<PAGE>
 

                                                                   Exhibit 10.21


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                          LOAN AND SECURITY AGREEMENT

                         dated as of November 1, 1997

                                    between

                       VISTANA TIMESHARE MORTGAGE CORP.
                                 as Borrower,

                                      and

              DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES
                                   as Lender






================================================================================
<PAGE>


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
1.   DEFINITIONS...............................................................1

2.   LOAN COMMITMENT; USE OF PROCEEDS.........................................24
     2.1  Agreement to Lend Contingent Upon Performance.......................24
     2.2  One Loan............................................................24
     2.3  The Note............................................................24
     2.4  Repayment...........................................................24
     2.5  Interest Payments...................................................25
     2.6  Repayments..........................................................25
     2.7  Optional Prepayment of Principal....................................25
     2.8  Manner of Payment...................................................25
     2.9  Extension of Maturity...............................................25
     2.10 Default Rate........................................................26
     2.11 Computation of Interest.............................................26
     2.12 Use of Proceeds.....................................................26
     2.13 Exit Fee Payments...................................................26
     2.14 Securitization......................................................26

3.   DESIGNATED RECEIVABLES COLLATERAL SECURITY...............................27
     3.1  Grant of Security Interest..........................................27
     3.2  Replacements of Ineligible Instruments..............................27
     3.3  Maintenance of Security Documents...................................28
     3.5  Release of Excess Collateral........................................28
     3.6  Release of Collateral Upon Repayment................................28

4.   ADVANCES.................................................................29
     4.1  Conditions to  Advances.............................................29
          (a)  Conditions Precedent to the Initial Advance....................29
          (c)  Conditions Precedent to Each Advance...........................32
          (d)  Conditions Precedent for Subsequent Advances...................34
     4.2  Form of Request; Timing.............................................34
     4.3  Disbursement of Advances............................................34
     4.4  No Waivers of Conditions Precedent..................................34

5.   NOTE, MAINTENANCE OF BORROWING BASE; PAYMENTS; SERVICING AND COLLECTION..34
     5.1  Repayment of Loan...................................................34
     5.2  [Reserved]..........................................................34
     5.3  Lockbox Bank; Servicer; Financial Reports...........................34
     5.4  Application of Payments.............................................35
</TABLE>

                                      -i-
<PAGE>
 

<TABLE>
<CAPTION>
<S>                                                                         <C>
     5.5  Obligations Absolute................................................35

6.   BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.....................36
     6.1  Representations and Warranties of the Borrower......................36
          (a)  Special Purpose Entity.........................................36
          (b)  Collateral.....................................................36
          (c)  Ownership......................................................36
          (d)  Organization and Good Standing.................................36
          (e)  Due Qualification..............................................36
          (f)  Power and Authority............................................36
          (g)  Binding Obligation.............................................36
          (h)  No Violation...................................................37
          (i)  Consents.......................................................37
          (j)  No Proceedings.................................................37
          (k)  Solvent........................................................37
          (l)  Collateral.....................................................37
          (m)  Nonconsolidation...............................................37
          (n)  Security Interest..............................................38
          (o)  No Other Security Interests....................................38
          (p)  Correct Copies.................................................38
          (q)  No Defaults....................................................39
          (r)  Notices of Defaults............................................39
          (s)  No Set-Offs....................................................39
          (t)  Margin Stock...................................................39
          (u)  Taxes..........................................................39
          (v)  ERISA..........................................................40
          (w)  Securities Law.................................................40
          (x)  Compliance with Law............................................40
          (y)  Eligible Instruments...........................................41
          (z)  Omissions and Statements.......................................41
          (aa) No Indebtedness................................................41
          (bb) Mortgage Document Representations..............................41
          (cc) Survival of Representations and Warranties.....................41
     6.2  Affirmative Covenants of the Borrower...............................41
          (a)  Special Purpose Entity.........................................42
          (b)  Tax Returns....................................................42
          (c)  Principal Place of Business....................................42
          (d)  Originator Defaults............................................42
          (e)  Security Interest in Future Collateral.........................42
          (f)  Servicer's Reports, Monthly Reports............................42
          (g)  Notice Upon Event of Default...................................42
          (h)  Other Information..............................................43
          (i)  Existence; Compliance with Law.................................43
</TABLE>

                                     -ii-
<PAGE>
 

<TABLE>
<CAPTION>
<S>                                                                         <C>
          (j)  Taxes and Other Liabilities....................................43
          (k)  Inspection Rights; Assistance..................................43
          (l)  Supplemental Disclosure........................................43
          (m)  Notice of Liens................................................43
          (n)  Performance Obligations........................................44
          (o)  Documentation; Further Assurances..............................44
          (p)  Assumption of Purchaser's Obligations..........................44
          (q)  Collection of Payments.........................................44
          (r)  Lender as Additional Insured...................................44
          (s)  No Indebtedness................................................45
          (t)  Payment of Fees and Expenses...................................45
          (u)  Indemnification................................................45
     6.3  Borrower's Negative Covenants.......................................46
          (a)  Liens; Negative Pledges; and Encumbrances......................46
          (b)  Disposition of Assets..........................................46
          (c)  No Subsidiaries................................................46
          (d)  Amendments of Organizational Documents.........................46
          (e)  Events of Default..............................................46
          (f)  Other Activities of Borrower...................................46
          (g)  No Advances....................................................47
          (h)  Existence; Qualification.......................................47
          (i)  Other Transactions.............................................47
          (j)  Validity of Liens..............................................47
          (k)  Extensions.....................................................47
          (l)  ERISA..........................................................47
          (m)  No Modifications of Instruments................................47
          (n)  No Modification of Timeshare Documents.........................48
          (o)  No Distributions...............................................48
          (p)  Securities Law.................................................48
          (q)  Additional Insurance...........................................48
          (r)  No Petition....................................................48
     6.4  Notification of Originators.........................................48
     6.5  Inspection..........................................................49
     6.6  Supplemental Nature of Article 6....................................49

7.   DEFAULT..................................................................49
     7.1  Events of Default...................................................49
     7.2  Remedies............................................................51
     7.3  Application of Funds Received.......................................52
     7.4  Foreclosure.........................................................52
     7.5  Proceeds from Sale of Collateral....................................52
     7.6  Performance by Lender...............................................53
     7.7  Remedies Non-Exclusive..............................................53
</TABLE>

                                     -iii-
<PAGE>


<TABLE>
<CAPTION>
<S>                                                                         <C>
     7.8  Waiver..............................................................53
     7.9  Power of Attorney...................................................53

8.   MISCELLANEOUS............................................................53
     8.1  Payment of Funds to Lender..........................................53
     8.2  Merger..............................................................53
     8.3  Powers Coupled with an Interest.....................................54
     8.4  Counterparts........................................................54
     8.5  Notices.............................................................54
     8.6  Assignees of Borrower and Lender....................................54
     8.7  Unenforceability....................................................55
     8.8  Time is of the Essence..............................................55
     8.9  Delay not Waiver....................................................55
     8.10 Headings............................................................55
     8.11 CHOICE OF LAW: JURISDICTION: VENUE AND WAIVER OF JURY TRIAL.........55
     8.12 Usury Law...........................................................57
     8.13 NO LIABILITY TO PURCHASERS..........................................57
     8.14 Reserved............................................................57
     8.15 Reliance by Lender..................................................57
     8.16 Termination; Survival...............................................57
     8.17 Amendments..........................................................57
     8.18 Marshalling; Payments Set Aside.....................................58
     8.19 No Set-Offs by Borrower.............................................58
     8.20 Equitable Relief....................................................58
     8.21 Waiver of Punitive Damages..........................................58
     8.22 General Interpretive Principals.....................................58
</TABLE>

                                     -iv-
<PAGE>
 

                               LIST OF EXHIBITS

                            [intentionally omitted]

<TABLE> 
<CAPTION> 
<C>            <S> 
Exhibit A      Assignment of Mortgage(s) (Fee Simple Timeshare Instruments)
            
Exhibit B      Form of Transfer Agreement
            
Exhibit C      Servicer Report
            
Exhibit D      Promissory Note
            
Exhibit E      Permitted Encumbrances
            
Exhibit F      List and Description of Timeshare Projects, Resorts and Related
               Real Property
            
Exhibit G      Borrower's Certificate pursuant to Section 3.2 of the Loan and
               Security Agreement
            
Exhibit H      Assignment of Mortgage(s) (Fee Simple Timeshare Instruments)
               pursuant to Section 3.2 of the Loan and Security Agreement
            
Exhibit I      Notice of Defaulted Instrument
            
Exhibit J      Request for Advance and Certification pursuant to Section 3.2 of
               the Loan and Security Agreement
            
Exhibit K      Reserved
            
Exhibit L      Real Estate Due Diligence Checklist
</TABLE> 

                                      -v-
<PAGE>
 
                          LOAN AND SECURITY AGREEMENT

          LOAN AND SECURITY AGREEMENT ("Agreement") dated as of November 1,
1997, by DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES, a New York State
licensed branch of a bank incorporated in the Federal Republic of Germany and
licensed to operate branches in New York State and the Cayman Islands (together
with its successors and assigns, "Lender"), and VISTANA TIMESHARE MORTGAGE
CORP., a Delaware corporation ("Borrower").

                                   RECITALS:

          A.  WHEREAS Borrower has requested that Lender make a revolving loan
("Loan") secured by certain level pay promissory notes and related mortgages on
timeshare interests, the Loan to be in the maximum principal amount of
$70,000,000;

          B. WHEREAS Lender desires to make such Loan to Borrower;

                                   AGREEMENT

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto do hereby
agree as follows:

      1.  DEFINITIONS

          As used in this Agreement and the other Documents (as defined below)
unless otherwise expressly indicated in this Agreement or the other Documents,
the following terms shall have the following meanings (such meanings to be
applicable equally both to the singular and plural terms defined).  Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Transfer and Servicing Agreement.


          1.1  "Advance":  an advance of the proceeds of the Loan by Lender to
Borrower in accordance with the terms and provisions of this Agreement.

          1.2  "Adverse Financial Conditions": the per annum coupon rate
inclusive of any letter of credit cost ("Anticipated Rate") of any single class
debt securities (the "Anticipated Securities") to be issued during the 180-day
period following receipt by Lender of a Notice to Securitize in connection with
any Securitization transaction sponsored by the Borrower and secured by the
Collateral would be reasonably likely to be greater than a spread of 2.25% over
the yield to maturity of the U.S. treasury security having a maturity most
nearly equal to the weighted average life of the Anticipated Securities ("Target
Rate"), provided however, that if (i) the face amount of the letter of credit to
be issued or arranged by the Lender or its Affiliate as credit enhancement in
connection with such Securitization is at least $20,000,000, (ii) the
Anticipated Securities are 
<PAGE>
 
reasonably likely to be rated less than A by DCR ("Rating Failure"), (iii) the
Anticipated Rate is expected to be greater than the Target Rate because of the
Rating Failure and (iv) it is anticipated that there would not be a Rating
Failure but for potential adverse tax liability to the anticipated issuer of
Anticipated Securities due to the exposure of such issuer to the tax liabilities
of Vistana or any Affiliate thereof, such reasonable likelihood of a failure to
meet the Target Rate shall not constitute an Adverse Financial Condition.

          1.3  "Affiliate":  with respect to any individual or entity, any other
individual or entity that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such individual or entity.

          1.4  "Agents":  the Servicer, Custodian and the Lockbox Bank.

          1.5  "Anticipated Securities":  has the meaning set forth in the
definition of "Adverse Financial Condition" herein.

          1.6  "Applicable Usury Law":  any or all of the usury laws,
regulations and rules that apply to, when used with respect to any Mortgage
Loan, such Mortgage Loan, and, when used with respect to the Note, the Note.

          1.7  "Articles of Organization":  the charter, certificate of
incorporation, certificate of trust, trust agreement, articles, operating
agreement, partnership agreement, by-laws and any other written documents
evidencing the formation, organization and continuing existence of the entity
related thereto.

          1.8  "Assignment of Mortgage":  a written assignment of one or more
specific Mortgages (and, only when delivered to Lender in blank) relating to one
or more Instruments  in recordable form, sufficient under the laws of the
jurisdiction wherein the related Unit is located to give record notice of a
transfer of a Mortgage and its proceeds, delivered by Borrower to Lender in the
form of Exhibit A.

          1.9  "Association": the Timeshare Association related to the pertinent
Time Share Interest.

          1.10 "Bankruptcy Code":  the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.

          1.11 "Borrower": Vistana Timeshare Mortgage Corp., a Delaware
Corporation, and, subject to the restrictions on merger, consolidation and
assignment contained in the Documents, its permitted successors and assigns.

                                       2
<PAGE>
 
          1.12 "Borrowing Base": with respect to an Eligible Instrument, shall
be an amount equal to the product of (i) the Borrowing Base Percentage
multiplied by (ii) the unpaid principal balance of such Eligible Instrument and,
with respect to all Eligible Instruments in the aggregate, shall be an amount
equal to the product of (i) the Borrowing Base Percentage, multiplied by (ii)
the aggregate Outstanding principal balance of all such Eligible Instruments
constituting Designated Receivables Collateral hereunder then owned by the
Borrower.

          1.13 "Borrowing Base Percentage":  ninety percent (90%).

          1.14 "Borrowing Term":  the period commencing on the Closing Date and
terminating upon the close of business 364 days thereafter, and as the same may
be extended any number of times by the Lender, in its sole discretion, for a 364
day period that commences upon the date upon which the Borrowing Term would have
expired but for the Lender's election to so extend (each such date upon which
such extension occurs, an "Extension Commencement Date"); provided that the
Lender shall have delivered at least sixty (60) days prior to such Extension
Commencement Date written notice to the Borrower that sets forth the Lender's
decision to make or not to make such election, as the case may be, or such
shorter period of time as is acceptable to the Borrower, provided, further, that
if the Lender shall not provide any notice of its intention to so extend, any
Advance extended to the Borrower after the expiry of such 60 day period shall be
conclusive evidence of acceptability to the Borrower.

          1.15 "Business Day":  any day other than a Saturday, Sunday or a day
on which banks in New York, New York or the State of Florida (and, with respect
to the calculation of LIBOR, London, England) are required or permitted to
close.

          1.16 "Certificate of Borrower": a certificate from the Borrower as
required pursuant to Section 3.2 hereof and substantially in the form of Exhibit
G hereto.

          1.17 "Closing Date": November 25, 1997.

          1.18 "Collateral": (a) the Designated Receivables Collateral, (b) any
and all other assets now or hereafter serving as security for the Performance of
the Obligations, (c) the Borrower's rights in, to and under the Transfer and
Servicing Agreement, (d) rights of the Intermediary Corporation in, to and under
each Transfer Agreement transferred to the Borrower pursuant to the Transfer and
Servicing Agreement, (e) any other rights acquired by the Borrower pursuant to
the Documents, (f) any rights of the Borrower, the Intermediary Corporation, and
each Originator in, to and under any interest rate swap agreement pertaining to
or otherwise directly affecting the Loan or any and each of the Mortgage Loan
Coupon Rates that are Mortgage Loan Coupon Rates related to Designated
Instruments and (g) all products, income and proceeds from any of the foregoing.

          1.19 "Collection Account": an account at Dresdner Bank AG New York and
Grand Cayman Branches, account number 100869-15, Account Name Vistana Timeshare
Mortgage Corp. Collection Account.

                                       3
<PAGE>
 
          1.20  "Collection Period": from the opening of business on the first
day to and including the close of business on the last day of, in either case,
each calendar month during the Term, provided, however, that the last Collection
Period shall terminate simultaneously with the expiration of the Borrowing Term.
With respect to any Payment Date, the Collection Period related thereto shall be
deemed to be the Collection Period occurring immediately prior to such Payment
Date.

          1.21 "Credit and Collection Policies":  the credit and collection
policies of the Servicer.

          1.22 "Custodial Agreement": the document dated the Closing Date among
the Borrower, the Lender and the Custodian whereby the Custodian will take
possession of the Designated Instruments on behalf of Lender, and as the same
may be from time to time renewed, amended, restated or replaced.

          1.23 "Custodian": First Union National Bank, a national banking
association,  and its permitted successors as Custodian, under the Custodial
Agreement.

          1.24 "Custodian's Certificate": a certificate substantially similar to
Exhibit B of the Custodial Agreement and required to be received by the Lender
prior to the making of any Advance, as further described in Article Four hereof.

          1.25 "Custodian's Fee": shall be as provided in the Custodial
Agreement.

          1.26 "DCR":  Duff and Phelps Credit Rating Co. and its successors.

          1.27 "Default Rate": a rate per annum equal to the sum of (i) LIBOR
plus (ii) 2.75%.

          1.28 "Defaulted Instrument": a Designated Instrument that shall be
deemed defaulted at the earlier of the date on which (i) the Servicer has
determined, in its sole discretion, in accordance with the Servicing Standard,
that such Designated Instrument is not collectible, (ii) all or part of a
Scheduled Payment thereunder is more than 60 days delinquent as of the last day
of any calendar month or (iii) otherwise ceases to be an Eligible Mortgage Loan.

          1.29 "Designated Instrument":  an Instrument which has been endorsed
by Borrower to Lender and which, as of the Transfer Date related thereto, (a)
satisfies each of the representations made with respect to it under Section 2.03
of the Transfer Agreement related to it, (b) does not otherwise cause a breach
of any other representation or warranty set forth in such Section 2.03 and (c)
is not 60 days or more past due at the end of the calendar month immediately
preceding such Transfer Date, and such endorsement has not been released.

                                       4
<PAGE>
 
          1.30  "Designated Receivables Collateral":  all Designated Instruments
which have not been previously replaced pursuant to Section 3.2 hereof, their
proceeds, and that other part of the Receivables Collateral related to the
Designated Instruments.

          1.31 "Determination Date":  with respect to a Payment Date, the date
which is the fourteenth Business Day of the calendar month in which such Payment
Date occurs, provided, however, that in no event shall such Determination Date
be later than one Business Day prior to such Payment Date.

          1.32 "Document Default": any one or more of the following: (a) an
Event of Default hereunder, (b) a Servicer Default, (c) a Guarantor Default or
(d) any "Default" or other Event of Default as defined in any Document.

          1.33 "Documents":  the Note, each Security Document, the Lockbox
Agreement, each Transfer Agreement, the Custodial Agreement, the Transfer and
Servicing Agreement, the Guaranty and all other documents executed in connection
with the Loan, as they may be from time to time renewed, amended, restated or
replaced.

          1.34 "Eligible Instrument":  a Designated Instrument which evidences
debt of an Eligible Mortgage Loan, as defined in the Transfer Agreement under
which such Designated Instrument is sold, transferred, conveyed and assigned to
the Intermediary Corporation.  An Instrument that has qualified as an Eligible
Instrument shall cease to be an Eligible Instrument upon the date of the first
occurrence of any of the following: (a) any installment due with respect to that
Instrument becomes more than 60 days past due as of the last day of any calendar
month; or (b) the Eligible Mortgage Loan as defined in the related Transfer
Agreement related to such Designated Instrument ceases to be an Eligible
Mortgage Loan or becomes a Defaulted Mortgage Loan.

          1.35 "Environmental Laws":  all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act.

          1.36 "ERISA":  the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

          1.37 "Event of Default":  the meaning set forth in paragraph 7.1
hereof.

          1.38 "Excess Interest": as set forth in Section 8.12 hereof.

                                       5
<PAGE>
 
          1.39 "Exit Fee": means the product, expressed in dollars, of 0.0035
and (i) with respect to repurchases of Instruments made under Section 2.13(b)
hereof, the aggregate Borrowing Base Percentage of the Outstanding principal
balance of such Instruments, and (ii) with respect to payment of the Exit Fee
pursuant to Section 2.13(a) hereof, the Borrowing Base Percentage of the
Outstanding principal balance of all Instruments that have been endorsed by
Borrower to Lender and which, before the date on which the Exit Fee is due
pursuant to Section 2.13(a), such endorsement has not been released; provided,
however, that the total Exit Fee during the initial Borrowing Term if a
Securitization has not been completed for reasons other than due to the
existence of an Adverse Financial Condition shall not be less than $175,000.00.

          1.40 "Extension Commencement Date": as set forth in the definition of
"Borrowing Term" above.

          1.41 "Federal Reserve Board":  the Board of Governors of the Federal
Reserve System and any successor thereto.

          1.42 "GAAP":  generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

          1.43 "Governmental Authority": (a) any federal, state, county,
municipal or foreign government, or political subdivision, (b) any governmental
or quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.

          1.44 "Grant":  grant, bargain, sell, convey, assign, transfer,
mortgage, pledge, create and perfect a Security Interest in and right of set-off
against, deposit, set over and continue.

          1.45 "Guarantor": Vistana.

          1.46 "Guarantor Default": as defined in Section 5.1 of the Guaranty.

          1.47 "Guaranty": the Guaranty, dated as of the Closing Date, executed
by Guarantor in favor of the Lender, as the same may be amended from time to
time.

          1.48 "Hazard Insurance Documents": all current insurance documentation
that exists with respect to a Unit related to a  Designated Instrument and that
pertains to damage or loss

                                       6
<PAGE>
 
of economic value that such Unit may suffer as a result of fire, flood,
earthquakes, volcanoes, wind or any other type of storm, typhoon, Act of God or
other similar event.

          1.49 "Incipient Default": an event which, after notice and/or lapse of
time, would constitute an Event of Default.

          1.50 "Income Taxes":  any federal, state, local or foreign taxes based
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, and any minimum taxes or
withholding taxes based upon any of the foregoing, including any penalties,
interest or additions to tax imposed with respect thereto.

          1.51 "Indebtedness":  as to any Person, (a) all indebtedness of such
Person for borrowed money, (b) all leases of equipment of such Person, including
all capital leases of such Person, (c) any obligation of such Person for the
deferred purchase price of Property or services (other than trade or other
accounts payable in the ordinary course of business and not more than ninety
(90) days past due), (d) any obligation of such Person that is secured by a Lien
on assets of such Person, whether or not that Person has assumed such obligation
or whether or not such obligation is non-recourse to the credit of such Person,
(e) obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person and (f) any
obligation of such Person to reimburse the issuer of any letter of credit issued
for the account of such Person upon which a draw has been made.

          1.52 "Independent Director": with respect to a corporation, a director
of the corporation, and, with respect to a trust,  a trustee of such trust who,
in each of the foregoing cases, shall at no time be, or have been, a director,
officer, member, trustee, or partner of, be employed by, or hold any beneficial
or economic interest in any Affiliate of such corporation or trust, as the case
may be, or, indirectly or directly, gain any benefit from, engage in any
activity (other than as contemplated herein) with, or be controlled or
influenced by, any Affiliate of such corporation and who shall at no time hold
any beneficial or economic interest in such corporation or trust, as the case
may be.  For the purpose of the preceding sentence, "Affiliate" shall mean any
Person other than such corporation or trust, as the case may be (i) which owns
beneficially, directly or indirectly, 10% or more of the outstanding shares of
common stock of the corporation or beneficial interest of such trust; or (ii) of
which 10% or more of the outstanding shares of its common stock or trust
certificates, as the case may be, is the owned beneficially, directly or
indirectly, by any entity described in clause (i) above, (iii) which is
"controlled", as defined in Section 230.405 of the Rules and Regulations of the
Securities and Exchange Commission, 17 C.F.R. Section 230.405 by an entity
described in clause (i) above or (iv) receives a substantial income from such
corporation or trust.

          1.53 "Independent Public Accountant":  any of (a) Arthur Andersen &
Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst & Young (e) KPMG
Peat Marwick and (f) Price Waterhouse and (g) any successors thereof; provided,
that such firm is independent with respect to the Servicer, as the case may be,
within the meaning of the Securities Act of 1933, as amended.

                                       7
<PAGE>
 
          1.54 "Ineligibility Date": with respect to any Instrument, the earlier
of (a) Borrower having obtained Knowledge the Instrument is, or will become an
Ineligible Instrument or (b) the Instrument ceasing to qualify as an Eligible
Instrument.

          1.55 "Ineligible Instrument":  an Instrument that either (a) was, and
subsequently ceases to be, an Eligible Instrument or (b) was not an Eligible
Instrument at the time such Instrument was assigned to Lender.

          1.56 "Initial Instruments":  each Instrument delivered to the
Custodian in connection with the initial Advance under this Agreement.

          1.57 "Instrument":  with respect to each Timeshare Interest, the
original executed promissory note evidencing the indebtedness of a Mortgagor in
connection with the sale of a Timeshare Interest by a Timeshare Developer to
such Mortgagor as Purchaser thereunder.

          1.58 "Insurance Policies": the insurance policies that (a) the
Borrower is required to cause to be maintained and delivered pursuant to Section
6.2(r) hereof and (b) property insurance, Hazard Insurance, private mortgage
insurance (but without implying any obligation on the part of Borrower to
provide same) and the flood insurance (if any) and the Title Policies (Mortgage)
that exist and pertain to the related Timeshare Interest or Unit, as applicable.

          1.59 "Interest":  the amount of interest payable by the Borrower on
the Note in accordance with the terms and conditions thereof and hereof.

          1.60 "Interest Collection Period": with respect to each Advance, that
portion of the Interest Period related thereto that falls within one Collection
Period.

          1.61 "Interest Period":  when used in the singular, any one of, and,
when used in the plural, each thirty (30) day period commencing upon, and
inclusive of, the first day of the Advance related thereto, concluding upon, and
inclusive of, the last day of such thirty (30) day period, provided that, the
final Interest Period shall conclude upon the Maturity Date of the Loan.

          1.62 "Interest Rate": with respect to each Interest Period a rate per
annum equal to the sum of (i) LIBOR plus (ii) one hundred basis points per
annum, provided, however, that in the event that all principal and Interest due
under the Note shall not be paid upon the end of the Maturity Date, then the
Interest Rate applicable to all Outstanding payments of Interest shall be the
Default Rate.

          1.63 "Intermediary Corporation": VTM Corp., a Delaware corporation
having its chief executive offices at c/o VCH Administration, Inc., 8801 Vistana
Centre Drive, Orlando, Florida 32821.

                                       8
<PAGE>
 
          1.64  "Interstate Land Sales Full Disclosure Act": Interstate Land
Sales Full Disclosure Act, as amended.

          1.65 "Investment Company Act":  the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.

          1.66 "Knowledge":  as to any natural person, the actual awareness of
the fact, event or circumstance at issue or proper delivery of notification of
such fact, event or circumstance at the place held out by such person as the
place for receipt of such communications and, as to any Person that is not a
natural Person, that (i) the fact, event or circumstance at issue is brought to
the attention of a Responsible Officer or (ii) notice has been delivered to such
Person in accordance with the provisions of the relevant Documents; provided,
however, that each such Person that is not a natural person shall be deemed to
have Knowledge of any fact, event or circumstance if such fact, event or
circumstance should have been known or would have been brought to the attention
of a Responsible Officer if the Person had exercised commercially reasonable due
diligence.

          1.67 "Lender":  Dresdner Bank AG New York and Grand Cayman Branches
and its permitted successors and assigns.

          1.68 "Lender's Attorneys Fee": lender's attorney's fees with respect
to the closing and post-closing plus disbursements (which, through November 25,
1997, are $121,307.18, which figures reflect the fee cap of $50,000 through
October 31, 1997), and with respect to any Advance thereafter, the reasonable
fees and disbursements of Lender's counsel incurred in connection with such
Advance as determined by Lender in its sole discretion.

          1.69 "Lender's Bill":  as set forth in Section 5.3(b) hereof.

          1.70 "LIBOR": the offered rate for United States dollar deposits for
30 days appears on Telerate Page 3750 as of 11:00 A.M., London Time, on such
LIBOR Determination Date; provided that if such rate does not appear on Telerate
page 3750 on any LIBOR Determination Date, the Lender will request each of the
reference banks (which shall be major banks that are engaged in transactions in
the London interbank market selected by the Lender) to provide the Lender with
its offered quotation for United States dollar deposits for one month to prime
banks in the London interbank market as of 11:00 A.M., London time, on such
date.  If at least two reference banks provide the Lender with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest one-sixteenth (1/16) of 1% of all such quotations.  If
on such date fewer than two reference banks provide the Lender with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest one-sixteenth (1/16) of 1% of the offered per annum
rates that one or more leading banks in the City of New York selected by the
Lender are quoting as of 11:00 A.M., New York City time, on such date to leading
European banks for United States dollar deposits for one month.  If such banks
in the City of New York are not quoting as provided above, LIBOR for such date
will be LIBOR as determined

                                       9
<PAGE>
 
by the Lender using such method as it shall deem reasonable under the
circumstances.  The establishment of LIBOR by the Lender in the absence of
manifest error shall be final and binding.

          1.71 "LIBOR Determination Date":  the second Business Day prior to the
first day of the applicable Interest Period.

          1.72 "Lien":  any mortgage, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge upon any and,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

          1.73 "Line of Credit Agreement": the Line of Credit Agreement, dated
the date hereof, among Lender, Vistana and Vistana Development, Ltd., as the
same may be amended from time to time.

          1.74 "Loan":  the Loan of up to $70,000,000.00 evidenced by the Note.

          1.75 "Loan Event of Default": an Event of Default hereunder.

          1.76 "Lockbox Agreement":  each agreement made between the Lender, the
Borrower, the Servicer and the Lockbox Bank, which provides for the Lockbox Bank
to collect through a lockbox payments made on Instruments constituting part of
the Designated Receivables Collateral and to remit them to the Collection
Account, subject to the provisions of Section 5.3 hereof, as it may be from time
to time renewed, amended, restated or replaced.

          1.77 "Lockbox Bank": First Union National Bank, a national banking
association, and its permitted successor as Lockbox Bank under the Lockbox
Agreement.

          1.78 "Lockbox Bank Fee": as provided in the Lockbox Agreement.

          1.79 "Management Agreement(s)":  any management agreement now or
hereafter existing by and between a Manager and the Association related to the
Resort managed pursuant to such Management Agreement and as the same may be as
amended, renewed, restated or replaced in which a Person agrees to perform
certain management services with respect to any Unit related to the Collateral
on behalf of the Originator that owns such Unit.

          1.80 "Manager":  a Person with whom an Association enters into a
Management Agreement.  As of the Closing Date, such Managers were Points of
Colorado, Inc., with respect to Eagle Pointe and Falcon Pointe, Resort Advisory
Group, Inc., with respect to Christie Lodge and Vistana MB Management, Inc. with
respect to Embassy Vacation Resort at Myrtle Beach.

                                       10
<PAGE>
 
          1.81 "Material Adverse Effect":  any set of circumstances or events
which (a) has, or would reasonably be expected to have, any material adverse
effect whatsoever upon the validity or enforceability of any Document against
any Vistana Transaction Entity or Agent(s), including the Note; (b) is, or would
reasonably be expected to be, material and adverse to the condition (financial
or otherwise) or business operations of any Vistana Transaction Entity or
constitute grounds for the revocation of any license, charter or permit material
to the conduct of such Person's business and a suspension of sales or a
liability incurred outside the ordinary course of business with respect to
Borrower or the Intermediary Corporation, in an amount greater than $10,000 or,
with respect to any Originator or any Servicer, in an amount greater than
$250,000 or, with respect to Vistana, in an amount greater than $1,000,000 or
more shall be deemed such a material and adverse effect; (c) materially impairs,
or could reasonably be expected to materially impair, the ability of any Vistana
Transaction Entity to perform any of its obligations under any of the Documents;
(d) materially and adversely affects any Resort related to any Timeshare
Interest comprising any part, or all, of the Collateral as of the date of
determination which is not fully covered by insurance; (e) materially impairs,
or would reasonably be expected to materially impair, the ability of the
Custodian, Lender or any Trustee or Noteholder to enforce any of the remedies
set forth in, or any interest under, any of the Documents such that the
Documents do not contain adequate provisions for the practical realization of
the rights and benefits afforded thereby; (f) materially and adversely affects
or would reasonably be expected to materially impair the interests of the
Custodian, Lender, any Trustee or any Noteholder in the Collateral including the
Grant of the Security Interest to the Lender in the Designated Receivables
Collateral, (g) materially and adversely affects, or could reasonably be
expected to have a material and adverse effect upon, the condition (financial or
otherwise) of any Association, any Manager, any Timeshare Developer or
constitute grounds for the revocation of any license, charter or permit material
to the conduct of such Person's business to which any Designated Investment
relates as of the date of determination, or (h) when used with respect to any
single Mortgage Loan, materially and adversely affects or impairs, or would
reasonably be expected to so affect or impair, any of the following: (i) the
enforceability, legality or binding nature of any document in the Mortgage Loan
File; (ii) the repayment of either principal or interest of the Instrument;
(iii) the Mortgage Loan Coupon Rate; (iv) the Lender's or any Trustee's
interests under, Security Interest in, or ability to enforce its rights under,
any Mortgage Document; (v) the enforceability, legality or validity of any
Mortgage Document; and, when used with reference to the Collateral, or the
property sold, transferred, conveyed and assigned by any Originator, means the
effects and impairments described in subclauses (h)(i) through and including
(h)(v) but only as when applied to a material number of Mortgage Loans that
constitute Designated Receivables Collateral. To the extent that the definition
of Material Adverse Effect makes a direct or indirect reference to a particular
Instrument, Mortgage Loan, Mortgage  File, Timeshare Interval, Unit, Resort or
Timeshare Project, then no Material Adverse Effect shall be deemed to have
occurred if Borrower causes the Designated Instruments related to the foregoing
to be replaced or repaid by the end of the calendar month following the month in
which Borrower obtains Knowledge of such occurrence.

          1.82 "Maturity Date":  The date which is 180 days after the last day
of the Borrowing Term.

                                       11
<PAGE>
 
          1.83  "Moody's":  Moody's Investors Service, Inc. and its successors.

          1.84 "Mortgage":  the purchase money mortgage or deed of trust given
to secure an Instrument, which shall in each case constitute a first priority,
perfected security interest in a Timeshare Interest granted by the Purchaser.

          1.85 "Mortgage Documents": (a) the original Instrument and any
amendments or modifications thereto; (b) each executed, original Assignment of
Mortgage (which may relate to more than one Mortgage); (c) the original Mortgage
(or copy thereof) and any amendments or modifications thereto; (d) the
Certificate of Private mortgage insurance (but without implying any obligation
on the part of Borrower to provide same), if any, for the Unit; (e) the Title
Policy (Mortgage) or a commitment that such Title Policy (Mortgage) will be
delivered within sixty (60) days from the date of the relevant Advance and (f)
each Time Share Declaration, Time Share Program Consumer Documents and Timeshare
Program Governing Documents  related to the Unit provided that, for the purposes
of any delivery requirements hereunder, the documents, in their most current
form, referenced in clause (f) hereof need (A) not be so delivered if previously
received by the required recipient and (B) notwithstanding the provisions of any
other Document, shall be delivered to the Lender.

          1.86 "Mortgagor":  the Person obligated to make the payments due under
each Instrument in accordance with the terms and conditions related to such
Instrument.

          1.87 [RESERVED]

          1.88 "Note":  the Promissory Note from Borrower in favor of Lender in
a form substantially similar to Exhibit D in the original principal amount of up
to $70,000,000, as it may from time to time be renewed, amended, restated, or
replaced.

          1.89 "Noteholders":  the holders of any notes, certificates or other
debt security issued in connection with any securitization of the Collateral.

          1.90 "Notice to Securitize":  has the meaning set forth in Section
2.14 hereof.

          1.91 "Obligations": all obligations, agreement, duties, covenants and
conditions that Borrower is now or hereafter required to Perform under any and
all of the Documents, including, without limitation, the obligation to make
timely payment under the Note.

          1.92 "Originator": in the singular, any one of, and, in the plural,
all of, the entities that, as of the date of determination, have executed a
Transfer Agreement and have sold at least one Eligible Instrument to the
Intermediary Corporation which constitutes Designated Receivables Collateral as
of the date of determination; provided, however, that on the Closing Date, the
Originators are deemed to be: Points of Colorado, Inc., a Colorado corporation,
and Vistana MB, Inc., a South Carolina corporation.

                                      12
<PAGE>
 
          1.93 "Outstanding":  as of the date of determination, either any
obligation that has yet to be performed or amount that has yet to be paid, as
the case may be.

          1.94 "Partial GAAP":  GAAP with the exception that such financial
statements shall not contain consolidating and eliminating entries, disclosure
or footnotes.

          1.95 "Payment Date":  the twentieth day of each calendar month, or if
such day is not a Business Day, the immediately succeeding Business Day,
commencing on December 20, 1997. With respect to any Advance, Interest Period or
Maturity Date, the Payment Date related thereto shall be the Payment Date
immediately following such Interest Period or Maturity Date, respectively.

          1.96 "Performance" or "Perform": full, timely and faithful
performance.

          1.97 "Permitted Encumbrances": the rights, restrictions, reservations,
encumbrances, easements and liens of record which Lender has agreed to accept as
set forth in Exhibit E.

          1.97A     "Permitted Investments": means any of the following, in each
case as determined at the time of the investment or contractual commitment to
invest therein:

               (1)  negotiable instruments or securities represented by
     instruments in bearer or registered or book-entry form which evidence:

               (1)  obligations which have the benefit of the full faith and
     credit of the United States of America, including depository receipts
     issued by a bank as custodian with respect to any such instrument or
     security held by the custodian for the benefit of the holder of such
     depository receipt,

               (2)  demand deposits or time deposits in, or bankers'
     acceptances issued by, any depositary institution or trust company
     incorporated under the laws of the United States of America of any state
     thereof and subject to supervision and examination by Federal or state
     banking or depositary institution authorities; provided that at the time of
     the investment or contractual commitment to invest therein, the
     certificates of deposit or short-term deposits (if any) or long-term
     unsecured debt obligations (other than such obligations whose rating is
     based on collateral or on the credit of a Person other than such
     institution or trust company) of such depositary institution or trust
     company has a credit rating in the highest rating category from DCR,
     Standard & Poor's or Moody's (each a "Rating Agency"),

               (3)  certificates of deposit having a rating in the highest
     rating category by a Rating Agency, or

                                      13
<PAGE>
 
               (4)  investments in money market funds which are (or which are
          composed of instruments or other investments which are) rated in the
          highest rating category by a Rating Agency;

               (b)  commercial paper (having original or remaining maturities of
     no more than 270 days) having a credit rating in the highest rating
     category by a Rating Agency;

               (c)  Eurodollar time deposits that are obligations of
     institutions whose time deposits carry a credit rating in the highest
     rating category by a Rating Agency; and

               (d) repurchase agreements involving any Permitted Investment
     described in any of clauses (a)(I), (a)(iii) or (d) above, so long as the
     other party to the repurchase agreement has its long-term unsecured debt
     obligations rated in the highest rating category by a Rating Agency and so
     long as the Lender has approved of such repurchase agreement in writing.

          Any Permitted Investment must mature no later than the Business Day
prior to the next Payment Date.

          1.98 "Person":  any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, firm, joint
stock company, estate, entity or Governmental Authority.

          1.99 "Proceeding": any suit in equity, action at law or other judicial
or administrative proceeding.

          1.100     "Plan":  any pension plan (as defined in Section 3(2) of
ERISA) covered by Title IV of ERISA or section 412 of the Tax Code or section
302 of ERISA, which is maintained by a "Commonly Controlled Entity" as described
in Section 4001(b) of ERISA or in respect of which such Commonly Controlled
Entity has liability or any welfare plan (as defined in section 3(3) of ERISA
which requires contributions or payments to be made on account of persons who
are no longer employees except as required by section 4980B of the Tax Code).

          1.101     "Principal Redemption Price": has the meaning set forth in
Section 6.2(v) herein.

          1.102     "Private Mortgage Insurance":  a primary mortgage guaranty
insurance policy. The inclusion of this definition shall not be construed as a
requirement that any such insurance be obtained.

          1.103     "Property":  means any interest in any kind of property or
asset, whether real, personal or mixed, whether tangible or intangible.

                                      14
<PAGE>
 
          1.104  "Purchaser":  a purchaser of a Timeshare Interest from a
Timeshare Developer.

          1.105  "Real Property": any and all real property upon or in which
a Unit related to any Instrument is located as further described on Exhibit F
hereto.

          1.106  "Receivables Collateral": (a) the Instruments which are now or
hereafter assigned, endorsed or delivered to Borrower and not thereafter
reassigned by Borrower as permitted by Section 6.3(b); (b) all rights under the
Mortgage Documents and all documents evidencing, securing or otherwise
pertaining to such Instruments; (c) the proceeds of such Mortgage Documents
(including the Instrument related thereto), the right to receive all amounts due
or to become due thereunder after the related Transfer Date, but excluding any
Late Fees and Miscellaneous Amounts; (d) the Mortgage Loan Files relating to
each such Mortgage Loan; (e) all guarantees, cash deposits or credit support
supporting or securing payment to the extent specifically relating to any such
Mortgage Loan; (f) all of the Borrower's rights and interest in, but none of its
obligations or liabilities under, each of the Documents, including, without
limitation, each Transfer Agreement; (g) all files, books and records of
Borrower pertaining to the foregoing; and (h) the proceeds and income from each
and all of the foregoing.

          1.107  [Reserved]

          1.108  "Regulations G, T, U and X": collectively, Regulations G, T, U
and X adopted by the Federal Reserve Board (12 C.F.R. Parts 207, 220, 221 and
224, respectively) and any other regulation in substance substituted therefor.

          1.109  "Replacement Date":  the date upon which an Ineligible
Instrument must be replaced pursuant to the terms and conditions of Section 3.2
hereof.

          1.110  "Replacement Instrument":  the meaning set forth in Section
3.2 hereof.

          1.111  "Reportable Event": shall mean a Reportable Event as defined
in section 4043(b) or 4063(a) of ERISA or the regulations promulgated
thereunder, except for those Respectable Events for which the PBGC has waived
notice.

          1.112  "Resolutions": as the context may require, either any or all of
the following, as appropriate: (a) a resolution of a corporation (including the
corporation as a general partner) certified as true and correct by an authorized
officer of such corporation, (b) a certificate signed by the manager of a
limited liability company and/or such other members whose approval is required,
(c) a partnership certificate signed by all of the general partners of such
partnership and such other partners whose approval is required or (d) the legal,
valid and binding consent of the Trustees of a business trust.

                                      15
<PAGE>
 
          1.113  "Resorts":  the projects, described in Exhibit F hereto,
developed by the Timeshare Developers; which include Eagle Pointe, Avon County,
CO; Falcon Pointe, Avon County, CO; Christie Lodge, Eagle County, CO; Embassy
Vacation Resort at Myrtle Beach, Horry County, SC; Vistana Lakes, Orange County,
FL; Vistana Condominium, Orange County, FL; Vistana Falls, Orange County, FL;
Vistana Fountains, Orange County, FL; Vistana Cascades, Orange County, Fl;
Vistana Fountains II, Orange County, FL; Vistana Spa, Orange County, FL; Vistana
Springs, Orange County, FL; Vistana's Beach Club, St. Lucie County, FL; Villas
at Cave Creek, Maricopa County, AZ; and any additional resorts designated in
writing by the Borrower and consented to, in writing, by the Lender.

          1.114  "Responsible Officer": the chairman of the board, the
president, any executive vice president, any vice president, the treasurer, any
assistant treasurer, the secretary, any assistant secretary, the controller or
any assistant controller if the entity of determination is a corporation; if
such entity is a partnership, any one of the foregoing corporate officers of any
general partner thereof, and if such entity is a trust, any one of the foregoing
corporate officers of any trustee thereof, and if such entity is a limited
liability company, any one of the foregoing corporate officers of the managing
member thereof.

          1.115  "S&P":  Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, and its successors.

          1.116  "Scheduled Borrowing Termination Date":  as of the date of
determination, the date upon which the Borrowing Term is scheduled to expire in
accordance with the terms and conditions of this Agreement.

          1.117  "Scheduled Payments": with respect to an Instrument, when used
in the singular, the periodic payment, including but not limited to (exclusive
of any amounts in respect of insurance or taxes and reflecting any adjustment
for any partial prepayment and further reflecting the effect of any permitted
modification to such Instrument) scheduled to be paid by a Mortgagor pursuant to
the terms and conditions of an Instrument, due from the Mortgagor during the
related Collection Period; and when used in the plural, all such payments under
all such Instruments that are Designated Instruments.

          1.118  "SEC":  the Securities and Exchange Commission and any
successor thereto.
 
          1.119  "Securities Act" or the "Securities Act of 1933": the
Securities Act of 1933, as amended.

          1.120  "Securitization": a securitization of assets that comprise any
part of, or all of, the Collateral effected in accordance with a Notice to
Securitize.

          1.121  "Security Documents": each Transfer Agreement, each Transfer
and Servicing Agreement, this Agreement, the Mortgage Documents and any and all
other documents

                                      16
<PAGE>
 
now or hereafter executed by Borrower and securing Performance of the
Obligations, as they may be from time to time renewed, amended, restated or
replaced.

          1.122 "Security Interest": a perfected, direct, first and (with
respect to any property constituting Collateral, subject only to the Permitted
Encumbrances applicable thereto) exclusive security interest in and charge upon
the property intended to be covered by it.

          1.123 "Servicer": VCH Portfolio Services, Inc., a Florida corporation,
serving in the capacity of Servicer pursuant to the Transfer and Servicing
Agreement and any permitted successor thereto.

          1.124 "Servicer Default": any and each "Event of Default" as defined
in Section 7.01 of the Transfer and Servicing Agreement.

          1.125 "Servicer Report": as set forth in Section 5.3(b) hereof.

          1.126 "Servicing Officer List": as set forth in the definition of
"Servicing Officer" in the Transfer and Servicing Agreement.

          1.127 "Servicing Standard": the customary standard of prudent
servicers of loans secured by fee simple timeshare interests similar to the
Timeshare Interests, but in no event lower than the standard employed by the
Servicer used when servicing such loans for its own account and such third
parties, but, in any case, without regard for:

          (i)    any relationship that the Servicer or any Affiliate of the
     Servicer may have with the related Mortgagor;

          (ii)   the Servicer's right to receive compensation for its services
     hereunder or with respect to any particular transaction; or

          (iii)  the fact that the Servicer or any Affiliate of the Servicer may
     be a Noteholder; 

and, in any case, shall include the following servicing activities:

          (i)    perform standard accounting services and general recordkeeping
     services with respect to the Mortgage Loans;

          (ii)   respond to any telephone and written inquiries of Mortgagors
     concerning the Mortgage Loans;

          (iii)  keep Mortgagors informed of the proper place and method for
     making payments with respect to the Mortgage Loans;

                                       17
<PAGE>
 
          (iv)  contact Mortgagors to effect collection and to encourage prompt
     payment of Mortgage Loans, doing so by lawful means in accordance with
     industry standards;

          (v)   report tax information to Mortgagors as required by law; and

          (vi)  take such other action as may be necessary or appropriate in the
     reasonable judgment of the Servicer for the purpose of collecting and
     transferring to the Collection Account or the related Lockbox Account, as
     required, all payments received in respect of Mortgage Loans (except as
     otherwise expressly provided herein), and to carry out the duties and
     obligations imposed upon the Servicer.

          1.128 "Solvent": as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
property in an orderly liquidation of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.

          1.129 "Special Purpose Entity": means, as applicable, a corporation,
limited partnership, owner trust arrangement, business trust or limited
liability company which at all times since its formation and at all times
thereafter shall have complied with each of the following:

          (i)    Affiliate Securities. Such entity has not acquired obligations
     or securities of its partners, members or shareholders.

          (ii)   Allocations. Such entity has allocated fairly and reasonably
     any overhead for shared office space and uses separate stationery, invoices
     and checks.

          (iii)  Arm's length Transactions.  Such entity has not entered into,
     nor has it been a party to, any transaction with its partners, members,
     shareholders or Affiliates except (i) for the Documents and (ii) in the
     ordinary course of its business and on terms which are intrinsically fair
     and are no less favorable to it than would be obtained in a comparable
     arm's-length transaction with an unrelated third party.

          (iv)   Bankruptcy Filing. Such entity, without the unanimous consent
     of all of the general partners, directors, trustees or members, as
     applicable, has not filed a bankruptcy or insolvency petition or otherwise
     instituted insolvency proceedings with respect to itself or

                                      18
<PAGE>
 
     to any other entity in which it has or had a direct or indirect legal or
     beneficial ownership interest, or dissolved, liquidated, consolidated,
     merged, or sold all or substantially all of its assets or any other entity
     in which it has or had a direct or indirect legal or beneficial ownership
     interest, engaged in any other business activity, or amended its
     organizational documents without the prior written consent of the
     Independent Director.

          (v)     Commingling. Such entity has not commingled its funds or
     assets with those of any other entity, and has held its assets in its own
     name.

          (vi)    Divisions. Such entity has not identified its partners,
     members or shareholders, or any affiliates of either of them as a division
     or part of it.

          (vii)   Formalities. Such entity has observed all partnership,
     corporate trust or limited liability company formalities, as applicable.

          (viii)  General Partner. If such entity is a general partnership, at
     least one general partner of such entity is a Special Purpose Entity that
     is also a corporation.

          (ix)    Guarantees. Such entity has not assumed or guaranteed or
     become obligated for the debts of any other entity or held out its credit
     as being available to satisfy the obligations of any other entity for
     liabilities permitted to be guaranteed by its Articles of Incorporation.

          (x)     Identification. Such entity has held and identified itself as
     a separate and distinct entity under its own name and not as a division or
     part of any other person or entity.

          (xi)    Independent Director. If such entity is a corporation or
     business trust, it has and has covenanted always to have at least one
     director that is an Independent Director.

          (xii)   Limited Liability Companies. If such entity is a limited
     liability company, (A) its articles of organization, certificate of
     formation and/or operating agreement, as applicable, provides that the vote
     of a majority-in-interest of the remaining members is sufficient to
     continue the life of the limited liability company in the event of a
     termination event, such as a bankruptcy of the managing member; (B) if the
     vote of a majority-in-interest of the remaining members is not obtained to
     continue the life of the limited liability company upon a termination
     event, its articles of organization, certificate of formation and/or
     operating agreement as applicable, provides that the limited liability
     company may not liquidate collateral without the consent of the holders of
     the related securities; (C) the only managing member of the liability
     company is the Special Purpose Entity member; and (D) it has at least one
     member that is a Special Purpose Entity that is a corporation.

                                      19
<PAGE>
 
          (xiii)  Limited Partnership. If such entity is a limited partnership
     with multiple general partners, the limited partnership agreement requires
     the remaining partners to continue the partnership as long as one solvent
     general partner exists.

          (xiv)   Loans. Such entity has not made loans to any Person.

          (xv)    No Dissolution. Such entity has not engaged in, sought, or
     consented to any dissolution, winding up, liquidation, consolidation,
     merger, asset sale, transfer of partnership or membership interest, or
     amendment of its limited partnership agreement, articles of incorporation,
     articles of organization, certificate of formation or operating agreement,
     as applicable without the prior written consent of the Independent
     Director.

          (xvi)   No Other Assets. Such entity has not had any assets as of the
     Closing Date other than those related, if such entity is a trust, to its
     trust property and if such entity is not a trust, as has been disclosed in
     writing to Lender.

          (xvii)  No Other Business. As of the Closing Date, such entity has not
     engaged in any business unrelated to the ownership of its assets.

          (xviii) No Other Indebtedness. As of the Closing Date, such entity has
     no Indebtedness other than, with respect to the Borrower only, the
     Indebtedness evidenced by the Note and existing under the Loan and Security
     Agreement, and liabilities in the ordinary course of business relating to
     the ownership and operation of its assets.

          (xix)   Own Liabilities. Such entity has paid its own liabilities out
     of its own funds and assets.

          (xx)    Own Name. Such entity has conducted its business in its own
     name.

          (xxi)   Pledges. Such entity has not pledged its assets for the
     benefit of any other person or entity other than pursuant to the Documents.

          (xxii)  Purpose. Such entity was organized solely for the purpose of
     owning the Collateral, entering into the Documents, and, with respect to
     the Borrower only, issuing the Note and, if agreed to with the Lender
     pursuant to the terms and conditions hereof, securitizing certain
     Instruments.

          (xxiii) Separate Accounts. Such entity has maintained its accounts,
     books and records separate from any other person or entity and in
     accordance with Partial GAAP.

          (xxiv)  Separate Records. Such entity has maintained its accounting
     records and other entity documents separate from any other person or
     entity.

                                       20
<PAGE>
 
          (xxv)  Unanimous Consent.  Such entity has not caused or allowed the
     board of directors of such entity to take any action requiring the
     unanimous affirmative vote of 100% of the members of the board of directors
     unless an Independent Director shall have participated in such vote.

          1.130     "Subordination Agreement(s)":  when used in the singular,
any one of, and, when used in the plural, each and every subordination
agreement(s) made and delivered to Lender pursuant to Section 6.2(s) hereof, as
it may be from time to time renewed, amended, restated or replaced.

          1.131     "Substitute Instrument Transfer Date": With respect to the
Instrument being substituted, the date upon which such Instrument is sold,
transferred, conveyed and assigned by a Originator pursuant to the terms of a
Transfer Agreement or this Agreement.

          1.132     "Substitute Instrument": An Eligible Instrument related to a
Substitute Mortgage Loan, as defined in the Transfer Agreement related thereto,
or a Replacement Instrument.

          1.133     "Tax Code":  the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations adopted thereunder, as the same may be in effect
from time to time and any successor thereto.
 
          1.134     "Term":  the duration of this Agreement, commencing on the
Closing Date and ending on the Maturity Date and the expiration of any
applicable bankruptcy preference period (but in no case less than one year and
one day after all Obligations shall have been performed).

          1.135     "Third Party Consents":  those consents which Lender
requires Borrower and its Affiliates to obtain or which one or more of them is
contractually or legally obligated to obtain, from others in connection with the
transaction contemplated by the Documents.

          1.136     "TIA"  or "the Trust Indenture Act of 1939":  the Trust
Indenture Act of 1939, as amended.

          1.137     "Timeshare Association": the not-for-profit corporation
responsible for operating a particular Resort.

          1.138     "Timeshare Declaration":  the declaration or other document
recorded/or to be recorded in the real estate records where the pertinent
Timeshare Project is located for the purpose of creating and governing the
rights of owners of Timeshare Interests related thereto, as it may be in effect
from time to time.

          1.139     "Timeshare Developer": unless otherwise set forth in the
terms of the applicable Transfer Agreement, the Originators that offer and
solicit offers to purchase Timeshare Interests related to the Collateral.

                                       21
<PAGE>
 
          1.140  "Timeshare Interest": an undivided 1/52 or 1/51 fee simple
interest in either perpetuity or every other year in perpetuity in a particular
Unit, together with the right to the exclusive occupancy and use and enjoyment
of such Unit for seven (7) consecutive days each calendar year or every other
calendar year, as the case may be, together with an appurtenant undivided
fractional interest in the common elements of the Timeshare Project and the non-
exclusive right to use such common elements during such same seven (7) day
period including rights as members of the Association related thereto, all in
accordance with, and subject to, the Timeshare Program Governing Documents.

          1.141     "Timeshare Program": the program under which (1) Purchasers
have purchased fee simple Timeshare Interests and (2) owners of Timeshare
Interests share the expenses associated with the operation and management of
such program.

          1.142     "Timeshare Program Consumer Documents": the purchase
contract, Instrument, Mortgage, credit application, credit disclosures,
rescission right notices, final subdivision public reports/prospectuses/public
offering statements, Timeshare Project exchange affiliation agreement, and other
documents and advertising materials used or to be used by a Timeshare Developer
in connection with the sale of Timeshare Interests.

          1.143     "Timeshare Program Governing Documents": the Articles of
Organization of each Timeshare Association, the rules and regulations of each
Timeshare Association, the Timeshare Program management contract between each
Timeshare Association and a management company, and any subsidy agreement by
which a Timeshare Developer is obligated to subsidize shortfalls in the budget
of a Timeshare Program in lieu of paying assessments, as they may be from time
to time in effect and all amendments, modifications and restatements of any of
the foregoing.

          1.144     "Timeshare Projects":  the part of the Resorts as described
in Exhibit F hereof and such other part of the Resorts as Lender may from time
to time hereafter approve in writing in either case, related to the Collateral
at the time of determination.

          1.145     "Title Insurer (Mortgage)": any of First American Title
Insurance Company, Chicago Title Insurance Company, Ticor Title Insurance
Company, Old Republic, Lawyer's Title Insurance Company or another title company
which the Lender has approved of in writing to the Borrower and issues a Title
Policy (Mortgage).

          1.146     "Title Policy (Mortgage)":  the original lender's policy of
title insurance securing an Instrument as a perfected, direct, first and
exclusive lien on the Timeshare Interest encumbered thereby, subject only to any
Permitted Encumbrances, issued by a Title Insurer (Mortgage) and in form and
substance acceptable to Lender, and all amendments, restatements and
modifications thereto.
 
          1.147     "Transfer Agreement":  when used in the singular, any one
of, and, when used in the plural, each and every, Transfer Agreement, as the
same may be amended, modified or 

                                       22
<PAGE>
 
restated as permitted under the Documents, each to be made among an Originator,
as transferor, and the Intermediary Corporation, as transferee in a form
substantially similar to Exhibit B hereto.

          1.148     "Transfer and Servicing Agreement": that certain Transfer
and Servicing Agreement, dated as of November 1, 1997, by and between the
Borrower, as transferee, and the Intermediary Corporation, as transferor, and
VCH Portfolio Services, Inc., as Servicer, transferring the Collateral,
including but not limited to specific Instruments, Mortgages, rights under the
Documents, and any and all proceeds of the foregoing, as the same may be amended
or modified from time to time.

          1.149     "Transfer Date":  with respect to each Substitute
Instrument, the related Substitute Instrument Transfer Date, and with respect to
any other Instrument, the date upon which such Eligible Instrument is sold,
transferred, conveyed and assigned by the related Originator to the Intermediary
Corporation, and transferred by the Intermediary Corporation to the Borrower,
and pledged by the Borrower to the Lender.

          1.150     "Trustee":  the indenture trustee for any holders of notes
issued in a Securitization.

          1.151     "UCC":  the Uniform Commercial Code as in effect in the
applicable jurisdiction.

          1.152     "Unit":  a dwelling unit in a Timeshare Project.

          1.153     "Vistana": Vistana, Inc., a Florida corporation having its
principal place of business at 8801 Vistana Centre Drive, Orlando, Florida
32821, and its permitted successors and assigns.

          1.154     "Vistana Transaction Entity":  when used in the singular,
any of, and when used in the plural, all of the following Persons: the
Guarantor, the Servicer, each Originator, the Intermediary Corporation and the
Borrower.

          1.155     "Weighted Average Interest Rate": the weighted average of
each Interest Rate in effect for each Advance made hereunder as of the date of
determination giving full credit to any interest rate protection agreement
entered into by Borrower.

          1.156     "Working Capital Loan": the loan in the maximum principal
amount of $20,000,000.00 and evidenced by a promissory note for the same maximum
amount from Vistana and Vistana Development, Ltd. in favor of Lender made
pursuant to the Working Capital Loan Agreement.

          1.157     "Working Capital Loan Agreement": the Line of Credit
Agreement.

                                      23
<PAGE>
 
      2.  LOAN COMMITMENT; USE OF PROCEEDS

          2.1  Agreement to Lend Contingent Upon Performance.  Lender hereby
agrees, subject to performance by Borrower of all of the Obligations due as of
the date of determination and to fulfillment of all conditions precedent, to
make Advances to Borrower in amounts up to (a) the then Borrowing Base of the
Eligible Instruments less (b) the then unpaid principal balance of the Loan;
provided, however, at no time shall the unpaid principal balance of the Loan
exceed Seventy Million Dollars ($70,000,000.00). Lender shall have no obligation
to make any Advance (a) after the Borrowing Term has expired and (b) on any day
that is not a Business Day.  For the avoidance of doubt, the parties acknowledge
that amounts advanced and repaid hereunder may be re-advanced in accordance with
the terms and conditions hereof.

          2.2  One Loan.  Notwithstanding that the Loan is a revolving line of
credit, all of the Advances shall be deemed to constitute a single loan.
Borrower shall not be entitled to obtain Advances after the expiration of the
Borrowing Term unless Lender agrees in writing with Borrower to make Advances
thereafter on terms and conditions satisfactory to Lender and such action, if
taken, shall not be deemed a waiver with respect to subsequent advances. This
Agreement and Borrower's liability for Performance of the Obligations shall
continue until the Obligations have been completely satisfied or waived in
writing by Lender.

          2.3  The Note.  The Loan shall be evidenced by the Note.  The Note
shall be dated the Closing Date, shall be in the maximum principal amount of
$70,000,000 and payable to the order of Lender in an amount equal to the sum of
(a) the aggregate unpaid principal amount of all Advances made to the Borrower
by the Lender and (b) all other Obligations hereunder.  The date of each
borrowing, the principal amount thereof, and the aggregate principal amount of
Advances Outstanding thereunder shall be recorded by the Lender on the schedule
attached to the Note, provided, however, that the failure of the Lender to
record any such information shall not affect the Obligations of the Borrower
hereunder or under the Note.  The aggregate unpaid principal amount of Advances
set forth on such schedule shall be presumptive evidence of the principal amount
owing and unpaid thereon.

          2.4  Repayment.  (a)   Principal.  The Outstanding principal balance
on the Note shall be due on the Maturity Date.  Unless otherwise directed by
Servicer, Lender shall apply all payments received in the Collection Account
prior to 1:30 P.M. Eastern Time on the day of receipt (unless such day is not a
Business Day, in which case on the next Business Day), and otherwise, on the
next Business Day (i) if no Event of Default has occurred and is continuing,  to
the payment of principal on the Note and (ii) if an Event of Default has
occurred and is continuing, first to pay Interest and Default Interest and then
to repay principal, all in accordance with Section 5.4 hereof.

          (b)  Interest on Loans.  Each Advance shall bear Interest at the
applicable Interest Rate in effect at the commencement of each Interest Period
related thereto throughout such Interest Period.  The Lender hereby acknowledges
that the Borrower may use some or all of the proceeds

                                      24
<PAGE>
 
of any Advance to pay Interest hereunder, as further described in Section 2.12
hereof. Notwithstanding any provision to the contrary in this Agreement or any
other Document, upon the occurrence and continuance of an Event of Default, any
Outstanding principal balance thereafter shall bear Interest at the Default
Rate.  Lender will compute the amount of Interest on the Loan for the Collection
Period ending immediately prior to such Determination Date and which shall be
payable on the Payment Date occurring immediately after such Determination Date,
and will notify Borrower of such Interest on the Loan due on such Payment Date
(such notice, a "Lender's Bill") and (y) Borrower will remit to Lender on each
Payment Date the amounts of Interest pursuant to each such Lender's Bill.

          (c) Prepayment Mortgage Interest Collected.  Prior to the related
Payment Date, the Borrower shall deposit or cause the prompt deposit into the
Lockbox Account of an amount equal to the amount of interest, if any, pre-paid
by each Mortgagor during the related Collection Period.

          2.5  Interest Payments.  Interest accrued during each Interest
Collection Period shall be payable in arrears on the next immediately succeeding
Payment Date.

          2.6  Repayments.  (a) On each Payment Date, the Borrower shall pay (i)
all Interest and (ii) any prepayments received from Instruments payable, in
either case, in accordance with the terms of Sections 2.4 and 2.5 hereof.

          (b) On the Maturity Date, the Borrower will repay the entire
Outstanding principal balance of the Loan together with all Interest accrued
thereon and all other sums due hereunder.

          2.7  Optional Prepayment of Principal.  Other than principal payments
made pursuant to Section 2.4(a), at its option, and upon not less than five (5)
Business Days' prior written notice, the Borrower may prepay on any Payment Date
the Outstanding principal balance in whole or in part.  Except after the
occurrence and continuance of an Event of Default, the Borrower may not prepay
Interest.

          2.8  Manner of Payment. Each payment of principal of the Note and each
payment of Interest on the Note shall be made by the Borrower to the Collection
Account not later than 2:00 p.m., Eastern Time, on the date on which payable
with notice to Lender thereof, or with respect to Interest, paid by an Advance,
as set forth in Section 2.4(b) above.

          2.9  Extension of Maturity.  Should any installment of Interest become
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day, and, in the case of principal,
shall be payable with Interest accrued to such date.

                                      25
<PAGE>
 
          2.10  Default Rate.  The Borrower shall pay a penalty on any principal
and/or Interest payment due under the Note which is not received by the Lender
on the date when the same is due by making payments at the Default Rate, as set
forth in the definition of "Interest Rate".

          2.11  Computation of Interest.  Interest on the Note shall be computed
on the basis of a 360 day year, and paid for the actual number of days involved.

          2.12  Use of Proceeds.  Borrower will use the proceeds of all Advances
only to (1) acquire additional Eligible Instruments (provided, however, that, if
the Instrument becomes part of a Securitization, for the purposes of this
Section 2.12, such Instrument need not be designated by the Borrower to become
part of the Designated Receivables Collateral hereunder to be deemed an Eligible
Instrument) and other Mortgage Documents related thereto, (2) pay Interest or
(3) pay expenses of the Borrower incidental to the transactions contemplated
hereunder (including, but not limited to, Custodial Fees, Lockbox Fees, servicer
fees, reasonable attorneys' fees, taxes and licensing fees, in each case, of the
Borrower).

          2.13  Exit Fee Payments.  (a) End of Borrowing Term. On the expiration
of the Borrowing Term the Borrower shall pay the Lender the Exit Fee, provided
that, no Exit Fee shall be due under the terms of this subsection 2.13(a) to the
extent that the Lender has, prior to the end of the Borrowing Term, received a
Notice to Securitize from the Borrower and the Lender and the Borrower are, in
the good faith judgment of the Lender, then working to consummate the
Securitization contemplated thereby, provided further, that in the event the
Lender informs the Borrower in writing after the expiration of the Borrowing
Term (whether the initial or as extended) that, in the Lender's sole good faith
judgement, the Securitization contemplated by the Notice to Securitize will not
be consummated, the Exit Fee shall be due on demand upon the Borrower's receipt
of such notification, unless the failure to be able to so consummate is due to
an Adverse Financial Condition.

          (b) Other Payments of Exit Fee. An Exit Fee shall be payable by the
Borrower, on demand, on all repurchases of Instruments made under the terms of
Sections 3.5 hereof, or under Section 3.2 hereof with respect to breaches of the
conditions set forth in Sections 2.03 (o), (r) or (s) of a Transfer Agreement.

          2.14  Securitization.  Borrower, at Borrower's election, may from
time to time during the Borrowing Term deliver to Lender a notice (the "Notice
to Securitize").  The Notice to Securitize shall set forth the anticipated size
of the Securitization and such other parameters as Borrower shall elect,
consistent with other agreements between the Lender and the Borrower or their
Affiliates related to the Securitization.  Within thirty (30) days after
Lender's receipt of the Notice to Securitize, Lender shall deliver a written
proposal to Borrower, indicating whether a Securitization as contemplated by the
Notice to Securitize is feasible and, if so, providing the anticipated details
of the Securitization, taking into account the information contained in the
Notice to Securitize and consistent with such agreements between the Lender and
the Borrower or their Affiliates.  The

                                       26
<PAGE>
 
obligations of the Borrower and the Lender to negotiate or consummate a
Securitization contemplated by a Notice to Securitize shall be governed by such
agreements, other than the Documents, as shall be entered into by the Borrower,
the Lender or their Affiliates from time to time.

     3. DESIGNATED RECEIVABLES COLLATERAL SECURITY

          3.1  Grant of Security Interest.  To secure the Performance of all of
the Obligations, Borrower hereby grants to Lender a Security Interest in the
Collateral.  Such Security Interest shall be absolute, continuing and applicable
to all initial and subsequent Advances and to all of the Obligations.  All of
the Collateral shall secure repayment of the Loan and the Performance of the
Obligations.  Borrower will unconditionally deliver to Custodian, as bailee for
Lender pursuant to the Custodial Agreement, with recourse for all Designated
Instruments that fail to be Eligible Instruments, all Mortgage Documents which
are part of the Receivables Collateral.  Lender is hereby appointed Borrower's
attorney-in-fact to take any and all actions in the name of Borrower or on
behalf of Borrower which are deemed necessary or appropriate by Lender with
respect to the collection and remittance of payments (including the endorsement
of payment items) received on account of any of the Collateral.

          3.2  Replacements of Ineligible Instruments.   If an Instrument which
is part of the Designated Receivables Collateral becomes an Ineligible
Instrument and the Outstanding principal balance of the Note is greater than or
equal to the Borrowing Base of all Eligible Instruments then, (x) not later than
the immediately succeeding Payment Date after the Borrower or any Affiliate
thereof acquires Knowledge that such Instrument has become an Ineligible
Instrument (each such Payment Date, a "Replacement Date"),  Borrower will either
pay, or cause to be paid to Lender an amount equal to the sum of (i) the
Borrowing Base Percentage of the Outstanding principal balance of such
Ineligible Instrument, plus (ii) all outstanding Interest, together with costs
and expenses attributable to it not already paid on such Payment Date pursuant
to Sections 2.4 and 2.5 hereof, or (y) prior to the applicable Replacement Date,
the Borrower will replace such Ineligible Instrument with an Eligible Instrument
or Eligible Instruments having, in either case, an aggregate Borrowing Base not
less than the Borrowing Base (calculated on the applicable Replacement Date) of
the Ineligible Instrument being replaced (each such Instrument, a "Replacement
Instrument"). Simultaneously with such payment or the delivery of each
Replacement Instrument to Custodian on behalf of Lender, the Borrower will cause
to be delivered to Custodian all of the items (except for a "Request for Advance
and Certification") required to be delivered by Borrower to Custodian pursuant
to Section 4 hereof, together with a "Borrower's Certificate" in a form
substantially similar to Exhibit G hereto.  If neither an Event of Default nor
Incipient Default has occurred and is continuing, then, (A) with respect to
Ineligible Instruments for which no repayment or replacement was required
pursuant to this Section 3.2, Lender will execute a reassignment instrument
prepared by Borrower substantially in the form of Exhibit H hereto within ten
(10) Business Days after Lender's receipt of request therefor; and (B) with
respect to Ineligible Instruments for which repayment or replacement was
required pursuant to this Section 3.2, Lender will execute a reassignment
instrument prepared by Borrower substantially in the form of Exhibit H hereto
within ten (10) Business Days after Lender's receipt of request therefor,
provided that either (i) the

                                      27
<PAGE>
 
repayment, was made or (ii) Custodian has acknowledged receipt of the Mortgage
Documents for the Replacement Instrument, in accordance with the requirements of
the Custodial Agreement, as applicable.  Upon Lender's execution of the
reassignment instrument, Lender will instruct the Custodian to deliver the
Mortgage Loan Documents related thereto to or at the direction of Borrower.

          3.3  Maintenance of Security Documents.  Borrower will deliver or
cause to be delivered to Lender, and will maintain or cause to be maintained
throughout the Term in full force and effect in accordance with their terms, the
Security Documents not required to be delivered to the Custodian pursuant to
Section 4 hereof or any other express provision of this Agreement, any
Subordination Agreement(s), and all other security agreements required pursuant
to the Documents.

          3.4  Immediate Replenishing of Borrowing Base Levels.  Subject to
Borrower's rights under Section 3.2 hereof to provide Replacement Instruments,
if for any reason the aggregate Outstanding principal amount of the Loan at any
time shall exceed the then Borrowing Base of all Eligible Instruments, Borrower,
without notice or demand, will immediately make to Lender a principal payment in
an amount equal to such excess plus accrued and unpaid Interest on such
principal payment.

          3.5  Release of Excess Collateral.  Provided that no Event of Default
or, in the good faith and reasonable business judgment of the Lender, no
Incipient Event of Default has occurred and is continuing, in the event, as of
the date of determination, that the aggregate Outstanding principal balance of
the Loan is less than ninety percent (90%) of the aggregate Outstanding
principal balance of all of the Designated Instruments that comprise Designated
Receivables Collateral on such date, Borrower may request in writing that Lender
release, and within four Business Days after receipt of such request Lender
shall release, an amount of Designated Receivables Collateral equal to the
amount requested in such writing by Borrower, provided, that the Borrower pay
the Exit Fee thereon, and provided, further, that the amount of Designated
Receivables Collateral which may be requested by Borrower to be so released
shall not, upon either the date so released or, as of the date of determination
on any Payment Date thereafter, reduce the Borrowing Base to be less than the
product of the Borrowing Base Percentage multiplied by the Outstanding principal
balance of all Designated Instruments.

          3.6  Release of Collateral Upon Repayment.  Notwithstanding any
provision of this Agreement to the contrary (including, without limitation, the
continuation of the Term of this Agreement beyond the Maturity Date), upon
receipt by Lender of all, and not less than all, amounts of principal, Interest
and any other amounts then due and payable under this Agreement (including,
without limitation, the entire Exit Fee, if any)  or any other Document
(including, without limitation, the Guaranty), Lender will execute a
reassignment instrument prepared by Borrower substantially in the form of
Exhibit H hereto within ten (10) Business Days after Lender's receipt of request
therefor provided, however, that the Borrower may request the release of certain
specified individual Mortgage Loans as necessitated by the terms of Section 3.2
hereof or otherwise if the conditions of Section 3.5 hereof are met.  Upon
Lender's execution of the reassignment instrument, Lender will

                                      28
<PAGE>
 
instruct the Custodian to deliver the Mortgage Loan Documents related thereto to
or at the direction of Borrower.

      4. ADVANCES

          4.1  Conditions to  Advances.  Lender's obligation to make each
Advance shall be subject to and conditioned upon the terms and conditions set
forth in the following sections and elsewhere in this Agreement being satisfied
and remaining satisfied during the Term.

                (a) Conditions Precedent to the Initial Advance.

          (1) Borrower shall have delivered to Lender prior to the Closing Date
(except with respect to item (N), which shall be provided within 10 days after
the Closing Date) or, with respect to paragraph (H) below, Lender shall have
received, unless otherwise requested by Lender, the original of each of the
following documents, duly executed and delivered by all parties thereto, and in
form and substance satisfactory to Lender and its counsel:

                    (A)  the Note;

                    (B)  [Reserved]

                    (C)  UCC financing statements for perfection of any of or
     all of the Collateral as reasonably requested by the Lender;

                    (D)  the Lockbox Agreement;

                    (E)  each Transfer Agreement;

                    (F)  the Custodial Agreement;

                    (G)  this Agreement;

                    (H)  final approval of Lender's credit committee to make the
     Loan (which approval shall be deemed granted upon the making of the first
     Advance);

                    (I)  the Transfer and Servicing Agreement;

                    (J)  each document comprising part of the Articles of
     Incorporation and Resolutions for the Borrower, the Intermediary
     Corporation, the Servicer, the Guarantor and each Originator certified by a
     Responsible Officer of the related entity; and

                                      29
<PAGE>
 

               (K) at least five Business Days prior to the Closing, favorable
     opinions in form and substance satisfactory to Lender and its counsel, from
     independent, nationally-recognized counsel for Borrower, with respect to
     (I) the Security Interest in the Collateral in favor of the Lender, as
     being first priority, perfected, valid and enforceable, (II) the "true
     sale" of the Instruments from each Originator related to such Timeshare
     Project to the Intermediary Corporation, and non-consolidation of, each
     Originator and the Intermediary Corporation, the Intermediary Corporation
     and its owners (if not addressed in the immediately preceding clause), and
     either "true sale" or first priority perfected security interest from the
     Intermediary Corporation to the Borrower, (III) the due organization, valid
     existence and good standing of the Custodian, the Lockbox Bank each
     Originator, the Intermediary Corporation, the Guarantor, the Servicer and
     the Borrower, (IV) the enforceability, legal, valid and binding nature of
     the Obligations of, due authorization of, the Custodian, the Lockbox Bank,
     the Borrower, the Intermediary Corporation, the Originator related to each
     such Timeshare Project, the Servicer, and Vistana with regard to the
     Documents and the Loan, (V) federal and applicable state and local real
     estate and securities law pertaining to the Guarantor, the Servicer, each
     Originator, the Intermediary Corporation and the Borrower, as applicable,
     including, without limitation, or as otherwise acceptable to Lender, the
     Securities Act of 1933, the Investment Company Act, the Real Estate
     Settlement and Procedures Act, the Truth-in-Lending Settlement Act,
     applicable local and state law and (VI) any other opinions reasonably
     requested by Lender, including, but not limited to if the Timeshare Project
     has not been registered under Interstate Land Sales Full Disclosure Act and
     Lender requests such an opinion, a copy of an advisory opinion issued by
     the federal Office of Interstate Land Sales Registration that the Project
     does not fall within the purview of the Interstate Land Sales Full
     Disclosure Act, and such opinions, shall be dated the Closing Date and
     opine to such entities and the Collateral, as applicable, not only as to
     the Closing Date but also as to each future Transfer Date as to
     subsequently-acquired Collateral. Lender may in its sole discretion, accept
     the opinion of Borrower's counsel on the applicability of such act;

               (L) lien, litigation and judgment searches, in form and substance
     satisfactory to Lender, for the Borrower, the Intermediary Corporation,
     each Originator and Vistana conducted in such jurisdictions as Lender deems
     appropriate;

               (M) [Reserved]

               (N) evidence of fidelity bond coverage and errors and omissions
     insurance insuring each Servicer and subservicer are acting with respect to
     the Collateral to the reasonable satisfaction of the Lender;

               (O) payment of the Lender's Attorney's Fees due with respect to
     the closing;

               (P) such other documents as Lender may reasonably require; and

                                      30
<PAGE>
 

               (Q) the Guaranty.

          (20) Conditions Precedent to First Advance and Subsequent Advances
Introducing New Timeshare Projects. For the first Advance, and for each Advance
made with respect to an Instrument stemming from a Timeshare Project or Resort
that, as of the Closing Date, was not previously related to any Designated
Receivables, the Lender shall have received the following in form and substance
satisfactory to the Lender and Lender's counsel at least 12 Business Days prior
to the date such Advance is to be made:

               (A) evidence that no taxes and assessments on the Timeshare
     Projects or Resort, as the case may be, are delinquent;

               (B) the approved subdivision plat of each Timeshare Project (if
     applicable);

               (C) a copy of the registrations/consents to sell, the final
     subdivision public reports/public offering statements and/or prospectuses
     and approvals thereof required to be issued by or used in the state where
     the Timeshare Projects are located and other jurisdictions where Timeshare
     Interests are offered for sale or sold;

               (D) a favorable opinion in form and substance satisfactory to
     Lender and its counsel which is from independent, nationally-recognized
     counsel for Borrower, with respect to such Timeshare Project or Resort, as
     applicable, satisfactory to Lender and, with respect to (A) the Security
     Interest in the Collateral in favor of the Lender, as being first priority,
     perfected, valid and enforceable, (B) the "true sale" of the Instruments
     from the Originator related to such Timeshare Project or Resort, as
     applicable, to the Intermediary Corporation, and non-consolidation of, the
     applicable Originator and the Intermediary Corporation, (C) the due
     organization, valid existence and good standing of such related Originator,
     (D) the enforceability, legal, valid and binding nature of the Obligations
     of, due authorization of such Originator with regard to the Documents, (F)
     real estate and securities law in a form substantial similar to that given
     on the Closing Date, as applied to the pertinent Timeshare project, the
     related Originator, the Intermediary Corporation and Borrower, and (G) any
     other opinions reasonably requested by Lender, including, but not limited
     to if the Timeshare Project has not been registered under Interstate Land
     Sales Full Disclosure Act and Lender requests such an opinion, a copy of an
     advisory opinion issued by the federal Office of Interstate Land Sales
     Registration that the Project does not fall within the purview of the
     Interstate Land Sales Full Disclosure Act. Lender may in its sole
     discretion, accept the opinion of Borrower's counsel on the applicability
     of such act;

               (E) a copy of the form of the Timeshare Program Consumer
     Documents and the Timeshare Program Governing Documents which have been or
     are being

                                      31
<PAGE>
 

     used by the Timeshare Developers, including, without limitation, the
     Management Agreements, and the Timeshare Declaration;

               (F) the Insurance Policies;

               (G) if requested by the Lender, a structural inspection report of
     the Timeshare Projects by an engineer satisfactory to the Lender;

          (c) Conditions Precedent to Each Advance. With respect to each
Advance, the following conditions precedent shall be true:

               (i) no Material Adverse Effect shall have occurred;

               (ii) there shall have been no breach in the warranties and
     representations made in the Documents by Borrower, the Intermediary
     Corporation, any Originator, any Servicer or the Guarantor or failure in
     the Performance of any of them, with regard to their respective Obligations
     under the Documents, and all such representations and warranties shall be
     true as of the related Transfer Date other than any representation or
     warranty limited by its terms to a specific date and taking into account
     any amendments thereto as a result of any written disclosures made by
     Borrower to Lender after the date hereof and approved in writing by Lender;

               (iii) neither an Event of Default nor any event that, in the
     Borrower's good faith and reasonable business judgment (without giving
     effect to any applicable grace period thereto), constitutes an Incipient
     Default shall have occurred and be continuing;

               (iv) the Interest Rate applicable to the Advance (before giving
     effect to any savings clause) will not exceed the maximum rate permitted by
     the Applicable Usury Law;

               (v) Borrower shall have paid to Lender (or its designee) at least
     one Business Day prior to the date that such Advance is requested to be
     made, or authorized such payment be made out of the Advance, any Lender's
     Attorney's Fee, any Custodian Fee, any Lockbox Bank Fee, and any other fees
     required to be paid at the time of the Advance; and

               (vi) Lender and its counsel shall have completed its due
     diligence investigation of the items set forth on Exhibit L hereto and
     shall be satisfied with the results thereof and no material amendments,
     modifications or waivers shall have occurred with respect thereto since the
     time when Lender or its counsel completed such investigation. Lender
     acknowledges that as of the Closing Date it and its counsel are, with
     respect to the Resorts actually named in Section 1.113, satisfied with the
     items indicated on Exhibit L that

                                      32
<PAGE>
 

     were delivered to them. Lender agrees that no additional diligence items
     shall be required with respect to the Resorts listed in the footnote to
     Exhibit L (the "Secondary Resorts") unless the aggregate Outstanding
     principal balance of Mortgage Loans from Secondary Resorts is greater than
     ten percent (10%) of the Borrowing Base in which event Borrower shall
     supply such additional diligence items as are requested by the Lender.

               (vii) Delivery of Mortgage Documents and other Documentation.
     Borrower shall have delivered, or caused delivery, to Custodian or Lender
     of the following items at least ten (10) Business Days prior to the date of
     each Advance, all of which shall be in form and substance satisfactory to
     Lender:

                    (A) the Articles of Organization of Borrower as in effect on
          the date thereof, the Intermediary Corporation, each Originator, the
          Servicer, the Guarantor and, if applicable, their respective managers,
          members and partners, to the extent any such entity is not a natural
          person, and (if not already provided by the terms hereof) Vistana,
          provided, however, the Borrower shall be under no obligation to
          deliver such documents if the Lender has previously received copies of
          such documents from the Borrower that are, at the time of such later
          requested Advance, still in full force and effect;

                    (B) the Resolutions of Borrower, the Intermediary
          Corporation, each Originator, the Servicer, the Guarantor and (if not
          already provided by the terms hereof) Vistana and, if applicable,
          their respective managers, members and general partners, to the extent
          any such entity is not a natural person as in effect on the date
          thereof, provided, however, the Borrower shall be under no obligation
          to deliver such documents if the Lender has previously received copies
          of such documents from the Borrower that are, at the time of such
          later requested Advance, still in full force and effect;

                    (C) any written amendments, written modifications, or
          written waivers or updated versions of any documents, certificates,
          instruments or agreements listed in Section 4.1(a) hereof or written
          notice of any material oral agreements having the same effect;

                    (D) the Borrower shall have delivered to Custodian all
          Mortgage Documents related to the Designated Instruments related to
          such Advance at least six (6) Business Days prior to the date upon
          which such Advance is requested to be made.

               (viii) Borrower shall have delivered to the Lender and the
     Custodian a duly executed and authorized "Borrower's Certificate",
     substantially in the form of Exhibit G hereto, at least six (6) Business
     Days prior to the date that such Advance is requested to be made.

                                      33
<PAGE>
 

               (ix) Borrower shall have delivered a duly executed and authorized
     "Request for Advance and Certification" substantially in the form of
     Exhibit J hereto, and including a Schedule of Instruments, as described in
     the Transfer Agreements, to Lender prior to 3:00 p.m. New York City time on
     a Business Day that is as least six (6) Business Days prior to the date
     upon which such Advance is requested to be made.

               (x) Lender shall have received a duly executed and authorized
     Custodian Certificate by fax (to be followed by original thereof) by 11:00
     a.m. New York Time on the Business Day prior to the date that such Advance
     is requested to be made.

               (xi) the Borrower shall have caused the delivery of an accurate,
     current Servicing Officer List, certified by the Servicer, to the Lender
     and the Custodian provided that, if the last delivered Servicing Officer
     List (if any was previously delivered) is, as of the date of determination,
     still accurate and current in all respects, this clause will be deemed
     satisfied.

                (d) Conditions Precedent for Subsequent Advances. After the
          initial Advance, the obligation of Lender to make a subsequent Advance
          shall be subject to the satisfaction of the conditions precedent set
          forth in Sections 4.1(b), 4.1(c) and 4.2 hereof.

          4.2 Form of Request; Timing. Advances shall be requested in writing of
a "Request for Advance and Certification" by a Responsible Officer of Borrower
and shall not be made more than one time in any calendar week; or (ii) in
amounts less than $250,000.00.

          4.3 Disbursement of Advances. Advances may be disbursed by wire
transfers or drafts payable to Borrower as requested by Borrower. Lender may, at
its option and upon notice to Borrower, withhold from any Advance any sum due it
(including costs and expenses) under the terms of any Document.

          4.4 No Waivers of Conditions Precedent. Although Lender shall have no
obligation to make an Advance unless and until all of the conditions precedent
to the Advance have been satisfied, Lender may, at its discretion, make Advances
prior to that time without waiving or releasing any of the Obligations.

     5.   NOTE, MAINTENANCE OF BORROWING BASE; PAYMENTS; SERVICING AND
          COLLECTION

          5.1 Repayment of Loan. The Loan shall be evidenced by the Note and
shall be repaid in immediately available funds according to the terms of the
Note and this Agreement.

           5.2 [Reserved]

                                      34
<PAGE>
 

          5.3 Lockbox Bank; Servicer; Financial Reports. (a) Borrower shall
cause the Lockbox Bank to collect payments on all of the Instruments
constituting part of the Designated Receivables Collateral and remit all amounts
collected in respect thereof and with respect to any other Collateral to the
Collection Account pursuant to the terms and conditions of each related Lockbox
Agreement.

          (b) The Borrower shall cause the Servicer, pursuant to the Transfer
and Servicing Agreement, to furnish on the fifteenth Business Day, but in no
event later than the twentieth calendar day of each calendar month, to Lender
and Borrower, at Borrower's sole cost and expense, on each Servicer Report Date,
separate reports (each, a "Servicer Report"), dated as of the last Business Day
of the calendar month immediately preceding the calendar month in which such
report is to be delivered, substantially in the format attached hereto as
Exhibit C. Within five (5) Business Days after receipt of Lender's written
request therefor, Borrower will have delivered or cause the Servicer to have
delivered to Lender a current list of the names, addresses and phone numbers of
the Mortgagors on each of the Instruments constituting part of the Designated
Receivables Collateral and Lender shall use such information only for the
purpose of monitoring, administering or verifying the particular Designated
Instrument. Borrower will also deliver or cause Servicer to deliver to Lender,
promptly after receipt of a written request therefore, such other reports with
respect to Instruments constituting part of the Designated Receivables
Collateral as Lender may from time to time reasonably request.

          (c) Lender, subject to any restriction contained in any Lockbox
Agreement, Custodial Agreement or Transfer and Servicing Agreement, as the case
may be, may at any time and from time to time, substitute or require Borrower to
substitute a successor or successors to any Agent acting under the Lockbox
Agreement, Custodial Agreement or the Transfer and Servicing Agreement.

          5.4  Application of Payments.  Subject to Lender's rights under
Article 7, all payments and proceeds from the Designated Receivables Collateral
(except Miscellaneous Payments and Late Fees) shall be applied as follows:
first, to principal on the Note (and applied to the repayment of Advances in the
order of their extension); second, to accrued and unpaid Interest on the Note
(and applied to the payment of interest on Advances in the order of the
extension of such Advances extension); third, to the other Obligations in such
order and manner as Lender may determine, and fourth, the payment of all late
charges, costs, fees, disbursements and expenses and other out-of-pocket amounts
required by the Documents to be paid by Borrower pursuant to the terms hereof
which are, as of the applicable Payment Date, due, payable and outstanding and
fifth, any balance remaining to the Borrower or, its designee provided that, if
at the time of application an Event of Default shall have occurred and be
continuing, the order of payments first and second shall be reversed.

          5.5 Obligations Absolute. Whether or not the proceeds from the
Designated Receivables Collateral shall be sufficient for that purpose, Borrower
will pay when due all payments

                                       35
<PAGE>
 

required to be made by Borrower pursuant to any of the Documents, Borrower's
Obligation to make such payments being absolute and unconditional.

     6. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS

          6.1 Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants that, on the Closing Date and on each Transfer
Date, provided however, that any representation or warranty limited by its terms
to a specific date shall be so limited and taking into account any subsequent
amendments related thereto made as a result of any written disclosures made by
Borrower to Lender after the date hereof and approved in writing by Lender:

               (a) Special Purpose Entity. The Borrower is a Special Purpose
Entity.

               (b) Collateral. On the date hereof the Borrower is the sole owner
of the Collateral free and clear of all Liens whatsoever, except for the
Permitted Encumbrances.

               (c) Ownership. VTM Corp. is the sole legal and beneficial owner
of the Borrower and owns 100% of the issued stock thereof. The legal names of
the Borrower and its owner are as set forth in this Agreement. The Borrower has
not operated under any other names. The Borrower does not have any trade names,
fictitious names, assumed names or "doing business as" names.

               (d) Organization and Good Standing. The Borrower is a corporation
that has been duly organized and is validly existing and in good standing under
the laws of Delaware, with power and authority to own the Collateral and to
enter into the transaction contemplated by the Documents to which it is a party.

               (e) Due Qualification. The Borrower is duly qualified to do
business as a foreign entity in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the conduct of its
business shall require such qualification, license or approval (except where the
failure to be so qualified, licensed and approved would not individually or in
the aggregate have a Material Adverse Effect.

               (f) Power and Authority. The Borrower has the power and authority
to execute and deliver this Agreement and the other Documents to which it is a
party and carry out their terms and to grant the Security Interest in the
Collateral to the Lender; and the execution, delivery and performance of this
Agreement and the other Documents to which the Borrower is a party have been
duly authorized by the Borrower by all necessary action.

               (g) Binding Obligation. This Agreement and the other Documents to
which the Borrower is a party constitute legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms except as the

                                      36
<PAGE>
 

enforceability thereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights and by general principles of
equity.

               (h) No Violation. The consummation of the transactions
contemplated by the Documents and the fulfillment of the terms hereof shall not
conflict with, result in any material breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default under,
the organizational documents of the Borrower, the Intermediary Corporation or
any Originator, or any Designated Instrument, Mortgage, Timeshare Declaration or
any indenture, agreement or other instrument to which the Borrower is a party or
by which it is bound; nor result in the creation or imposition of any Lien upon
any of its Properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Agreement); nor violate any law, order, rule
or regulation applicable to the Borrower of any Governmental Authority having
jurisdiction over the Borrower or its Properties where such violation would have
a Material Adverse Effect.

               (i) Consents. No approval, authorization or consent of any other
Person under any agreement, contract, lease or license or similar document or
instrument to which Borrower is a party or by which Borrower is bound, is
required to be obtained by Borrower in order to make or consummate the
transactions contemplated under the Documents which has not been obtained. All
consents and approvals of, filings and registrations with, and other actions in
respect of, all Governmental Authorities required to be obtained by Borrower in
order to make or consummate the transactions contemplated under this Agreement
and the other Documents have been, or prior to the time when required will have
been, obtained, given, filed or taken and are or will be in full force and
effect.

               (j) No Proceedings. There are no Proceedings or investigations
pending or, to the Borrower's Knowledge, threatened before any Governmental
Authority having jurisdiction over the Borrower or its Properties: (A) asserting
the invalidity of this Agreement or the other Documents; (B) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
the other Documents; or (C) seeking any determination or ruling that might have
a Material Adverse Effect. There are no Proceedings pending or, to the best of
the Borrower's Knowledge, threatened before any Governmental Authority involving
the Timeshare Projects or Resorts that will cause a Material Adverse Effect.

                (k) Solvent. The Borrower is Solvent.

               (l) Collateral. The representations and warranties regarding the
Collateral contained in the Documents to which the Borrower is a party are true
and correct in all material respects. Any Servicer and the Lender may rely on
such representations and warranties to the same extent as if such
representations and warranties were set forth by the Borrower herein.

               (m) Nonconsolidation. The Borrower is operated in such a manner
that it would not be substantively consolidated with the Servicer, each or any
Originator or the

                                      37
<PAGE>
 

Intermediary Corporation, in accordance with applicable bankruptcy or insolvency
laws, such that the separate existence of the Borrower would not be disregarded
in the event of a bankruptcy or insolvency of any Servicer, any Originator or
the Intermediary Corporation, and in such regard, among other things:

               (i) None of any Servicer, any Originator or the Intermediary
     Corporation, is involved in any day-to-day management of the Borrower;
     provided however, that nothing contained in this clause (i) shall prohibit
     VCH Portfolio Services, Inc. from acting as Servicer pursuant to the terms
     of this Agreement;

               (ii) the Intermediary Corporation maintains a separate business
     office from the Borrower;

               (iii) all business correspondence of the Borrower and other
     communications are conducted in the Borrower's own name and on its own
     stationery; and

               (iv) the Borrower does not act as an agent of Vistana, the
     Servicer, any Originator or the Intermediary Corporation in any capacity
     and neither Vistana, any Originator nor the Intermediary Corporation
     thereof acts as agent for the Borrower, but instead presents itself to the
     public as a corporation separate from the Borrower; provided that VCH
     Financial Services, Inc. may act as the Servicer under the Transfer and
     Servicing Agreement.

          (n) Security Interest. The Lender will have, on the related Transfer
Date, a valid perfected Security Interest in the Collateral transferred as of
such date which has not been released by the Lender from the Grant of Security
Interest in accordance with the terms and conditions of this Agreement, and
which Security Interest will be prior to all other Liens.

          (o) No Other Security Interests. No Security Interest (other than the
Security Interest granted to the Lender hereunder, or as may be conveyed to the
Borrower pursuant to the Transfer and Servicing Agreement) has been or will be
granted by any Vistana Transaction Entity or Vistana with respect to any
component or part of the Designated Receivables Collateral (other than as may be
granted with respect to a Securitization) that has not been, as of the related
Transfer Date, released and such release is the legal, valid and binding release
of the party releasing such Security Interest.

          (p) Correct Copies. The Instruments and each other Mortgage Document
related thereto has been delivered by Borrower to Custodian, as bailee on behalf
of the Lender, prior to the applicable Transfer Date, and are true and correct
copies of such documents, each of which is in full force and effect and has not
been amended, modified or terminated in any respect through the date hereof as
of such Transfer Date other than such amendments, modifications or terminations
as have been previously and explicitly approved by Lender in writing.

                                      38
<PAGE>
 

          (q) No Defaults. No payment under an Instrument being sold,
transferred, conveyed or assigned on any Transfer Date is more than thirty (30)
days past due as of the end of the calendar month immediately preceding such
Transfer Date pursuant to the terms of such Instrument, and, to Borrower's
Knowledge, no Originator related to any such Instrument is otherwise in default
under any of its obligations under such Instrument(s).

          (r) Notices of Defaults. No Originator, Intermediary Corporation or
Servicer has notified Borrower, directly or indirectly, that any Originator, the
Intermediary Corporation or Servicer is in default under any of its obligations
under any Instrument or Mortgage which is part of the Receivables Collateral as
of the date this representation is made or deemed re-made.

          (s) No Set-Offs. To the Knowledge of the Borrower, after due inquiry,
there are no setoffs, counterclaims, or defenses on the part of any Mortgagor to
pay any amounts due under any Instrument related to it.

          (t) Margin Stock. Borrower does not own any "margin security", as that
term is defined in Regulations G and U of the Federal Reserve Board, and the
proceeds of the Loan under this Agreement will be used only for the purposes
contemplated hereunder. None of the proceeds of the Loan will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any such "margin security" or for any other
purpose which might cause the Loan to be considered a "purpose credit" within
the meaning of Regulations G, T, U and X of the Federal Reserve Board. Borrower
will not take or permit any agent acting on its behalf to take any action which
might cause this Agreement or any document or instrument delivered pursuant
hereto to violate any regulation of the Federal Reserve Board.

          (u) Taxes. All federal, state, local and foreign tax returns, reports
and statements required to be filed by Borrower have been filed with the
appropriate Governmental Authority except where failure to file will not have
any Material Adverse Effect, and all material charges and other impositions
shown thereon to be due and payable by Borrower have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof other than those charges that the Borrower is protesting in
good faith and has set aside adequate reserves therefore in accordance with
GAAP. Borrower has paid when due and payable all material charges upon the books
of Borrower and no Government Authority has asserted any Lien against the
Borrower with respect to unpaid charges. Proper and accurate amounts have been
withheld by Borrower from any employees for all periods in full and complete
compliance (other than such non-compliance that shall not have any Material
Adverse Effect) with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.

                                      39
<PAGE>
 
          (v) ERISA.  The Borrower and each of its Affiliates are in compliance
in all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder, and neither the Borrower
nor any of its Affiliates have received, and the Borrower has no reason to
believe that it or any of its respective Subsidiaries will receive, any
notification of non-compliance thereunder.  No Reportable Event has occurred
with respect to any Plan administered by the Borrower or any of its respective
Subsidiaries or any administrator designated by the Borrower or any of its
respective Subsidiaries.  With respect to each Plan: (i) the Borrower and each
of its respective Subsidiaries have made all payments due from them to date, and
all amounts properly accrued to date as liabilities of the Borrower and each of
its respective Subsidiaries, which have not been paid, have been properly
recorded on the books of the Borrower and each of its respective Subsidiaries;
(ii) no such Plan which is subject to section 302 of ERISA or section 412 of the
Code has incurred any "accumulated funding deficiency" (as defined in either
such section), whether or not waived; (iii) the Borrower and each of its
respective Subsidiaries have complied with and each such Plan conforms to all
applicable laws and regulations, including but not limited to ERISA and the
Code; (iv) each such Plan which is a pension plan intended to qualify under
section 401(a) or 403(a) of the Code has received a favorable determination
letter form the Internal Revenue Service with respect to such qualification, its
related trust has been determined to be exempt from taxation under section
501(a) of the Code and nothing has occurred since the date of such letter that
would adversely affect such qualification or exemption; and (v) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the Knowledge of the Borrower, threatened with respect to any Plan or against
the assets of any Plan.  Neither the Borrower nor any of its respective
Subsidiaries nor any Plan administered by the Borrower or any of its respective
Subsidiaries has engaged in any Prohibited Transaction within the meaning of
section 405 of ERISA and section 4970 of the Code for which the Borrower or any
of its Subsidiaries may incur liability.

          (w) Securities Law.  Neither the Borrower, directly or indirectly, nor
anyone acting on its behalf has offered the Note or any part thereof for issue
or sale to, or has solicited or will solicit any offer to acquire any of the
same from, anyone so as to bring the issuance and sale of the Note within the
provisions of Section 5 of the Securities Act of 1933, as amended. The Borrower
is neither an "investment company" nor a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
This Agreement need not be qualified as an "indenture" pursuant to the terms of
the TIA, as amended.

          (x) Compliance with Law.  Borrower has complied with all applicable
laws and regulations, including, without limitation, all federal and state laws
and regulations of all of the states in which each of the Timeshare Projects
relating to any component, as of the applicable Transfer Date, of the
Receivables Collateral are located and all other governmental jurisdictions in
which such Timeshare Projects are located or in which Timeshare Interests
relating thereto have been or are being sold or offered for sale, other than any
noncompliance that shall not have a Material Adverse Effect.

                                      40
<PAGE>
 
          (y) Eligible Instruments.  Each Instrument which is assigned to Lender
pursuant to this Agreement and against which an Advance is requested or which is
assigned in satisfaction of Borrower's obligations under Section 3.2 hereof is,
or shall be at the time that it is assigned, as the case may be, an Eligible
Instrument and in conformance with the terms and conditions of this Agreement
and all of the other Documents applicable to Instruments at the time of
assignment; provided however, that, if such Instrument is in fact an Ineligible
Instrument due to a lack of enforceability and if the Borrower replaces or
substitutes such instrument in accordance with the provisions of Section 3.2
hereof, no Event of Default shall thereby occur hereunder.  As of the related
Transfer Date, Borrower, each Originator and each Servicer shall have performed
all their obligations to Purchasers required to be performed as of such date,
and there shall be no executory obligations to Purchasers to be Performed by
Borrower,  any Originator or any Servicer or other than obligations which by
their nature or by agreement are to be executed in the future.  Each Instrument
pledged to the Lender hereunder has been duly endorsed by the Borrower to such
Lender, and in a manner that satisfies all requirements of endorsement and
assignment, in order to transfer all right, title and interest of the Borrower
in each such Instrument.

          (z) Omissions and Statements.  The Documents and all certificates,
financial statements and written materials furnished to Lender by Borrower in
connection with the Loan do not contain any untrue statement of a material fact
or omit to state a fact which has or will have a Material Adverse Effect.

          (aa) No Indebtedness.  Borrower is not in default of any payment on
account of indebtedness for borrowed money or of any repurchase obligations in
connection with any other receivables purchase financing, or in violation of or
in default under any material term in any agreement, order, decree or judgment
of any court, arbitration or governmental authority to which it is a party or by
which it is bound.

          (bb) Mortgage Document Representations.  The representations and
warranties relating to any or all of the Instruments, Mortgages and other
Mortgage Documents made by any Originator, any Servicer, the Intermediary
Corporation or any other Vistana Transaction Entity in the Documents are true
and correct as of the date made provided, however, that if such representations
or warranties relate to Instruments that constitute Ineligible Instruments or,
such Mortgages or other Mortgage Documents are related to Ineligible
Instruments, and Borrower replaces or substitutes same in accordance with the
provisions of Section 3.2, no Event of Default shall occur hereunder.

          (cc) Survival of Representations and Warranties.  Until payment and
Performance in full of the Obligations, the representations and warranties
contained herein shall have a continuing effect as having been true when made.

          6.2  Affirmative Covenants of the Borrower.  The Borrower hereby
agrees that, until full, complete and indefeasible payment and performance of
the Obligations, unless the Lender shall otherwise consent in writing, Borrower
shall do or cause to have done all of the following:

                                      41
<PAGE>
 
          (a) Special Purpose Entity.  The Borrower at all times shall
remain a Special Purpose Entity.

          (b) Tax Returns.  The Borrower will deliver, or cause to be delivered,
to the Lender the annual federal income tax return of each of the Borrower, each
Originator, the Intermediary Corporation, each Servicer and Vistana.

          (c) Principal Place of Business.  The Borrower shall give Lender at
least 30 days' prior written notice of any change in the location of its, the
Intermediary Corporation's, any Originator's, any Servicer's or Vistana's
principal place of business, chief executive office or the place at which its
books and records are kept from its current principal place of business.

          (d) Originator Defaults.  The Borrower shall use its best efforts to
cooperate fully with Lender and Servicer in connection with the collection of
any amounts payable by an Originator or an Mortgagor, as the case may be.

          (e) Security Interest in Future Collateral.  The Borrower promptly
will take all action (1) necessary to maintain the Security Interest of Lender
in the Collateral and (2) as reasonably requested by the Lender.

          (f) Servicer's Reports, Monthly Reports.  The Borrower shall cause to
be delivered to the Lender when due the certified monthly portfolio performance
data and quarterly compliance certificate of the Servicer as further described
in Section 6.01 of each Transfer and Servicing Agreement.

          (g) Notice Upon Event of Default.  Promptly upon any officer of
Borrower obtaining Knowledge (i) of any condition or event which constitutes an
Event of Default, or, in the good faith and reasonable business judgment of the
Borrower or any Affiliate of the Borrower,  an Incipient Default under this
Agreement, (ii) that any Person has given any notice to Borrower or taken any
other action with respect to a claimed misrepresentation, breach or default
under any Document or event or condition of the type referred to in Section 7.1
hereof, provided that, if such Person (or Persons with related claims) is not a
Vistana Transaction Entity, such claim (or related claims in the aggregate), if
true, could give rise to a liability of no less than $100,000, (iii) of the
institution of any litigation or of the receipt of written notice from any
Governmental Authority as to the commencement of any formal investigation
involving an alleged or asserted liability of Borrower of any amount or any
adverse judgment in any litigation involving a potential liability of Borrower
of any amount, or (iv) of a Material Adverse Effect, Borrower shall deliver to
Lender and Custodian a certificate of Borrower signed by a responsible Officer
of Borrower, specifying the notice given or action taken by such Person and the
nature of such claimed misrepresentation, breach, litigation, Event of Default,
Incipient Default, Material Adverse Effect and what action Borrower has taken,
is taking and proposes to take with respect thereto.

                                      42
<PAGE>
 
          (h) Other Information.  Borrower shall deliver to Lender such other
information respecting the condition or operations, financial or otherwise, of
Borrower as the Lender may from time to time reasonably request.

          (i) Existence; Compliance with Law.  Borrower shall preserve and
maintain its existence and all of its licenses, permits, governmental approvals,
rights, privileges and franchises necessary or desirable in the normal conduct
of its business as now conducted or presently proposed to be conducted
(including, without limitation, its qualification to do business in each
jurisdiction in which such qualification is necessary or desirable in view of
its business other than such qualification that shall not have a Material
Adverse Effect); to conduct its business and maintain its Property in an orderly
and regular manner; and comply with (a) the provisions of its Articles of
Incorporation, (b) the requirements of all applicable laws, rules, regulations
or orders of any Governmental Authority and requirements for the maintenance of
Borrower's insurance, licenses, permits, governmental approvals, rights,
privileges and franchises and (c) the requirement of all Environmental Laws (as
applicable), except, in any case, to the extent that the failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.

          (j) Taxes and Other Liabilities.  Borrower shall pay or cause to be
paid all taxes (which individually or in the aggregate are material), fees,
assessments, governmental charges and levies, including claims for labor,
material and supplies when due and payable or levied against its or any of its
affiliate's assets, properties or income, including any Property that is part of
the Collateral, except to the extent Borrower or such Affiliate is contesting
the same in good faith and has set aside adequate reserves in accordance with
Partial GAAP for the payment thereof.

          (k) Inspection Rights; Assistance.  Upon ten Business Days' prior
notice, at any reasonable time and from time to time during normal business
hours, permit the Lender or any agent, representative or employee thereof, to
examine and make copies of and abstracts from the financial records and books of
account of Borrower and other documents in the possession or under the control
of Borrower relating to any Obligation of Borrower arising under or contemplated
by this Agreement or any other Document, and to visit the offices of Borrower to
discuss the affairs, finances and accounts of Borrower with any of the officers
of Borrower.

          (l) Supplemental Disclosure.  From time to time as may be necessary
(in the event that such information is not otherwise delivered by Borrower to
Lender pursuant to this Agreement) disclose to Lender in writing any material
matter hereafter arising which would have a Material Adverse Effect or which
would have been required to be set forth or described by Borrower in this
Agreement (including any and all Schedules and Exhibits hereto) or which is
necessary to correct any information set forth or described by Borrower
hereunder or in connection herewith which has been rendered inaccurate thereby.

          (m) Notice of Liens.  Borrower will notify Lender of the existence of
any Lien (except Permitted Encumbrances) on any of the Collateral immediately
upon discovery thereof.

                                      43
<PAGE>
 
Borrower shall defend the Security Interest of the Lender in the Collateral,
whether now existing or hereafter arising, against all claims of third parties.

          (n) Performance Obligations.  Borrower will duly and punctually
fulfill all obligations on its part to be fulfilled under or in connection with
each Document to which it is a party and will do nothing to impair the rights of
the Lender in the Collateral and the Documents.

          (o) Documentation; Further Assurances.

              (i)  Borrower shall from time to time, at the expense of Borrower,
     promptly execute and deliver all further instruments and documents, and
     take all further action, that may be necessary or desirable that the Lender
     may request in order to maintain and protect the Lien and Security Interest
     of the Lender in the Collateral or to enable the Lender to exercise and
     enforce its rights and remedies hereunder with respect to any Collateral.
     Without limiting the generality of the foregoing, within ten (10) Business
     Days after receipt of written request therefor, Borrower shall execute and
     file such financing or continuation statements, or amendments thereto, and
     such other instruments or notices, and make such recordings, as may be
     necessary or desirable, or as the Lender may request, in order to perfect
     and preserve the lien and Security Interest Granted or purported to be
     Granted in this Agreement and the other Documents.

              (ii) Borrower shall furnish to the Lender from time to time or
     upon reasonable request of the Lender statements and schedules further
     identifying and describing the Collateral.

          (p) Assumption of Purchaser's Obligations.  Borrower at all times will
fulfill and will cause its agents and independent contractors at all times to
fulfill all obligations to Purchasers, except where failure to do so will not
have a Material Adverse Effect. Borrower will cause its Affiliates to perform,
prior to the expiration of any applicable grace period, all of their respective
obligations under the Timeshare Program Governing Documents except where failure
to so perform would not give rise to a Material Adverse Effect.

          (q) Collection of Payments.  Borrower will cause Servicer to undertake
the diligent and timely collection of amounts delinquent under each Instrument
which constitutes part of the Designated Receivables Collateral and will bear
the entire expense of such collection. Lender shall have no obligation to
undertake any action to collect under any Instrument.

          (r) Lender as Additional Insured.  Timely after the closing, Borrower
will use reasonable commercial efforts to (i) cause to be maintained and (ii)
deliver or cause to be delivered to Lender, evidence of insurance policies
required by Lender relating to the Resorts, naming Lender an additional insured
and written by insurers, in amounts and on forms as are customary in the
timeshare resort industry.

                                      44
<PAGE>
 
          (s) No Indebtedness.  Borrower will promptly discharge any and all
Indebtedness owing by it other than the Note.  Borrower will cause any and all
Indebtedness owing by it or secured by its property (including the Collateral)
which does not relate to  a Permitted Encumbrance, or that otherwise could have
a Material Adverse Effect and all Liens, and other charges upon any Property
thereof of Borrower to be fully subordinated in writing in all aspects to the
Obligations and Lender's claims now held or hereafter acquired to the assets of
Borrower, including, without limitation, the Collateral; provided, however, that
if no Event of Default has occurred and is continuing, Borrower may make
regularly scheduled payments on any such Indebtedness and other normal and
customary payments for services rendered.

           (t) Payment of Fees and Expenses.

               (i)   Borrower shall, at the time of the initial Advance of the
     Loan, pay or cause to be paid all of Lender's Attorneys Fees for services
     rendered in connection with this Loan.

               (ii)  Borrower will pay Custodian the Custodial Fee and recurring
     fees that are set forth in the Custodial Agreement.

               (iii) Borrower will pay upon demand any and all costs
     incurred by the Lender in connection with the making of Advances, the
     protection of the Collateral, or the enforcement of the obligations against
     Borrower, including, without limitation, all attorneys' and other
     professionals' fees and costs, revenue, documentary stamp and intangible
     taxes and any other taxes imposed on the Documents.

          (u) Indemnification.  Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS,
AND DEFEND Lender, its successors, assigns and shareholders (including corporate
shareholders), and the directors, officers, employees, agents and servants of
the foregoing, for, from and against any and all losses, costs, expenses
(including, without limitation, any attorneys' fees and costs), demands, claims,
suits, proceedings (whether civil or criminal), orders, judgments, penalties,
fines and other sanctions arising from or brought in connection with (a) the
Timeshare Projects, the Collateral, Lender's status by virtue of the Security
Documents, creation of Security Interests, the terms of the Documents or the
transactions related thereto or any act or omission of Borrower or any Agent or
their respective employees, contractors or agents, whether actual or alleged,
unless arising out of Lender's negligence or wilful misconduct and (b) any and
all brokers' commissions or finders' fees or other costs of similar type by any
party in connection with the Loan. On written request by a person or other
entity covered by the above agreement of indemnity, Borrower will undertake, at
its own cost and expense, on behalf of such indemnitee, using counsel
satisfactory to the indemnitee, the defense of any legal action or proceeding to
which such person or entity shall be a party. At Lender's option, Lender may at
Borrower's expense prosecute or defend any action involving the priority,
validity or enforceability of the Security Interests in the Collateral.

                                      45
<PAGE>
 
     6.3  Borrower's Negative Covenants. Borrower covenants and agrees as
follows that, until full, complete and indefeasible payment and performance of
the Obligations, unless the Lender shall otherwise consent in writing, Borrower
shall not do any of the following:

          (a) Liens; Negative Pledges; and Encumbrances.  Borrower shall not
create, incur, assume or suffer to exist (i) any Lien of any nature upon or with
respect to the Collateral (except for Permitted Encumbrances under this
Agreement); (ii) any Indebtedness in excess of $10,000 (other than the
Obligations, any Securitization, and indebtedness incurred in the ordinary
course of business) with respect to itself or (iii) any direct or indirect
contingent obligation with respect to itself except in the ordinary course of
business; nor shall Borrower do anything to impair the rights of the Lender in
the Collateral.

          (b) Disposition of Assets.  Borrower shall not sell, assign, convey,
transfer or otherwise dispose of, any of the Receivables Collateral, nor enter
into any sale and sale agreement covering any of the Receivables Collateral
other than as expressly contemplated by the Documents. The foregoing shall not
prohibit the sale, assignment, conveyance or other transfer of any Instrument
that is not part of the Receivables Collateral.

          (c) No Subsidiaries.  Borrower shall not create any Subsidiaries.

          (d) Amendments of Organizational Documents. Borrower shall not amend
its Articles of Organization.

          (e) Events of Default.  Borrower shall not take or omit to take any
action, which act or omission would constitute (a)  an Event of Default under
this Agreement, (b) any other Documents Default or (c) a default under any other
material agreement, contract, lease, license, mortgage, deed of trust or
instrument to which it is a party or by which it or any of its Properties or
assets is bound, which default or event of default (after the expiration of any
applicable grace period) in the good faith reasonable judgment of the Borrower
may have a Material Adverse Effect.

          (f) Other Activities of Borrower.  Borrower shall not (x) make any
capital expenditures that create, in the aggregate and at any one time, an
Outstanding Indebtedness of the Borrower in excess of $10,000, (y) without the
prior written consent of its Independent Director, (1) commence any case,
proceeding or other action under any existing or future bankruptcy, insolvency
or similar law seeking to have an order for relief entered with respect to it,
or seeking reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, (2)
seek appointment of a receiver, trustee, custodian or other similar official for
it or any part of its assets, (3) make a general assignment for the benefit of
creditors, or (4) take any action in furtherance of, or consenting or
acquiescing in, any of the foregoing, (z) guarantee (directly or indirectly),
endorse the obligations of (except in the ordinary course of business), or own
or purchase any stock, obligations or securities of or any other interest in, or
make any capital contribution to, any other Person, or engage in any other
action that bears on whether the separate legal identity of Borrower shall be
respected, including, without limitation (i)

                                      46
<PAGE>
 
holding itself out as being liable for the debts of any other party or (ii)
acting other than in its corporate name and through its duly authorized officers
or agents.

          (g) No Advances.  The Borrower shall not make any advances, loans,
extensions of credit, acquisitions or investments other than the acquisition of
Permitted Investments.

          (h) Existence; Qualification.  The Borrower shall not dissolve or
terminate its existence as a Delaware corporation.

          (i) Other Transactions.  The Borrower shall not engage in any business
or activity other than in connection with, or relating to, this Agreement, the
other Documents and the specific transactions contemplated thereby (which
permitted transactions include any Securitization).

          (j) Validity of Liens.  The Borrower shall not permit the validity or
effectiveness of this Agreement or any Security Interest set forth herein to be
impaired, or permit the Lien of this Agreement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations under any of the Documents, except as may be
expressly permitted hereby.

          (k) Extensions.  The Borrower shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or other law that would prohibit or forgive the
Borrower from paying all or any portion of the principal of or Interest on the
Note as contemplated herein or in the Note, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do so) the Company hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Lender or the Custodian, but will suffer and permit the execution of every
such power as though no such law had been enacted.

          (l) ERISA.  The Borrower shall not permit any Plan to engage in a
prohibited transaction within the meaning of section 406 of ERISA or section
4975 of the Code, except in those cases for which there is a statutory or
administrative exemption available under section 408 of ERISA or section 4975(d)
of the Code where such action could reasonably be expected to have a Material
Adverse Effect, or permit to exist with respect to any Plan any accumulated
funding deficiency within the meaning of section 412 of the Code, or incur any
liability (other than for required insurance premiums) where such action could
reasonably be expected to have a Material Adverse Effect.

          (m) No Modifications of Instruments.  Without the prior written
consent of Lender (which shall not be unreasonably withheld), Borrower will not
cancel or materially modify, or consent to or acquiesce in any material
modification (including, without limitation, any change in the Mortgage Loan
Coupon Rate or the amount, frequency or number of payments of

                                      47
<PAGE>
 
principal or interest on any Instrument) to, or solicit the prepayment of, any
Instrument (provided however, that if prompt notice of such modification is
provided to the Lender and the affected modified Instrument is replaced no later
than the next succeeding Payment Date in accordance with the provisions of
Section 3.2, no Event of Default shall occur hereunder) which constitutes part
of the Designated Receivables Collateral; waive the timely performance of the
obligations of the Mortgagor under any such Instrument or its security; or
release the security for any such Instrument. Borrower will not pay or advance
directly or indirectly for the account of any Originator, the Intermediary
Corporation or any sum requested to be deposited or owing by any Mortgage under
any Instrument (whether or not an Eligible Instrument) which constitutes part of
the Receivables Collateral.

          (n) No Modification of Timeshare Documents.  The Borrower will not,
without the prior written consent of Lender, cancel, amend, or materially
modify, waive or permit or acquiesce in the cancellation or material
modification of any underlying transaction document relating to an Instrument,
including but not limited to, any Mortgage Document, true and complete copies of
which have been delivered in accordance with Article Four hereof, provided
however, that if prompt notice of such modification is provided to the Lender
and such modified Instrument is replaced no later than the next succeeding
Payment Date in accordance with the provisions of Section 3.2, no Event of
Default shall occur hereunder.

          (o) No Distributions.  Borrower will not make, any distribution
(inclusive of dividends, stock repurchases and redemptions, the repayment of
loans from, and the making of loans to or investments in the distributees)
unless at the time of the distribution and after giving effect thereto, there
exists neither an Event of Default nor any Incipient Default.

          (p) Securities Law.  Unless substantially due to an action of the
Lender, neither the Borrower, directly or indirectly, nor anyone acting on its
behalf (provided Bank shall not be considered to be acting on behalf of
Borrower) will offer the Note or any part thereof or any similar securities for
issue or sale to, or will solicit any offer to acquire any of the same from,
anyone so as to bring the issuance and sale of the Note within the provisions of
Section 5 of the Securities Act of 1933, as amended. Borrower will not conduct
its activities in such a manner that would make it subject to the provisions of
the Investment Company Act.

          (q) Additional Insurance.  Borrower will not obtain or carry insurance
relating to the Instruments separate from that required by any Document, unless
the Lender shall have the same rights with respect thereto as it has with
respect to the insurance required by such Document.

          (r) No Petition.  Borrower hereby agrees and covenants that it will
not commence or join in any action or proceeding against the Intermediary
Corporation or itself under any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement, or other insolvency law now or hereafter
existing.

                                      48
<PAGE>
 
          6.4  Notification of Originators.  Lender may notify Purchasers or
Originators of the existence of Lender's or Trustee's interest as assignee in
the Receivables Collateral and reasonably request from such Purchasers or
Originators any information relating to the Receivables Collateral but, with
respect to the Purchasers, solely for the purpose of monitoring, administering
or verifying the Receivables Collateral.  Borrower will deliver such notice of
the Lender under its letterhead if so requested by Lender.

          6.5  Inspection.  Lender's examination, inspection, or receipt of
information pertaining to the Collateral or the Timeshare Projects and their
respective proposed operation shall not in any way be deemed to reduce the full
scope and protection of the warranties, representations and Obligations
contained in this Agreement.

          6.6  Supplemental Nature of Article 6.  The representations,
warranties and covenants contained in this Article 6 are in addition to, and not
in derogation of, the representations, warranties and covenants contained
elsewhere in the Documents and shall be deemed to be made and reaffirmed on each
Transfer Date, provided that, when specifically referencing Instruments, shall
be made only with respect to all of the Instruments being sold, transferred,
conveyed or assigned upon such Transfer Date.

      7.  DEFAULT

          7.1  Events of Default.  The occurrence of any of the following events
or conditions shall constitute an event of default ("Event of Default")
hereunder:

          (a) if any payment or prepayment of all or any part of the principal
of or Interest on any Advance and/or any other amounts payable by Borrower under
this Agreement or any other Document (after the expiration of any applicable
grace period expressly set forth in such Document), whether at the stated
maturity thereof or at any date fixed for payment by acceleration, by notice of
prepayment or otherwise shall not be paid within three (3) Business Days
immediately succeeding the date as and when due;

          (b) any representation or warranty of a Person other than Lender
contained in the Documents or in any certificate furnished to Lender under the
Documents by or on behalf of Borrower proves to be, in any respect, false or
misleading as of the date deemed made and has a Material Adverse Effect;

          (c) a default in the Performance of the Obligations set forth in
Sections 3.2, 6.2(j), 6.2(k), 6.2(o), 6.2(p), 6.2(q), 6.2(t)(i), 6.3(a), 6.3(o),
6.3(p), or 6.3(r) hereof;

          (d)  reserved;

                                      49
<PAGE>
 
          (e) breach by any of the Borrower, the Intermediary Corporation, any
Originator, any Servicer (if it is an Affiliate of the Borrower) or Vistana in
the performance of any negative covenant contained in any of the Documents;

          (f) a default in the Performance of any Obligations by the Borrower,
the Intermediary Corporation, any Originator or the Servicer or a violation of
any term, covenant or provision of the Documents (other than a default or
violation referred to elsewhere in this Section 7.1) which continues unremedied
(i) for a period of ten (10) Days after notice of such default or violation of
Borrower in the case of a default under or violation of Section 6.3(a) hereof or
any other default or violation which can be cured by the payment of money alone
or (ii) in the case of any other default or violation, for a period of twenty
(20) Business Days after the earlier of knowledge of such breach by such non-
performing person or notice to such Person of such default or violation, plus
only if such default or violation cannot be cured by such Person within twenty
(20) Business Days and such Person has been, in the good faith and reasonable
commercial judgment of the Lender, as determined by the Lender in its sole
discretion, diligent in attempting to effect cure, such additional period not to
exceed an additional ten (10) Business Days as may be required by Borrower
proceeding diligently to effect cure, provided that if any grace period
expressly set forth and relating to such specific covenant pursuant to the terms
of the Documents applies, such grace period shall be the only applicable grace
period for the purposes of this Section 7.01(f);

          (g) the occurrence of an "Event of Default", "Servicer Default" or
"Guarantor Default" or other "Event of Default" as defined elsewhere in any of
the Documents;

          (h) any final, non-appealable judgment or decree for money damages or
for a fine or penalty against Borrower which is not paid and discharged or
stayed within 30 days thereafter and when aggregated with all other judgments or
decree(s) that have remained unpaid and undischarged or stayed for such period
is in excess of $100,000;

          (i) Borrower, the Intermediary Corporation, any Originator, the
Servicer or Vistana shall (i) generally not be paying its debts as they become
due, (ii) file or consent by answer or otherwise to the filing against it of a
petition for relief or reorganization, arrangement or liquidation or any other
petition in bankruptcy or insolvency or the appointment of a custodian under the
laws of any jurisdiction, (iii) or any other commencement by such Person of a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of it in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (iv) make an assignment for the
benefit of its creditors, (v) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers for itself or any
substantial part of its property, (vi) be adjudicated insolvent, (vii) dissolve;
commence to wind-up its affairs, (viii) take any action for purposes of the
foregoing; or a petition for relief or reorganization, arrangement or
liquidation or any other petition in bankruptcy or insolvency or the appointment
of a custodian under the laws

                                      50
<PAGE>
 
of-any jurisdiction is filed against it or a custodian is appointed for
Borrower, the Collateral or any material part of its properties and such
proceeding is not dismissed and appointment vacated within forty-five (45) days
thereafter or (ix) a final judgment, fine or other order for the payment of
money shall be rendered by any Governmental Authority against such Person and
the applicable Person shall not discharge the same or provide for its discharge
in accordance with its terms, or obtain an adequate bond with respect thereto,
or procure a stay of execution thereof within thirty (30) days from the date of
its entry and the Lender shall have reasonably determined that such final
judgment, fine or order is likely to have a Material Adverse Effect;

               (j)  a material adverse change in any of the Timeshare Projects
which is uninsured for less than the full value of such claim and which would
have a Material Adverse Effect that affects, directly or indirectly, Instruments
having, at the time such Material Adverse Effect occurs (as determined by the
Lender in its sole discretion) an Outstanding principal balance of more than
$100,000 or in the business or financial condition of Borrower or in the
Collateral, which change (i) is not otherwise enumerated in this Section 7.1 as
an Event of Default, (ii) is not fully cured by Borrower within thirty (30) days
of the occurrence thereof, and (iii) as the result of which Lender in good faith
deems the prospect of Performance of the Obligations impaired or its Collateral
imperiled. A change shall not be deemed material and adverse until it results in
cumulative damages of at least $100,000 or, in Lender's reasonable opinion, is
not subject to quantification;

               (k)  an order or decree has been entered by any court or
Governmental Authority of competent jurisdiction enjoining the intended use as
Timeshare resorts of any Timeshare Project or Timeshare Projects that, in either
case, gave rise to a material number of Designated Instruments having a then-
Outstanding principal balance of $100,000 and such order or decree is not
vacated, or such Designated Instruments are not repurchased or replaced within
sixty (60) days of entry thereof;

               (l)  If an "Event of Default", as defined under the Line of
Credit Agreement, occurs and is not cured within the applicable grace period (if
any) provided therein.

          7.2  Remedies. At any time after an Event of Default has occurred and
while it is continuing, Lender may, but without obligation, in addition to the
rights and powers granted elsewhere in the Documents and not in limitation
thereof, do any one or more of the following:

               (a)  cease to make further Advances;

               (b)  declare all Outstanding principal of, and Interest accrued
to the date of payment on the Note, and all other sums owing by Borrower to
Lender in connection with the Documents, immediately due and payable without
notice, presentment, demand or protest, which are hereby waived by Borrower;

               (c)  receive and retain any proceeds from the other items of
Collateral;

                                      51
<PAGE>
 
          (d)  with respect to the Receivables Collateral, (i) institute
collection, foreclosure and other enforcement actions against Purchasers and
other persons obligated on the Receivables Collateral, (ii) enter into
modification agreements and make extension agreements with respect to payments
and other performances, (iii) release persons liable for performance, (iv)
settle and compromise disputes with respect to payments and performances claimed
due, all without notice to Borrower, without being called to account for such
actions by Borrower and without relieving Borrower from Performance of the
Obligations, and (v) receive, collect, open and read all mail of Borrower for
the purpose of obtaining all items pertaining to the Receivables Collateral; and

          (e)  proceed to protect and enforce its rights and remedies under the
Documents and any other documents or instruments related thereto, to foreclose
or otherwise realize upon the collateral and/or to exercise any other rights and
remedies available to it at law, in equity or by statute.

          7.3  Application of Funds Received. Notwithstanding anything in the
Documents to the contrary, while an Event of Default exists, any cash received
and retained by Lender in connection with the Collateral may be applied to
payment of the Obligations in the manner provided in Section 7.5 hereof.

          7.4  Foreclosure. (a) Lender shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code of the relevant
jurisdiction and all other rights and remedies accorded to a secured party in
equity or at law. Any notice of sale or other disposition of the Collateral
given not less than ten (10) Business Days prior to such proposed action in
connection with the exercise of Lender's remedies shall constitute reasonable
and fair notice of such action. Lender may postpone or adjourn any such sale
from time to time by announcement at the time and place of sale stated on the
notice of sale or by announcement of any adjourned sale, without being required
to give a further notice of sale. Any such sale may be for cash or, unless
prohibited by applicable law, upon such credit or installment as Lender may
determine. Borrower shall be credited with the net proceeds of such sale only
when such proceeds are actually received by Lender in good current funds.
Despite the consummation of any such sale, Borrower shall remain liable for any
deficiency on the Obligations which remains outstanding following such sale. All
net proceeds recovered pursuant to a sale shall be applied in accordance with
the provisions of Section 7.5 hereof.

          (b)  Lender may, in the name of Borrower, or in its own name, make and
execute all conveyances, assignments and transfers of the Collateral sold in
connection with the exercise of Lender's remedies; and for this purpose Lender
is hereby appointed attorney-in-fact for Borrower.

          (c)  Upon request of Lender when an Event of Default exists, Borrower
shall assemble the Collateral not already in Lender's possession and make it
available to Lender at a time and place designated by Lender.

                                      52
<PAGE>
 
          7.5  Proceeds from Sale of Collateral. The proceeds realized from any
sale of all or any part of the Collateral made in connection with the exercise
of Lender's remedies shall be applied in the following order of priorities;
first, to the payment of all costs and expenses of such sale, including, without
reasonable compensation to Lender and its agents, attorneys fees, and all other
expenses, liabilities and advances incurred or made by Lender, its agents and
attorneys in connection with such sale, and any other unreimbursed expenses for
which Lender may be reimbursed pursuant to the Documents; second, to the payment
of the Obligations, in such order and manner as Lender shall determine, with no
amounts applied to payment of principal until all Interest has been paid; and
third, to the payment to Borrower, its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.

          7.6  Performance by Lender. Lender may, at its option, and without any
obligation to do so, pay, perform and discharge any and all liabilities agreed
to be paid or performed in the Documents by Borrower, any Guarantor or any
surety for the Performance of the Obligations if the person obligated fails to
do so. For such purposes Lender may use the proceeds of the Collateral. All
amounts expended by Lender in so doing or in exercising its remedies under the
Documents following an Event of Default shall become part of the Obligations,
shall be immediately due and payable by Borrower to Lender upon demand, and
shall bear Interest at the Default Rate from the dates of such expenditures
until paid.

          7.7  Remedies Non-Exclusive. No remedy in any Document conferred on or
reserved to Lender is intended to be exclusive of any other remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under any Document or now or hereafter existing at law
or in equity. No delay or omission to exercise any right or power shall be
construed to be a waiver of or acquiescence to any default or a waiver of any
right or power; and every such right and power may be exercised from time to
time and as often as may be deemed expedient.

          7.8  Waiver. Borrower, for itself and for all who may claim through or
under it, hereby expressly waives and releases all right to have the Collateral
or any part thereof, marshalled on any foreclosure sale or other enforcement of
Lender's rights and remedies.

          7.9  Power of Attorney. For the purpose of exercising its rights and
remedies under Sections 7.2(d) and 7.6 hereof, Lender may do so in the name of
Borrower or its name and is hereby appointed as Borrower's attorney-in-fact to
take any and all actions in the name of Borrower and/or on behalf of Borrower as
Lender may deem necessary or appropriate in the accomplishment of such purposes.

      8.  MISCELLANEOUS

                                      53
<PAGE>
 
          8.1  Payment of Funds to Lender. All moneys payable under the
Documents shall be paid to Lender at its address set forth herein in lawful
monies of the United States of America, unless otherwise designated in the
Documents or by Lender by notice.

          8.2  Merger. The Documents exclusively and completely state the rights
and obligations of Lender and Borrower with respect to the Loan. No
modification, variation, termination, discharge, abandonment or waiver of any of
the terms or conditions of the Documents shall be valid unless in writing and
signed by duly authorized representatives of the party sought to be bound by
such action. The Documents supersede any and all prior representations,
warranties and/or inducements, written or oral, heretofore made by Lender.

          8.3  Powers Coupled with an Interest. The powers and agency granted to
Lender by Borrower in the Documents are coupled with an interest and are
irrevocable and are granted as cumulative to Lender's other remedies for
collection and enforcement of the Oblations.

          8.4  Counterparts. Any Document may be executed simultaneously in any
number of identical copies each of which shall constitute an original for all
purposes.

          8.5  Notices. Except as otherwise expressly provided in the Documents,
any notice required or permitted to be given under any Document by any Person to
the other shall be in writing and shall be (a) personally delivered, (b) sent by
overnight express carrier, or (c) sent by telecopy, to such other Person (or
Persons) at its address and/or telecopy number as set forth below, or at such
other address and/or telecopy number as any party thereto may designate for such
purpose in a notice given to the other party. Such notice shall be deemed
received upon the earliest of the following to occur: (a) upon personal
delivery; (b) on the next Business Day following the day sent, if sent by
overnight express courier; and (c) on the day sent if the time of transmission
is prior to 2:30 p.m. or if such day is not a Business Day on the next Business
Day after the day sent, if sent by telecopy.

               Notices to Borrower:           VISTANA TIMESHARE MORTGAGE 
                                              CORP. 
                                              c/o VCH Administration, Inc.
                                              8801 Vistana Centre Drive
                                              Orlando, Florida   32821
                                              Attn: Chief Financial Officer
                                              Telephone: (407) 239-3100
                                              Telecopy: (407) 239-3222

               With a copy to:                VISTANA, INC.
                                              701 Brickell Avenue, Suite 2100
                                              Miami, Florida 33131
                                              Attn: Susan Werth, Esq.
                                              Telephone: (305) 577-3150

                                      54
<PAGE>
 
                                             Telecopy: (305) 374-7159


               Notices to Lender:            DRESDNER BANK AG NEW YORK AND 
                                             GRAND CAYMAN BRANCHES
                                             75 Wall Street                 
                                             New York, New York  10005-2889 
                                             Attn: Asset-Backed Finance 
                                             Telephone: (212) 429-2552      
                                             Telecopy: (212) 429-2780        

          8.6  Assignees of Borrower and Lender. This Agreement, the Note and
any other Document shall be binding upon, and inure to the benefit of, the
parties hereto and their permitted successors and assigns, whether so expressed
or not. The Lender shall have the right (i) to sell, assign or otherwise
transfer to any Person all or any portion of its interest under this Agreement
and the Note and (ii) to grant any participation or other interest herein or
therein; provided that Lender shall give Borrower at least ten (10) Business
Days written advance notice of Lender's intent to assign any of its rights
hereunder; provided, further, however, that Lender shall not disseminate any
information regarding the Borrower or the Collateral to any timeshare developer,
timeshare exchange company or hospitality industry company without Borrower's
advance written consent, which consent shall not be withheld unreasonably.
Borrower may not assign its rights in the Documents in whole or in part except
as may be expressly provided in a Document or with the prior written consent of
the Lender.

          8.7  Unenforceability. If any one or more of the provisions contained
in any Document shall be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
in the Document shall not in any way be affected or impaired thereby.

           8.8 Time is of the Essence. Time is of the essence in the Performance
of the Obligations.

          8.9  Delay not Waiver. No modification, variation, termination,
discharge, abandonment or waiver granted or consented to by Lender including a
waiver of the time of the essence standard, shall be deemed to be an abandonment
of such rights.

          8.10 Headings. All headings are inserted for convenience only and
shall not affect any construction or interpretation of the Documents. Unless
otherwise indicated, all references in a Document to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of the Document; the words "herein", "hereof", "hereto",
"hereunder" and words of similar import refer to the Document as a whole and not
to any particular section, paragraph, clause or other subdivision; the use of
any gender shall be deemed to include other genders, unless inappropriate; and
reference to a numbered or lettered subdivision of an Article, or paragraph
shall include relevant matter within the Article, section or paragraph which is
applicable to but not within

                                      55
<PAGE>
 
such numbered or lettered subdivision; the word "or" shall be deemed to have the
expansive meaning of "and/or". All Schedules and Exhibits referred to in this
Agreement are incorporated in this Agreement by reference.

          8.11 CHOICE OF LAW: JURISDICTION: VENUE AND WAIVER OF JURY TRIAL.
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS AGREEMENT SHALL BE LITIGATED, AT LENDER'S SOLE DISCRETION AND ELECTION,
ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK.
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. BORROWER HEREBY IRREVOCABLY
APPOINTS AND DESIGNATES CT CORPORATION SYSTEM, WHOSE ADDRESS IS C/O CT
CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH
PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON
BORROWER PROVIDED THAT A COPY OF SUCH PROCESS BE DELIVERED TO BORROWER PURSUANT
TO THE PROVISIONS OF SECTION 8.5 ABOVE. IN THE EVENT SERVICE IS UNDELIVERABLE
BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN NEW YORK, NEW YORK, OR
LENDER WISHES TO HAVE A DIFFERENT AGENT, BORROWER SHALL, WITHIN TEN (10) DAYS
AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN NEW YORK, NEW YORK) ON
ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH
SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION,
HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO
BORROWER. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN
ACCORDANCE WITH THIS PARAGRAPH.

          BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND BY
LENDER, AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON
BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF
TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT, BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND LENDER HAVE
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF
THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.

                                      56
<PAGE>
 
BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL.

          THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF
THE UNITED STATE SOF AMERICA.

          8.12  Usury Law. It is the intent of the parties hereto to comply with
any applicable usury law. In no event whatsoever shall the amount of Interest
paid or agreed to be paid by Borrower pursuant to this Agreement or the Note or
any of the other Documents exceed the highest lawful rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Agreement or the Note or of the other
Documents shall involve exceeding the lawful rate of interest which a court of
competent jurisdiction may deem applicable hereto ("Excess Interest"), then ipso
facto, the obligation to be fulfilled shall be reduced to the highest lawful
rate of interest permissible under such law, and, if for any reason whatsoever,
Lender shall receive, as Interest, an amount which would be deemed unlawful
under such applicable law, such amount shall be applied to the Loan (whether or
not due and payable), and not to the payment of Interest, or refunded to
Borrower if the Loan has been paid in full. Borrower shall not have any action
against Lender for any damages whatsoever arising out of the payment or
collection of any such Excess Interest.

          8.13  NO LIABILITY TO PURCHASERS. LENDER DOES NOT HEREBY ASSUME AND
SHALL HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO PURCHASERS, LENDER'S
RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO HAS TAKEN, AS SECURITY FOR
INDEBTEDNESS OWED TO IT, AN ASSIGNMENT FROM BORROWER OF THE INSTRUMENTS. EXCEPT
AS REQUIRED BY LAW, INCLUDING WITHOUT LIMITATION, ANY REPORT OR REQUEST BY THE
SEC, BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF OR MAKE REFERENCE TO LENDER
WITH RESPECT TO THE TIMESHARE PROJECTS, THE SALE OF TIMESHARE INTERESTS OR
OTHERWISE, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF LENDER.

          8.14  Reserved.

          8.15  Reliance by Lender. All representations, warranties, covenants
and agreements made by Borrower herein, in the other Documents or in any other
agreement, document, instrument or certificate delivered by or on behalf of
Borrower under or pursuant to the Documents shall be considered to have been
relied upon by Lender and shall survive the delivery to Lender of such Documents
and the extension of the Loan (and each part thereof), regardless of any
investigation made by or on behalf of Lender.

                                      57
<PAGE>
 
          8.16  Termination; Survival. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loan hereunder. This Agreement
shall terminate promptly at the end of the Term, provided, however, that any
obligation that the Borrower may have hereunder to indemnify the Lender or the
Custodian shall survive such termination.

          8.17  Amendments. Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Agreement
or any Note shall not be effective unless set forth in a writing signed by, in
any case, Borrower and Lender. Any waiver or consent with respect to any
provision of this Agreement or the Note shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances.

          8.18  Marshalling; Payments Set Aside. Lender shall be under no
obligation to marshall any assets in favor of Borrower or any other Person or
against or in Performance of any or all of the Obligations. To the extent that
Borrower makes a payment or payments to Lender, or Lender enforces its Liens and
such payment or payments or the proceeds of such enforcement or set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under the Bankruptcy Code or under any other similar federal or
state law, common law or equitable cause, then to the extent of such recovery
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.

          8.19  No Set-Offs by Borrower. All sums payable by Borrower pursuant
to this Agreement or the Note shall be payable without notice or demand and
shall be payable in United States Dollars without set-off, counterclaim,
defense, abatement, recoupment or reduction of any manner whatsoever.

          8.20  Equitable Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement or the Note, any remedy at law may prove to be
inadequate relief to the Lender; therefore, Borrower agrees that the Lender
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

          8.21  Waiver of Punitive Damages. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, EACH OF THE PARTIES HERETO AGREES THAT IT
SHALL NOT SEEK ANY PUNITIVE DAMAGES FROM THE OTHER PARTY HERETO UNDER ANY THEORY
OF LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY THEORY IN TORT.

                                      58
<PAGE>
 
          8.22  General Interpretive Principals. For purposes of this Agreement
except as otherwise expressly provided or unless the context otherwise requires:

          (a)  the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;

          (b)  the term "include" or "including" shall mean without limitation
by reason of enumeration.

                                      59
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names, personally or by their duly authorized
representatives as of the date above written.

                                BORROWER:

                                VISTANA TIMESHARE MORTGAGE CORP.
                                a Delaware corporation

                                By:  /s/ John M. Sabin
                                    -------------------------------------

                                Name:  John M. Sabin

                                Title: Sr. Vice President



                                LENDER:

                                DRESDNER BANK AG NEW YORK AND GRAND 
                                CAYMAN BRANCHES

                                By:  /S/ Michael M. Kownacki
                                    --------------------------------------
                                Name:  Michael M. Kownacki
                                      ------------------------------------
                                Title:  Vice President
                                       -----------------------------------

                                By:  /S/ Harry C. Forsyth
                                    --------------------------------------
                                Name:  Harry C. Forsyth
                                      ------------------------------------
                                Title:  Vice President
                                       -----------------------------------