
Collateral consisting of Equipment which shall have become worn out or obsolete
and provided further that the Debtor may sell Notes Receivable (other than the
Pledged Notes Receivable) provided no Event of Default exists under the
Inventory Loan and any applicable Release Fee and Release Price have been paid.

        7.5 CONSOLIDATION AND MERGER.

        Without the prior written consent of Lender, the Debtor shall not
consolidate with or merge into any other Person or permit any other Person to
consolidate with or merge into it or consent or agree to a Change in Management.

        7.6 TIMESHARE COVENANTS.

        The Debtor covenants that:

               (a) ACCESS -- the owner of each Timeshare Interval in respect of
        each Unit shall have direct access to a publicly dedicated road and all
        roadways inside the Resort shall be common elements under the
        Declaration;

               (b) UTILITIES -- electric, sewer, water facilities and other
        necessary utilities shall be available in sufficient capacity to service
        each Unit;

               (c) AMENITIES -- each purchaser of a Timeshare Interval in
        respect of a Unit shall have access to, and the use of, all of the
        amenities and public utilities relating to such Unit, including, without
        limitation, the Common Amenities (subject to only the requirements of
        the Debtor in respect of on-going renovations and construction with
        respect to the Units that are not completed Units and the Amenity
        Building);

               (d) LAWS -- each of the Units and the Timeshare Intervals in
        respect thereof shall comply with all applicable restrictive covenants,
        zoning and land use ordinances and building codes, all applicable health
        and environmental laws and regulations and all other applicable laws,
        rules and regulations and all approvals, consents, licenses, and all
        certificates of occupancy in respect of the use and operation of the
        Units and the Timeshare Intervals in respect thereof shall be obtained
        and remain in full force and effect;

               (e) SALE OF TIMESHARE INTERVALS -- the sale, offering of sale,
        and financing of Timeshare Intervals (i) shall not constitute the sale,
        or the offering of sale, of Securities subject to the registration
        requirements of the Securities Act of 1933, as amended, or the blue-sky
        securities laws of the State of Colorado, (ii) shall only be done in the
        State of Colorado, the State of Nevada and/or the State of Texas and in
        such other jurisdictions where the Debtor has made all necessary filings
        and obtained all necessary permits, to do so (and no solicitation and no
        advertising in respect of the sale of Timeshare Intervals that would, in
        either case, be in violation of applicable law shall be done in any
        other State or Province), (iii) shall not violate any applicable
        federal, state or local consumer credit, sale rescission or usury
        statute, including, without limitation, any such statute of any state in
        which a Maker of a Note Receivable may reside, and (iv) shall not
        violate in any material respect any other applicable federal, state or
        local law, statute or regulation. Without limiting the generality of the
        foregoing, the Debtor shall, to the extent



                                       59
<PAGE>   65

        required by its activities and businesses, fully comply with (1) all of
        the applicable provisions of (A) the Consumer Credit Protection Act, as
        amended, (B) the Federal Trade Commission Act, as amended, (C) all rules
        and regulations promulgated under the foregoing Acts, (D) the Interstate
        Land Sales Full Disclosure Act and the rules and regulations promulgated
        thereunder, and (E) all other applicable federal statutes and the rules
        and regulations promulgated thereunder pertaining to the operation of
        the Resort and (2) all of the applicable provisions of any law of any
        state (and the rules and regulations promulgated thereunder) or
        municipality relating to the operation of the Resort, including, without
        limitation, the laws, rules and regulations of the State of Colorado and
        the Town of Steamboat Springs, Colorado; and the sale and offering of
        sale of Timeshare Intervals shall not be effected by any home
        solicitations.

               (f) EXCHANGE PROGRAM -- the Resorts (including, without
        limitation, each of the Units and the Timeshare Intervals in respect
        thereof) shall be and shall remain a participant in good standing in the
        timeshare exchange programs of Resort Condominium International, Inc.
        and/or Interval International, Inc. and all eligibility requirements in
        respect thereof shall be and shall continue to be satisfied.

        7.7 GUARANTIES.

               (a) Except as required by applicable law or any government agency
        having regulatory authority with respect to the sale of the Timeshare
        Intervals, the Debtor shall not become liable in respect of, or be
        liable in respect of, any Guaranty except the endorsement in the
        ordinary course of business of negotiable instruments for deposit or
        collection.

               (b) "Guaranty" by any Person shall mean all obligations of such
        Person guaranteeing or in effect guaranteeing any indebtedness, dividend
        or other obligation of any other Person (the "primary obligor") in any
        manner, whether directly or indirectly, including but not limited to
        obligations incurred through an agreement, contingent or otherwise, by
        such Person:

                      (i) to purchase such indebtedness or obligation or any
               Property or assets constituting security therefor;

                      (ii) to advance or supply funds

                             (A) for the purchase or payment of such
                      indebtedness or obligation, or

                             (B) to maintain working capital or other balance
                      sheet conditions or otherwise to advance or make available
                      funds for the purchase or payment of such indebtedness or
                      obligation;

                      (iii) to lease Property or to purchase any Security or
               other Property or services primarily for the purpose of assuring
               the owner of such indebtedness or obligation of the ability of
               the primary obligor to make payment of the indebtedness or
               obligation; or

                      (iv) otherwise to assure the owner of the indebtedness or
               obligation of the primary obligor against loss in respect
               thereof.

        7.8 COMPLIANCE WITH ENVIRONMENTAL LAWS.



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        The Debtor shall comply, and shall cause the Resorts to be in
compliance, in a timely and diligent fashion with

               (a) all Environmental Protection Laws (including, without
        limitation, all federal, state and local environmental or
        pollution-control laws, regulations, orders and decrees governing the
        emission of waste water effluent, the treatment, transportation,
        disposal, generation and storage of solid and hazardous waste, hazardous
        and toxic substances and air pollution, and/or setting forth general
        environmental conditions),

               (b) any other applicable requirements for conducting, on a timely
        basis, periodic tests and monitoring for contamination of ground water,
        surface water, air and/or land, and for biological toxicity of the
        aforesaid and

               (c) the regulations of each relevant federal, state or local
        authority administering environmental laws, ordinances or regulations,

        to the extent that the failure to so comply could have a material and
        adverse effect on the business, prospects, profits, Property or
        condition (financial or otherwise) of the Debtor or the Resort.

        Without limiting the generality of the foregoing, the Debtor shall not
release or otherwise dispose of any Hazardous Substance or any other substance
regulated, controlled or described as hazardous under any Environmental
Protection Law on or beneath any real Property owned, leased or otherwise used
by the Debtor or allow the same to occur with respect to the Resort; and no
asbestos, urea formaldehyde foam, polychlorinated biphenyls, aluminum wire or
lead-containing paint shall be installed or used on any such Property or the
Resort. The Debtor shall not take or suffer to be taken any act or omission that
would subject it or the Resort to liability under any Environmental Protection
Law which liability could have a material and adverse effect on the business,
prospects, profits, Property or condition (financial or otherwise) of the Debtor
or the Resort.

        The Lender shall have the right, but shall not be obligated, to notify
any state, federal or local governmental authority of information which may come
to its attention with respect to Hazardous Substances on or emanating from the
Resort and the Debtor irrevocably releases the Lender from any claims of loss,
damage, liability, expense or injury relating to or arising from, directly or
indirectly, any such disclosure. The Lender will notify the Debtor prior to or
contemporaneously with any action taken by the Lender pursuant to this
paragraph, provided that the failure by the Lender to provide such notification
shall not affect any action so taken.

        Without limiting the scope and the effectiveness of the foregoing
undertakings in this Section 7.8, the Debtor agrees to indemnify and hold the
Lender harmless from and against any losses, liabilities, damages, claims,
causes of action, costs or expenses (including, without limitation, attorneys'
fees and disbursements), arising from, incurred by, or asserted against, the
Lender in connection with any cleanup, removal or similar protective or remedial
action that may be required or undertaken by any governmental authority as a
result of the presence of any Hazardous Substances at the Resort, the release of
any other Hazardous Substance on or from the Resort or the generation,
treatment, storage, handling or disposal of any Hazardous Substances on or from
the Resort (unless such presence, release, generation, treatment, storage,
handling or disposal is directly caused by the Lender or by any agent of the
Lender acting under the Lender's direct orders). The liability of the Debtor to
the Lender under this paragraph shall survive any assignment, transfer,
discharge or foreclosure of the Inventory Deed of Trust or any transfer of the
Resort (or any portion thereof) by deed in lieu of foreclosure or otherwise, and
any one or more transfers of the Resort (or any portion thereof) by deed or
otherwise, by whosoever made.



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        If the Debtor fails to diligently take any action required under this
Section 7.8 or by any governmental entity with respect to the cleanup, control
or reporting of any Hazardous Substances, materials or wastes in, on, from or
under the Resort, the Lender, at its option, may enter upon the Resort, retain
such experts and consultants at the expense of the Debtor and take such action
as the Lender deems advisable, and the Lender may advance such sums of money as
it deems necessary, with respect to the cleanup, control or reporting of any
such substances, materials or wastes in, on or under the Resort. The Debtor
shall pay to the Lender immediately and upon demand, all sums of money so
advanced or expended by the Lender pursuant to this paragraph, together with
interest on each such advance at the Default Rate, and all such sums, and the
interest thereon, shall be secured by the Collateral. The Lender will notify the
Debtor prior to or contemporaneously with any action taken by the Lender
pursuant to this paragraph, provided that the failure by the Lender to provide
such notification shall not affect any action so taken.

        7.9 TRANSACTIONS WITH AFFILIATES; PRINCIPAL PROPERTIES.

        The Debtor shall not enter into any transaction including, without
limitation, the purchase, sale or exchange of Property or the rendering of any
service with any Affiliate except in the ordinary course of, and pursuant to the
reasonable requirements of, the Debtor's business and upon fair and reasonable
terms no less favorable to the Debtor than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate. Steamboat shall have no
Subsidiaries.

        7.10 USE OF THE LENDER NAME.

        The Debtor shall not, nor shall it permit any Affiliate to, without the
prior written consent of the Lender, use the name of the Lender or the name of
any affiliate of the Lender in connection with any of its respective businesses
or activities, except in connection with internal business matters and as
required in dealings with governmental agencies.

        7.11 SUBORDINATED OBLIGATIONS.

        The Debtor shall not, directly or indirectly, (a) permit any payment to
be made in respect of any indebtedness, liabilities or obligations, direct or
contingent, which are subordinated by the terms thereof or by separate
instrument to the payment of principal of, and interest on, the Notes except in
accordance with the terms of such subordination, (b) permit the amendment,
rescission or other modification of any such subordination provisions of any of
the Debtor's subordinated obligations in such a manner as to affect adversely
the Lender's Lien or the prior position of the Notes, or (c) permit the
unscheduled prepayment or redemption of all or any part of any subordinated
obligations of the Debtor except in accordance with the terms of such
subordination and except as provided in this Section 7.11 in respect of
indebtedness extended to Steamboat by Preferred Equities and except for payments
pursuant to tax sharing agreements. The Debtor shall cause the Guarantor to
subordinate all indebtedness, liabilities or obligations, direct or contingent,
owing to it from the Debtor to the payment of the Obligations. The Debtor shall
cause each of its other Affiliates to subordinate all indebtedness, liabilities
or obligations, direct or contingent, owing to it from the Debtor to the payment
of the Obligations. The terms of such subordination shall be satisfactory to the
Lender. Such subordination may permit payments by the Debtor in respect of such
subordinated indebtedness, liabilities or obligations if (i) in the case of all
such indebtedness other than that owing to Preferred Equities and except for
payments pursuant to tax sharing agreements, such payments are regularly
scheduled payments and the terms of such regularly scheduled payments are
acceptable to the Lender and, in the case of such indebtedness owing to
Preferred Equities, no such payments (whether for interest, principal or
otherwise), shall be permitted or made for so long as the Inventory Loan is
outstanding and thereafter any payments of principal and interest may be made



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(subject to the requirements of clause (ii) and (iii) which follow), (ii) no
Default or Event of Default then exists or, after giving effect to such payment,
would exist and (iii) the Debtor would not be rendered insolvent, made unable to
pay its debts as they come due or be left without adequate capital to pursue its
business after giving effect to such payment.

        7.12 NOTICE OF LEGAL PROCEEDINGS.

        Promptly upon becoming aware of the existence thereof, the Debtor shall
deliver to the Lender written notification of the institution of any litigation,
legal proceeding or dispute with any Person, entity or governmental authority in
any way involving the Debtor, the Guarantor, the Resort, the Collateral or any
of the Debtor's other assets as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, would materially
adversely affect the Debtor, the Guarantor, the Resort the Collateral or any of
the Debtor's other real Property assets.

        7.13 FURTHER ASSURANCES.

        The Debtor shall from time to time execute and deliver to the Lender
such other instruments, certificates and documents and shall take such other
action and do all other things as may from time to time be reasonably requested
by the Lender in order to implement or effectuate the provisions of, or more
fully perfect the rights granted or intended to be granted by the Debtor to the
Lender pursuant to the terms of, this Agreement, the Notes or any other Security
Document. The Debtor agrees, in its capacity as Declarant (to the extent
permitted by applicable law), to cause the Association to take such action and
to do all other things as may from time to time be reasonably requested by the
Lender in order to implement or effectuate the provisions of this Agreement and
the other Security Documents.

        7.14 FINANCIAL STATEMENTS.

        The Debtor shall submit to the Lender the following:

               (a) ANNUAL STATEMENTS -- As soon as practicable after the end of
        each fiscal year of the Debtor, and in any event no later than 120 days
        thereafter, duplicate copies of:

                      (i) a balance sheet of the Debtor (including all assets
               and liabilities of, or in respect of, the Resort) as at the end
               of such fiscal year, and

                      (ii) a statement of income of the Debtor (including the
               operations of the Resort) for such fiscal year, and

                      (iii) a statement of changes in cash flows of the Debtor
               (including the cash flows of, or in respect of, the Resort)
               during such fiscal year, and

                      (iv) a statement of material changes of accounting
               policies, presentations or principles during such fiscal year,
               and

                      (v) notes to such financial statements.

               Each of the above shall have been prepared in reasonable detail
        and in accordance with generally accepted accounting principles,
        procedures and practices consistently applied and shall set forth, in
        each case, in comparative form the figures for the previous fiscal year,
        and shall be certified as complete and correct by the principal
        financial officer of the Debtor. The Debtor shall also deliver to the
        Lender with the above financial statements a report, certified as
        complete



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        and correct by the chief accounting officer of the Debtor, showing all
        sales and cancellations made in respect of Timeshare Intervals at the
        Resort for the fiscal year of the Debtor then most recently ended and in
        respect of which said financial statements shall have been prepared. The
        above financial statements shall be accompanied by a certificate of the
        chief accounting officer of the Debtor, which certificate shall be
        acceptable to the Lender and shall, without qualification, state that
        such financial statements present the financial condition of the Debtor
        and have been prepared in accordance with generally accepted accounting
        principles consistently applied.

               (b) QUARTERLY STATEMENTS -- As soon as practicable after the end
        of each fiscal quarter of the Debtor, and in any event no later than 90
        days thereafter, duplicate copies of:

                      (i) a balance sheet of the Debtor (including all assets
               and liabilities of, or in respect of, the Resort) as at the end
               of such fiscal quarter, and

                      (ii) a statement of income of the Debtor (including the
               operations of the Resort) for such quarter and (in the case of
               the second and third quarters) for the portion of the fiscal year
               ending with such quarter, and

                      (iii) a statement of changes in cash flows of the Debtor
               (including the cash flows of, or in respect of, the Resort)
               during such quarter and (in the case of the second and third
               quarters) for the portion of the fiscal year ending with such
               quarter, and

                      (iv) a statement of material changes of accounting
               policies, presentations or principles during such quarter.

               Each of the above shall have been prepared in reasonable detail
        and in accordance with generally accepted accounting principles,
        procedures and practices consistently applied (other than the
        preparation of notes to such financial statements), subject to changes
        resulting from year-end adjustments, and shall set forth in each case in
        comparative form the figures for the corresponding periods in the
        immediately preceding fiscal year, and shall be certified as complete
        and correct by the chief accounting officer of the Debtor.

               (c) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- Promptly upon
        becoming aware of the existence of any condition or event which
        constitutes a Default or an Event of Default, a written notice
        specifying the nature and period of existence thereof and what action
        the Debtor is taking or proposes to take with respect thereto.

               (d) NOTICE OF CLAIMED DEFAULT -- Immediately upon becoming aware
        that the holder of any obligation or of any evidence of indebtedness or
        other Security of the Debtor or Guarantor has given notice or taken any
        other action with respect to a claimed default or event of default
        thereunder, a written notice specifying the notice given or action taken
        by such holder and the nature of the claimed default or event of default
        and what action the Debtor is taking or proposes to take with respect
        thereto.

               (e) MATERIAL ADVERSE DEVELOPMENTS -- Immediately upon becoming
        aware of any development or other information which may materially and
        adversely affect the Property, business, prospects, profits or condition
        (financial or otherwise) of the Debtor or the ability of the Debtor to
        perform its obligations under this Agreement, the Notes or the other
        Security Documents, telephonic, telefax or telegraphic notice specifying
        the nature of such development or information and the anticipated
        effect.



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               (f) NOTES RECEIVABLE INFORMATION. On or before the 15th day of
        each month, a detailed trial balance of all Pledged Notes Receivable
        together with a detailed report setting forth (i) which of the Pledged
        Notes Receivable are delinquent and the duration of such delinquency,
        (ii) a summary of collections of the Pledged Notes Receivable for the
        preceding month and the balances of the Pledged Notes Receivable as at
        the end of such month, and (iii) such other information, in type and
        scope, as the Lender may reasonably request including, but not limited
        to the updated name, address and telephone number of each purchaser
        whose note has been pledged to Lender. Debtor may discharge its
        obligations under this clause (f) by having the Collection Agent deliver
        the aforesaid information and reports.

               (g) SALES INFORMATION. On or before the 15th day of each month, a
        report showing the previous month's sales of, and cancellations of sales
        of, Timeshare Intervals.

               (h) FINANCIAL INFORMATION. As promptly as possible after the
        receipt thereof, all financial statements, budgets and other information
        distributed by the Association. The Debtor, as Declarant or otherwise,
        shall cause the Association to prepare annual financial statements,
        substantially as provided in clause (a) above, and an annual budget, and
        shall deliver the same to the Lender within 120 days of the end of each
        of its fiscal years.

               (i) REQUESTED INFORMATION -- With reasonable promptness, such
        other data and information as from time to time may be reasonably
        requested by the Lender.

        7.15 OFFICERS' CERTIFICATE.

        The financial statements delivered to the Lender pursuant to Section
7.14(a) and Section 7.14(b) of this Agreement shall be accompanied by a
certificate substantially in the form of Exhibit O of the President or a
Vice-President and the Treasurer or an Assistant Treasurer of the Debtor setting
forth:

               (a) COVENANT COMPLIANCE -- the information (including detailed
        calculations) required in order to establish whether the Debtor was in
        compliance with all financial covenants contained in Section 7 of this
        Agreement during the period covered by the financial statements or
        reports then being furnished; and

               (b) EVENT OF DEFAULT -- that the signers have reviewed the
        relevant terms of the Agreement (and all other agreements and exhibits
        between the parties) and have made, or caused to be made, under their
        supervision, a review of the transactions and conditions of the Debtor
        from the beginning of the period covered by the financial statements or
        reports being delivered therewith to the date of the certificate and
        that such review has not disclosed the existence during such period of
        any condition or event which constitutes a Default or Event of Default
        or, if any such condition or event existed or exists or will exist,
        specifying the nature and period of existence thereof and what action
        the Debtor has taken or proposes to take with respect thereto.

        7.16 INSPECTION.

        The Debtor shall permit the Lender or its representatives to make such
inspections/audits of its books, accounts, records, orders, original
correspondence and such other papers as it may desire and of its premises, the
Resort, the Units, and the other Collateral, from time to time, as the Lender
may in its sole discretion determine. The Debtor shall supply copies of such
records and papers as the Lender may reasonably request, and shall permit the
Lender to discuss the Debtor's respective affairs, finances and accounts with
the Debtor's officers, employees and independent public accountants (and by this
provision the Debtor hereby authorizes said accountants to discuss with the
Lender the finances and affairs of the



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Debtor), all at reasonable times and as often as may be desired by the Lender.
The Debtor further agrees to supply the Lender with such other reasonable
information relating to the Debtor and the Collateral as the Lender may request.
With respect to any inspections and/or audits referred to in this Section 7.16,
the Debtor shall pay for all out-of-pocket costs and reasonable expenses
incurred by the Lender (including, without limitation, travel expenses, but
excluding salaries of employees of the Lender) and shall promptly reimburse the
Lender therefor upon receipt by the Debtor of a written demand therefor from the
Lender.

SECTION 8. EVENTS OF DEFAULT

        8.1 DEFAULT.

        The Debtor hereby covenants, agrees and acknowledges that an Event of
Default shall exist under this Agreement if any of the following events or
conditions (each, an "Event of Default") shall occur and be continuing:

               (a) PAYMENTS -- (i) failure to make any payment of interest on
        the Inventory Note, (ii) failure to make any payment of interest on the
        Receivables Note; (iii) failure to make any payment of principal of, or
        prepayment premium on, any Note; (iv) failure to make any Mandatory
        Receivables Prepayment, whether by payment of money or addition of
        Eligible Note Receivables; or (v) failure to make any other payment
        required pursuant to the terms of this Agreement, the Notes or any other
        Security Document or any instrument securing the Inventory Loan; in
        each case on or before 2 Business Days after the date such payment is
        due; or

               (b) WARRANTIES OR REPRESENTATIONS -- any warranty, representation
        or other statement made or furnished to the Lender by or on behalf of
        the Debtor or Guarantor in this Agreement or any other Security Document
        proves to have been false or misleading in any material respect when
        made or furnished; or

               (c) COLLATERAL AND FINANCIAL COVENANTS -- failure by Debtor to
        comply with any covenant set forth in Section 3.5, Section 3.6, and
        Section 7 of this Agreement; or

               (d) OTHER COVENANTS -- failure by the Debtor to comply with
        Section 2.3(a) of this Agreement and the continuance of such failure for
        more than 2 Business Days after such failure shall have first become
        known to any officer of the Debtor or the failure by the Debtor to
        comply with any other covenant relating to the Debtor contained in this
        Agreement or any other Security Document, and the continuance of such
        failure for more than 20 days after such failure shall have first become
        known to any officer of the Debtor or Guarantor; or

               (e) MATERIAL ADVERSE CHANGE -- any material adverse change in or
        in respect of the Collateral (including, without limitation, the
        termination of any applicable timeshare or condominium regimen {whether
        by consent of the condominium or timeshare owners thereunder or
        otherwise}, any modification or amendment to the Declaration which
        shall, in the opinion of the Lender, adversely affect the Collateral or
        the operations or prospects of the Resort, or the substantial
        destruction of any uninsured Building, or any Unit) or in the financial
        condition of the Debtor or Guarantor; or

               (f) INSOLVENCY -- (i) a receiver, liquidator, custodian or
        trustee of the Debtor or Guarantor, or of all or any of the Property of
        any of them, shall be appointed by court order and such order remains in
        effect for more than 50 days; or an order for relief shall be entered
        with respect to the Debtor or Guarantor, or the Debtor or Guarantor
        shall be adjudicated a bankrupt or insolvent; or any of the Property of
        any of them shall be sequestered by court order and such



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        order remains in effect for more than 50 days; or a petition shall be
        filed against the Debtor or Guarantor under any bankruptcy,
        reorganization, arrangement, insolvency, readjustment of debt,
        dissolution or liquidation law of any jurisdiction, whether now or
        hereafter in effect, and shall not be dismissed within 50 days after
        such filing; or (ii) the Debtor or Guarantor shall file a petition in
        voluntary bankruptcy or seeking relief under any provision of any
        bankruptcy, reorganization, arrangement, insolvency, readjustment of
        debt, dissolution or liquidation law of any jurisdiction, whether now or
        hereafter in effect, or shall consent to the filing of any petition
        against it under any such law; or (iii) the Debtor or Guarantor shall
        make an assignment for the benefit of its creditors, or shall admit in
        writing its inability, or shall fail, to pay its debts generally as they
        become due, or shall consent to the appointment of a receiver,
        liquidator or trustee of the Debtor or Guarantor, or of all or any part
        of the Property of any of them; or

               (g) JUDGMENT -- final judgment or judgments for the payment of
        money, the aggregate of which exceeds $100,000, shall be outstanding
        against one or more of the Debtor and the Guarantor and any of such
        judgments shall have been outstanding for more than 30 days from the
        date of its entry and shall not have been discharged in full or stayed;
        or

               (h) DEFAULT IN LENDER AGREEMENTS -- any default (after giving
        effect to the expiration of any applicable grace periods) under, and as
        defined in the Inventory Loan Agreement or any other agreement, now
        existing or hereafter entered into, between (i) the Debtor and the
        Lender or any affiliate of the Lender, (ii) Preferred Equities and the
        Lender or any affiliate of the Lender (including, without limitation,
        Dorfinco), (iii) Mego Financial and the Lender or any affiliate of the
        Lender (including, without limitation, Dorfinco) or (iv) any Affiliate
        of the Debtor and the Lender or any affiliate of the Lender (including,
        without limitation, Dorfinco); or

               (i) DEFAULT BY DEBTOR IN OTHER AGREEMENTS -- any default by the
        Debtor or Guarantor in the payment of indebtedness for borrowed money;
        any other default under such indebtedness which accelerates or permits
        the acceleration (after the giving of notice or passage of time, or
        both) of the maturity of such indebtedness, whether or not such default
        has been waived by the holder of such indebtedness, provided that any
        such acceleration or permitted acceleration with respect to a default by
        Guarantor shall be an Event of Default only if such acceleration or
        permitted acceleration could reasonably be expected to have a material
        adverse affect on Guarantor and provided further that any default with
        respect to that indebtedness described on Schedule 18 shall not be an
        Event of Default hereunder unless such default becomes an unappealable
        judgement against Debtor; or

               (j) SUSPENSION OF SALES -- the issuance of any stay order, cease
        and desist order or similar judicial or nonjudicial sanction limiting or
        otherwise affecting the sale of Timeshare Intervals in any state or any
        jurisdiction thereof in which the Debtor shall have made a material
        percentage of sales of Timeshare Intervals and any one of such orders or
        sanctions shall have been outstanding for more than 30 days from the
        date of its entry and shall not have been discharged in full or stayed
        by appeal, bond or otherwise; or

               (k) GUARANTY -- any Guaranty Agreement shall have been
        terminated, revoked or declared invalid; or

        8.2 DEFAULT REMEDIES.

               (a) ACCELERATION OF OBLIGATIONS; RIGHT TO DISPOSE OF COLLATERAL.
        If an Event of Default under Section 8.1(f) of this Agreement shall
        occur, then the Obligations shall, automatically and



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        without notice or demand by the Lender, become at once due and payable,
        and the Debtor will forthwith pay to the Lender, in addition to any and
        all sums and charges otherwise due in respect of the Obligations, the
        entire principal of and interest accrued on the Receivables Note and the
        Inventory Note and, to the extent permitted by law, a premium in an
        amount equal to the amount which would be payable if the Debtor then had
        elected to prepay the Receivables Note at a premium pursuant to Section
        2.3 of this Agreement. If any other Event of Default shall occur, all of
        the Obligations shall, at the option of the Lender, and without notice
        or demand by the Lender, become at once due and payable, and the Debtor
        will forthwith pay to the Lender, in addition to any and all sums and
        charges otherwise due in respect of the Obligations, the entire
        principal of and interest accrued on each of the Receivables Note and
        the Inventory Note and, to the extent permitted by law, a premium in an
        amount equal to the amount which would be payable if the Debtor then had
        elected to prepay the Receivables Note at a premium pursuant to Section
        2.3 of this Agreement. The Lender shall have all the rights and remedies
        of a secured party under the Colorado Uniform Commercial Code, all the
        rights and remedies of a beneficiary under the Inventory Deed of Trust
        and all other legal and equitable rights to which it may be entitled,
        including, without limitation and without further notice to Debtor, the
        right to continue to collect all payments being made on the Pledged
        Notes Receivable and to apply such payments to the Obligations and to
        sue in its own name (or the name of the Debtor) the obligor under any
        defaulted Pledged Note Receivable. The Lender shall also have the right
        to require the Debtor to assemble the Collateral, at the Debtor's
        expense, and make it available to the Lender at a place to be designated
        by the Lender, which is reasonably convenient to both parties, and the
        Lender shall have the right to take immediate possession of the
        Collateral and may enter any of the premises of the Debtor or wherever
        the Collateral shall be located, in accordance with applicable law, and
        to keep and store the same on said premises until sold (and if said
        premises be the Property of the Debtor, the Debtor agrees not to charge
        the Lender for storage thereof for a period of at least 90 days after
        sale or disposition of such Collateral). The Debtor and the Lender agree
        that 10 days' notice to the Debtor of any public or private sale or
        other disposition of Collateral shall be reasonable notice thereof and
        such sale shall be at such location(s) as the Lender shall designate in
        said notice. The Lender shall have the right to bid at any such sale on
        its own behalf.

               In view of the fact that federal and state securities laws may
        impose certain restrictions on the methods by which a sale of
        Collateral, if comprised of Securities, may be effected after an Event
        of Default, the Debtor agrees that, upon the occurrence and continuance
        or existence of an Event of Default, the Lender may, from time to time,
        attempt to sell all or any part of such Collateral by means of a private
        placement restricting the bidding and prospective purchasers to those
        who will represent and agree that they are purchasing for investment
        only and not for, or with a view to, distribution. In so doing, and
        without limiting any other means of private placement, the Lender may
        solicit offers to buy such Collateral, or any part of it for cash, from
        a limited number of investors deemed by the Lender, in its reasonable
        judgment, to be responsible parties who might be interested in
        purchasing the Collateral, and if the Lender solicits such offers from
        not less than 4 such investors (and otherwise acts in good faith), then
        the acceptance by the Lender of the highest offer obtained therefrom
        shall be deemed to be a commercially reasonable method of disposition of
        such Collateral.

               (b) APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon
        the occurrence of any Event of Default, the Lender may, with or without
        proceeding with such sale or foreclosure or demanding payment of the
        Obligations, without notice, terminate the Lender's further performance
        under this Agreement to extend Receivables Advances to the Debtor,
        without further liability or obligation by the Lender, and may also, at
        any time, appropriate and apply (as provided below) to any Obligations
        any and all Collateral in its possession and any and all balances,
        credits, deposits, accounts, reserves, indebtedness or other monies due
        or owing to the



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        Debtor held by the Lender hereunder or under any other financing
        agreement or otherwise, whether accrued or not. Neither such
        termination, nor the termination of this Agreement by lapse of time, the
        giving of notice or otherwise, shall absolve, release or otherwise
        affect the liability of the Debtor in respect of transactions prior to
        such termination, or affect any of the Liens, security interests,
        rights, powers and remedies of the Lender hereunder, but they shall, in
        all events, continue until all of the Obligations are satisfied.

               (c) APPLICATION OF PROCEEDS. To the extent permitted under
        applicable law, the proceeds of any exercise of rights with respect to
        Collateral or any part thereof shall be paid to and applied as follows:

                      FIRST, to the payment of

                             (i) all costs and charges in connection therewith,
                      including, without limitation, (A) attorneys' fees for
                      advice, counsel or other legal services, (B) costs and
                      expenses incurred as a result of pursuing, reclaiming,
                      seeking to reclaim, taking, keeping, removing, storing,
                      advertising for sale, selling and foreclosing on the
                      Collateral and any and all other charges and expenses in
                      connection therewith, and (C) any costs and expenses
                      (including, without limitation, costs and expenses in the
                      management and operation of the Resort) provided for in
                      the Assignment of Rents, the Inventory Deed of Trust or
                      any other Security Document,

                             (ii) all taxes, assessments or Liens superior to
                      the Lien of this Agreement or the other Security
                      Documents, except any taxes, assessments or other superior
                      Liens subject to which any sale of Collateral may have
                      been made,

                             (iii) all fees, costs and expenses as set forth in
                      Section 10.2 of this Agreement, and

                             (iv) all Release Fees;

                      SECOND, towards the payment of accrued and unpaid interest
               then due and payable, if any, at the Default Rate in respect of
               the Loan,

                      THIRD, towards the payment of all other accrued and unpaid
               interest, if any, then due and payable in respect of the Loan,

                      FOURTH, to the payment of the principal amount of the Loan
               (and any prepayment premium payable in respect thereof), and

                      FIFTH, to the payment of the surplus, if any, to the
               Debtor, its successors and assigns, or to whomsoever may be
               lawfully entitled to receive the same, provided that if any
               Obligations then due and payable shall not have been paid in
               full, any such surplus shall continue to be held as Collateral
               hereunder and shall continue to be subject to the terms and
               conditions hereof until such Obligations then due and payable
               shall have been paid in full.

               The Debtor shall remain liable hereunder for payment of any
        deficiency owing on the Obligations after application of such proceeds.



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               To the extent that any amount allocated to any of the payment
        categories set forth above is insufficient to fully satisfy all of the
        Obligations referred to in said category, such amount shall be allocated
        ratably to each of such Obligations in accordance with the ratio that
        the amount of such Obligation bears to the aggregate amount of such
        Obligations referred to in such category.

               (d) REMEDIES CUMULATIVE. All covenants, conditions, provisions,
        warranties, guaranties, indemnities and other undertakings of the Debtor
        contained in this Agreement, or in any document referred to herein or
        contained in any agreement supplementary hereto or in any schedule given
        to the Lender or contained in any other agreement between the Lender and
        the Debtor, heretofore, concurrently or hereafter entered into,
        including, without limitation, the Inventory Deed of Trust, shall be
        deemed cumulative to and not in derogation or substitution of any of the
        terms, covenants, conditions or agreements of the Debtor herein
        contained. The failure or delay of the Lender to exercise or enforce any
        rights, Liens, powers or remedies hereunder or under any of the
        aforesaid agreements or other documents or security or Collateral shall
        not operate as a waiver of such Liens, rights, powers and remedies, but
        all such Liens, rights, powers and remedies shall continue in full force
        and effect until the Loan and all other Obligations shall have been
        fully satisfied. All Liens, rights, powers and remedies herein provided
        for are cumulative and none are exclusive.

               The acceptance by the Lender at any time and from time to time of
        partial payments of the Obligations shall not be deemed to be a waiver
        of any Event of Default then existing. No waiver by the Lender of any
        Event of Default shall be deemed to be a waiver of any other or
        subsequent Event of Default. No delay or omission by the Lender in
        exercising any right or remedy under the Security Documents shall impair
        such right or remedy or be construed as a waiver thereof or an
        acquiescence therein, nor shall any single or partial exercise of any
        such right or remedy preclude other or further exercise thereof, or the
        exercise of any other right or remedy under the Security Documents or
        otherwise.

SECTION 9. REVIVAL OF OBLIGATIONS AND LIENS

        The Debtor expressly agrees that if the Debtor makes a payment to the
Lender, which payment or any part thereof is subsequently invalidated, declared
to be fraudulent or preferential, or otherwise required to be repaid to a
trustee, receiver or any other party under any bankruptcy act, state or federal
law, common law or equitable cause, then to the extent of such repayment, the
Obligations or any part thereof intended to be satisfied and the Liens provided
for hereunder securing the same shall be revived and continued in full force and
effect as if said payment had not been made.

SECTION 10. MISCELLANEOUS

        10.1 GOVERNING LAW.

        This Agreement and all transactions, assignments and transfers
hereunder, and all the rights of the parties hereto shall be governed as to the
validity, construction, enforcement and in all other respects by the internal
laws of the State of Colorado. To the extent any provision of this Agreement is
not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.

        10.2 EXPENSES AND CLOSING FEES.



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        Whether or not the transactions contemplated hereunder are completed,
the Debtor shall pay all expenses of Lender relating to negotiating, preparing,
documenting, closing and enforcing this Agreement and relating to the making by
the Lender of any Advances hereunder to the Debtor (the "Loan Costs"),
including, but not limited to:

               (a) the cost of reproducing this Agreement, the Receivables Note,
        and the other Security Documents;

               (b) the fees and disbursements of the Lender's counsel and
        Lender's special Colorado counsel;

               (c) the Lender's out-of-pocket expenses, including, without
        limitation, Lender's out-of-pocket expenses in connection with any
        audits in respect of the Debtor and/or the Collateral conducted by
        Lender prior to the date hereof (but excluding salaries of employees of
        the Lender);

               (d) all fees and expenses (including fees and expenses of the
        Lender's counsel and Lender's special Colorado counsel) relating to any
        amendments, waivers, consents or review of documents in connection with
        any subsequent closings pursuant to the provisions of this Agreement;

               (e) all costs, outlays, attorneys' fees and expenses of every
        kind and character had or incurred in (i) the enforcement of any of the
        provisions of, or rights and remedies under, this Agreement, any
        assignment agreement, or any other Security Document and (ii) the
        preparation for, negotiations regarding, consultations concerning, or
        the defense of legal proceedings involving, any claim or claims made or
        threatened against the Lender arising out of this transaction or the
        protection of the Collateral securing the Obligations, expressly
        including, without limitation, the defense by the Lender of any legal
        proceedings instituted or threatened by any Person to seek to recover or
        set aside any payment or setoff theretofore received or applied by the
        Lender with respect to the Obligations;

               (f) all expenses relating to the maintenance and administration
        of the lock box account or accounts by the Collection Agent;

               (g) all expenses relating to the safekeeping of the Pledged Notes
        Receivable, the Pledged Contracts related thereto and the other
        documents in connection therewith by the Lender (including, without
        limitation, the retention by the Lender of any custodian or trust
        department to safekeep such Pledged Notes Receivable, Pledged Contracts
        and other documents), as set forth in the first paragraph of Section
        3.13 hereof;

               (h) all expenses and fees of the Collection Agent; and

               (i) all taxes levied against or paid by the Lender (other than
        taxes on, or measured by, the income or profits of the Lender) and all
        filing and recording fees, costs and expenses which may be incurred by
        the Lender with respect to the filing or recording of any document or
        instrument relating to the transactions described in this Agreement.



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        10.3 PARTIES, SUCCESSORS AND ASSIGNS.

        This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns (except that the
Debtor may not assign any of its rights hereunder), and all representations,
covenants, provisions and agreements by or on behalf of the Debtor which are
contained in this Agreement shall inure to the benefit of the successors and
assigns of the Lender. Except as provided in this Section 10.3, this Agreement
shall not create and shall not be construed as creating any rights enforceable
by, or benefits in favor of, any Person not a party hereto. If Textron Financial
Corporation shall delegate to any other Person any of its obligations hereunder
to extend Advances to the Debtor, Textron Financial Corporation shall provide to
the Debtor a guaranty of performance of such Person in respect of such
obligations; such guaranty of performance shall be in form and substance
reasonably acceptable to the Debtor.

        10.4 NOTICES.

        All notices or demands by either party to the other relating to this
Agreement shall, except as otherwise provided herein, be in writing and sent by
certified or registered United States mail, first class postage prepaid and
return receipt requested, or by a nationally recognized overnight courier
service with all delivery fees prepaid. Notices shall be deemed received (a) on
the 3rd succeeding Business Day following deposit in the United States mail,
certified or registered and first class postage prepaid and return receipt
requested or (b) upon delivery if sent by nationally recognized overnight
courier with all delivery fees prepaid. Notices and demands shall be addressed,
if to the Debtor, at the mailing address set forth on Schedule 16 to this
Agreement or to such other address as the Debtor may from time to time specify
in writing or, if to the Lender, at the mailing address of the Lender set forth
on Schedule 17 hereto or to such other address as the Lender may from time to
time specify in writing to the Debtor.

        10.5 TOTAL AGREEMENT.

        This Agreement, including the Exhibits, the Schedules and the other
agreements referred to herein, is the entire agreement between the parties
hereto relating to the subject matter hereof, incorporates or rescinds all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof, and may not be changed or terminated orally or by course of
conduct. This Agreement may be modified or changed only in a writing executed by
both the Lender and the Debtor. The failure or delay of the Lender to exercise
or enforce any rights, Liens, powers, remedies, conditions or other terms
hereunder or under any other agreement or instrument executed in connection
herewith shall not operate as a waiver of any such rights, Liens, powers,
remedies, conditions or other terms.

        10.6 SURVIVAL.

        All warranties, representations and covenants made by the Debtor herein
or in any certificate or other instrument delivered by it or on its behalf under
this Agreement shall be considered to have been relied upon by the Lender and
shall survive the delivery to the Lender of the Notes regardless of any
investigation made by the Lender or on its behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Debtor hereunder.

        10.7 LITIGATION.



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        EACH OF THE DEBTOR AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY
BE COMMENCED ARISING OUT OF THIS AGREEMENT, THE NOTES, ANY OTHER SECURITY
DOCUMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER
CAUSE OR DISPUTE WHATSOEVER BETWEEN THE DEBTOR AND THE LENDER OF ANY KIND OR
NATURE.

        THE DEBTOR AND THE LENDER HEREBY AGREE THAT THE FOLLOWING COURTS:

        STATE COURT: COLORADO DISTRICT COURT FOR THE SECOND DISTRICT SITTING AT
DENVER;

        FEDERAL COURT: UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
SITTING AT DENVER,

OR, (TO THE EXTENT PERMITTED BY APPLICABLE COLORADO LAW) AT THE OPTION OF THE
LENDER, ANY OTHER COURT LOCATED IN THE STATE OF COLORADO IN WHICH IT SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH SHALL HAVE SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE DEBTOR AND
THE LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR TO ANY MATTER
ARISING HEREFROM. THE DEBTOR AND THE LENDER EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN ANY SUCH
COURT.

        THE STIPULATIONS OF THE DEBTOR AND THE LENDER IN THIS SECTION 10.7 SHALL
SURVIVE THE FINAL PAYMENT OF ALL OF THE OBLIGATIONS OF THE DEBTOR AND THE
RESULTING TERMINATION OF THIS AGREEMENT.

                                                                INITIALS____/___

        10.8 POWER OF ATTORNEY.

        The Debtor hereby makes, constitutes and appoints the Lender the true
and lawful agent and attorney-in-fact of the Debtor, with full power of
substitution, (a) to receive, open and dispose of all mail addressed to the
Debtor relating to the Pledged Notes Receivable or the Pledged Contracts related
thereto; (b) to open all such mail and remove therefrom any notes, checks,
acceptances, drafts, money orders or other instruments constituting Collateral,
with full power to endorse the name of the Debtor upon any such notes, checks,
acceptances, drafts, money orders, instruments or other documents, and to effect
the deposit and collection thereof (in accordance with the procedures
established therefor in the Agency Agreement), and the Lender shall have the
further right and power to endorse the name of the Debtor on any documents
relating to the Collateral; (c) to execute on behalf of the Debtor assignments,
notices of assignment, financing statements and other public records and notices
in respect of the Pledged Notes Receivable or the Pledged Contracts related
thereto; (d) to notify Makers of Pledged Notes Receivable to make all payments
thereunder directly to the Lender at an address to be designated by the Lender
and to execute and send other notices to Makers of such Pledged Notes Receivable
or the Pledged Contracts related thereto; and (e) to do any and all things
necessary or take action in the name and on behalf of the Debtor to carry out
the intent of this Agreement, including, without limitation, the grant of the
security interest provided herein and to perfect and protect the security
interest granted to the Lender with respect



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<PAGE>   79

to the Collateral and the Lender's rights created under this Agreement. The
Debtor agrees that neither the Lender nor any of its agents, designees or
attorneys-in-fact will be liable for any acts of commission or omission, or for
any error of judgment or mistake of fact or law with respect to the exercise of
the power of attorney granted under this Section 10.8 except for its own gross
negligence or willful misconduct. The power of attorney granted under this
Section 10.8 is coupled with an interest and shall be irrevocable during the
term of this Agreement.

        10.9 SURVIVAL OF INDEMNITIES.

        All indemnities set forth in this Agreement shall survive the execution
and delivery of this Agreement and the execution and delivery of the Notes as
well as the payment in full of the Notes and the otherwise full performance of
this Agreement.

        10.10 CONFLICTING OBLIGATIONS; RIGHTS AND REMEDIES.

        To the extent that the terms of any of the Security Documents contain
conflicting obligations, the terms set forth in this Agreement shall be deemed
to be the controlling terms, provided that all rights and remedies of the Lender
under the Security Documents are cumulative and in addition to every other right
or remedy, and no right or remedy is intended to be exclusive of any other right
or remedy.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

DEBTOR:                                    LENDER:

STEAMBOAT SUITES, INC.                     TEXTRON FINANCIAL CORPORATION


By:                                        By:
    ---------------------------------          ---------------------------------
      Title: President                           Title: Assistant Vice President

[CORPORATE SEAL]


PREFERRED EQUITIES CORPORATION


By:
    ---------------------------------

Title:

[CORPORATE SEAL]






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<PAGE>   80


STATE OF              )
                      )  ss.
COUNTY OF             )

        At __________ in said County and State on this ___ day of _______, 1999,
personally appeared ___________________, duly authorized officer of Steamboat
Suites, Inc., and he/she acknowledged the foregoing instrument by him/her signed
and sealed to be his/her free act and deed and the free act and deed of
Steamboat Suites, Inc.

        Before me:
                                   Notary Public in and for said State
                                   My Commission expires:



STATE OF              )
                      )  ss.
COUNTY OF             )

        At _________ in said County and State on this ___ day of December, 1999,
personally appeared _____________, duly authorized officer of Preferred Equities
Corporation, and he/she acknowledged the foregoing instrument by him/her signed
and sealed to be his/her free act and deed and the free act and deed of
Preferred Equities Corporation.

        Before me:
                                   Notary Public in and for said State
                                   My Commission expires:

STATE OF                     )
                             )  ss.
COUNTY OF                    )

        At _______________ in said County and State on this ___ day of December,
1999, personally appeared _________________, duly authorized officer of Textron
Financial Corporation, and he/she acknowledged the foregoing instrument by
him/her signed and sealed to be his/her free act and deed and the free act and
deed of Textron Financial Corporation.

        Before me:
                                   Notary Public in and for said State
                                   My Commission expires:





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